Equinox Partners, L.P. - Q4 2014 Letter

Dear Partners and Friends,

PERFORMANCE & PORTFOLIO

Equinox Partners fell -4.0% in the fourth quarter and -26.4% for the full year of 2015. Our fund has declined an additional -10.6% in 2016 through January 28.

Our recent performance was one of our worst on record, with Equinox Partners declining -30% from a June 2014 peak to a January 2015 low. As highlighted in our third quarter letter, our precious metals miners and newly-purchased energy companies suffered significant declines during the period. In the face of these declines, we increased our energy exposure substantially to 16% and maintained our precious metals-related exposure at 35%. These weightings reflect the opportunity that we see in the depressed shares of superior North American E&P and mining companies. Equally attractive, but not equally depressed, our non-resource operating companies are trading at just 11x our estimate of this year’s earnings and generate mid-teens per share earnings growth and returns on equity.[1]


Our recent struggles call to mind a similar period of underperformance in the last phases of the 1990’s speculative mania.  While the bond market, not the stock market, is the center of today’s serious “irrational exuberance,” the uninterrupted rise of U.S. stocks should also give investors pause. For the first time in the S&P’s 90-year history, the S&P 500 closed out a calendar year without posting four consecutive days of decline. Valuations are also high by any objective measure. Specifically, the median price-to-earnings multiple of U.S. stocks is the highest since World War II.[2] Such valuations are particularly worrisome given the unusually high profit margins enjoyed by U.S. companies in the aggregate. 


As tempting as shorting such overvalued stocks can be, experience has taught us that the best opportunities during a bubble can be the outright ownership of great companies in unloved sectors. This was certainly true in the late 1990s. We, for example, made far more money owning out-of-favor longs than we did on our tech bubble-related short positions. RJR, for instance, doubled from 2000 to 2002, a period during which the NASDAQ declined roughly 70%. In this spirit, we have increased our holdings of commodity-related businesses that are trading at cyclical lows. Specifically, we own businesses that can profitably extract commodities in today’s price environment while their peers hemorrhage cash. This superior economic characteristic, when combined with low absolute levels of valuation, creates an extraordinary return opportunity in our opinion. 


We have also applied the lessons of the late 1990s to our short exposure. During the final years of the last century, lower volatility shorts that offered an attractive risk/reward generated better full-cycle returns than more volatile shorts that offered the real possibility of going to zero.  We believe the same is true today. Accordingly, we’ve concentrated our short portfolio in historically low-yielding government bonds that can decline far more than they can appreciate. While the path to record low yields has generated greater losses than we expected, the risk/reward has continued to improve as these positions have gone against us. 


In sum, Equinox’s long and short exposures offer contrarian investors a fundamentally sound alternative to the increasingly manic environment in U.S. stocks and bonds.

on sale: shale revolution growth stocks


The large decline in the marginal cost of production for North American hydrocarbons and the corresponding massive, new North American energy resources resulting from the “shale revolution” will come to be seen as a watershed event of the early 21st century. The step-change down in costs and increase in resources is a result of hydraulic fracturing and horizontal drilling. Developed by a good ol’ Texas boy, George Mitchell, in the Fort Worth Barnett Shale, these new techniques offer fundamentally better ways of extracting hydrocarbons that are particularly well suited to North American geology and land rights. 


Given the very low demand elasticity for these fuels, these cost declines have now manifested themselves in both the much lower North American natural gas price and in the last year’s stunning drop in global oil prices. We have referenced this “energy game changer,” in previous letters. That said, at $50 dollar oil and $3 dollars gas, North American energy prices have dropped to a substantial discount to their long-run equilibrium when accounting for their marginal replacement costs. Thus, we believe energy prices will rise over the next few years. 


The “Shale Revolution” has not only lowered the prices of petroleum, but it has also transformed the structure of the industry itself. To wit, there are now a handful of companies—dominant in the “sweet spots” of the shale rock—that have ascended to defensible, long-term, high-return businesses over a pricing cycle. Moreover, many of these same companies have a decade or more of very lucrative drilling opportunities in which to reinvest the cash flow from their wells. As they grow production very rapidly, their cash flow and hence, intrinsic value should compound at similarly high rates.  As a consequence, those few well-positioned businesses have become true “growth stocks” and thus are very valuable financial assets. Despite this transformation, these companies are still on sale at deeply discounted valuations.  We highlight one such company, Paramount Resources, as part of our yearend Top-5 holdings discussion below.

Top-five holdings[3] 

paramount resources     -        8.0% of the fund


Paramount Resources is the one of the most attractive companies that we own. Its liquids-rich Montney acreage in the Musreau/Kakwa region of Alberta generates rates of return that are on par with the best in North America. As detailed by the company, at $55 WTI Oil and $3.50 AECO gas, investment in Paramount’s Montney wells produces a 65% IRR.[4] While these are technically natural gas wells, they also produce liquids which have a much higher sales value than the natural gas itself. Accordingly, in our current commodity price scenario, over 70% of Paramount’s revenue comes from liquids. To the west of Paramount’s acreage is dry gas that does not contain such high liquids rates and to the east of their acreage are less productive oil wells. In short, Paramount is in an economic sweet spot.


Furthermore, Paramount’s management is very much aligned with shareholders. Paramount has been the holding company of the Riddell family’s oil and gas interests for over 30 years. Clay Riddell, the CEO and founder of Paramount, sold a significant amount of the company for five million dollars when he IPO’d the business in 1978. He quickly learned that he didn’t like dilution and, combined with other officers and directors, retains over 50% of the company today. This truly differentiates Paramount from most other global oil and gas companies. 


Over the years, the Riddells have remained faithful to two fundamental strategies. First, they have captured large resources cheaply with the idea that at some point either technology or the price of the commodity would make these assets much more valuable. This strategy worked wonders with the company’s oil sands leases, and has again proved successful in their early entry into the Musreau/Kakwa region. Second, the Riddells control the relevant infrastructure so that their play economics tend to improve over time as their companies gain scale. In Canada, where midstream capacity is very tight, control of the route to market can make the difference between dominating a play and being a forced seller. Both of the aforementioned strategies initially result in years of small losses and require a level of patience and long-term thinking made possible by the Riddell’s large insider ownership. 


Paramount is busy putting the finishing touches on the first phase of their Montney liquids rich project that will give them a long-term strategic advantage in the region. When this facility comes on line in the first half of this year, Paramount will be producing over 70k barrels per day.[5] At today’s energy prices, and once the facility comes on line, Paramount will trade at approximately 8x depressed cash flow.[6] This valuation is extraordinarily attractive given our confidence that Paramount can self-fund multiples of their current production.

Mag silver -   8.1 of the fund


MAG Silver is a precious metals miner with a joint venture in one of the highest-grade silver mines in the world—the Juanicipio Joint Venture in Mexico. We wrote about MAG in 2012 after we concluded a process that resulted in the appointment of Rick Clark and Peter Barnes to the MAG board. Our decision to engage in board-level restructuring was motivated by the unique characteristics of the Juanicipio Joint Venture.


Two and a half years later, it is safe to say that MAG has undergone a very positive transformation.  Most importantly, in 2013, MAG’s board appointed a new CEO, George Paspalas, to oversee the company’s transition from an exploration to a development company.  George’s strong background in mining operations has lent MAG greater credibility in its relationship with its joint venture partner, Fresnillo. Under George’s leadership, development of Juanicipio is proceeding steadily, and we anticipate a low-friction relationship between MAG and Fresnillo as the mine goes into production. The improved relationship with Fresnillo has other benefits. Importantly, the joint venture is now drilling prospects that have been on hold for years.


While the aforementioned improvements have added substantially to MAG’s intrinsic value, there have been negatives as well. Most notably, the Mexican government raised tax rates on the mining industry, transforming a very competitive jurisdiction to a high-tax jurisdiction overnight. Additionally, MAG’s exploration property, Cinco de Mayo, has faced an extended hiatus as the company attempts to come to an access agreement with local landowners.  Cinco de Mayo, which could become an important second asset for the company, remains stuck.


Happily, MAG’s flagship asset, its 44% stake in the Juanicipio JV, is not stuck. [7] Currently under construction, it is expected to go into production in 2017. At a “base case” $23.39 silver price, the company expects $100 million dollars of after-tax free cash flow will be credited to MAG’s account annually for the first six years. And even at $15 silver, the project still generates a 28% IRR.[8] Importantly, with the high grade of the resource and Fresnillo’s operational expertise, Juanicipio’s development risks are as low as can be found in the mining industry. Factoring in their gold, lead, and zinc by-products, the silver ounces produced at Juanicipio will be almost entirely profit for the joint venture, making this cash-flow stream akin to a precious metals royalty. Precious metals royalties garner very lofty multiples, and we believe that the market will eventually view MAG’s ownership in Juanicipio through this lens.

altius minerals -      6.0% of the fund

Altius Minerals remains a top-5 holding. This company has compounded its share price at 21.7% over the past 17 years; it’s one of the best records we’ve ever seen. Notably, this compound has continued during both up and down cycles in the mining business. Altius’ strategy is simple: sell mining companies attractive drilling targets. When their partners have success, Altius retains exposure through equity and royalty interests.   When, however, their partners don’t have success, Altius preserves its capital. 


Last year provided an excellent case in point of Altius’ risk-mitigating model.  A year ago, an iron ore project staked by Altius and vended into a sister company, Alderon, looked as though it would add substantially to Altius’ intrinsic value. Unfortunately, Alderon was unable to complete the permitting needed to finance the project before iron prices started to decline. As a result, the project has been put on care and maintenance until the next iron ore cycle and we lost out on an important source of growth for the company—in full production the royalty on this project would have nearly doubled revenues for Altius.  That’s the bad news.


The good news is that beyond the initial money needed to stake the property, carry out some exploration activity and structure the spinout of Alderon, Altius did not invest another dollar in the project. In pure financial terms, Altius spent just over $2m of its own money.  And, despite the decline in Alderon’s value, Altius’ equity stake in Alderon is still worth more than $2m. Moreover, Altius still retains the option value of the royalty should the project be revived in the next cycle.


Mining is a notoriously volatile business, featuring repeating cycles of boom and bust in commodity prices and extreme changes in asset valuations. So much so, that volatility is about the only thing that can be predicted with confidence.  Surprisingly, very few companies in the mining industry have business models that capitalize upon this inherent cyclicality, but Altius does. While we are disappointed that Alderon did not produce the growth we had hoped for, our appreciation for the strength of Altius’ business model has been enhanced by the experience. 

 

Downturns, such as the one we are currently experiencing, create numerous opportunities for companies like Altius.  As the industry faces financial pressure due to a lack of access to capital and falling asset prices, Altius is poised to create value.  Brian Dalton, Altius’ CEO, will use the low points in the cycle to stake claims that other companies drop, and perhaps find opportunities to acquire additional royalties at bargain prices. In this vein, on March 4, Altius announced the acquisition of a smaller royalty company at an attractive price.  At some point in the future, when the current hard times are a memory, Altius will be a seller of assets to companies with less foresight. Brian and his team run Altius with the same contrarian streak that we strive for in our investments at Equinox. Our similar investment style gives us a deep appreciation of his approach.

aramex –      10.1% of the fund


Aramex remains one of Equinox’s top-5 holdings. The company is a domestic and international express business similar to FedEx and DHL. Aramex operates primarily in the Middle East and increasingly in Africa. The company currently sells for 12.1x our estimate of its 2015 earnings, an absolute bargain given the company’s quality and growth prospects.


Aramex increased earnings by 15% last year.[9]  This substantial improvement is largely due to stronger growth in the higher-margin express segments. Management expects further improvements in its freight forwarding business due to the decline in oil prices and an increase in overall global trade. In addition, management remains optimistic about making additional acquisitions which would further the company’s geographic expansion. Their business remains focused on their core countries of U.A.E. and Saudi, which have not been materially affected by the continued strife in the region.

ferrycorp -       6.9% of the fund

Ferreycorp continues to be an Equinox top-5 holding. This long-tenured Caterpillar dealer in Peru is perfectly positioned to benefit from the growth opportunity in mining and infrastructure in that country. Its competitive advantage lies in its higher-margin, dominant parts and service network.  Ferreycorp is currently selling for 1.1x its tangible book value and 7x our estimate of its 2015 earnings.


2014 was a difficult year for Ferreycorp as both revenue and earnings declined by 8%. The weakness was driven entirely by mining sales which fell by 60%.[10]  Going forward, however, copper production is expected to double in Peru over the next 4 years, and the country anticipates doing a lot of infrastructure spending.[11]  As such, we remain very positive on the company’s prospects, and are surprised that it continues to sell at such an enormous discount to its intrinsic value.

Top-Five, Year-Over-Year Subtractions: APR & Virginia Mines


 APR, a provider of temporary power, dropped out of our top five as its stock was hit by a combination of negative events, including management turnover, the loss of its largest contract and the failure to win material new business. We had estimated our downside for the investment to be the company’s asset value. APR now sells for a material discount to that figure. While we think the market has overreacted, we certainly overestimated the company’s ability to consistently win new business, and thus, earn an adequate return on its assets. That said, we still consider APR to be a good investment given its discount to very real, saleable assets. Unfortunately, it had to decline dramatically in price to reach this attractiveness. In retrospect, we clearly failed to accurately estimate the company’s intrinsic value and assess its ability to generate high returns on capital on a consistent basis. The position is presently 5% of partners’ capital due to additional purchases followed by a recent increase in the stock price.

Virginia Mines was acquired late last year by Osisko Gold Royalties. We long suspected that the company would be acquired by a larger royalty company.  When Osisko Gold Royalties was created last year as a spin out from the acquisition of the Canadian Malartic mine, it became apparent that combining the two premier royalties on Quebec mines made sense. The larger scale and diversification of the combined entity has already resulted in a rerating of the merged company. 

Energy Webinar: MArch 24, 2:30-3:00 PM (Eastern time)

We’re hosting a “webinar” on March 24 from 2:30-3:00 PM for our partners and friends in order to discuss our energy investments in greater detail. Viewed online, the webinar will combine our in-depth commentary with corresponding graphics. By way of update, our newly-launched Equinox Energy Fund—which holds many of the same core energy positions as Equinox Partners—has attracted $40m thus far.  With so much attention in the sector and with our large investment therein, we think this presentation is more than merited. 


To participate, register in advance as follows:

1.      Click here to go to our WebEx site.

2.      Once there, click “register” to complete the short process.

3.      You will then get a confirmation email with the details to join the webinar on March 24 at 2:30 PM.


Note: If using the Chrome browser, you may need to run a simple application. Having issues? Use Explorer instead.







Sincerely,


Andrew Ewert

Sean Fieler                   

Daniel Gittes

William W. Strong

END NOTES

[1] Performance contribution as stated uses fund’s dollar-weighted gross internal rate of return calculations derived from average capital and sector P&L. Sector performance figures derived using monthly performance contribution calculations in US dollars, gross of fees and fund expenses. Interest rate swaps included in Fixed Income. Yen puts including in Operating Companies. P&L on cash excluded from the table.


[2] Graph and data source: Wells Capital Management, January 8, 2015, James W. Paulson, Ph. D., “Median NYSE Price/Earnings Multiple at Post-War RECORD”


[3] Top holdings as of 12.31.14, using pre-yearend redemption AUM. Aramex and Ferreycorp valuations as of 1.13.2015. MAG, Paramount, and Altius valuations as of March 2015. Estimates derived from internal models. Paramount CF and ROE adjusted for subsidiaries. Compound annual return based on monthly gross IRR from inception to February 2015.


[4] Company presentation, January 2015


[5] Company presentation, January 2015


[6] Valuation derived from internal model


[7] MAG Silver joint venture ownership documentation


[8] Company presentation


[9] Company press release


[10] Q4 MD&A


[11] Peruvian Ministry of Energy and Mining

Precious Metals Fund - Q3 2025 Letter

By Kieran Brennan • October 31, 2025
Dear Partners and Friends, PERFORMANCE Equinox Partners Precious Metals Fund, L.P. rose +36.2% in the third quarter of 2025 and is up +90.2% for the year-to-date 2025. By comparison, the Junior Gold Mining Index GDXJ rose +46.6% in the quarter and is up +132.7% for the year-to-date. Exploration stage companies were the best performing segment of the portfolio, appreciating +55.0% in the quarter. The spot gold price rose +18% in the quarter and is up +47% for the year-to-date. The letter that follows provides our thoughts on the outlook for the gold price and implications for the portfolio holdings. gold The gold bull market, initially driven by central bank buying, has evolved into an investor-driven dollar debasement trade. This second phase of the gold bull market is more explosive than the first because it draws on the approximately $470 trillion of the world’s wealth as opposed to the roughly $35 trillion of central bank balance sheets. If President Trump fans the dollar debasement fire by forcing a politicized Fed to cut rates, gold could rapidly displace the dollar as the world’s reserve currency. However, if President Trump takes a more nuanced approach to the Fed, gold should still displace the dollar as the world’s reserve currency over time with the competition between gold and the dollar taking longer to play out. Gold investors warning about fiat currency debasement is nothing new. That, after all, is why gold investors own gold in the first place. There’s also nothing new about most American investors ignoring these warnings. The dollar’s relative stability has long made concerns about dollar debasement appear quixotic. Since the early 1980’s, American inflation has been largely tolerable, the dollar has outperformed almost all other fiat currencies, and U.S. government bonds have been the safest asset to own in an economic downturn. The dollar has sloughed off so much criticism for so long that Janet Yellen likely did not imagine the chain of events that freezing Russia’s foreign exchange reserves would set into motion. With confidence in the dollar’s inertia and a bit of hubris, in our opinion, Secretary Yellen engineered the freezing of $300 billion of Russia’s foreign exchange reserves and put the world’s central banks on notice that their use of dollar reserves depends upon the tacit approval of the U.S. Treasury. Foreign governments, shocked by this policy change, sought to reduce their dependence on the U.S. Treasury and doubled their gold purchases to roughly $60-80 billion per year (potentially $100 billion in 2025). This increase in central bank gold demand drove the gold price up over +50% from March 2022 to March 2025. This bull market, in turn, gave gold the additional scale necessary to function as a more viable alternative to the dollar and damaged the dollar’s air of invulnerability. This two-fold outcome is problematic because inertia and a lack of alternatives were fundamental to the dollar’s stability. On the back of gold’s appreciation, long-ignored arguments of gold investors began sounding more plausible. Financial professionals accustomed to deriding gold investors and referring to them as insects began to worry that gold’s price action is telling them something important. Jamie Dimon aptly summed up the change of heart: “This is one of those times where it is semi-rational to own gold.” His comment captures both his continued distaste for gold and his willingness to own it. Despite the broadening acceptance of gold as an investment, markets remain skeptical of the underlying dollar-devaluation narrative. Inflation, a broad measure of the dollar’s strength, is just 2.8%. The 10-year U.S. Treasury yields 4.0%, indicating the bond market’s indifference to the dollar debasement narrative. Furthermore, the decline in the trade weighted dollar has partially reversed since early July. At this moment, the dollar debasement trade appears to be waiting for additional macroeconomic and geopolitical events to play out. Of these, none looms larger than President Trump’s effort to bend the Federal Reserve to his will. In January, the Supreme Court will likely allow President Trump to remove Federal Reserve Board Governor Lisa Cook, making the selection of the next Fed Chair even more important. If Trump nominates a loyalist like Kevin Hassett who appears more committed to pleasing the President than price stability, we could see broadening concern about the dollar’s store of value and a growing asset allocation into gold. In this hyper-politicized Fed scenario, gold could quickly become a $100 trillion dollar asset and displace the dollar as the world’s reserve currency. However, if Trump nominates an institutionalist like Chris Waller, the dollar debasement trade will likely remain in limbo for a while as markets suss out how much control Trump really has over the Fed. Either way, the U.S. bond market will not be allowed to freely adjudicate the outcome at the Fed. We expect both Treasury and Fed to proactively manage the yield curve during the particularly politically sensitive period when the Fed is cutting rates while inflation is above their stated 2% target. Treasury will keep longer-dated bond issuance to a minimum while coercing banks to keep the Treasury market well bid. JP Morgan increased its holdings of Treasuries by $80 billion in the first half of this year, and we expect other banks to follow suit. The Fed, for its part, has announced an end to quantitative tightening and its intention to shift its balance sheet from mortgage-backed securities to Treasuries. Given the likely extent of the coordinated intervention of the Treasury and Fed, the bond market will not be a good indicator of the market’s confidence in Trump’s economic policies. Gold will be. To the extent that investors sense that the bond market is not providing a reliable price signal, they will begin paying more attention to gold. And, should the gold price becomes the accepted indicator of U.S. financial health, the Trump administration will take action to influence it. At the very least, this will entail the Trump administration encouraging other central banks to stop buying gold or even sell gold. But the anti-gold policy options are limitless. Needless to say, the U.S. government pushback on gold will not solve the dollar’s long-term structural problems. Nor will it mark the end of gold’s challenge to the dollar. It will simply mark the next phase of financial repression. Our Gold Mines The second phase of the bull market in gold has been broadly positive for our portfolio, as a portion of the investor money flowing into gold has bid up gold mining equities as well. Where central banks buy the physical gold bullion, private wealth investors allocating to gold will also buy gold mining stocks. The GDXJ Junior Mining Index is up +132.7% for the year-to-date through September 30. Even with this year’s rapid rise in the gold mining portfolio, valuations remain cheap at spot gold prices. Our in-production portfolio trades at a 24.0% IRR as compared to a 23.4% IRR on March 31. The most dramatic mis-valuation among our gold miners continues to be in the pre-production companies. While these equities have appreciated more rapidly than our producing companies for the year-to-date 2025, they began from such a low valuation that even at twice or three times their January price, they are still undervalued. Troilus Gold, a junior gold mining company with an 11.2 million ounces gold-equivalent resource in Quebec, Canada, is a case in point. Troilus Gold shares have more than tripled in 2025, rising from C$0.31 to C$1.35 per share. The company still trades at an IRR of 30%, 0.2x price-to-NAV (using a 10% discount rate), and a price per ounce of recoverable gold of $63. When Troilus goes into commercial production in 2029, we expect it will generate annual net income roughly equal to its current market cap. Troilus historically traded at an extremely low valuation because the market did not believe that the company could finance the project's upfront capital expenditure of $1.3 billion. Throughout 2025, Troilus began addressing these financing concerns by signing an offtake agreement with a European smelter and a related letter of intent for $700 million of debt financing on attractive terms. If Troilus Gold raises the necessary equity and signs a streaming arrangement to fully fund the mine’s construction, we believe the stock will trade much closer to its NAV (using a 10% discount rate and the spot gold price) of $2.5 billion.

Equinox Partners, L.P. - Q3 2025 Letter

By Kieran Brennan • October 30, 2025
Dear Partners and Friends, PERFORMANCE Equinox Partners, L.P. rose +24.5% net of fees in the third quarter and is up +54.4% for the year-to-date 2025. By comparison, the S&P 500 index rose +8.1% in the third quarter and is now up +14.8% for the year-to-date 2025. Our quarterly performance has been almost exclusively driven by our gold and silver miners. In the third quarter, the spot gold price rose +18%, and the fund’s mining portfolio returned +40%. As of this writing, 78% of Equinox Partners’ capital is invested in the gold and silver sector. The letter that follows provides our thoughts on the gold price and our gold mining holdings. Gold The gold bull market, which was initiated by central bank buying, has evolved into an investor-driven dollar debasement trade. This second phase of the gold bull market is more explosive than the first because it draws on the approximately $470 trillion of the world’s wealth as opposed to the roughly $35 trillion of central bank balance sheets. If President Trump fans the dollar debasement fire by forcing a politicized Fed to cut rates, gold could rapidly displace the dollar as the world’s reserve currency. However, if President Trump takes a more nuanced approach to the Fed, gold should still displace the dollar as the world’s reserve currency over time with the competition between gold and the dollar taking longer to play out. Gold investors warning about fiat currency debasement is nothing new. That, after all, is why gold investors own gold in the first place. There’s also nothing new about most American investors ignoring these warnings. The dollar’s relative stability has long made concerns about dollar debasement appear quixotic. Since the early 1980’s, American inflation has been largely tolerable, the dollar has outperformed almost all other fiat currencies, and U.S. government bonds have been the safest asset to own in an economic downturn. The dollar has sloughed off so much criticism for so long that Janet Yellen likely did not imagine the chain of events that freezing Russia’s foreign exchange reserves would set into motion. With confidence in the dollar’s inertia and a bit of hubris in our opinion, Secretary Yellen engineered the freezing of $300 billion of Russia’s foreign exchange reserves and put the world’s central banks on notice that their use of dollar reserves depends upon the tacit approval of the U.S. Treasury. Foreign governments shocked by this policy change sought to reduce their dependence on the U.S. Treasury and doubled their gold purchases to roughly $60-80 billion per year (potentially $100 billion in 2025). This increase in central bank gold demand drove the gold price up over +50% from March 2022 to March 2025. This bull market in turn gave gold the additional scale necessary to function as a more viable alternative to the dollar and damaged the dollar’s air of invulnerability. This two-fold outcome is problematic because inertia and a lack of alternatives were fundamental to the dollar’s stability. On the back of gold’s appreciation, long-ignored arguments of gold investors began sounding more plausible. Financial professionals accustomed to deriding gold investors and referring to them as insects began to worry that gold’s price action is telling them something important. Jamie Dimon aptly summed up the change of heart: “This is one of those times where it is semi-rational to own gold.” His comment captures both his continued distaste for gold and his willingness to own it. Despite the broadening acceptance of gold as an investment, markets remain skeptical of the underlying dollar-devaluation narrative. Inflation, a broad measure of the dollar’s strength, is just 2.8%. The 10-year U.S. Treasury yields 4.0%, indicating the bond market’s indifference to the dollar debasement narrative. Furthermore, the decline in the trade weighted dollar has partially reversed since early July. At this moment, the dollar debasement trade appears to be waiting for additional macroeconomic and geopolitical events to play out. Of these, none looms larger than President Trump’s effort to bend the Federal Reserve to his will. In January, the Supreme Court will likely allow President Trump to remove Federal Reserve Board Governor Lisa Cook, making the selection of the next Fed Chair even more important. If Trump nominates a loyalist like Kevin Hassett who appears more committed to pleasing the President than price stability, we could see broadening concern about the dollar’s store of value and a growing asset allocation into gold. In this hyper-politicized Fed scenario, gold could quickly become a $100 trillion dollar asset and displace the dollar as the world’s reserve currency. However, if Trump nominates an institutionalist like Chris Waller, the dollar debasement trade will likely remain in limbo for a while as markets suss out how much control Trump really has over the Fed. Either way, the U.S. bond market will not be allowed to freely adjudicate the outcome at the Fed. We expect both Treasury and Fed to proactively manage the yield curve during the particularly politically sensitive period when the Fed is cutting rates while inflation is above their stated 2% target. Treasury will keep longer-dated bond issuance to a minimum while coercing banks to keep the Treasury market well bid. JP Morgan increased its holdings of Treasuries by $80 billion in the first half of this year, and we expect other banks to follow suit. The Fed, for its part, has announced an end to quantitative tightening and its intention to shift its balance sheet from mortgage-backed securities to Treasuries. Given the likely extent of the coordinated intervention of the Treasury and Fed, the bond market will not be a good indicator of the market’s confidence in Trump’s economic policies. Gold will be. To the extent that investors sense that the bond market is not providing a reliable price signal, they will begin paying more attention to gold. And, should the gold price becomes the accepted indicator of U.S. financial health, the Trump administration will take action to influence it. At the very least, this will entail the Trump administration encouraging other central banks to stop buying gold or even sell gold. But the anti-gold policy options are limitless. Needless to say, the U.S. government pushback on gold will not solve the dollar’s long-term structural problems. Nor will it mark the end of gold’s challenge to the dollar. It will simply mark the next phase of financial repression. Our Gold Mines The second phase of the bull market in gold has been broadly positive for our portfolio, as a portion of the investor money flowing into gold has bid up gold mining equities as well. Where central banks buy the physical gold bullion, private wealth investors allocating to gold will also buy gold mining stocks. The GDXJ Junior Mining Index is up +131% for the year-to-date through September 30. Even with this year’s rapid rise in the gold mining portfolio, valuations remain cheap at spot gold prices. Our in-production portfolio trades at a 24% IRR as compared to a 25% IRR on March 31. The most dramatic mis-valuation among our gold miners continues to be in the pre-production companies. While these equities have appreciated more rapidly than our producing companies for the year-to-date 2025, they began from such a low valuation that even at twice or three times their January price, they are still undervalued. Troilus Gold, a junior gold mining company with an 11.2 million ounces gold-equivalent resource in Quebec, Canada, is a case in point. Troilus Gold shares have more than tripled in 2025, rising from C$0.31 to C$1.35 per share. The company still trades at an IRR of 30%, 0.2X its NAV (using a 10% discount rate), and a price per ounce of recoverable gold of $63. When Troilus goes into commercial production in 2029, we expect it will generate annual net income roughly equal to its current market cap. Troilus historically traded at an extremely low valuation because the market did not believe that the company could finance the project's upfront capital expenditure of $1.3 billion. Throughout 2025, Troilus began addressing these financing concerns by signing an offtake agreement with a European smelter and a related letter of intent for $700 million of debt financing on attractive terms. If Troilus Gold raises the necessary equity and signs a streaming arrangement to fully fund the mine’s construction, we believe the stock will trade much closer to its NAV (using a 10% discount rate and the spot gold price) of $2.5 billion. New Board Seat at Gran Tierra Energy On September 30, portfolio company Gran Tierra Energy announced that Brad Virbitsky has joined the board on behalf of Equinox Partners. While it is a relatively modest-sized position in the fund, we believe there is significant value to unlock, and we can help realize that value through our participation in the boardroom.

Kuroto Fund Wins 2025 HFM US Global Equity Award

By Kieran Brennan • October 30, 2025
Kuroto Fund Wins HFM 2025 US Performance Award

Kuroto Fund, L.P. - Q3 2025 Letter

By Kieran Brennan • October 30, 2025
Dear Partners and Friends, PERFORMANCE Kuroto Fund, L.P. appreciated +16.6% in the third quarter and is up +51.6% year-to-date 2025. By comparison, the broad MSCI Emerging Markets Index rose +11.0% in the third quarter and is up +28.2% for the year-to-date. Performance in the quarter was driven primarily by our investments in Nigeria, with additional strong contribution from our largest position, MTN Ghana. A breakdown of Kuroto Fund exposures can be found here . Portfolio Changes During the third quarter, we initiated a position in Solidcore Resources, a company described in our February webinar . Solidcore is similar to the oil companies we profiled in our Q2 2025 letter in that it is a competitively advantaged commodity producer. The company’s main asset is a long-lived and low-cost mine, the management team is among the best in the region, and the infrastructure they are building will make them a natural consolidator of regional assets. Given the subsequent increase in commodity prices, we ended up purchasing the bulk of our position at a 40%+ free cash flow yield. Solidcore is now a top 5 position in the fund. We funded our purchase of Solidcore by reducing our Georgia Capital position weighting from 17% to 11% and by selling our stake in a Greek consumer-focused business. In the case of Georgia Capital, while the discount to the sum of the parts value decreased from 50% to a more reasonable 30%, we still see it as a compelling investment opportunity. Georgia Capital’s portfolio of oligopolistic businesses is growing earnings double digits, buying back stock, and trading at a single digit, look-through price-to-earnings multiple. The sale of our Greek investment was driven by stock appreciation combined with a management change that led us to re-underwrite our investment. GHANAIAN AND NIGERIAN MACRO Over the past decade, Nigeria and Ghana have endured a seemingly unending series of self-inflicted macro problems. Inflation increased to over 30% in both countries, and the currencies depreciated 64% and 79%, respectively. Ghana defaulted on its domestic and foreign debt in 2023, and Nigeria imposed onerous capital controls for multiple years. However, 2025 has been a turning point for both countries. For the first time in over a decade, investors in these markets are experiencing macroeconomic tailwinds. In Ghana, since the beginning of the year, the currency has appreciated 43% vs. the U.S. dollar, GDP growth averaged over 6%, the budget has been in primary surplus, inflation declined from 24% to 9%, and debt to GDP declined from 62% to 43%. Ghana’s macro environment has improved due to three factors: One, Ghana’s debt restructuring is mostly finished, and the country now has a much smaller interest expense burden, which should decline further as the central bank lowers rates to be more in line with the decline in inflation. Two, the new government which assumed power in January has cut spending 14% in real terms. Three, the country has been helped by the large increase in the gold price, which is both the country’s largest export and a significant component of Ghanaian central bank reserves. Ghana now has 4.8 months of import cover, half of which is held in gold bullion. Whether Ghana can maintain this strong start to the year is an open question, but the fundamentals are certainly in a better place than they have been in the past decade. In Nigeria, President Tinubu’s bold reforms upon taking office are finally starting to have some effect. In 2023, Tinubu eliminated the local fuel subsidy which consumed about 40% of the government’s annual revenues, floated the currency which resulted in a 68% depreciation, forced a recapitalization of the banking sector, and removed the board of the notoriously corrupt national oil company and replaced them with technocrats who formerly worked at companies like Exxon and Shell. While not perfect, the scale of the reforms is impressive by any standard. A year later, inflation has fallen from over 30% to the high teens and is expected to fall to single digits next year. Economic growth has increased from less than 3% to over 4%. Oil production is up more than 10% and oil theft is down 90%. Importantly, the exchange rate has been stable for a year and anecdotally, we are hearing that conditions on the ground are night and day different, businesses are looking to invest, and banks are willing to lend. We initially invested in Ghana and Nigeria in 2018 with the expectation that both countries would eventually adopt a sane set of macroeconomic policies. While it took longer than we expected, sane policy is gaining traction in both countries, and our superior companies are getting re-rated to more sensible, albeit still very cheap, valuations. In Ghana, our main investment has been in MTN Ghana, which has compounded at approximately 25% in U.S. dollar terms since 2018 despite all the on-the-ground challenges. The stock’s historical return understates our investment performance because we increased our weighting at opportune times. The total contribution to our P&L has been +$17.7 million over that time frame, resulting in a +24.9% cumulative contribution to fund returns. Our Nigerian investment results have also been strong. While our initial entry was poorly timed, we added counter-cyclically, and as a result have generated +$9 million of P&L, contributing a cumulative +15.0% to the fund’s return. Our experience in both markets underscores the importance of our investment strategy of looking at out-of-favor markets to find competitively advantaged, well-run businesses at unusually cheap valuations. NEW BOARD SEAT AT GRAN TIERRA ENERGY On September 30th, portfolio company Gran Tierra Energy announced that Brad Virbitsky has joined its board on our behalf. While it’s a relatively modest position size in the fund, we believe there is significant value to unlock and we can contribute to that process through our participation in the boardroom. Sincerely, Sean Fieler & Brad Virbitsky

Precious Metals Fund - Q2 2025 Letter

By Kieran Brennan • August 1, 2025
Dear Partners and Friends, PERFORMANCE Equinox Partners Precious Metals Fund, L.P. rose +13.2% in the second quarter of 2025 and is up +39.7% for the first half of 2025. By comparison, the Junior Gold Mining Index GDXJ rose +18.7% in the quarter and is up +58.7% for the first half of the year. Our meaningful year-to-date underperformance relative to the GDXJ reflects the continued discount at which our companies trade compared to peers. Specifically, our portfolio of producing companies trades at an average internal rate of return (IRR) of 24%, roughly double the 11.5% IRR of the broad universe of gold miners that BMO covers. the gold mining bull market is young The skepticism that characterizes the gold mining sector stands in sharp contrast to the enthusiasm in the broader stock market. The animal spirits that have propelled popular stocks like Wingstop and Robinhood to an average of nearly 80 times 2025 earnings remain totally absent among gold mining investors. One indication of the sober mood that dominates the gold mining sector is the use of gold price assumptions below spot in net asset value (NAV) calculations. Looking at four important sell-side houses for the sector, their models include an average long-term price assumption of $2,400 per ounce, representing a 28% discount to the quarter-end spot price. 

Equinox Partners, L.P. - Q2 2025 Letter

By Kieran Brennan • July 24, 2025
Dear Partners and Friends, PERFORMANCE Equinox Partners, L.P. rose Equinox Partners, L.P. rose +11.6% net of fees in the second quarter and is up +24.1% for the year-to-date 2025. By comparison, the S&P 500 index rebounded +10.9% in the second quarter and is now up +6.2% for the year-to-date 2025. Our portfolio has performed well across the board this year, with our gold miners, oil and gas producers, and emerging market businesses all appreciating. We were particularly gratified by the long-overdue outperformance of several of our earlier stage gold companies in the first half of this year. With markets and complacency on the rise, we think it prudent to address the non-negligible risk of an economic downturn. Beware the Next Recession 

Kuroto Fund, L.P. - Q2 2025 Letter

By Kieran Brennan • July 23, 2025
Dear Partners and Friends, PERFORMANCE Kuroto Fund, L.P. appreciated +21.3% in the second quarter and is up +30.1% for the first half of 2025. By comparison, the broad MSCI Emerging Markets Index rose +12% in the second quarter and is up +15.3% for the first half of 2025. Key performance drivers for the fund have been our large position in MTN Ghana, as well as the strong returns from our holdings in Nigeria and the Republic of Georgia. A breakdown of Kuroto Fund exposures can be found here . Despite Kuroto Fund’s outperformance in the first half of the year, our portfolio remains very attractively valued. Given the diversity of business models we own, it is difficult to find metrics that provide an accurate picture of the value and quality of our portfolio in the aggregate. In the absence of an alternative, our portfolio’s weighted average price-to-earnings multiple of 7.3x 2025 earnings, dividend yield of 5.2% and ROE of 24.7% will have to do.

Precious Metals Fund - Q1 2025 Letter

By Dan Donohue • May 1, 2025
Dear Partners and Friends, PERFORMANCE Equinox Partners Precious Metals Fund, L.P. rose +23.4% in the first quarter of 2025. Over the same period the price of gold rose +18.9%. The fund’s performance was driven by strong returns from both the producing and exploration stage companies as gold crossed $3,000 per ounce. Trump's New Economic Policy Trump’s New Economic Policy has roiled markets and bolstered investor gold buying globally. While the violent market gyrations remain a focus for our team, we have also been thinking through the long-term effects of Trump’s policies. In this latter endeavor, Nixon’s 1971 New Economic Policy has proven an invaluable guide. The policy similarities between Nixon’s first term and Trump’s second are striking. Both presidents declared emergencies, raised tariffs, cut spending, reduced foreign aid, blamed foreigners, devalued the dollar , proposed tax cuts, attacked the Federal Reserve chair, and directly managed consumer prices. There are, of course, also meaningful differences. Most notably, Trump has raised tariffs more, devalued the dollar less, and has not imposed formal wage and price controls. Nevertheless, the policy resonance is striking.

Kuroto Fund, L.P. - Q1 2025 Letter

By Kieran Brennan • April 30, 2025
Dear Partners and Friends, PERFORMANCE Kuroto Fund, L.P. appreciated +7.3% in the first quarter of 2025, while the broad MSCI Emerging Markets index rose +3.0%. Kuroto performance for the quarter was driven primarily by the strong performance of our operating companies in Georgia and Ghana. A breakdown of Kuroto Fund exposures can be found here . Returning to Brazil Though the Kuroto Fund didn’t invest outside of Asia until 2014, as a firm we began investing in Brazil in the late 1990s and made our first sizable investment there in 2004. We have followed the market ever since. Given our love for the country of Brazil and admiration for many of the companies there, it has been challenging for us to remain mostly absent from Brazilian capital markets for the past decade. We stayed away for a variety of reasons, but primarily because we didn’t like the valuations on offer. So it is with more than a bit of enthusiasm that we were able to make two substantial investments in Brazil this January, taking our portfolio weighting in the country from 0% to 10%. Brazil remains a macroeconomic and political adventure, but today’s valuations are incredibly attractive. The Brazilian stock market is down over 40% in US dollars over the past 14 years. 
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