Sprott Inc. Q2 FY2024 earnings call

• AUM finished the quarter at $31.1 billion, a record high, with year-to-date growth of $2.6 billion.
• The Copper Trust IPO was a strategic priority, with gross proceeds of $110 million, 80% from institutions, and 80% of institutional participation from existing investors or Sprott-related holders.
• There was a strong rebound in sales in Q2 after a low in March, with investor interest in precious metals slowly returning.
• The product suite has been scaling effectively, with AUM doubling over the last six quarters, and equity-based ETFs showing a recovery after a soft Q1.
• Diversification strategy has been effective as metal markets don't always move in sync, allowing capture of new assets when investor interest arises.

Assets under management (AUM) finished the quarter at $31.1 billion, up 6% from $29.4 billion last quarter and 8% from $28.7 billion at the end of last year. In Q2, the company generated $357 million in net sales plus an additional $110 million in flows from the Copper Trust IPO. Precious metals physical trusts benefited from market value appreciation, exchange-listed products had net inflows, and the launch of the Physical Copper Trust was a key addition. Equity-based ETFs saw a strong recovery in Q2 with Uranium Mining ETFs leading, and AUM in this segment doubled over the last six quarters. AUM in mining equity ETFs reached an all-time high, with many appealing to institutional, adviser, and individual investors through thematic stock baskets.

• Little has changed from the 2024年初 outlook; inflation was stickier than expected in the first half. U.S. short-term rates unchanged with Fed edging towards a September cut. Fiscal deficits growing.
• AUM is near record highs, results steadily improving. Critical materials strategy capturing market share in a growing category.
• Expect uranium and copper price weakness to be short-lived.

• Market volatility due to sudden unwinding of yen carry trade and weak U.S. economic data.
• Geopolitical uncertainties from ongoing wars and election-related turmoil.
• Inflation stickiness and potential Fed policy impacts.
• Fluctuations in metal prices, though critical materials strategy is positioned to handle short-term weakness.

Q: Good morning, everybody. Thank you and thanks for taking the questions and congrats on a great quarter. Just one question from me on the Uranium Trust; other than the ATM what other levers could you potentially pull to keep the cash position up in that trust. I mean you've done location swaps in the past, I believe. Could these be ramped up in any way? And if you needed to, are there any other alternative methods to raise in cash in the Uranium Trust specifically?

A: Yes. Hi, Mike, it's John. That's an interesting question. So obviously, the ATM is the primary way to issue new units and receive cash. As you mentioned, we've done a number of location and origin swaps over the last three years, which have been very beneficial in terms of generating additional income. And the last resort, if those two things don't work out, is we physically would sell a small portion of uranium, which we've not had to do in three years. So we prudently manage the cash so that we don't have to let go of any raw material. And right now, we're holding, I think, a sufficient cash balance to cover expenses of running the trust for the next two months, so it's not anything of near-term concern.