Building a Global Alternative Asset Manager Analyst Lunch April 28, 2011 Sprott Group of Companies 2011 Analyst Lunch 1
Forward Looking Statements This presentation 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…
Sprott Group of Companies Peter Grosskopf, CEO, Sprott Inc. Sprott Group of Companies 2011 Analyst Lunch 3
Agenda 11:00 11:10 a.m. Welcome & Introduction Peter Grosskopf, CEO, Sprott Inc. 11:10 11:30 p.m. Market Outlook Eric Sprott, CIO and Senior Portfolio Manager 11:30 12:10 p.m. Sprott Group of Companies James Fox, President, Sprott…
Sprott Group of Companies 2009: An evolving organization Asset / Wealth Management Direct Management Sprott Inc. (TSX: SII) Market Cap: 675 Milliion* Sprott Consulting LP Sprott Sprott Asset Private Management Wealth 4.8…
Sprott Group of Companies 2011: Primed for growth Asset / Wealth Management Direct Management Sprott Inc. (TSX: SII) Market Cap: 1.6 billion** Sprott Consulting LP Sprott Sprott Sprott Asset Private U.S. Management…
Sprott Group of Companies Leveraging platform for growth Significant investments in operations, systems, marketing, compliance and infrastructure Industry-leading investment team Capacity to manage significantly more Financial…
Sprott Group of Companies Major initiatives Organic growth through: US retail expansion Continue to focus on: International institutional and family office marketing Performance Continued growth of new and existing Broadening…
Market Outlook Eric Sprott, Chairman, Sprott Inc. CIO Sprott Asset Management. Sprott Group of Companies 2011 Analyst Lunch 9
Market Outlook Weak consumer sector and excessive government debt are a bad combination End of quantitative easing may remove cash from system Potential for high inflation remains Focused on hard assets Precious metals…
Sprott Asset Management James Fox, President Steve Rostowsky, CFO John Ciampaglia, COO Sprott Group of Companies 2011 Analyst Lunch 11
Sprott Asset Management Industry Leading Investment Team 20 investment professionals strong performance contributions across the team Fund Lead Managers 2010 Return Sprott Canadian Equity Fund Eric Sprott 58% Sprott Capital Fund…
Sprott Asset Management: Diversifying through new product offerings Success in new product segments: 2011 new product initiatives: Fixed Income & Balanced Funds Products aligned to macro-economic 202 million in AUM thesis: Rising…
Sprott Asset Management: Key sales and marketing priorities Building client relationships through multiple distribution channels: Capitalize on our strong recent and long-term performance results Adding sales coverage to independent…
Sprott Asset Management Accelerating Sales Momentum Strong year-to-date sales across all channels* Distribution Channels/Offerings Gross Sales Redemptions Net Sales Advisors Domestic 404 301 104 Offshore 105 33 72 Sprott 2011…
Sprott Private Wealth David Franklin, CEO Sprott Group of Companies 2011 Analyst Lunch 17
Sprott Private Wealth Overview Developing customized solutions for high net-worth investors, family trusts, and foundations Sprott Private Wealth is an Investment Industry Regulatory Organization of Canada (IIROC) member 2,000…
Sprott U.S. Rick Rule, Founder and CEO Sprott Group of Companies 2011 Analyst Lunch 20
Sprott U.S. Product and Service Platforms General partner for six limited partnerships that invest in small cap natural resource companies Resource Capital USD 565 million AUM*, 2% management fee with 25.5% or 30% Investments…
Sprott U.S. Expanding our Product Distribution Working on re-launch of U.S. Managed Account platform in June Will be adding complementary, Sprott-managed mandates: precious metals energy Aligning interests through addition of…
Sprott U.S. Expansion Plans New CEO of brokerage firm will be joining in June Planning on adding 4 or 5 new brokers in 2011 Strong new account growth Shared market intelligence and idea flow Growing brand awareness since joining the…
Sprott U.S. Limited Partnership Fee Model Private equity type fee structure The allocation of capital occurs in the following priority: Captive asset pools with 10-year 1. Return of capital to the LPs and GP on lock-ups a pro-rata…
Sprott U.S. Contribution Discussion Brokerage Recent historical annual EBITDA* contribution of between 3 million and 6 million Asset Management Recent historical annual EBITDA* contribution between 5 million and 8 million…
Sprott Consulting LP Kevin Bambrough, CEO, Sprott Consulting Sprott Group of Companies 2011 Analyst Lunch 26
Sprott Consulting Direct investing capabilities Sprott Consulting: Sprott Consulting Provides capital and management LP services to independent public and private companies Earns performance and management Management Services…
Sprott Consulting The Advantage Identifies gaps in the market to invest in or create new companies with a first mover advantage Deep expertise in natural resource investing Team of specialized professionals Global network of…
Sprott Consulting Vision Launched in 2007 for nominal capital (essentially legal fees) and generated over 52 million in fees for Sprott Inc. Sprott partners have funded all of the managed companies launched, and will continue to do…
Sprott Consulting Companies Natural resource private equity: Natural resource lending: Renewable power developers: Has typical private equity type Mezzanine / bridge lending to Acquisition, development and mandate mining, energy,…
Sprott Resource Corp. April 2011 31
Management Team and Board of Directors Kevin Bambrough Eric Sprott Director, President & CEO Chairman CEO of Sprott Asset Management LP President of Sprott Inc. John Embry Paul Dimitriadis Director Chief Operating Officer Chief…
Corporate Structure Sprott Resource Corp. has a management services agreement with Sprott Consulting LP, Sprott which is part of Sprott Inc. Resource Corp. Annual management fee of 2% of Net Asset Value (NAV) Management Services…
Capital Structure April 21, 2011 Market Cap: 566 million Share Price: 5.00 TSX: SCP Shares Outstanding: 113.3 million Insider Ownership: 9.7% Warrants Nil Outstanding: Options Outstanding: 270,000 35
Historical Performance 300% +267.8% 250% Sprott Resource Corp. seed 200% financing through General Minerals Corp. 60M private placement at 1.50 per unit (share plus 2.50 150% warrant) 100% Sprott Resource Corp. 50% TSX…
Cycle of value creation Toronto is the resource funding capital of the world Identify Opportunities The Sprott deal team has the ability to select and capitalize on the best opportunities Financing and We execute our value…
Diversified Portfolio Investment Sectors (Based on Book Value) As at December 31, 2010 adjusted to reflect subsequent publicly disclosed events Public & Private Securities1 Agriculture 5% Precious Metals 22% 17% Cash Energy 20%…
Strategy Executed: PBS Coals Transaction Total timeline = 11 months Exit Strategy Coal prices rose dramatically Strategic Facilitated RTO and sold shares in secondary Development offering for 99.8MM Board representation Sold to…
Opportunity Discovered and Developed: Stonegate Agricom Future Strategy Strategic Company is now fully funded to advance through Development feasibility without further Financing Supported Stonegates capital required Opportunity…
Orion Oil & Gas: Strategic Acquisition With a Proven Partner Future Strategy Has gone from 2,600 Strategic boe/d producer to 6,000 Development boe/d Financing Orion now focused on Continuing growth through growing production…
Waseca Energy Inc.: Economically Attractive Partnership in an Ideal Location Future Strategy Continuing to increase Strategic production Development Look to sell or merge with a major producer or a Financing Ramping up production…
Seeding Growth: One Earth Farms Future Strategy Target is to be one of the biggest farms in the world, Strategic with over 1,000,000 acres Opportunity Development by 2015 with a significant Financing Support from First Nations…
One Earth Oil and Gas Inc.: Building on Our Long-Term Partnership with First Nations Future Strategy Continue to prove up Strategic strategic partnerships, Development building production in both Canada and the United Financing…
Conclusion: Unique Opportunity Analyst Coverage: Proven management team for sourcing Cormark Securities Inc. Marc Robinson deals and executing accretive (416) 943-4224 transactions GMP Securities L.P. Unique exposure to private…
Sprott Resource Lending Corp. Capital Structure April 21, 2011 Market Cap: 268 million Share Price: 1.73 Book Value per Share as at 1.59 TSX: SIL December 31, 2010 Unrecognized Accounting Value of Tax Loss (56MM) Per Share…
The Opportunity Growth in the natural resource sector and the global contraction in resource lending by banks has created a market opportunity. TSX/TSXV Issuers* < CAD 1BN Market Cap Issuers Total Mkt. Cap Mining 1,364 112.9BN…
Investment Summary Sprott Resource Lending (SRLC) aims to become the leading mezzanine lender to the sector by partnering with resource companies to take it to the next level Targeting lending opportunities, enhanced with equity or…
Origination Strengths Origination has historically been the primary challenge for mezzanine lenders to the sector SRLC is positioned to benefit from: Active resource markets Relationship network of SRLC shareholders: Sprott,…
Resource Loan Position As at: March 31, 2011 Amount Deployed Funded Resource Bridge Loans 45 MM Funds for use in completing projects With another 26MM closing shortly Significant Amount of Capital Remaining to be Deployed…
Case Studies African Minerals Limited: (AIM: AMI Market Cap 2.5bln) USD418 million 2 year secured 11.5% loan facility led by Sprott Resource Lending and Dundee Corp. debt to market cap of 16% Proceeds used to finance iron ore…
SRLC Target Metrics Pay initial dividend by the second half of 2011 Defend net asset value through normal course issuer bid Increase dividend yield to higher yield range Once capital is fully engaged in resource lending Target up to…
Board of Directors for Upcoming AGM Murray Sinclair, Chairman of SRLC. Current Director, Sprott Resource Corp. Chairman Serves as advisor to SRLC for origination and remediation Peter Grosskopf President & CEO Robert G. Atkinson…
Appendix Typical Bridge and Precious Metal Loans Corporate Structure Real Estate Loan Book Update Management Team 57
Mezzanine Resource Lending Typical Bridge Loan Amount: 5MM to 10MM, and may not exceed 25 MM, unless syndicated Duration: 624 months, with a target of 12 months Purpose: Production expansion, working capital, construction, general…
Precious Metal Lending Opportunity for higher rates of return when taking on precious metal risk target returns of 30% SRLC retains the upside on commodity price Downside can be protected: Lowering per ounce payment band to below…
Corporate Structure Sprott Resource Lending Corp. has a management services agreement and Sprott Resource partnership agreement with Sprott Lending Lending Corp. Consulting LP Annual management payment of 2% of Net Management…
Real Estate Loan Book Update Cash position amounts to 114 MM (April 8, 2011) Management anticipates that successful monetization of real estate loans will be substantially complete by Q2 2011 dovetails with resource book build…
Management Team SRLC has an experienced and proven executive team Peter Grosskopf Also CEO, Sprott Inc. and President Sprott Consulting LP as of September 7, 2010 President & CEO Formerly President, Cormark Securities Inc. and…
renewable. growth. income. Sprott Powers Ravenswood, Ontario Project Jeff Jenner, CA, CBV Chief Executive Officer, April 2011 TSX: SPZ
Agenda Introduction to the Opportunity Strategy and Current Portfolio Capital Structure Conclusion and Questions Sprott Power Corp. 65
Financial Crisis in 2008 Created Difficult Corporate Finance Markets Investors Fled the Stock markets dropped 50% in 9 months Markets Financial crisis gripped the world Credit spreads tripled Debt Market Countries faced…
Crisis Created Compelling Renewable Energy Investment Attributes Canada Offers an Premium pricing for renewable energy generation Attractive, Stable Long term, inflation indexed, government backed Revenue Regime contract…
Its what I did. Sprott Power Corp. 68
Its what we do. Sprott Power Corp. 69
Sprott Power Senior Management Team Fifteen years of energy industry experience in a variety of senior leadership roles Previously Canadian Country Delegate and Senior Vice President Business Development for GDF SUEZ until 2009…
Mission Statement Sprott Power Corp.s goal is to be a premier renewable power operating and development company that will serve as a conduit between investors looking to invest in power generation assets for low risk yield along…
Sprott Power: Income with Growth Sprott Power has operating assets providing income: 46 MW of operating assets with long-term power purchase contracts with a Shareholders Equity of 65 million1 2010 Forecast Pro Forma Income from…
Sprott Power: Income with Growth Sprott Power has key additional assets to fuel significant growth: Proven management team delivering projects on-time and on-budget as well as experience building successful renewable energy…
Pipeline Portfolio Operational Near-term Advanced-stage Ontario Wind Contracted Development Nova Scotia Wind Nova Scotia Wind BC Hydro Ontario Wind Ontario Wind Saskatchewan Wind Quebec Wind Quebec Wind Nova Scotia Wind New…
Sprott Powers Existing Operational and Development Projects Across Canada Operational Assets Ontario Wind 3 projects 21.6MW Nova Scotia Wind 3 projects 24.1MW Subtotal 45.7MW Near-Term Contracted Projects - Wind Nova Scotia…
Sprott Power Tomorrow Today Twelve Twenty-Four End 2015 Months Months 46MW 500MW 80MW 155MW 1B AUM Sprott Power Corp. 76
Opportunities for Additional Growth for Sprott Power The Sprott Power team has proven its ability to acquire operating assets, contracted development assets and pipelines of additional development opportunities since the inception…
Capital Structure1 Outstanding Shares 47,890,744 Cash 25.9 million Long-term Debt 53.9 million Warrants outstanding 20,305,7432 1. The unaudited pro forma consolidated balance sheet as at June 30, 2010, reflects the…
Conclusion Sprott Power is striving to become a leader in alternative energy generation and development in North America with a proven management team Sprott Power is well-capitalized with cash and income from operating assets…
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