Ero Copper continues to perform well despite the pull back in copper prices. The company is achieving good availability in the mill, thereby increasing production and lowering all in sustaining costs. While the stock is expensive relative to its peers, Ero has huge exploration upside. Given its high valuation, we have reduced the portfolio’s position but still maintain a 2.8% position in anticipation of good exploration results that will increase the company’s NAV and justify the valuation.

When analyzing Semafo’s performance last quarter, we need to consider the breakout we have seen in the Canadian gold sector. After several years of consolidation, gold stocks broke out of their long malaise after the gold price traded above $1400/oz. In the second quarter, the gold sector was up +19%, while Semafo was up over +39%. Semafo outperformed as they put their Bongou mine into production on-time/on-budget and was revalued accordingly. We continue to hold the Semafo position.

The worst sector last quarter was energy, down -15.6%. The three detractors; Yangarra, Kelt and Nuvista are all oil and gas producers. The portfolio was underweight the energy sector for the second quarter but has since increased the weight in June as oil began to recover (WTI traded above $60). The portfolio is now closer to the index weight. We have sold the Nuvista and added to Yangarra, Kelt, Torc and Tamarack Valley.

1 2 3 4 5