Welcome to Sprott Incorporated 2017 Annual Results Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded today, March 2, 2018. On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meanings of the Safe Harbor provision of the Canadian provincial securities law. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are implied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the MD&A for the quarter and Sprott's other filings with the Canadian securities regulators. I'll now turn the conference over to Peter Grosskopf.

Good morning, everyone, and thanks for joining us today. On the call with me today is our CFO, Kevin Hibbert; John Ciampaglia. The Head of our Asset Management business; and our Head of Investor Relations, Glen Williams. Our 2017 annual results were released this morning and are available on our Web site, where you can also find the financial statements and MD&A. I will start on Slide 3 with a recap of our progress in 2017. Sprott accomplished much in 2017 and we enjoyed our best year in recent memory. We took the year to reposition the firm to focus on our historical strengths in precious metal and real asset investments. To complete this positioning, we sold our Canadian diversified mutual fund assets for $46 million, and we significantly completed the strategic acquisition of the Central Fund of Canada in the transaction that added $4.3 billion in assets to our physical Bullion franchisor after year end. We completed the $640 million capital raising for our private resource lending LPs. And we successfully launched our resource focused merchant bank, which contributed to our idea and transaction generation as well as our financial results during the year. Turning now to Slide 4. Our AUM as of year-end was $7.3 billion compared to $9.2 billion at the end of 2016. This decline related entirely to the sale of our diversified business and was subsequently more than offset by the CFCL acquisition, which closed in January 2018 and increased our total AUM to $11.5 billion. Our adjusted base EBITDA increased by 67% to $40.2 million or $0.16 per share. We maintained a strong balance sheet with $293 million investable capital at the end of 2017 before giving effect to the CFCL transaction price. We generated more than $50 million in net sales during the year. On Slide 5, you can see some of the recent highlights from each of our business unit. I'm very pleased to report that all of our divisions were profitable in 2018 and each of them is focused on raising new pools of capital to deploy into our existing strategies. With the CFCL acquisition, our physical trusts are now the third-largest Bullion management complex in North America. Our exchange listed products business is highly scalable and we expect to launch additional new ETS over the course of the year. Subsequently, we've now deployed approximately $250 million in capital from our resource lending LPs and including existing loan commitments which are undrawn, we believe this fund is on track to be close to majority deployed by Q4 of this year. Sprott Capital Partners delivered the first -- the successful first years in operation, participating in more than $900 million of financings and generating close to $6 million in EBITDA. This team is looking to expand its operations slightly in 2018, while also taking on more advisory mandates. With that, I will turn it over to Kevin for a closer look at our financial results.

Thanks, Peter, and good morning, everyone. Before I begin, I should quickly note that you will notice a slightly different layout to our financial presentation this quarter. However, the information you are used to seeing can still be found in the supplemental financial information section of this deck. That said, I will start on Slide 6, with a look at our earnings transition. This year marks a key milestone for us as it is the first time since 2012 that we eclipsed the $40 million EBITDA mark, which is a 67% increase in EBITDA from last year to Peter's point and more than double our financial results from 2015. Higher 2017 full-year EBITDA was mainly attributable to higher net commissions from our merchant banking division as Sprott Capital Partners had a very good start to its first year of operations. We also benefited from the reversal of a loan loss provision and recognition of the related interest on that previously impaired loan, and lower SG&A and compensation expenses on the year, on the sale of our non-core Canadian diversified funds business earlier in the year and from changes to our annual and long-term incentive program. Looking at our revenue performance, details of which can be found on Slide 13 of this deck. Total net revenues for the year were $121.8 million, a decrease of $11.4 million or 9% from 2016. Key revenue items worth noting include net fees, interest income and net commission. Net fees for the year were $58.2 million, a decrease of $16.9 million or 23% from 2016. The decrease was due to the sale of our non-core Canadian diversified funds business earlier in the year, but was partially offset by new fee generation from the deployment of committed capital in our lending LPs and higher fee generation…

Thanks, Kevin. Like everyone else, we watched the rise of cryptocurrency and sympathize with the desire of their users to seek alternatives to Central Bank controlled currencies. We have to admit that we are skeptical of the long-term viability of most cryptocurrencies, which have at best confusing claims to underlying value. However, we're convinced that the underlying block chain technology is ideally suited to the digitization of the physical gold market. And that this conversion will be the single most important events happening to the gold universe in decades. One way we've chosen to participate in this digitization is through our investment in Tradewind. Tradewind is a fintech company launching a new digital gold platform which combines the exchange technology of the IEX Group with a tailored block chain application, offering secured physical vaulting with significant advances in trading, settlement and ownership of physical gold. Tradewind is now in the process of a commercial launch. We also expect to participate directly in the distribution of digital gold to our clients in an effort to generate a profitable activity for Sprott. Finally, on Slide 10, you can see some of our key priorities for 2018. We remain steadfast in our conviction that gold and other resource investments will provide a valuable form of insurance from other market direct gyrations and corrections, as investors digest a normalization of interest rates and the likely reemergence of inflation. Institutional and retail investor interest in precious metal investments continues to rise. And we think this is a great time to be in our position with more than 90% of our AUM concentrated in these investments. With the repositioning of the business now complete, we're entirely focused on execution and driving profitable growth in each of our business units. We will continue to build on the relationships established in our first lending LP and we expect to launch an additional PE style fund later this year. To the extent that are opportunity -- there are opportunities to add strategies and talents in our areas of focus and we will continue to selectively evaluate acquisition opportunities. And our merchant bank continues to provide meaningful origination opportunities in margin contribution. Finally, we will continue to build our client coverage team and adding -- we will be adding more new professionals in both Canada and the U.S during this quarter. And with that, I will turn it back to the operator for questions.

Thank you. with [Operator Instructions] Our first question comes from the line of Nik Priebe of BMO Capital Markets. Your line is open.

Oh, hi. Good morning everyone. With the acquisition of the CFCL assets complete in January, I was wondering if you could give us an update just on how the integration of those assets has progressed with respect to retention rates, better or worse than expected, anything notable at all there?

Yes, I will pass it over to John to answer that question.

Hi, there. Good morning. So we’ve -- we assumed management of the fund on January 16 as you know. So our first redemption notice period was February 15. We received one redemption that is totaling approximately $US100 million. That redemption amount, I would say is well within our expectations. As you may recall back in 2016 when we acquired the Central GoldTrust. We did experience some redemptions for the first couple of months post close of the transaction. The wildcard in all of this is really about how the underlying metals are trading. If the underlying metals have a good bit to them, what we find is a lot of the market participants will opt to sell their shares into the open market and close our arbitrage opportunities that way. We think with the backdrop of the markets that Peter referenced a few minutes ago, we think the market environment is quite positive for this, with all of the rhetoric coming out of the U.S with trade wars, which inevitably cause a lot of anxiety and inflationary pressures in the system, with Central Banks all trying to figure out how to unwind their balance sheet and normalized interest rates. And with the return of equity market volatility as well as some of the dislocation we’ve seen with the VIX Index and whatnot in the few weeks. It's starting to change the narrative around precious metals, and particularly, gold and is starting to change the psyche in a lot of investors mind. So we are very positive. We think the redemptions are going to be well within reason and manageable.

And also I wouldn’t hesitate to add -- and this is a personal expectation only, is that we’re total enhanced client base now totaling over a $150,000 or our sincere hope is that with additional products we can build that AUM over time as opposed to have further impact from arbitrage.

Okay. Yes, that’s helpful cover. Thanks. Can you talk a little bit more about, I mean, you’ve spoken about the cross-selling opportunities to CFCL holders. But now that you brought those assets into the fold, just wondering what’s playing on that front this year? And how do you engage to a broad audience?

Right. While we are early signs of that engagement, and we see that every day in our Web site traffic for example. So, specifically since January 16 from the new fund has come on board our Web site traffic has gone up a 100%. And primarily that is being driven by the new shareholder base that we’ve acquired through central fund. And so those are wonderful opportunities to engage in a digital format to showcase all of our products, our company. What we’re finding from not only the web traffic, but also all of the inbound inquiries by email and telephone that this shareholder base is obviously eager to engage with us. They’re spending a lot of time on the Web site to be tracked -- we track the depth of the page views, we track the time on the Web site. And those are all very good metrics to measure their level of interest and engagement. We hope over time, we’re going to have more meaningful engagements through webcasts and other ways of educating them and updating them on the market that we will be able of nurture those relationships alone. So I think six weeks into it, we are very happy with the way we are on boarding that client base, how the funds are trading and how they’re engaging with us, thus far.

Okay. And then just lastly, for me, I'm just wondering what's next on the agenda in terms of the new products pipeline? I know 2017 was a very busy year for you guys, but I think you had alluded in your comments the introduction of new PE-style strategy this year. Just interested if you could expand on that a bit?

Yes, well the track record, the deployment, the experience, that we have with clients in the structured financing business and mining has been very positive. So I think that there's a chance to build that business significantly during the balance of the year. We also have a joint venture that we announced on Farmland and agricultural investments with Ceres LP in the U.S. We are going to be out there, with a $500 million race this year. I do think there is opportunities for ETFs and active gold funds, depending on which market you’re looking at or what specialty. There is a lot of -- now what I would call broad based interest in mining, commodities, everything from electric vehicle components and battery products to agricultural products. So there's no lack of opportunities. We recently inked a new joint venture in the lithium area to generate project finance opportunities with lithium. So there is no shortage of opportunity to look at new areas right now.

Okay. That’s it for me. Thanks.

Thank you. Our next question is from the line of Gary Ho of Desjardins Capital. Your line is open.

Thanks and good morning, just the first question, Peter, just on the capital deployment of the lending fund, slightly slower than expected. I think it was roughly $50 million in Q4. Is that the rate we -- you think we should look for going forward or could there be a pickup in deployment? And as well, do you need to be at a certain deployment level before you start marketing the PE fund you just alluded to?

Yes. Well, it's not slower than we wanted. And there's a lag between what you see as AUM drive downs, and committed capital that we have under term sheets. So for instance, we have currently over a $100 million sitting in committed term-sheets which will be drawn down. So for us, it's notionally AUM. You haven't seen it yet, because it's not been funded. But the actual deployment of the fund, again notionally in our mind sits at around $300 million now, and it's actually gone much quicker than we expected. So we are on a good pace there. And what was the second part of your question? Sorry to get you to repeat.

Yes. No just wondering if there's a -- you need to hit a certain deployment level before you start your PE fund?

Yes, we do. Out of respect for the points in that front. We need to be -- I think it's about 75% or 80% deployed and the way they draw downs go -- we see that happening within the next two quarters.

Okay. Got it. Helpful. Thank you. And then next question as it relates to Tradewind, do you anticipate future investments that's needed for Tradewind to expand?

Well, they received a lot of interest from strategic parties in the gold markets. And if those strategic parties come in we would not want to be diluted. Okay.

Okay. Can you -- how much is invested? And what's your percentage in Tradewind? Can you remind me?

I think our percentage is about 20 and the amount invested is about $5 million to $6 million.

Okay. Yes, and then just my last question, I think in your press release you alluded to complementary acquisitions and strategic partnerships. Can you elaborate what those could look like?

Sorry, that’s the comment that I made on the outlook about acquisitions, okay. Well, there are other markets in the globe that have growing resource, funds, and one of them would be UCITS, another one would be China, another one would be certain components of the U.S., more on the private side rather than the [indiscernible]. And each of those have competitors that have all suffered through the same resource market downturns in the same difficulties that we have. I think the opportunity for consolidation is getting a little better right now.

Okay. That’s it for me. Thank you.

Thank you. Our next question is from the line of Geoffrey Kwan of RBC Capital Markets. Your line is open.

Just first question I had with -- in your press release, you made reference to that bylaw amendment. Just was wondering if there was -- what kind of precipitated that need to make that change?

Well, we saw at a standard protocol. As you know this has been a shareholder -- sorry, an employee shareholder company for a long time ever since Eric founded the company. But as we get bigger, we expect it's going to be difficult for employee shareholders to continue to own the same percentage. So not having that kind of blocking and plays I think that it's just a prudent thing to do, that we don’t want to see outsider, action that disturbs the culture of the company with two warning and it seems as though, every large company has been doing the same thing. So it was time for us to put it in place as well.

Okay. So, you haven't seen anything specific from, say, other parties, that would have …

If we had, we'd be announcing it. So, no, no, is the answer.

Okay. Just the other question I had is that you made -- you mentioned in some of your remarks about hiring some people and as you think about your strategy and growth over the next two years. Can you talk about, from an operating leverage standpoint, how to kind of think about that? You talked about obviously with the divestiture of the assets and rightsizing the expense base, but I'm just trying to get a sense here of what you're looking at, if you're able to execute on everything there, kind of what the expense growth might look like on the comp and the G&A.? And obviously, we can run it, but we would be on the top line on the revenue.

Okay. Well, that’s a great question. So we invested a time in the platform this year, you may not have seen that. You see it some of the amortizations of the equity programs that we see seeded the senior employees with those are on a high amortization level for last year and this year which unfortunately and I apologize for this mix year-on-year comparisons, very difficult. Kevin, can give you the normalized numbers kind of after the call or even in a subsequent question. But I think the important part is that we’re entire focused on margin now. And the business is entirely scalable. And if we don’t get a 50% plus kind of EBIT contribution we’re not going to be doing it. And so you heard, John talk about the client base and the exchange-traded business. We don’t need more platforms to do that. And when you hear me talking about consolidation other than a key revenue producer or revenue producing PM. We don’t need more platform to do that. The sales people, when I talk about adding sales people, they pay for themselves very quickly. Basically there are additional revenues and client services revenues from those clients generally, they’re making contributions within 6 months. So I think you’re going to see margins or Paul committed to making margins higher going forward as we grow.

And then, maybe if I can just sneak in one related question there. From the system side that you’ve got a lot of different products that you’re offering to the market. Just wondering, from a system standpoint, is that -- do you have the technology to allow that scalability to take you through the next 3 to 5 years are -- is there a chance that you may need to kind of tweet how are you missing your systems to be able to support that growth that you’re expecting.

Hey, Jeff. It's Kevin here. I will take that one. That’s a very good question. The show dancer is as part of the whole reorganization and strategic focus on the business, we’ve reset. We’ve got a clean start and during that process we look at our -- what I call are people or processes in our technology frameworks alongside the co-head of our shared services group. And we believe now that we’ve put in place the right technology. There is at least three or four different middle office front end and back office technologies we grow to support the lending fund which kid probably handle double to AUM we have right now quite easily and from a process and people standpoint. We have the right people in place now to also take on growth in several other areas that Peter touched on. So as far as the shared services world, there will no material increase in technology spend. We’ve already done all of that through this current reorg and strategic shift in the business.

Okay, great. Thank you very much.

Thank you. Our next question is from the line of Graham Ryding of TD Securities. Your line is open.

Maybe I could just start with the $49 million of resource loans on your balance sheet. Just as you rollout further or fund further you’re committed assets in your resource lending LP. Does not change at all, the amount of assets that you keep on your balance sheet or should we assume that roughly this $49 million resource as well as in your balance sheet is sort of go hold will hold in that range from next year so …

Yes, so hey, Graham, it's Kevin here. So, no, consistent with what we’ve been mentioning for, probably the path maybe eight quarters now. So it's been a while now. We’ve always had the view that as we build scale in the resource lending LPs, that we would continue to runoff the on-balance sheet loan book. So what you're going to see is discontinued sort of transition away from on-balance sheet lending to off-balance sheet AUM. And what would be replaced program is as those loans roll off. What you would see is an increase in the lending LP units that were holding as a co-investment alongside our clients in those fund.

So will that will sit in your balance sheet under that resource or loans receivable line?

No, it wouldn’t constitute a loan anymore, because we wouldn’t be the one that would be providing the funds to the borrowers. They would be -- it would be the LPG themselves doing that. So what you would see is the loans receivable line of the balance sheet will continue to drop and then what you will see increase in the long-term investment line, which is the new line that you all have -- would have seen in this morning's release.

Got it. Compensation, if I strip out the severance in the performance GPS, compensation was higher than I was expecting. Was there anything sort of year-end true up in the number this quarter or just any color around the level that it was at this quarter.

Yes, sure. So you said you backed out the severance and what else?

The performance fees.

Okay, perfect. Okay. So if you -- when you get a get chance if you look at page 12 MD&A, we show a breakout of the three components of our -- for lack of a better word are sort of normalized our comp .being salaries, AIP which is our annual incentive and the LTIP. What’s causing, perhaps, the number to be different from what you were thinking is the fact that when we launched the new LTIP program to replace the old 16th 2016 version, because it's no longer relevant, it was designed to drive different strategic objectives we’re now looking to be more focused on and so forth. You're required to expand more of the equity upfront in the early years. And so, as we launched it in the fourth quarter, early in the fourth quarter you would see a very large equity amortization numbers in there. It's probably about $1.5 million that’s sitting in there, if you back that out, that might get you back to the number that you would have expected.

And that’s not your share based comp? That’s separate?

That is the share based comp. So our comp -- if you take our compensation plus our stock based comp number, and back out commissions performance in severance, that you would get the numbers that we’re showing up on page 12. We can talk offline, to give more detail on that.

One other changes that we put in place is we’re paying the executive team mostly with shares.

Which is also why the cash bonus dropped so significantly if you look at page 12.

Okay. Okay, great. And then my last question, just to be clear, post the Central Fund closing, you haven't seen any material redemptions, there is only $100 million that you're expecting as of today that’s going to come out?

That’s correct.

Right.

That’s why I reference that number was for the month of February. So each month, up until the 15th of that month, an investor is able to tender a redemption notice to us. So in approximately two weeks, we will get a sense of any other redemptions. But as I said earlier, it's -- we have an expectation for some redemptions and we think it is well within reason and normal experience.

Okay. That’s helpful. Thank you.

Thank you. And at this time, I’m showing no further questions. I’d like to turn the conference back over to Peter Grosskopf for closing remarks.

Well, thanks again everyone for participating. We forward to updating you next quarter, we're happy to answer any questions you have in the meantime. Just call us directly. Also have a good weekend.

Ladies and Gentlemen, thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone have a great day.