SII Sprott Inc

TORONTO, Nov. 11 /CNW/ -- TORONTO, Nov. 11 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three and nine month periods ended September 30, 2010. Q3 2010 Highlights -- Assets Under Management ("AUM") were $6.5 billion as at September 30, 2010, compared to $4.3 billion as at September 30, 2009 and $5.5 billion as at June 30, 2010 -- Management Fees were $24.7 million, an increase of 19% compared with Q3 2009 -- Base EBITDA was $10.4 million, compared with $8.0 million for Q3 2009 -- Net income increased by 74% to $9.6 million ($0.06 per share), from $5.5 million ($0.04 per share) in Q3 2009 -- Peter Grosskopf took over as Chief Executive Officer of Sprott Inc. -- Began management of Sprott Resource Lending Corp. (formerly Quest Capital Corp.) -- Signed Letter of Intent to acquire Global Resource Investments -- Completed US$318 million follow-on offering of Sprott Physical Gold Trust units Subsequent to the end of Q3 2010 -- Completed Initial Public Offering of Sprott Physical Silver Trust units for gross proceeds of US$575 million -- Increased quarterly dividend to $0.03 per share from $0.025 per share "Our funds continued to perform well during the third quarter, with many of our larger funds benefiting from significant exposure to gold and silver. I'm pleased to report that, as a result of our excellent investment performance this year, the majority of our assets under management are currently in a position to generate performance fees," said Peter Grosskopf, CEO of Sprott Inc. "Our assets under management increased significantly during the quarter, driven by our strong investment performance as well as significant net sales from the follow-on offering of units of the Sprott Physical Gold Trust," continued Mr. Grosskopf. "We are extremely pleased with the response to this Trust, which now exceeds $1.1 billion in assets. In October, we successfully launched our second precious metals specialty product, the Sprott Physical Silver Trust, which raised US$575 million through an initial public offering." "We were also active on a number of other fronts during the quarter as we worked to diversify our offerings and expanding our business internationally," continued Mr. Grosskopf. "In September, Sprott Consulting added to its roster of managed companies, completing a transaction to re-brand Quest Capital Corp. as Sprott Resource Lending Corp. The new business will focus on providing bridge and mezzanine financing to mid-sized resource companies. We believe this is an underserved area of the market and look forward to building a significant presence in the sector." "Also in September, we signed a letter of intent to acquire Global Resource Investments and its affiliated companies. Based in California and led by Rick Rule, one of North America's leading resource investors, the Global Group includes a specialized asset manager and a broker dealer with an investment approach that is complementary to ours at Sprott and a product line that will further diversify our asset and earnings mix. Rick and his team bring an element of resource specialization that will strengthen our already deep investment team. We are currently in the due diligence phase of the transaction, which we expect to close early next year. Once successfully completed, the transaction will provide us with an entry point into the large and fragmented U.S. market, where the Sprott brand is already well known. We expect the deal to be accretive to our shareholders," concluded Mr. Grosskopf. _____________________________________________________________________ | $ millions |Three months |Three months | Nine months | Nine months | | | ended | ended | ended | ended | | |September 30,|September 30,|September 30,|September 30,| | | 2010 | 2009 | 2010 | 2009 | |_____________|_____________|_____________|_____________|_____________| |AUM, | 5,546| 4,444| 4,774| 4,449| |beginning of | | | | | |quarter | | | | | |_____________|_____________|_____________|_____________|_____________| |Net sales | 354| (252)| 875| (503)| |(redemptions)| | | | | |_____________|_____________|_____________|_____________|_____________| |Market value | | | | | |appreciation | | | | | |of portfolios| 613| 146| 864| 392| |_____________|_____________|_____________|_____________|_____________| |AUM, end of | 6,513| 4,338| 6,513| 4,338| |quarter | | | | | |_____________|_____________|_____________|_____________|_____________| Assets Under Management At the end of the third quarter of 2010, AUM were approximately $6.5 billion as compared with $4.3 billion at September 30, 2009 and $5.5 million at June 30, 2010.  During the quarter, net sales were $0.4 billion and market value increases of portfolios totaled $0.6 billion, resulting in a net $1.0 billion increase in AUM. Monthly average AUM for the quarter ended September 30, 2010 was $5.7 billion, compared with $4.2 billion for the third quarter of last year. Income Statement Total revenue for the quarter ended September 30, 2010 increased by 32.0% to $29.1 million, from $22.0 million in the third quarter of 2009. For the nine-months ended September 30, 2010, total revenue increased by 13.0% to $81.1 million from $71.8 million in the first nine months of 2009. Management fees for the third quarter of 2010 increased by $4.0 million to $24.7 million from $20.7 million for the period ended September 30, 2009. The increased management fees reflect the 34.2% increase in average monthly AUM as compared with the prior year. For the nine-months ended September 30, 2010, management fees increased by 11.1% to $72.2 million from $65.0 million in the first nine months of 2009, as average monthly AUM increased by 19.5% over the same period. Crystallized performance fees for the third quarter and first nine months of 2010 were $0.7 million and $0.9 million, respectively. In the same periods of the prior year, the Company earned $0.2 million and $2.4 million respectively in crystallized performance fees resulting from higher redemptions and strong performance by the funds in early 2009. Gains from proprietary investments (realized and unrealized) totaled $2.9 million for the third quarter of 2010, compared with gains of $0.7 million in the third quarter of 2009. For the nine months ended September 30, 2010, gains from proprietary investments totaled $3.1 million, compared with $3.6 million during the first nine months of 2009. Other income for the third quarter of 2010 increased by $0.3 million to $0.8 million from $0.5 million during the same period in 2009. For the nine months ended September 30, 2010, other income increased by $4.1 million to $5.0 million from $0.9 million during the prior year period. Total expenses for the three months ended September 30, 2010 were $16.2 million, an increase of 15.5% from $14.0 million for the third quarter of 2009.  The increase is mainly attributable to a $1.8 million increase in compensation and benefits and a $0.4 million increase in trailer fees versus the same period in 2009. Total expenses for the first nine months of 2010 were $48.7 million, an increase of 8.1% from $45.1 million in the nine months ended September 30, 2009. Base EBITDA increased by 28.7% to $10.4 million for the quarter ended September 30, 2010 from $8.0 million in the third quarter of 2009. For the nine months ended September 30, 2010, base EBITDA increased by 30.6% to $31.0 million from $23.7 million during the first nine months of 2009. Net income for the quarter ended September 30, 2010 increased 74.3% to $9.6 million ($0.06 per share) from $5.5 million ($0.04 per share) in the third quarter of 2009. For the nine months ended September 30, 2010, net income increased by 25.3% to $23.2 million ($0.15 per share) from $18.5 million ($0.12 per share) for the same period of the prior year. Dividends On November 9, 2010, the Board of Directors approved an increase to the regular dividend. A dividend of $0.03 per common share was declared for the quarter ended September 30, 2010. Conference Call and Webcast A conference call and webcast will be held today, Thursday, November 11, 2010, at 10:00am ET to discuss the Company's financial results. To access the call, please dial 647-427-7450 or 1-888-231-8191 ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Thursday, November 18, 2010 by calling 416-849-0833 or 1-800-642-1687, reference number 19107877. The conference call will also be webcast live at www.sprottinc.com and www.newswire.ca. An archived replay of the webcast will be available for 365 days. *Non-GAAP Financial Measures This press release includes financial terms (including AUM, EBITDA, Base EBITDA and net sales) that the Company utilizes to assess the financial performance of its business that are not measures recognized under Canadian generally accepted accounting principles ("GAAP"). These non-GAAP measures should not be considered alternatives to performance measures determined in accordance with GAAP and may not be comparable to similar measures presented by other issuers. For additional information regarding the Company's use of non-GAAP measures, including the calculation of these measures, please refer to the "Non-GAAP Financial Measures" section of the Company's Management's Discussion and Analysis and its financial statements available on the Company's website at www.sprottinc.com and on SEDAR at www.sedar.com. Forward-Looking Statements This release contains "forward-looking statements" which reflect the current expectations of the Company. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements including, without limitation, those listed under the heading "Risk Factors" in the Company's annual information form dated March 24, 2009. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this release. Although the forward-looking statements contained in this release are based upon what the Company believes to be reasonable assumptions, the Company cannot assure investors that actual results, performance or achievements will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and the Company does not assume any obligation to update or revise them to reflect new events or circumstances. About Sprott Inc. Sprott Inc. is a leading independent asset manager dedicated to achieving superior returns for its clients over the long term. The company currently operates through three business units: Sprott Asset Management LP, Sprott Private Wealth LP and Sprott Consulting LP.  Sprott Asset Management is the investment manager of the Sprott family of mutual funds and hedge funds and discretionary managed accounts; Sprott Private Wealth provides wealth management services to high net worth individuals; and Sprott Consulting provides management, administrative and consulting services to other companies, including Sprott Resource Corp. (TSX: SCP) and Sprott Resource Lending Corp. (TSX: SIL) (NYSE AMEX: SILU). Sprott Inc. is headquartered in Toronto, Canada, and is listed on the Toronto Stock Exchange under the symbol "SII". For more information on Sprott Inc., please visit www.sprottinc.com. pbInvestor contact information:/b (416) 203-2310 or 1 (877) 403-2310 or a href="mailto:ir@sprott.com"ir@sprott.com/a./p

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