January Fund Performance & Market Commentary

The Delbrook Resource Opportunities Fund rose +4.9% in January vs. a +1.5% return for the SPDR Metals and Mining ETF. Performance of long positions, specifically those with primary exposure to base metals, led with returns of +3.5%. Short exposure was focused on precious metal equities and returned +0.3%, despite gold rising +3.3% during the month. 

Annualized Fund performance now sits at +20.9% since inception. Just as importantly, the Fund has a rolling 24 month Sharpe Ratio of 2.3, reflecting a careful analysis and monitoring of risk. Our investment approach stresses the importance of identifying opportunities with positive asymmetric risk profiles. We insist that our unitholders, ourselves included, be well compensated for the calculated exposure we take as we navigate an inherently volatile sector

We continue to monitor declining inventory levels within select base metals as an indicator of short term upside in the spot market.  As previously discussed, zinc inventories are at critical levels and treatment and refining charges have declined rapidly.  A scarcity of refined zinc in the market leads us to believe that a short term spike in spot prices is imminent and forecast LME spot zinc to approach $2.00/lb in the second half of 2018. In our view, Ascendant Resources (TSX: ASND) is ideally positioned to benefit from the current zinc environment, with a compelling valuation (<2.0x P/CF) and current efforts to implement operational improvements. 

Matthew Zabloski
Portfolio Manager/Founder