Q2 2025 Sprott Inc Earnings Call
And only mode.
Following the presentation, we will conduct a question and answer session and instructions will be provided at that time for you to come up for questions.
As a reminder, this conference is being recorded today August six 2025.
I would now like to hand, the conference over to your first speaker today, Mr. Whitney George Please go ahead.
Good morning, everyone and thanks for joining us today.
Starting on slide three.
On the call with me today is our CFO, Kevin and John <unk> CEO of <unk> broad asset management as you can see from slide three all the turmoil has not asked us a bit.
Our 2025 second quarter results were released this morning and are available on our website, where you can also find the financial statements and MD&A.
Four.
2025 continues to be an eventful year since the April 2nd Liberation day tariff announcements, we have witnessed extreme volatility in all markets a 20% correction in the S&P 500 index, followed by a full recovery to new highs and one quarter is extreme but not unexpected.
As I noted in this quarter's letter to shareholders. We expect more of the same going forward in the short term. We don't know what comes next and we will avoid making any predictions.
Turning now to a vote.
The work that our assets under management increased by $5 billion in the second quarter to $40 billion.
Net sales continue to accelerate during the quarter due to the rising interest in multiple metals. In addition to strong ATM.
Speaker #2: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to SPROTT NC. 2025 second quarter results conference call. At this time, all participants are in a listen-only mode.
Physical Trust. We also completed two capital raises in this broad physical uranium trust, which John will speak to more about in a few minutes.
Speaker #2: 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. As a reminder, this conference is being recorded today, August 6th, 2025.
What are your strategies continued to perform well delivering strong results in the quarter and over the first half of 2025 and we also benefited from carried interest in performance fees crystallization and our managed equities segment.
Speaker #2: I would now like to hand the conference over to your first speaker today, Mr. Whitney George. Please go head.
Earlier this year, we launched two new precious metals Etfs and we are very pleased with the early results from these strategies.
Speaker #3: Good morning, everyone, and thanks for joining us today. I'm starting on slide three. On the call with me today is our CFO, Kevin Hibbert, and John Ciampaglia, CEO of SPROTT Asset Management.
Active Golden Silver miners ETF, our first actively managed ETF and the sprott silver miners and physical silver ETF had been two of our most successful ETF launches to date hitting key AUM thresholds more quickly than any of our.
Speaker #3: As you can see from slide three, all the turmoil has not aged us a bit. Our 2025 second quarter results were released this morning and are available on our website, where you can also find the financial statements and MDNA.
The previous.
With that I'll pass it over to Kevin for a look at our financials Kevin.
Thank you Whitney and good morning, everyone I'll start on slide five which provides a summary of our historical AUM.
Speaker #3: Slide four, 2025 continues to be an eventful year. Since the April 2nd liberation day tariff announcements, we have witnessed extreme volatility in all markets.
AUM finished the quarter as Whitney noted at $40 billion up 14% from $35 $1 billion at March 31 2025.
Speaker #3: A 20% correction in the S&P 500 index, followed by a full recovery to new highs in one quarter, is extreme. But not unexpected. As I noted in this quarter's letter to shareholders, we expect more of the same going forward.
And up 27% from 31 5 billion as at December 31, 2024.
On a three and six months ended basis, we benefited from positive market value appreciation across the majority of our fund products and positive net inflows to our physical trusts.
Speaker #3: In the short term, we don't ow what comes next, and we will avoid making any predictions. Turning now to our ability to report that our assets under management increased by $5 billion, in the second quarter to $40 billion.
Slide six provides a brief look at our three and six months earnings.
Speaker #3: Net sales continue to accelerate during the quarter due to the rising interest in multiple metals. In addition to strong ATL shifts, our metals physical trust, we also completed two capital raises in the SPROTT physical uranium trust, which John will speak to more about in a ew minutes.
Net income this quarter was $13 $5 million up 1% from $13 $4 million over the same three months period last year.
On a year to date basis net income was $25 5 million up 2%.
Speaker #3: Our regulatory strategies continue to perform well delivering strong results in the quarter and over the first half of 2025. And we also benefited from carried interest and performance fees crystallization in ur managed equities segment.
From $24 $9 million this time last year.
Our flat net income performance was caused by a change in accounting requirements brought on by our new cash settled stock plan that took effect this year <unk>.
Speaker #3: Earlier this year, we launched two new precious metals ETFs, and we are very pleased with the early results from these strategies. The Sprott Active Gold and Silver Miners ETF, our first actively managed ETF, and the Sprott Silver Miners and Physical Silver ETF have been two of our most successful ETF launches to date, hitting key AUM thresholds more quickly than any of our previous ones.
Largely offsetting much of the net income we otherwise generated on market appreciation and flows into our physical trusts and carried interest in performance fee crystallization at our managed equity segment.
By way of background cash settled stock plans like the one we implemented this year require the use of mark to market and greater divest accounting under <unk> two <unk>.
Speaker #3: With that, I'll it over to Kevin for a look at our final results. Kevin?
Which creates the dual impact of accelerating the amount of vesting that occurs each period, and adding market volatility to each vested amount in our case at a time when our stock has appreciated 54% in the quarter and 64% on a year to date basis.
Speaker #4: Thanks, Whitney. And good morning, everyone. I'll start on slide five, which provides a summary of our historical AUM. AUM finished the quarter as Whitney noted at $40 billion up 14% from $35.1 billion as at March 31st, 2025.
In contrast last year, we had an equity settled stock program that required each back to be valued at the original grant date fair value on a constant basis over the entire amortization period.
Speaker #4: And up 27% from $31.5 billion as at December 31st, 2024. On a three and six months ended basis, we benefited from positive market value appreciation across the majority of our fund products, and positive net inflows to our physical trusts.
Adjusted EBITDA on the other hand, which excludes quarterly volatility from items, such as stock based compensation FX volatility and intermittent carried interest in performance be crystallized patients was $25 $5 million for the quarter up 14% from $22 $4 million.
Speaker #4: Slide six provides a brief look at our three and six month earnings. Net income this quarter was $13.5 million, up 1% from $13.4 million over the same three month period last year.
Over the same three month period last year.
And was $47 4 million on a year to date basis up 12% from $42 $1 million. This time last year.
Speaker #4: On a year to date basis, net income was $25.5 million, up 2% from $24.9 million this time last year. Our flat net income performance was caused by a change in accounting requirements brought on by our new cash settled stock plan that took effect this year.
Adjusted EBITDA.
EBITDA in the quarter and on a year to date basis benefited from higher average AUM on market value appreciation and inflows to our precious metals physical trust.
However, offsetting these positives with our finance income being down due to last year's higher syndication fees and our net commissions also being down due to last year's copper Trust IPO and higher ATM activity in our physical uranium trust.
Speaker #4: Largely offsetting much of the net income we otherwise generated on market appreciation and flows into our physical trusts, as well as carried interest and performance fee crystallizations in our managed equity segment.
Speaker #4: By way of background, cash settled stock plans like the one we implemented this year require the use of marked to market and graded vest accounting under IFRS II.
Finally, slide seven provides a few treasury and balance sheet management highlighted and as you can see there our cash and liquidity profile remains quite strong.
Speaker #4: This creates the dual impact of accelerating the amount of vesting that occurs each period and adding market volatility to each vested amount. In our case, this is happening at a time when our stock has appreciated 54% in the quarter and 64% on a year-to-date basis.
For more information on our revenues expenses net income adjusted EBITDA and balance sheet metrics you can refer to the supplemental information section of this presentation as well as our quarterly MD&A and financial statements filed earlier this morning.
With that said I'll pass things over to Jonathan.
Speaker #4: In contrast, last year we had an equity settled stock program, that required each vest to be valued at the original grant date fair value on a constant basis over the entire amortization period.
Thanks, Kevin and good morning, everybody. Thanks for joining us we enjoyed a very strong operating results in second quarter as Kevin mentioned, a significant asset growth and our physical trust product suite.
Speaker #4: Adjusted EBITDA, on the other hand, which excludes quarterly volatility from items such as stock based compensation, FX volatility, and intermittent carried interest and performance fee crystallizations, was $25.5 million for the quarter, up 14% from $22.4 million over the same three month period last year.
A combination of market appreciation and net flows contributed to this growth.
<unk> silver platinum Palladium and uranium were all solid performers in the quarter.
AUM was 31 billion as of August one, which represents an all time high for the physical trust product suite as.
As the funds continue to grow in size they benefit from an important scale effects, which drives liquidity, which in turn to get liquidity. This is.
Speaker #4: And was $47.4 million on a year to date is, up 12% from $42.1 million this time last year. Adjusted EBITDA on the quarter and on a year to date basis benefited from a higher average AUM on market value appreciation and inflows, to our precious metals physical trusts.
Eckel in order to attract more institutional capital as they begin to reallocate to the metal sector.
Next slide please.
Okay.
We enjoyed our strongest sales quarter in the past three years driven by renewed interest as we sat in multiple metals, our business tends to produce the best results when multiple metals are working at the same time.
Speaker #4: However, offsetting these positives was our finance income being down due last year's higher syndication fees, and our net commissions also being down due to last year's copper trust IPO, and higher ATM activity in our physical uranium trust.
As we discussed in previous quarters metals like silver are finally experiencing a catch up trade with gold.
Over remains undervalued relative to gold and it's still well off its 2011 high.
Speaker #4: Finally, slide seven provides a few treasury and balance sheet management highlights. And as you can see there, our cash and liquidity profile remains quite strong.
Since the beginning of 2021, our physical Silver Trust has captured over 100% of net flows amongst U S listed peers, allowing us to grow our market share of assets meaningfully.
Speaker #4: For more information on our revenues, expenses, net income, adjusted EBITDA, and balance sheet metrics, you can refer to the supplemental information section of this presentation, as well as our quarterly MDNA and financial statements filed earlier this morning.
Shifting over to uranium or uranium trust completed two novel capital raises which were well supported by institutional investors with the proceeds spot has accumulated and another 2 million pounds of uranium, bringing our overall stockpile to $68 4 million pounds.
Speaker #4: With that said, I'll pass things over to John.
Speaker #5: Yeah, thanks, Kevin. And good morning, everybody. Thanks for joining us. We enjoyed a very strong operating results in the second quarter. As Kevin mentioned, with significant asset growth in our physical trust product suite, a combination of market appreciation and that flows contributed to this growth.
And since the inception of spot four years ago, we have now purchased a total of 50 million pounds of uranium.
Moving to slide 10.
Good thing to our suite of Etfs.
We've seen a nice recovery in AUM since the market lows in early April assets have rebounded to $3 billion.
Speaker #5: Gold, silver, platinum, palladium, and uranium were all solid performers in the quarter. AUM was $31 billion, as of August 1st. Which represents an all-time high for physical trust product suite.
We have been extremely pleased with the initial market reception for our two latest ETF launches the sprott silver miners and physical silver ETF ticker <unk> is off to a very strong start with assets approximately $170 million and just for context. There are so many new etfs coming to market.
Speaker #5: As the funds continue to row in size, they benefit from an important scale effect, which drives liquidity which, in turn, begets liquidity. This is critical in order to attract more institutional capital as they begin to reallocate to the metal sector.
Etfs, new Etfs in their first year of life somewhere.
Speaker #5: Next slide, please. We enjoyed our strongest sales quarter in the past three years, driven by renewed interest, as we said, in multiple metals. Our business tends to produce the best results when multiple metals are working at the same time.
Somewhere around $5 million just to put it into context.
Our first actively managed ETF the spa active gold and silver miners ETF is also gaining traction and is approaching $50 million.
We believe there are strong opportunities to grow our market share.
Speaker #5: As we discussed in previous quarters, metals like silver are finally experiencing a catch-up trade with gold. Silver remains undervalued relative to gold and is still well off its 2011 high.
With both of these new Etfs and obviously they are very scalable.
Moving to slide 11 to talk about ETF flows overall it was a solid quarter. Despite mixed results by product type.
Speaker #5: Since the beginning of 2021, our physical silver trust has captured over 100% of net flows amongst US listed peers, allowing us to grow our market share of assets meaningfully.
The precious metals mining Etfs are driving most of the flows while the uranium mining Etfs have been under some redemption pressure of late we attribute this to some investors shifting to the downstream segment of the nuclear energy sector as more market participants understand that we are entering another nuclear Renaissance.
Speaker #5: Shifting over to uranium, our uranium trust completed two novel capital raises which were well supported by institutional investors. With the proceeds SPROT accumulated another $2 million pounds of uranium, bringing our overall stockpile to $688.4 million pounds.
Period.
We expect this to be transitory as the price of uranium is still remains quite low in our opinion and the uranium mining stocks represent good value to capture that upside.
Speaker #5: And since the inception of SPROT four years ago, we have now purchased a total of $50 million pounds of uranium. Moving to slide 10, shifting to our suite of ETFs.
And with that I'm going to pass it over to Whitney.
Thank you John we'll move now to slide 12 for a look at our managed equity segment.
Speaker #5: We've seen a nice recovery in AUM since the market lows in early April, assets have rebounded to $3 billion. We have been extremely pleased with the initial market reception for our two latest ETF launches, the SPROTT Silver Miners and Physical Silver ETF.
As I mentioned in my opening remarks, our managed equity strategies have performed well this year our flagship gold equity fund was up 15, 5% during the quarter and has gained 46% year to date.
River flows continue to lag performance and we reported $61 million in net redemptions during the quarter and $81 million on a year to date basis.
Speaker #5: Thicker SLVR, is off to a very strong start with assets approximately $170 million. And just for context, there are so many new ETFs coming to market.
One of the reasons, we launched sprouts active Goldman silver miners ETF was to capitalize on investors' current preference for Etfs over mutual funds.
Speaker #5: ETFs, new ETFs in their first year of life, somewhere attract somewhere around $5 million just to put it in the context. Our first actively managed ETF, the SPROTT Active Gold and Silver Miners ETF, is also gaining traction and is approaching $50 million.
<unk>.
But it allows strengths that our investment team and an active strategy with the ETF wrapper, which is more transparent and tax efficient for investors. We are pleased with the early response to this new strategy, which actually yesterday, just surpassed $50 million in AUM.
Speaker #5: We believe there are strong opportunities to grow our market share with both of these new ETFs. And viously, they are very scalable. Moving to slide 11 to talk about ETF flows.
Looking ahead, we expect to launch at least one additional active ETF before the end of 2025.
I'll turn now the private strategies on slide 13.
Speaker #5: Overall, it was a solid quarter despite mixed results by product type. The precious metals mining ETFs are driving most of the flows, while the uranium mining ETFs have been under some redemption pressure of late.
Private strategies AUM was $2 1 billion down slightly from March 31, 2025, the decline reflects a net decrease in investments quarter over quarter, new investments with distributions to our partners across the lending in streaming and royalty segment. The team continues to.
Speaker #5: We attribute this to some investors shifting to the downstream segment of the nuclear energy sector, as more market participants understand that we are entering another nuclear renaissance period.
Assess new investment opportunities for lending fund three and is actively monitoring our streaming and royalty portfolio investments.
Speaker #5: We expect the this to be transitory as the price of uranium still remains quite low in our opinion. And the uranium mining stocks represent good value to capture that upside.
Slide 14.
To recap we're pleased with our results over the first half of 2025 AUM has increased $8 5 billion year to date, driven by rising metal prices as well as $1 6 billion in net sales middle markets are experiencing a new kind of scarcity, which is placing upward pressure on prices.
Speaker #5: And with that, I'm going to pass it over to Whitney.
Speaker #6: Thank you, John. We'll move now to slide 12 for a look at our managed equity segment. As I mentioned in my opening remarks, our managed equity strategies have performed well this year.
The global trade and inventory system for some metals is starting to break down due to geopolitical tensions protectionist trade policies and resource nationalism.
Speaker #6: Our flagship gold equity fund was up 15.5% during the quarter and has gained 46% year to date. However, flows continue to lag performance, and we reported $61 million in redemptions during the quarter and $81 million on a year to date basis.
The result is a greater volatility in spreads higher regional price differences and a long term premium on strategically essential metals.
Speaker #6: One of the reasons we launched SPROTT Active Gold and Silver Miners ETF was to capitalize on investors' current preference for ETFs over mutual funds.
Gold has set a new series of record prices for it.
As you go to a 12 year high and platinum was recently at its highest level in 10 years.
Speaker #6: GBUG allows strengths of our investment team in an active strategy with an ETF wrapper which is more transparent and tax efficient for investors. We are pleased with the early response to this new strategy, which actually yesterday just surpassed $50 million in AUM.
Prices may stay elevated even without significant changes in traditional supply demand metrics, because it's become harder for metals flow freely around the world.
It's brought we're fortunate.
Minute to be extremely well positioned to create value for our clients and our shareholders with an asset base divided between precious metals and critical materials investments. We look forward to reporting to you on our progress in the quarters ahead that concludes our remarks for today's call and I will now turn it over to the operator for some Q&A operator.
Speaker #6: Looking ahead, we expect to launch at least one additional active ETF before the end of 2025. I'll turn now to the private strategies on slide 13.
Speaker #6: Private strategies, AUM was $2.1 billion down slightly from March 31st, 2025. The decline reflects a net decrease in investments quarter over quarter, new investments less distributions to our partners.
Thank you at this time, we will conduct a question and answer session to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again please standby.
Speaker #6: Across the lending and streaming and royalty segments, the team continues to assess new investment opportunities for lending fund three and is actively monitoring our streaming and royalty portfolio investments.
Our first question comes from Matt Lee from CG. Please go ahead.
Speaker #6: Slide 14, to recap, we're pleased with our results over the first half of 2025. AUM has increased 8.5 billion year to date, driven by rising metal prices, as well as 1.6 billion in net sales.
Hey, good morning, guys I've seen my question.
Let me start with the housekeeping one can I just ask.
Ask you how you determined market value changes in private strategies like is it that market to market or is it recognized when the underlying investments which maturity.
Speaker #6: Metal markets are experiencing a new kind of scarcity, which is placing upward pressure on prices. The global trade and inventory system for some metals is starting to break down due to geopolitical tensions protectionist trade policies and resource nationalism.
Hey, Matt it's Kevin here good question so.
The accounting requires because they are because they are loans, we have to use pull to par accounting. So it's basically amortize cost, but we also believe that that amortized cost is a reasonable proxy for market.
Speaker #6: The result is a greater volatility in spreads, higher regional price differences, and a long-term premium on strategically essential metals. Gold has set a new series of record prices.
But some of them have like equity components, right and the private strategies and inevitably if it's gold's related and given a lot of the gold market is done.
Speaker #6: For both this year out to a 12-year high, and platinum was recently at its highest level in 10 years. Prices may stay elevated even without significant changes in traditional supply-demand metrics because it's become harder for metals to flow freely around the world.
In theory, there is some market appreciation is not captured in that market value change.
Well the market so when youre dealing with those those types of equity Kickers, there was equity Kickers actually come out and then you have the pull to par accounting of that will get you back up to that.
Speaker #6: At SPROTT, we're fortunate to be extremely well positioned to create value for our lients and our shareholders with an asset-based divided between precious metals and critical materials investments.
Ultimate amortize cost value.
In times like this to your point, where the market value has gone up a fair bit you will see.
Speaker #6: We look forward to reporting to you on our progress in the quarters ahead. That concludes our remarks for today's call, and I'll now turn it over to the operator for some Q&A.
Some of that but the equity kickers tend to make up us relatively smaller portion of the overall value of those loans.
Got it Thats helpful.
Speaker #6: Operator?
Speaker #7: Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.
Can you just give us an idea of what youre seeing in uranium market in general spot market does seem to have pulled back a bit the last month, but if you read the news U S executive orders international demand both seem to point towards kind of an upswing is that kind of what you mean, when you are saying, they're going to be a nuclear Renaissance on the way.
Speaker #7: To withdraw your question, please press star 11 again. Please stand by. Our first question comes from Matt Lee from CG. Please go head.
Yeah, Hey, Matt its John Yes, sure I'd love to pick up on that yes, I think it's fair to say that the.
Theres been kind of a disconnect between the physical uranium market and the overwhelming shift of energy policy support back to nuclear energy over the last three years.
Speaker #8: Hey, morning, guys. Thanks for taking my question. Maybe starting with the housekeeping one. Can I just ask you how you determine the market value changes in private strategies?
Speaker #8: Like, is it that market to market, or is it recognized when the underlying investments reach maturity? Hey, Matt. 's Kevin here. Good question. So the accounting requires, because they're loans, we have to use pull to par accounting.
Most of that disconnect has been in the last 12 months and its been related to largely uncertainty around.
Obviously, the incoming administration.
I'll also in part to the price of uranium jumping very sharply in 2023 in early 2024, which I think made some utilities cautious about chasing the price.
Speaker #8: So it's basically amortized cost, but we also believe that amortized cost is a reasonable proxy for market.
Now that we have some clarity in terms of the Trump administration's position with four executive orders, which were incredibly holistic and beneficial for the sector.
Speaker #9: But some of them have, like, equity components, right, in the private strategies? And inevitably, you know, if it's gold related, and given how well the gold market's done, you know, in theory, there's some market appreciation that's not captured in that market value change.
As well as clarity on tariffs, which were not applied to uranium products or related fuel services.
Speaker #8: Well, the market, so when you're dealing with those, those types of equity kickers, those equity kickers actually come out and then you have the pull to par accounting that'll get you back up to that ultimate amortized cost value.
I think it's we're really set up right now for utilities to come back to market and I'll just share a quick stat with you, which I think is very important.
The industry basically operates through long term purchase agreements and to August the fourth year to date. The industry has signed a grand total of 30 million pounds.
Speaker #8: So in times like this, to your point, where the market value has gone up a fair bit, you see, some of that. But the equity kickers tend to make up a relatively smaller portion of the overall value of those loans.
Of contracts for future delivery.
It's about one third of replacement rates, so far year to date. So it really signals that utilities have not been actively buying they've been on the sidelines because of all the distraction of noise, but we just yesterday got an early sign that our Korean utility came to market through a public RFP process for <unk>.
Speaker #8: Okay, got it. That's helpful. and then maybe can you just ive us an idea of what you're seeing in the uranium market in general?
Speaker #8: you know, spot market does em to have pulled back a bit in the last month, but, you know, if you read news, US executive orders, international demand, both seem to point towards kind of an upswing.
Speaker #8: Is that kind of what you mean when you're saying there's ing to be a nuclear renaissance, on the way? Yeah, hey, Matt, it's John.
Almost 9 million pounds of uranium that theyre looking for and we're now moving into the seasonal start of the contracting cycle, which starts with the World Nuclear Association.
Speaker #8: Yeah, sure. I'd ove to pick up on that. Yeah, think it's fair to say that the, there's been kind of a disconnect between the physical uranium market and the, overwhelming shift of energy policy support back to nuclear energy over the last three years.
Conference, which is going to start the first week of September so.
We think that the utilities are finally, starting to emerge from their hibernation.
And the price in the term market and the spot market should should respond accordingly to that.
Speaker #8: Most of that disconnect has been in the last 12 months, and it's been related to largely uncertainty around, viously, the incoming administration, it was also in part to the price of uranium.
Okay. That's very helpful. Thanks for the robust answer.
Thank you.
Speaker #8: Jumping very sharply in 2023 and early 2024, which I think made some utilities cautious about chasing the price. Now that we have some clarity in terms of the Trump administration's position with the four executive orders, which were incredibly holistic and beneficial for the sector, as well as clarity on tariffs, which were not applied to uranium products or related fuel services, I think it's, we're, we're really set up right for utilities to come back to market.
Our next question comes from Etienne retired from BMO capital markets. Please go ahead.
Thank you and good morning, I'd like to cover copper.
The physical truss is trading at quite a discount to NAV.
I'm curious what do you think needs to happen for this discount to to narrow and more broadly how is the.
And volatility to trade policies impacting demand.
Speaker #8: And I'll just share a quick stat with you, which I think very important. You know, the industry basically operates through long-term purchase agreements and two August the 4th, year to date, the industry has signed a grand total of $30 million pounds of contracts for future delivery.
For the corporate Trust.
Yes, Hi, <unk>, John I'll cover that.
Well the most notable thing about the copper market, which I'll start with is obviously been up until a few days ago the dislocation between.
Yes.
And LNG prices and that was obviously due to uncertainty in tariff threats, where CME prices, meaning copper stored in the U S warehouse was trading about 30% higher than copper.
Speaker #8: That's about one-third of replacement rates so far year to date. So it really signals that utilities have not been actively buying. They've been on the sidelines because of all the distraction and noise.
And our European warehouse that obviously is unwound since.
Speaker #8: But we just yesterday got an early sign that a Korean utility came market through a public RFP process for almost $9 million pounds of uranium that they're looking for.
In the last few days as.
Tariffs were not applied as broadly as is considered.
Speaker #8: And we're moving into the seasonal start of the contracting cycle, which starts with the World Nuclear Association conference, which is going to start the first week of September.
So that dislocation with tier two markets is now unwound that has obviously created a lot of uncertainty.
And a lot of stress for traders and end users.
Speaker #8: So we think that the utilities are finally starting to emerge from their hibernation. And the price and the term market and the spot market should, should respond accordingly to that.
With respect to the copper trust, yes, we acknowledge it is trading at a discount, but we're clearly not happy with its approximately 20% discount which is a real anomaly an outlier relative to our other funds one of the.
Speaker #8: Okay, that's very helpful. Thanks for robust answer.
Speaker #7: Thank ou. Our next questions come from Etienne Ricard from BMO Capital Markets. Please go head.
Initiatives that is underway right now.
Is that we have filed with the New York stock exchange, an application to the SEC to duly list the vehicle.
Speaker #10: Thank ou and good morning. I'd like to, cover copper. the physical trust is trading at quite a discount to NAV. I'm curious what do you think needs to happen for this discount to, to narrow?
And part of the dual listing would envision a more robust and flexible redemption option and that physical redemption in cash redemption option if approved.
Speaker #10: And more broadly, how is the, current volatility to trade policies impacting demand, for the copper trust?
Wood in.
In our opinion and in our experience act as a very powerful incentives to close that discount to NAV.
So we are obviously still in kind of a quiet period with the SEC.
Speaker #8: Yeah, hi, Etienne. It's John. I'll, I'll, I'll cover that. well, the most notable thing about the copper market, which I'll start with, is obviously been, up until a few days ago, the dislocation between CME, and LME prices.
But that is our best effort to address the product and help to tighten that discount.
We have had an institution that has been under some stress that has been selling shares.
Speaker #8: And, and that obviously due to uncertainty and, and tariff threats were CME prices, meaning copper stored in the US warehouse was, was trading about 30% higher than copper sitting in a European warehouse.
That is also I think exacerbated the situation.
Thank you John.
And a question maybe for Kevin.
Speaker #8: That obviously is unwound since, in last few days as, tariffs were not applied as broadly as, as, as, as considered. So that dislocation between the two markets is, is now unwound.
On operating expenses can you remind us.
Incremental margins.
Sprott could achieve given the.
The rising net flows.
Sorry, I don't understand the question.
Speaker #8: That is obviously created a lot of, uncertainty. And a lot of stress for traders and, and users. with respect to the copper trust, yes, we acknowledge it is trading at a discount that we're clearly not happy with.
So currently you are generating about 60%.
Adjusted EBITDA margins.
How do you think about incremental margins as you raised.
Okay.
Speaker #8: It's, approximately 20% discount, which is a real anomaly. And outlier relative to our other funds. One of the, initiatives that is underway right now, is that we have filed with the New York Stock Exchange an application to the SEC to duly list the vehicle and part of the dual listing would envision a more robust and flexible redemption option.
Oh, Okay got you okay. Thanks.
Thanks for that well.
I think one of the things that can.
Can help you or any any.
Analyst or investor looking at the story to get a sense of what's what's left as far as.
Margin expansion opportunities.
As the.
Earnings base grows and to the extent that that growth is coming primarily from our exchange listed product segment.
What will just happen is youll see a greater proportion of that business, making up.
Speaker #8: And that physical redemption and cash redemption option, if approved, would, in our opinion and in our experience, act as a very powerful incentive to close that discount to NAV.
The consolidated results and if you just look at the margins of that business.
It's a little north of 80%.
Speaker #8: So we are obviously still in, in kind of a quiet period with the SEC. But that is our best, effort to address the product and help to, to tighten that discount.
So.
In other words.
As that business continues to grow and make up a bigger proportion of our overall consolidated results you should see that 60% margin climbing.
Higher.
Speaker #8: we have had an institution that has been under some stress that has been selling shares. that has also, I think, exacerbated the situation.
In theory.
In theory.
If the exchange the Sip products segment made up a significantly bigger portion of the overall business then you'd see the number getting closer to that 80% number there but as.
Speaker #10: Thank you, John. and, and the question may be for Kevin. on operating expenses, can you remind us what incremental margins SPROTT could achieve given the, the rising net flows?
Whitney as mentioned.
Over the last few quarters.
We do reinvest in the business to continue to achieve that growth and so that will offset that climb a bit a fair bit as well so.
Basically there was a high end.
Speaker #8: Sorry, I don't understand the question.
Probably looking at somewhere a little closer to where the exchange listed businesses right now, which is I think it's page 14 of the.
Speaker #10: Well, so currently you're generating about 60%, adjusted EBITDA margins. How do you think about incremental margins as ou raise more AUM?
The shareholders' report.
And then the low end would be to the extent the managed equities business became a bigger portion since that's the lower margin segment that we'd have.
Speaker #8: Oh, okay. Oh, okay, gotcha. Okay. thanks for that. Well, you know, I, I think one of the things that can, can help you or any, any, analyst or investor looking at the, the, the story to get a sense of what's, what's left, as far as, margin expansion opportunities, as the earnings base grows and to the extent that that growth is coming, primarily from our exchange listed product segment.
I'd add to that we would like to grow the lower margin businesses.
Because they carry higher fees on AUM.
So we would trade off margin expansion for absolute net income growth for sure.
But we've been blessed by having these physical truss do very well.
And it's certainly our hope that other divisions.
Speaker #8: what'll just happen is you'll see a greater proportion of that business making up a, the consolidated results. And if you just look at the, margins of that business, it's, a little north of 80%.
Catch up at some point.
And then sorry to pile on with that but that was another good point on Whitney and that those businesses are also where all the carry and performance fees come from.
Yeah.
Speaker #8: So, in other words, as that business continues to grow and make our overall up a bigger proportion of should see that 60% margin climbing, higher.
Okay. Thank you very much.
Yeah.
Thank you.
Our next question comes from Graham Ryding from TD Securities. Please go ahead.
Speaker #8: in theory, in theory, if the exchange listed products segment made up a significantly bigger portion , the overall business, then you would see the number getting closer to that 80% number there.
Alright.
Hi, good morning.
Maybe I could start on that carried interest performance fees.
Can you just give us some color on like maybe what the contribution was in the quarter from I think there was one fund that you.
Speaker #8: But, as Whitney's mentioned, over the last few quarters, we do reinvest in the business, to continue to achieve that growth. And so that, will offset that climb a bit, a fair bit as well.
It was sort of in a wind up and then there was also some contribution from your active.
Mining equities fund can you maybe give us some color on the mix.
Yes, sure it's Kevin here Graham how is it going so I'd say probably roughly about.
Speaker #8: So, basically, there was a high end, you're probably looking somewhere a little closer to where the exchange listed business is right now, which is, I think it's page 14 of the, of the shareholders report.
65 percentage, 65% to 70% ish would've come from that legacy exploration LP and.
And the rest would have come from our resource exploration and development in active equities.
Speaker #8: and then the low end would be, to extent the managed ities business became a bigger, portion since that's the, the, the lower margin, segment that we'd have.
Okay, and then on that.
It looked like the sort of the payout of the compensation payout was quite low relative to the $15 million in total.
Speaker #10: I'd, I'd add to that. We would like to grow the lower margin businesses, because they carry higher fees on AUM.
Interest yet towards Fuchs any reason why.
Why that was so low.
Speaker #8: Yes.
Speaker #10: And so, we would trade off margin expansion for absolute net income growth for sure. but, you know, we've been blessed by, you ow, having these physical trusts, you know, due to do very well.
Yes.
So because it is from that the majority of it was from that legacy LP when we reopen.
Re imagined and restructured the business and exited those areas. We were left with those exploration Lps that were now harvesting for.
Speaker #10: and it's certainly our hope that, other divisions, you know, catch up at some point.
Speaker #8: And then, and then sorry to pile on with that, but, that, that another good point on Whitney's end. that those businesses are also where all the carry and performance fees come from.
For cash and in the process of closing down so the folks that would have otherwise had a bigger claim on that.
That P&L are no longer here. So we're in the enviable position of retaining it for our shareholders.
Speaker #10: Okay. Thank you very much.
And.
Speaker #7: Thank you. Our next question comes from Graham Writing from TD Securities. Please go head.
Thats pretty much the reason.
Yes, Okay that makes sense and then my last question on this theme is just.
Can you give us any sort of color on sort of outlook, maybe multi year or next year, how youre thinking about.
Speaker #11: Hi. Hi, good ning. maybe I could start on that carried interest performance fees. can you just give us some color on, like, maybe what the contribution was in the quarter from, I think it was one fund that you, that it was sort of in a wind-up, and then there also some contribution from your active, mining equities fund.
The outlook for carried interest you performance fees, because when I look historically.
I think youre, averaging about 3% of your net fees would come from carried interest or performance fees, but this quarter was obviously.
Big outliers so.
It doesn't feel like we should be using this as a run rate can you give us any sort of color on what your expectations are.
Speaker #11: Can you maybe give us some color on the mix?
Speaker #8: Yeah, sure. it's Kevin here, Graham. how's it going? So I, I'd say probably roughly about 65%-ish, 65 to 70 percent-ish would have come from that legacy expiration LP.
Okay.
You want me to take that Kevin.
Yes, sure Whitney so generating performance fees carried interest in the second quarter as we've been unusual we have one small fund it's an exploration of importance fund that.
Speaker #8: and the rest would have come from our resource, expiration and development and active equity fund.
Crystallized performance fees semi annually, but most of our funds and managed equities.
Speaker #11: Okay. And then on that, I, it looks like the sort of the, the, the payout or the compensation payout was quite low relative to the, I think, $15 million in total.
Calculate them and get them at year end.
So that's kind of the timing and where most of these come and then of course, there is the lending franchise.
Speaker #11: Carrying interest performance fees. Any
Speaker #8: Yeah.
Speaker #11: reason why that was so low?
And those are long term partnerships and we earn those fees at the end of those partnerships.
Speaker #8: Yeah, the, so because it's from that, the, the majority of it was from that legacy LP, when we, reimagined and restructured the business, and exited those areas, we were left with those expiration LPs that were now harvesting, for cash and in the process of closing down.
Oh, I would've been fun too will wind up some time.
Maybe late next year.
And that's when those lumpy performance were carried interest.
Show up but I think it would be very hard I, certainly wouldn't try and model them in.
On a long term basis.
Speaker #8: So the folks that, would have otherwise had a, a, a bigger claim on that, on that, P&L are no longer here. So, we're the enviable position of, retaining it for our areholders.
Okay.
Understood and then my last question, if I could be a bit greedy here just flows quarter to date it looks like I'm estimating about $100 million are just north of a $100 million does that sound right.
Speaker #8: and, that's pretty much the reason.
Speaker #11: Yeah. Okay, that makes sense. And then my, my last question on this theme is just, can you give us any sort of color on sort of outlook, maybe multi-year or next year, how you're thinking about, ou know, the outlook for carried interest or performance fees?
Okay.
Okay.
John do you want to take that.
Yeah, Hey, Graham I don't have the number in front of me.
Speaker #11: ecause if I look historically, you know, I think you're averaging about 3% of our net fees would come from carried interest or performance fees.
I think it's fair to say that.
With heightened volatility and metals markets, which is what we've been experiencing obviously at the last few months.
Speaker #11: But this quarter was obviously a big outlier. So it doesn't feel like we should be using this as a run rate. Can you give us any sort of color on what your expectations are?
That does.
Put us in a stronger position to issue new equity.
Because of the requirement we need to.
Speaker #11: Well, you take that, evin.
<unk>, which is issued above NAV.
Speaker #8: Yeah, sure, Whitney.
That volatility while the market's traders don't like it it's actually positive for our business.
Speaker #10: So, generating performance fees, carried interest in the second quarter has a bit unusual. We have one small fund, it's an expiration partners fund, that, crystallizes performance fees semi-annually, but most of our funds in managed equities, you know, calculate them and, and, you know, get them at year end.
And we have seen pretty consistent sales.
And it seems as though.
Platinum carries the baton for a few weeks and then it goes to silver and then it goes to gold and I think that's what's really helped our business is that.
Speaker #10: so that's kind of the timing of most of these come. And then, of course, there's the lending franchise, and those are long-term partnerships. And so, and we earn those fees at the end of those partnerships.
We've had multiple metals kind of pulling pulling the load and contributing here. So.
I think that's why we've had such good sales in the last in the last four months or so.
Speaker #10: so our lending fund too, will wind up sometime maybe late next year, and, that's when those lumpy, performance or carried interest would, you know, would show up.
Yes.
Okay.
And just remind me Graham Graham you were saying what it what number did you say Graham you said 100, you have roughly.
Yes through your exchange listed products I had just over $100 million recorded like basically through July.
Speaker #10: But it, I think it'd be very hard, I certainly wouldn't try and model them in, you know, on a, on a -term basis. Okay.
Yes, we're probably we're probably a little higher than that.
On the other hand, we have had redemptions in some of our ETF for particularly uranium Etfs. So.
Speaker #10: understood. And then my last question, if I could be a bit greedy here, just flows quarter to date, it looks like I'm estimating about a $100 million or just north of $100 million.
That's a little bit of an offset that Mike.
Bring it down a bit.
Speaker #10: Does that sound right?
Yeah.
Okay, so with the offset that Whitney.
Speaker #11: Okay. I know, John, do you want to take ?
Alright.
Yeah.
Speaker #8: Yeah, I think, Graham, don't have the number in front of me. you know, I, I, I think it's fair to say that with heightened volatility in metals markets, which is what we've been experiencing, obviously, for the few months, that does put us in a stronger position to issue new equity.
So I was just going to say Graham with the offsets Whitney talked about and what Youre, probably missing you probably want to be a little closer to $1 50.
Okay.
Sounds good.
Thank you.
Speaker #8: because of the requirement we need to, achieve, which is issue above NAV. So that volatility, while the markets and traders don't like it, it's actually positive for our business.
Our next question comes from Mike Kozak from Cantor Fitzgerald. Please go ahead.
Yes, good morning, Whitney John and Kevin two questions for me first one maybe just at a higher level.
Speaker #8: and we, we have seen, you know, pretty consistent sales, and it seems as though, you ow, platinum carries the baton for a few weeks, and then it goes to silver, and then it goes to gold.
You kind of got.
John you alluded to just now, but multiple metals metals kind of firing on all cylinders goal at all time highs.
Silver I think made a 14 year high a couple a couple of weeks ago.
Speaker #8: And, and I think that's what's really helped our business is that, we've, we've had multiple metals kind of pulling, pulling the load and, and, and contributing here.
And then you guys reported a very nice cash build in the second quarter I believe about 20 million in free cash flow in Q2, how do you how do you think kind of the.
Speaker #8: So, it, I think that's why we've had such good sales in the last, in the last four months or so. Yeah, and,
Corporate level about the dividend policy would you ever consider spur.
Special dividend when you have multiple metals running like this.
Speaker #10: Okay, good to know.
We brought that up with a lot of our shareholders.
Speaker #8: , and just remind me, Graham, you were saying what number did you say, Graham? You said 100; you have roughly?
Most of them don't like special dividends.
Speaker #11: Yeah, it's for your exchange listed products. I had just over 100 million quarter, like, basically through July.
Always thought that particularly when we've got the performance fees are carried interest for one off kind of windfalls that.
That might be a way to distribute to shareholders.
Speaker #8: Yeah, we're, we're, we're probably we're probably a, a, a little higher than that.
But I think.
Speaker #10: On the other hand, we have had redemptions in, you know, some of our ETFs, particularly the uranium ETFs. So, you ow, that's a little bit of an offset that might, might bring you down a bit.
The current thinking is that we're going to continue to maintain a high payout.
On our earnings and if things persist and continue to grow certainly you should expect the dividend to grow.
We are coming into a kind of a difficult period for markets in general.
Speaker #11: Okay, that's helpful.
Speaker #8: Yeah, so with the offset that Whitney's, sorry. So I was just going say, Graham, with the offsets Whitney talked and what you're ably missing, you, you, you probably want to be a little closer to 150.
And so we remain committed to buying shares back opportunistically.
There are always a few items worth looking at.
In the acquisition area, but not significant I would say at this point.
Okay. Thanks, and then my second question.
Speaker #10: Okay. Sounds good.
John you kind of mentioned on the call and I would agree with you that the.
Speaker #7: Thank ou. Our next question comes from Mike Kozak from Canner Fitzgerald. Please go head.
Rightly or wrongly the interest in the last couple of months has been elsewhere in the nuclear fuel cycle, specifically with the.
Conversion enrichment some of the SLR tech companies.
Speaker #11: Yeah, good morning. Whitney, John, and evin. just two questions for me. The one maybe is just at a higher level. you know, you, you kind of got what, John, you, you alluded to it just, just now, but you have multiple metals, metals kind of firing on all cylinders, gold at all time highs.
My question is.
Would you consider <unk> and.
An ETF that tracks that section of the fuel cycle I, certainly think it would be well received in the current market conditions.
Yes, Hi, Mike.
Nice to chat.
Speaker #11: silver, I think, made a 14-year high a couple, a couple weeks ago. and then, you know, you guys reported a very nice, cash build in the second quarter, I believe, about $20 million in free cash flow in Q2.
Yes look I mean, we're obviously.
Opportunistic and innovative it's brought I think.
Our track record confirms that and we're always looking for new ideas.
Speaker #11: How, how do you, how do ou think kind of a, a, the, the corporate level about the dividend policy? Would you ever consider, you know, a special dividend when you have multiple metals running like this?
Yes.
Strict criteria around what we will do and not to Etfs are very crowded.
So the last thing we want to do is to trade another me too product.
Speaker #11: we've brought that up with a lot of our shareholders. most of them don't like special dividends. I've always thought that if it, you know, particularly when we've got a performance fees or carried interest or one-off kind of windfalls that, you know, that might be a, a way to distribute to shareholders.
But we do acknowledge that the interest in the space has shifted somewhat some of those stocks have gotten way ahead of themselves.
So you have to be kind of mindful of what people are chasing but yes, we're always open to different ideas.
Speaker #11: but I think, you, you know, the current thinking is, is that we're going to continue to maintain a high payout. you know, on our earnings.
But we don't.
So one straight out of our lane, which I think has been very helpful and it allows us to.
Speaker #11: And if things persist and continue to grow, certainly you should ect a dividend to w. we are coming into, a kind of a difficult period for markets in general.
Build on our core strengths and our competitive advantages.
Yeah, if we could find a way to make something better.
That brings our mining expertise to bear.
Speaker #11: and so we remain committed to buying shares back, opportunistically. And, you know, there are always a few items, you know, worth looking at. you know, in the, in the acquisition area, but none significant, I would say, at this point.
That's certainly something we'd look at but again.
We want to be focused on what we think we're best at and Thats in metals and mining.
Okay very good. Thanks, that's it for me I'll turn it back.
Thank you.
A reminder to ask a question you will need to press star one one on your telephone.
Please standby.
Okay I'm showing no further questions at this time. This concludes the question and answer session I would now like to turn it back to Whitney George for closing remarks.
Thank you everyone for participating in this call. We appreciate your interest in front and look forward to speaking to you again after our third quarter results.
Have a great day.
Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.