Sprott Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to SPROT Inc's 2025 First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a -and-answer session. Instructions will be provided at that time for you to queue up for questions. As a reminder, this conference is being recorded today, May 7, 2025. On behalf of the speakers that follow, listeners are cautioned that today's presentation and responses to questions may contain forward-looking information and forward-looking statements within the meaning of applicable Canadian and U.S. securities laws. Forward-looking statements involve risk and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are implied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the MD&A for the quarter and SPROT's other filings with the Canadian and U.S. securities regulators. I will now turn the call over to Mr. Whitney George. Please go ahead, Mr. George.

Thank you, Operator, and good morning, everyone, and thanks for joining us today. On the call with me today is our CFO, Kevin Hibbert, and John Cimpalvia, CEO of SPROT and U.S. At management. Our 2025 first quarter results were released this morning and are available on our website, where you can also find the financial statements and MD&A. I'll go to slide four. A quick review of first quarter and -to-date highlights. A lot has happened since we last spoke late February. On April 2nd, 2025, Liberation Day, the Trump administration announced massive tariff hikes which triggered a sharp selloff in a wild month in the markets. After initially falling by 12%, the S&P 500 finished April basically flat. Ten-year Treasury bond yields initially fell as the beginnings of a global trade war introduced the possibility of a recession. However, yields later spiked back up as foreign and domestic confidence in U.S. investments was shaken. Despite the recent volatility, all signs are currently pointing to a period of stagflation. Against this backdrop, gold has emerged as the last hedge standing. Turning now to our results, I'm pleased to report that despite the volatile environment, our assets under management increased by $3.5 billion in Q1 to $35.1 billion. Our asset growth was driven by both surging gold prices and strong inflows to our precious metal strategies. During the quarter, we generated $407 million in net sales. Our managed equity strategies performed well during the quarter with our flagship gold equity fund posting a gain of 26.4%. While mining equities have benefited from rising precious metal prices, investors have not yet returned to the sector despite what appears to be a very attractive catch-up trade with the miners lagging the metals. With the addition of lower oil prices and higher metal prices, we've rarely seen such a strong set-up for that sector. We continue to expand our ETF product suite. During the first quarter, we launched the Sprott Silver Miners and Physical Silver ETF and our first actively managed ETF, the Sprott Active Gold and Silver Miners ETF. We are very pleased with the early reception for these funds, which have been two of our most successful ETF launches to date. With that, I'll pass it over to Kevin for a look at our financial results. Kevin?

Thanks, Whitney, and good morning, everyone. I'll start on slide five, which provides a summary of our historical AUM. AUM finished the quarter at $35.1 billion, as Whitney mentioned, which was up 11% from $31.5 billion on December 31, 2024. On a -months-ended basis, we did benefit from strong market value appreciation and net inflows to our Precious Metals Physical Trusts, to Whitney's point. However, that was partially offset by weaker market valuations in our critical materials products. Subsequent to quarter end, on May 2, our AUM increased to $36.5 billion, and as of close of business yesterday, our AUM has now surpassed $38 billion. That's $3 billion of new AUM since the quarter end, $800 million of which are new inflows into our flagship physical trusts. Slide six provides a brief look at our three-month earnings. Net income this quarter was $12 million, up 3% from $11.6 million over the same three-month period last year. Similarly, adjusted EBITDA was $21.9 million in the quarter, up 11% from $19.8 million over the same three-month period last year. Our earnings results benefited from higher average AUM on strong market value appreciation and inflows to our Precious Metals Physical Trusts, partially offset by ongoing weaker market valuations of our critical materials product offerings. Importantly, the strong run-up in gold prices to north of $3,000 an ounce did not occur until very late in the quarter on March 17. Effective the first quarter of this year, we changed the name of our key non-IFRS measure, Adjusted Base EBITDA, to Adjusted EBITDA. The change was made to simplify wording and there was no impact to the underlying calculation. Finally, slide seven provides a few Treasury and balance sheet management highlights, and as you can see, our cash and liquidity profile remains strong and we continue to be debt-free. For more information on our revenues, expenses, net income, Adjusted EBITDA, and balance sheet metrics, you can refer to the supplemental information section of this presentation, as well as our quarterly MD&A and financial statements filed earlier this morning. With that said, I'll pass things over to John.

Thanks, Kevin, and good morning, everybody. Thanks for participating on the call. Before I review our operating results, I'd like to provide some additional color on what we're seeing in the market and how the current market environment is really an ideal and opportune time for SPROT. Once again, gold is proving itself to be a reliable safe haven against a very turbulent and uncertain macro environment. But as Whitney mentioned, unlike previous market and financial calamities of the past, the U.S. dollar and U.S. Treasuries are failing to provide investors with similar insurance attributes, and it's uncertain whether this will be a short-term phenomena or the beginning of a longer-term secular shift given the growing signs of de-dollarization. Last year, it was all about a number of central banks accumulating gold to reduce their foreign reserve assets away from U.S. dollar assets, and investors were largely indifferent about gold's 27 percent increase in value when MAG-7 stocks were appreciating to atmospheric values. With markets being whipsawed by a flurry of uncertainty and a potential reordering of the global trading system, gold is reasserting itself as a monetary metal. We see strong demand for gold coming from a growing number of global capital pools, and when I refer to gold, I mean physical gold, not paper gold. This is an important distinction because there is a finite supply of physical gold, and the physical market is driving the price action. It's not just physical gold. We see a shift to secure a number of strategically important physical commodities, including silver, uranium, and copper. Now, shifting to our suite of physical trusts, we are experiencing very strong growth in our assets so far in 2025. This suite of funds has been the primary growth engine for Sprott over the past several years, and the funds are highly scalable to capture the growing interest in physical metals. Their growing sizes and liquidity are important factors as they are attracting capital from an ever larger group of investors. Our Sprott physical gold trust crossed the $12 billion mark in assets, which is a proud milestone considering we were less than $9 billion at the beginning of the year. Our physical silver trust and physical gold and silver trust have each eclipsed $6 billion in size, and our physical uranium trust is approaching $5 billion once again. Moving to slide nine. On our last quarterly call, I expressed how we were disappointed by only raising $350 million in our physical gold trust last year. So far in 2025, the trust has generated $1.1 billion in net flows. Over the past few weeks, we have experienced single trading days where our physical gold trust has raised between $200 million and $300 million. While market volatility remains extreme, driven by daily headlines and tweets, the shift to gold feels enduring. Globally, flows into gold ETFs stand at $30 billion this year, which is a bullish sign that investors are returning, but it's a drop in the bucket compared to global capital pools. Allocations to gold remain very low relative based on a number of historical metrics, so we find the chatter about gold being a crowded trade to be amusing. While silver is up 12% this year, it is not yet attracting the same investor interest and capital flows as gold. Silver remains incredibly cheap with the gold to silver ratio standing at approximately 100 to 1, and silver still being well off its 2011 price high. Nonetheless, our physical silver trust has attracted approximately $200 million in net flows in 2025 compared to net outflows for our closest competitor. Our uranium and copper trusts have been held back by market sentiment, and in the case of uranium, shorting pressure across the sector. However, we are starting to see signs that these dynamics are shifting. The spot uranium price is slowly grinding higher, and there are growing signs that physical copper buying is accelerating in an already tight market. Moving to slide 10, we are starting to see recovery in the assets in our suite of ETFs. Strong performance from our gold mining ETFs in Q1 was a key driver, with the Sprott gold miners ETF, ticker SGVM, being ranked number three in performance amongst more than 3,500 funds. We are also seeing a rebound in uranium mining stocks and inflows into our ETFs after a challenging number of months for the sector. A number of uranium stocks, including the Sprott physical uranium trust, have been the targets of short sellers over the past few months, which has pressured valuations and frustrated investors who believe in the long-term fundamentals for nuclear energy and uranium. Over the past couple of weeks, we have seen the spot price of uranium reach the $70 level, and some of the uranium miners have rallied 30 to 50 percent. It feels like the shorts are being squeezed, and recent industry announcements and activity in both the spot and term markets are reaffirming the positive market fundamentals. Finally, on slide 11, despite the challenging market environment with many investors opting to stay on the sidelines, we are seeing solid sales results into our suite of ETFs with a broad number of funds contributing. And I'd also like to highlight two of our newest ETFs, the Sprott silver miners and physical silver ETF ticker SLVR, which provides more targeted exposure to the silver stock sector compared to competitors, and the Sprott active gold and silver miners ETF, the ticker is GBUG, the world's first actively managed gold and silver mining ETF. Both provide investors with highly differentiated alternatives, are very timely, and they're off to solid starts. I'll pass it back to Whitney.

Thanks, John. I'll start on slide 12, managed equities. As I mentioned in my opening remarks, our managed equities strategies have performed well this year, but despite the strong performance, investors have been slow to allocate capital to the sector. During the quarter, we reported 20 million in net redemptions. The launch of our first actively managed ETF allows us to leverage the strength and depth of our investment team. For reporting purposes, the Sprott active gold and silver miners ETF resides in our managed equity segment because it really is an actively managed fund packaged in an ETF wrapper. As of May 2nd, the AUM for this fund was 33.5 million, which while modest, a modest number is a very encouraging start for an ETF launched just on February 20th. I'll turn to slide 14 now for a look. I guess it's slide 15. Private strategies. Private strategies AUM was 2.2 billion, down slightly from December 31, 2024. The decline reflects a decrease in investments in the quarter over quarter, which is new investments less distributions. Across lending and streaming slash royalty segments, our team continues to assess new investment opportunities, in particular for LF3 and streaming and royalty strategies. In summary, I've got my slides wrong, but it says 14 here. For some closing remarks, to recap, strong precious metals prices and flows are driving AUM growth. Gold has reached a series of record highs in 2025. Silver has lagged and appears poised to move higher once tariff uncertainties dissipate. And our outlook for critical materials is constructive despite recent weakness. At Sprott, we're fortunate to be extremely well positioned with an asset base divided between precious metals and critical materials. We have a balanced product suite that offers both safe havens and growth opportunities, all of which offer investors some inflation protection. We're in a strong position to create value for our clients and shareholders in any environment. Our team of owner operators is working hard to focus on the opportunities ahead of us and is not distracted by all the noise. We're grateful to our patient long-term shareholders and we're very pleased to welcome some new ones during the first quarter. We look forward to reporting to you on our progress in the quarters ahead. We remain contrarian, innovative, and aligned. That concludes our remarks for today's call, and I'll now turn it over to the operator for some Q&A. Operator. Thank you.

As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press

star 1-1 again. One moment for questions. Our first question comes from Etienne Ricard with BMO Capital

Markets. You may proceed.

Thank you and good morning, team. I believe you mentioned in the past that the physical gold trust largely attracted a retail investor base. So I wonder, given the significant market volatility recently, are you seeing changes in the way institutions look at precious metals?

Yeah, hi. Good morning, Etienne. It's John. No, I definitely think we've seen a shift in investor segments. Institutional investors, I think, are most concerned and usually the first to start adding portfolio hedges and changing their allocations in response to market dynamics. So the trading volumes in the trust, I think, are highly reflective of institutional interest in the vehicles. We look at a number of different barometers to gauge retail interest, and right now, believe it or not, they're kind of soft. So it's mostly institutional investors that are trying to hedge a number of obviously emerging portfolio risks.

Interesting. And following the recent launch of your first active ETF, what is the wide space left for you to expand your ETF offering? And if I can add to follow up, at what level of AUM are you now breakeven on a new ETF?

Sure. John again. Obviously, the breakeven on ETF is highly dependent on what the top line fee is. And one of the, I think, key differentiators for Sprott is that we have not been dragged into the price war that has emerged in ETF land the last five, six, seven years. We continue to hold very solid fees because our products are very unique and very differentiated, and they're not commoditized, very market cap weighted indexes. They obviously utilize a lot of our expertise at Sprott and metals and mining and a lot of the index designs we're very heavily involved in. But having said that, we have been very active the last couple of years, you know, organically trying to build out this suite of ETFs. We've covered a lot of the major metals. You know, we are getting into the small little pockets that remain. But I think the big opportunity is to scale what we have. So that's the opportunity. Many of these funds are still nascent in their life, and we're really focused on trying to scale each of them. So that's the opportunity as opposed to launching 10 more right now.

I'll just add to that. I think we do have some white space on the active side. This is a sector, mining sector has got just about more risk than just any other sector I can think about, which creates more opportunities to generate alpha through active management. So I'm very excited as a long term active manager myself to be able to offer the market this product.

And lastly, as it relates to the uranium trust, John, I'm curious based on your investor discussions, what do you think needs to happen to discount to net asset value to narrow?

Yeah, I think people are looking for signals. And obviously, there's a lot of noise in the market right now. I think people have been

really

anchored on the spot price as a signal. Which has obviously been disturbed by a lot of one time selling in the market that we've seen with some unwinds of other uranium vehicles in the last few months. The spot price hit a low of sixty three dollars a few weeks ago. We've seen trades at 70 and 71 dollars in the last week. So we're starting to see some green shoots. What's also interesting is that we're starting to see some term contracts request for proposals. And while they're not big in volume, what's interesting to us is the start of the deliveries are next year. Why I'm highlighting this is that it tends to indicate to us that utilities are starting to get back into the market and they've been dragging their feet on buying. And typically these are for deliveries three or four years out in the future. The fact that they're asking for delivery next year tells us that the foot dragging is kind of caught up to them. And we think that's very bullish. There's also been a number of bullish announcements in the last few days, including Google today announcing they were going to be funding three nuclear bills. And we think the the Trump administration is close to be making a very large support announcement around nuclear energy in the coming days. So I think sentiment is shifting. Utilities are kind of coming out of the woodwork after being on the sidelines. And one thing I should mention is that tariffs and the uncertainty around that were really a big catalyst to keep utilities on the sidelines. And uranium, given its critical nature, was largely unscathed from the Trump tariffs. So that has removed a key obstacle for utilities to get back into the market. Great. Thank you very much.

Thank you. Our next question comes from Matthew Lee with CGF. You may proceed.

Hi, morning, guys. Thanks for taking my question. So AUM growth was very strong, particularly on the gold side, and it looks to be mainly spot increases for Q1. When we look at share activity, it makes sense that the gold trust has seen really good share issuances so far in Q2. But silver actually appears to be heating up a bit as well. I think we've talked in the past about how beneficial it would be if multiple resources were kind of working at the same time. Do you maybe see use silver as that second leg this year? Or could it be a bounce back on the critical side, just given something you said just now?

We never know. And if you ask us to guess, we're probably going to be wrong. Uranium seems to be perking up. There's a lot of interest. There are a lot of new investors that we've been in contact with in the last year who kind of missed the first round or doing their work. So I just don't know which penguin jumps off the iceberg first, but once they go, they all go. And again, I agree with you on silver. Silver, like copper, is probably being held back a little bit because of its industrial applications and concerns about recession due to the tariffs.

Great. And then maybe a bigger picture question. Stocks obviously are working well. Balance sheet is pristine. I know you've talked about potentially supplementing your funds with inorganic growth. Can you just provide some color as to what kind of targets you might be looking for when you think about expanding the business outside of the organic growth that you already have?

Well, as I think I said, we're always looking and we're always open. The asset management businesses tend to get sold, not bought, so we're not totally in control of what happens. We did scour the earth pretty carefully for a number of years when we were transitioning from Eric Sprott's boutique to what we are today. And of course, we were able to do that in a time when nobody else was interested. So I would imagine given the price activity and commodities, and particularly gold this year, anything we looked at probably would have some competitors. So if something comes up, it's great. It's not going to happen. We haven't seen anything that would dramatically change the complexion of Sprott. We like the way we're positioned and really want to execute. So that probably means the focus is on organic growth and openness to check out some new things if they come along. OK, that's fair enough. Thanks

for your questions.

Thank you. Our next question comes from Graham Riding with TD Securities. You may proceed.

Hi, good morning. Can you just remind us, you know, historically your redemptions on the exchange listed trusts have been pretty low. Is that because of the close end structure or, you know, are you required to redeem units if they're trading at a certain discount to that? Can you just remind us why your redemptions have been quite low?

I think there are two factors. One is the kind of investors that we attract in our trust, our longer term oriented investors, GLDs out there if you want daily liquidity and GLD minis if you don't want to pay fees. So I think we start off with a bit of an advantage with a longer term investment horizon for anybody who buys our funds. And then again, you know, that's followed by the fact that they're closed end. If sentiment is bad enough and they trade at big enough discounts, there's an arbitrage community out there that's happy to buy some of the trusts at a discount versus a short metal and take delivery. So that sort of would be the two factors that determine, you know, whether we're in redemption or not. And it's certainly we've been gaining share relative to our competing products over the last few years.

Okay, understood. So that would have been what essentially played out back in late 2023, early 2024 when you saw some outsized redemptions. That was sort of arbitrage activity.

Yep.

Okay.

Yeah, I think it's a fair say, Graham, that at that time there wasn't a whole lot of interest in metal. That obviously has shifted pretty dramatically.

Yeah. Yeah. Okay. And then is there any reason why right now you're seeing, you know, strong flows into your physical gold trust? You've seen some influence in your physical silver, but the combined gold and silver trust has outflows.

Investors seem to want a more focused kind of product. You know, they don't necessarily want a basket. You know, we've learned that, you know, over the years, we're very happy to have our gold and silver trust. But that's probably more for a retail kind of investor who wants, you know, one stock shop for precious metals as opposed to an investor or family office.

Okay, that makes sense. Thank you. And then last question, just probably for Kevin, the comp ratio, just the outlook here. Big move in AUM quarter of a quarter and year over year. Looks like your comp ratio is up quarter of a quarter and flat year over year. Maybe you can just provide some color on how we should be thinking about operating leverage and margins with this move higher in AUM.

Sure. Sure, Graham. So a couple things. One, on the operating margin side, I think that if things continue the way they are, and obviously you've seen the run up in gold prices that happened very late in the quarter, that should start trickling its way down even more into our bottom line, given your point, the operating leverage we have. So I would expect our EBITDA margins to continue to pull up slightly over the year. And when it comes to the comp ratio, I would say that the number you're seeing now is probably about right for your modeling purposes. I don't think that a more constructive bottom line is going to necessarily cause the comp ratio to blow out. We've done a pretty good job, Whitney and the board, in sort of making sure that although on the AIP side we're linked to performance, there's enough fixed costs in that line to keep our comp in check, even if gold prices continue to positively run away from us.

So 47 is a reasonable number for the year? Yes. Okay, that's it for me. Thank you.

Thank you. Our next question comes from Mike Kosak with Kent of Fitzgerald. You may proceed.

Yeah, morning guys. Congrats on the inflows over the last couple of weeks and months. Just a couple of questions from me. The first is you posted I think 43 million in net inflows into the precious metals ETFs in Q1, which is the first meaningful quarter of net inflows in quite some time. Are you seeing that accelerate so far in Q2 or is it still, on a percentage basis, still the physical metals that are attracting most of the interest?

Oh, hey Mike, it's John. Yeah, I mean it's still lumpy given all of the market uncertainty, but I think the point to highlight is that some of our funds are doing much better than the competitors in this environment, meaning there are outflows and our funds have been able to grow. So that's a good sign. I think it does speak to the point Whitney made earlier that our constituency tends to be more buy and hold as opposed to rapid traders. So some of the hot money is leaving, but more of the long-term buy and hold money is coming into our vehicles, which is positive. But it is encouraging that we have had good flows. And, you know, there's obviously a lot of runway here. Investors are not, you know, overly responding to very strong performance in some of the sectors we're in. I think it's just they just don't know what to do right now and they're just sitting on the sidelines, but the performance has been great. So it sets us up well, but it's very hard to predict given everything is just day to day right now with a lot of headline risk.

Yeah, fair point. And then second, maybe just like the marketing you've been doing over the last few months or maybe better way to put it, the inbounds you've received over that time. What would you say is the approximate split of investor interest between precious metals now versus the uranium?

Yeah, it's a good question. I would say we obviously have, you know, shifted more to gold in the last few months after it being heavily skewed to uranium for three years. But we're definitely in the last few months seeing a new cohort of investors that missed the first move in uranium, looked at the pullback and are kind of reevaluating whether it's an interesting time to get in. So I do I do think we're going to start to see a swing back to uranium. We may have been 80 percent uranium, 20 percent precious metals at the peak. And now it's probably more balanced with probably growing interest in uranium with gold being kind of number one right now. I think

it's

important

that our approach to marketing is to become a trusted resource with with content that's available for people to access. And, you know, there are a lot of people out there that have a lot to say about precious metals, but there's I don't think anybody out there that has a size scope and focus on the uranium market that we have. It's brought. So it is an important part, and it's one of the things I think that really makes us a little different.

Yeah, makes sense. Thanks for that color. I'll turn it over.

Thank you. And as a reminder to ask a question, please press star one one on your telephone.

One moment for questions. And I'm not showing any further questions at this time. I will now turn the call back over

to Whitney George for any closing remarks.

Thank you. And thank you, everyone, for participating in this call. We appreciate your interest in Sprott and look forward to speaking to you again after our second quarter results. Have a great day.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.