Dundee's (DDEJF) CEO David Goodman on Q2 2016 Results - Earnings Call Transcript

| About: Dundee Corp.A (DDEJF)

Dundee Corp.A (OTCPK:DDEJF) Q2 2016 Earnings Conference Call August 10, 2016 10:00 AM ET

Executives

John Vincic - Media Relations

David Goodman - President and Chief Executive Officer

Lucie Presot - Executive Vice President and Chief Financial Officer

Mark Goodman - Executive Vice President and Chief Operating Officer

Richard McIntyre - Executive Vice President, Wealth Management

Analysts

Stephen Boland - GMP Securities

Brett Reiss - Janney Montgomery Scott

Vijay Lohia - Value Investment

Zach Liggett - the FIM Group

Operator

Good morning, ladies and gentlemen. My name is Sally and I will be your conference operator today. At this time, I would like to welcome everyone to the Dundee Corporation 2016 Second Quarter Results Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

Mr. John Vincic, you may being your conference.

John Vincic

Thank you, operator. Good morning, everyone, and welcome to Dundee Corporation’s 2016 second quarter results conference call and webcast. The company's financial results were issued last night and are available on our website at dundeecorporation.com.

Before we get started, please be advised that the information discussed today is current as of June 30, 2016 unless otherwise indicated and the comments made on today's call may contain forward-looking information. This information by its nature is subject to risks and uncertainties and as such actual results may differ materially from the views and expectations expressed today. For further information on these forward-looking statements, please consult the company's relevant filings on SEDAR. Also, please be reminded that all currency amounts discussed on today's call are in Canadian dollars unless otherwise stated.

Our presenters today are David Goodman, Dundee’s President and Chief Executive Officer; and Lucie Presot, Executive Vice President and Chief Financial Officer. Joining them for the Q&A session following the conclusion of the formal remarks are Mark Goodman, Executive Vice President and Chief Operating Officer; and Richard McIntyre, Executive Vice President, Wealth Management.

And now, I'd like to turn the call over to David Goodman. David?

David Goodman

Thank you, John, and thanks everyone for joining the call this morning. Before we get into a review of our second quarter performance, let me first discuss where we are in the company's evolution. We're still in the midst of a positive transition at Dundee. Much has been done to actively manage our portfolio of investments, more still needs to be done. We're still rationalizing some businesses and continuing to optimize our portfolio of investments. This is critically important work and with the portfolio totaling approximately $1.2 billion, it takes time.

That said, I'm encouraged by what I have seen here to-date and I truly believe there's momentum in our business. As we continue to work on this transition, we are well positioned to pivot from defense to offense where we can then focus on what we believe will be key growth drivers for us going forward.

During the second quarter, we continue to focus on what I believe are the two key value drivers for our business: strategic capital allocation and active portfolio management. As you'll see in today's presentation, we're sticking to our discipline in how we invest capital. Non-core investments were exited and capital is reallocated to businesses with better growth opportunities.

In so doing, we continue to invest our capital alongside our partner's capital. This is very important to Dundee as we are putting more emphasis on partnership and collaboration in our investing model. As I have said before, we no longer want to be the sole source of capital for our invested companies. We prefer to be the lead order or one of many orders when we invest and endeavor to structure our companies to be attractive to third parties.

And we are holding our management teams to a very high standard. Once capital is seeded, we will lend our expertise to help businesses flourish. In exchange for our support, we expect management teams to also be shareholders whose interests are aligned with ours. More importantly, we expect their businesses to be cash flow positive enable to access capital independently in a short time frame. This lessens the burden on us and provide us with more strategic flexibility as our invested companies become more attractive to other investors.

Let me discuss some of our key operational achievements for the quarter. Early in the quarter, we closed the sale of Dundee Goodman Private Wealth to Echelon Partners. The closing of this transaction resulted in a gain on sale of $2.6 million and in the release of approximately $20 million in regulatory capital available for redeployment to other business. Subsequent to quarter end, an additional $9 million of regulatory capital was released for redeployment. This transaction is a good example of our capital allocation focus. We exited a non-core business and reallocated capital to support businesses with superior growth potential.

The Parq casino and resort project in Vancouver is a business that has the potential to become one of our flagship holdings. It is scheduled for completion and opening in the third quarter of 2017. During the quarter, we combined an existing $18 million completion guarantee with an additional $22 million in capital to invest a total of $40 million in a preferred security. Once completed Parq casino will offer a unique casino and resort experience in one of North America's greatest cities.

During the quarter, we also restructured our Dundee 360 business. This resulted in us taking a non-cash impairment charge of $24 million of which $14 million was goodwill. We also had a change at the senior management level and Brad Henderson, who is the President and CEO of our Sotheby's International Canada business is now also overseeing Dundee 360. In this role, Brad will look to create more synergies between these two businesses as Dundee 360 places more of an emphasis on luxury and higher end real estate.

Positive progress was made on a number of fronts within our portfolio during the quarter. United Hydrocarbon, or UHIC, as we call it, has initiated a process to source new investors or financial partners to help with the potential development of its world-class oil fields in Chad. Financial advisors have been hired, a data room has been established, and meetings with prospective investors have been held. The company has also had discussions with potential partners about the establishment of low-cost alternatives to help it achieve initial production at its properties.

We are encouraged by these developments in support of management and its efforts to source new partners in capital. We also continue to believe in the potential of the properties in Chad. As a result, we're in the final stages of negotiating conversion of our debt into equity, which we believe will be beneficial to bringing in third-party investors for establishing a joint venture.

Blue Goose Capital, as many of you know, was contemplating a transaction earlier this year that would have seen it become a public company. Management has made the decision to shift strategy and remain a private company for the time being and consider the possibility of a go-public transaction in the future when the business matures and market conditions improve.

In the meantime, Blue Goose has continued to actively seek capital to help fund the growth of its business. We have been supportive of these efforts, which are now at an advanced stage and with seed Dundee investment capital alongside a partner with a proven track record of success in this industry. This pending investment will provide Blue Goose with capital to fund its growth via potential acquisitions while also providing its management team access to knowledgeable professionals with deep food industry experience.

Let me conclude our portfolio update with a brief discussion about TauRx. TauRx is currently undertaking a substantial phase 3 clinical trial program using its patented drug LMTX – it’s actually LTMX, a drug targeted at treatment of mild to moderate Alzheimer's disease and behavioral variant frontotemporal dementia.

During the first half of 2016, TauRx moved into the final stages of its phase 3 clinical trial program. On July 27, TauRx announced the results from study 15 for patients with mild to moderate Alzheimer's disease. The first of three studies results expected this year. This study show that LTMX as a monotherapy demonstrated significant reductions in disease progression in mild to moderate Alzheimer's disease. However, it failed to show marked improvements in combination with other standard Alzheimer's treatment.

TauRx’s press release from July 27 states that an initial analysis from the second study called study 5 undertaken in 800 patients with mild Alzheimer's disease confirms the findings of study 15 and supports the potential of LMTX drug as a monotherapy. The results from this study are expected be published later in 2016. We continue to believe in the potential of TauRx and are excited for them to publish the results in the coming months.

Now I would like to turn the call over to our CFO, Lucie Presot for a review of financial information.

Lucie Presot

Thanks very much David. As David noted earlier in his remarks, our company is moving to a period of transition. From a finance standpoint, we are actively engaged in the work being done to support emerging capital group and its efforts to rationalize and reposition our investment portfolio. Key to this is the ongoing management of our cash and liquidity position, which I will discuss in greater detail in a moment.

Ultimately, as we emerge from this transitional period, we expect to be in a stronger financial position in order to support some of the key growth initiatives at Dundee. During the second quarter, our portfolio continues to benefit from increases in commodity prices as shown primarily in the stock performance of our investment in Dundee Precious Metals. This in turn has helped us deliver improved results, compared with the same period of the prior year.

We were reporting a net loss of $17.3 million in the second quarter, compared with the loss of $149.9 million in the second quarter of 2015. After we account for the interest of minority shareholders, the net loss attributable to our shareholders was $12.7 million or a loss of $0.25 per share. This compares favorably to a loss of $141.3 million or a loss of $2.44 in the second quarter of the prior year.

Our financial performance is significantly driven by changes in the market value of our portfolio, which we include in our net earnings or loss. In the second quarter, we saw appreciation in our portfolio of $52.2 million, and as we previously indicated this was primarily driven by our investment in Dundee Precious Metals, which accounted for $35 million of the gain. This quarter, our general and administrative expenses have decreased to $38.4 million from $56.3 million in the same period of the prior year.

The decrease reflects both the divestiture of the retail business, as well is cost savings initiatives, which were implemented in 2015. At head office, general and administrative expenses decreased from $10.9 million in the second quarter of 2015 to $9.4 million this quarter. Our general and administrative expenses at head office are always queued by our requirement to mark-to-market certain of our stock-based compensation arrangements.

In addition, the current quarter's results reflect non-recurring costs associated with the sale of Dundee Goodman Private Wealth to Echelon, and costs associated with the ongoing build-out of our wealth management strategy. When these costs are removed, our head office general and administrative costs are approximately $10.5 million during the first half of 2016 consistent with our anticipated run rate of approximately $5 million per quarter.

We continue to estimate our current interest expense obligations at approximately $16 million to $20 million per year or $4 million to $5 million per quarter. As you will see presented in the table on slide 8, in the second quarter of this year we incurred interest expense of $3.3 million and another $1.7 million in dividend payment for a total of $5 million.

Let me now provide an overview of significant cash transactions during the quarter in our liquidity at June 30. Our additional $40 million investment in the Park Casino and Resort project was essentially funded using proceeds from the sale of non-core assets. We received $20 million in the quarter from the release of regulatory capital following the sale of Dundee Goodman Private Wealth to Echelon of which $6 million was redeployed into our various subsidiaries, including the funding of united hydrocarbon.

We paid off for the $11.5 million in the quarter to retire certain of a preferred shares and our general and administrative and interest cash needs were approximately $14 million. As a result, at the end of the quarter and at the head office level Dundee had cash and available liquidity of $76.7 million, compared with cash and available liquidity at March 31 of this year of $84.9 million.

In addition to our cash and borrowing capacity, the market value of our portfolio of public companies exceeded $350 million at the end of June. In aggregate cash borrowing capacity, ability to recover regulatory capital, and our large investment portfolio gives us comfort in knowing we have sufficient liquidity to manage the needs of our business. This concludes our financial review.

I would now like to turn the call back to David Goodman. David?

David Goodman

Thank you, Lucie. I’d like to conclude by touching upon some of the key strategic priorities and businesses that have not been discussed yet. First, we continue our efforts to build out our wealth management business. This remains a top strategic priority and we are actively seeking M&A opportunities in an effort to accelerate the growth of the business. Both the corner store acquisition and smaller tuck-in transactions remain a possibility.

We feel an acquisition is the most sufficient way to grow this business in order to achieve economies of scale, and as we scale the business we increase our ability to generate regular and reliable cash flows. As we seek and evaluate acquisition opportunities, we're building this platform internally. Key relationship managers have been added and personal have joined us who will lead our business advisory services practice to help business owners transition their wealth needs.

During the quarter, we also made some progress on a proposed partnership structure at Dundee Capital Markets. Commercial terms are being discussed and finalized with key employees and documents have been filed for a review and approval by IROC, which we expect to be issued this fall. This is another important transition within our portfolio and we look forward to a positive outcome by year's end.

We believe we have laid out a plan that identifies important key long-term value drivers for Dundee and we believe we have the right team in place to execute that plan. As I have said many times, our focus is squarely on capital allocation, portfolio oversight and optimization in cash and liquidity management.

Everyone on our senior management team is involved in the execution of our plan and is committed to emerging from this transition as a stronger, leaner enterprise. In closing, let me thank our employees for their dedication and perseverance, and let me also thank our shareholders for their continued support. This concludes our formal remarks today. We would now be happy to answer any questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from the line of Stephen Boland with GMP Securities, your line is open.

Stephen Boland

Good morning.

Lucie Presot

Good morning.

David Goodman

Hi Steve.

Stephen Boland

Maybe just, Lucie maybe just the first question, just a numbers question, when I look at your portfolio the market value of portfolio investments, that is the $556 million bucket there was a positive change from market values not only from Dundee Precious Metal [indiscernible], but others had about $22 million gain, was that one or two large holdings or was that - was it more just across the portfolio?

Lucie Presot

Thank you for the question and it was actually across a number of our investments. So we did see the benefit of commodity prices primarily and it affect our portfolio overall. So, it was across quite a large sector of our portfolio.

Stephen Boland

Okay. And if you can, on your slide 9 there, when you talk about that $76.6 million cash and available liquidity, when I go in your segment notes, I think you have about $16 million of cash in sort of the end of your financials, so what’s included in that cash and available liquidity number of 76?

Lucie Presot

It includes the $16.1 million of cash plus our borrowing capacity is under our credit facility.

Stephen Boland

Under the facility. Okay so the facility is, it is a $250 million facility right? And you have you used up 92 of it, is that correct?

Lucie Presot

That is correct.

Stephen Boland

And so that delta between wouldn't you have more then I guess $50 million of capacity on the credit line then?

Lucie Presot

It is a very good question, our borrowing capacity is somewhat subject to the financial ratios that we have to maintain which is a function of the market value of our portfolio. So, when we do this calculation we factor in the market value of our portfolio on our ability to borrow.

Stephen Boland

Okay, that makes sense. And with that I'll maybe, David like when you look at your balance sheet with that capacity does it give you enough flexibility when you are talking about supporting TauRx continuous support, you know United hyrdrocarbon as well as a look at acquisition?

David Goodman

Yes, I think it does for now Steve. The TauRx doesn't require or more capital from us, we are of 4% shareholder. We look at it with excitement, but let’s face it the – that type of businesses is a risky business. It is a high reward high risk opportunity. We look forward to favorable outcome for them, but it’s not asking us for more capital at this stage. We have thought to limit the amount of capital that we invest in our underlying subsidiaries and that’s why in how we are structuring them we’re putting management to the test of structuring their companies where we are not the only provider of capital, seeking to limit the amount that is being asked from us in the future and that will put them in a, I think a more disciplined position to structure their business to be attractive not just to us, but to third parties as well. So, I don't think it gives us a runway well into 2017 to navigate through our portfolio.

Stephen Boland

You mentioned on the call that United Hydrocarbon Holding that you're looking at converting the debt you placed in the equity, what is the timing of that and how much, I mean would that be a total amount or a portion of it?

David Goodman

Right now all of our money in United is in by way of debt and it puts a burden on the company to attract third-party capital. They have all of our money standing in the way. So the prudent course of action would be to find the right terms to convert our debt into equity. We are in the late stages of making that happen and we hope to announce something in the near future.

Stephen Boland

Okay, and then just lastly you talk about building out the wealth management, certainly you probably done, probably year end of the review of looking at the different segments of wealth management that you find attractive or not attractive, early on I believe you said you didn't want to compete in the mutual fund business what have you found now or what can you update us in terms of what segments you do find attractive and where are you continuing to look for deals?

David Goodman

Yes we think the high net work segment is where we want to be. We want to provide a high level of service and a family office type of offering to families in high net worth individuals that are not in a position to establish a family office on their own. So, we can build up that offering in house and have the team in-house that allows the cost of building up that to be divided amongst a larger group of people. And then the type of offerings would be consistent with what we have with Adam Donsky, our Chief Investment Officer. We have a very prudent and value investment oriented strategy that we've grown from a board, I think it was $100 million to $180 million in the first six months of the year.

We have a Private Equity type of offering that will consist of potential to create a private equity fund, the ability to get our back launched, I think applies into that strategy as well. Our Sotheby's franchise I think provides us with the good window into the high net worth world that we are hoping to take advantage of and so we think that we put all these things together and we can create a pretty nice offering in the company that builds upon the long history of money management that Goodman and company have.

Stephen Boland

Okay, that's all my questions. Thank you very much.

David Goodman

Thanks Steve.

Operator

And your next question comes from the line of Brett Reiss with Janney Montgomery Scott. Your line is open.

Brett Reiss

Good morning, how is everybody?

Lucie Presot

Good morning.

David Goodman

Good morning Bret.

Brett Reiss

The Casino project, you know my own channel checking, there were issues with boulders when you were laying the foundation and there were complications with the commanding control center, are those the two problems that held up the project, are these problems behind us, are there any other things to be concerned about or it full speed ahead?

David Goodman

Well it is full speed ahead, but let me address your question. The casino was suffered from some delays and because of those delays it increased the cost of bringing the project to completion. So, we had as an ownership group between Dundee PBC which is a pension fund and paragon made the decision to support our project, provide more capital to it, negotiate with our lenders for an extension for a few months and we believe the project is now full steam ahead and on track to be opened at the end of September, but it is a construction project Brett. So, we continue to monitor it closely, but we put a new oversight team in-charge to, which includes Paul [indiscernible] who is an experienced developer and the head of PBC pension fund. And our team has taken on a more active role in monitoring the progress of this. But I think we are now on track. I think we are past the problems that we experienced early on, and we look forward to getting this built. And the reality is the, we're about 13 months away from having it built.

So are there going to be hiccups along the way? Maybe, but we're standing behind this project, as I think it will represent potential for a cash flowing, flagship project for Dundee Corporation. And our strategy is to make investments in assets who have the ability to become cash flow generators within 24 months, and this one certainly meets the bill. So we’re there.

Brett Reiss

Right. Now, the world doesn't standstill. There's been some challenges with the VIP market in Macau, arguably the mass market gambling in Macau has kind of recovered. Has there been anything that’s happened in the world that when ultimately the casino project comes online that – is the valuation you saw it going into it going to be the same, maybe greater. Can you share with me your thoughts on that?

David Goodman

Right now. I think we – our valuation parameters are really not that changed. We do think that the value of the two hotels in the parking garage has probably gone up, and definitely represents some strategic value. Also, the high-end nature of this casino in downtown Vancouver, I think, is – makes it a very unique asset, and in real estate they talk about location, location, location, this location could not be better.

Brett Reiss

Okay and our ultimate – as a Dundee corporate shareholder what percent of that project do I own?

David Goodman

I think our equity in that project is approximately 41%.

Brett Reiss

Okay, now also there was some sort of management contract in connection with Park that was canceled, I didn’t quite understand that?

David Goodman

There was a management contract in favor of Dundee 360 that was as part of the reset of the timeline converted into a management contract in favor of Dundee Corporation PBC and Paragon. And so we moved the contract that was in the subsidiary to a contract that’s directly in Dundee Corporation.

Brett Reiss

Okay now Blue Goose is it cash flow positive?

David Goodman

Almost.

Brett Reiss

Okay.

David Goodman

We’re looking forward to getting it to cash flow positive in the coming months we’re working on structuring that business to put it in a position to grow. We think it's an exciting opportunity the product is great, the feedback from the channel is great. But it needs a little more scale and then once we achieve that scale and operating leverage we think it will be very profitable.

Brett Reiss

Right, right I’m going to drop back in queue, there may be others, but I may come back.

David Goodman

Thank you, Brett.

Operator

[Operator Instructions] And your next question comes from the line of Vijay Lohia with Value Investment. Your line is open.

Vijay Lohia

Hi, guys good morning.

Lucie Presot

Good morning.

Vijay Lohia

Hi, so couple of questions for me starting with United Hydrocarbon just wanting to understand what oil prices needed for you to resume production and exploration that I understand that because of the current low oil prices you stopped couple of rigs and canceled lot of contracts. So what level of pricing, oil price will make you assume those?

David Goodman

We’re going to differ the answer to that leave that to the management of United that is going to be coming out with their own investor presentation quite shortly. The reality is that the price of oil which is profitable is a variable number it’s much lower if they're able to get the ability to truck their oil to local facilities and share local facilities in the area, which is a project they're working on. And it is a little bit higher in the event that they cannot do that. So I am going to leave that to the management team of United to answer. We’ve traditionally thought that it was in and around $50 Brent number, but I'd rather have the detail and accuracy of that number vetted through management of United.

Vijay Lohia

Okay, and the exploration improvement that you have that six hiring I believe next year in May so you’re going to renew it or how much do you have to pay incrementally to renew that permit?

David Goodman

Again a good question for the management of United, I don't know the answer to that.

Vijay Lohia

Okay, no worries. So coming to Dundee Capital Markets at the end of the prepared remarks you said that you’re restructuring that Dundee capital markets. So can you talk somewhat give more detail what kind of thing structure that you’re planning and your plans in that?

David Goodman

Sure, we believe that to be successful as an independent capital markets group in Canada and effectively compete with the banks in this country that the ownership of the firm needs to be in the hands of the key people that are driving that business and as a result we have made available to the management group of Dundee Capital Markets the ability to buy this business. We’re seeking to support them in that purchase and put them in charge of independent privately owned and operated business.

Vijay Lohia

So then how much will Dundee shareholders or Dundee Corp. own of that business?

David Goodman

Well, you know, it's not entirely finalized, but the current thinking is that Dundee would be exiting the business and the employees would be buying it and that we might provide some capital by way of loan with some type of preferential return. But all of the details are not done yet.

Vijay Lohia

Okay. Fair enough. Coming to buyback side, I do read that you authorized 10% buyback, how much do you actually plan to do it this year and have you started buying back anything so far given the stock price lurking at these low levels?

David Goodman

We don't discuss what we're planning to do on that front in the future. Right now, we are managing our liquidity position carefully. We're allocating capital to our subsidiaries where necessary to put them in a stronger position to attract third-party capital. And the buyback is something that's open to us to make decisions as we see fit on an ongoing basis. I don't want to lock us into anything on that go forward basis.

Vijay Lohia

Okay. No problem. So a final question from me. I just wanted to understand a little bit about your real estate portfolios. So with oil coming off from its lows of $27 last year, overall, are you seeing an improvement in your real estate portfolio across various cities in Canada?

David Goodman

It was very difficult to hear the question, but I think you asked with the improvement in the price of oil are we seeing any improvement in our real estate portfolio.

Vijay Lohia

Absolutely, yeah.

David Goodman

Most of our real estate portfolio is held through a public company called DREAM, and that’s for them to disclose and answer and we're super supportive. It’s a company that – they came through Dundee Corporation and we hope to replicate the success that we've had with DREAM. Some of the other companies in our portfolio where we subsequently see them become successful public companies. We are optimistic about the price of oil. It is – oil has been obviously down significantly over the last two years. It's impacted our strategy and ownership of United Hydrocarbon, it’s impacted some of the real estate held in western Canada by our subsidiaries. But we do think over the long-term, it will stabilize and go higher.

Vijay Lohia

Okay. Thank you for taking my questions and all the best for the upcoming quarters.

David Goodman

Thank you very much.

Operator

And your next question comes from the line of Zach Liggett with the FIM Group. Your line is open.

Zach Liggett

Hi. Good morning, guys, and thanks for all the color today.

David Goodman

Thank you.

Lucie Presot

Good morning.

Zach Liggett

Just a couple of questions from me. On the non-core – as far as the portfolio rationalization is going, the non-core assets that you've identified, anyway you can quantify kind of what's left in that bucket and timeframe for that? That’s my first question.

David Goodman

I don't think – I don't think so. I think you'll see how we unfold as time goes on. I think we're nearing the end of the repositioning of Dundee Corporation to start focusing on growing our businesses. The biggest part of what I think is core to us is the building up of the wealth management business. Over the years that's where I've had most of my experience and it's where Dundee Corp. through our historic investment in DundeeWealth has built up a great amount of our value. So that has been – that’s a core part of our growth strategy going forward.

You're going to see more things happening on that front over the course of the next year or two squarely and clearly show the growth of that core investment. We've already identified that. We consider real estate and agriculture and assets that tends to hold their value in a declining currency market, so we see [ph] that currencies will decrease in value, hard assets will increase in value. Our portfolio has been structured to benefit from that transition that we see going forward.

Zach Liggett

Okay, great. And then on the wealth management business, any updates you have on assets under management as it stands today and then what your goals are here over the next year?

David Goodman

Yeah, I think, we put it all in the MD&A, I think our assets under management are about $176 million, which as a percentage is up significantly, but it's still not a huge number. We would like to significantly grow that number. I mean when we talk about it internally we are very focused on getting that number to $1 billion. In order for us to do that, we have to make some acquisitions. The organic growth while great and we’re super proud of our team and we're really happy with the results.

To move the needle the way we want to move it, we think an acquisition is the best way to go. And there would be two type that we look at. One would be small tuck in acquisitions where we deal with a group that represents assets under administration that we could work with and bring in house and convert that business into assets under management. That was our – a big part of our strategy and success of DundeeWealth. Richard McIntyre, who joined us from DundeeWealth, who was my partner, back then is my partner, again, so we're trying to apply that strategy in a slightly different format going after high net worth this time from mutual fund business. And the second type of acquisition would be something more substantial. And we're taking a look to see how we can implement that type of – that three part strategy on growing the business.

Zach Liggett

Okay. Great. And then last for me than just the mix of the privately owned versus the publicly traded securities within the portfolio of that mix. Do you have any guidance, I guess, on how you see that going forward? Do you aim to continue the kind of current ratio or would you look to maybe liquidate some of the public stuff over time and become more of a privately held?

David Goodman

Well, you know, again, I've been asked that type of question before. My view is the publicly traded securities are really the result of good work we've done navigating our private portfolio. All of the companies that from DREM and Dundee Precious Metals and others, all started as private companies that we nurtured to become public companies. And once they become a public company, generally speaking, they don't ask us for more money. They have their own management team, so they don't ask us for management expertise and they become an independent subsidiary, which is what we're trying to do with every one of our private investment at this stage. So, I think, I kind of like the public companies, they don't ask much from us.

The private companies require us to work on them, to work with the management team to structure them, to help attract talent, to build the Board of Directors, and to be put in a position where they too can attract third-party capital. In today's world, that third-party capital can come in the form of other private investors because it’s a very robust private equity market that develops or it can come in the form of putting it into a public company and have these companies emerge with the strength of management team and financial stability that we see in DREAM and Dundee Precious Metals. So for us, working on the private company portfolio is the most attractive option.

Zach Liggett

Okay, great. And if I sneak one more and then -- just on – when you're looking at bringing in new capital whether it’d be for Blue Goose, I guess, UHIC, how do you feel about – or how do you balance the current valuations and protecting what you have in the book value of the company today versus the long term potential of those investments?

David Goodman

I'm not sure I get it. I’m not sure I understand the question.

Zach Liggett

Yeah, I mean, my question is how comfortable do you feel with the current valuations on the balance sheet for these companies that you may have to bring in dilutive capital?

David Goodman

Yeah. So I guess the question is, if we bring in capital at lower prices than we have it on our books, is that going to result in some type of write down. I mean, if we did do that, I think it would result in – you’d have to write it down for that transaction value. So our best situation is to make the companies strong and attractive, so that we don't how to do that, but some sometimes those things will be out of our control and it'll depend on factors that we can't control like market.

Zach Liggett

All right. Okay, great. Thank you.

Operator

[Operator Instructions] And your next question comes from a line of Brett Reiss with Janney Montgomery Scott. Your line is open.

Brett Reiss

Thanks for taking the added questions. Has there been a recent appraisal of the acreage that Blue Goose owns?

Lucie Presot

Brett, there hasn't been anything recent.

Brett Reiss

Okay. So the numbers I heard at the annual meeting, those are good numbers?

Lucie Presot

They pretty much are, yes.

David Goodman

I think we had it apprized at approximately $100 million, maybe it was $95 million. And I don't think we have any information that's different than that.

Brett Reiss

Okay. Well, that's real money. There's so many moving parts, what would you say are the most likely positive catalysts that we can look for over the next six months to a year with all of the things that you're moving forward on?

David Goodman

Well, I'd like to know whether or not TauRx gets approval. I wouldn't access my probability on that. I think it's a – it's a difficult industry. However, in terms of positive catalyst, I think between now and the end of this year we will know more. Alzheimer's disease is – hasn't really had any significant treatment approved in a decade. And the ones that have been approved, don't seem to work. So our scientists are saying they have something promising and I'm excited to see how that – when they publish their report, when they – over the next three months, I'm excited to see how the scientific community reacts to it. That's one thing.

And then on a go forward basis, I think, if we saw a big improvement in the price of oil, I think, that would bode extremely well for United Hydrocarbon. And they are actively searching for joint venture partnership with a data room that's open right now. I think that's something that we think – I don't know when, but on the horizon, the opportunity to see value enhancement there is something that we look forward to.

We're looking to get something done by the end of the year on Dundee Capital Markets, which we think represents both an opportunity for Dundee Corporation on the release of regulatory capital and in the providing of – we're going to provide some capital on what we think are attractive terms and also an opportunity for the group that runs that firm to make their mark on the Canadian independent capital markets world and what we think is a better structure than the one we currently have.

So, I'd say those things are that the ones that are currently on the horizon. But, your point, that there's so many moving parts, is a very valid point and we're looking to get our teams focused and reduce the number of working parts that we have to speak about. I mean when I come to these meetings, I talk to you Brett about 12 different businesses when we have a conversation. And I think we have to and continue to focus our resources, allocate our capital in a focused way, reduce our expenses and the amount of money that is being asked for from Dundee Corp. to make our subsidiaries independent and to the extent we have to grind it out, which we will do over the coming year, so that Dundee Corp. emerges leaner with stronger subsidiaries underpinning its value.

Brett Reiss

Right, right. One final one. Just an update on Union Group.

David Goodman

Do you want to take that?

Lucie Presot

I will do a little bit. Brett, we did include some information in the MD&A on Union Group. They have progressed quite extensively with their hydropower line of business and have put some into production and expect to put two more locations into production within the next three to six months. In addition, I think, you may have read that they bought into a company that is working in Uruguay to make candidates available through the pharmacies. I mean that's another project that they just initiated. So those are the two big events that have happened at Union Group.

Brett Reiss

Do I get some samples as a shareholder?

Lucie Presot

I said that that was pharmacies in Uruguay, right.

Brett Reiss

That’s too bad.

David Goodman

I've think you are referring to blueberries.

Brett Reiss

All right. Thanks for the questions.

Lucie Presot

Thank you, Brett.

David Goodman

Thank you, Brett.

Operator

[Operator Instructions] And there are no further questions at this time. I will now turn the call back over to David Goodman.

David Goodman

Well, thanks, again, for everyone for joining today's call. I appreciate the questions and the interest in our company. We look forward to updating you again when we present our third quarter results in November. Have a great day.

Operator

Thank you, ladies and gentlemen, for your participation. This concludes today’s conference call. You may now disconnect.

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