Rollover Completion and Dissolution Information – MARQUEST MINING QUEBEC 2022-II SUPER FLOW-THROUGH LIMITED PARTNERSHIP
TORONTO, October 24, 2023 – The Marquest Mining Québec 2022-II Super Flow‐Through LP has completed a mutual fund rollover transaction (“the Mutual Fund Rollover”) where the Marquest Mining Québec 2022-II Super Flow‐Through LP transferred all of its assets other than cash (all cash in excess of funds required to meet existing liabilities was distributed to limited partners on October 20, 2023) to Marquest Mutual Funds Inc. on October 20, 2023, in exchange for Marquest Mutual Funds Inc. ‐ Explorer Series A/Rollover and Series F Mutual Fund (MAV2206/MAV2208) (the “Mutual Fund Shares”). As part of the wind‐up and dissolution of the Marquest Mining Québec 2022-II Super Flow‐Through LP, the Mutual Fund Shares were distributed to limited partners of record as of October 20, 2023 on a pro rata basis.
The information contained herein is strictly for information purposes only and should in no way be regarded as tax advice. You are advised to obtain professional tax advice about your individual circumstances.
MUTUAL FUND ROLLOVER
Limited partners of the Marquest Mining Québec 2022-II Super Flow‐Through LP, A Class, received 99.448130 Mutual Fund Shares (issued at the October 20, 2023 Net Asset Value per Mutual Fund Share of $0.401000 (MAV7001)) for each limited partnership unit, based on a net asset value of $39.8787 per unit of the Marquest Mining Québec 2022-II Super Flow‐Through LP.
Limited partners of the Marquest Mining Québec 2022-II Super Flow‐Through LP, F Class, received 99.619240 Mutual Fund Shares (issued at the October 20, 2023 Net Asset Value per Mutual Fund Share of $0.421000 (MAV7011)) for each limited partnership unit, based on a net asset value of $41.9397 per unit of the Marquest Mining Québec 2022-II Super Flow‐Through LP.
AFTER TAX RETURNS and ACB OF PARTNERSHIP UNITS – AS AT October 20, 2023
We can report that our investors in the Marquest Mining Québec 2022-II Super Flow‐Through LP have the following pre-tax and after-tax returns on their initial investment of $100.00, factoring in capital gains tax*:
Pre-Tax (A Class) After-Tax (A Class)
9.76% 4.27%
Pre-Tax (F Class) After-Tax (F Class)
11.82% 6.04%
The ACB per unit of the Marquest Mining Québec 2022-II Super Flow‐Through LP, based on the information available to us will be provided to you with your 2023 tax slips.
Investors who have not redeemed their holdings of the Mutual Fund Shares (or any shares of Marquest Mutual Funds Inc. that they hold as a result of a switch transaction in respect of the Mutual Fund Shares) resulting from the rollover transaction have deferred the potential tax liability of capital gains until they do so. Investors who have redeemed a portion or all of their holdings of the Mutual Fund Shares (including shares of Marquest Mutual Funds Inc. that they hold as a result of a switch transaction in respect of the Mutual Fund Shares) resulting from the rollover transaction should use the ACB per share that will be provided with the 2023 tax slips when determining their capital gains tax liability. Investors are urged to consult with their Investment Advisor and tax professionals.
MARKET COMMENTS
Market challenges that were an integral component of the investment landscape in 2022 continued into 2023, as global inflation stalled growth and equity markets. While inflation levels in most western markets came down from multi-decade highs, both equity and bond markets priced in recession risks as central banks continued on their path of raising rates to further slow inflation, and therefore economic growth. And if recession concerns and runaway inflation were not enough to concern markets, the ongoing conflict in the Ukraine, and now the Middle East, further weighed heavily on market sentiment. As a result of these factors, the S&P/TSX Composite Index was up barely 0.9% in the first nine months of the year on a price basis and the S&P/TSX Venture Composite Index (a broad market indicator of Canadian micro-cap securities in Canada) was down 2.0% over the same period***. Junior mining equities selected for the Marquest Mining Québec 2022-II Super Flow-Through Limited Partnership are of a higher risk profile than those found in the S&P/TSX Venture Composite Index and therefore would have been more negatively impacted than the constituents of the Venture index. As capital exited equity markets, the junior mining space suffered outsized losses.
Year-to-date, the lack of conviction that inflation has been fully contained, combined with slowing global growth, and global geopolitical risks, generated high market volatility this year. And while a moderate recession is still quite possible in both Canada and the United States, the declines we saw in equity markets this year, specifically in the junior mining sector, appear to be overdone and there is now a greater potential for upside from here. Thus, the equity market weakness has been mostly factored into potential risks, in our view. Accordingly, the outlook for equities for the remainder of this year and into 2024 has become more balanced and a strong argument now exists for increasing portfolio allocations to equity markets, specifically the junior mining sector, which is very well positioned for outsized growth.
***The data was derived using the TRA function within the Bloomberg terminal.
Note: Limited partners will receive a T5013/RL15 for the 2023 taxation year early in 2024. Certain tax deductions will be available for the taxation years 2023 through to 2026.
For further information, please contact Marquest Asset Management at 1‐888‐964‐3533.
*Based on approximate amounts of Canadian Exploration Expenses and additional credits and deductions for a Québec resident; assuming Québec marginal tax rate of 53.31%; including the amortized offering costs deductions; no alternative minimum tax is triggered from other deductions; ACB at rollover is considered $0; assumes disposition of the rollover value; exoneration on capital gains for Québec is taken into account. All numbers are approximate and for illustration purposes only. All investors will receive tax slips that reflect their exact amounts. Investors should discuss with their tax specialist in order to evaluate their respective performance.