Explorer II Resource
Limited Partnership (the "Fund" or "Explorer II") raised $27.2 million in
December 2004 that was invested in both flow-through and non-flow-through
common shares of 29 Canadian resource companies. The portfolio assets were 77%
invested in TSX listed stocks and 86% in companies with a market capitalization
greater than $50 million. Based on the initial investments, the portfolio
assets were 95% invested in companies whose principal operations were comprised
of oil and gas exploration, production and development. The Fund's initial
portfolio parameters substantially exceeded the minimum investment criteria
required by the Fund's prospectus.
At June 30, 2006 the
Fund's net asset value was $28.09 per unit, representing a total after-tax
return on money-at-risk of 49% for an Ontario investor taxed at the highest
marginal tax rate.