http://www.reuters.com/article/2011/06/03/us-dalton-resources-idUSTRE7525HW20110603?feedType=RSS&feedName=innovationNews&rpc=43

More firms are raising capital to expand summer drilling programs in the Yukon said Marc Sontrop, a portfolio manager for the $69 million fund, which is overweight precious metals.

"We have seen some majors move in and the exploration dollars going in are said to be about $300 million, versus $30 million about five years ago," he told Reuters.

The fund was up 36 percent in the 12 months to end-May, according to Lipper data, and outperformed its peers in the Lipper Global Natural Resource Equity sector by 13 percentage points.

Sontrop said interest in the Yukon had picked up because of discoveries in the last three years by the likes of Underworld Resources, Kaminak Gold (KAM.V) and Atac Resources.

Sontrop added that senior gold mining companies are becoming increasingly involved in the region, pointing to Kinross (K.TO) buying Underworld in 2010.

Strategic Metals (SMD.V), which forms 4.4 percent of the fund, has over 150 projects in the Yukon. Sontrop said it has a strong management team, and stakes of 10-25 percent in a number of juniors with exploration projects of their own.

Spot gold is currently trading at about $1,542 an ounce, having performed strongly since February, boosted the ongoing eurozone debt crisis.

Sontrop said gold was being supported by central bank buying, with Mexico, Thailand and Russia all in the market of late. "There's also good demand out of India and China."

In base metals, the fund has taken advantage of what it perceives as overselling in Peruvian miners.

"The elections scared some people in the last quarter," he said. "(Presidential candidate Keiko) Fujimori is seen as left-wing and anti-mining, so a lot of the mining stocks have been hit hard. We think it's an opportunity.

Holdings include Rio Alto Mining (RIO.V), which has just gone into production, and Trevali Mining (TV.TO), a zinc play considering a Lima listing, which should help the share price.

THE NEXT COLOMBIA

Energy stocks make up about a third of the portfolio, with Argentina-focused assets amongst the biggest holdings.

Samuel Lee, another portfolio manager on the fund, said the team had identified Argentina as having potential.

"The country has gone from a significant natural gas exporter to an importer as a result of an unfriendly business environment, which ultimately chased capital away from Argentina and into Colombia," he said. "The fiscal regime has since improved and interest has soared."

In May, Argentina's state producer YPF (YPFD.BA) announced its biggest oil find in nearly 20 years [ID:nN10109141], confirming the managers' view that there are significant oil and gas reserves yet to be tapped.

The fund has added to existing holdings that are well-placed to capitalize on these developments, such as Americas Petrogas (BOE.V), which makes up 4.5 percent of the fund.

This has over 1 million net acres in the basin where the discovery was made, making it one of the largest players.

"The company has farmed-out a well to Apache (APA.N), who are very aggressive in the country. The well is currently being drilled with results expected this summer," said Lee.

(Editing by Keiron Henderson)