In the portfolio, the top three contributing stocks for the quarter were Prometic Life Sciences, Kirkland Lake Gold and Storm Resources.  Collectively these three names added 2.0% to the portfolio.

Prometic Life Sciences is a biopharmaceutical company based in Quebec that sells products for use in pharmaceutical manufacturing.  Prometic uses its own technologies to purify and develop best-in-class plasma derived therapeutics and is developing a traditional small-molecule drug.  During the quarter, PLI signed a new agreement to develop an affinity resin for an existing multinational client.

Kirkland Lake is a gold company focused with operations in the Lower Abitibi Greenstone belt in northeastern Ontario.  Last quarter the company returned to profitability and generated significant free cash flow by focusing on higher grades and cost reductions.

Storm Resources is focused on two large natural gas plays in Northeastern British Columbia.  Last quarter, Storm released very strong operating results at their liquids rich gas assets in the Montney.  The company also reported that their new facility, which came online in August, was operating at full capacity and raised their end of year production guidance to over 9,000 Boe/day (a 90% increase year over year).

The bottom three detractors in the portfolio were Ikkuma Resources, Oncolytics Biotech Inc. and Nevada Copper.  These 3 names subtracted -3.7% from the portfolio.

Ikkuma Resources is led by a proven, industry leading technical team that worked together at Talisman and Manitok.  The Company has completed three highly accretive acquisitions in the Alberta and BC foothills and expects first drill results in 1Q15.  The stock was not down due to any stock specific news, but on a large block of restricted stock that became available for sale in September.  The fund held a significant position of this restricted stock, and has been reducing the position prudently.  For context, the restricted stock was purchased in the portfolio at $0.75 in May of this year, and finished September at $2.17.

Oncolytics is a Calgary based biotech company developing a cancer therapy that utilizes a live virus to specifically kill tumor cells.  During the quarter the company reported disappointing results from a phase II study in patients suffering from pancreatic cancer.  While the overall trial produced disappointing data, we continue to believe that the therapy has value and expect 3 clinical trial sets to be released over the next 9 months.

Nevada Copper is developing the Pumpkin Hollow copper mine located outside Yerington, Nevada.  Nevada Copper’s high level of price volatility in the third quarter is reflective of the broader underperformance of development stage mining stocks during this recent period of softening copper prices.  In addition, Nevada Copper was specifically impacted by a necessitated slowing of the mine construction program pending an arrangement for the balance of the Stage 1 project capital.  Despite these headwinds, the prospects for Nevada Copper remain unchanged.

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