Equinox Partners, L.P. - Q4 2015 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. [1] 

TOP-FIVE HOLDINGS


 2015 was a difficult year for Equinox Partners. As detailed in the table above, more than half of the decline was attributable to our ill-timed investment in E&P companies. Our precious metals miners also performed poorly last year while our emerging markets companies and fixed income shorts were down slightly in the aggregate. In contrast to our third quarter letter, the purpose of this communication is not to rehash the macro trends and stock-specific decisions that buffeted our portfolio. Rather, in this top-five letter, we will review our largest holdings, which we expect will drive performance in the future. 


Appropriately, our top-five holdings reflect the broader portfolio: three emerging market businesses, a Mexican silver mine, and a Canadian natural gas producer. While not a perfect representation of the portfolio, these five companies are an accurate reflection of our portfolio which at year end was 56% invested in emerging markets, 36% invested in gold and silver miners, and 16% invested in North American E&P companies.


Together these top-five holdings represent 53% of partners’ capital as of year-end. Their very sizable weighting highlights an intentional process of concentrating our portfolio in our best investments. Specifically, we’ve reduced the number of companies the fund owns from 29 to 24 year over year by exiting a handful of companies that were not truly exceptional in our opinion. Among those positions that we’ve exited, our sale of APR Energy during the first week of January merits a final mention.


Our disappointing investment in APR Energy concluded on a similarly frustrating note. Last year, a consortium of Fairfax Financial, ACON Equity Management, and Albright Capital Management effectively partnered with APR’s management in order to recapitalize the company and to take it private at roughly half of its book value. The company’s poorly designed sale process, which we believe failed to appropriately explore all viable alternatives, was particularly galling. Given our experience, it is ironic that Fairfax is a portmanteau of “fair and friendly acquisitions.”


In our opinion, the consortium opportunistically used the company’s violation of its debt covenants as leverage to pursue a deal that was only in the interest of a select few shareholders and management. We, of course, opposed it and voted against it. Unfortunately, not enough other independent shareholders joined us. Therefore, we had no real choice but to sell at the offer price. 


The lessons learned from APR are multiple. But, the conclusion once again demonstrated that we not only erred in our assessment of the business and its short-term prospects, but we also erred in our assessment of APR’s management and board. We will redouble our efforts to only partner with superior managements.  The concentration of our portfolio reflects a meaningful first step in this direction. 

Aramex   -    17.0% of the fund


Aramex is a UAE listed express delivery company similar to FedEx or DHL. The combination of the company’s reputable brand and the “network effect” inherent in express delivery forms a particularly durable barrier to entry. Aramex further differentiates itself by its ability to operate efficiently in the Middle East, its entrepreneurial culture, and its variable cost structure.


The company’s financial performance slowed somewhat last year as it revenues increased by 5% and earnings by 11% on a year-to-date basis through Q3. The slower growth was in large part due to currency translation, the lack of growth in Aramex’s freight forwarding business, and the general slowdown in the Middle East as a result of lower oil prices. Freight forwarding, in particular, has suffered from weak demand from oil-related customers and secular changes in its industry. The company’s profitability improved as a result of a mix shift to its higher-margin e-commence business in addition to lower fuel costs.


Despite last year’s slower rate of growth, we believe the company is an extraordinarily attractive investment. We estimate that the company’s adjusted returns on equity (excluding cash and goodwill) are more than 50%, making it one of the highest return businesses we own. The management is world class in every respect. And, importantly, despite two decades of success, the company still has a great long-term growth opportunity as e-commerce further develops in its core markets and as the company expands into new regions. Not surprisingly, Aramex remains our largest single position.

Mag silver -   13.6% of the fund     


MAG Silver remains a top five position for the fourth consecutive year. Despite a steep decline in the price of silver, MAG’s shares are flat over the four year period. The company’s low-cost Juancipio joint venture, improved corporate governance, and a new discovery, have enabled MAG to weather the severe bear market with a strong balance sheet while keeping their world-class project on track.


More specifically, 2015 marked a year of significant progress at the Juancipio joint venture, the company’s flagship asset. The rate of development at this joint venture with Fresnillo has improved dramatically during the course of 2015 and the main ore body should be reached late this year according to the company. More importantly, even at today’s silver prices the JV generates an IRR better than 25% based on our analysis. With $77 million in cash and no debt, we expect that MAG will be able to fund their portion of the remaining capital expenditure with about 10% dilution. 


When in production, we estimate that at the base case of 2,400 tonnes per day of ore processed, the Juancipio mine should produce 12.5 million ounces of silver equivalent annually at an all-in-sustaining cost of less than $4 per ounce.[2] 44% of this annual production, 5.6m ounces, is MAG’s on a pro rata basis. At $14 silver, we estimate that MAG would receive $45 million USD of annual, after-tax free cash flow from this long-lived asset. At a silver price of $23, the after-tax cash flow to MAG’s account would top $75m USD per year. Moreover, there is good chance that the JV opts for a larger operation. Should Frenillio and MAG choose a processing rate of 4,000 tonnes per day, we estimate MAG’s cashflow would jump more than 50%. With a year-end market cap of just $490 million USD, the joint venture’s cash generation provides both serious downside protection as well as tremendous upside to higher silver prices. 


The consideration of a larger mine is based on the successful exploration results of the last year. We believe the JV has discovered a second high-grade gold and silver ore body directly under the known Valdecañas vein on the Juancipio joint venture. With only four drill holes testing this deeper mineralization, it is too early to determine how large this zone might be. That said, the JV is already evaluating the construction of a shaft to access this zone, so there is good reason to be optimistic.

Ferrycorp   -   10.0% of the fund


Ferreycorp, Caterpillar’s exclusive dealer in Peru since 1942, remains a top-five holding for the third year in a row. As we have previously noted, Ferreycorp’s adherence to Caterpillar’s “Seed, Grow, Harvest” business model has allowed it to develop a strong service network. This service network is critical to its mining and construction customers, who need to maximize their equipment “uptime” and can’t afford operational delays caused by equipment failure and downtime. According to the company, Ferreycorp has a 70% market share in general construction in Peru, 58% in open-pit mining, and 83% in underground mining.


Despite the severe decline in commodity prices and the persistent lack of infrastructure investment in Peru, Ferreycorp was able to increase revenue by 10% and grow its operating profit by 38% on a year-to-date basis through September 30. This strong financial performance is primarily due to the parts and service business which we believe accounted for a majority of the company’s profits last year. In addition, management has instituted several cost-control initiatives over the past twelve months. Finally, even though fewer new mines are breaking ground in Peru, Ferreycorp has benefited from expansions at the existing mines it serves and further gains in market share.


Despite strong financial performance last year, the company’s share price has declined by 24% in USD terms; it currently sells for 76% of its Q3 ’15 book value. Importantly, that book value is largely comprised of liquid, saleable assets. Over time, we believe copper mining and infrastructure investment will grow at healthy rates in Peru and that the company’s parts and service business makes it a more recurring business than the current valuations would indicate. Ferreycorp’s board appears to share this view; they recently authorized the repurchase of 10% of the company’s shares.

crew   –   6.4% of the fund


Crew Energy is a small Canadian E&P company with an enormous land position in the middle of the best resource play in British Columbia. With 474 sections across roughly 300,000 acres, Crew is the fourth largest landowner in the Montney Shale despite being a junior company with a market capitalization of approximately $540 million CAD.


Importantly, Crew’s land position is surrounded by larger, technically-advanced operators like Shell, Encana, and ARC Resources—all three of which have had success on that same land. The success of these large companies enhances Crew’s attractiveness in two principal ways. First, their competitors’ well data independently corroborates the attractiveness of Crew’s resource. Second, while we have no desire to see Crew sell out during this bear market, each of the sizable operators on abutting land is a potential acquirer.


Septimus—an area that forms the core of Crew’s production—is generating some of the highest-return wells in Canada. Specifically, at $40 USD WTI oil and $2.25 CAD AECO gas, Crew estimates that it can generate 43% IRRs on these wells. The company’s results in the Western portion of this acreage (i.e. West Septimus) are even better. On these wells the company is earning a 91% IRR using the same commodity-price deck. The company’s ability to tie in wells that are so economic at today’s depressed commodity prices will allow Crew to keep production flat or even grow slightly in this tough environment.   


At the company’s current rate of production and spot energy prices, as of January 28, Crew now trades below 10x this year’s estimated cash flow. This unexceptional multiple indicates that the market is giving Crew no credit for their large, unexplored acreage position. While we worry that a competitor could bid for Crew in today’s distressed environment, we are comforted that their well-capitalized neighbors would not let such an exceptional asset get away too cheaply.

ite   –   5.9% of the fund

ITE is a UK-based event marketing company with a global portfolio of leading trade shows, conferences, and exhibitions. The vast majority of ITE’s events are based in emerging markets, with Russia accounting for roughly 34% of revenue in 2016 according to the company. More importantly, ITE’s events are typically market leaders.  Having a leading position in event marketing is particularly important given the industry’s winner-take-all and network effect dynamics. That is, attendees want to visit the event with the best and/or most exhibitors and vice versa. Hence, attendees and exhibitors will consistently attend and pay a premium for dominant events. Despite their strong portfolio of events and high returns (40%+ ROE) ITE sells for just 11.8x depressed 2016 estimated earnings. 


Event-marketing businesses are asset light and have very favorable working capital terms. Exhibitors begin paying for their booth or floor space shortly after the previous year’s event, allowing organizers like ITE to operate and grow their business without much capital investment. This, in turn, allows well-managed event-marketing companies like ITE to use their excess free cash flow for acquisitions and dividend payments. ITE currently pays out approximately half of its earnings and has a 5% dividend. 


Event marketing businesses also benefit from first-mover advantages as leading events are particularly difficult to displace. Anyone who has been to both good and bad industry events knows that the bad ones are a waste of time and money, and the good ones can be invaluable. Therefore, price tends not to be a primary consideration when attending an industry event. Trade halls also don’t need the risk of a bad event and almost always prefer to stick with proven winners. This makes it difficult for startup events to even get access to the best locations.


For several years, ITE has been expanding upon its strong position in Russia and the CIS countries with a series of acquisitions in Asia. Going forward, we expect that ITE will be able to leverage its multi-national sales contacts from existing successful shows into new markets in a way local competitors cannot. The company’s revenues shrunk in 2015 and we are predicting a further -5% revenue decline in 2016. That being said, we are confident that ITE will generate strong organic growth if and when their portfolio of emerging market countries stabilize and then begin to grow again.

off the top-five list: altius minerals & paramount resources

Altius Minerals

As precious metal mining companies continued their long decline during 2015, the relative attractiveness of more highly-valued royalty companies like Altius Minerals declined. Accordingly, we began selling a portion of our shares in Altius over the summer.  These sales proved timely, as the shares of royalty companies—our remaining shares of Altius included—fell precipitously in the fourth quarter of last year.


Altius remains a 3% investment in Equinox, and we remain confident in its management and in the company’s prospects. The company’s present $330 million CAD market cap is largely supported by a portfolio of long-lived potash, coal, and nickel royalties that we estimate will generate $40 million CAD in royalty payments to Altius this year. The company’s substantial interest in iron ore, uranium, and other prospects in Labrador and Newfoundland, provide significant upside when these commodities return to economically sustainable prices.


Paramount Resources

With the share price of Paramount Resources down over 90% from a September 2014 peak and the company’s bonds presently trading at a 15% and 18% yield to maturity, the market is pricing the company’s equity like an option. We understand the market’s concern.  With $1.8b CAD in debt and just above $200m CAD in cash flow at today’s energy prices, Paramount’s management has put the company in a very vulnerable position at a very inopportune time. While the company has no financial covenants on their debt, Paramount’s roughly $640 million CAD of bank debt is up for renewal in April.  Rather than ask for leniency from the banks, we expect Paramount will sell non-core assets and joint venture some of their best acreage to repair their balance sheet. 


Specifically, we believe that Paramount can cut its debt in half by selling their mid-stream assets and joint venturing their prime locations for a year or two. With the proceeds from these sales, Paramount could completely pay off their credit facility, leaving in place $450m CAD of bonds maturing in 2019 and $450m USD of bonds maturing in 2023. Furthermore, a JV would likely result in reduced capital spending requirements in the near future, putting the company in a strong position to weather an extended downturn. While the size of Paramount’s debt makes it impossible to dismiss the possibility of a creditor-driven liquidation, the likelihood of such a scenario remains remote in our opinion. 


Though the company’s problems are in part attributable to the decline in energy prices, it is important to note that much of the damage is self-inflicted. Most notably, Paramount failed to start up their deep cut gas facility on time or on budget, thereby foregoing a critical stream of revenues early last year. With the E&P sector under stress and Paramount’s company-specific challenges obvious to everyone, it is easy to gloss over the full range of outcomes that its truly world-class resources afford the company. The company is extraordinarily undervalued and, consequently, remains a sizable position at 4% of partners’ capital. 







Sincerely,


Andrew Ewert

Sean Fieler                   

Daniel Gittes

William W. Strong 

END NOTES

[1] Sector exposures calculated as a percentage of 12.31.15 post-redemption AUM. Therefore, exposures stated herein will be higher than the December 2015 monthly summary which uses 12.31.15 ­pre-redemption AUM. 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 notional value included in Fixed Income exposure and contribution. P&L on cash and U.S. equity options excluded from the table (combined contribution is -1.5% of average capital) as are market value exposures for derivatives. Unless otherwise noted, all company-specific data derived from internal analysis, company presentations, or Bloomberg. All values as of 12.31.15, unless otherwise noted. Valuation analysis as of 12.29.15.


[2] Converting gold to silver equivalent while taking lead and zinc revenues as a by-product.

Value Investor Insight Interview October 2025 Issue with Sean and Brad

By Kieran Brennan • November 11, 2025
Value Investor Insight Profile with Sean Fieler and Brad Virbitsky

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.
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