Tamarack Valley is one of my favorite energy positions with an established and prudent management team who have a great suite of assets in the Wilson Creek Area and a financial position that gives them much flexibility in this challenging oil environment.  With its currently reduced budget the company should be able to show some production growth on a year over year basis and exit 2015 with a debt to cash flow in the 1.5x range.  I have both reduced and added to this position in the volatility that has been experienced to date in the energy sector.  As of current the stock has held up better than many of its peers and has not reached a new price low since December 15, 2014.

Copper Mountain has had a very successful year operationally with the installation of their secondary crusher.  The ramp up of the secondary crusher has gone quite smoothly and the company is ahead of its production guidance.  I believe part of the recent negative stock performance is a result of there being some concern that the company may be an acquirer of additional copper assets and that there is concern that copper may move to an oversupply position in 2015.  The stock still trades at a substantial discount to its peers and the portfolio continues to hold Copper Mountain but has reduced the position in favour of the pristine balance sheet of Lundin in what is proving to be a more challenging stock market environment for copper stocks in the short term.

Mawson West is a company with copper assets in the DRC.  The company has a great asset in Kapulo that is currently under construction for a start up in 2015.  The company had replaced its previous management with a new CEO, Bruce McFadzean at the end of 2013.  The initial plan was to restart the Dikulushi Mine to generate some cash flow to help with the funding on Kapulo.  This endeavour proved to be overly optimistic and management missed their guidance for the start up and the cost estimates.  As a result the company was in a difficult financial position and in need of cash.  I have maintained the position as when the situation became evident the stock lost a significant amount of its value and was very illiquid.  Looking into the ownership of Mawson West and believing in the quality of the Kapulo asset that was months away from cash flowing I felt that the copper offtake agreement and loan from Trafigura would be enough for Trafigura to back stop Mawson West financially.  At the end of the year an equity financing was announced with Trafigura back stopping the full amount.  Although the financing is dilutive, the stock is so ridiculously undervalued and from persons close to the financing it is my understanding that Trafigura is very comfortable with Kapulo as an asset and with the timetable to production.  The stock is still trading at a significant discount to Trafigura’s price for the rescue financing and I have recently begun adding to the position.

The three positions with the most positive contribution to returns include Interfor Corp., Patient Home Monitoring Corp., and Richmont Mines Inc.  These three positions collectively add a 2.15% positive contribution to returns.

In the quarter Interfor made an acquisition of Simpson Lumber which included 4 sawmills in the southern United States.  The acquisition was done at an attractive price and is accretive to cash flow and earnings and increases the company’s capacity by approximately 30 percent.  With a favourable outlook to the lumber market in southern US and a modestly positive outlook for US housing I continue to hold a position in this well operated company.  Interfor just completed an equity raise that puts it in a good financial position to continue its acquisition strategy.

Patient Home Monitoring is a company listed in Canada but largely operating in the United States.  The company strategy is one of patient acquisition in the medical home care space.  The company has established three high margin areas in pulmonary, blood thinners and patient wound care for diabetics.  They have shown good organic growth over and above their acquisition growth by cross selling these higher margin products into their general respiratory clients.  The company is achieving double digit growth rates but is still trading at 5x EV/EBITDA.  I continue to hold the position.

Richmont Mines is a gold mining company located in Quebec.  The story this year centers on the Island Gold Mine and the discovery of a new significant high grade deposit called the C Zone.  This high grade discovery is now being accessed and further delineated with the expectation that it will significantly increase the mines life, lower its cost and potentially increase future production.  The company operates in one of the safest mining jurisdictions in the world and has just attracted a very credible new CEO, Renaud Adams from Primero.  I continue to hold the position but took some profits recently given the aggressive run up of the stock and the potential that the upcoming news release could be viewed slightly negatively as year over year production will decrease to allow for mine development for the future.

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