Dundee Corp

TSX:DC.A

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen. Welcome to Dundee Corporation's First Quarter 2020 Conference Call and Webcast being held on Wednesday, May 13, at 10 a.m. Eastern Time. I would now like to turn the call over to John Vincic. Please go ahead, John.

[John Vincic, Head of Investor & Media Relations]

Thank you, operator. Good morning, everyone, and welcome to Dundee Corporation's 2020 First 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 March 31, 2020, unless otherwise indicated, and that comments made on today's call may contain forward-looking informations. 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 Jonathan Goodman, Dundee's Chairman and Chief Executive Officer; and Robert Sellars, Executive Vice President and Chief Financial Officer. And now I'd like to turn the call over to Jonathan Goodman. Jonathan?

[Jonathan Carter Goodman, Chairman & CEO]

Thank you, John, and thanks to everyone for joining this call this morning. Like many businesses around the world, ours was not immune to the impact of COVID-19. That impact has been felt across our business and many of our portfolio investments. However, before I get into discussing those impacts, let me provide a brief overview of our COVID-19 response. As noted on our Q4 call 6 weeks ago, we implemented our business continuity plan in mid-March in response to global pandemic. The well-being of our employees is a top priority, and all of our head office employees continue to work from home, and we expect they will for the foreseeable future. We feel this is the best course of action to limit their personal risks and to help ensure their safety. Working at home is not without its challenges, and we'd like to thank all of our employees for their efforts in the face of adversity to ensure our operations continue to run smoothly. Now I'd like to turn to today's presentation. As noted earlier, COVID-19 is having an adverse impact on some of our businesses, while others are flourishing. Let me start my review with those that have been impacted negatively. During the first quarter, we were forced to take a significant write-down in our investment in United Hydrocarbon International or UHIC. I'll discuss this in more detail in a moment, but needless to say, we are monitoring this investment closely in the current depressed oil price environment. At Parq Vancouver, the casino remains closed. Hotel occupancies are down significantly, and this is clearly having a negative impact on the food and beverage side of the business as well. In light of this, we decided to write the remainder of our investment in Parq Vancouver down to 0. At Dundee Precious Metals, we continue to see strong performance both -- as both mines generated strong production results, while the smelter achieved near-record performance. I will discuss DPM's Q1 results in greater detail in a moment. More importantly, subject to quarter end, on May 7, we announced our decision to monetize a large portion of our interest in DPM. In many ways, this was a difficult decision, but it was also the right decision for Dundee at the right time. I'll discuss why in a few moments. But first, let me discuss the impact of COVID-19 on some of our key portfolio holdings. Android Industries, the Michigan-based automotive manufacturing and solutions provider, closed all of its plants in North America, Europe at the outset of this pandemic. We're starting to see some plant reopenings in the U.S. and are still waiting words on when plants in Europe will reopen. Due to guarantees built on some of Android's contracts, we've decided not to take a write-down on this asset at this time. COVID-19 has also had an impact on the value of our portfolio of publicly traded securities. At the end of March, the value of the publicly traded securities was approximately $176.4 million, down from $226 million at the end of 2019. The recovery we saw in the value of our publicly traded portfolio in April and into early May allowed us to make the decision to sell a significant portion of our shares in DPM. We continue to monitor this portfolio very closely as we brace for more market volatility during this pandemic. Now I will turn to UHIC. During the first quarter, there were 2 major impacts on UHIC, the significant drop of oil prices related to COVID-19, demand shock and the collapse of the OPEC+ alliance. Together, these 2 events led to an unprecedented drop in oil prices, the likes of which have never been seen before in history. As a result, we took $117 million noncash write-down on our investment in UHIC. In the process, we had to implement the remeasurement of fair value of the royalty and onset of related first oil production bonus payments. Previously, we anticipated first oil production in late '22 or early 2023. If this assumption holds true, then clearly, there is time for recovering oil prices. However, we are reviewing corporate and oil industry developments on an ongoing basis, and this could have an effect on further valuation changes in the second quarter of UHIC. At Dundee Precious Metals, first quarter production was strong, with nearly 73,000 ounces of gold in concentrate produced at an all-in sustaining cost of USD 593 per ounce. Copper production for the quarter was 9.4 million pounds. And the Tsumeb smelter achieved near-record performance with total complex concentrate smelted of more than 65,000 tonnes, its second highest quarterly production on record. For the quarter, DPM generated USD 49 million of free cash flow, and the Board of Directors declared a second quarterly dividend for the company. And DPM remains on track to meet its previously issued guidance for 2020. On the back of this strong performance, we made a strategic decision to sell a significant portion of our shares in DPM. Let me now turn to that transaction. Our initial sale of DPM shares was a total of 23.9 million units, comprised of 1 DPM share and a half warrant at a price of $6.35 per unit. For Dundee, this generated immediately -- immediate growth proceeds of nearly $152 million in cash. Should we achieve a full warrant exercise in the next 12 months, this will result in the sale of 12 million additional shares of DPM at a price of CAD 8 per share. This, in turn, will generate gross proceeds for Dundee Corporation of nearly $96 million in cash. All told, this has the potential to generate aggregate gross proceeds for us of approximately $247 million. Let me provide some context around that transaction. First, the unit offering was significantly oversubscribed. The demand was so strong that we took the option of upsizing the offering the same day it was announced. Next, the strong demand clearly demonstrates external validation of DPM's strategy and ongoing rerating in the market. And finally, should the gross proceeds of the full offering achieve $247 million, that will nearly double the current market capitalization of Dundee Corporation. So clearly, there's an opportunity for us to continue with the rerating of our own shares. Now let me take a moment to summarize our remaining interest in DPM following the closing of the transaction. We will continue to own 12 million shares of DPM, representing about 6.62% of the shares outstanding. We remain very supportive of management and their strategy, and I remain Chairman of the Board of DPM. And we believe that as DPM continues to execute at the operational level, that shares will continue their upward momentum in this rising gold price environment. Should all warrant the exercise, Dundee Corporation will ultimately own a very small amount of DPM shares outstanding. Now let's turn to a discussion of our enhanced capital position. As noted earlier, the initial sale of DPM units has generated approximately $152 million in cash proceeds for Dundee Corporation, with the potential to generate nearly $247 million in total cash proceeds, should the full warrant sale be completed with the next 12 months. Clearly, this provides Dundee Corporation with significant improved liquidity position and much more flexibility. From a strategic perspective, this gives us a number of [Audio Gap] decision to consider. We already have a normal course issuer bid in place for our Series 2 and Series 3 preferred shares, and we will consider an application to the Toronto Stock Exchange to also initiate a normal course issuer bid for our subordinated voting common shares. At this time, no decision has been made regarding a substantial issuer bid for either our outstanding preferred shares or common shares. We have heard from both shareholders who own these various securities who would like to see us initiate substantial issuer bids. And while we see the benefits of purchasing and retiring some of these outstanding securities, we need to balance these broader strategic ambitions. Since I rejoined the company more than 2 years ago, I've been very clear about the strategic shift we are implementing at Dundee. We see numerous value creation opportunities in junior mining, particularly in the precious metal sectors, and we believe that we are uniquely positioned to capitalize on these opportunities. So while I can't provide specifics today, I will say that we will be prudent in how we allocate our capital. And it will be done to focus on what management and the Board of Directors believe in the best interest of the company. Now I'd like to turn the call over to Bob Sellars for a review of our financial position. Bob?

[Robert Mark Sellars, Executive VP & CFO]

Thank you, Jonathan. I will cover off first quarter financial summary. In the first quarter, the pretax loss was $185 million. This is compared to a pretax gain in the prior year of $23 million. As Jonathan mentioned, the loss on the UHIC royalty and contingent consideration was $117 million, and this is compared to a $12 million gain in the prior year. The corporation's carrying value of the royalty, contingent consideration, cash and receivables is now at approximately $55 million. We will continue to monitor developments in the global oil markets, the price of Brent and developments at Delonex, the operator in determining ongoing carrying value. As mentioned above, we have written our investment in Parq [ Casino ] resulting in an $11 million charge in the quarter. And again, we are continuing to monitor developments in that casino. The portfolio had a valuation decrease in the quarter of $47 million, which was primarily from DPM of $39 million and Reunion Gold, which was $4 million. DPM completely recovered. It was sold on May 7 at a unit and a half warrant at $6.35 a share for gross proceeds of approximately $152 million. Blue Goose lost $2.7 million in the quarter compared to a $4.1 million loss in the prior year, reflecting some continued shrinking of that business and expenses. The other subsidiaries, GCIC, Dundee Sustainable, AgriMarine and Dundee 360, had a combined loss of $3 million, and this compares to approximately $4 million loss in the first quarter of '19. Consolidated G&A was $7 million compared to prior year of $9 million and in the prior quarter, the fourth quarter, of $8 million, again, reflecting continued efforts on reducing cost. Corporate head office G&A was $4 million compared to prior year of $5 million and the prior quarter, $5 million. We continue to reduce our corporate run rate to be in the normalized range of $12 million to $14 million, subject to any continued downsizing cost. We usually would have a commentary on liquidity, and we monitor our liquidity very closely, but obviously, with the sale of DPM and providing approximately 147 net proceeds today, which we have received, and a potential $96 million on the exercise of the orders within the first year, our liquidity is in very good shape. We have had no further developments with CRA and continue to have the $12 million on deposit regarding the 2014 tax year. And this amount is separately disclosed on the balance sheet. CRA continues to review 2015 and 2016, but with COVID-19, things have ground to a halt. So we have no idea when they're going to finish those audits. And that concludes my comments. Back to you, Jonathan.

[Jonathan Carter Goodman, Chairman & CEO]

Thank you, Bob, for your thorough and comprehensive update. I'd like to conclude with a brief overview before we take questions. Our business continuity plans remain in place for the foreseeable future, and we continue to monitor COVID-19 developments on a daily basis. We will continue to make employee health and well-being our top priority during this global pandemic. The sale of a substantial portion of our position in DPM is provided with significant and immediate cash proceeds. This, in turn, provides us with additional financial flexibility as we pursue our longer-term strategy. We will continue to pursue the monetization of other holdings, the 2 most prominent positions where we look to crystallize value, our Blue Goose and TauRx. Discussions are ongoing with parties that have expressed serious interest in each of these holdings. In both instances, we're keen to complete a transaction, but understand more patience may be required to achieve what we believe is a transaction reflective of fair value. And finally, we'll look to continue our efforts to optimize our capital structure in a prudent and responsible manner. As we have seen in the midst of this global pandemic, cash is king. To that end, we need to consider the stability of our corporation and its best interest as we also contemplate other stakeholder interests. I'm confident that management and the Board will work together to balance these various interests. In closing, on behalf of senior management and the Board of Directors, I'd like to thank all of our employees for their resolve and dedication during this COVID-19 pandemic. These are unprecedented times that have brought unique challenges to the modern workplace. In the face of this, our entire team has remained focused and continue to perform under stressful circumstances. And now I'd be happy to answer your questions. Thanks, everyone, again, for joining today's call. And questions are open. Operator?

[Operator]

[Operator Instruction] Your first question comes from Brett Reiss from Janney Montgomery.

[Brett Reiss]

Gentlemen, glad everybody is okay. I've got a couple of questions on the preference preferreds. Based on what the terms of these preferreds are, what is the cost of capital of those preferreds as presently constituted?

[Robert Mark Sellars, Executive VP & CFO]

Yes, sure. Both of them have interest rates, as disclosed in the financials, of approximately 5%. One is slightly variable. And so on par value, so the $25 par of shares ending we pay, it's -- we have about $125 million outstanding. And so at a 5%-or-so dividend, we pay about $7 million a year in dividend. And we also pay Part VI tax of $0.40 on the dollar for every dollar dividend. So we pay about $2.8 million in Part VI tax, which tax is offsetable against income tax when -- if and when we become taxable.

[Brett Reiss]

Okay. So if you had to replace that type of capital with a new, similar instrument, would that be higher or lower than keeping the preference preferreds in your capital structure?

[Robert Mark Sellars, Executive VP & CFO]

So effectively, when you include the tax, the cost of those preferreds are costing us 10% on par. So we would obviously have to find an investment that would be yielding better than that, all things being equal, including tax. But if you were to say -- if we were to go out and get -- try to get additional financing, hard to say what our cost would be now that we've got some substantial liquidity. But I would say that we're not a high credit-rated business, obviously. So our cost of capital for borrowing additional debt would be higher. We'd be outnumbered.

[Jonathan Carter Goodman, Chairman & CEO]

If I could jump in. I mean, Brett, your point is very valid. With our cost of capital implied through the market price, the [ price ] is very high. And I think that's something that we are looking at closely.

[Robert Mark Sellars, Executive VP & CFO]

Yes. I mean, before we sold off the DPM, we did open a -- and it's in the financials, a small $10 million caught line, but it was in a margin account. We were borrowing at prime plus 1, but that was because it was fully collateralized with DPM shares.

[Brett Reiss]

Right. Look, the purpose of the question is to try to put ourselves in the shoes of management and the Board to try to see whether it's better to use this cash that's coming in from Dundee Precious Metals to do something with the preferreds. Or is it better to kind of just leave it in place in the capital structure and do something more aggressive with the common or a dividend? To the extent you can share with me your thoughts on that, I would appreciate it.

[Jonathan Carter Goodman, Chairman & CEO]

I mean, the reality of it is -- Brett, is we're looking at all of the above. We're doing a lot of work on it as we speak. We're also looking at the rest of the preferred markets. And the -- and we're -- I want to keep in mind that the deal closed less than an hour ago. So the reality is we've got a lot of work to do. But you're 100% right. Our cost of capital is very high, and that definitely needs to be addressed.

[Operator]

Your next question comes from [ Jim Belin ] from [ Aldebaran Asset Management ].

[Unknown Analyst]

Question is also about the preferreds. You've had the issuer bid in place. And I think during the first quarter, you had -- you purchased a total of 68,000 preferred shares. They don't trade that much. So I mean, don't you think that more than just a regular course issuer bid is going to be called for?

[Jonathan Carter Goodman, Chairman & CEO]

If I could summarize what I just said, the reality is we're looking at everything. I mean, I don't want to make a sense that we said that we're not doing a substantial issuer bid. There's just been no decision made yet. We are collecting a lot of data and doing a lot of work as we speak. And as we finish that analysis, we will be in a better position to come out and tell people what we want. I want -- I don't want people to think that we're not doing the work.

[Unknown Analyst]

Okay. And then I just have one other question. On Dundee Sustainable Technologies, you just had a contract that you announced. What do you see is the revenue potential of that company?

[Jonathan Carter Goodman, Chairman & CEO]

Yes, that's one that's hard to assess from a revenue potential point of view, and I don't want to make that seem like a negative comment. DST, Dundee Sustainable Technologies, has some very, very interesting technology. And the one we just announced was the GlassLock Process. And as ore bodies become depleted around the world, more and more every year, we see new ore bodies are what's called the areas that are refractory. And refractory is just a complicated term for saying it's hard to recover the gold or the copper or whatever you're dealing with out of the sulfide minerals that they're locked in. And very often, the refractory means that there's arsenic associated with it. And the proper and safe handling and disposal of arsenic is a very difficult industry -- a job facing the mining industry. And DST has some very, very interesting technology that they can encapsulate that arsenic into glass. That's why it's called GlassLock. And even if you then took a hammer and shattered all that glass, the arsenic would still be encapsulated and is not soluble. And it's a excellent, excellent solution. The best practices in the industry prior to this was turning it into a mineral called scorodite, which is something called ferric arsenate. So we really like the technology. Right now, we're not sure whether the best use of that technology is just getting paid revenue for it or using it a little more strategic and using it as a competitive advantage and get involved in ore bodies that can use that. And I suspect the answer is somewhere in between. So we're looking at all of that but to just say what the revenue potential is. The other line of business that they're going to be looking at is environmental remediation because, unfortunately, a lot of people in the past have used bad practices with arsenic, and you can actually go into some of these older places and use this technology to clean it up. But we're working on all of that right now. And I think that up until now, the key thing was the derisking of the technology, which is -- implies using it at a larger scale than Alaska, and that's now been complete.

[Operator]

Your next question comes from Sam Rebotsky from SER Asset Management.

[Sam Rebotsky;SER Asset Management;Analyst]

Yes. Did your book -- your net asset value was CAD 273. Did you indicate what the profit was on the sale of Dundee Precious Metals? And what would be the net asset value of the stockholders' equity as of now with the gain to be reported?

[Jonathan Carter Goodman, Chairman & CEO]

Okay. I'll start because I want to correct me. You're calling book value net asset value. I just want to correct that because I see book value as an accounting measure and net asset value as an analytical measure. But our book value will be marked up by the fact that Dundee Precious Metals dipped down to, I think, $4.55 at the end of March. And I think it's moved back up, and we sold for $6.35. So there'll be a correction on that. And I guess on the warrant stock -- stocks out for warrant, they'll be mark-to-market at the end of June, which we, as of yet, don't know what the end of June price is going to be.

[Sam Rebotsky;SER Asset Management;Analyst]

No. But I'm asking your net -- your stockholders' equity, you listed at CAD 273.

[Jonathan Carter Goodman, Chairman & CEO]

[indiscernible]

[Sam Rebotsky;SER Asset Management;Analyst]

Okay. Now based -- what is the gain from the transaction so far?

[Jonathan Carter Goodman, Chairman & CEO]

So far, 23.9 million shares. 23.9 million shares that will be revalued from $4.55 a share to $6.35 a share.

[Robert Mark Sellars, Executive VP & CFO]

Yes. Actually, Jon, it was CAD 4.44 at the end of March.

[Jonathan Carter Goodman, Chairman & CEO]

Sorry.

[Sam Rebotsky;SER Asset Management;Analyst]

Okay. Now one of your biggest asset write-downs was United Hydrocarbon. And is that based on -- and what is the carrying value now of United Hydrocarbons?

[Robert Mark Sellars, Executive VP & CFO]

It's $55 million, combination of the royalty and the contingent consideration. Then there's cash in the company and cash sitting in escrow in Europe.

[Sam Rebotsky;SER Asset Management;Analyst]

And based on what price of oil and natural gas? And how do we look at a potential if price of oil or natural gas would move up? Presumably, this asset would move up in valuation?

[Robert Mark Sellars, Executive VP & CFO]

Yes. Correct. There's a multiple of items that are coming to the calculation of it. The forward price of oil is making the assumption on first oil. The royalty kicks in. Only kicks in if the price of oil is above USD 45 a barrel. First oil is expected to be 2022 and 2023, which would then start kicking in the royalty. The contingent consideration is not tied to a price of oil, it's just tied to the bonus that they are starting to get oil, but that would obviously be subject to oil being profitable to Delonex and Delonex being -- getting oil out of the ground, out of the -- and then there are costs, obviously, to get production up and running. And then we discounted at -- we have a risk rating on it discounted, and then we have a discounted rate of back to $55 million value. So there are a few things that affect it. And the forward price of oil is obviously the biggest consideration.

[Sam Rebotsky;SER Asset Management;Analyst]

Okay. And getting back to the preferred, what discount is the preferred trading at? Is it a 10%, 20%, 30% discount to the stated value?

[Robert Mark Sellars, Executive VP & CFO]

I think they're trading at -- the par value is $25, and I think they're trading around $15 right now, $14, $15.

[Sam Rebotsky;SER Asset Management;Analyst]

So the -- a purchase, if there was a tender offer at an appropriate price, that would improve the stockholders' equity. And the only question determination is what is the best use of capital. And evidently, the sale of the precious -- Dundee Precious gives you more options. And is there some timetable when you're going to make a decision on what you're going to do? The decision...

[Jonathan Carter Goodman, Chairman & CEO]

That -- we haven't established a timetable per se, but I would suspect that we will have something more concrete to say within the next month to 1.5 months.

[Operator]

[Operator Instruction] Your next question comes from Andrew Hood from M Partners.

[Andrew Hood, Former Research Analyst]

I just wanted to briefly talk about UHIC as well. I noticed one of the assumptions was the success probability lowering from 47.5% to 22.6%. Obviously, that's a subjective number, but I just wanted to hear your view on, I guess, what's driving that. I mean, obviously, at this price level, they probably -- it wouldn't be profitable to produce oil. So I don't know if that's the only thing driving that, that it's not a feasible project at this price level. Or what's the driver of the success probability being cut in half?

[Robert Mark Sellars, Executive VP & CFO]

Well, I think, primarily, it's because oil has been dropping so low and that whether Delonex is going to continue to work this project or whether it's going to sit on its hands for a while to until oil recovers. So that's why we changed the success probability. We're also not very -- Doba's not looking as likely as the other is happening. So that was also a factor in the calculation.

[Andrew Hood, Former Research Analyst]

Okay. So do you have any kind of idea of the price level of oil where it's more likely a feasible project?

[Robert Mark Sellars, Executive VP & CFO]

Yes. We don't know all their cost. But it's -- yes, I'm not going to calculate your guess. I have an idea in my mind, what I think it -- what it could be, but they could take oil. I mean, they do have to tap into a pipeline or create a pipeline, and they have planned -- they had plans around that. They had plans around spending a significant amount of money in the [ year on ] further seismic, and they have spent a bunch of money on there. But as far as we know, obviously, with the COVID-19, things have been shut down, and then with the collapse of the price of oil, the project's on hold.

[Andrew Hood, Former Research Analyst]

Great. So I think for your oil price assumption, somewhere around $45, that was based either off Q4 2020 or Q4 2021? I'm not sure which, so maybe clarify.

[Robert Mark Sellars, Executive VP & CFO]

In the past, we had been using the -- I think it's called McDaniel's future oil, but then we switched to future oil curve. And I think it's still even at -- when we expect to have first oil, it's still below the $45. It's not far below the $45 to be successful in the future oil, but it still is. So -- but if oil recovers, we do have some time on our side for oil to recover for this to start having value.

[Andrew Hood, Former Research Analyst]

Okay. I guess where I was getting with that question is how much of an increase in those future prices you need to kind of substantially change your assumptions or if you're just changing your oil price assumptions every quarter based on rolling forward another quarter.

[Robert Mark Sellars, Executive VP & CFO]

Well, we will change -- yes, we are changing every quarter. And it would take, I think, some fairly significant improvement for us to do anything on writing it up. Obviously, bad news will cause us to write it down further, if required, but we're going to be conservative on that.

[Andrew Hood, Former Research Analyst]

Okay. The next thing I was wondering about briefly, the corporate debt, I saw the addition of $10 million, and it looks like it was linked to a subsidiary in January opening a margin account.

[Robert Mark Sellars, Executive VP & CFO]

Yes. And that was -- as liquidity was getting tight, we had a margin account at our Canadian broker-dealer, unrelated to us, and we borrowed $10 million, and it was just a normal margin account, no different than if you had a margin account. And we were able to get prime plus 1 as a percentage, and we were able to pledge DPM shares as collateral. And so we had it just as a cash reserve, and we announced once we knew we were doing the Dundee Precious deal, we paid that off.

[Andrew Hood, Former Research Analyst]

Okay. Yes, that's ultimately what I was wondering. Okay. And then just the last question. On G&A, Bob, you mentioned a $12 million to $14 million run rate on G&A, and you guys have mentioned that before. But I just wanted to be clear because there are 2 G&A numbers. Is this at the -- just at the head office level, like the $3.6 million? Or the first...

[Robert Mark Sellars, Executive VP & CFO]

Yes. No. That's at the head office. It's approximately $3.6 million. You're right. But...

[Andrew Hood, Former Research Analyst]

Okay. So unless it's on the low end of that range, essentially, you've captured all the cost savings, you think?

[Robert Mark Sellars, Executive VP & CFO]

We're still looking at what we can do. There's -- we're down below 30 people. Effectively half are in the -- or probably 1/3 are in the front office, sort of the asset management side, and then the rest are operational and executives. So we're going to continue to look at what we can do to write down further in the next 2 quarters. We think we have some room for...

[Jonathan Carter Goodman, Chairman & CEO]

The bottom line is there's still work to do. It's not all headcount. So...

[Robert Mark Sellars, Executive VP & CFO]

Yes. I mean, we have less than 2 years in our space in Toronto, and we're going to have to make a decision what we do going forward after that. So we'll take it from there. This -- everybody from working home has been a bit of an eye opener on how much we're able to function normally.

[Operator]

Your next question comes from Brett Reiss from Janney Montgomery Scott.

[Brett Reiss]

I thought of another question on TauRx. Is there any submission of abstracts that TauRx is going to be making at medical conferences or trial data that is coming down the road that could drive the value of TauRx up or down, depending on what that news flow might be?

[Jonathan Carter Goodman, Chairman & CEO]

The answer is I don't know the answer to the question as to whether or not they're going to be doing any university stuff. The reality of it is, is that we're living in an environment right now that's just so confusing. I know they've got the money to do the studies they need to do, and I know they're working to carefully progress them all. And I think we're quite excited. They've made a lot of progress since they last did a study. But I don't have all the details of what they're going to publish in universities and when and all of that. But I'm pretty sure that they're going to be pushing hard because I do know there's been a lot of progress.

[Operator]

Your next question comes from [ Jim Belin ] from [ Aldebaran Asset Management ].

[Unknown Analyst]

With respect to your investments that you're contemplating in junior mining, do you see yourself as investing in 2 or 3 different juniors or spread across 10 or 20? And are you thinking, in terms of total, something like $50 million to put in?

[Jonathan Carter Goodman, Chairman & CEO]

Well, first, let me preface what you're saying. We segregated the market a little differently. And I'll tell you the first pool we segregated in is the exploration pool. And for the most part, we deal with that through third-party management. We manage the CMP funds, and they invest in flow-through shares throughout Canada. And they have a rollover fund. And I think there's about $50 million of assets under management. And we're trying to build that business because we believe that the flow-through shares is the most efficient way to -- certainly in Canada, to invest in exploration because of the tax benefits there. The second pool of capital, I would call almost like a venture capital pool where I would say that the risk -- you can make investments in some really interesting businesses where the risk reward is very attractive, but the overall risk is still very high. And I would say, on things like that, we do not put a lot of capital towards that. You might see from moving forward that historically we have. But we're probably going to -- that's going to be a relatively smaller pool of capital, but still one where we can hopefully generate some fees and make some investments. And the third pool of capital is where we see the opportunities to invest in things where there is a solid ore body there, deposits, something that's very much real, where you can do a deep due diligence and analysis. And if we're going to put larger pools of capital to work, that's where you're going to see the money invested, where you would be able to concretely say, "Hey, this is going to be a mine." There's still some risk but consistently less risk than the other pools of capital. And we invest across all 3, but we keep -- the other 2 pools are relatively small compared to the third. And I can tell you that we're always looking at things, but we don't have any plans right now to make a significant investment.

[Operator]

There are no further questions at this time. I'll turn the call back over to the presenters.

[Jonathan Carter Goodman, Chairman & CEO]

Okay. I'd like to thank everybody for coming on the call, and I hope I've answered all of your questions, and look forward to talking to you next quarter. Thank you very much.

[Robert Mark Sellars, Executive VP & CFO]

Thank you.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.