The three stocks which contributed most to the returns for the quarter include Tamarack Valley, Parex Resources and Nevsun. The securities detracting most from overall returns were Trevali Mining, Detour Gold, and Baylin Technologies.

Starting with the names that detracted from performance, Trevali has been a holding for some time. TrevaliIt is effectively Glencore’s zinc vehicle for projects that are too small for Glencore. Trevali has 3 main bases of operation: The New Brunswick camp, Santander in Peru and the newly acquired African assets from Glencore. The stock has been severely discounted due to the production issues and the zinc price decline. Santander began production in 2017 with a few bumps along the way, however the most recent data from the company imply Santander may be through its growing pains. The portfolio reduced the position but we are inclined to add to the position after the stocks recent pullback. The stock is trading at a 2.5X current cashflow.

Detour is a gold producer with its asset located in Quebec. The portfolio added the position in the first quarter after we met with several analysts and Detour management. At the time the company appeared to be past their startup/expansion issues and were improving operations and results. Unfortunately, the company surprised the market in their latest results when they announced the west pit in their mine would be further delayed. As the company continues to be a relatively high cost producer and without higher-grade ore, the position was sold after the announcement. As we write this report, an activist shareholder (Paulson & Co.) has started pressuring Detour to sell the company.

Baylin is a technology company specializing in RF engineering providing creative wireless antennae solutions. The company has completed an acquisition of Alga Microwave which included a $35 million bought deal offering. The acquisition is accretive, and the issue was well received. We added to the position on the offering and continue to anticipate this company to do well as they integrate the acquisition and continue to grow in this field.

On the positive side, the energy stocks provided significant upside to the portfolio with Tamarack Valley and Parex Resources adding +2.5% to the portfolio. Nevsun, was the third highest contributing stock in the portfolio, adding 0.79%.

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