Keep connected
Our investment management team is made up of engaged thought leaders. Get their latest commentary and stay informed of their frequent media interviews, all delivered to your inbox.
Another quarter is in the books, and despite some apprehension at the outset—on the heels of President Trump’s tariff threats—the market shrugged off recession concerns and rallied strongly from first‑quarter lows. The portfolio continued its robust performance in Q2, returning +11.9% versus the index’s +11.8%. Gold remained a standout, climbing +4.9% to finish the quarter at US$3,303 per ounce, with smaller developers outperforming their larger counterparts this time around. Silver also delivered a significant move, trading at US$38.19 per ounce as of July 14. While Q1 was weighed down by recession fears, those concerns had largely dissipated by Q2, and base metals began to outperform, driven in part by renewed emphasis on domestic critical‑minerals security and escalating defence spending.
Energy, by contrast, remained range‑bound. A mid‑quarter flash rally—sparked by the Israel–Iran tensions—saw WTI briefly touch the mid‑US$70s per barrel, only to retreat back into the mid‑US$60s once U.S. involvement and additional OPEC production emerged. Natural‑gas names fared somewhat better on anticipation of Canada’s first LNG export facility. Although energy stocks rallied on geopolitical drivers, the durability of that advance remains uncertain.
Q2 saw broader sector participation beyond precious metals. Below is a summary of global market returns, with our portfolio’s performance for comparison:
The chart below shows the portfolio and TSX Small Cap index GIC weights.
The three stocks detracting most from portfolio performance in the second quarter were Lycos Energy Inc., Atex Resources and Arizona Sonoran Copper Company, collectively subtracting 0.9 percent from returns.
Lycos Energy Inc. is a junior exploration, development and production company operating in the Western Canadian Sedimentary Basin. Leveraging its proprietary multi‑leg well‐bore drilling technology, Lycos acquires low‑decline, long‐life heavy oil assets and applies its approach to extend their productive lives. The management team is both experienced and highly regarded. While we remain confident in their strategy and execution, we elected to exit our position to free up capital for opportunities with more immediate upside potential; however, Lycos remains firmly on our radar for future re‑entry.
Atex Resources is advancing the 100 percent‐owned Valeriano copper‑gold porphyry project in the Link Belt of north‑central Chile. The company is executing definition and extension drilling ahead of a targeted updated resource estimate in H2 2025. Situated adjacent to the El Encierro deposit—jointly held by Antofagasta and Barrick Gold—Valeriano benefits from both strategic location and growing investor support. Agnico Eagle Mines serves as the largest cornerstone investor, followed by Pierre Lassonde, providing Atex with strong financial backing. We continue to maintain our position, anticipating that copper’s tightening supply‑and‑demand dynamics—and the scarcity of large new development projects—will underpin significant value.
Arizona Sonoran Copper Company is an emerging U.S. developer with 100 percent ownership of the former Cactus mine, located on private land within Arizona’s well‑established copper belt. Robust infrastructure on site translates into comparatively low capital intensity, while CEO George Ogilvie, with his proven track record of creating shareholder value, leads the project with methodical precision. This holding aligns directly with our thesis on the United States’ drive to secure domestic supplies of critical minerals. Accordingly, we remain steadfast in our investment.
The three positions driving our strongest performance in Q2 were Tenaz Energy, Lundin Gold and Northisle Copper, which together contributed +1.7 percent to returns.
Tenaz Energy Corp. is a mid‑sized energy company specializing in the acquisition and sustainable development of international oil and gas assets. As the second‑largest natural gas operator in the Dutch sector of the North Sea, Tenaz leverages under‑appreciated European opportunities to diversify beyond Canada’s more constrained growth outlook. Under the leadership of CEO Anthony Marino—formerly President of Vermilion Energy and a seasoned international dealmaker—the company has established a track record of disciplined capital deployment and operational excellence. We retain our full position to capture further upside as the global gas market tightens.
Lundin Gold is a Canadian‑listed producer operating the 100 percent‑owned Fruta del Norte gold mine in southeast Ecuador. Renowned as one of the world’s highest‑grade gold operations, Fruta del Norte generates robust free cash flow in the current gold price environment. Beyond steady production, Lundin Gold is actively exploring its extensive land package for new discoveries; recent drilling has identified compelling copper‑gold porphyry targets that could evolve into a standalone development project. While we have modestly trimmed our exposure to crystallize gains at current valuations, we maintain a core holding to benefit from potential exploration breakthroughs and accretive M&A opportunities.
Northisle Copper is a Canadian exploration and development company advancing its North Island Project on northern Vancouver Island, a region with a rich legacy of forestry and mining. The project’s 34,000‑hectare land package offers multiple untested targets, and the company recently released an updated Preliminary Economic Assessment—fueling its progression toward a pre‑feasibility study. Current drilling programs at Northwest Expo, Goodspeed and Macintosh aim to delineate higher‑grade starter‑pit zones, laying the groundwork for future mine planning. Having realized a significant share‑price appreciation since our initial commitment, we have modestly pared the position to manage portfolio concentration while preserving exposure to continued value creation.
Outlook
Writing this section last quarter felt daunting, and preparing for the next three months remains challenging. The Trump administration’s tariff rhetoric continues to ebb and flow, creating uncertainty. Geopolitical tensions—especially in the Middle East and the Russia–Ukraine conflict—further complicate the backdrop.
Fed Chair Powell has maintained a steady hold on interest rates, balancing a slowing economy against inflationary pressures from tariffs. His stance, though market‑friendly, has drawn Washington’s ire amid speculation over his replacement.
Currency markets have seen notable moves, with the U.S. dollar weakening significantly against peers like the Canadian dollar. Global central banks have resumed gold purchases, signaling reduced reliance on the U.S. dollar. Gold stocks have surged in H1 2025 and may require consolidation before the next leg higher. Our portfolio retains an overweight in gold, shifting weight toward explorers and developers on valuation grounds.
USD Currency Chart
Gold Chart
Broad economies continue to expand—albeit at a more moderate pace—so recession risk is likely underpriced. We remain underweight consumer‑exposed names, favoring basic materials, industrials and energy, all of which could face headwinds in a downturn.
Basic materials—now more commonly dubbed “critical minerals”—are undergoing a fundamental transformation. Historically, our analysis has centered on classic supply‑and‑demand curves: chronically underfunded exploration has left the project pipeline unusually thin, and any severe recession would inevitably dent demand, create temporary oversupply and trigger corrections in both commodity prices and related equities. Yet today’s shifting priorities—driven by heightened geopolitical risks and the imperative of domestic supply security—mean that traditional cost‑curve metrics may no longer dominate investment decisions. Instead, governments are prepared to underwrite higher‑cost production through incentive pricing, direct funding, expedited permitting and other regulatory carrots to ensure reliable access. In effect, cost considerations are giving way to strategic imperatives. The scramble to secure these essential resources is well and truly underway, but we remain at the starting line of what promises to be a long and complex race. In July, for example, the U.S. Department of Defense unveiled a multibillion‑dollar commitment to MP Materials—complete with a ten‑year price guarantee—while simultaneously imposing a 50 percent tariff on copper imports to spur domestic output. Such policy actions leave us decidedly bullish on copper, uranium and the broader suite of minerals now officially designated as critical.
Energy is still an underweight with the positioning more focused on natural gas, international and services. The price of oil is somewhat hijacked by OPEC and their continuous announcements to increase production thereby keeping a lid on pricing.
Defence spending is another clear theme. As NATO allies—including Canada—are pressed to raise their budgets, domestic defence‑contractors such as MDA and Firan are set to benefit. We will continue to seek opportunities in this space.
We are living in interesting times, rich with uncertainty but also ripe with opportunity. Canada’s resource wealth, technical expertise and ESG leadership position us well; it is time to leverage these strengths and invest in our future.