Press Release

Sprott Inc. announces second quarter 2008 results

        Results highlighted by 14% growth in assets under management over Q1 2008        TORONTO, July 31 /CNW/ - Sprott Inc. (TSX:SII) ("Sprott"or the "Company")  today announced its financial results for the three- and six-month periods  ended June 30, 2008.Q2 2008 Highlights        -   Assets under management (AUM) increased to $7.7 billion, compared to          $6.8 billion as at March 31, 2008 and $5.2 billion as at June 30,          2007        -   Total revenue was $39.5 million, an increase of $35.8 million from Q2          2007        -   Net income was $11.4 million, or $0.08 per share, compared with a net          loss of $7.7 million in Q2 2007        -   Completed $200 million IPO on the Toronto Stock Exchange via a          secondary public offering        -   Declared a second quarter dividend of $0.025 per share on July 29,          2008"The second quarter was highlighted by our successful initial public  offering and continued solid growth in assets under management in the face of  turbulent equity markets," said Eric Sprott, President and Chief Executive  Officer. "The rise in assets reflects our strong investment performance and  solid net sales of our funds across multiple channels. We remain focused on  protecting our fundholders' investments and believe our proven strategies  position our portfolios well for the current environment. Investment  outperformance remains a key growth driver, and we are also working on  increasing marketing efforts, expanding our offshore segment and introducing  new products."Financial Review        -------------------------------------------------------------------------                          3 months   3 months   6 months   6 months  12 months                             ended      ended      ended      ended      ended                           June 30,   June 30,   June 30,   June 30,  December      $ millions              2008       2007       2008       2007   31, 2007      -------------------------------------------------------------------------      AUM, beginning of       period                6,801      4,648      6,215      4,239      4,239      -------------------------------------------------------------------------      Net sales                259      482(*)       561      621(*)     1,350      -------------------------------------------------------------------------      Market value       appreciation of       portfolios              666         21        950        291        626      -------------------------------------------------------------------------      AUM, end of period     7,726      5,151      7,726      5,151      6,215      -------------------------------------------------------------------------      (*) Includes the initial public offering of Sprott Molybdenum          Participation Corporation.In Q2 2008, AUM rose by $925 million, or 14%, to $7.7 billion from  $6.8 billion as at March 31, 2008. The increase reflects net sales in the  second quarter of $259 million combined with market value appreciation of  portfolios of $666 million. In the first six months of 2008, AUM increased by  $1.5 billion, or 24%, to $7.7 billion from $6.2 billion as at December 31,  2007. The increase reflects net sales of $561 million and market value  appreciation of $950 million. The Company's offshore funds posted the  strongest asset growth and accounted for 18% of AUM at June 30, 2008 compared  with 13% at June 30, 2007.      On a year-over-year basis, AUM increased by 50% from $5.2 billion due to  net sales of $1.3 billion and market value appreciation of $1.3 billion.      Total revenue was $39.5 million and $82.6 million in the three and six  months ended June 30, 2008. Total revenue consists of management fees,  crystallized performance fees, gains (losses) from proprietary investments,  and interest and other income. While management fees are earned throughout the  year, performance fees (with the exception of one fund and performance fees  attributable to redeemed units together termed as crystallized performance  fees) are earned on the last day of the fiscal year and therefore are not  included in the financial results for the first three quarters of the year.      For the three months ended June 30, 2008, management fees increased by  38% to $36.6 million, from $26.6 million in the comparable period in 2007. For  the six months ended June 30, 2008, management fees rose 41% to $69.4 million,  from $49.1 million in the prior year period. The increase in management fees  is due to the increase in AUM.      Crystallized performance fees for the three- and six-month periods ended  June 30, 2008 were $4.0 million and $4.3 million, respectively, compared to  $0.3 million and $0.3 million for the corresponding periods in 2007. The  Sprott offshore funds were the largest contributors to the increase in 2008.      Gains (losses) from proprietary investments totaled a net loss of  $2.8 million for the quarter and a gain of $5.4 million for the six months  ended June 30, 2008. As discussed in the Company's Prospectus dated May 8,  2008, Sprott Asset Management Inc. (SAM) sold the majority of its proprietary  investments in anticipation of the initial public offering (IPO). However, SAM  retained investments in certain funds that, on a mark-to-market basis,  resulted in a net loss from investments for the quarter.      For the quarter ended June 30, 2007, losses on these investments, a  dilution loss on the IPO of Sprott Molybdenum Participation Corporation  (Sprott Moly) and an impairment of long term assets amounted to $23.6 million  and led to unusually low revenues. The dilution loss was in effect a reversal  of $11.8 million in unrealized gains on investments held by Sprott Moly in  anticipation of its IPO that was completed in April 2007.      Interest and other income increased to $1.6 million and $3.5 million for  the three- and six-month periods ended June 30, 2008, compared to $0.4 million  and $1.0 million for the comparables periods in 2007. The increase is mainly  due to early redemption fees, foreign exchange gains on fees receivable from  offshore funds and commissions earned by SAM as part of the selling group for  the Sprott Inc.      Expenses for the three- and six-month periods ended June 30, 2008 were  $22.6 million and $40.7 million, respectively, compared with $14.1 million and  $25.4 million for the corresponding periods in 2007. The increase in expenses  reflects costs associated with higher AUM and management fees, primarily  trailer fees, additional employees, as well as the change in the way the  Company accounts for quarterly employee bonuses.      Net income was $11.4 million, or $0.08 per share, compared with a net  loss of $7.7 million in Q2 2007, mainly as a result of the investment and  dilution losses described above. For the six months ended June 30, 2008, net  income was $28.1 million, or $0.20 per share, versus net income of  $11.1 million in the corresponding period of 2007.        Second Quarter Dividend        The Company announced on July 29, 2008 that it has declared a dividend of  $0.025 per share for the quarter ended June 30, 2008. The dividend will be  paid on August 29, 2008 to shareholders of record on August 11, 2008.        Conference Call and Webcast        A conference call and webcast will be held today, Thursday, July 31,  2008, at 10:30 am ET to discuss the company's financial results and outlook  for 2008. To access the conference call, please dial 416-915-5763 or  1-800-590-1508. To access the live webcast, please visit www.sprottinc.com or  www.newswire.ca. Participants will require Windows Media Player™ to listen  to the webcast.        Non-GAAP Financial Measures        This press release includes financial terms (including AUM 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 prospectus. 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 and Sprott Asset Management  (SAM) believe to be reasonable assumptions, neither the Company nor SAM can  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 neither the Company nor  SAM assumes any obligation to update or revise them to reflect new events or  circumstances.        About Sprott Inc.        Sprott Inc., through its wholly-owned subsidiary Sprott Asset Management  Inc., is an independent asset management company with approximately  $7.7 billion of assets under management mainly among its 21 investment funds,  discretionary managed accounts and management of certain public companies.  Sprott Asset Management has a history of offering investment management  services to high net worth individuals and institutions for more than 26  years. For more information about the Company, please visit www.sprottinc.com.Summary Financial Information                                                   Balance Sheet Information                                           ------------------------------------                                                    As at          As at                                                   June 30,     December 31,                                                    2008           2007                                                      $              $        Total Assets                                96,556,139    280,872,838      Total Liabilities                           34,726,036    142,785,169                                           ------------------------------------      Shareholders' Equity                        61,830,103    138,087,669                                      For the      For the      For the      For the                                  three        three          six          six                                 months       months       months       months                                  ended        ended        ended        ended                                June 30,     June 30,     June 30,     June 30,                                   2008         2007         2008         2007                                      $            $            $            $      -------------------------------------------------------------------------                                    Assets Under Management (at period end)                            ---------------------------------------------------      Assets Under       Management       (in $000's)            7,726,326    5,150,827    7,726,326    5,150,827                                            Income Statement Information                            ---------------------------------------------------        Revenue      Management fees        36,627,349   26,559,536   69,390,612   49,107,910      Crystallized       Performance Fees       3,991,360      312,069    4,296,418      345,779      Unrealized and       realized gain (loss)       on proprietary       investments           (2,753,506) (10,619,620)   5,396,118   (6,564,541)      Dilution loss related       to Sprott Molybdenum       Participation       Corporation                    -  (11,808,172)           -            -      Impairment of long       term assets                    -   (1,137,945)           -   (1,137,945)      Other income            1,440,947      373,177    3,060,621      562,045      Interest income           193,096        8,064      484,334      427,519      -------------------------------------------------------------------------      Total revenue          39,499,246    3,687,109   82,628,103   42,740,767      -------------------------------------------------------------------------        Expenses      Compensation and       benefits              11,281,865    5,887,945   19,800,570   10,528,874      Trailer fees            7,947,954    6,131,877   15,055,607   11,360,795      General and       administration         2,845,916    1,053,009    5,074,699    2,343,138      Donations                 365,830       29,400      690,830       30,900      Amortization              172,100      219,846      113,301      388,165      Interest expense                -      728,656            -      739,899      -------------------------------------------------------------------------      Total expenses         22,613,665   14,050,733   40,735,007   25,391,771      -------------------------------------------------------------------------      Income (loss) before       income taxes for       the period            16,885,581  (10,363,624)  41,893,096   17,348,996        Provision for       (recovery of) income        taxes                 5,494,835   (2,687,360)  13,792,835    6,238,000      -------------------------------------------------------------------------      Net income (loss) and       comprehensive income       (loss) for the period 11,390,746   (7,676,264)  28,100,261   11,110,996      -------------------------------------------------------------------------