Q121 Report: Memento Mori

The fourth quarter capped off a spectacular year for the Canadian venture space. Though ravaged by an initial sell-off in the early spring, the TSXV ended the year with an annual return of 50% and a 145% increase from its March lows. In comparison, the TSX returned 3% and 55% over the same timeframe. Not only did investors regain composure quickly, they were apparently undeterred by the coronavirus after all– encouraged by a dovish Fed and waves of fiscal stimuli that continued to weaken the dollar, inflating assets. Q4 served to confirm this trend and Canadian markets responded generally positively to key news, namely Biden’s securing of the Presidency and the beginning of global COVID-19 vaccine rollout initiatives.

Q420 Report: All Around the Bonfire

The fourth quarter capped off a spectacular year for the Canadian venture space. Though ravaged by an initial sell-off in the early spring, the TSXV ended the year with an annual return of 50% and a 145% increase from its March lows. In comparison, the TSX returned 3% and 55% over the same timeframe. Not only did investors regain composure quickly, they were apparently undeterred by the coronavirus after all– encouraged by a dovish Fed and waves of fiscal stimuli that continued to weaken the dollar, inflating assets. Q4 served to confirm this trend and Canadian markets responded generally positively to key news, namely Biden’s securing of the Presidency and the beginning of global COVID-19 vaccine rollout initiatives.

Intrynsyc Capital – Q320 Report

Despite showing signs of deal fatigue towards its tail end, the junior mining sector in Q320 exhibited very much a continuation of the momentum we saw drive the market in Q220. The figure below demonstrates the steep increase in mining capital raised through Q320, with total financings posting 7% higher than the previous quarter. Within the span of H120, ~$1,168M in equity capital was raised across the TSXV’s mining sector in contrast with the $1,931M raised in Q320 alone, demonstrating the disproportionate investor interest this past quarter relative to the year as gold and copper reached YTD highs.

A Precursor to the Copper Movement

In our last Intrynsyc Quarterly, we mentioned that our short-term expectations for copper were improving on the account of operational disruptions in key South American producers and signs of Chinese economic recovery. To date, the potential for COVID-related halts continue to loom over key producers in the absence of a vaccine (despite some operators having temporarily averted employee walk-offs) and recent macro data from China has indicated a faster than expected recovery in manufacturing production and infrastructural spending– foreshadowed by a jump in base-metal demand over the last quarter. Assuming China and its peer economies do recover, the copper fundamentals look favourable in the long term as well. The decline of new copper discoveries in the past decade may bottleneck supply as longstanding trends such as the urbanization of developing areas, and novel proposals for massive copper intensive ‘green’ infrastructural developments in major economies sustain and create demand.

Quarterly Report – Momentum Accumulates Down the Miner Risk-Profile

Last quarter we published “A Flight to Quality”, where we took you through our gold thesis in the context of a rapidly evolving global pandemic response. There, we recommended a tactical entry into a basket of gold producers and near-development explorers. The rationale was that these companies would remain solvent until sentiment shifted back into risk, and be buoyed by a rising gold price driven by an expansionary Fed and weaker dollar.

As gold rallied, we saw momentum accumulate down the miner risk-profile: with investment in senior producers first, then the mid-tiers, then the near-development juniors and so on. As interest picked up, we participated in four early stage junior exploration financings: Blackrock Gold (TSXV: BRC), Tectonic Metals (TSXV: TECT), Pan Global Resources (TSXV: PGZ) and Portofino Resources (TSXV: POR). All things holding equal, we believe that explorers will continue to attract even more risk capital going into the new quarter. Our technology/alternatives portfolio also gained on the continuous growth of Exro Technologies (CSE: XRO) and the acquisition of Askott Entertainment (Private) by FansUnite (CSE: FANS). Please see below a more detailed review of select names in our portfolio.

A Flight to Quality in the Midst of Market Uncertainty

These are sobering times. Though strained credit and equities markets have long indicated to us an environment ripe for correction, the Russia-Saudi oil dispute and the development of the COVID-19 pandemic took the world by surprise– catalyzing a wanton downturn affecting nearly all asset classes. The unforeseen emergence of these events have in turn lent them unprecedented effect: between late February and mid-March we saw the quickest reversal in history from a bull to bear market, with the VIX hitting 82.69 on March 16th, a hair higher than its 2008 peak. As of today, the VIX has since retreated from its reflexive extremes to lower (albeit still elevated) levels in tandem with a tentative recovery in equities on optimistic COVID-19 news and incoming government stimulus programs.