Equinox Partners, L.P. - Q4 2022 Letter

Dear Partners and Friends,


PERFORMANCE

Equinox Partners rose +17.3% in the fourth quarter of 2022 and +20.8% for the full year.


Visit our performance page to view the Equinox Partners, L.P. fund summary in more detail.[1]


COMMODITY PESSIMISM PERVADES

Having been out of favor for years, commodities were decimated in the spring of 2020 when global demand collapsed. With almost three years of hindsight, it’s clear that this near-death experience on the back of a lengthy commodity bear market severely traumatized commodity investors and producers alike. Accordingly, even as the commodities have rebounded sharply, pessimism pervades the sector, and commodity producers and investors remain fixated on the return of capital rather than expansion into the nascent bull market in commodities. In our opinion, the prevailing commodity pessimism is not the result of enlightened thinking about supply and demand dynamics but rather the product of the psychological scarring of those invested in commodities and generalist investors who continue to believe that commodity businesses are inherently low return and unpredictable. 

 

 Oil, the largest and most economically important commodity, provides the most glaring example of underinvestment. In 2022, oil producers spent just over $300bn on upstream capital expenditures, down from a peak of over $500 billion. Today’s oil companies are committed to returning the majority of their cash flow to investors who have little faith in the long-term prospects of the businesses. Exxon, the largest of the supermajors, is a case in point. In a December 8th investor presentation, Exxon’s CEO, Darren Woods, reiterated the company’s intention of keeping oil reinvestment well below half of Exxon’s cash flow assuming $60 oil.   With a fortress balance sheet and aggressive return of capital, Exxon is preparing for another bear market, not a commodity super cycle.

Exxon and other oil producers regularly pin their underinvestment on the coming energy transition. However, this argument fails to explain why many other commodities are suffering from the same underinvestment as oil.  For example, copper, which is slated to play a critical role in the energy transition, has experienced almost equally large percentage declines in capital expenditure over recent years. As a result of the underinvestment in copper, by 2026 there is likely to be a significant shortfall in the global copper supply. Eventually correcting this shortfall promises to be extraordinarily painful for consumers of copper given that the average copper project takes over ten years to bring online.  

Generalist investors who don’t want anything to do with commodities deserve much of the blame for the continued underinvestment. Many of these investors were formed by the bull market of the past decade and believe that fortunes are made in tech, not commodities. They point out that there are no trillion-dollar commodity companies and few centi-billionaire commodity companies CEOs because commodity companies don’t lend themselves to differentiation and long-term value creation. Put succinctly, the same investors who were willing to pay any price for tech business also are unwilling to own commodity company at any price. Moreover, even if these investors were to change their mind, many would not know where to begin. An entire generation of investors has never deeply analyzed a commodity business, and most who have, have been turned off by the politics, capital intensity, and cyclicality. 


It is not just equity investors who have become skittish about commodity investing; commodity pessimism extends to participants in the futures market as well.  Oil, in particular, is in severe backwardation, i.e. futures prices are below the spot price. That said, $60 oil implies an unbelievable pessimism about future oil demand.  If this very low price does indeed come to pass, much of the pessimism that prevails in the oil market today is more than justified. Investors in the space own structurally low-return businesses and should extract as much capital as quickly as possible from the sector.

For our part, in contrast to both the stock market and the futures market, we believe that pervasive commodity pessimism has laid the foundation of a massive commodity super cycle.  The supply problems are not going to be cured anytime soon and growing resource nationalism ensures increased friction when markets eventually decide to invest. Perhaps the only thing that could prevent much higher commodity prices across the board would be the implosion of the Chinese economy or a prolonged decline in global economic activity. While the likelihood of these bearish outcomes is not driving the prevailing commodity pessimism, some combination of the two events is likely in our opinion. These downside scenarios would likely be positive for gold and silver prices and not particularly bearish for oil given OPEC’s renewed ability to manage supply. Given this view, our weightings in the monetary metals and hydrocarbons remain high.

Top 5 Year End Holdings

Please note all figures in above table and below descriptions are in $USD and as of 12/31/2022 unless noted otherwise. Several securities’ prices have moved meaningfully since year-end impacting market capitalization, valuation ratios, etc. 

 

Crew Energy Inc. 

Crew Energy is a natural gas producer in British Columbia. With a strong balance sheet, strategic asset base, and still-modest valuation, Crew is well positioned to grow production and achieve a premium multiple in a transaction.


Management’s execution of a countercyclical investment program has put the company on solid financial footing.  In the summer of 2022, Crew Energy completed a two-year strategic plan that they embarked on in the depths of the COVID crisis.  The results of the program were significantly better than initially forecasted largely due to better than expected commodity prices. In 2022, we estimate that Crew generated $225m in operating cash flow and $74m in operating free-cash flow. Both figures exclude $95m Crew realized through the disposal of a non-core asset. 

 

On the back of the successful completion of this two-year strategic plan, Crew announced another, even larger, countercyclical investment program. Over the next four years, the company intends to double production as its peers focus on returning capital. Crew will outspend cash flow in both 2024 and 2025 while keeping debt to cash flow under one turn. At $4 gas and $75 oil, we estimate Crew’s four-year investment will deliver an IRR of approximately 26%, at which point the company would be trading north of a 30% FCF yield. 


While Crew’s expansion plan is sensible, the market is weary of the company’s growth strategy. Key areas of concern are: 1) disagreements between indigenous groups and the BC government which could prevent BC from issuing drilling permits;[2] 2) delays and cost overruns; 3) low natural gas prices; 4) new taxes on oil and gas producers; 5) the inability to achieve a premium multiple in an exit. While we are certainly mindful of all these potential risks, the board is prudently positioning Crew to play a strategic role in the export of LNG to Asia. In our opinion, this unique positioning makes it likely that Crew will achieve a premium valuation in a transaction.


Paramount Resources Ltd.

Paramount Resources is an oil and gas producer based in Alberta.  Paramount combines high-quality assets and a net-cash position with a steep discount to our estimate of intrinsic value. Paramount is growing production 15% this year while also generating a 10% FCF yield.  We believe the company can keep growing at attractive rates while generating a double-digit free cash flow yield for shareholders. Additionally, at $100 oil prices, this free cash flow yield rises to approximately 20%.


The biggest question for us is how the Riddell family, who controls Paramount, will deploy the company’s free cash flow. The board has committed to paying out a majority of the company’s free cash flow in 2023. The resulting schedule of dividends and distributions should deliver an 8% yield at today’s stock price.  Going forward, we expect Paramount to redeploy most of its free cash flow into acquisitions. Given the Riddell family’s excellent long-term track record of value creation and large ownership of the company, we trust them to allocate capital intelligently. 


The Riddell’s astute, countercyclical capital allocation strategy has been on display for the past two years.  In 2020, at a moment when almost all of Paramount’s peers were paralyzed by the uncertainty in the energy market, Jim Riddell pulled the trigger on Paramount’s acquisition of 20% of NuVista Energy—a company with an adjacent land package. Paramount would have preferred to buy all of NuVista, but NuVista wasn’t a willing seller in the summer of 2020 and Paramount wasn’t willing to go hostile. 


Paramount’s 2022 accumulation of land in the Willesden Green Duvernay is a second example of the Riddell’s ability to create value through deals. Last year, Paramount purchased two separate land packages resulting in over 250k acres with over 600 high-graded locations that can support a production plateau of 50k boepd for over 20 years. Given the quality of these well locations, Paramount thinks they should be worth over $1m each. We estimate Paramount paid less than $200k per location. Importantly, Paramount was able to more than offset the cost of the Willesden Green deal by selling its Kaybob Duvernay land package at a valuation of ~$1.3m per drilling location.


NuVista Energy Ltd.

NuVista Energy is an oil and gas producer based in Alberta. Like Paramount, NuVista combines high quality assets, strong free cash flow and a steep discount to our estimate of intrinsic value.  And, like Paramount, NuVista is growing production (19% in 2023) while also generating a 10% free cash flow yield at current oil prices. At $100 oil, the company would generate a 20% free-cash-flow yield. We believe NuVista can grow at attractive rates while generating double-digit free cash flow yields for several years. Finally, we expect NuVista to return most of its free cash flow to shareholders.


In 2022, NuVista achieved its ambitious de-leveraging goal and publicly committed to returning ~75% of future free cash flow to shareholders. Having been skeptical of management in the past, we were pleasantly surprised by both outcomes. We attribute management’s newfound clarity and focus to the realization that the company could be taken over. Ever since Paramount took a run at NuVista in 2020, management elected to give investors exactly what they want to get the share price up and stave off an unwelcome bid from Paramount.  Given this rationale, it’s not surprising that most of that return of capital will be done via share repurchases. Last year alone, NuVista reduced its share count by 7.8%. 


Over the medium term, we think NuVista can grow ~10% per year while returning most of its free cash flow to shareholders. When multiples for E&P companies eventually expand, we expect NuVista to be a seller. The C-suite and board at NuVista own meaningful stock options that will crystallize upon a change of control, and thus are incentivized to transact when the time is right. Until that day comes, we think shareholders of NuVista can expect to receive over a 20% total return per year (free cash flow yield + production growth), in a company with over a decade of top-tier inventory and de minimis debt. 


MAG Silver Corp.

MAG Silver is the 44% owner of the world-class Juanicipio silver mine in Zacatecas, Mexico.  After four years of construction, the mine was commissioned in the first week of 2023. We expect production to ramp up to 4,000 tonnes per day by the end of this year but never achieve the 8,000 tonnes per day we were anticipating.  Accordingly, at $24 silver, we estimate the cash flow from MAG’s 44% stake to be around $100m. As a result, we reduced our position to a more modest weight in January.


The electrification of the Juanicipio mine just before Christmas of last year ends a painful chapter in MAG’s history. This world-class asset, which was discovered over 2003-2006, took a full 16 years to come into production. Initially, conflict between MAG and their JV partner, Fresnillo, was to blame for the delay. But in recent years, the disfunction of the AMLO administration, a drug war in the state of Zacatecas, and the COVID shutdowns across Mexico, were the culprits. Given the challenges MAG and Fresnillo faced completing the Juanicipio mine, both companies will take a cautious approach to further expenditures on the JV property.


Even so, the Juanicipio mine will be expanded beyond 4,000 tonnes per day when additional ore is sent through Fresnillo’s Saucito plant which is just a few kilometers away from the Juanicipio JV.  Longer-term, the aggressive exploration of the JV land package and exploitation of additional veins will require a better environment in Mexico. While Mexico is not yet Venezuela, it is on the path to becoming a failed state.  This unfortunate reality makes the expansion of the Juanicipio JV to 8,000 tonnes per day unlikely anytime soon.


International Petroleum Corp. (IPCO)

IPCO is a Swiss based oil and gas company controlled by the Lundin family. At $80 oil, we calculate that approximately 20% of the company’s market cap is available for distribution or reinvestment each year. At $100 oil, IPCO’s free cash flow yield is above 30%. Given this wave of free-cash-flow generation, low valuation, and attractive investment opportunities, the decision to reinvest free cash flow or return it to shareholders is top of mind for the Lundin family.  Last year, after paying off its remaining debt, the majority of the company’s free cash flow was used to repurchase shares, resulting in a 10% reduction in shares outstanding in calendar year 2022.  Over the next two to three years, we expect the majority of the company’s free cash flow to be deployed into a Canadian oil sands project called Blackrod. 


IPCO’s Blackrod project is a fully permitted Canadian oil-sands project with over one billion barrels of resource. When IPCO decides to go ahead and develop this asset, the investment will consume $600m of capital, or two years of free cash flow. The investment decision is in essence a prediction about the future oil price. Given the Lundin’s family’s relatively bullish view of the oil price, we believe they will proceed with the investment. When built, we estimate that the project will more than double the company’s production and reserves. 



Sincerely,


Equinox Partners Investment Management

end notes

[1] Please note that estimated performance has yet to be audited and is subject to revision. Performance figures constitute confidential information and must not be disclosed to third parties. An investor’s performance may differ based on timing of contributions, withdrawals and participation in new issues.


[2] On Jan 18th 2023, it was announced Province of BC came to an agreement with the Blueberry River First Nations Indigenous group: Canadian province and First Nations reach Montney shale play deal | Reuters


Unless otherwise noted, all company-specific data derived from internal analysis, company presentations, Bloomberg, FactSet or independent sources. Values as of 12.31.22, unless otherwise noted.

 

This document is not an offer to sell or the solicitation of an offer to buy interests in any product and is being provided for informational purposes only and should not be relied upon as legal, tax or investment advice. An offering of interests will be made only by means of a confidential private offering memorandum and only to qualified investors in jurisdictions where permitted by law.

 

An investment is speculative and involves a high degree of risk. There is no secondary market for the investor’s interests and none is expected to develop and there may be restrictions on transferring interests. The Investment Advisor has total trading authority. Performance results are net of fees and expenses and reflect the reinvestment of dividends, interest and other earnings.

 

Prior performance is not necessarily indicative of future results. Any investment in a fund involves the risk of loss. Performance can be volatile and an investor could lose all or a substantial portion of his or her investment.

 

The information presented herein is current only as of the particular dates specified for such information, and is subject to change in future periods without notice.

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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