John Vincic - Investor and Media Relations Jonathan Goodman - Executive Chairman Lucie Presot - EVP and CFO Bob Sellars - Incoming EVP and CFO

Stephen Boland - GMP Securities Brett Reiss - JanneyMontgomery Scott

Thank you, Operator. Good morning everyone and welcome to Dundee Corporation's 2018 first quarter results conference call and webcast.

The company's financial results were issued this morning 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, 2018 unless otherwise indicated and that 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 Jonathan Goodman, Dundee's Executive Chairman; and Lucie Presot, Vice President and Chief Financial Officer.

Joining them for the question-and-answer session following the conclusion of the formal remarks will be Mark Goodman, President and Richard McIntyre, Executive Vice President and Chief Operating Officer. And now, I would like to turn the call over to Jonathan Goodman.

Jonathan?

Thank you, John. And thanks to everyone for joining the call this morning.

Today’s comments and discussion will be brief, as we recently reported our results in late March. There’ll be ample time for Q&A following our remarks.

Before we review the performance for the first quarter, let me begin by addressing the executive changes announced today. I’d like to start by expressing a heartfelt thank you to Lucie Presot.

Many of you on this call today know Lucie and have had interactions with her over the years. For more than three decades, she has been a dedicated employee at Dundee.

Her commitment to Dundee has been unwavering and she has served the company’s shareholders well. As she prepares to embark on the retirement, I’d like to express my gratitude and personal thanks to Lucie for all she has done for Dundee.

Lucie thank you and I’m glad you’ll be helping us in an advisory capacity transition until your retirement. Next, let me welcome Bob Sellars to the executive leadership team.

Bob is a longtime Dundee employee, who has held many senior finance roles within the company since 2000. Prior to that, he was CFO at First Marathon Corporation, a well-known and highly regarded independent firm that was acquired by National Bank Financials.

He knows many aspects of our business intimately and his knowledge and wisdom will be a welcome addition to the executive leadership team. Bob will be instrumental in helping us in the pursuit of our revised corporate strategy.

Thank you, John. I look forward to working with you and the rest of the executive team, as we continue to move forward with the company to roll-out our strategic initiatives.

I also look ahead to dealing with many constituents that are part of Dundee Corporation. Thank you.

Thanks, Bob. Now, let me turn to a review of our business in the first quarter.

During the first quarter, we continue to focus on rationalizing our portfolio and we generated nearly $43 million in proceeds from the sale of assets, we believe to be non-core to our longer term strategy. A portion of these sales proceeds $17.4 million, were invested Parq Vancouver one of our cornerstone assets.

This is part of a total investment of $33.4 million Parq Vancouver with the remaining $16 million be invested by our partners CBC Group, our third equity partner in the project Paragon Holdings, chose not to participate in this investment and as a result, we’ll see their equity ownership diluted. The initial ramp-up at Parq Vancouver is proceeding slower than anticipated, due to a variety of factors.

However, we remain optimistic and continue to believe this is a world class asset, it is a unique one of a kind urban resource in one of North America’s most popular destinations. As we look ahead, we’re forecasting improved operating results in the second and third quarter of this year, which is traditionally the strongest period of the year for tourism in Vancouver.

In the quarter, we also took steps to enhance our existing Dundee’s securities platform, with a creation of an industry focused capital mortgage group, that will provide advisory and investment banking services to its client, primarily in the resort sector. As we’ve previously noted, we added seasoned investment banking professionals to our team in Vancouver, and today they’ve already begun touring mandates that are aligned with our new strategy.

To support their efforts, we’ll be adding to our sales capabilities by hiring individual in Vancouver and Toronto. This will add an important element to our platform and will allow us to tap into international networks, the increased participation in financings and transactions, our team is involved with.

And finally, we continue to take steps during the quarter to lower our overall expense profile at the corporate level. This included additional headcount reductions and the continued consolidation of our real estate footprint in Toronto.

We expect the real estate reduction to be largely completed in the second quarter, and we’ll continue to review our personnel needs, as our strategic shift in focus continues to evolve. Now, I’d like to turn the call over to Lucie Presot, for the financial review.

Lucie?

Good morning, everyone. Given that we released our annual financial performance just about six short weeks ago, my comments today will be brief, and will center on some of the key aspects of the company’s operating performance during the first quarter of this year.

As they’ve reflected in the financial statements, that we released earlier this morning. We’re reporting a loss for the quarter of $25 million, including a loss of $8.8 million that resulted from lower market values for some of our portfolio investment.

This compares unfavorably to net earnings of $28 million earned in the first quarter of last year, during which we realized market appreciation in our portfolio over investments of $57.4 million. As we've indicated in our previous reports, these changes which are driven by trends and information in equity and capital markets will continuingly cause substantial volatility in our operating results.

At March 31, 2018, the value of our investments was $352.3 million, of which $184.9 million was in publicly traded securities. At our last conference call, management indicated that it was their intent to continue to rationalize our portfolio holdings.

And in fact during the first quarter of 2018 and as Don previously noted, we generated proceeds of $43 million from the sale of investments that were considered non-strategic, including $29 million from the sale of publicly traded securities, another $9 million from the sale of investments in private entities and yet another $5 million was received in settlement of a debt instrument. We used approximately $17.4 million of the proceeds to reinvest back into the portfolio and again As Jonathan noted, all of this relates to our injection of cash in the Parq Vancouver project.

At March 31, 2018 our equity accounted investments had an aggregate carrying value of $95.8 million, that's excluding real estate joint ventures. And during the quarter, we're reporting losses from these investments of $10.2 million, including a loss of $13.8 million from Parq Vancouver, offset by a mark-to-market gain of $3.3 million related to our investment in Union Group.

Just a few brief remarks to outline the operating loss at our Parq Vancouver project. During the first quarter of 2018, Parq Vancouver incurred a net loss of $37.5 million, of which our shares of $13.8 million that you see reported as an equity loss.

As previously indicated on this call, the initial ramp up of operations was slower than anticipated due to a number of factors. Operations represent about $7 million of the net loss.

Also included in the first quarter loss is interest expense on existing debt of $23 million. Interest on the debt prior to the commencements of operations was capitalized and therefore added to the cost of the project itself.

Finally, our investors are keenly aware that the debt financing for the Parq Vancouver project is denominated in U.S. dollars and this subject Parq to operational performance volatility in foreign exchange translation rate between the Canadian and the U.S.

dollar. Parq's operating loss include almost $15 million of foreign exchange losses in the first quarter.

Although, this is partially mitigated by an $8 million gain in derivatives designed to hedge against these FX changes. A key aspect of the Corporation's investment in Parq Vancouver, is the refinancing of existing debt with an interest burden at small commensurate with an operating entity and free of construction risk.

And we caution that until current debt arrangements are refinanced Parq Vancouver may require additional injections of cash from its equity partners in order to fund shortfalls in its operations. The Corporation continues to carefully monitor its investment in Parq Vancouver.

Just a brief comment on our investment in Union Group. You will recall that we impaired this investment at the end of 2017 to recoverable amount equal to Union Group's investment in 40 million shares of ICC Labs plus the 30% discount to reflect escrow arrangements and possible cost associated with the investment.

Increases in the trade price for the shares of ICC are the basis for the recognition of a $3.3 million gain from this investment that you see during the quarter. Our operating subsidiaries incurred losses of $5.3 million in the first quarter of 2018, compared with losses of $8.1 million in the first quarter of the prior year.

There are perhaps a few items to note in these results. Our two financial services subsidiaries Goods & Investment Council and Dundee Securities Limited incurred losses of $2.7 million in the first quarter of this year compared with losses of $0.6 million in Q1 of 2017.

Prior year results resulted from a $3.7 million investment banking revenues for transactions that have been initiated prior to the sale of the capital markets division to Eight Capital. AUM grew to $210.8 million at March 31, 2018, including $30.6 million raised in the launch of CMP 2016 resource limited partnership.

We continue to streamline this business line in light of the shift of our business strategy and in that regard we anticipate that during the second quarter we will be transferring about $130 million of AUM to other third-party investment platform. In terms of resource based subsidiaries, you will note that we're reporting a $6 million gain relating to our investment in United Hydrocarbon.

Virtually, all of the gain relates to mark-to-market changes in the fair value of both the anticipated first production bonus payment and the royalty interest that we received as part of the 2017 transaction with Delonex Energy. At this time, we have not changed any of the underline probabilities or expectations of our valuation models, but since year-end the gain results from increases in the price of oil, as well as from the effect of the passage of time on the discounted cash flow value.

For those of you that maybe following our investment in Dundee Energy and Dundee Energy's investment in the southern Ontario producing assets, Dundee Energy has announced that it has found the potential buyer for the assets, however the transaction is subject to court approval under CCAA requirements. Blue Goose’s reporting losses of $6.4 million in the quarter compared with losses of $1.9 million in the first quarter of 2017.

Just to be clear, these losses do not include any of the operations of the chicken processor plant that had been operating as Tender Choice, as those operations have been reclassified to discontinue operations in the financial statement. The significant swing is due primarily to changes in the fair value of livestock.

In the prior period and as a herd size was growing, these gains were over $5 million. In the current quarter, and partially in an intended strategy to control herd size as we struggle with feed issues following the 2017 wildfires in British Columbia.

Our herd size has not experienced the same growth, and hence we are only reporting a fair value gain in livestock of $1.5 million in the current quarter. Dundee 360, our real estate subsidiary is reporting losses of $1.7 million this quarter compared with earnings of $0.2 million in the first quarter of last year.

Volatility in earnings is driven principally by real estate project management activities, which intern are driven specific projects. At the head office level, we continue to see the results of our cost containment effort.

G&A cost excluding stock-based compensation, decreased to $4 million in the first quarter of 2018 compared with cost of $4.3 million in the comparative period. Cost containment is one of our key strategies going forward and as we reported to you at the end of the year, we expect to see further reductions in G&A going forward principally as we rationalize our footprint.

While this is already happening in the physical sense with the relocation of our office premises, the benefit in our financial statements will likely not be seen until the third or fourth quarter of this year. Therefore our guidance remains unchanged at approximately $16 million to $18 million per annum.

In addition, we continue to have about $13 million of interest in dividends to pay primarily in respect of our preference share arrangement. With the sale of some of our non-core assets, we ended the quarter with cash on hand of $37.2 million and with the portfolio of publically traded securities of $184.9 million.

As we've done each quarter on these conference calls, allow me to walk through the significant changes in our cash position during the quarter. So we started the year with cash of $40.5 million.

Operationally, we paid $4 million in operating costs and we paid another $4 million in income taxes. Our interest costs were $1.4 million and we paid another $1.8 million in dividends, that's primarily on our series 5 Preference Shares, which are treated as debt in our financial statement.

And in respect of the Preference Share series 5, in January of this year we expended $7.6 million to partially redeem some of these shares under their respective term. As we indicated to you previously, we generated proceeds of $43 million from the sale of investments that were non-core, we invested $17.9 million back into the portfolio, including the $17.4 million invested in Parq Vancouver.

And finally, as you’ll see from the segmented cash flow continuity that we’re providing in the MD&A, we funded almost 10 million to our subsidiaries this quarter, most of which related to the operations of Blue Goose. Some of these monies were directed to paydown debt arrangements in this subsidiary in order to elevate concerns over possible debt covenant breaches.

This leaves us with cash resources at the end of the quarter of about $37 million at head office and no debt other than our existing series 5 by Preferred Shares. You will have noted that we’ve temporarily extended our bank lines for two months period, during which we will transition the management team and introduce them to our banking partner.

This concludes our quarterly financial review, and we’ll now turn the call back over to Jon. Jon?

Thank you Lucie, for that thorough update. Before we move on to the Q&A portion, let me provide a brief summary of some of the things we expect in the near-term.

As noted in our news release this morning during our second quarter, we expect to streamline our private client business. As part of this process, we expect that approximately $130 million of AUM, assets under management and private client assets, and alternative investment products will be transferred to other investment platforms.

Goodman & Company, Investment Council will continue to manage approximately $80 million in assets under management. The continued build out of our capital markets platform remains a key focus this quarter and beyond.

As noted earlier, we’re adding talent to our team with the addition of dedicated sales people in Toronto and Vancouver, and we’re seeing encouraging deal flow, with our team currently involved in two deals. This is evidence that our strategy is well timed and that we’ve the right team in place to deliver results.

And finally, we’re maintaining a rigid focus on capital allocation. This is all in company and includes everything from our ongoing portfolio rationalization to expense reduction to managing our capital structure.

It also plays a role in how we evaluate future investment opportunities. It has been nearly four months since I returned to Dundee, and I’m pleased with our progress, in such a short period of time.

More work remains to be done, but I believe we’re headed in the right direction, and I believe we’ve the right team in place to move our business forward. Now, we’d be happy to answer any questions.

Operator?

Good morning everyone. I guess first question, Jonathan, just on the sale of the $43 million of securities sales was that -- was there a concentration there, or is it sort of mix bag of equities and or bonds?

I think it’s fair to say that it was mix bag, I mean to the extent that I think, we’ve more equities than we have bonds sales was more equities and bonds. But it was a mix bag across the board.

Okay. And just on the casino, do you anticipate any more capital calls, or any more future capital ejections into that investment?

Well, at some point in time, the balance sheet of that investment has to be restructured. So the answer is, yes.

But that’s a tabular [ph] we’re having a lot of discussions, with many different parties right now, and it’s not necessarily going to -- all going to come from -- assuming not all going to come from us.

Okay. When would you anticipate that that process to be completed?

It’s hard to say -- it’s good, on a long short, be completed this quarter, but if at all most likely it will be concluded third or fourth quarter.

Okay, that’s it for me. Just want to say, congratulations on your retirement, Lucie, thanks for your help over the years.

Thank you very much.

Hi. Lucie good luck, on your next walk on the road.

Thank you very much, Brett.

The continued use of cash at Blue Goose, at some point do you draw a line in the sand and just say enough is enough, and kind a just walk from this. What are your intentions with Blue Goose?

So I think we're -- as we said last quarter, we're doing a strategic review over the whole portfolio, and that certainly includes Blue Goose we're looking at, not just Blue Goose, but all of the different divisions of Blue Goose. We're looking at them can they be turned profitable, what type of capital they require or whether or not they can -- they will be sold.

That process is not yet complete, but certainly the status-quo is not one of the alternatives.

Right. And did I read in the M&A we had to extend money to Eurogas $5 million.

Did I read that right?

No, I don't think that that's right. I'm not sure where you're reading that, Brett.

Okay, alright. Forgive me for that.

Now just, the net debt from Dundee Energy and Blue Goose, which is non-recourse, but it still shows as a liability on the balance sheet. I know you've walked me through this, but just say again why it really isn't debt and yet it still appears there?

Okay. So first of all, let's just be very clear.

So the debt in Dundee Energy shows up as liabilities held for sale. It doesn't appear as debt in the financial statements under the corporate debt line.

The debt in Blue Goose does however. So the reason that they do not have recourse to Dundee Corporation is because in the terms of the debt and the contract with the banks, the arrangements were such that the entities that we're borrowing were not permitted to look up the chain, in the event that they were unable to pay, So that's written into the contract.

Notwithstanding accounting has a different framework that you need to work in and from an accounting perspective when we consolidate those entities we have to consolidate their debt. So there is an inconsistency between what the financials say and what the legal contractual arrangement is with the banks.

Okay. Now this potential -- thank you for that.

The potential sale of the assets for Dundee Energy, is there going to be any residual value for us after this sale?

That would be highly unlikely, Brett. While we can't obviously disclose any of terms until the court have approved it.

It would be highly unusual to see the money is coming in under a CCAA in excess of the value that we carry it as, otherwise the bank wouldn't have called the loan.

Right. Is it important for us by any reason that this potential acquirer in effect acquires the assets?

I'm not sure that I understand the question, Brett. Can you ask it perhaps in a different way?

Well, if there is no residual value to a very unlikely that we’ll see residual value, why was it even mentioned on the call that these assets are going to be potentially sold?

Because the assets are in a separate entity. Remember they're not in Dundee Energy directly, they're in a subsidiary of Dundee Energy, which then means that Dundee Energy is -- become the shelf.

Okay. In terms of -- can you give us just an estimate on an aggregate, the potential sales of additional assets?

Is there a number of -- is there like a pipeline number that you can give us?

I don't…

Its Jonathan, I'm going to step in here, Brett. The question is do we had it yet, we certainly have a target on what we're trying to do.

But obviously we can't really talk about things until that are completed. So -- and certainly don't have a pipeline number off the top of my head, but we're in a precarious position where you can't really preannounce what you do because it will affect you in a negative way.

Right. Now the -- just one more and I'll drop back into queue, the partner in the casino project that elected not to make the additional investment.

Is there anything I should read into that if you wearing my shoes?

No, I would not read anything into that. Everybody has got their now liquidity constraints and concerns and have to manage it and I know they are base supporter and a big believer in the operation.

And I would not read anything into that.

Okay, thank you very much. And once again, Lucie thank you for all your help over the years.

I appreciate it.

Thank you very much, Brett and it's been my pleasure and my honor.

First of all, thank you again everyone for joining today's call. And we look forward to updating you again at our Annual General Meeting on June 4th in Toronto.

Thank you very much.