The worst performing names within the portfolio were TMAC Resources, Titan Mining and Valeura Energy, collectively the three names cost the portfolio -1.4%.

TMAC Resources is a Canadian based gold mine which operates its Doris Mine (from the 100% owned Hope Bay property in Nunavut.) The company had achieved commercial production in 2017 but struggled with an ill designed mill. Towards the end of 2018, the company raised money to re-outfit the mill to achieve the recoveries laid out in the feasibility study. We purchased the portfolio’s position on this financing. We are confident that there is no fatal flaw with the mine, and the company just needs time to achieve the mine’s throughput and recovery targets. TMAC’s stock trades at significant discount to its NAV and we feel is an excellent takeout candidate given the potential of the Hope Bay Camp property and positive political jurisdiction. We have added to the position on this recent pull back.

Titan Mining Corporation is a mining company which produces zinc concentrate at its, 100% owned Imperial State Mine in New York State. The company has made numerous missteps with regards to the restart of this mine. Titan has not met our expectations and we are concerned that there will be a dilutive financing. In the quarter we significantly reduced the position and are monitoring the company for further developments.

Valeura Energy is engaged in the exploration, development and production of petroleum and natural gas in Turkey. Its focus is the prolific Thrace Basin in Northwest Turkey. Valeura is currently commencing the drilling at the Devepinar -1 appraisal well and is completing the Inanli -I well. The focus is delineating the Basin Centered Gas Accumulation and the results will be released in the coming months. We continue to hold the position and anticipation further positive delineation of this resource.

The three positions which added most to returns this quarter included Ero Copper Corp., K92 Mining and Kraken Robotics Inc. Collectively these three names added over +4.7% to performance.

Ero is a Vancouver based copper mining company that owns a 99.7% interest in Mineracao Caraiba S/A (‘MCSA’ is an established Brazilian mining company.) The primary asset is the fully integrated mining and processing assets of the MCSA Mining Complex. Ero’s strategy is centered upon aggressively increasing the mineral reserves and maximizing the mill’s throughput. The company has done a fantastic job optimizing and bringing the mine into production. With the stock appreciating over +62% in the quarter, we have been reducing the position to maintain the portfolio’s target weight.

K92 has commenced gold production from the Kora Gold deposit, which is part of the company’s Kainantu Gold Project in Papua New Guinea. Production at Kora is targeted to ramp up to its steady state in the coming months. The company also has significant opportunities to expand the asset, which is open in all directions, and is strongly mineralized. The property also has multiple porphyry targets, that K92 will begin to drill. We anticipate the company will likely look for a joint venture partner with new drill successes. This is the portfolio’s largest gold holding and despite being a producing, cash flowing operation, the stock trades at less than 0.5% of NAV.

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