Q4 2024 Sprott Inc Earnings Call
Yeah.
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Sprott Incorporated's 2024 board quarter results conference call.
Speaker Change: Good morning, ladies and gentlemen, thank you for standing by welcome. This response incorporate a 'twenty 'twenty four fourth quarter results conference call.
Operator: At this time, all participants are on a listen-only mode. Following the presentation, we will conduct a question and answer. Instructions will be provided at that time for you.
At this time all participants are in a listen only mode. Following the presentation. We will conduct a question and answer session instructions will be provided at that time for you to queue up for questions.
Operator: As a reminder, this conference is being recorded February 26th, On behalf of the speakers of Let's hear some and the responses to questions may contain within the meaning of the safe harbor provision of the Canadian Frippin Shoal.
Speaker Change: As a reminder, this conference is being recorded today that were 26 2025.
Speaker Change: The speakers I'll follow listeners are cautioned that today's presentation and responses to questions may contain forward looking statements within the meaning of the safe Harbor position.
Speaker Change: For the Securities law.
Operator: The following forward-looking statements involve risks and uncertainties, and under-reliance should not be tolerated. Certain material factors or assumptions are implied in making a decision. And actual results may differ materially from those expressed or implied in the article.
Speaker Change: Forward looking statements involve risks and uncertainties and undue reliance should not be placed on such statements.
Certain material factors or assumptions are applied in making forward looking statements and actual results may differ materially from those expressed or implied in such statements.
Operator: For additional information about factors on and Mickey. consult the MD&A for the quarter and Sprott's other filings with the Canadian and U.S.
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 and spots auto filings with the Canadian and the U S Securities regulators.
Whitney George: I will now turn the conference over to Mr. Whitney George. Please go ahead. Thank you, operator. And good morning, everyone. Thank you for joining us today.
Speaker Change: Now I'll turn the conference over to Mr. Whitney George Please go ahead Mr. George.
Whitney George: Thank you operator, and good morning, everyone. Thank you for joining us today on the call with me today is our CFO Kevin <unk>.
Whitney George: On the call with me today is our CFO, Kevin Hibbert, and John Ciampaglia, CEO of Sprott Asset Management. Our 2024 quarter and year-end 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 with a review of 2024 highlights. We will discuss in more detail later in the call, but a lot has happened since we last spoke, and we hope you are all managing well in this rapidly evolving environment. It's very difficult to give you a current outlook because the letter I wrote two weeks ago has already become dated with things moving so quickly.
Speaker Change: And Jon <unk>, CEO was broad asset management or.
Speaker Change: Our 2020 for fourth quarter and year end results were released this morning and are available on our website, where you can also find the financial statements and MD&A.
Speaker Change: I'll start on slide four with a review of 2024 highlights.
Speaker Change: We will discuss in more detail later in the call, but a lot has happened since we last spoke and we hope you are all managing well in this rapidly evolving environment.
Speaker Change: It's very difficult to give you our current outlook because.
Speaker Change: The letter I wrote two weeks ago has already become dated with things moving so quickly.
Whitney George: Turning now to our results, I'm pleased to report that in 2024 was Sprott's seventh consecutive year of double-digit AUM growth. Despite a pullback in the fourth quarter, our AUM increased by $2.8 billion during the year to $31.5 billion as of December 31, 2024. Importantly, we have carried that momentum into 2025, with assets increasing by $2 billion year to date to $33.5 billion. Our AUM growth in 2024 was driven by rising precious metal prices, as well as almost $700 million in net sales, mostly in our exchange-listed products. Our managed equity strategies also performed well in 2024, with certain funds generating performance fees.
Speaker Change: Turning now to our results I'm pleased to report that in 2024.
Speaker Change: Sprouts seventh consecutive year of double digit AUM growth. Despite a pullback in the fourth quarter, our AUM increased by $2 8 billion during the year to $31 5 billion as of December 31, 2024.
Speaker Change: Importantly, we have carried that momentum into 2020 with assets, increasing by 2 billion year to date to 33.5 billion.
Speaker Change: Our AUM growth in 2024 was driven by rising precious precious metal prices as well as almost $700 million and net sales mostly in our exchange listed products are managed equity strategies also performed well in 2024 with certain funds generating generating performance fees.
Whitney George: During the year, we continued to expand our critical materials offerings, with the launch of two new ETFs and one physical trust. At the corporate level, we paid down our line of credit during the fourth quarter, resulting in a debt-free balance sheet. In November, we increased our quarterly dividend by 20 percent. We were also in the market at the end of the year for modest repurchases of our shares through our normal course issuer bid.
Speaker Change: During the year, we continue to expand our critical materials offerings with the launch of two new Etfs in one physical trust.
Speaker Change: At the corporate level.
Speaker Change: We paid down our line of credit during the fourth quarter, resulting in a debt free balance sheet.
Speaker Change: In November we increased our quarterly dividend by 20%. We were also in the market at the end of the year for modest repurchases of our shares through our normal course issuer bid with that I'll pass it over to Kevin for a look at our financial results, Kevin Thanks, Whitney and good morning, everyone.
Kevin Hibbert: With that, I'll pass it over to Kevin for a look at our financial results. Kevin? Thanks, Whitney, and good morning, everyone.
Kevin Hibbert: I'll start on slide five, which provides a summary of our historical AUM. AUM finished the year at $31.5 billion, down 6% from $33.4 billion last quarter, but was up 10% from $28.7 billion at the end of 2023. To Whitney's point, although fourth quarter AUM was negatively impacted by market value depreciation across most of our funds and the termination of certain sub-advised fund contracts, 2024 was nevertheless our seventh consecutive year of double-digit AUM growth as we benefited from strong full-year market value appreciation in our precious metals physical trusts and net inflows to our exchange-listed products more broadly.
Speaker Change: I'll start on slide five which provides a summary of our historical AUM.
Speaker Change: AUM finished the year at 31 $5 billion down 6% from $33 4 billion last quarter.
Speaker Change: But was up 10% from $28 $7 billion at the end of 2023.
Speaker Change: To Whitney's point, although fourth quarter AUM was negatively impacted by market value depreciation across most of our funds and the termination of certain sub advised fund contracts 2024 was nevertheless, our seventh consecutive year of double digit.
Speaker Change: AUM growth as we benefited from strong full year market value appreciation in our precious metals physical trusts and net inflows to our exchange listed products more broadly.
Kevin Hibbert: Subsequent to year-end, on February 21st, our AUM increased by $2 billion to $33.5 billion.
Speaker Change: Subsequent to year end on February 21st our AUM increased by $2 billion to $33 5 billion.
Kevin Hibbert: Slide 6 provides a brief look at our 3 and 12 month earnings. Net income this quarter was $11.7 million, up 21% from $9.7 million for the same three-month period last year. On a full year basis, net income was $49.3 million, up 18% from $41.8 million last year.
Speaker Change: Slide six provides a brief look at our three and 12 months earnings.
Speaker Change: Net income this quarter was $11 $7 million up 21% from $9 7 million for the same three months period last year.
Speaker Change: On a full year basis, net income was $49 $3 million.
Speaker Change: Up 18% from $41 8 million last year.
Kevin Hibbert: Our 3- and 12-month-ended results benefited from higher average AUM on strong market value appreciation in our precious metals physical trusts and inflows to the majority of our exchange-listed products. We also benefited from carried interest and performance fee crystallization in certain funds in our managed equities and private strategies segment.
Speaker Change: Alright, three and 12 months ended results benefited from higher average AUM on strong market value appreciation in our precious metals physical trusts and inflows to the majority of our exchange listed products.
Speaker Change: We also benefited from carried interest and performance fee crystallization and certain funds and our managed equities and private strategies segments.
Kevin Hibbert: Adjusted base EBITDA was $22.4 million in the quarter, up 19% from $18.8 million earned over the same three-month period last year, and was $85.2 million on a full-year basis, up 18% from $71.9 million earned last year. Similar to our net income performance, our 3- and 12-month-ended results benefited from a higher average AUM on both strong market value appreciation and flows to our Precious Meadows Physical Trust.
Speaker Change: Adjusted base EBITDA was $22 $4 million in the quarter up 19% from $18 8 million earned over the same three months period last year and was $85 $2 million on a full year basis up 18% from $71 9 million last year.
Speaker Change: No.
Speaker Change: Similar to our net income performance, our three and 12 months ended results benefited from higher average AUM on both strong market value appreciation and flows to our precious metals physical trusts.
Kevin Hibbert: Finally, slide seven provides a few treasury and balance sheet management highlights. And as you can see, due to our improved earnings, our cash and liquidity profile strengthened this year.
Speaker Change: Finally, slide seven provides a few treasury and balance sheet management highlights.
Speaker Change: And as you can see due to our approved improved earnings our cash and liquidity profile strengthened this year, we've raised our dividend by 20% in November to Whitney's point and became debt free in the fourth quarter.
Kevin Hibbert: We raised our dividend by 20% in November, to Whitney's point, and became debt-free in the fourth quarter. For more information on our revenues, expenses, net income, EBITDA, and balance sheet metrics, you can refer to the supplemental information section of this presentation, as well as our annual MD&A and financial statements filed earlier this morning.
Speaker Change: For more information on our revenues expenses net income EBITDA and balance sheet metrics you can refer to the supplemental information section of this presentation as well as our annual MD&A and financial statements filed earlier. This morning, with that said I'll pass things over to John.
John Ciampaglia: With that said, I'll pass things over to John. Thank you, Kevin. And good morning to everybody. I'll start on slide eight and with our AUM growth. Despite softness in gold, silver and uranium prices in the fourth quarter, we experienced very strong AUM growth for the overall year. This product category continues to be our primary growth engine as we see growing investor interest in physical metals right across the world, and across multiple investors. Year-to-date, our AUM has experienced a sharp recovery, lifted primarily by precious I think it's also important to note that AUM in this segment stands at an all-time high and that this product category is highly scalable.
John: Thank you, Kevin and good morning to everybody I'll start on slide.
John: Slide eight and with our AUM growth despite softness in gold silver and uranium prices in the fourth quarter, we experienced very strong AUM growth for the overall year. This product category continues to be our primary growth engine as we see growing investor interest in physical metals right across the world and across multiple investor segment.
John: Year to date, our AUM has experienced a sharp recovery lifted primarily by precious metals prices I think it's also important to note that AUM. In this segment stands at an all time high and that this product category is highly scalable.
John Ciampaglia: Moving to the next slide.
John: Moving to the next slide please.
John Ciampaglia: On slide nine are our sales. We generated 100. million of net flows in Q4 despite softer metal. For the full year, we achieved $957 million in net flows, including the proceeds. Physical Copper Trust IPO.
John: On slide nine our sales we generated $126 million of net flows in Q4, despite softer metal prices.
John: For the full year, we achieved 957 million in net flows including the proceeds from the spot physical copper Trust IPO. While we're pleased with these results on both an absolute and relative basis. Many investors were focused on other high flying market segments like Tech stocks.
John Ciampaglia: While we're pleased with these results on both an absolute and relative basis, many investors were focused on the future. and other high-flying market segments like tech stocks. However, we see the early stages of rotation underway as investors are becoming increasingly cautious about growing market and political risks, and are once again adding gold to their portfolios after an extended period of indifference. and in the last few days, we're starting to see inflows. Silver ETF segment as well, after a period of net.
John: However, we see the early stages of rotation underway as investors are becoming increasingly cautious about growing market and political risks and are once again, adding goal to their portfolios. After an extended period of a difference and in the last few days, we're starting to see inflows into the silver ETF segment as well after a period of net outflows.
John Ciampaglia: Spott Uranium prices experienced a material correction over the last 12 months, which we believe has largely run its course. The spot price at $65 now sits $15 below the term price of $80, which increased 20% last year. We believe the sell-off over the past few months was exacerbated by year-end selling and the liquidation of the Kazakh-based ANU Energy Fund, which held over 2 million pounds of uranium, which came into the spot. At one point in 2024, the spot price traded more than $30 over the term price, which acted as a strong disincentive for producers and utilities to buy in the spot market to top up their inventories, which they do from time to time.
Our spot uranium price has experienced a material correction over the last 12 months, which we believe has largely run its course.
John: <unk> price at $65 now sits $15 below the term price of $80, which increased 20% last year.
John: We believe the sell off over the past few months was SaaS exacerbated by year end selling and the liquidation of the Kazakh based new energy funds, which held over 2 million pounds of uranium which came into the spot market at one point in 2020 for the spot price traded more than $30 over the term price, which act as a strong disincentive for produce.
John: And utilities to buy in the spot market to top up their inventories, which they do from time to time historically.
John Ciampaglia: The current $15 price differential seems unsustainable to us in a market that is projected to have a 35 million pound production deficit in 2025 and is only forecast to widen over the next Next slide.
John: Current $15 price differential seems unsustainable to ask in a market that is projected to have a 35 million tonne production deficit in 2025 and is only forecast to widen over the next few years.
John Ciampaglia: Shifting to our ETFs, AM growth was largely flat in 2024, primarily on weakness in uranium equities.
John: On the next slide shifting to our Etfs AAM growth was largely flat in 2024, primarily on weakness in uranium equities changes in this.
John Ciampaglia: Changes in the A segment tends to be more volatile given the smaller cap nature of many of the holdings held by the on slide 11. He generated sales of $17 million in the fourth quarter, despite softer equity values. And for the full year, we achieved $297 million in net flows.
John: Segment.
John: It tends to be more volatile given the smaller cap nature of many of the holdings held by these etfs.
John: On slide 11.
John: We generated sales of $17 million in the fourth quarter, despite softer equity values and for the full year, we achieved 297 million in net flows.
John Ciampaglia: It's important to note our growing suite of ETFs covering multiple... positions us well to capture investor flows when interest returns to these demands.
John: Important to note our growing suite of Etfs covering multiple.
John: Market segments in trading across various stock exchanges.
John: <unk> done well to capture Investor flows when interest returns to these dynamics.
John Ciampaglia: During the slide 12, as Whitney mentioned, we're very pleased to report two new additions to our ETF lineup. Firstly, the Sprott Silver Miners and Physical Silver ETF, the ticker is SLVR on the NASDAQ, is a natural extension and complement to our Sprott Physical Silver Trust. This is a passively managed ETF that tracks an index that we co-developed with our partners at Nasdaq, and we were very fixated on designing an index that provided investors with a significantly higher exposure to silver than some of the existing competitors in the market. When we dissected competitor silver mining indexes, we were shocked to learn that the underlying exposure to silver ranged from only 26% to 31%.
John: Turning to slide 12, as what you mentioned, we're very pleased to report two new additions to our ETF lineup, firstly, the spots of silver miners and physical silver Etfs, particularly as S. LDR on the NASDAQ is a natural extension and complement to our spot physical Silver Trust.
John: This is a passively managed Etfs tracks an index that we co developed with our partners at NASDAQ and we were very fixated on designing an index that provided investors with a significantly higher exposure to silver and some of the existing competitors in the marketplace. When we dissected competitor silver mining and indexes.
John: Stock to learn at the underlying exposure to silver range from only 26% to 31%.
John Ciampaglia: Just because a company may have silver in its name, doesn't mean it's a silver SLVR currently provides approximately 70% exposure to silver, which provides a highly differentiated and thoughtful approach. The fund is receiving very good traction and interest in its first few weeks of life, and we're very excited about adding this to our line.
John: Just because of silver accompany may have silver its name doesn't mean, it's a solar focused company.
John: Celebrate S. LDR currently provides approximately 70% exposure to silver, which provides a highly differentiated and thoughtful approach.
John: We're seeing very good traction and interest in the law in its first few weeks of life and we're very excited about adding this to our lineup.
John Ciampaglia: Secondly, we'd like to highlight our Sprott Active Gold and Silver Miners ETF.
John: Secondly, we'd like to highlight our active gold and silver miners ETF with the nice ticker <unk>.
John Ciampaglia: Nice ticker, GBUG. This ETF represents a number of firsts for us, it's our first actively managed ETF, and it's also the world's first actively managed gold and silver miner. our active investment team, which has over 100 years of collective experience. manages over $1 billion in similar strategies via our flagship mutual fund, separate accounts, sub-advisory relationships, and limited partner Offering our active capabilities within an ETF wrapper will allow us to target investors that have migrated to ETFs, which has quickly become the go-to product structure for many.
John: This ETF represents a number of firsts for us. It's our first actively managed ETF. That's also the worlds first actively managed gold and silver miners Etfs.
Our active investment team, which has over 100 years of collective experience.
John: Just over $1 billion in similar strategies via our flagship mutual funds separate accounts sub advisory relationships and limited partnerships.
John: <unk>, our active capabilities within an ETF wrapper will allow us to target investors that have migrated to Etfs, which has quickly become the go to product structure for many.
John Ciampaglia: ETF will offer intraday trading, lower fees, as well as greater transparency and tax relative to our I should also note that this ETF will not be an exact clone of our flagship gold equity fund, as it will not own physical gold, but it will be highly similar And with that, I'll pass. Thank you, John.
John: ETF will offer intraday trading lower fees as well as greater transparency and tax efficiency relative to relative to our mutual fund I should also note that this ETF will not be an exact clone of our flagship gold equity fund as it will not only physical gold, but it will be highly similar in nature and with that I'll pass it over to Whitney.
John Ciampaglia: Turning to slide 14, our managed equity strategies delivered strong full-year performance in 2024, notwithstanding weaker gold and silver prices during the fourth quarter. Our flagship gold equity fund was down 9.3 percent in the fourth quarter, but posted a full-year gain of 20.6 percent.
Whitney George: Thank you John.
Whitney George: Turning to slide 14, our managed equity strategies delivered strong full year performance in 2024, notwithstanding weaker gold and silver prices during the fourth quarter.
Whitney George: Our flagship gold equity fund was down nine 3% in the fourth quarter, but as opposed to full year full year gain of 26%. Despite good.
John Ciampaglia: Despite good performance, investors have not yet taken advantage of the opportunities in precious metals equities. We reported $182 million in net redemptions in the fourth quarter and $349 million on a four-year basis. I should note that $127 million of those redemptions were related to the cancelization of certain sub-advisory agreements during December.
Whitney George: Good performance investors has not yet taken advantage of the opportunities in precious metals equities.
Whitney George: We reported a $182 million and net regenerative medicines in fourth quarter and $349 million on a full year basis.
Whitney George: Should note that $127 million of those.
Whitney George: <unk> related to the canceled was the cannibalization of certain sub advisory agreements during December.
John Ciampaglia: We remain optimistic that investor flows will eventually return to mining equities.
Whitney George: We remain optimistic that investor flows will eventually return to mining equities.
John Ciampaglia: I'll now turn to slide 15 for a look at our private strategies. Combined Lending and Streaming Strategies AUM was $2.3 billion as of December 31, 2024. The team is continuing to monitor and harvest investments on our second private lending fund and is actively assessing new investment opportunities for Lending Fund III. And the streaming team is also monitoring and managing its portfolio of investments.
Whitney George: I'll now turn to slide 15 for a look at our private strategies.
Whitney George: Combined lending and streaming strategies AUM was $2 3 billion as of December 31, 2024. The team is continuing to monitor and harvest investments on our second private lending fund and is actively assessing new investment opportunities for lending fund III and the streaming team is also monitoring and managing it.
Whitney George: Portfolio of investments.
John Ciampaglia: Slide 16, in summary. Rising precious metals prices were the main driver of our asset growth in 2024 and this trend has continued into the early months of 2025. Shortly after the U.S.
Whitney George: Slide 16 in summary.
Whitney George: Rising precious metals prices were the main driver of our asset growth in 2024, and this trend has continued into the early months of 2025. Shortly after the us election, a new dynamic emerged in the gold market that has made its way into the headlines as prices are making all time highs on a nearly daily basis.
John Ciampaglia: election, a new dynamic emerged in the gold market that has made its way into the headlines as prices are making all-time highs on a nearly daily basis. Concerns over potential tariffs on precious metals have caused premium prices in the U.S. market relative to others, especially London. Although there have never been tariffs on gold except during the Nixon administration when the rate was set at zero, the ongoing arbitrage is putting enormous pressure on physical markets. Beginning in January, record amounts of physical gold were shipped from London to New York. Lead times for delivery became extended and lease rates rose significantly.
Speaker Change: <unk> over potential tariffs on precious metals have caused premium prices in the U S market relative to others, especially want them.
Speaker Change: Although there have never been tariffs our goal except during the next one administration when the rate was set at zero. The ongoing arbitrage is putting enormous pressure on physical markets. Beginning in January record amounts of physical gold were shipped from London to New York lead times for delivery became extended in lease rates rose significantly.
John Ciampaglia: There are additional logistical delays due to the fact that COMEX vaults will only take delivery of 100-ounce gold bars, while the London Bullion Market Association vaults hold 400-ounce bars.
Speaker Change: There are additional logistical delays due to the fact that comment exports will only take delivery of 100 ounce gold bars, while the London Bullion market Association of volts hold 400, Alex bars.
John Ciampaglia: While this is all short-term activity, it does demonstrate the fragility of the old system and the need for it to adapt to gold's larger role as a global reserve asset.
Speaker Change: Well. This is all short term activity. It does demonstrate the fragility of the old system and the need.
Speaker Change: For it to adapt to gold's larger role as a global reserve asset.
John Ciampaglia: For many critical materials, 2024 was a challenging year as investors struggled to gauge the impact of the Fed's interest rate path, geopolitical tensions, and slowing demand from China. Spot uranium prices, as John mentioned, declined by 10.7% during the fourth quarter and closed the year down 19.7%. After reaching record highs during the second quarter of 2024, copper bore the brunt of weakening Chinese demand, falling 20% from its peak close, and to close the year up just 2.2%. Obviously, today's news has made increased interest in copper as it becomes subject to potential tariffs as well. We expect further volatility in 2025 as evolving trade alliances force many countries to focus on security of supply and incentivizing domestic production to guard against an increasingly fragile global supply chain.
Speaker Change: For many critical materials 2024 was a challenging year as investors struggled to gauge the impact of defense interest rate path geopolitical tensions and slowing demand from China spot uranium prices as John mentioned declined by 10.
Speaker Change: 10, 7% during the fourth quarter and closed the year down 19, 7% after reaching record highs during the second quarter of 2020 for copper bore the brunt of weakening Chinese demand falling 20% from its peak flows.
Speaker Change: And to close the year up just two 2% obviously today's news.
Speaker Change: Yes.
Speaker Change: Increased interest in copper has it become subject to potential tariffs as well we.
Speaker Change: We expect further volatility in 2025 this evolving trade alliance points has forced many countries to focus on security of supply and incentivizing domestic production to guard against me.
John Ciampaglia: Despite the near-term turbulence, we remain confident in our critical materials thesis, which is rooted in the growing global electrification. Western electricity demand is outpacing power production capacity, and aging grids must be upgraded to accommodate power-intensive technologies like artificial intelligence. Massive amounts of critical materials will be required to achieve these goals. We continue to expand our exchange-listed product offerings, launching three critical mineral strategies in 2024 and two new precious metals ETFs so far in 2025.
Speaker Change: Recently fragile global supply chain. Despite the near term turbulence, we remain confident in our critical materials thesis, which is rooted in the growing global electrification western electricity demand is outpacing power production capacity and aging grid must be upgraded to a common accommodate power intensive technologies like artificial.
Speaker Change: Initial intelligence massive amounts of critical materials will be required to achieve these goals.
Speaker Change: We continue to expand our exchange listed product offerings launching three critical minerals strategies in 2024, and two new precious metals ETF. So far in 2025 looking ahead <unk> is well positioned for an uncertain future global central banks are clearly focused on reducing our reliance on U S. <unk>.
John Ciampaglia: Looking ahead, Sprott is well-positioned for an uncertain future. Global central banks are clearly focused on reducing their reliance on U.S. treasuries and have turned to gold instead. We expect this trend to accelerate and broaden with investor participation increasing. The recent turmoil in the metals markets has highlighted the importance of physical ownership, an area where Sprott offers best-in-class solutions to individual and institutional investors.
Speaker Change: <unk> and have turned to gold instead, we expect this trend to accelerate and broaden with investor participation increasing.
Speaker Change: The recent turmoil in the metals markets has highlighted the importance of physical ownership in area, where spot offers best in class solutions to individual and institutional investors.
John Ciampaglia: The realignment of global trade and the focus on energy security will create demand for critical materials produced in friendly jurisdictions. We are pleased to offer investors a range of unique strategies to capitalize on this powerful long-term trend. We have continued to invest in our sales and marketing capabilities to deliver our clients the highest levels of client service, while building our position as thought leaders in our core themes.
Speaker Change: The realignment of our global trade and the focus on energy security will create demand for critical materials produced in friendly jurisdictions. We are pleased to offer investors a range of unique strategies to capitalize on this powerful long term trend.
Speaker Change: We have continued to invest in our sales and marketing capabilities to deliver our clients at the highest levels of client service while building our position as thought leaders in our core teams, we remain contrarian innovative and aligned and that concludes our remarks for today's call I'll now turn it back to the operator for Q&A.
John Ciampaglia: We remain contrarian, innovative, and aligned.
John Ciampaglia: And that concludes our remarks for today's call. I'll now turn it back to the operator for Q&A.
Operator: Operator? Thank you.
Speaker Change: Operator.
Operator: Ladies and gentlemen, to ask a question at this time, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question simply press star 118 Please stand by while we compile the...
Speaker Change: Thank you, ladies and gentlemen to ask a question at this time, you will need to Westar one one on your telephone and wait for your name to be announced.
Speaker Change: Can we draw your question simply press Star one again please.
Speaker Change: Please standby, while we compile the Q&A roster.
Matthew Lee: Now first question coming from the lineup, Matthew Lee with Canaccord, your line is open. Hey, good morning, guys. Thanks for taking my question. Um, there's been a considerable pullback in uranium and sprout prices the last quarter, you know, the trust continues to turn a bit of a discount to now. Can you tell me what your expectations are for the Iranian market and spot prices in the next couple of days?
Speaker Change: No first question coming from the line of Matthew Lee with Canaccord. Your line is now open.
Matthew Lee: Hey, good morning, guys. Thanks, taking my question.
Speaker Change: Considerable pullback in uranium spot prices last quarter Trust continues to trade at a discount to NAV.
Speaker Change: Can you just talk about your expectations are for the uranium market any spot price here in the next couple of quarters.
John Ciampaglia: Yeah, hey, good morning. I've just finished over 40 meetings with institutional investors down at the Bank of Montreal Mining Conference. So this has been a hot topic.
Speaker Change: Yeah, Hey, good morning.
Speaker Change: I've just finished over 40 <unk>.
Speaker Change: Meetings with institutional investors down.
Speaker Change: Bank of Montreal Mining conference. So this has been a hot.
Speaker Change: Topic.
John Ciampaglia: What we think is really going on right now, if you want to break it into two parts. think about the term market, where utilities buy uranium, it was it was kind of a mediocre year last year in terms of pounds contracted. And if you think about what utilities are facing right now, it's it's a whole lot of uncertainty coming from mobile. Potential changes to the Inflation Reduction Act is obviously a concern, even though the current administration is very pro-nuclear, but we know all kinds of things are being tinkered with. Obviously tariffs on uranium could become a meaningful cost increase for them.
Speaker Change: What we think is really going on right now if you want to break it into two parts is if you think about the term market where.
Speaker Change: Where utilities buy uranium it was it was kind of a mediocre year last year in terms of.
Speaker Change: Pounds contracted and if you think about what utilities are facing right now, it's a whole lot of uncertainty coming from multiple angles.
Speaker Change: Potential changes to the inflation reduction act is obviously a concern even though the current administration is very pro nuclear there'll be no all kinds of things are being tinkered with obviously tariffs on uranium could become a meaningful.
John Ciampaglia: Remember, the U.S. requires about 47 million pounds of uranium each year. The U.S. produces less than 1 million domestically. So they're hugely dependent on countries like Canada. There could be retaliatory export tax. And then finally, President Trump's recent coziness. President Putin is clearly creating some anxiety around what does this mean for the ban against Russian enriched uranium? How could that change?
Speaker Change: Cost increase for them remember the U S requires about 47 million pounds of uranium each year. The U S produces less than $1 million domestically, so they're hugely dependent on countries like Canada.
Speaker Change: There could be retaliatory export taxes.
Speaker Change: And then finally.
Speaker Change: President Trump's.
Speaker Change: A recent cosiness with with.
Speaker Change: President Putin is clearly, creating some anxiety around what does this mean.
Speaker Change: For the band against Russian enriched uranium how could that change.
John Ciampaglia: And with all of these uncertainties, I think it's fair to say that market participants are frozen, waiting for some clarity. That is clearly creating downward pressure in the spot price, where a lack of sellers, where there's, you know, regular sellers and one large seller that I mentioned earlier. But buyers have really stepped to the sidelines until they get some more clarity.
Speaker Change: Fuel cycle.
Speaker Change: And with all of these uncertainties I think it's fair to say that market participants are frozen waiting for some clarity that is clearly <unk>.
Speaker Change: Creating downward pressure in the spot price.
Speaker Change: A lack of sellers.
Speaker Change: Whether it's regular sellers and one large seller that I mentioned that buyers have really step to the sidelines until they get some more clarity so.
John Ciampaglia: Unfortunately, the theme of the day, and it's not just rain, it's obviously happening with physical markets across So until we get some clarity, I think we're going to chop away here for the next step.
Speaker Change: Unfortunately, the theme of the day and it's not just a range, that's obviously happening with physical markets across many many.
Speaker Change: Different commodities, there's just a lot of uncertainty right now I would note that the price of uranium that is sitting in the United States right now is trading at a $2 50 premium over uranium sitting in Canada. So while there are no tariffs officially announced the market is starting to build in some expectation.
Speaker Change: Till we get some clarity I think we're going to chop or chop away here for the next quarter or two.
Matthew Lee: That's great, Colin. And then you mentioned friendly jurisdictions a couple of times. Does that imply maybe a demand for an ETF that focuses on material producers in particular geographies? Yeah, I mean, that's a good question. So, I mean, we use the term friendly geography.
Speaker Change: That's great color and then you mentioned a friendly jurisdictions a couple of times.
Speaker Change: Does that imply maybe a demand for an ETF that focuses on material producers in particular geographies.
Speaker Change: Yes, I mean thats a good question so I mean.
John Ciampaglia: I used to, you know, we obviously thought Canada was a friendly geography at one point to the US, but that's obviously changing with the threat of tariffs on all our commodities that the US buys. But putting that aside for a moment. Obviously, what's happening is the tariffs are designed to try to incentivize reshoring or restarting of lost industry. and many lost industries include things like uranium mining, copper mining, etc. And so if you can give your local producers a cost advantage, and like I mentioned just a minute ago, that $2.00 Spread for U.S. domiciled uranium right now, it could go to a $5 or $6 premium.
Speaker Change: We use that wouldn't use the term friendly geography.
Speaker Change: We obviously thought Canada was a friendly geography at one point that you asked but that's obviously changing with the threat of tariffs on all our commodities at the U S buys.
Speaker Change: But putting that aside for a moment.
Speaker Change: Obviously whats happening is the tariffs are designed to try to incentivize re shoring are restarting of loft industries. Many lost industries include things like uranium mining copper mining et cetera in United States, we're processing of materials.
Speaker Change: And so if you can give your local producers a cost advantage and like I mentioned, just a minute ago that $2 50.
Speaker Change: Spread for U S domiciled uranium right now it could go to a five or six dollar premium could that give producers with higher cost structures in the United States, which they currently do relative to their counterpart minds in places like Canada, Australia and France.
John Ciampaglia: Could that give producers with higher cost structures in the United States? That gives them an advantage? Sure it could. Again, tariffs are unpredictable and tariffs can change. So that's the, you know, the... obviously, the economic rationale around the tariffs. We'll see what happens right now.
Speaker Change: Kazakhstan could that give them an advantage sharp fed again tariffs are unpredictable and tariffs can change so.
Speaker Change: That's the obviously the economic rationale around around the tariffs we will see what happens right now I think.
John Ciampaglia: My message to investors is we're in a cloud of uncertainty and uncertainty is always worse than bad. It's almost like you need to rip the band-aid and move forward to understand what the new rules are. Okay, I understand that's helpful.
Speaker Change: My message to investors is we're in a cloud of uncertainty and uncertainty is always worse than bad news. So.
Speaker Change: It's almost like you need to rip the band aid and move forward and to understand what the new new rules of the game are going to be.
Matthew Lee: Then maybe just last one for me on comp ratio, obviously, there's some puts and takes there regarding fee levels, but it's pretty nice step down in Q4 and for the year.
Speaker Change: Okay I understand that's helpful. And then maybe just last one from me on comp ratio.
Speaker Change: Obviously, there's some puts and takes everybody fee levels, that's pretty nice step down in Q4 and for the year.
Kevin Hibbert: Can you just talk about how that's trending for 2025 and how you see that going forward?
Speaker Change: Can you just talk about how that's trending for 2025, and how you see that coin Gulfport.
Kevin Hibbert: Hey, Matt, Kevin here. So I would say it's fair to to assume that we'd probably be in the somewhere ebbing and flowing in the mid to high 40s range through 2025.
Speaker Change: Hey, Matt and Kevin here.
Speaker Change: Sure.
Speaker Change: So I would say, it's fair to assume that we'd probably be.
Speaker Change: Somewhere ebbing and flowing in the mid to high <unk> range.
Matthew Lee: All right, that's all for me.
Speaker Change: 2025.
Speaker Change: Alright, Thats all for me thanks.
Thanks.
Speaker Change: Thank you.
Michael Kozak: And our next question coming from the line of Michael Kozak with Cancer First Gerald, Yolanda... Good morning, everybody. Thanks for hosting the call.
Speaker Change: And our next question coming from the line of Mike Kozak with Cantor Fitzgerald. Your line is now open.
Mike Kozak: Yes, good morning, everybody. Thanks for hosting the call just two questions from me first one so Bloomberg Bloomberg ran an article two days ago. I think it was two days ago, saying that physical gold Etfs. They posted their biggest week of net inflows in over two years last week.
Michael Kozak: Just two questions from me.
Michael Kozak: First one, so Bloomberg ran an article two days ago, I think it was two days ago, saying that physical gold ETFs, they posted their biggest week of net inflows in over two years last week. And I see that in the data that you guys post every day on the website for PHYS. So you're seeing those inflows as well.
Speaker Change: And I see that in the data that you guys post every day.
Speaker Change: On our website for <unk>. So you see youre seeing those inflows as well. My first question is do you have any way to gauge kind of geographically, where and maybe by what type of investor that demand is coming from like is it are you seeing most of the inflows from from U S. Buyers are Europe and to your best estimation is it mostly retail at this stage are you seeing some real Chuck.
Michael Kozak: My first question is, do you have any way to gauge kind of that demand is coming from? Like, is it you're seeing most inflows from from US buyers or Europe and to your best estimation, is it mostly retail at this stage?
John Ciampaglia: Are you seeing some real chunky Yeah, hi, Mike.
Speaker Change: Key institutions.
John Ciampaglia: It's John. Yeah, I mean, getting ETF data is not the easiest in terms of, you know, the transparency of where the flows are coming. and you raised some really good points that Gold ETFs have finally gone into net inflows. they were largely in net outflows for most of last year as people were really not paying attention and chasing things like Meg 7 stocks. That has clearly changed, the sentiment has changed, the price action has changed. and we're starting to see some trend building in the gold ETFs back into net sales. U.S. institutions last year were the biggest sellers of gold ETFs because quite frankly, everything else was working for them.
John: Yeah, Hi, Mike It's John.
John: Yes, I mean getting ETF data is not the easiest in terms of the transparency of where the flows are coming from.
John: And you raised some really good points that.
John: Gold Etfs have finally gone into net inflows.
John: They were largely in net outflows for most of last year as people were really not paying attention and chasing things like make seven stocks.
John: That has clearly changed the sentiments changed the price actions changed and we're starting to see some.
John: Trend building in the gold Etfs back into net sales U S institutions last year, where the biggest sellers.
John: Gold Etfs because.
John Ciampaglia: So why bother with gold? Obviously, the mindset right now, given all the uncertainty, politically, geopolitically, trade wars and tariffs, et cetera, et cetera, are now causing people to rethink potential risks and whether they need to have some physical gold in their portfolio as a balance. and I think it's a very good sign. We're clearly at Sprott seeing renewed interest in our gold product. We had a very good capital raising day the other day. And on the silver side, again, it's a hybrid metal, so it's not gonna have the exact attributes, but. We're starting to see some inflows on the silver side as well across the industry, which up until recently has been just steady net outflows.
John: Quite frankly everything else was working for them. So why why why bother with gold.
Obviously, the mindset right now given all the uncertainty politically geopolitically trade wars, and tariffs et cetera et cetera.
John: Are now, causing people to rethink potential risks and whether they need to have.
John: Some physical gold in their portfolio has a balanced and I think it's a very good sign we're clearly at sprott seeing renewed interest in our gold products.
John: We had a very good capital raising data the other day and on the silver side again, it's a hybrid model. So it's not going to have the exact attributes but.
John: We're starting to see some inflows on the silver side as well across the industry, which up until recently has been just steady net outflow. So.
John Ciampaglia: Price Action and ETF flows don't always correlate the way you would like them to. But we think it's it's the start of a rotation as these risks and all these uncertainties and things that we've highlighted, investors are starting to think very differently about risks in the portfolio and gold. Historically, in these periods of market dislocation or calamity. again, not promising anything, but historically, gold has done very well in a row.
John: Price action in ETF flows don't always correlate the way you would think but we think it's the start of a rotation.
John: These risks and all of these uncertainties and.
John: Things that we've highlighted investors are starting to think very differently about risks in our portfolio and gold historically in these periods of market dislocation or calamity again, not promising anything, but historically gold has done very well on a relative basis.
Michael Kozak: Okay, that's helpful.
Michael Kozak: And then maybe as a follow up on that, and just because you brought it up earlier in the call, you're down at BMO, it sounds like most of the investors you were chatting with are still talking to you about the uranium side, as opposed to the precious side. Is that a fair assessment at this stage?
John: Okay.
John: And then maybe as a follow up on that and just because you brought it up earlier in the call you're down at BMO.
It sounds like most of the investors you were chat with ours are still talking to you about the uranium side as opposed to the precious side. That's a fair assessment at this stage.
John Ciampaglia: Yeah, I think I'm here specifically to talk about uranium. But naturally, the discussion has cascaded into precious metals and copper, as well and what's going on in the world. It's interesting because last year, I would say the focal point of the conference was uranium the year before that it was lithium. And for two years, gold was kind of in the shadows. clearly there's a lot more interest right now going on in the gold market given it's at all-time highs and that many of these gold companies are well positioned here to capture that operating leverage. So the tone is definitely more buoyant on the gold side, but uranium remains a very intriguing long-term investment for many of these institutions because they do believe that a nuclear renaissance is underway.
John: Yes, I think I'm here, specifically to talk about uranium, but naturally that will cashing of cascaded into precious metals and copper as well and what's going on in the world.
John: Interesting because last.
John: Last year I would say the focal point of the conferences uranium the year before that it was lithium and for two years all of us kind of in the Shadows.
John: Clearly theres a lot more interest right now going on in the gold market given its at all time highs in that many of these gold companies are well positioned to capture that operating leverage. So the tone is definitely more blend on the on the gold side, but uranium remains a very intriguing long term investment for many of these institutions because.
John: They do believe that nuclear Renaissance is underway. It is a slow moving as we know glacial kind of <unk>.
John Ciampaglia: It is a slow-moving, as we know, glacial kind of target, but they firmly believe that the supply-demand imbalance that we're dealing with has to be solved through higher prices.
John: Target, but they firmly believe that the supply demand.
John: Imbalance that we're dealing with have to be solved through higher prices and that's why I think many institutions remain very well.
Michael Kozak: many institutions remain very well positioned in the And then last one for me, and you kind of front-ran this one a little bit, because you mentioned $2.50 per pound premium for uranium sitting at Conradine.
John: Well positioned in the uranium space.
John: Okay, and then last one for me.
John: And you kind of front ran this one a little bit because you mentioned to $2 50 per pound premium for.
John Ciampaglia: I know you guys store a lot of material there, so my final question is, could you and would you, and to what extent would you feel comfortable putting location swaps on to raise some capital in the trust that way? Yeah, that's a really great question. And obviously we're contingency planning for all kinds. outcomes, and one of them that we've been thinking very seriously about. Strategic Value of our stockpile of uranium held in the U.S., which is about 25% of the trust, or about 16 odd million pounds. That obviously has the potential to trade, theoretically, at a $5 or $6 premium over the rest of the market, and we would absolutely love to optimize that value through location swaps, which we have done historically.
John: For uranium sitting at <unk> I know you guys have store a lot of material there.
John: My final question is could you and would you add to what extent would you feel comfortable putting location swaps on.
John: To raise some capital in.
John: And the trust that way.
John: Yes, that's a really great question and obviously, we're contingency planning for all kinds of <unk>.
John: Outcomes and one of them that we've been thinking very seriously about is the strategic value of our stockpile of uranium held in the U S, which is about 25% of the trust or about 16 odd billion pounds.
John: That is obviously has the potential to trade.
John: Radically out of five or $6 premium over the rest of the market and we would absolutely look to optimize that value through location swaps, which we have done historically in the past that could be a very nice kind of.
John Ciampaglia: That could be a very nice. win and bump to our Navis.
John: And bump to our NAV, if we can do that.
Michael Kozak: Okay, that's it for me. Very helpful.
John: Okay. That's it for me very helpful I'll turn it over.
Operator: I'll turn it over. And as a reminder, to ask a question, please press star 1-1 on your touchtone phone and wait for your name to be announced.
John: Yes.
John: Thank you.
Speaker Change: And as a reminder to ask a question. Please press star one on your Touchtone phone and wait for your name to be announced.
Michael McHugh: Our next question coming from the line of Michael McHugh with T-Securities, your line is open. Hi, good morning. Just, it looks like your base EBITDA margins came up almost just over 100 basis points in 2024. And just wondering what you think, you know, if that level of expansion is doable again in 25 or 26, and what your forecast might be for those margins for the next two years. Thanks for that. We don't provide forecasts of earnings or margins, but what I can say is there is definitely ample operating leverage in the model to see this number continue to rise at least for the remainder of this year.
Speaker Change: Our next question coming from the line of Michael <unk> with TD Securities. Your line is now open.
Speaker Change: Hi, good morning.
Speaker Change: Just it looks like your base EBITDA margins came up.
Speaker Change: Most just over 100 basis points in 2024, and just wondering what you think.
Speaker Change: If that level of expansion is doable again in 'twenty five 'twenty six and what your forecast might be for those margins for the next two years.
Speaker Change: Hey, Mike Thanks for that we don't provide forecast of earnings or margins, but what I can say is theres definitely ample operating leverage in the model to see this number continue to rise at least for the rig.
Speaker Change: There are this year.
Kevin Hibbert: Okay, great. Thanks.
Kevin Hibbert: And just also know that you're debt free plans for excess cash flow through 2025. So we've been a dividend payer for a long time and plan to continue that. So that's one source. As I've said, we've been opportunistic from time to time to buy our own shares back, and we'll continue to do that. And, you know, we have a couple of smallish opportunities that, you know, might come to fruition along the way. And we'll continue to see new products, nothing on the private side, you know, in the first part of the year. But the team has a very good record.
Speaker Change: Okay, great. Thanks, and just also now that you are.
Speaker Change: Free plans for excess cash flow through 2025.
Speaker Change: So.
Speaker Change: We've been a dividend payer for a long time and plan to continue that so that's one source.
Speaker Change: As I've said, we've been opportunistic with from time to time to buy our own shares back and we'll continue to do that.
Speaker Change: And we have a couple of smallish opportunities.
Mike Kozak: Mike come to fruition along the way.
Mike Kozak: And we will continue to see new products nothing on the private side and the <unk>.
First part of the year.
Kevin Hibbert: And we might have an opportunity down the road to do our next fund. So, you know, lots of uses, you know, we're not a money market fund, so we're not going to sit on a pile of cash. But we're going to return it as shareholders as prudently as we see fit and try and continue to grow our business.
Mike Kozak: But the team is a very good record.
Mike Kozak: We might have an opportunity down the road to do our next month, so lots of users.
Mike Kozak: We're not a money market fund so we're not going to sit on a pile of cash.
Mike Kozak: But we're going to have return it to shareholders as prudently as we see fit.
Mike Kozak: Try and continue to grow our business.
Michael McHugh: Great, thanks.
Michael McHugh: And just one final quick one, if I may.
Speaker Change: Great. Thanks, and just one final quick one if I may.
Michael McHugh: Just how, you know, flows are looking Q1 2025 to date, obviously, we're two thirds of the way through the quarter now. And just sort of what the overall flows picture looks like. And then maybe if any particular products are standing out on that front.
Speaker Change: Just how flows are looking Q1, 'twenty five to date, obviously, where two thirds of the way through the quarter now.
Speaker Change: And just sort of what the overall flows picture looks like and then maybe if any.
Michael McHugh: And that'll be all for me. Thanks. and others.
Speaker Change: Each of our products are standing out on that front and that will be all for me. Thanks.
John Ciampaglia: Thank you. Yeah, hi, it's John. Obviously, the physical gold trust, given the price action we're seeing in gold and in its role as a portfolio diversifier. is where we're seeing the most traction and the most global flows across. The way it's trading right now, very tight to its net asset value is a very strong signal in terms of investment. which positions us very well to raise capital when we get these, you know, intraday.
Speaker Change: Yes, hi, its John obviously, the physical gold trust given the price action, we're seeing in gold and its role as a portfolio diversify our I think.
Speaker Change: Is where we're seeing the most traction in the most.
Speaker Change: Global flows across the whole suite of funds so.
Speaker Change: The way its trading right now very tight to its net asset value is a very strong signal in terms of investor interest, which positions us very well to raise capital when we get these intraday moves.
John Ciampaglia: So I would say that that's going to be our go-to fund. It would be nice to get Silver kind of going as well. They usually work together in tandem. It's been a little quieter, but it feels as though... to join the party.
Speaker Change: So I would say that that's going to be our go to fund.
Speaker Change: It would be nice to get silver kind of going as well they usually work together in tandem.
Speaker Change: It's been a little quieter, but it feels as though it's.
John Ciampaglia: Unfortunately, uranium given the very different market dynamics and all the geopolitical risks that it's dealing with right now. seems to be a little bit on the sidelines. So gold and silver would be my guess. Great.
Speaker Change: Positioning itself to join the party.
Speaker Change: Unfortunately uranium given the very different market dynamics and all the geopolitical risks that it's dealing with right now.
Speaker Change: Seems to be a little bit on the sidelines, so golden silver would be my guess in terms of where.
Speaker Change: Where we're going to see the most most interest.
Whitney George: Thanks very much, guys.
Speaker Change: Great. Thanks, very much guys.
Speaker Change: Thank you.
Speaker Change: And I'm not showing any further questions in the queue I will now turn the call back over to Mr. George <unk> for any closing remarks.
Whitney George: I will now turn the call back over to Mr. 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 first quarter year-end results. Have a great day. Thanks. of the day's conference call. Thank you.
Speaker Change: Thank you and thank you everyone for participating in this call. We appreciate your interest and support and look forward to speaking to you again after our first quarter results.
Speaker Change: Have a great day thanks.
Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.
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