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Dundee Corporation Announces Fourth Quarter and Year End 2020 Financial Results and Management Change

TORONTO, March 30, 2021 (GLOBE NEWSWIRE) — Dundee Corporation (TSX: DC.A) (the “Corporation” or “Dundee”) today announced its financial results for the three months and year ended December 31, 2020. All currency amounts in this press release are in Canadian dollars except as otherwise indicated. FOURTH QUARTER 2020 HIGHLIGHTS Net earnings attributable to owners of Dundee Corporation of $32.8 million (2019 – $6.3 million) or earnings of $0.31 (2019 – $0.04) per share, before the effect of any dilutive securities. During the three months ended December 31, 2020, the Corporation generated proceeds of $56.6 million from the completion of its early discount exercise price program of Dundee Precious Metals Inc.’s purchase warrants. An aggregate of 7.5 million purchase warrants were exercised at the discounted exercise price of $7.60 per share. FULL YEAR 2020 HIGHLIGHTS Consolidated revenues of $32.4 million (2019 – $29.3 million). Net loss attributable to owners of the Corporation of $65.4 million (2019 – $15.3 million), or a loss of $0.69 (2019 – $0.26) per share. During the year 2020, the Corporation generated net proceeds of $220.9 million from the sale of various mining and other investments, which were deemed to be non-strategic to its ongoing business strategy.On a consolidated basis, the Corporation reported cash of $122.6 million at December 31, 2020 (2019 – $26.5 million). Jonathan Goodman, President and Chief Executive Officer of Dundee Corporation, commented: “Dundee made solid progress in 2020 on bringing the Corporation back to its roots as an active investor focused on the mining sector. There are three main areas of focus integral to this transformation – doing more private equity-style mining deals, rationalizing our legacy portfolio of operating companies, and streamlining our capital and cost structures – and we made advancements on all fronts this past year.” “Mining investment has historically been an area where we have been strongest, and it is where we see the opportunity for the best long-term returns. In 2020, we were very active in identifying and de-risking attractive mining investment opportunities and in the last twelve months our team has made seven investments in projects with exciting upside.” Mr. Goodman continued, “We remain focused on rationalizing our legacy portfolio of operating companies; and have advanced the divestures of several non-core assets. We are working hard to engineer orderly, professional exits from the business lines that are no longer aligned with our longer-term strategy, while minimizing their cash drains. Dundee aims to be more aggressive on this front in 2021.” “Lastly, we took several steps to streamline our capital structure and corporate G&A costs. In 2020 we reduced our head office G&A before non-cash stock based compensation by 10%. We plan to continue to look for ways to further reduce cash overheads in 2021 to more closely align the interests of management with shareholders. We also streamlined our capital structure in 2020 and early 2021 through buying back shares for cancellation through substantial issuer bids and announcing a new normal course issuer bid subsequent to year-end. We believe these transactions are prudent uses of capital and good investments at current share prices which also align with our goal of returning cash to shareholders when appropriate.” Mr. Goodman concluded, “Dundee enters 2021 with good momentum and is well-positioned to continue to execute on its strategy and deliver value to its stakeholders and partners. We have a clear strategy and aim to accelerate the execution on all aspects in 2021.” FINANCIAL RESULTS Operating results during 2020 reflect an $81.4 million market appreciation (2019 – $51.0 million) in certain of the Corporation’s investments that are carried in the consolidated financial statements at fair value through profit or loss. In addition, net income from investments during 2020 also includes $5.2 million (2019 – $0.3 million) dividend and interest income distributed from its portfolio investments. On May 13, 2020, the Corporation announced the closing of the sale of 23.9 million units at a price of $6.35 per unit for gross proceeds of $151.8 million. Each unit consisted of one common share of Dundee Precious Metals Inc. owned by the Corporation and one-half of a common share purchase warrant. On October 28, 2020, the Corporation announced the completion of its early discount exercise price program of Dundee Precious Metals Inc.’s purchase warrants. A total of 7.8 million purchase warrants were exercised during 2020 providing aggregate proceeds of $59.6 million of which 7.5 million purchase warrants were exercised at the discounted exercise price of $7.60 for proceeds of $56.6 million. A total of 4.1 million purchase warrants remain issued and outstanding. The cash generated from these sale transactions improved the Corporation’s liquidity and ongoing effort to streamline its capital structure, while providing the Corporation with capital to support its strategic focus on the junior mining sector. The Corporation incurred a $5.7 million transaction cost relating to the sale of shares of Dundee Precious Metals Inc., which was netted against “Net income from investments” in the consolidated statements of operations during 2020. A number of the Corporation’s investments are accounted for using the equity method of accounting, which requires that the Corporation increase or decrease the carrying value of its investment by its proportionate share of the net earnings or loss of the underlying investee. This method of accounting further subjects the Corporation to significant volatility in its operating performance as the underlying net earnings or loss of the equity accounted investee may be subject to market forces or other events over which the Corporation does not exert control. During 2020, the Corporation recognized a loss from its equity accounted investments, excluding real estate joint ventures, of $5.8 million (2019 – $1.6 million). On November 23, 2020, the Corporation announced that it would purchase 14,285,714 Class A subordinate voting shares (the “SV Shares”) in the capital of the Corporation under the substantial issuer bid launched on November 25, 2020 at C$1.40 per SV Share, which would reduce the SV Shares issued and outstanding by approximately 14.3%, advancing the Corporation’s stated objectives of returning capital to shareholders and streamlining its capital structure. Subsequent to year-end, the Corporation announced the results of its substantial issuer bid, confirming the purchase of 14,285,714 SV Shares at $1.40 per SV Share. Also subsequent to year-end, the Corporation announced that it would implement normal course issuer bids on its class A subordinate voting shares, cumulative 5-year rate reset first preference shares, series 2, and cumulative floating rate first preference shares, series 3. Dundee may purchase up to a maximum of approximately 10% of the Corporation’s public float on each class of security. OPERATING SUBSIDIARIES’ PERFORMANCE Goodman & Company, Investment Counsel Inc. (“GCIC”) GCIC grew its AUM 86% from $45.5 million at the end of December 2019 to $84.8 million at the end of December 2020. During 2020, GCIC raised capital of $30.4 million from launching a new tax-sheltered limited partnership, CMP 2020 Resource Limited Partnership, as well as transfers into GCIC’s alternative investment product. During 2020, this segment recognized a performance fee revenue of $0.7 million (2019 – $nil) with a pre-tax operating loss of $1.8 million (2019 – $0.9 million). United Hydrocarbon International Corp. (“UHIC”) As a result of the fair value change of the royalty interest and its associated contingent bonus payments, the Corporation’s 84% owned subsidiary, UHIC, reported a pre-tax loss of $130.5 million (2019 – $8.2 million) during 2020. Due to the COVID-19 pandemic and the associated drop in the price of oil during 2020, as well as material operational and financial developments at Delonex Energy Limited, UHIC increased the discount rates and lowered the success probabilities along with the long-term oil price forecasts in determining the fair value of its royalty interest and associated contingent consideration. As a result, UHIC recorded a $129.8 million fair value loss (2019 – $5.9 million) during 2020, which is included in the 2020 Audited Consolidated Financial Statements as “Remeasurement of financial instruments”. Dundee Sustainable Technologies Inc. (“Dundee Technologies”) Dundee Technologies incurred a pre-tax operating loss of $3.3 million (2019 – $3.3 million) during 2020. Due to the outbreak of COVID-19, Dundee Technologies’ Thetford site was temporarily closed as a result of the measures taken by the Quebec provincial government on March 23, 2020. Operations resumed in May 2020 with employees and contractors following the controls and practices that have been established on site. Dundee Technologies continues to expand the provision of technical services in the mining industry to evaluate processing alternatives using its state-of-the-art metallurgy plant and skilled technical team. Dundee Technologies expects the primary driver in the coming years will be from its GlassLock Process™, followed by higher upside from its CLEVR Process™ in the long run. Blue Goose Capital Corp. (“Blue Goose”) Blue Goose incurred a pre-tax loss of $2.3 million during 2020 (2019 – $17.8 million). The 2019 pre-tax loss included an impairment charge of $10.0 million against certain properties and equipment in its beef division, as well as an operating loss of $2.3 million incurred by its fish operation that Blue Goose exited in December 2019. AgriMarine Holdings Inc. (“AgriMarine”) AgriMarine expanded its sales to alternative markets at lower prices to relieve the overstocked position resulting from the slump in the fourth quarter of 2019. Since the onset of COVID-19 in the first quarter of 2020, AgriMarine has continued to supply these alternative, lower price markets to maintain sales volume. As a result, during 2020, AgriMarine generated $7.2 million sales revenue with $0.6 million contribution margin, compared with $6.5 million sales revenue with $0.9 million contribution margin recognized during 2019. During 2020, AgriMarine reported a pre-tax operating loss of $2.3 million (2019 – $3.8 million). SHAREHOLDERS’ EQUITY ON A PER SHARE BASIS Carrying Value as at Dec 31 2020 2019 Operating Subsidiaries$97,354 $201,694 Equity accounted investments 23,134 28,699 Investments carried at fair value through profit or loss 222,380 306,687 Other net corporate account balances 113,161 29,999 Total shareholders’ equity 456,029 567,079 Less: Shareholders’ equity attributable to holders of: Preference Shares, series 2 (27,667) (75,026)Preference Shares, series 3 (50,423) (50,473) Shareholders’ equity attributable to holders of Class A Subordinate Voting Shares and Class B Shares of the Corporation$377,939 $441,580 Number of Class A Subordinated Voting Shares and Class B Shares of the Corporation issued and outstanding Class A Subordinate Voting Shares 99,977,802 99,977,802 Class B Shares 3,114,581 3,114,713 103,092,515 103,092,515 Shareholders’ Equity on a Per Share Basis$3.67 $4.28 MANAGEMENT CHANGE The board of directors of Dundee is pleased to announce today the appointment of Lila Manassa Murphy to the role of Executive Vice President and Chief Financial Officer of the Corporation, effective May 14, 2021. The Corporation also announced that Robert Sellars, Executive Vice President and Chief Financial Officer of the Corporation, will retire on May 14 following completion of first quarter 2021 financial reporting. Mr. Sellars will continue to provide consulting services to Dundee to help ensure an orderly transition of responsibilities to his successor who will begin working with Mr. Sellars in a consulting capacity commencing April 1, 2021. “On behalf of the board of directors I would like to congratulate Lila on her appointment to the executive leadership team at Dundee,” said Jonathan Goodman, President and Chief Executive Officer. “Lila has been a director of the board of Dundee since 2018 and has deep industry expertise in the natural resources sector. She is a welcome addition to our leadership team and we are confident that she will contribute to Dundee’s growth as we continue to build Dundee 2.0.” “Bob has been a committed member of the senior management team at Dundee for many years and a valuable partner in repositioning Dundee with a renewed focus in the mining sector. I would like to thank him for more than 20 years of dedicated service to the Corporation,” said Mr. Goodman. “We wish Bob all the best as he embarks on his retirement.” Lila A. Manassa Murphy, CFA founded Intrinsic Value Partners, LLC in 2018, a provider of consulting services to asset management firms and family offices. She has been an Independent Director and member of the Audit Committee of Dundee Corporation since August 2018. She also sits on the board of Gold Resource Corporation (NYSEAMEX: GORO). Previously she was Vice President and Portfolio Manager at Federated Hermes, Inc., a Fortune 500, ESG focused investment firm with over $600 billion in assets under management. Ms. Murphy joined the firm in 2008 and was responsible for portfolio management and fundamental analysis in the alternative equity investment area with a dedicated focus in natural resources and hard assets. Previously, Ms. Murphy worked as an Analyst at David W. Tice & Associates Inc. with a dedicated focus on natural resources investing for the Prudent Global Natural Resources Fund and the Prudent Global Gold Fund. Prior to that, she was an Equity Research Analyst at Lee Financial Corporation. She has more than 25 years of diverse investment management experience. She earned the Chartered Financial Analyst designation in 2004. Ms. Murphy holds a Bachelor of Arts degree from New York University. She sits on the board and finance committee of Sustainable Development Strategies Group, a US based independent non-profit research institute advancing best practices for sustainable management of natural resources. She is also a member of the Latino Corporate Directors Association (LCDA). FOURTH QUARTER 2020 CONFERENCE CALL AND WEBCAST DETAILS Dundee’s management will be hosting a conference call for interested investors on March 31, 2021 at 10:00 am ET. Analysts and investors are invited to participate using the following dial-in numbers or webcast link: Participant Number (Local): 647-427-7450Participant number (Toll-free): 1-888-231-8191Conference ID: 7598406Audience URL: https://produceredition.webcasts.com/starthere.jsp?ei=1442625&tp_key=154b34b1e0 A replay of the conference call will be available until 11:59 pm (ET) April 14, 2021, and can be accessed using the following dial-in numbers: Encore (Local): 416-849-0833Encore (Toll-free): 1-855-859-2056Encore ID: 7598406 The Corporation’s audited consolidated financial statements as at and for the years ended December 31, 2020 and 2019, along with the accompanying management’s discussion and analysis have been filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”) and may be viewed by interested parties under the Corporation’s profile at www.sedar.com or the Corporation’s website at www.dundeecorporation.com. ABOUT DUNDEE CORPORATIONDundee Corporation is a public Canadian independent holding company, listed on the Toronto Stock Exchange under the symbol “DC.A”. Through its operating subsidiaries, Dundee Corporation is an active investor focused on delivering long-term, sustainable value as a trusted partner in the mining sector with more than 30 years of experience making accretive mining investments. FORWARD-LOOKING STATEMENTSThis press release may contain forward-looking information within the meaning of applicable securities legislation, which reflects Dundee Corporation’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dundee Corporation’s control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risk Factors” in the Annual Information Form of Dundee Corporation and subsequent filings made with securities commissions in Canada. Dundee Corporation does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. FOR FURTHER INFORMATION PLEASE CONTACT: Greg DiTomasoNATIONAL Public RelationsT: (416) 433-2801E: gditomaso@dundeecorporation.com

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Canadian regulator lifts banks’ capital buffer to record, priming for post-pandemic world

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Banks in Canada

Canada‘s financial regulator raised the amount of capital the country’s biggest lenders must hold to guard against risks to a record 2.5% of risk-weighted assets, from 1% currently, in a surprise move that could pave the way for them to resume dividend increases and share buybacks.

The new measures, which take effect on Oct. 31, is a sign that the economic and market disruptions stemming from the coronavirus pandemic have abated and banks’ capital levels have been resilient, the Office of the Superintendent of Financial Institutions (OSFI) said in a statement.

But the regulator acknowledged that key vulnerabilities, including household and corporate debt levels, as well as asset imbalances caused by steep increase in home prices over the past year, remain.

In a sign of concern about the housing market, OSFI and the Canadian government raised the benchmark to determine the minimum qualifying rate for mortgages, starting June 1.

The increase in the Domestic Stability Buffer (DSB) to the highest possible level raises the Common Equity Tier 1 (CET1) capital – the core bank capital measure – to 10.5% of risk-weighted assets; a 4.5% base level, a “capital conservation buffer” of 2.5%, and a 1% surcharge for systemically important banks, plus the DSB.

The change “gives OSFI more leeway to loosen a restriction down the road, namely the freeze on buybacks and dividend increases,” National Bank Financial Analyst Gabriel Dechaine said.

OSFI felt it was “useful for the banks to understand what our minimal capital expectations are and to give them time to adjust to that… ahead of any lifting of the temporary capital distribution restrictions,” Assistant Superintendent Jamey Hubbs said on a media call.

Even with the higher requirement, Canada‘s six biggest banks would have excess capital of about C$51 billion, dropping from C$82 billion as of April 30, according to Reuters calculations.

That was driven in part by a moratorium on dividend increases and share buybacks imposed by OSFI in March 2020, although a pandemic-driven surge in loan losses has so far failed to materialize.

The Canadian banks index slipped 0.25% in morning trading in Toronto, while the Toronto stock benchmark fell 0.1%.

The increase is the first since the last one announced in December 2019, which did not come into effect as planned in April 2020, as OSFI made an out-of-schedule change https://www.reuters.com/article/canada-mortgages-regulation-idUSL1N2B636J that dropped the rate to 1% in March. It has maintained that level at its twice yearly reviews.

Prior to that, OSFI had raised the required level by 25 basis points at every twice yearly review since it was introduced at 1.5% in June 2018.

($1 = 1.2326 Canadian dollars)

 

(Reporting By Nichola Saminather; Editing by Marguerita Choy and Jonathan Oatis)

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Economy

Canada Economic Indicators

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The economic indicators used to gauge the performance of an economy and its outlook are the same across most nations. What differs is the relative importance of certain indicators to a specific economy at various points in time (for instance, housing indicators are closely watched when the housing market is booming or slumping), and the bodies or organizations compiling and disseminating these indicators in each nation.

Here are the 12 key economic indicators for Canada, the world’s 10th-largest economy:1

GDP Growth

Statistics Canada, a national agency, publishes growth statistics on the Canadian economy on monthly and quarterly bases. The report shows the real gross domestic product (GDP) for the overall economy and broken down by industry. It is an accurate monthly/quarterly status report on the Canadian economy and each industry within it.2

 

Employment Change and Unemployment

Key data on the Canadian employment market, such as the net change in employment, the unemployment rate, and participation rate, is contained in the monthly Labour Force Survey, released by Statistics Canada. The report contains a wealth of information about the Canadian job market, categorized by the demographic, class of worker (private sector employee, public sector employee, self-employed), industry, and province.3

Consumer Price Index

Statistics Canada releases a monthly report on the consumer price index (CPI) that measures inflation at the consumer level. The index is constructed by comparing changes over time in a fixed basket of goods and services purchased by consumers. The report shows the change in CPI monthly and over the past 12 months, on an overall and core (excluding food and energy prices) basis.4

International Merchandise Trade

This monthly report from Statistics Canada shows the nation’s imports and exports, as well as the net merchandise trade surplus or deficit. The report also compares the most current data with that for the preceding month. Exports and imports are shown by product category, and also for Canada’s top ten trading partners.5

Teranet – National Bank House Price Index

This composite index of house prices across Canada was developed by Teranet and the National Bank of Canada and represents average home prices in Canada’s six largest metropolitan areas. A monthly report shows the change in the index monthly and over the past 12 months, as well as monthly and 12-month changes in Canada’s six and 11 largest metropolitan areas.6

RBC Manufacturing Purchasing Managers’ Index – PMI

Released on the first business day of each month, this indicator of trends in the Canadian manufacturing sector was launched in June 2011 by Royal Bank of Canada, in association with Markit and the Purchasing Management Association of Canada. RBC PMI readings above 50 signal expansion as compared to the previous month, while readings below 50 signal contraction. The monthly survey also tracks other information pertinent to the manufacturing sector, such as changes in output, new orders, employment, inventories, prices, and supplier delivery times.7

The Conference Board’s Consumer Confidence Index

The Conference Board of Canada’s Index of Consumer Confidence measures consumers’ levels of optimism in the state of the economy. It is a crucial indicator of near-term sales for consumer product companies in Canada, as well as an indicator of the outlook for the broad economy since consumer demand comprises such a significant part of it. The index is constructed on the basis of responses to four questions by a random sampling of Canadian households. Survey participants are asked how they view their households’ current and expected financial positions, their short-term employment outlook, and whether now is a good time to make a major purchase.8

Ivey Purchasing Managers Index – PMI

 An index prepared by the Ivey Business School at Western University, the Ivey PMI measures the monthly variation in economic activity, as indicated by a panel of purchasing managers across Canada. It is based on responses by these purchasing managers to a single question: “Were your purchases last month in dollars higher, the same, or lower than in the previous month?” An index reading below 50 shows a decrease; a reading above 50 shows an increase. Panel members indicate changes in their organization’s activity over five broad categories: purchases, employment, inventories, supplier deliveries, and prices.9

Housing Starts

Canada Mortgage and Housing Corporation (CMHC) issues a monthly report on the sixth working day of every month, showing the previous month’s new residential construction activity. The data is presented by region, province, census metropolitan area, and dwelling type (single-detached or multiple-unit). The indicator is an important gauge of the state of the Canadian housing market.10

Home Sales

This key indicator of housing activity is compiled by the Canadian Real Estate Association (CREA) and is based on the number of home sales processed through the MLS (Multiple Listing Service) Systems of real estate boards and associations in Canada. The monthly report from the CREA shows the change in home sales across Canada, as well as for major markets, from month to month. The report also includes other important housing-related information, such as the change (as a percentage) in newly listed homes, the national sales-to-new listings ratio, months of housing inventory, the change in the MLS Home Price Index, and the national average price for homes sold within the month.11

Retail Sales

Statistics Canada releases a monthly report on retail sales activity across Canada, with changes shown on month-over-month and year-over-year bases. The headline number shows the percentage change in national retail sales on a dollar basis; the percentage change in volume terms is also shown. The retail sales figures are shown by industry and for each province or territory, and provide insights into Canadian consumer spending.12

Building Permits 

The building permits survey conducted monthly by Statistics Canada collects data on the value of permits issued by Canadian municipalities for residential and non-residential buildings, as well as the number of residential dwellings authorized. Since building permit issuance is one of the very first steps in the process of construction, the aggregate building permits data are very useful as a leading indicator for assessing the state of the construction industry.13

The Bottom Line

The 12 economic indicators briefly described above show the health of key aspects of Canada’s economy: consumer spending, housing, manufacturing, employment, inflation, external trade, and economic growth. Taken together, they provide a comprehensive picture of the state of the Canadian economy.

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Canada adds jobs for fourth straight month in May

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Canada added 101,600 jobs in May, the fourth consecutive month of gains, led by hiring in the education and health services sector as well as in professional and business services, a report from payroll services provider ADP showed on Thursday.

The April data was revised to show 101,300 jobs were gained, rather than an increase of 351,300. The report, which is derived from ADP’s payrolls data, measures the change in total nonfarm payroll employment each month on a seasonally-adjusted basis.

 

(Reporting by Fergal Smith; Editing by Alex Richardson)

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