Somewhere in North America, there is a mine that has been producing high-grade iron ore for decades. It will keep doing so until 2055.

A single company owns the right to collect a percentage of every tonne shipped. Not a stake in the miner. Not a bond. A royalty — the cleanest, most durable cash flow structure in natural resources. No capex. No operating costs. No balance sheet risk from the mine itself. Just a check, every quarter, for as long as ore leaves the ground.

That royalty, by every reasonable comp, is worth somewhere between two and four times the company's entire market cap.

So why is the stock at a fraction of that? Because for years, the people running this company didn't want you to find it. They held shareholder meetings on the other side of the world. They wore every executive title simultaneously so no one could check their work. They made acquisitions that evaporated. They answered to no one.

Then one family office — patient, angry, and holding 13% of the shares — decided they were done waiting.

What happened next involves a locked conference room, a Cayman Islands court ruling, a CEO fired for cause, and royalty payments currently sitting in an Ontario court because nobody can agree on who's legally in charge.

This is one of the most asymmetric setups I've seen in the small-cap space this year. The asset is real. The activists have won the vote. The question now is whether they can consolidate control before the old guard's lawyers run out the clock.

PAID SUBSCRIBERS GET THE FULL BREAKDOWN:

The complete governance disaster — and exactly how management kept shareholders in the dark for a decade
The royalty valuation math: what comparable transactions say this asset is worth vs. what the market is pricing in
The Raiffeisen Bank International litigation — a €153M freezing injunction that could be the iceberg under the surface
The full activist timeline: from 13D filing to locked boardroom to CEO termination for cause
The specific catalysts — in the sequence they need to happen — that turn this from a thesis into a return
Bull case, bear case, and my position sizing framework for a situation this hairy

I want to tell you about a company that held its shareholder meetings in Hong Kong. Then Macau. Both cities chosen — it seems pretty clear in hindsight — to make sure North American investors couldn't easily show up and ask uncomfortable questions.

That company is Scully Royalty Ltd. (NYSE: SRL), and it has spent the better part of a decade being one of the most frustrating stocks in the small-cap universe: genuinely valuable core asset, incompetent or deliberately opaque management, and a share price that's reflected every bit of that skepticism.

But something changed at the end of 2025. A family office called MILFAM LLC — patient shareholders for over 12 years — finally said enough, launched a proxy fight, won all five board seats with 59% of outstanding shares behind them, and fired the CEO for cause. The AGM itself became a corporate governance thriller: management tried to postpone it, the Cayman Islands court said no, and MILFAM held the meeting outside a locked conference room after finding no company officials present to open the door.

This is a special situation. It's messy, it's hairy, there are real risks — but the risk/reward, if you believe in the asset and the new stewards, is some of the most asymmetric I've come across in this market.

Let's dig in.

The Many Names of a Complicated Company

Scully Royalty did not start life as Scully Royalty. Its origin traces to a company called MFC Bancorp Ltd. — a merchant banking conglomerate incorporated in the Cayman Islands but operationally centered in Shanghai, China. The company had a complex, multi-layered corporate structure involving subsidiaries across Canada, Europe, Asia, and Africa.

From 1997 to roughly 2011, under CEO Michael Smith, MFC Bancorp actually delivered impressive returns — reportedly 15% annualized vs. the S&P 500's 4.4% over the same period. Smith built value through a series of spin-offs and restructurings. But then the formula stopped working. From 2011 onward, the story turned ugly.

In June 2019, the company rebranded as Scully Royalty — ostensibly to highlight its most valuable asset, a 7% gross royalty on the Scully Iron Ore Mine in Newfoundland and Labrador, Canada. But underneath the new name, the same structure and much of the same management remained.

CEO Samuel Morrow held the titles of CEO, CFO, and President simultaneously — a one-man show at the top with virtually no checks on his authority. The board that was supposed to provide oversight was, by all accounts, captured. Acquisitions would be made, written down to zero, and vanish from the books. Corporate cash flowed in opaque directions. Shareholder inquiries went unanswered or were rebuffed.

The stock, unsurprisingly, reflected all of this. A company that started 1997 at ~$24/share has traded as low as $5 in 2025 — an annualized destruction of roughly 5.5% per year over nearly three decades.

A 7% Royalty on Canadian High-Grade Iron Ore

Here's the thing though. Buried inside this governance disaster is a genuinely excellent asset.

The Scully Mine is located in Wabush, Newfoundland and Labrador. The mine produces 65%+ iron content concentrate — meaningfully higher grade than the benchmark 62% Fe price. In global steel markets, high-grade ore commands real premiums; in the first half of 2025, the Platts 65% Fe index was trading at roughly a 12% premium over 62% Fe ore.

Scully Royalty holds a 7.0% gross revenue royalty on all iron ore shipped from the mine, plus a 4.2% royalty on shipping revenues. The sub-lease runs through 2055 — nearly 30 more years of royalty life. There's also a minimum annual royalty guarantee of $3.25M CAD per year, regardless of production levels, payable quarterly.

The mine operator — Tacora Resources — has had a bumpy recent history. Tacora entered CCAA restructuring proceedings in October 2023. But it completed a successful recapitalization in September 2024, involving a significant equity injection and new operating arrangements. The mine is now better-capitalized and has resumed stable operations.

Historic production capacity at nameplate is around 6.25 million metric tonnes of iron concentrate annually, with actual production ranging from 5.8 to 7.55 million tonnes in different periods. The ore travels by rail to Point-Noire, Quebec, where it's loaded onto vessels for global seaborne markets.

What Management Did to This Company

To understand why the stock trades where it does, you need to understand just how bad the governance was. This wasn't merely "suboptimal capital allocation." This was a pattern of behavior that looked designed to prevent accountability.

Consider the structural choices: a company with a NYSE listing and a primarily North American investor base, incorporated in the Cayman Islands, headquartered in Shanghai, holding annual shareholder meetings in Hong Kong and later Macau. For retail and institutional investors stateside, attending an AGM in person was effectively impossible. That's not an accident — it's a moat around management entrenchment.

Samuel Morrow served simultaneously as CEO, CFO, and President — a concentration of authority that's a red flag at any company, let alone one with a complex multi-segment structure spanning four continents. Acquisitions were made into opaque subsidiaries, written down, and disappeared. Where that capital went is not entirely clear.

The board that was supposed to provide oversight failed comprehensively. When MILFAM finally moved against them, those same directors — even after being voted out by a landslide — refused to step down, refused to hand over operational control, and at Morrow's direction continued obstructing the new board's most basic requests.

Morrow was not terminated because MILFAM didn't like his strategy. He was terminated for cause — after being given multiple opportunities to engage with the new board and declining each time.

How MILFAM Took the Wheel

The proxy fight itself deserves its own chapter. The sequence of events reads like a corporate governance thriller:

MILFAM LLC quietly accumulates a position in SRL, becoming one of the company's largest shareholders. The Miller family office — managing assets for descendants of Lloyd I. Miller Jr. — watches management's poor stewardship for over a decade before deciding to act.
MILFAM discloses its ~13% stake and submits a notice of nomination for five director candidates to the board of Scully Royalty. The incumbent board immediately contests the validity of the nomination, arguing it doesn't comply with advance notice provisions.
Major win: The Grand Court of the Cayman Islands rules in MILFAM's favor, declaring the nomination notice was validly and timely delivered. The board tries to appeal and simultaneously attempts to unilaterally postpone the AGM — but their own Articles of Association didn't grant them the power to do so.
MILFAM announces it will show up the next day and conduct the meeting as scheduled, regardless of management's maneuvers.
The coup: MILFAM holds the AGM outside a locked conference room with no company officials in attendance. All five of their nominees — Jerrod Freund, Mark Holliday, Alan Howe, Nimesh Patel, and Skyler Wichers — are elected with a majority of votes cast. The incumbent directors are not re-elected. 59% of outstanding shares vote in favor.
The new board terminates Samuel Morrow as CEO, CFO, and President for cause. The board assumes day-to-day operations and begins a search for new leadership. All authority previously held by Morrow is rescinded.
Tacora Resources commences an interpleader action in Ontario Superior Court regarding the January 2026 royalty payment — caught between demands from the old management (who have no authority) and the new board (who do). The new board views this as a predictable complication that will resolve in their favor.
The new board announces the Tacora interpleader filing publicly. Separately, a December 31, 2025 MD&A filing — made by the old management before they were removed — had disclosed that the company decided to convert the European banking subsidiary into an unregulated entity. Whether the new board will adopt, accelerate, or revisit that decision is not yet known. The restructuring agenda remains a catalyst to watch, not a fait accompli.
The Cayman Islands legal battle over board legitimacy is still live. Royalty funds remain in Ontario court pending the interpleader resolution. No new CEO has been named. The new board is fighting on multiple fronts simultaneously — and the investment outcome depends heavily on how quickly they can consolidate control and begin executing.

The Activists Running the Show

MILFAM LLC is the single-family office of the Miller family — descendants of Lloyd I. Miller Jr. — based in Stuart, Florida. They are not a typical activist hedge fund looking for a quick trade. They have been shareholders in SRL for over 12 years, which speaks to a genuine belief in the underlying asset rather than an opportunistic raid.

Key board members have direct ties to Alimco Financial Corporation: both Skyler Wichers (new Chairman, VP of MILFAM) and Alan Howe serve as Alimco directors. Alimco is a holding company with a track record in financial restructurings, which is exactly the skillset this situation requires.

The fact that MILFAM commanded 59% of outstanding shares in a contested vote — despite management's best efforts to prevent it — is a strong signal that the broader shareholder base was fed up and aligned. This wasn't a narrow activist victory; it was a shareholder revolt.

Their stated agenda is focused on "operational and capital efficiency" and "fair representation of the interests of all shareholders" — code for: stop the leakage, surface the value of the royalty, and potentially monetize or restructure the non-core assets (European banking, Chinese industrial operations).

The Raiffeisen Bank Litigation

Any honest write-up of SRL has to stare directly at the biggest risk: the Raiffeisen Bank International (RBI) litigation.

In August 2019, RBI filed suit in the Grand Court of the Cayman Islands against Scully Royalty and related entities. The allegation is serious: RBI claims it was the victim of a fraudulent conspiracy to asset-strip the former MFC Group, against which RBI held guarantees. The bank obtained worldwide freezing injunctions tied to unencumbered assets worth up to EUR 153 million.

A March 2025 court decision dismissed the defendants' challenges to jurisdiction, meaning the case is moving forward. Trial is not expected for another two years. The Scully Mine's holding companies are specifically among the assets subject to the freezing orders.

This is a material overhang. It could limit the new board's ability to sell, spin, or refinance assets until there is resolution. However, there are mitigating factors to consider:

First, the new board had nothing to do with the alleged conduct — this is a legacy of the old management regime. Second, RBI's claim, while large, is against the former structure and actors; the new board's engagement may actually facilitate resolution rather than prolonging it. Third, if the new board can demonstrate that they represent a clean break from the prior management, a negotiated settlement becomes more plausible.

What the Royalty Could Actually Be Worth

The core valuation exercise is straightforward in concept, if uncertain in precision. Here's the framework:

The key variable — and the one most sensitive to assumptions — is iron ore pricing. China's steel demand drives the global seaborne iron ore market, and that is not something SRL or MILFAM can control. But even with a meaningful haircut to spot prices, the royalty's long-dated, high-grade nature creates a durable floor on intrinsic value that the current market cap does not reflect.

There is also a "hidden" option embedded in the corporate structure: the European merchant banking subsidiary (Merkanti) and Chinese industrial assets. These are currently loss-making drags on the consolidated P&L. If the new board can exit or restructure them — as they've signaled by moving to de-regulate Merkanti — even that cleanup alone would improve the earnings picture substantially.

Bull Case vs. Bear Case

What Unlocks the Value in 2026

This is a situation where the investment outcome is almost entirely a function of execution. The asset is there. The activists have control. The question is sequencing. Here are the events to watch:

1. New CEO hire. The new board has assumed day-to-day operations themselves — a temporary but unsustainable situation. When they announce a credible new chief executive, expect the market to re-rate. This is probably the single highest-impact near-term catalyst.

2. Royalty payment resolution. The Tacora interpleader action — where Tacora has paid royalty funds into Ontario court pending a determination of who legitimately controls Scully — needs to resolve. The new board's position is legally strong, but the resolution will confirm operational control of the company's primary income stream.

3. RBI litigation development. Any movement toward settlement, or favorable preliminary rulings, would remove the largest discount factor in the thesis. Conversely, adverse developments here would extend the timeline significantly.

4. Asset simplification. The announced move to de-regulate the European banking subsidiary is a start. If the new board can exit or monetize the non-core assets — Chinese industrial operations, European merchant banking — the sum-of-parts picture becomes far cleaner and the royalty's value more legible to the market.

5. Royalty monetization. The ultimate bull case is the new board seeking a buyer for the royalty asset itself, or a spin-off that allows the royalty to trade at proper comparable multiples. This is not a near-term certainty, but it is the scenario that creates 2–4x returns from today's price.

The Setup

I want to be direct about what this is and isn't. This is not a clean, easy compounder. It is a special situation with real legal risk, uncertain timelines, a micro-cap liquidity problem, and multiple moving parts that need to go right.

What makes it interesting — and what makes it worth doing the work — is the combination of three things happening simultaneously:

First, the underlying asset is genuinely world-class. A 29-year royalty on a high-grade Canadian iron ore mine is a rare, durable asset that should command premium multiples. It hasn't, because of everything else happening around it.

Second, the governance regime has changed completely. The activists aren't new money opportunists — they're 12-year shareholders who have seen enough. They have board control, a mandate, and the experience to execute a restructuring.

Third, the stock is cheap on almost every metric that matters. 0.35x book. A fraction of comparable royalty company valuations. A market cap that assigns essentially zero value to anything but the most pessimistic scenario.

When messy situations get cleaned up, the rerating can be fast and violent. The market hates uncertainty. The activists are now working to resolve that uncertainty one piece at a time.

Position sizing matters here — this is a high-conviction, small-size idea. But if the new board executes half of what the situation appears to offer, the upside more than compensates for the tail risks.

Watch for the CEO hire. Watch for the royalty interpleader resolution. And watch for any hint of asset monetization — that's when the real fireworks start.

Here's a clean disclosure you can drop right in:

Disclosure & Disclaimer

I am long shares of the company discussed in this post. This post is for informational and entertainment purposes only and does not constitute investment advice, a solicitation, or a recommendation to buy or sell any security. I may add to, reduce, or exit my position at any time without notice.

Do your own due diligence. I am not a registered investment advisor, broker-dealer, or financial professional of any kind. Nothing written here should be construed as personalized financial advice. Investing in small-cap and micro-cap securities involves substantial risk, including the risk of total loss of capital. Past performance is not indicative of future results.

The information contained in this post is based on publicly available sources I believe to be reliable, but I make no representations as to its accuracy or completeness. This is not a complete analysis of every material fact regarding the company. Situations like this change rapidly — always verify current facts before making any investment decision.

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