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Safety in Numbers
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I am a value investor focused on situations where margin of safety is high including sum-of-the-parts, special situations and operating businesses. I have an undergraduate degree in mathematics, a post graduate degree in accounting and am a CFA charterholder.
  • Corona Gold Trades At 50% Of Its Cash And Marketable Securities With No Debt 13 comments
    Feb 26, 2014 12:23 PM | about stocks: DDEJF, RYGZF, CRGAF

    A few months ago I wrote about Strategic Metals (OTCPK:OTCPK:SMDZF) as an undervalued name trading below cash and marketable securities as the weight of a gold/resource bear market caused investors to flee the stock. Since then we have a had a decent recovery in gold stocks and in Strategic Metals. If we consider the Market Vectors Junior Miners ETF (NYSEARCA:GDXJ) as a proxy, it's up ~ 42% since December 12, 2013 and Strategic Metals is up ~45% (in CAD terms). While the performance has been comparable, I would argue buying a stock below cash had less risk.

    I would like to focus on another small cap gold/resource stock that is trading well below its cash and marketable securities named Corona Gold (OTCPK:OTC:CRGAF)


    Corona Gold (CRG) is effectively a subsidiary of Dundee Corp (OTCPK:OTCPK:DDEJF) which owns 23% of the equity and management/board who are mainly officers and employees of Dundee Corp who own another 22%.

    As disclosed in the Annual Information Form (available on, the Company, formerly invested in mineral properties and then decided beginning in 2006 to maximize the value of these holdings by either selling for cash and/or stock in various junior mining companies. Some of the Company's biggest portfolio positions are based on these transactions. The Company has also invested these proceeds on other investments in the resource sector, straying from gold in some cases into energy and iron ore.

    The performance of the investments that the company has chosen have been awful the last three years as a bear market in resources has caused many of the names in the portfolio to lose significant ground as most of them are/were in significant need of financing and found very little capital available to advance projects.

    The company marks its positions to market so the net loss reported is a pretty good indicator of how badly the portfolio has done.

        Year ended Year ended Year ended
        12/31/2013 12/31/2012 12/31/2011
    Net Loss        
    - Total   -$7,976,976 -$3,941,574 -$12,868,590
    - Per share (basic & diluted)   -$0.37 -$0.19 -$0.67

    Source: Corona Gold 2013 MD&A (

    Its no surprise then that the stock has also suffered significantly.

    Source: (CRG on TSX)

    I don't have a fundamental view on any of the particular holdings that CRG has in its investment portfolio (included below) but I do think that given its somewhat depressed state, there may be an opportunity for a rebound, some of which we have already seen since year end.

    (click to enlarge)

    Source: Corona Gold 2013 Financial Statements (


    At the Company's recent price of C$0.50 (CRG on the TSX), CRG trades at a material discount to cash and marketable securities and pretty close to its cash/share.

    Corona NAV      
      ($m) (per basic share) (per fully diluted)
    Cash 10.25 0.48 $0.50
    Net current assets ex Marketable Securities 0.21 0.01 $0.01
    Investment holdings 11.37 0.53 $0.48
    Total NAV 21.82 1.02 0.99
    Share price ($) / NAV discount (%) 0.500 -51% -49%

    Closing the Discount

    The company has a share buyback in place but it is very inactive with the company only purchasing 35,300 shares in 2013 at an average price of $0.53.

    However, a recent development with a portfolio holding of the Company may help resolve the NAV discount. The Company owns 6.6 million shares of Ryan Gold (OTCPK:OTC:RYGZF) representing a 5.6% stake. Ryan Gold (RYG on TSX) has recently decided to cease its mineral exploration and development activities and is conserving its cash. It is effectively a holding company similar to CRG with significant cross ownership. The biggest difference being that RYG trades at only a 10% discount to NAV but has a similar amount of assets.

    The combination of these two companies at the same discount that RYG trades, would result in a premium to CRG of 72%. It would also result in cost savings of over $600k per year in operating expenses (per CRG outlook for 2014 expenses in 2013 MD&A) and provide the new company with cash resources of over $30m which would give more flexibility to make investments in a cash strapped resource sector and/or do a substantial share repurchase if a giant NAV discount were to reappear.

    Interested investors should note that Corona only trades 1400 shares a day on the OTC but trades 16k shares a day on the TSX.


    The discount could remain for a very long time if the resource sector continues to struggle. Management could use significant cash resources to make further poorly performing investments as opposed to repurchasing its stock which could result in a lower liquidation value. A potential merger with RYG is speculation and may never occur.

    Disclosure: I am long CRGAF, DDEJF, SMDZF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: I may add to or reduce my position in the next 72 hours.

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Comments (13)
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  • Safety in Numbers
    , contributor
    Comments (80) | Send Message
    Author’s reply » I'm not sure if anyone read this article or if I'm just writing to myself but since publishing, some of Corona's larger holdings have done pretty well and the basic NAV is up to $1.07 and the fully diluted is $1.03.
    12 Mar 2014, 10:30 AM Reply Like
  • Safety In Value
    , contributor
    Comments (207) | Send Message
    This is a great find! I love reading about net-nets, and have subscribed as a follower to your future articles.
    17 Mar 2014, 03:21 PM Reply Like
  • Safety in Numbers
    , contributor
    Comments (80) | Send Message
    Author’s reply » Thanks! I'm glad someone's reading this!


    CRG was down 7% today which was in line with a lot of junior gold stocks while the NAV barely budged at $1.11/share basic and $1.07/share fully diluted. The cash per share at $0.48 basic and $0.53 acts as a pretty good buffer.


    Also interesting to point out that CRG and RYG both put out their AGM and record dates of June 25 and May 14, respectively.
    17 Mar 2014, 09:48 PM Reply Like
  • peruaner
    , contributor
    Comments (4) | Send Message
    Interesting find! How do you come up with CAD 11.37 mof investment holdings?
    11 Apr 2014, 07:12 AM Reply Like
  • Safety in Numbers
    , contributor
    Comments (80) | Send Message
    Author’s reply » Thanks Peruaner. I just used the holdings data provided in the Q4 financials (pictured above) and mark it to current market prices with the exception of the warrants which I just leave at the value reported by the company (basically valued at zero) and the one private holding.


    In fact, the current market value of the investments is $12m and the NAV is $1.05/share basic and $1.01/share fully diluted.
    11 Apr 2014, 09:56 AM Reply Like
  • Black Spruce
    , contributor
    Comments (72) | Send Message
    Thanks Safety in Numbers.


    Great to find real value hunters at the cigar butt level!


    Keep your eyes peeled fellas. This sector is unpopular enough to be interesting.
    30 Apr 2014, 07:12 PM Reply Like
  • Safety in Numbers
    , contributor
    Comments (80) | Send Message
    Author’s reply » Thanks Black Spruce.


    FYI, Corona put out its Q1`14 last week and made some changes to the portfolio selling out of a few names and selling down others while adding one. My revised NAV (based on April 30 prices) is 0.95/share on basic and $0.93/share on fully diluted so still over 50% discount.
    1 May 2014, 12:36 PM Reply Like
  • Safety in Numbers
    , contributor
    Comments (80) | Send Message
    Author’s reply » A nice write up on Hummingbird Resources which is CRG's biggest holding after cash.



    Also note there was some insider buying yesterday and according to SEDI, Dundee corp has been adding to their position earlier in August.
    27 Aug 2014, 09:28 AM Reply Like
  • kellen.heusinger13
    , contributor
    Comments (2) | Send Message
    Thanks for the information on both corona and ryan. any work on ryan finding a joint venture partner for its drilling work in the Yukon?
    26 Jan 2015, 12:28 PM Reply Like
  • Safety in Numbers
    , contributor
    Comments (80) | Send Message
    Author’s reply » Nothing new has come up. Ryan recently appointed a director common to both companies, Mark Goodman, as CEO, replacing Murray John.
    26 Jan 2015, 09:00 PM Reply Like
  • Safety in Numbers
    , contributor
    Comments (80) | Send Message
    Author’s reply » Deal finally announced and Ryan and Corona are part of a 5 way combination at around or above current NAV.
    9 Jun 2015, 10:43 AM Reply Like
  • Safety In Value
    , contributor
    Comments (207) | Send Message
    Thanks for posting an update, this was a great call! I had some Ryan shares as well and am enjoying the pop today.
    9 Jun 2015, 02:10 PM Reply Like
  • Safety in Numbers
    , contributor
    Comments (80) | Send Message
    Author’s reply » Thanks!


    The discount to deal price is still huge on both RYG and CRG but I'm sure there is no borrow on the OBM.TO.


    Could be a good spot for adventurous arbs.
    9 Jun 2015, 05:24 PM Reply Like
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