Q2 2024 Sprott Inc Earnings Call

Speaker Change: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Sprout, Inc.'s 2024 Second Quarter Results Conference Call.

Operator: for the second quarter results conference call. At this time, all participants are on a listen-only mode. Following the presentation, we will conduct a question and answer session, and instructions will be provided at that time for you to queue up for questions.

Operator: at this time all participants on a listen only mode.

Operator: Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at the time for you to queue up for questions.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: Following the presentation, we will conduct a question and answer session. Instructions will be provided at the time for you to queue up for questions.

Operator: As a reminder, this conference has been recorded today, August 7th, 2024. On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the safe harbor provision of the Canadian Provisional Security Laws. Forward-looking statements involve risks and uncertainties and not be placed on such statements. Certain material factors are assumptions are implied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements.

Operator: As a reminder, this conference is being recorded today, August 7th, 2024. On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the safe harbor provision of the Canadian Provisional Security Law, for forward-looking statements involve risk and uncertainties, and should not be placed on such statements. Certain material factors and 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, see Risk Factors and Other Important Information.

Speaker Change: As a reminder, this conference is being recorded today, August 7, 2024.

Speaker Change: On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the safe harbor provision of the Canadian Provisional Security Laws.

Speaker Change: for looking statements involve risk and uncertainties and not be placed on such statements.

Speaker Change: Certain material factors are assumptions are implied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements.

Operator: Additional information about factors that may cause actual results to differ materially from expectations and about material factors are assumptions applied in making forward-looking statements. Please consult the MDNA for the quarter of Sprott's other failings in the Canadian and U.S. Security regulatory.

Speaker Change: 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 of Sprott's other filings and the Canadian and U.S. Security Regulators.

Operator: Please consult the MD&A for the quarter of Sprott's other filings under the Canadian and U.S. security regulations. I would now like to turn the conference over to Mr. Whitney George. Please go ahead, sir.

William George: I would now like to turn the conference over to Mr. Whitney George. Please go ahead, sir.

Speaker Change: I would now like to turn the conference over to Mr. Whitney George. Please go ahead, sir.

William George: Thank you and good morning, everyone, and thanks for joining us today. On the call with me today is our CFO, Kevin Hebert, and John Chimpave, CEO of Sprott, as management. Our 2024 second quarter results are released this morning and are available on our website, where you can also find the financial statements in MDNA. I'll start on slide four.

Whitney George: Thank you, and good morning, everyone, and thanks for joining us today. On the call with me today is our CFO, Kevin Hibbert, and John Ciampaglia, CEO of Sprott Asset Management. Our 2024 second 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 start on slide four.

Whitney George: Thank you and good morning everyone and thanks for joining us today. On the call with me today is our CFO Kevin Hibbert and John Ciampaglia, CEO of Sprott Asset Management.

Speaker Change: Our 2024 second quarter results were released this morning and are available on our website where you can also find the financial statements and MD&A.

Whitney George: Before I get into our results for the quarter, I'd like to comment briefly on the recent turmoil in the markets and the world at large. Sadly, two wars continue with no feasible end in sight. The upcoming U.S. election has been turned on its head by the recent assassination attempt on former President Trump, as well as President Biden's decision not to seek re-election. Globally, recent election results reflect a general dissatisfaction with the incumbents.

William George: Before I get into our results for the quarter, I'd like to comment briefly on the recent turmoil in the markets in the world at large. Sadly, two wars continue with no feasible ending. I mean, U.S.

Whitney George: I'll start on slide four.

Whitney George: Before I get into our results for the quarter, I'd like to comment briefly on the recent turmoil in the markets and the world at large. Sadly, two wars continue with no feasible end in sight.

William George: Election has been turned on its head by the recent assassination attempt on former President Trump, as well as President Biden's decision not to seek reelection. Globally, recent election results reflect a general dissatisfaction with the eating companies. On top of this, financial markets have experienced about an extreme volatility resulting primarily from the sudden unwinding of the end-carry trade, as well as about a two-week economic data in the United States.

Speaker Change: U.S. election has been turned on its head by the recent assassination attempt on former President Trump, as well as President Biden's decision not to seek re-election.

Whitney George: On top of this, financial markets have experienced a bout of extreme volatility resulting primarily from the sudden unwinding of the yen carry trade, as well as a batch of weak economic data in the United States. At Sprott, we do our best not to be distracted by the noise.

Speaker Change: Globally, recent election results reflect a general dissatisfaction with the incumbents. On top of this, financial markets have experienced a bout of extreme volatility resulting primarily from the sudden unwinding of the yen carry trade, as well as a bout of weak economic data in the United States.

William George: At Sprott, we do our best not to be distracted by the noise, where focus on the key long-term drivers of our business, which are fundamentally unchanged, or focus on precious metals and critical material investments, we believe are very well positioned for the current market environment. Turning now to our results, I am pleased to report that our assets under management increased by $1.7 billion to $31.1 billion, which is another record high for Sprott. Subsequent to the quarter end, we added an additional 400 million assets, reaching $31.5 billion as of August 1st, 2024. However, this number has moved around a bit over the last few days due to the recent volatility across all asset classes.

Whitney George: We're focused on the key long-term drivers of our business, which are fundamentally unchanged. Our focus on precious metals and critical materials investments, we believe are very well positioned for the current market environment. Turning now to our results, I am pleased to report that our assets under management increased by $1.7 billion to $31.1 billion, which is another record high for Sprott. Subsequent to the quarter end, we added an additional 400 million assets, reaching 31.5 million as of August 1st.

Sprott: At Sprott, we do our best not to be distracted by the noise. We're focused on the key long-term drivers of our business, which are fundamentally unchanged. Our focus on precious metals and critical materials investments, we believe, are very well positioned for the current market environment.

Whitney George: However, this number has moved around a bit over the last few days due to the recent volatility across all asset classes. Gold and silver performed well in the first half of 2024. Gold recently reached a new record high of $2,484 before retreating back to around $2,400 on some profit-taking. Silver achieved its highest quarterly close since the third quarter of 2012 at $2,914. Buoyed by gold's move, global monetary expansion policies, and demand from the photovoltaic sector.

Sprott: Turning now to our results.

Sprott: I am pleased to report that our assets under management increased by $1.7 billion to $31.1 billion, which is another record high for Sprott.

Sprott: Subsequent to the quarter end, we added an additional $400 million in assets, reaching $31.5 million as of August 1st.

Sprott: 2024. However, this number has moved around a bit over the last few days due to the recent volatility across all asset classes.

William George: Golden Silver performed well on the first half of 2024. Gold recently reached a new record client of $1,484 for retreating back to around $2,400 on some profit-taking. Silver achieved its highest quarterly close since the third quarter of 2012 at a 29-14. Boyed by gold's move, global monetary expansive policies, and demand from photovoltaic sector, the photovoltaic sector. Sorry, it's a mouthful. We continue to note the series of new highs set in 2024 have been driven by central bankers. Services, and achieved with limited investor, general investor participation in the precious metal sector.

Sprott: Gold and silver performed well in the first half of 2024. Gold recently reached a new record high of $2,484 before retreating back to around $2,400 on some profit taking. Silver achieved its highest quarterly close.

Sprott: Since the third quarter of 2012, at 2914, buoyed by gold's move, global monetary expansion policies and demand for the photovoltaic sector, sorry, that's a mouthful.

Whitney George: We continue to note the series of new highs set in 2024 have been driven by central bank purchases and achieved with limited general investor participation in the precious metals sector. We continue to build out our critical..., with the IPO of the Sprott Physical Copper Trust, which is the world's first physical copper fund. Launching the Copper Trust was a strategic priority for Sprott and the latest addition to our critical materials investment strategy.

Sprott: We continue to note the series of new highs set in 2024 have been driven by central bank purchases.

Speaker Change: and achieved with limited general investor participation in the precious metals sector. We continue to build out our critical material quarter with the IPO of the Sprott Physical Copper Trust, which is the world's first physical copper fund.

William George: We continue to build out our critical material in the tier quarter, with the IPO of the Sprott Physical Copper Trust, which is the world's first physical copper fund. Launching the Copper Trust was a strategic priority for Sprott, and the latest addition to our critical materials investment strategies. John will talk more about that, and the launch in future plans in a few minutes.

Speaker Change: Launching the Copper Trust was a strategic priority for Sprott and the latest addition to our critical materials investment strategies.

Whitney George: John will talk more about that and the launch and future plans in a few minutes. After reporting net redemptions in the first quarter for the first time in more than four years, we returned to net sales in Q2. During the quarter, we generated $357 million in net sales, plus an additional $110 million in flows from the Copper Trust IPO. With that, I'll pass it over to Kevin for a look at our financial results. Kevin?

William George: After reporting that redemption through the first quarter, for the first time in more than four years, we returned to net sales in Q2. During the quarter, we generated 357 million in net sales, plus an additional 110 million in flows from the Copper Trust IPO.

Speaker Change: John will talk more about that and the launch and future plans in a few minutes.

Kevin Hibbert: With that, I'll pass it over to Kevin for a look at our financial results. Kevin?

Kevin Hibbert: Thanks, Whitney, and good morning, everyone. I'll start on slide five, which provides a summary of our historical AUM. As Whitney noted, AUM finished the quarter at $31.1 billion, which was up 6% from $29.4 billion last quarter and up 8% from $28.7 billion at the end of last year. On a three- and six-month end basis, we benefited from market value appreciation in our precious metals physical trusts. Net inflows across our exchange-listed products mix, and the launch of the physical copper trust in the quarter.

Kevin Hibbert: Thanks, Whitney, and good morning, everyone. I'll start with slide 5, which provides a summary of our historical AUM. As Whitney noted, AUM finished the quarter at $31.1 billion, which was up 6% from $29.4 billion last quarter and up 8% from $28.7 billion at the end of last year. On a three and six months ended basis, we benefited from market value appreciation in our precious metals physical trust. Net inflows across our exchange-listed products mix and the launch of the Physical Copper Trust in the quarter.

Speaker Change: As Whitney noted, AUM finished the quarter at $31.1 billion, which was up 6% from $29.4 billion last quarter, and up 8% from $28.7 billion at the end of last year.

Kevin Hibbert: Over the last five years, our AUM has grown by $21.8 billion, of which 49% was attributable to net inflows, 37% was related to market value appreciation, and 14% was related to acquisitions and new fund launches, demonstrating the quality and resolve of our asset base and related earnings.

Kevin Hibbert: Over the last five years, our AUM has grown by $21.8 billion, of which 49% was attributable to net inflows, 37% was related to market value appreciation, and 14% was related to acquisitions and new fund launches, demonstrating the quality and resolve of our asset base and related earnings. Subsequent to quarter end on August 1st, our AUM increased 2% to $31.5 billion.

Kevin Hibbert: Subsequent to quarter end on August 1, our AUM increased 2% to $31.5 billion. Slide six provides a brief look at our three- and six-month earnings. Last year, our net income benefited from the realization of an $18.6 million non-recurring asset. Consequently, our net income this quarter of $13.4 million was down 25% from $17.7 million for the three months ended last year. On a year-to-date basis, net income was $24.9 million, down 2% from $25.4 million last year. Excluding the impact of last year's realization of a non-recurring asset, our three months ended net income was actually up $14.2 million from the same three-month period last year, and our six months ended net income was up $18.1 million from the same six-month period last year.

Kevin Hibbert: Slide six provides a brief look at our three and six month earnings. Last year, our net income benefited from the realization of an $18.6 million non-recurring asset. Consequently, our net income this quarter of $13.4 million was down 25% from $17.7 million for the three months ended last year. On a year-to-date basis, net income was $24.9 million, down 2% from $25.4 million last year. Excluding the impact of last year's realization of a non-recurring asset, our three months ended net income was actually up $14.2 million from the same three-month period last year, and our six months ended net income was up $18.1 million from the same six-month period last year.

Speaker Change: On a year-to-date basis, net income was $24.9 million, down 2% from $25.4 million last year.

Kevin Hibbert: Adjust the base EBITDA was $22.4 million in the quarter. Up 25% from $18 million earned over the same three-month period last year. and was $42.1 million on a six-month-ended basis. Up 19% from $35.3 million earned over the same six-month period last year. Our three- and six-month-ended results benefited from higher management fees, unimproved market valuations in our precious metals exchange-listed products, higher commission income on increased ATM activity in our critical materials exchange-listed products, and higher finance income in our private strategy segment due to higher streaming syndication fees.

Kevin Hibbert: Adjusted base EBITDA was $22.4 million in the quarter, up 25% from $18 million earned over the same three-month period last year, and was $42.1 million on a six-month basis, up 19% from $35.3 million earned over the same six-month period last year. Our three- and six-month-ended results benefited from higher management fees on improved market valuations in our Precious Metals Exchange-listed products, higher commission income on increased ATM activity in our critical materials exchange-listed products, and higher finance income in our private strategy segment due to higher streaming syndication. Finally, slide seven provides a few treasury and balance sheet management highlights.

Speaker Change: Adjusted base EBITDA was $22.4 million in the quarter, up 25% from $18 million earned over the same three-month period last year.

Speaker Change: and was $42.1 million on a six-month ended basis, up 19% from $35.3 million earned over the same six-month period last year.

Speaker Change: and higher finance income in our private strategy segment due to higher streaming syndication fees.

Kevin Hibbert: Finally, slide seven provides a few treasury and balance sheet management highlights. And as you can see, our cash and liquidity profile continues to strengthen quarter over quarter. Our leverage remains low and we will be even lower in the second half of the year as we expect to pay down more debt.

Speaker Change: Finally, slide 7 provides a few treasury and balance sheet management highlights.

Kevin Hibbert: And as you can see, our cash and liquidity profile continues to strengthen quarter over quarter. Our leverage remains low, and we will be even and will be even lower in the second half of the year as we expect to pay down more debt. For more information on our revenues, expenses, 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 year. With that said, I'll pass things over to John.

Speaker Change: And as you can see, our cash and liquidity profile continues to strengthen quarter over quarter. Our leverage remains low and we will be even lower in the second half of the year as we expect to pay down more debt.

Kevin Hibbert: For more information on our revenues, expenses, 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.

Speaker Change: For more information on our revenues, expenses, 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.

John Ciampaglia: With that said, I'll pass things over to John. Thanks, Kevin, and good morning, everybody. We enjoyed a very strong rebound in sales in Q2, as Whitney mentioned, and the positive momentum has continued since the end of the quarter. We did feel as though March marked the bottom for our business, where there was a low in sentiment across a number of metals markets, and I'm pleased to report we've realized that expected rebound that we were anticipating. After a period of indifference, investor interest in precious metals is slowly returning. This is very positive for our business. Given gold is already sitting at $2,400, largely with institutional investors in the West not participating.

John Ciampaglia: Thanks, Kevin. And good morning, everybody.

John Ciampaglia: We enjoyed a very strong rebound in sales in Q2, as Whitney mentioned, and the positive momentum has continued since the end of the quarter. We did feel as though March marked the bottom for our business, where there was a low in sentiment across a number of metals markets, and I'm pleased to report we've realized the expected rebound that we were anticipating. After a period of indifference, investor interest in precious metals is slowly returning. Let's go to the next slide.

Speaker Change: After a period of indifference, investor interest in precious metals is slowly returning. This is very positive for our business, given gold is already sitting at $2400, largely with institutional investors in the West not participating.

John Ciampaglia: Central bank buying of gold coupled with concerns about a number potential portfolio risks is generating renewed interest, while copper is well positioned to benefit from the growing long-term demand for electricity and copper-intensive clean energy technologies.

Speaker Change: Central bank buying of gold coupled with concerns about a number of potential portfolio risks is generating renewed interest

Speaker Change: While copper is well positioned to benefit from the growing long-term demand for electricity and copper intensive clean energy technologies.

John Ciampaglia: Let's go to the next slide. AUM growth has been strong year to date, up 2.6 billion, with assets reaching an all-time high during the quarter, and over the last six quarters, our AUM and this segment has increased approximately 30%, which is really great, considering many markets have been somewhat range bound. On June 6, we welcomed our newest physical metals trust to our lineup with the Copper Trust. We're very excited about adding another metal, given the compelling long-term fundamentals for copper. We spent the last few years building out our product suite, both organically and via acquisitions, to diversify and competitively position ourselves in market segments that we believe are entering new bull markets.

Speaker Change: Let's go to the next slide.

Speaker Change: AUM growth has been strong year-to-date, up $2.6 billion, with assets reaching an all-time high during the quarter.

John Ciampaglia: And over the last six quarters, our AUM in this segment has increased approximately 30%, which is really great considering many markets have been somewhat range-bound. On June 6th, we welcomed our newest physical metals trust to our lineup, the Copper Trust. We're very excited about adding another metal, given the compelling long-term fundamentals for copper. We spent the last few years building out our product suite, both organically and via acquisition, to diversify and competitively position ourselves in market segments that we believe are entering new bull markets. And assets continue to scale for many of the newer funds as we achieve platform approvals and achieve break-even AUM levels. Next slide, please.

Speaker Change: And over the last six quarters, our AUM in this segment has increased approximately 30%, which is really great considering

Speaker Change: Many markets have been somewhat range bound. On June 6th, we welcomed our newest Physical Metals Trust to our lineup with the Copper Trust. We're very excited about adding another metal, given the compelling long-term fundamentals for copper.

Speaker Change: to diversify and competitively position ourselves in market segments that we believe are entering new bull markets.

John Ciampaglia: This diversification strategy has been very effective, as metal markets do not always move in sync, allowing us to capture new assets when investor interest appears.

Speaker Change: This diversification strategy has been very effective as metal markets do not always move in sync, allowing us to capture new assets when investor interest appears.

John Ciampaglia: Next slide, please. Shifting over to our equity-based ETFs, we enjoyed a strong recovery in sales for the quarter after a soft Q1. Our uranium mining ETFs led the pack for the quarter. In this category, we now have over 10 funds across various metal segments and listing locations, and assets continue to scale from any of the newer funds as we achieve platform approvals and achieve break even AUM levels.

Speaker Change: Next slide, please.

Speaker Change: And assets continue to scale for many of the newer funds as we achieve platform approvals and achieve break-even AUM levels.

John Ciampaglia: Next slide, please. We're very pleased with how the products we disscaling AUM has also reached an all-time high in the quarter and has essentially doubled over the last six quarters. Mining equity ETFs are popular choices for both institutional, advisor, and individual investors, as many prefer to invest in a thematic through a basket of stocks. Many of the ETFs we offer track indices that Sprott has co-developed with index providers such as NASDAQ that integrate our knowledge and experience as a long-time investor in metals and mining. This allows us to provide differentiated offerings to represent more pure-play options in the marketplace.

Speaker Change: We're very pleased with how the product suite is scaling. AUM has also reached an all-time high in the quarter and has essentially doubled over the last six quarters.

Speaker Change: Many of the ETFs we offer track indices that Sprott has co-developed with index providers such as Nasdaq that integrate our knowledge and experience as longtime investors in metals and mining. This allows us to provide differentiated offerings that represent more pure play options in the marketplace.

John Ciampaglia: Next slide, please. As I mentioned earlier, we're very pleased with the successful completion of the Sprott Physical Copper Trust IPO. The market environment for IPOs remains very challenging. With COP, we're representing the first IPO on the Toronto Stock Exchange since March 2023. Gross proceeds raised were $110 million, with 80% of the assets coming from institutions. Of the institutional participation, approximately 80% were existing investors in other Sprott funds and/or holders of Sprott Inc. stock. We'd like to thank these institutions for their continued support in helping us get this IPO off the ground. We're very excited about the long-term growth potential of the COP, given the size of the market and the broader appeal of COP amongst generalist investors.

Speaker Change: Next slide, please.

Speaker Change: As I mentioned earlier, we're very pleased with the successful completion of the Sprott Physical Copper Trust IPO. The market environment for IPOs remains very challenging, with COP representing the first IPO on the Toronto Stock Exchange since March 2023.

Speaker Change: Gross proceeds raised were $110 million, with 80% of the assets coming from institutions.

Speaker Change: Of the institutional participation, approximately 80% were existing investors.

Speaker Change: in other Sprott funds and or are holders of Sprott Inc. stock, and we'd like to thank these institutions for their continued support in helping us get this IPO off the ground.

Speaker Change: We're very excited about the long-term growth potential of the Copper Trust, given the size of the market and the broader appeal of copper amongst generalist investors. We've been talking to investors for three years now about uranium, and I would say that 80% of the time, there's also dual interest in copper as well.

John Ciampaglia: We've been talking to investors for three years now about uranium, and I would say 80% of the time there's also dual interest in COP, as well.

William George: We've recently implemented an APA market program to raise additional capital, and our plan is to ramp up marketing investor outreach over the coming months, and with that, I will pass it over to Whitney. Thanks, John.

Speaker Change: We've recently implemented an at-the-market program to raise additional capital, and our plan is to ramp up marketing investor outreach over the coming months.

Speaker Change: And with that, I will pass it over to Whitney.

John Ciampaglia: Well, I'll turn to slide 13 now, managed equities. Despite the lack of investor interest, we are pleased with the strong performance of our precious metals equity strategies in the first half of 2024. Our flagship gold equity fund was up approximately 20% as of August 1, and its performance has been steadily improving relative to its peer group. I'll turn now to slide 14 for a look at our private strategy. Combined lending and streaming strategies AUM was $2.5 billion as of June 30, 2024.

William George: Well, I'll turn to slide 13 now, managed equities. Well, gold and silver enjoyed the strong first half of the year. The mining equities have stubbornly lagged the metals themselves. Investor sentiment towards the miners is at historically low levels, and a small rotation out of tech stocks into precious metals equities would have a profoundly positive impact on the sector. Despite the lack of investor interest, we are pleased with the strong performance of our precious metals equities strategies in the first half of 2024. Our flagship gold equity fund is up approximately 20% as of August 1, and its performance has been steadily improving relative to its peer group.

Whitney George: While gold and silver enjoyed a strong first half of the year, the mining equities have stubbornly lagged the metals themselves. Investor sentiment towards the miners is at historically low levels and a small rotation out of tech stocks into precious metals equities would have a profoundly positive impact on the sector.

Whitney George: Despite the lack of investor interest, we are pleased with the strong performance of our precious metals equity strategies in the first half of 2024.

Whitney George: Our flagship gold equity fund is up approximately 20% as of August 1st, and its performance has been steadily improving relative to its peer group. I'll turn now to slide 14 for a look at our private strategies.

William George: I'll turn now to slide 14 for a look at our private strategies. Combined lending and streaming strategies at UN was 2.5 billion as of June 30, 2024. The team is continuing to monitor and harvest investments in our second private lending fund and is actively assessing new investment opportunities in our lending fund three. We are also pleased with the early investor response to our active physical commodity strategy, which was launched late last year.

Whitney George: Combined lending and streaming strategies AUM was $2.5 billion as of June 30, 2024. The team is continuing to monitor and harvest investments in our second private lending fund and is actively assessing new investment opportunities in our lending fund three.

John Ciampaglia: The team is continuing to monitor and harvest investments in our second private lending fund and is actively assessing new investment opportunities in our Lending Fund III. We are also pleased with the early investor response to our active physical commodities strategy, which was launched late last year. Slide 15. I'll move now to slide 15 for closing remarks.

William George: Slide 15. I'll move now to slide 15 for closing remarks. Despite the recent volatility in the markets, little has changed from our outlook as we presented at the start of 2024. As expected, inflation remained a bit stickier than most had hoped for the first half of the year. While many countries have begun to cut interest rates, the U.S. in the U.S. short-term rates are unchanged, although expectations have fluctuated wildly over the last six months. Once again, the Fed appears to be behind the curve and is only now edging towards a September cut. Fiscal deficits continue to grow to new, non-recessionary records as a percentage of U.S.

Whitney George: Slide 15.

John Ciampaglia: Despite the recent volatility in the markets, little has changed from our outlook that we presented at the start of 2024. As expected, inflation remained a bit stickier than most had hoped for the first half of the year. Fiscal deficits continue to grow to new non-recessionary records as a percentage of U.S. GDP, and, as noted at the start of the call, wars and elections are creating geopolitical uncertainty. Fortunately, gold prices have responded favorably to these difficult fundamentals, setting several new highs before settling close to the 2400 mark, at least for the time being.

Whitney George: I'll move now to slide 15 for closing remarks. Despite the recent volatility in the markets, little has changed from our outlook that we presented at the start of 2024. As expected, inflation remained a bit stickier than most had hoped for the first half of the year.

Whitney George: While many countries have begun to cut interest rates, in the U.S., short-term rates are unchanged, although expectations have fluctuated wildly over the last six months. Once again, the Fed appears to be behind the curve and is only now edging towards a September cut.

William George: GDP, and has noted the start of the call, wars, and elections are creating geopolitical uncertainty. Fortunately, gold prices have responded favorably to these difficult fundamentals, setting several new highs before settling close to the 2400 mark, at least from the time being. We're pleased with our performance in the first half of 2024. AUN is near record highs. We delivered positive net sales in the first half of the year; results are steadily improving. Despite some recent weakness in uranium and copper prices, which we expect to be short lived, our critical materials strategy, our capturing market share, and a rapidly growing category.

John Ciampaglia: We're pleased with our performance in the first half of 2024. AUM is near record highs, and we delivered positive net sales in the first quarter. That's right, but the results are steadily improving. Despite some recent weakness in uranium and copper prices, which we expect to be short lived, our critical materials strategy is capturing market share in a rapidly growing category.

Speaker Change: We're pleased with our performance in the first half of 2024. AUM is near record highs. We delivered positive net sales in the first half of 2024.

Speaker Change: The results are steadily improving. Despite some recent weakness in uranium and copper prices, which we expect to be short-lived, our critical materials strategy are capturing market share in a rapidly growing category.

William George: We appreciate the continued support of our clients and shareholders, and feel confident their trust will be rewarded in the quarters and years ahead.

Speaker Change: We appreciate the continued support of our clients and shareholders and feel confident their trust will be rewarded in the quarters and years ahead.

William George: That would conclude our remarks for today's call. I'll now turn it over to the operator for some Q&A.

Operator: Operator. Thank you.

Speaker Change: That would conclude our remarks for today's call. I'll now turn it over to the operator for some Q&A. Operator?

Operator: Ladies and gentlemen, to ask the question, please press star 11 on your telephone, and then wait to hear your name announced. To withdraw your question, please press star 11 again. Please stand by if I will come out of the Q&A roster.

Operator: Thank you. Ladies and gentlemen, to ask a question, please press star 11 on your telephone and then wait to hear your name announced. To withdraw your question, please press star 11 again.

Speaker Change: Thank you. Ladies and gentlemen, to ask a question, please press star 11 on your telephone and then wait to hear your name announced.

Speaker Change: Please stand by while we compile the Q&A roster.

Mike Kozak: Our first question comes from the line of Mike Kozak with Jennifer Stirl. Your line is open. Yeah. Good morning, everybody. Thank you. Thanks for taking the questions. And then congrats on a great quarter.

Unnamed Questioner: Yeah, good morning everybody. Thank you. Thanks for taking the questions and congratulations on a great quarter. Just one question from me on the Uranium Trust.

Speaker Change: Our first question comes from the line of Mike Kozak with Cantor Fitzgerald. Your line is open.

John Ciampaglia: 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 raising cash in the Uranium Trust specifically? Yeah.

John Ciampaglia: Yeah, hi Mike, it's John. And the last resort, if those two things don't work out, is we would physically sell a small portion of uranium, which we haven't had to do in three years. So we prudently manage the cash so that we don't have to let go of any of our material, and right now, we're holding, I think, a sufficient cash balance to cover the expenses of running the trust for the next few months, so it's not anything of near-term concern.

John Ciampaglia: 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.

Unnamed Respondent: Thank you.

John Ciampaglia: Yeah, hi Mike, it's John .

Speaker Change: 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.

Speaker Change: 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 of our material, and right now we're holding, I think, a sufficient cash balance.

Speaker Change: You know, to cover expenses of running the trust for the next few months, so it's not anything of near-term concern.

Mike Kozak: Very good. That's helpful. Thanks. I'll turn it back on.

Operator: Thank you.

Operator: Thank you. As a reminder, ladies and gentlemen, that's star 11 to ask the question.

Operator: As a reminder, ladies and gentlemen, that star one-one to ask the question. I'm showing no further questions than the Q.

Speaker Change: Thank you. As a reminder, ladies and gentlemen, that's star 11 to ask the question.

William George: I would now like to turn the call back over to Whitney or close remarks.

Speaker Change: I'm showing no further questions in the queue.

William George: Thank you, everyone, for participating on this call, particularly on a very quiet August summer day. We appreciate your interest in Sprott and look forward to speaking to you again after our third quarter results.

Speaker Change: I would now like to turn the call back over to Whitney for closing remarks.

Whitney George: Thank you everyone for participating in this call, particularly on a very quiet August summer day. We appreciate your interest in Sprott and look forward to speaking to you again after our recorded results. Thanks again, and that concludes our conversation.

Whitney George: Thank you everyone for participating on this call, particularly on a very quiet August summer day. We appreciate your interest in Sprott and look forward to speaking to you again after our third quarter results. Thanks again, and that concludes our.

Operator: Thanks again, and that concludes our. Ladies and gentlemen, this includes today's call. Thank you for your participation.

Operator: Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.

Whitney George: Thank you. Bye.

Operator: You may now disconnect.

Speaker Change: Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.

Speaker Change: Thank you.