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Ninepoint Gold & Precious Minerals Fund

March 2018 Commentary

Volatility continued to plague the broader equity markets in the month of March. In our previous commentary, we had commented on the resiliency of gold bullion in the face of rising volatility across equities, bonds and currencies. This did not change in March as gold bullion rose 0.54% in U.S dollar terms. Over the same time-frame, the S&P 500 declined by 2.54%, while the Nasdaq Composite and the S&P/TSX Composite declined by 2.79% and 0.16% respectively. The Ninepoint Gold and Precious Minerals Fund fared better than the broader indices as it rose by 0.92% in the month of March. Our bogey, the S&P/TSX Global Gold Index rose by 4.20% over the same period.

We view the recent increase in volatility as a symptom of broader shifts occurring across multiple asset classes. Equity markets are trying to figure their way around increased risk arising from rising trade and geopolitical tensions while also attempting to quantify the current economic backdrop. Let’s also not forget that the central banks around the world are in a process of reducing their balance sheet, taking away the enormous amount of monetary stimulus markets had grown used to over the years. The current environment is exceptionally bullish for gold with prices marching higher despite rising interest rates year-to-date. Gold equities have endured one of the worst bear markets they have seen since 2012; with gold continuing to notch monthly and annual gains, we are beginning to see gold equities take their cue from gold once again and generate leveraged returns to bullion itself. Based on our work, gold’s outlook, especially over the next twelve months could not be brighter. We see the metal primed for a move beyond $1400/oz in the coming months as the U.S. dollar continues its slide lower. This move would hugely benefit those invested in precious metals equities.

The top performers for the fund were Atlantic Gold, Dacian Gold and Semafo Inc. Atlantic Gold declared commercial production at their wholly-owned Moose River gold operation. The Company’s goal is to be a 200,000 ounce per year producer as indicated by their recently released pre-feasibility study. Dacian has been an outperformer as they have guided the market to pouring first gold at their Mt Morgans project and that milestone was achieved on March 29, 2018. Mt Morgans is expected to produce approximately 200,000 ounces a year. Semafo is on the verge of starting production at their Boungou mine in Burkina Faso: the Company announced that the project is 87% complete and first gold is scheduled for early Q3.

The top detractors for the month of March were B2Gold, Roxgold and Torex Gold. B2Gold addressed media reports around a potential mining code revision in Mali. The Company believes that any changes in the code would not apply to B2’s Fekola mine given stability agreements within the recently signed mining contract. The perceived risk caused B2’s shares to underperform. Roxgold provided an update on its Yaramoko mine in Burkina Faso with the mine and mill performing well, Q1 was a strong quarter. The Company also provided an update on the Bagassi South expansion project with early construction activities being on the way. Torex continued to deal with challenges caused by the Los Mineros Union, which created disturbances by trespassing on the Company’s property.

 

COMPOUNDED RETURNS (%) AS AT MARCH 30, 20181

1MTH YTD 3MTH 6MTH 1YR 3YR 5YR 10YR ANNUALIZED INCEPTION (11/15/01)
SPROTT GOLD & PRECIOUS MINERALS FUND, SERIES F 0.92 -6..39 -6.39 -3.24 -9.88 11.03 -2.12 -2.56 1.17
S&P/TSX GLOBAL GOLD TRI 4.20 -4.20 -4.20 -4.43 -9.39 6.98 -5.03 -4.76 -0.09

1 All returns and fund details are a) based on Series F units; b) net of fees; c) annualized if period is greater than one year; d) as at March 30, 2018; e) 2001 annual returns are from 11/15/01 to 12/31/01. The index is 100% S&P/TSX Global Gold Total Return Index and is computed by Ninepoint Partners LP based on publicly available index information.

The Fund is generally exposed to the following risks. See the prospectus of the Fund for a description of these risks: commodity risk; concentration risk; currency risk; cybersecurity risk; derivatives risk; exchange traded funds risk; foreign investment risk; inflation risk; liquidity risk; market risk; securities lending, repurchase and reverse repurchase transactions risk; series risk; short selling risk; small capitalization natural resource company risk; substantial unitholder risk; tax risk; uninsured losses risk.

Ninepoint Partners LP is the investment manager to the Ninepoint Funds (collectively, the “Funds”). Commissions, trailing commissions, management fees, performance fees (if any), other charges and expenses all may be associated with mutual fund investments. Please read the prospectus carefully before investing. The indicated rate of return for series F units of the Fund for the period ended March 30, 2018 is based on the historical annual compounded total return including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The information contained herein does not constitute an offer or solicitation by anyone in the United States or in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should contact their financial advisor to determine whether securities of the Fund may be lawfully sold in their jurisdiction.

The opinions, estimates and projections (“information”) contained within this report are solely those of Ninepoint Partners LP and are subject to change without notice. Ninepoint Partners makes every effort to ensure that the information has been derived from sources believed to be reliable and accurate. However, Ninepoint Partners assumes no responsibility for any losses or damages, whether direct or indirect, which arise out of the use of this information. Ninepoint Partners is not under any obligation to update or keep current the information contained herein. The information should not be regarded by recipients as a substitute for the exercise of their own judgment. Please contact your own personal advisor on your particular circumstances. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds managed by Ninepoint Partners. Any reference to a particular company is for illustrative purposes only and should not to be considered as investment advice or a recommendation to buy or sell nor should it be considered as an indication of how the portfolio of any investment fund managed by Ninepoint Partners is or will be invested. Ninepoint Partners LP and/or its affiliates may collectively beneficially own/control 1% or more of any class of the equity securities of the issuers mentioned in this report. Ninepoint Partners LP and/or its affiliates may hold short position in any class of the equity securities of the issuers mentioned in this report. During the preceding 12 months, Ninepoint Partners LP and/or its affiliates may have received remuneration other than normal course investment advisory or trade execution services from the issuers mentioned in this report.

Ninepoint Partners LP: Toll Free: 1.866.299.9906. DEALER SERVICES: RBC Investor & Treasury Services: Tel: 416.955.5885; Toll Free: 1.877.874.0899