Olive Resource Capital Outperforms Mining Indices While Building Cash Amid Iran Tensions

• Olive Resource Capital reported double-digit returns in April 2026, outperforming traditional mining indices that were down or up only single digits, driven by stock-specific alpha from individual holdings
• The fund increased cash holdings to approximately $3 million (over 50% of the $4.1 million in cash equivalents), raising capital through the Aurion Resources takeout by Agnico Eagle and trimming Asia-Pacific exposure
• Management believes markets are not adequately pricing the ongoing Iran-Strait of Hormuz situation, particularly supply disruption risks for Asia-Pacific regions, despite Brent crude trading above $100
• The portfolio is transitioning from a momentum-driven market environment to one requiring significant company-specific catalysts, with upcoming events including Omai's PEA (Q2), Goldsky's resource update (June), and multiple drill programs
• The fund maintains approximately 85% invested while holding elevated cash reserves, prioritising North American holdings over Asia-Pacific assets due to geopolitical supply chain concerns

Olive Resource Capital released its April 2026 performance update on May 4, highlighting strong stock selection that delivered double-digit returns while positioning defensively amid ongoing geopolitical tensions. Executive Chairman Derek Macpherson and President/CEO Sam Pelaez outlined a strategic shift toward catalyst-driven investing as commodity momentum fades and Iran-related supply risks remain underpriced by broader markets.

April Performance Exceeds Benchmarks

The fund delivered double-digit percentage gains in April, significantly outperforming traditional resource indices that posted flat to single-digit returns during the same period. This performance was attributed to pure alpha from stock selection rather than broad commodity tailwinds.

"The performance was driven by very specific stocks," Pelaez explained during the update. The gains effectively recovered losses incurred during the initial phase of the Iran conflict, bringing portfolio values close to year-to-date highs.

When combined with audited December 2025 numbers, the fund has generated over 20% returns year-to-date despite considerable market volatility. Management emphasised that these results reflect multi-year positioning in companies now delivering on planned catalysts.

Strategic Cash Accumulation

Olive Resource Capital has built a cash position exceeding $3 million, representing more than half of its $4.1 million in cash equivalents and liquid investments. This defensive posture stems from two primary portfolio actions.

First, the fund monetised its entire Aurion Resources position following Agnico Eagle's cash acquisition announcement. Despite the transaction not yet closing, the narrow arbitrage spread allowed exit at 98.5-99% of ultimate deal value due to Agnico's strong credit profile.

Second, management trimmed positions in companies subject to takeover offers after record dates for shareholder votes passed, converting paper gains into deployable capital. The fund also reduced exposure to Asia-Pacific and Australian mining assets, citing heightened vulnerability to energy supply disruptions.

Iran Conflict Risk Assessment

A central theme of the May 4 discussion was management's view that equity markets have not appropriately priced ongoing risks from the Iran-Strait of Hormuz standoff. While the strait has not experienced complete closure, reduced throughput and floating inventory depletion create medium-term supply concerns.

Macpherson noted that the S&P 500 trading at all-time highs while Brent crude exceeds $100 per barrel represents a disconnect. He referenced recent South Australian legislation addressing fuel hoarding penalties as evidence of regional supply anxiety that has not translated to broader market pricing.

"We don't think that the situation in Iran is adequately reflected in the markets. Everybody's hoping for a positive resolution in the short term. But there's no guarantee that that'll happen.” 

Management drew parallels to the Ukraine conflict, which continues more than four years after its escalation despite initial expectations of rapid resolution. An Indonesian smelter shutdown attributed to sulfur supply constraints was cited as an early indicator of derivative supply chain impacts.

The fund's defensive positioning reflects concern that markets are pricing near-zero probability to extended disruption scenarios. Rather than adopting a fatalistic stance, management views elevated cash as insurance against potential 40-50% drawdowns while accepting the opportunity cost of missing a potential 10% rally if tensions resolve quickly.

Geographic Rebalancing and Energy Security

Olive Resource Capital has materially reduced Asia-Pacific exposure while maintaining comfort with North American and Canadian holdings. This rebalancing acknowledges that Australia and regional mining operations face greatest vulnerability to hydrocarbon logistics breakdowns.

Many Australian mining operations rely on fly-in/fly-out workforce models dependent on consistent jet fuel availability. Even temporary fuel constraints could disrupt productivity and profitability without necessarily forcing mine closures. Management views these operational risks as inadequately reflected in current valuations.

Canada was characterised as among the countries best positioned to weather extended global energy supply disruptions given its domestic production capacity and pipeline infrastructure.

Market Character Shift: Momentum to Catalysts

A key analytical insight from the April performance review was recognition that market dynamics have transitioned from momentum-driven to catalyst-dependent. From September 2025 through February 2026, strong commodity tailwinds allowed even modest corporate developments to drive significant stock price appreciation.

In the current environment, Macpherson observed that only major catalysts are moving individual equities meaningfully. April's outperformance came specifically from a takeover (Aurion), significant resource updates (Omai), and similar substantial developments rather than incremental news flow.

This assessment informed portfolio strategy going forward, with increased focus on companies approaching material near-term catalysts rather than broad sector exposure.

Upcoming Portfolio Catalysts

Management identified several specific catalyst events expected over the next three to four months:

Omai Gold Mines is scheduled to release its Preliminary Economic Assessment (PEA) in late Q2 2026, potentially within days of the May 4 discussion. This follows a substantial resource update in April that management compared favorably to the G2 Goldfields transaction multiples.

Goldsky Resources expects a June resource update for the Barsele project in Sweden. This will incorporate years of drilling conducted by joint venture partner Agnico Eagle since 2018 that has not been reflected in existing resource estimates. The company also holds a separate million-plus-ounce deposit in Finland as additional optionality.

Sun Valley Minerals (a private Brazilian holding where Pelaez serves as director) has a fully-funded drill program scheduled for the northern hemisphere summer of 2026.

West Point Gold is approximately two-thirds complete with its annual drill program, with substantial assay results pending that will feed into a future resource update.

Bravo Mining is conducting follow-up work on base metals targets following a high-grade intercept in 2025, funded by a well-timed January capital raise.

Prospector Metals is executing a significant follow-up program at its ML Yukon discovery, with results expected in mid-to-late summer 2026.

Portfolio Positioning Summary

Olive Resource Capital currently maintains approximately 85% invested with 15% in cash, representing a balanced rather than fatalistic positioning. This allows participation in equity upside while providing dry powder for potential market dislocations or attractive entry points.

The fund continues to focus on fundamental stories with strong management teams executing multi-year plans, but has heightened emphasis on near-term catalysts that can generate stock-specific outperformance independent of sector momentum.

Conclusion and Key Takeaways

Olive Resource Capital's May 2026 update reveals a nuanced approach to navigating uncertain markets. The fund's strong April performance validates its multi-year stock selection while elevated cash positions reflect pragmatic risk management around underpriced geopolitical scenarios.

The transition from momentum-driven to catalyst-dependent markets requires more selective deployment focused on companies with imminent value-crystallising events. Management's geographic rebalancing away from Asia-Pacific assets and toward North American exposure reflects specific supply chain vulnerability analysis rather than broad sector pessimism.

With multiple portfolio companies approaching significant catalysts through summer 2026, the fund appears positioned to generate alpha through stock selection while maintaining defensive flexibility should broader market dislocations materialise from extended Iran-related disruptions.

TL;DR: Executive Summary

Olive Resource Capital delivered double-digit April returns through stock-specific alpha while building cash to over $3 million, citing markets' failure to price Iran-Strait of Hormuz supply disruption risks adequately. Management has pivoted from momentum-driven to catalyst-focused investing, with six portfolio companies scheduled for major developments (PEAs, resource updates, drill programs) through summer 2026. Geographic rebalancing reduced Asia-Pacific exposure favoring North American assets better insulated from energy logistics vulnerabilities.

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