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Siddharth Rajeev, B.Tech, MBA, CFA Analyst

August 9, 2016

2016 Fundamental Research Corp. “10+ Years of Bringing Undiscovered Investment Opportunities to the Forefront “ www.researchfrc.com

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT

Pavilion Flow-Through Limited Partnership (2016) – New FT Fund to capitalize on a possible longer

term recovery in the resource sector

Sector/Industry: Investment Management www.accilentcapital.com

Issuer Pavilion Flow-Through L.P.

(2016) 1

Securities Offered L.P. units

Offering Minimum: None

Maximum: $5 million

Minimum Subscription $10 K (1,000 units)

Unit price $10 (minimum 1,000 units)

Dissolution date December 31 2019, no later

than March 31, 2020

Management Fee 2.25% of the NAV

Performance Fees 20% of the NAV in excess of

$11.20

Selling Fee and Offering Expenses

Up to 10.75% of the gross

proceeds plus 1% EMD fee

Auditor BDO Canda LLP

Offering Summary

- Based on Offering Memorandum dated June 30,

2016

FRC Rating

Expected IRR N/A

Rating 3

Risk 4

*see back of report for rating definitions

Investment Highlights � Pavilion Flow-Through Limited Partnership (2016) 1 (“LP", “fund”) is raising a

maximum of $20 million. The funds will be used to form an actively managed portfolio composed of flow-through (“FT”) shares of junior resource companies

(private and public). � FT shares are a special type of common shares (usually purchased at a premium)

that allows the issuing company to pass along their exploration or development expenses to investors, which they can use as tax deductions. They offer attractive options for investors looking to gain exposure to smaller resource companies, in a tax efficient manner.

� Accilent Capital Management Inc. (“Accilent”), the investment manager, was formed in 2002, and provides advisory services for third party and proprietary funds, and structured investments. Accilent Capital has formed and managed 14 flow-through funds since 2008. These funds have raised a total of $22 million from investors.

� The TSXV is up 55% YTD. The precious metals resource market has so far experienced a strong recovery in 2016. The price of gold is up by 26% YTD, and silver is up by 48% YTD.

� The gradual recovery in the junior resource market, we believe, will provide increasing investment options for the fund.

� Most of Accilent’s previous funds have outperformed the TSXV. � Considering the improvement in the resource sector, and the performance of

Accilent’s previous funds, we are assigning a rating of 3, and a risk rating of 4 on the new fund. We had assigned a rating of 4, and risk rating of 4, to the Pavilion Flow-Through Limited Partnership (2014) 1.

Risks

� Annual distributions and return of principal are not guaranteed. � There is no redemption option until dissolution. � The junior resource sector is highly speculative. � Due to the recent weakness in the junior resource sector, FT financings have

dropped considerably in recent times. � Changes in tax regulations, and the treatment of flow-through shares, may

negatively impact investors. � As with most funds, the portfolio manager is crucial to operations, which exposes

investors to key personnel risk. � Concentration risks exist as the LP primarily invests in junior resource issuers. � The fund may invest in securities of private companies. Securities of private

companies carry higher liquidity risks.



Background

Investment

Manager

Pavilion Flow-Through Limited Partnership (2016) 1 is offering investors LP units. Funds from the offering will be invested in flow-through securities. Flow-through investments allow companies to pass their exploration and development expenses to those invested in flow-through shares. Investors can then use these expenses as tax deductions, while still holding the company’s shares. The investment manager is Accilent Capital Management, who has formed and managed 14 flow-through funds since 2008. These funds have raised a total of $22 million from investors. The first two funds (formed in 2008) were dissolved in 2013. Accilent Capital Management Inc. is a registered portfolio manager (PM), exempt market dealer (EMD), commodities trading manager (CTM), and investment fund manager (IFM), regulated by the Ontario Securities Commission and Commodity Trading Manager (CTM). Accilent manages a portfolio of flow-through funds as well as other funds in conjunction with other co-managers. These other funds have raised a total of $5.9 million from investors. Accilent is also an exempt market dealer (“EMD”), and may act as sales agent in this offering. The principal manager of this offering is Dan Pembleton, who is also the President of Accilent. Accilent has five full time employees. Senior management do not have direct technical/geological experience in the resource sector, but have a strong background in investment management. Brief biographies of the senior management team, as provided by Accilent, are presented below:

Dan C. Pembleton, MBA, CFA - President of Accilent Capital Management Inc.

Mr. Pembleton graduated from Brock University with an Honours BA. He completed his MBA from Western’s Ivey School of Business and received the Chartered Financial Analyst Designation in 1998 from the CFA Institute. Mr. Pembleton has been a trader and portfolio manager for 20 years with nearly 10 years at RBC Dominion Securities where he rose to the level of Vice-President Money Markets. Accilent Capital Management Inc. was founded in 2002 by Dan Pembleton to provide investment advisory services for third party and proprietary funds, individual managed accounts and structured investments. Mr. Pembleton is also a Commodity Trading Manager.

Paul J. Crath, JD - Consulting Senior Manager of Accilent Capital Management

Mr. Crath graduated with a Bachelor of Law from the Osgoode Hall Law School at York University and is a member of the New York State Bar Association. Mr. Crath has extensive experience as a principal investor, merchant banking and mergers and acquisitions executive, financier, business development, general counsel and strategic advisor to family investors, chief executive officers, boards and owners of growing companies and fund management companies. Mr. Crath is a senior consultant at Accilent Capital Management Inc. Mr. Crath is also currently the Managing Director who is actively involved in finance, origination and corporate development for Norvista Resources Corporation., a mining merchant bank formed by mining royalty pioneer and prominent resource investor Gerry



Flow-Through

Investments

McCarvill (who, along with his network, have been early stage investors and drivers of multiple resource companies including without limitation gold, iron-ore, and uranium companies). Mr. Crath is also currently a Managing Director of Tarra Partners Inc. a merchant bank that acts as investment principal and/or provides certain advisory services in the areas of institutional real estate, infrastructure and private equity and lending transactions. Mr. Crath is a former Vice-President and Principal of Tricaster Capital Corporation, a family investment company and merchant bank he co-founded with the Campbell family of Toronto. Flow-through investments allow companies to raise capital for exploration and development, and pass on the expenses incurred to investors for tax deduction purposes. Pavilion offers investors the opportunity to invest in a portfolio comprised of either Canadian Exploration Expense (CEE) or Canadian Development Expense (CDE) flow-through shares. Flow-through shares typically trade at a premium to a company’s common shares due to the tax advantage. Premiums range from 10% to 30% for CEE, and 0% to 15% for CDE. Institutional investors usually have priority on securing flow-through shares, making this type of investment difficult to access by retail investors.

CEE flow-through shares are primarily issued by small and/or early-stage companies

that are engaged in exploration. The exploration business is risky, but shares of such companies have potential for high returns due to their inherent risks. Expenses transferred to investors are eligible to be deducted 100% in the year received.

CDE flow-through shares are primarily issued by larger junior to medium size

companies that are looking to develop resources that have already been identified. These investments are less risky, but also do not have the higher upside potential of CEE investments. CDE investments also provide a 100% deduction; however, the deduction is calculated on an annual 30% p.a. declining balance. Pavilion may invest in CEE or CDE shares. Management of Pavilion states that their

previous flow-through funds have been 100% invested in CEE shares. The following table outlines the key differences between CEE and CDE investments.

CEE CDE

Used for Exploration Development

RiskIs generally riskier, but offers

higher upside potential

Lower risk, but lower upside

potential

Size of Company Early stage to large juniors Larger juniors to mid size

Price premium relative

to common share price

Higher premium because 100%

of the deduction can be used in

the year the expense is

transferred

Lower premium because

deduction is spread over time

Tax deduction100% in the year expenses are

transferred

100% tax deduction based on an

annual 30% declining balance

basis



Track Record

An example of the tax benefits from CEE and CDE flow-through shares are shown below. CEE investments provide a 100% deduction in the year expenses are transferred. For example, on a $100 tax deduction, an investor with a 45% marginal tax rate can reduce his/her income by the full $100, and save $45 in taxes. CDE is done on an annual declining balance, which allows the first 30% of the total deduction to be taken when the expense is transferred. The remaining balance can further be used each year (up to 30% of the declining balance). For example, in year one, 30% of the $100 is used leaving a $70 deductible balance the next year. This method allows deductions every year until the full $100 is used up. Both CEE and CDE tax deductions can be carried forward indefinitely. Due to the tax advantages of the flow-through shares, the amount of capital at risk is decreased. Given a $10,000 investment, the following table shows the amount at risk and proceeds needed to break even, with the tax benefit offered by the flow-through shares.

Breakeven

Initial investment 10,000$

Tax saving (49.5% Ontario's highest rate) 4,950$

Investment at risk 5,050$

Proceeds needed to breakeven 6,711$ * Note 1 - The break even amount varies with region and investor’s tax rate. * Note 2 – Certain provinces also grant a 15% tax credit on top of the CEE tax deductions. Overall, we believe flow-through shares offer attractive options for those looking to gain exposure to smaller resource companies, and take advantage of the tax benefits offered by these investments.

Management has raised a total of $22.07 million from investors for its previous 13

flow-through funds since 2008. A summary of the previous flow through limited partnerships (“FTLP”) is shown below.



Number Name of the fund Date of inception Status

1 Pavillion Flow-Through LP (2008)-1 September, 1, 2008 Closed

2 Pavillion Flow-Through LP (2008)-2 January, 2, 2008 Closed



5 Pavillion Flow-Through LP (2011)-1 January, 24, 2011 Active

6 Pavillion Flow-Through LP (2011)-2 August, 29, 2011 Active


8 Pavillion Flow-Through LP (2012)-2 May, 9, 2012 Active


10 Pavillion Flow-Through LP (2013)-2 August, 1, 2013 Active

11 Pavillion Flow-Through LP (2014)-1 March 14, 2014 Active

12 Pavillion Flow-Through LP (2014)-2 September 15, 2014 Active

13 Pavillion Flow-Through LP (2015)-1 April 15, 2015 Active

Number Name of the fundAmount raised

(Million)

2015

Expenses2014 Expenses

2015 Expenses

% of Amount

Raised

2014 Expenses

% of Amount

Raised

1 Pavillion Flow-Through LP (2008)-1 $0.53 NA NA NA NA

2 Pavillion Flow-Through LP (2008)-2 $0.30 NA NA NA NA

3 Pavillion Flow-Through LP (2009)-1 $0.95 8,460 5,094 0.89% 0.54%










13 Pavillion Flow-Through LP (2015)-1 $0.68 0,598 NA 0.09% NA

We have analyzed Accilent’s previous funds – namely Pavilion Flow-Through Limited

Partnership (2011) 1 (report dated April 29, 2011), and Pavilion Flow-Through

Limited Partnership (2014) 1 (report dated September 5, 2014).

The exit strategy preferred by management is a cash exit for investors. An optional exit strategy is to roll over the LP units into a mutual fund to provide investors liquidity options. All of the previous exists were cash exits where management distributed funds to investors after selling the securities in the portfolios. In addition to the flow through funds, the investment manager has managed three non flow- through LPs shown below. They include two funds that invested in wine, and one fund that invested in U.S. real state. The total amount raised for these funds by the manager from

2008 – 2013, was approximately $3.1 million. Management states they are no longer raising capital for these funds. The table below shows a summary of these funds.



Product Date of Inception Status

Wine Investment Fund Canada 2008 Jul-2008 Closed

Wine Investment Fund Canada 2011 Feb-2011 Active

Panurban 112°W L.P. 1 Oct-2008 Active

The wine funds do not have audited financial statements. Therefore, we have not been able to verify their performance. The Panurban 112°W L.P, which offered investors an opportunity to invest in distressed real estate housing in Arizona, had a total return of 33% as of 2014, and is still active. As stated earlier, management is no longer raising capital for these funds. In the following section, we present a summary of the performance of Accilent’s flow-through funds. Our analysis was based on the following:

• We have chosen the TSXV composite as the benchmark, as we believe it is the closest benchmark to the funds’ investment style. Over 50% of the TSXV is comprised of equities of mining companies. The composite is comprised of a much more diverse universe of stocks, and has far more holdings than the fund, so the standard deviation (“SD”) is understandably much lower for the composite compared to the fund. We have also calculated the correlations of the funds’ returns with respect to the monthly returns of the TSXV exchange.

• The returns data include distributions to unit holders.

• Net Asset Value (NAV) data was provided by management, and verified by us based on audited financial statements.

• Due to the tax advantages of the flow-through shares, the amount of capital at risk is decreased. As shown earlier, the proceeds needed to break even on a $10,000 investment is approximately $6,711 (assuming Ontario’s highest rate of 49.5%). Although units were issued at $10 per unit, we used a break-even NAV of $6.71 per unit for return calculations to account for tax benefits. Note that the break-even amount varies with region and investors’ tax rate.

In the section below, we present charts of monthly returns of Pavilion’s Flow Through Limited Partnerships’ (“FTLP”) units and the TSXV composite. We have also presented the returns, standard deviation, Sharpe ratio, and correlation of their monthly returns. The Sharpe ratio indicates the risk adjusted performance of a fund. It is calculated as the excess returns above the risk free rate, divided by standard deviation of the fund’s returns.

Pavilion’s 2008 funds, which have the longest track record of all Accilent flow-through

funds, largely outperformed the TSXV. The two funds were liquidated in September

2013 (Fund 2008-1) and March 2013 (Fund 2008-2). Their performance charts and tables are presented below:



Monthly Returns (January 2009 - September 2013)

Mean Standard Deviation Correlation Sharpe Ratio

TSX.V 0.45% 7.98% -0.21

2008-1 2.02% 15.05% 0.02

Total Return 164.38% Total Return

Annualized Return 23.16% Annualized Return

0.04

2008-1 TSX.V

17.85%

3.58% Note: The total return and the annualized return include tax benefits.



Monthly Returns (January 2009 - May 2013)


TSX.V 0.45% 8.50% -0.01

2008-2 3.38% 16.10% 0.07



-0.07

2008-2 TSX.V

20.7%

4.6% Note: The total return and the annualized return include tax benefits.

Source: Capital IQ, Management, FRC and Bank of Canada

As shown above, the total return on the 2008-1 and 2008-2 funds, from inception to

dissolution date, were 164% and 253%, respectively. The TSXV had a return of 18%

and 21%, respectively, over the same period. The SD of the index was less than the funds. The funds’ monthly returns and the index’s monthly returns had low correlation (-0.07 and 0.04), implying the funds provided diversification benefits. Both funds’ Sharpe ratios were higher than the index, indicating that the funds’ risk adjusted returns were better than the index. Pavilion Flow-Through 2009 and 2010’s performance charts and tables are presented below. FTLP 2009, between December 2009 and December 2013, followed a trend similar to the index. The 2009 fund had a total return of -46.80% versus the TSXV’s -60.41% over the same period. The 2010 fund returned -44.11% versus the index’s -70.66%. Both funds had higher risk adjusted returns (Sharpe ratio) than the index.



Monthly Returns (December 2009 - March 2016)


TSX.V -1.05% 5.94% -0.22

2009-1 -0.57% 10.99% -0.07

2009-1 TSXV

Total Return -46.80% Total Return -60.41%

Annualized Return -9.48% Annualized Return -13.61%

0.29

Monthly Returns (December 2010 - April 2016)


TSX.V -1.75% 5.49% -0.36

2010-1 -0.82% 11.22% -0.09

Total Return -44.11% Total Return


0.32

2010-1 TSXV

-70.66%

Note: The total return and the annualized return include tax benefits.

Source: Management, Capital IQ, FRC and Bank of Canada

Pavilion Flow-Through 2011-1 and 2011-2 performance charts and tables are presented below. The 2011 funds outperformed the TSXV. FTLP 2011-1 had a total return of -35.47% (since inception) versus the TSXV’s -58.63%. FTLP 2011-2 had a total return of -31.59% (since inception) versus the TSXV’s -59.63%.



Monthly Returns (October 2011 - April 2016)


TSX.V -1.48% 5.40% -0.31

2011-1 -0.56% 12.63% -0.06



0.54

2011-1 TSXV

-58.63%




Monthly Returns (January 2012 - April 2016)


TSX.V -1.62% 5.34% -0.34

2011-2 -0.39% 11.78% -0.05



0.52

2011-2 TSXV

-59.63%


Source: Management, Capital IQ, FRC and Bank of Canada

Pavilion Flow-Through 2012-1 and 2012-2 funds raised about $6.5 million. FTLP 2012-2 raised a majority of those funds ($4.5 million), and is Accilent’s largest flow-through fund by assets. Their performance is shown in the charts below. FTLP 2012-1, and 2012-2, followed a trend similar to the index before spiking near the start of 2016. Both funds outperformed the index. 2012-1 had a total return of 18.78% versus the TSXV’s -47.19%. 2012-2 had a return of 39.64% versus the TSXV’s -46.98%.

Monthly Returns (July 2012 - April 2016)


TSX.V -1.27% 5.23% -0.28

2012-1 1.10% 12.96% 0.07


Annualized Return 4.59% Annualized Return -15.34%

0.54

2012-1 TSX.V

-47.19%






TSX.V -1.43% 5.29% -0.31

2012-2 1.30% 14.06% 0.08


Annualized Return 10.27% Annualized Return -16.95%

0.58

2012-2 TSX.V

-46.98%


Pavilion Flow-Through 2013-1 and 2013-2 performance charts and tables are presented below. Both funds showed low volatility during December 2013 to December 2015. Both 2013-1 and 2013-2 had impressive growth in 2016, reaching NAVs of $14.80 and $17.42 respectively, in April 2016, up from $5.92 and $6.86 at 2015 year end. The 2013-1 fund had a total return of 128.02%, versus the TSXV’s -30.35% over the same period. The 2013-2 fund returned 167.06% versus the index’s -30.35%. Both funds also had higher risk adjusted returns (Sharpe ratio) than the index.





TSX.V -1.12% 5.81% -0.22

2013-1 3.53% 17.04% 0.20


Annualized Return 40.65% Annualized Return 31.20%

0.54

2013-1 TSX.V

-30.35%






TSX.V -1.12% 5.81% -0.22

2013-2 3.69% 17.31% 0.20



0.53

2013-2 TSX.V

-30.35%


Pavilion Flow-Through 2014-1 and 2014-2 performance charts and tables are presented below. The 2014-1 fund had a total return of 77.35%, versus the TSXV’s -34.58% over the same period. The 2014-2 fund had a total return of 74.66% versus the TSXV’s -7.48%.

Monthly Returns (September 2014 - April 2016)


TSX.V -2.00% 6.57% -0.33

2014-1 3.01% 21.14% 0.13



0.78

2014-1 TSX.V

-34.58%






TSX.V -0.34% 5.54% -0.09

2014-2 6.59% 29.17% 0.22



-7.48%

52.10%

0.80

2014-2 TSX.V


Pavilion Flow-Through 2015-1 fund’s performance chart and table are presented below. FTLP 2015-1 performed strong compared to the TSXV index during 2016. The fund has had a total return of 233.23% versus TSXV’s 19.51%. The fund also had a larger Sharpe ratio.



Strategy

Monthly Returns (November 2015 - April 2016)


TSX.V 3.80% 6.64% 0.55

2015-1 28.73% 29.48% 0.97



0.53

2015-1 TSX.V

19.51%


Accilent uses the following key guidelines when making their investment decisions:

• The LP will have no more than 85% invested in private companies, and have at least 15% of the net assets invested in TSXV or TSX listed resource issuers.

• The LP will not allocate more than 20% of net assets to any one publicly traded resource issuer. The LP may invest up to 25% in a private resource issuer and/or a reporting issuer whose common shares are listed on an exchange other than the TSXV or TSX.

• The LP will not invest in securities of resource issuers, if after investment, the LP would own more than 19.9%, of any publicly traded issuer, and 30% of any private/non-TSXV or TSX listed issuer.

• Although management uses independent engineering or geological technical reports for their due diligence, they do not make such reports a mandatory requirement in order to make an investment decision.

• The LP will only invest in securities of issuers that are independent to the investment manager. However, the LP may own securities that are also owned by the investment manager. In certain cases, companies pay due diligence / commission / placement fees to the investment manager in return for the LP’s investment in their securities.

• The LP may borrow up to 10% of the total value of the fund. Management has not used debt in any of their funds, but we believe that using leverage to invest in securities of junior resource issuers is highly risky.

Management has held less than 15% of a portfolio in private equities in their previous funds. The primary exit strategy of securities of a private company is when the company goes public through an IPO (initial public offering) or a RTO (reverse takeover). If this does not happen, the fund would look at selling their shares through a private transaction. If the fund is unable, or otherwise believes the terms of the transaction are not favorable, the shares may be distributed “in-kind” on a pro-rata basis to investors. In their previous funds, the manager invested in 23 private companies of which, 11 (48%) went public; which we believe is a reasonably strong track record and shows management’s ability to identify investments with viable exit options. Management’s goal is to have 100% of the LP’s funds to be invested in FT shares. However, the manager does have the option to purchase non flow-through shares of resource



Structure

companies, or money market funds, in the event of a shortage of good flow-through investment opportunities. Accilent uses a top-down approach to portfolio construction. The investment manager looks at key macroeconomic factors (such as global Gross Domestic Product growth, the demand and supply of commodities, etc.) and the implications it will have on commodity prices and the Canadian capital markets, to determine an investment strategy for the fund. The portfolio turnover varies depending on a few variables. The entire process, from a flow-through financing to completion of an exploration program, and transfer of expenses to investors, usually takes about a year. If the results of the exploration program are favourable, the fund will revaluate if there is still upside potential to be realized, and make a decision to hold/sell the investment. If the results are not favourable, instead of selling the shares at a low (due to the drop after unfavorable results), the fund will generally wait for another drilling season. If results still do not improve, the manager will then begin to liquidate their position. Investors should note that many publicly traded junior mining stocks have relatively less liquidity. As such, the fund may encounter situations where it may find difficulty selling securities without depressing the market price or conversely, buying securities without inflating them.

The fund is structured as a limited partnership. The General Partner (“GP”) is PRF Management Ltd. The officers, directors and controlling owners of the GP are Dan Pembleton and Paul J. Crath. The chart below shows the structure of the LP:

Investors

Pavilion Flow-Through Limited

Partnership (2016) 1 Investment Manager and

Sales agent - Accilent

Capital Management Inc.

General Partner (the "GP")- PRF Management Limited



The following table shows all the fees and expenses associated with the offering:

Management Fee 2.25% of the NAV per annum

Administrative and

Operating Expenses Up to $0.1 million per annum

Performance Fees 20% of the NAV in excess of

$11.20 per unit

Selling Fee Up to 10% of the gross proceeds

Offering Expenses

Up to 0.75% of the gross proceeds

plus 1% distribution fee

Fees and Expences

We believe the offering’s management fee of 2.25% of the NAV plus annual administration and operating expenses of $0.10 million (0.5% p.a. assuming maximum offering) is slightly higher than comparable offerings. However, management notes that the annual operating expenses of $0.10 million are the maximum, and that the expense of their previous funds have been lower. We have confirmed this; see page 5 for details. Selling fees, and the offering expenses of up to 11.75% of the gross proceeds, are also on the higher side relative to comparable offerings. The table below shows the available funds:

Total Funds - $20,000,000

Selling Fees - $2,000,000

Offering Expenses - $350,000

Available Funds - $17,650,000

Minimum Offering Maximum Offering

The NAV of the LP will be calculated at the last business day of each calendar month, and will be audited independently on December 31st of every year by BDO. Accilent is responsible for the net asset value calculations. For private shares, valuation is done at cost or the most recent arms-length sale of comparable securities. As mentioned earlier, the LP assets maybe rolled over into a mutual fund. If the LP is not rolled-over, the LP will be terminated/liquidated and the net assets returned to investors no later than March 31, 2021. None of Accilent’s previous dissolved flow-through funds have been rolled over into a mutual fund.



Risks

Rating

The following, we believe, are few of the key risks of the offering:

• Annual distributions and return of principal are not guaranteed.

• There is no redemption option until dissolution.

• The junior resource sector is highly speculative.

• Changes in tax regulations, and the treatment of flow-through shares, may negatively

impact investors.

• As with most funds, the portfolio manager is crucial to operations, which exposes investors to key personnel risk.

• Concentration risks exist as the LP primarily invests in junior resource issuers.

• The fund may invest in securities of private companies. Securities of private

companies carry higher liquidity risks.

• The company may invest in equities and money market funds that may have no tax

benefits.

We continue to believe that Pavilion Flow-Through Limited Partnerships offer benefits to investors in the higher tax brackets seeking alternative tax planning strategies. The tax benefits provide some downside protection to investors. The recovery in the precious metal prices in 2016, we believe, will offer Pavilion Flow-Through Limited Partnership (2016) with increasing investment opportunities. However, investors have to keep in mind that the underlying assets are shares issued by companies that are highly speculative, as highlighted by the volatile historical returns. Considering the improvement in the resource sector,

and the performance of Accilent’s previous funds, we are assigning a rating of 3, and a

risk rating of 4 on the new fund. We had assigned a rating of 4, and risk rating of 4, to Pavilion Flow-Through Limited Partnership (2014) 1.

FRC Rating

Expected IRR N/A

Rating 3

Risk 4



Fundamental Research Corp. Rating Scale:

Rating – 1: Excellent Return to Risk Ratio

Rating – 2: Very Good Return to Risk Ratio Rating – 3: Good Return to Risk Ratio Rating – 4: Average Return to Risk Ratio Rating – 5: Weak Return to Risk Ratio Rating – 6: Very Weak Return to Risk Ratio Rating – 7: Poor Return to Risk Ratio A “+” indicates the rating is in the top third of the category, A “-“ indicates the lower third and no “+” or “-“ indicates the middle third of the category.

Fundamental Research Corp. Risk Rating Scale:

1 (Low Risk) 2 (Below Average Risk) 3 (Average Risk) 4 (Speculative)

5 (Highly Speculative)

Rating - 1 0% Risk - 1 0%

Rating - 2 26% Risk - 2 4%

Rating - 3 47% Risk - 3 34%

Rating - 4 9% Risk - 4 39%

Rating - 5 5% Risk - 5 10%

Rating - 6 1% Suspended 13%

Rating - 7 0%

Suspended 11%

FRC Distribution of Ratings

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