Quarterly commentary - Mackenzie Resource Team

Global Resource Fund - Portfolio Insights

• Gold equities were a key contributor to performance, led by Barrick Gold (+31% in the quarter), following sustained strong investor response to its world-class discovery in Nevada. Gold prices and related equities remain well supported by elevated geopolitical risk, sustained central-bank buying, and an accelerating de-dollarization trend.
• The fund’s overweight exposure to aluminium and copper-focused names also contributed meaningfully. Aluminum producers Alcoa (+60%) and Companhia Brasileira de Alumínio (+89%) benefited from rising aluminium prices as the market moved toward a tighter supply–demand balance heading into 2025 and early 2026. Copper holdings Koryx Copper (+94%) and Arizona Sonoran Copper (+56%) performed strongly, supported by higher copper prices driven by global supply disruptions and constrained mine output amid resilient global demand, alongside positive project-level developments.
• The energy sector underperformed the materials sector during the quarter, with global oil oversupply weighing on prices. Enerflex (+41%) was a positive exception, as the company re-rated with strong operational performance and the improved outlook for its power segment.
• Interfor (-16%) was the primary detractor during the quarter. The company raised equity to support its balance sheet, but remained pressured by low lumber prices due to subdued housing activity in the U.S., and rising tariffs.
• Within the materials sector, we increased our position in Gerdau, as higher U.S. steel tariffs are improving industry fundamentals and supporting earnings prospects. We also initiated a new position in G Mining Ventures, reflecting the company’s continued progress in advancing its Oko West gold project. In the energy sector, we tactically increased our position in EQT, a leading U.S. natural gas producer, ahead of the seasonally stronger winter demand period. We exited our position in EOG Resources to reduce overall oil exposure, consistent with our outlook for oil prices.

Precious Metals Fund - Portfolio Insights

• Emerging gold producer Rio2 (+71% during the quarter) has commenced with its re-rating, ahead of the startup of its Fenix gold project in Chile, which the portfolio manager visited in early-2025. The company is highly leveraged to gold with a very large resource base and has recently added gold and copper options to its portfolio.
• Ontario-based Discovery Silver Corp (+62%) continued with its energetic revitalization of the Timmins gold camp, but also continued to advance its large silver development project in Mexico where the government is increasingly supportive of permitting the next generation of critical mineral mines.
• Royalty company Osisko Royalties (-13%), together with many other royalty companies, underperformed the producers. Royalty companies are less levered to higher gold prices, but also face the growing challenge of replenishing their portfolios as alternative, better, financing alternatives become available to operators in funding their future mining projects.
• Eldorado Gold was added to the portfolio, as the company is approaching the completion of building its attractive Skouries gold/copper project in Greece, after many years of setbacks.
• Profits were taken in Lundin Gold and Harmony Gold Mining following impressive operational and share price performances.

Macro Views

• Markets never revisited the April lows and ended the year 2025 on a strong footing. Long-term yields stabilized near 4%, while short-term rates continued to decline as inflation pressures eased and labor markets began to show early signs of softening. Monetary policy remains broadly accommodative across major economies, supporting our expectation of renewed global economic momentum.
• The U.S. administration maintained an assertive stance with trading partners, securing commitments for increased foreign direct investment, particularly from Asia. At the same time, governments globally have embarked on sizable fiscal programs focused on infrastructure, defense and reindustrialization. These initiatives are inherently commodity-intensive and supportive of medium-term demand.
• In China, the announcement of “anti-involution” policies is beginning to translate into tangible supply-side effects. Aluminum prices have moved above their long-term historical ranges as authorities target inefficient and counterproductive production. After decades of benefiting from low capital costs, inexpensive power, and lax environmental standards, Chinese producers now face a structural shift. We expect similar supply rationalization across other capital-intensive, low-margin, and highly polluting industries as policymakers redirect resources toward higher-value sectors, which should benefit many commodity markets.

Oil & Natural Gas

• Oil prices continued to drift lower in the fourth quarter as inventories accumulated, particularly in floating storage. OPEC members show little inclination to moderate supply growth, while Western producers have yet to materially adjust capital programs in response to weaker prices. We expect global production to rise by an additional 0.5–1.0 million barrels per day in 2026, while demand growth remains subdued. Meaningful changes to capital allocation are unlikely until prices approach $50 per barrel or lower. Refining margins, however, remain well supported by capacity losses in Russia and limited global refinery additions, particularly benefiting middle distillates.
• Natural gas fundamentals remain more constructive. Global electricity demand continues to rise, driven in part by data center and AI-related power requirements. U.S. LNG export capacity expanded meaningfully in 2025, with further projects scheduled for completion later this decade. Prices eased from mid-year highs near $5/mmbtu to the $3.50–$4.00 range heading into 2026, reflecting improved takeaway capacity from the Permian to the Gulf Coast. Much gas will be needed to feed the next wave of LNG expansions for the coming years. We estimate incentive prices to fuel a 3-4% per year growth in demand at above $4/mmbtu.
• Accordingly, we remain underweight oil producers and overweight natural gas producers, reflecting our more favorable long-term outlook for gas demand.

Copper

• Copper prices ended the year near $6/lb, supported by resilient demand and ongoing supply disruptions at several major mines. Prices are now above incentive levels, which should eventually attract investment. However, the supply response is likely to be slower than historical norms given a thin project pipeline over the next two years, regulatory constraints, and limited skilled labor availability. Against this backdrop, copper remains a key beneficiary of the transition.

Gold & Precious Metals

• Gold reached new all-time highs during the fourth quarter amid heightened concerns over monetary credibility and fiscal sustainability. While U.S. policymakers are likely to preserve the dollar’s reserve currency status, markets and Central Bank administrators globally remain uneasy with the policy mix. Strong performance in precious metals reflects investor skepticism toward low real yields in an environment characterized by onshoring, rising defense spending, geopolitical conflict, and tariff-driven inflationary pressures - conditions that ultimately challenge sovereign balance sheets and currencies.
• Investment flows into bullion are in addition to the systemic buying from Central Banks that has been underway since Russia’s foreign reserves were confiscated and since Asian buyers started diversifying their high saving rates away from real estate into gold. The gold bullion market is increasingly tightening, with the ongoing physical squeeze in silver a striking example of price action once tradeable reserves of precious metal run out.
• Going forward, gold appears well supported by continued central bank buying, but price action will also depend on the fiscal, monetary and policy actions of the U.S. and the dramatic response of many countries to an emerging multipolar ‘order’. With recent investment flows into gold ETFs an increasingly important driver of the price rally, continued price gains are increasingly a function of (the lack of) confidence in the U.S. dollar and U.S. Treasuries, and China’s response to a polarizing world.

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