Sprott
Annual Report 2023

Plain-text annual report

Contrarian. Innovative. Aligned. 2023 Annual Report Annual report 2024 FINAL v2.indd 1 Annual report 2024 FINAL v2.indd 1 2024-02-20 10:38:47 AM 2024-02-20 10:38:47 AM Table of Contents 3. Financial Highlights 6. Leadership Team 10. MD&A 4. Business Overview 8. Board of Directors 30. Financial Statements & Notes 1. Letter from Our CEO 5. Purpose & Values 9. ESG Highlights 71. Corporate Information Annual report 2024 FINAL v2.indd 2 Annual report 2024 FINAL v2.indd 2 2024-02-20 10:38:48 AM 2024-02-20 10:38:48 AM Letter From Our CEO Dear Fellow Shareholders, We are pleased to report that during 2023, Sprott’s Assets Under Management (“AUM”) increased by $5.3 billion (23%) to $28.7 billion. Much of this growth came late in the fourth quarter and is already positively contributing to our 2024 performance. Net income for the fourth quarter was $9.7 million ($0.38 per share), up 32% from $7.3 million ($0.29 per share) for the quarter ended December 31, 2022. On a full-year basis, net income was $41.8 million ($1.66 per share), up 137% from $17.6 million ($0.70 per share) during the year ended December 31, 2022. Net income in the quarter benefited from higher average AUM across most of our exchange listed products and private strategies. Adjusted base EBITDA was $18.8 million ($0.75 per share) in the quarter, up 4% from $18.1 million ($0.72 per share) for the quarter ended December 31, 2022. On a full-year basis, adjusted base EBITDA was $71.9 million ($2.85 per share), up 1 % from $71 million ($2.83 per share) in 2022. While our fourth quarter results were up 4% year-over- year, our full year results were relatively flat at 1% due to management fee growth on higher average AUM being offset by lower commission income due to the sale of our former Canadian broker-dealer during the second quarter of the year and lower at-the-market originations of our uranium trust throughout 2023. 2023 Review Our AUM growth in 2023 was mainly driven by strong uranium prices and inflows to our related exchange listed products. Since entering the uranium sector in 2021 with the launch of the Sprott Physical Uranium Trust and the subsequent addition of Sprott Uranium Miners ETF (URNM), the growth of our uranium franchise has been a great success for Sprott’s clients and shareholders. We have since expanded this product suite by adding two additional uranium mining equities ETFs listed in North America and Europe. With uranium currently trading at 16-year highs, these strategies now account for approximately 28% of our total AUM. Our success in the uranium space has also had ancillary benefits. It has introduced us to a new global client base and greatly expanded our institutional client relationships. Our private strategies segment also contributed to our AUM growth during the year via two successful capital raises totaling approximately $0.7 billion. In 2023, we launched seven new ETFs in the U.S. and Europe. We also seeded a new actively-managed physical commodities strategy. Going forward, we will re-brand our Energy Transition offerings Whitney George Chief Executive Officer “ We have a strong pipeline of new products and a growing reputation as a trusted partner in our areas of specialization.” Annual report 2024 FINAL v2.indd 1 Annual report 2024 FINAL v2.indd 1 1 2024-02-20 10:38:49 AM 2024-02-20 10:38:49 AM 2024 Outlook Looking ahead, we expect 2024 to be a volatile year for investors. Last year we witnessed the start of another global conflict to add to the growing list. We are somewhat surprised by the complacent response of the financial markets thus far to rising geopolitical tensions. This will also be an election year in which new leaders will be chosen in 64 countries, plus the European Union, that represent nearly half of the world’s population. Despite, or perhaps because of, these macroeconomic uncertainties, we are excited about our prospects. We have a strong pipeline of new products and a growing reputation as a trusted partner in our areas of specialization. We are welcoming many new clients who have just started to explore opportunities in critical materials and are now joining our loyal clients invested in our precious metals products. Finally, we have a focused team of employee shareholders who are eager to demonstrate the potential of our highly-scalable asset management platform. Thank you for your continued support. We look forward to reporting to you on our progress in the quarters ahead. Sincerely, Whitney George Chief Executive Officer Precious metals physical trusts & ETFs as Critical Materials strategies. Given the demand growth for electricity in the developed world to power innovations like cloud computing, artificial intelligence and robotics, we expect any transition away from fossil fuels to take longer than expected to ensure clean, secure and affordable energy. Further, in the developing world, the desire for the basic appliances we take for granted will require decades of energy growth to be fulfilled. We do not believe that the case for critical materials will hinge on any one industry or geography. Any disappointments that might surface around electric vehicle adoption will have minimal impact on the demand for increasingly scarce mined materials. Precious metals markets were relatively quiet in 2023. Gold ended the year 13% higher, performing its job as a safe haven asset and currency despite two liquidity-induced corrections in the spring and fall. Gold’s performance was notable given high real interest rates, which are normally toxic for gold prices. Tellingly, 20% of the global oil trade in 2023 was conducted in currencies other than U.S. dollars – currencies increasingly backed by gold. Central banks purchased 4,500 tonnes of gold in 2023, close to the all-time record of 4,899 tonnes in 2022. The silver price was flat in 2023, while the Silver Institute reported higher demand and projected a third year of supply deficit. Precious metals equities continue to lag the underlying metals, rendering them the cheapest they have ever been on a relative basis. As discussed in previous letters, during the year we exited two non-core businesses to refocus the company to drive sustainable growth in our core asset management business. With this cleanup behind us, the Sprott team can now fully direct its energy and resources to our key growth areas. As our AUM, product offerings and global client base grow, we remain committed to reinvesting in the business. In 2023, we added new sales, marketing and investment talent and reorganized our client relations team to support our continued growth. Finally, during 2023, we paid down $30.2 million in debt and bought back 126,353 shares. We continue to hold significant co-investments in Sprott products and maintained our dividend at $1 per share. Annual report 2024 FINAL v2.indd 2 Annual report 2024 FINAL v2.indd 2 2 2024-02-20 10:38:49 AM 2024-02-20 10:38:49 AM Financial Highlights Historical AUM Growth in billions $ Adjusted Base EBITDA (1 and 5 year performance) 28.7 23.4 CAGR: 30% 20.4 17.4 7.8 9.3 Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Exchange listed products Managed equities Private strategies Non-core AUM +1% +148% From December 31, 2022 From December 31, 2019 2023: $71.9 million (operating margin 57%) 2022: $71 million (operating margin 57%) 2023: $71.9 million (operating margin 57%) 2019: $29 million (operating margin 38%) AUM Composition Historical Operating Margin Growth $28.7B Precious metals physical trusts & ETFs 53% $15.3B 28% $7.9B Critical materials physical trust & ETFs 57% 10% $2.9B 9% $2.6B Managed equities funds Private strategies funds 38% 2019 2020 2021 2022 2023 Historical Annual Shareholder Return Sprott Inc - Dividend Adjusted S&P/TSX Composite Total Return 350 300 250 200 150 100 50 0 +103% +71% Dec 31, Dec-31-2018 2018 Dec 31, Dec-31-2019 2019 Dec 31, Dec-31-2020 2020 Dec 31, Dec-31-2021 2021 Dec 31, Dec-31-2022 2022 Dec 31, Dec-31-2023 2023 Sprott Inc. S&P/TSX Composite Total Return Annual report 2024 FINAL v2.indd 3 Annual report 2024 FINAL v2.indd 3 3 2024-02-20 10:38:50 AM 2024-02-20 10:38:50 AM Business Overview Exchange Listed Products Private Strategies Managed Equities Our reportable operating segments are as follows: Exchange Listed Products • The Company’s closed-end physical trusts and exchange traded funds (“ETFs”). Managed Equities • The Company’s alternative investment strategies managed in-house and on a sub-advised basis. Private Strategies • The Company’s lending and streaming activities which occur through limited partnership vehicles (“private strategies LPs”). Corporate • Provides the Company’s operating segments with capital, balance sheet management and other shared services. All other segments • Contains all non-reportable segments as per IFRS 8, Operating Segments (“IFRS 8”). Effective Q1 2023, the brokerage segment no longer met the definition of a reportable segment. Consequently, this segment is now included as part of “All other segments”. See Note 14 of the annual financial statements for further details. For a detailed account of the underlying principal subsidiaries within our reportable operating segments, refer to the Company’s Annual Information Form and note 2 of the annual financial statements. Annual report 2024 FINAL v2.indd 4 Annual report 2024 FINAL v2.indd 4 4 2024-02-20 10:38:53 AM 2024-02-20 10:38:53 AM Purpose & Values We aspire to be the leading global asset manager focused on precious metals and critical materials. Our Purpose: As contrarian investors with a long-term investment horizon, we remain both patient and persistent. We will continue to innovate to bring our clients the best possible investment products. We remain aligned (shareholders, clients, with our partners employees, and the communities wherein we operate) as significant shareholders of Sprott and meaningful co-investors in Sprott products. We are committed to the support and advancement of our people. We give back to communities we operate in both with our time and resources. At Sprott, we have a strong plan, but the flexibility to adjust where necessary. We share our success with our partners. Our Values: • We believe in partnership with our employees, clients, and our shareholders • We are prepared to be contrarian • We are innovative • We are aligned • We are patiently persistent Annual report 2024 FINAL v2.indd 5 Annual report 2024 FINAL v2.indd 5 5 2024-02-20 10:38:58 AM 2024-02-20 10:38:58 AM Leadership Team From left to right (first row) – Heather Macleod, Chief Marketing Officer, Sprott Inc.; John Ciampaglia, CEO, Sprott Asset Management; Whitney George, CEO, Sprott Inc. (second row) – Kevin Hibbert, CFO, Sprott Inc.; Ed Coyne, Head of Global Sales, Sprott Inc.; Arthur Einav, General Counsel, Sprott Inc.; Greg Caione, Head of Private Strategies, Sprott Inc. Annual report 2024 FINAL v2.indd 6 Annual report 2024 FINAL v2.indd 6 6 2024-02-20 10:39:01 AM 2024-02-20 10:39:01 AM Leadership Team continued Samay Bhachech, Managing Partner Varinder Bhathal, Managing Partner Vishal Chhabra, Managing Partner Caroline Donally, Managing Partner Dan Elder, Managing Partner Douglas Groh, Managing Partner Jim Grosdanis, Managing Partner Michael Harrison, Managing Partner John Hathaway, Managing Partner Shree Kargutkar, Managing Partner Sarah-Jane Martin, Managing Partner Jason Mayer, Managing Partner Ryan McIntyre, Managing Partner Lara Misner, Managing Partner Narinder Nagra, Managing Partner Maria Smirnova, Managing Partner J’aime Spork, Managing Partner Andrew Stronach, Managing Partner Justin Tolman, Managing Partner Tom Ulrich, Managing Partner Robert Villaflor, Managing Partner Glen Williams, Managing Partner Annual report 2024 FINAL v2.indd 7 Annual report 2024 FINAL v2.indd 7 7 7 2024-02-20 10:39:02 AM 2024-02-20 10:39:02 AM Board of Directors “ With our keen focus on precious metals and critical materials investments, we believe Sprott is well positioned to continue creating value for our shareholders and clients and we look forward to the year ahead.” Ron Dewhurst, Chairman Graham Birch Graham Birch Chair, Audit and Risk Chair, Audit and Risk Management Committee Management Committee Barbara Connolly Keady Barbara Connolly Keady Chair, Governance, Sustainability Chair, Governance, Sustainability and Nominating Committee and Nominating Committee Catherine Raw Catherine Raw Chair, Compensation Committee Chair, Compensation Committee Independent Director Independent Director Independent Director Independent Director Independent Director Independent Director Judith W. O’Connell Judith W. O’Connell Independent Director Independent Director Whitney George Whitney George Chief Executive Officer Chief Executive Officer Non-independent Director Non-independent Director Image source: www.oceanhouseri.com Annual report 2024 FINAL v2.indd 8 Annual report 2024 FINAL v2.indd 8 8 2024-02-20 10:39:05 AM 2024-02-20 10:39:05 AM Environmental, Social, Governance Highlights Sprott is committed to implementing ESG and sustainability considerations into both our investment management activities as well as our corporate operations. Our 2023 ESG accomplishments are noted below. Please see “Environmental, social, and governance policy” in the 2023 Annual Information Form for additional details regarding our commitment to ESG. Environmental Social Governance • We completed our annual assessment of greenhouse gas emissions (GHG) associated with our offices in Canada and the United States and achieved carbon neutrality under the Carbonzero program after we sourced carbon offsets in the equivalent amount of our 2022 Scope 1 and Scope 2 GHGs. • We continue to grow our suite of investment funds providing investors with exposure to materials essential for the generation, transmission and storage of cleaner energy. Our critical materials strategies now represent $7.9 billion or 28% of our total AUM as at December 31, 2023, up 12% from this time last year. These include the Sprott Physical Uranium Trust and Sprott Uranium Miners ETFs, investment vehicles focused on a form of energy generation that is one of the cleanest energy generation sources based on CO2 emissions(1), and a contributor to global decarbonization goals. • This year, we launched the Sprott Copper Miners ESG Screened UCITS ETF, providing investors with a differentiated offering for the production of copper, a raw material that is essential in the transition to a less carbon-intensive economy and critical for the energy transition from fossil fuels to cleaner energy sources and technologies. • We continue to engage a leading, independent Diversity, Equity and Inclusion (“DEI”) specialist to further refine and enhance our overall approach to DEI. In this context, we have established a multi-year DEI strategic plan to continue to promote and enhance DEI at Sprott. We have also formed a DEI Leadership Committee led by our employees and championed by senior leadership to ensure DEI initiatives are developed, monitored and maintained throughout the organization. • Along with our mandatory company-wide training, in the current year, we completed an inaugural DEI survey which established a baseline of employee demographics and inclusion sentiments amongst our employees. • In response to the Truth and Reconciliation Commission Calls to Action, we are proud to be the founding sponsor of First Nations STEM Futures Academy (“FNSFA”), which will expand the offerings of Indigenous Futures in Engineering that will be administered by a leading Canadian university. The mission of FNSFA is to extend and enrich STEM experiences throughout high school, targeting communities underrepresented in post- secondary STEM programs, and First Nations communities. • Sprott continues to be a longstanding supporter of the UHN Foundation, one of the largest health care and medical research organizations in North America, and in 2023, our contributions supported the advancement of equity in health and wellness through research and education. • Continued our support of various organizations in the communities we operate, that focus on the areas of health and wellness, DEI, and sustainability in the mining sector. • We completed our second assessment under the Principles for Responsible Investment, continuing our incorporation of ESG factors into our investment ownership decisions. • Added a new independent board member. Now 83% of our board members are independent and 50% of them are women. • We continue to add depth to our annual board of directors and executive committee training program with additional CPD-accredited mandatory training modules, covering such topics as DEI, cyber security, and the role of effective committee chairs. • We continue to comply with the terms and conditions of our sustainability linked credit facility which is based primarily on ESG performance metrics. • Successfully completed our annual National Institute of Standards (“NIST”) audit for 2023 and our cybersercurity framework continues to be classified as Tier 3, indicating that we have best practices in place. • Our compensation practices continue to incorporate a mix of pay reflecting the objectives of our shareholders that management be compensated more towards variable at-risk pay (AIP) and long-term stock incentives (LTIP). Performance evaluation when determining compensation levels for senior managing partners is achieved via scorecards that not only incorporate quantitative measures such as net revenues, EBITDA and operating margins, but also key qualitative measures surrounding ESG, employee engagement, risk management etc. 1) Based on Greenhouse gas emissions factors from the Intergovernmental Panel on Climate Change AR5 (2014) and Pehl et al. (2017) in Nature Annual report 2024 FINAL v2.indd 9 Annual report 2024 FINAL v2.indd 9 9 2024-02-20 10:39:08 AM 2024-02-20 10:39:08 AM Management's Discussion and Analysis Years ended December 31, 2023 and 2022 10 Forward looking statements Certain statements in this Management's Discussion & Analysis ("MD&A"), and in particular the "Outlook" section, contain forward-looking information and forward-looking statements (collectively referred to herein as the "Forward-Looking Statements") within the meaning of applicable Canadian and U.S. securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify Forward-Looking Statements. In particular, but without limiting the forgoing, this MD&A contains Forward-Looking Statements pertaining to: (i) our strong pipeline of new products and a growing reputation as a trusted partner in our areas of specialization; (ii) the potential of our highly-scalable asset management platform; (iii) our positioning to benefit from a highly constructive operating environment for precious metals and critical materials in fiscal 2024; (iv) the eventual monetization of shares received on the realization of a previously unrecorded contingent asset from a historical acquisition; (vi) the potential contingent consideration owing on last year's acquisition of assets relating to the North Shore Global Uranium Mining ETF (“URNM”) acquisition; and (vii) the declaration, payment and designation of dividends and confidence that our business will support the dividend level without impacting our ability to fund future growth initiatives. Although the Company believes that the Forward-Looking Statements are reasonable, they are not guarantees of future results, performance or achievements. A number of factors or assumptions have been used to develop the Forward-Looking Statements, including: (i) the impact of increasing competition in each business in which the Company operates will not be material; (ii) quality management will be available; (iii) the effects of regulation and tax laws of governmental agencies will be consistent with the current environment; (iv) the impact of public health outbreaks; and (v) those assumptions disclosed herein under the heading "Critical Accounting Estimates and significant judgments". Actual results, performance or achievements could vary materially from those expressed or implied by the Forward-Looking Statements should assumptions underlying the Forward-Looking Statements prove incorrect or should one or more risks or other factors materialize, including: (i) difficult market conditions; (ii) poor investment performance; (iii) failure to continue to retain and attract quality staff; (iv) employee errors or misconduct resulting in regulatory sanctions or reputational harm; (v) performance fee fluctuations; (vi) a business segment or another counterparty failing to pay its financial obligation; (vii) failure of the Company to meet its demand for cash or fund obligations as they come due; (viii) changes in the investment management industry; (ix) failure to implement effective information security policies, procedures and capabilities; (x) lack of investment opportunities; (xi) risks related to regulatory compliance; (xii) failure to manage risks appropriately; (xiii) failure to deal appropriately with conflicts of interest; (xiv) competitive pressures; (xv) corporate growth which may be difficult to sustain and may place significant demands on existing administrative, operational and financial resources; (xvi) failure to comply with privacy laws; (xvii) failure to successfully implement succession planning; (xviii) foreign exchange risk relating to the relative value of the U.S. dollar; (xix) litigation risk; (xx) failure to develop effective business resiliency plans; (xxi) failure to obtain or maintain sufficient insurance coverage on favorable economic terms; (xxii) historical financial information being not necessarily indicative of future performance; (xxiii) the market price of common shares of the Company may fluctuate widely and rapidly; (xxiv) risks relating to the Company’s investment products; (xxv) risks relating to the Company's proprietary investments; (xxvi) risks relating to the Company's private strategies business; (xxvii) those risks described under the heading "Risk Factors" in the Company’s annual information form dated February 20, 2024; and (xxviii) those risks described under the headings "Managing Financial Risk" and "Managing Non-Financial Risk" in this MD&A. In addition, the payment of dividends is not guaranteed and the amount and timing of any dividends payable by the Company will be at the discretion of the board of directors of the Company and will be established on the basis of the Company’s earnings, the satisfaction of solvency tests imposed by applicable corporate law for the declaration and payment of dividends, and other relevant factors. The Forward-Looking Statements speak only as of the date hereof, unless otherwise specifically noted, and the Company does not assume any obligation to publicly update any Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws. Management's discussion and analysis This MD&A of financial condition and results of operations, dated February 20, 2024, presents an analysis of the consolidated financial condition of the Company and its subsidiaries as at December 31, 2023, compared with December 31, 2022, and the consolidated results of operations for the three and twelve months ended December 31, 2023, compared with the three and twelve months ended December 31, 2022. The board of directors of the Company approved this MD&A on February 20, 2024. All note references in this MD&A are to the notes to the Company's December 31, 2023 audited annual consolidated financial statements ("annual financial statements"), unless otherwise noted. The Company was incorporated under the Business Corporations Act (Ontario) on February 13, 2008. Presentation of financial information The annual financial statements, including the required comparative information, have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB"). Financial results, including related historical comparatives contained in this MD&A, unless otherwise specified herein, are based on the annual financial statements. While the Company's source and presentation currency is the U.S. dollar, IFRS requires that the Company measure its foreign exchange gains and losses through its consolidated statements of operations and comprehensive income using the Canadian dollar as its functional currency. Accordingly, all dollar references in this MD&A are in U.S. dollars, however the translation gains and losses were measured using the Canadian dollar as the functional currency. The use of the term "prior period" refers to the three and twelve months ended December 31, 2022. 11 Key performance indicators and non-IFRS and other financial measures The Company measures the success of its business using a number of key performance indicators that are not measurements in accordance with IFRS and should not be considered as an alternative to net income (loss) or any other measure of performance under IFRS. Non-IFRS financial measures do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. Our key performance indicators and non-IFRS and other financial measures are discussed below. For quantitative reconciliations of non-IFRS financial measures to their most directly comparable IFRS financial measures, please see page 15 of this MD&A. Assets under management Assets under management ("AUM") refers to the total net assets managed by the Company through its various investment product offerings and managed accounts. Prior to the exit of our non-core asset management business domiciled in Korea ("Korea"), we divided our total AUM into two distinct categories: Core and Non-core. Core AUM arose from our IFRS reportable segments involved in asset management activities (exchange listed products segment, managed equities segment and the private strategies segment) and non-core AUM arose from IFRS non-reportable segments (primarily Korea). Net inflows Net inflows result in changes to AUM, and as such, have a direct impact on the revenues and earnings of the Company. They are described individually below: At-the-market ("ATM") transactions and ETF unit creations ATM transactions of our physical trusts and new 'creations' of ETF units are the primary manner in which inflows arise in our exchange listed products segment. Net sales Fund sales (net of redemptions) are the primary manner in which inflows arise in our managed equities segment. Net capital calls Capital calls, net of capital distributions ("net capital calls") are the primary manner in which inflows arise in our private strategies segment. Other net inflows Other net inflows include: (1) new AUM from fund launches; (2) fund acquisitions; and (3) lost AUM from fund closures. It is possible for committed capital in our private strategies to earn a commitment fee despite being uncalled, in which case, it will also be included in this category as AUM. Net fees Management fees, net of trailer, sub-advisor, fund expenses and direct payouts, and carried interest and performance fees, net of carried interest and performance fee payouts (internal and external), are key revenue indicators as they represent the net revenue contribution after directly associated costs that we generate from our AUM. Net commissions Commissions, net of commission expenses (internal and external), arise from purchases and sales of uranium in our exchange listed products segment and transaction-based service offerings by our broker-dealers. Net compensation Net compensation excludes commission expenses paid to employees, other direct payouts to employees, carried interest and performance fee payouts to employees, which are all presented net of their related revenues in this MD&A, and severance, new hire accruals and other which are non-recurring. Total shareholder return Total shareholder return is the financial gain (loss) that results from a change in the Company's share price, plus any dividends paid over the period. 12 EBITDA, adjusted EBITDA, adjusted base EBITDA and operating margin EBITDA in its most basic form is defined as earnings before interest expense, income taxes, depreciation and amortization. EBITDA (or adjustments thereto) is a measure commonly used in the investment industry by management, investors and investment analysts in understanding and comparing results by factoring out the impact of different financing methods, capital structures, amortization techniques and income tax rates between companies in the same industry. While other companies, investors or investment analysts may not utilize the same method of calculating EBITDA (or adjustments thereto), the Company believes its adjusted base EBITDA metric, in particular, results in a better comparison of the Company's underlying operations against its peers and a better indicator of recurring results from operations as compared to other non-IFRS financial measures. Operating margins are a key indicator of a company’s profitability on a per dollar of revenue basis, and as such, is commonly used in the financial services sector by analysts, investors and management. Neither EBITDA, adjusted EBITDA, adjusted base EBITDA, or operating margin have a standardized meaning under IFRS. Consequently, they should not be considered in isolation, nor should they be used in substitute for measures of performance prepared in accordance with IFRS. The following table outlines how our EBITDA, adjusted EBITDA, adjusted base EBITDA and operating margin measures are determined: (in thousands $) Net income for the period Adjustments: Interest expense Provision for income taxes Depreciation and amortization EBITDA Other adjustments: (Gain) loss on investments (1) Amortization of stock based compensation Other (income) and expenses (2) Adjusted EBITDA Other adjustments: Carried interest and performance fees Carried interest and performance fee payouts - internal Carried interest and performance fee payouts - external Adjusted base EBITDA Operating margin (3) 3 months ended 12 months ended Dec. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022 9,664 7,331 41,799 17,632 844 1,159 658 12,325 (2,808) 4,260 5,263 19,040 (503) 222 — 1,076 2,372 710 11,489 930 3,635 2,560 18,614 (1,219) 567 121 4,060 8,492 2,843 57,194 (1,375) 16,282 219 72,320 (891) 458 — 18,759 18,083 71,887 2,923 7,447 3,355 31,357 10,242 14,546 15,929 72,074 (3,265) 1,596 597 71,002 56 % 59 % 57 % 57 % (1) This adjustment removes the income effects of certain gains or losses on short-term investments, co-investments, and digital gold strategies to ensure the reporting objectives of our EBITDA metric as described above are met. (2) In addition to the items outlined in Note 5 of the annual financial statements, this reconciliation line also includes $0.2 million severance, new hire accruals and other for the three months ended December 31, 2023 (three months ended December 31, 2022 - $1.2 million) and $5.6 million for the year ended December 31, 2023 (year ended December 31, 2022 - $5.2 million). This reconciliation line excludes income (loss) attributable to non-controlling interest of $0.1 million for the three months ended December 31, 2023 (three months ended December 31, 2022 - $0.3 million) and ($0.9) million for the year ended December 31, 2023 (year ended December 31, 2022 - ($0.5) million). (3) Calculated as adjusted base EBITDA inclusive of depreciation and amortization. This figure is then divided by revenues before gains (losses) on investments, net of direct costs as applicable. 13 Business development & outlook • • • • • A key area of focus this year was the strategic exit of all remaining non-core businesses across the Company. This initiative led to the third quarter exit of our legacy, non-core asset management business domiciled in Korea. In the second quarter of the year, we exited our former Canadian broker-dealer. During the year, the Company bought back 126,353 shares, or 0.49% of our January 1, 2023 float, for total proceeds of $4.2 million. In the third quarter, we completed a review of our current and near-term funding and borrowing needs and determined that we no longer require a $120 million credit facility. Consequently, the Company lowered the maximum borrowing capacity under its credit facility to $75 million. In addition, as part of the Company’s ongoing treasury and balance sheet management program, we paid down $30.2 million on our line of credit to a December 31, 2023 outstanding balance of $24.2 million (December 31, 2022: $54.4 million). During the second quarter, we successfully closed our fund raising efforts on a new lending fund and a new streaming fund in our private strategies segment. The capital raises led to $688 million of new AUM in the year. In the first quarter of the year, we launched five new exchange listed products focused on providing investors with pure-play exposure to critical materials essential to the generation, transmission and storage of cleaner energy. The five funds were: Sprott Energy Transition Materials ETF (Nasdaq: SETM), Sprott Lithium Miners ETF (Nasdaq: LITP), Sprott Junior Uranium Miners ETF (Nasdaq: URNJ), Sprott Junior Copper Miners ETF (Nasdaq: COPJ); and Sprott Nickel Miners ETF (Nasdaq: NIKL). With the exit of low operating margin, non-core businesses, a reduction in financial leverage and introduction of new critical materials product offerings to our focused and scalable operating platform, the Company is well positioned to benefit from a highly constructive operating environment for precious metals and critical materials in fiscal 2024. Subsequent to year-end, we continue to benefit from our late 2023 asset growth as well as ongoing strength in uranium prices. As at February 16, 2024, AUM was $29.2 billion, up 2% from $28.7 billion at December 31, 2023. 14 Results of operations Summary financial information (In thousands $) Summary income statement Management fees Trailer, sub-advisor and fund expenses Direct payouts Carried interest and performance fees Carried interest and performance fee payouts - internal Carried interest and performance fee payouts - external (1) Net fees Commissions Commission expense - internal Commission expense - external (1) Net commissions Finance income Gain (loss) on investments Other income (2) Total net revenues(3) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 34,485 (1,968) (1,283) 503 (222) — 31,515 33,116 (1,557) (1,472) — — — 30,087 33,222 (1,635) (1,342) 388 (236) — 30,397 31,434 (1,554) (1,187) — — — 28,693 28,405 (1,204) (1,114) 1,219 (567) (121) 26,618 29,158 (1,278) (1,121) — — — 26,759 30,620 (1,258) (1,272) — — — 28,090 27,172 (853) (1,384) 2,046 (1,029) (476) 25,476 1,331 (161) (441) 729 539 (88) (92) 359 1,647 (494) (27) 1,126 4,784 (1,727) (642) 2,415 5,027 (1,579) (585) 2,863 6,101 (2,385) (476) 3,240 6,458 (2,034) (978) 3,446 13,077 (3,134) (3,310) 6,633 1,214 2,808 405 36,671 1,181 (1,441) (73) 30,113 1,277 (1,950) 19,763 50,613 1,180 1,958 1,250 35,496 1,439 (930) 999 30,989 933 45 (227) 30,750 1,186 (7,884) 170 25,008 1,433 (1,473) 208 32,277 Compensation Direct payouts Carried interest and performance fee payouts - internal Commission expense - internal Severance, new hire accruals and other Net compensation 16,675 (1,283) (222) (161) (179) 14,830 16,825 (1,472) — (88) (122) 15,143 21,610 (1,342) (236) (494) (4,067) 15,471 19,103 (1,187) — (1,727) (1,257) 14,932 17,030 (1,114) (567) (1,579) (1,240) 12,530 18,934 (1,121) — (2,385) (1,349) 14,079 19,364 (1,272) — (2,034) (2,113) 13,945 21,789 (1,384) (1,029) (3,134) (514) 15,728 Severance, new hire accruals and other (4) Selling, general and administrative Interest expense Depreciation and amortization Other expenses Total expenses Net income (5) Net income per share (6) Adjusted base EBITDA Adjusted base EBITDA per share Operating margin Summary balance sheet Total assets (7) Total liabilities (8) Total AUM Average AUM 179 4,195 844 658 5,142 25,848 122 4,000 882 731 3,811 24,689 4,067 4,988 1,087 748 471 26,832 1,257 4,267 1,247 706 2,824 25,233 1,240 4,080 1,076 710 1,650 21,286 1,349 4,239 884 710 5,697 26,958 2,113 4,221 483 959 868 22,589 514 3,438 480 976 1,976 23,112 9,664 0.38 18,759 0.75 6,773 0.27 17,854 0.71 17,724 0.70 17,953 0.71 7,638 0.30 17,321 0.68 7,331 0.29 18,083 0.72 3,071 0.12 16,837 0.67 757 0.03 17,909 0.71 6,473 0.26 18,173 0.73 56 % 56 % 57 % 57 % 59 % 55 % 55 % 57 % 378,835 73,130 375,948 79,705 381,519 83,711 386,765 108,106 383,748 106,477 375,386 103,972 376,128 89,264 380,843 83,584 28,737,742 25,398,159 25,141,561 25,377,189 23,432,661 21,044,252 21,944,675 23,679,354 27,014,109 25,518,250 25,679,214 23,892,335 22,323,075 21,420,015 23,388,568 21,646,082 (1) These amounts are included in the "Trailer, sub-advisor and fund expenses" line on the consolidated statements of operations. (2) The majority of the amount in Q2, 2023 relates to the receipt of shares on the realization of a previously unrecorded contingent asset from a historical acquisition. (3) Total revenues for the year ended December 31, 2023 were $169,021 (December 31, 2022- $145,182; December 31, 2021- $164,645). (4) The majority of the Q2, 2023 amount is accelerated compensation and other transition payments to the former CEO on the successful completion of the sale of Sprott Capital Partners ("SCP") during the second quarter. (5) Net income for the year ended December 31, 2023 was $41,799 (December 31, 2022 - $17,632; December 31, 2021- $33,185). (6) Basic and diluted net income per share for the year ended December 31, 2023 was $1.66 and $1.60, respectively (December 31, 2022 - $0.70 and $0.67, respectively; December 31, 2021 - $1.33 and $1.28, respectively). (7) Total assets as at December 31, 2023 were $378,835 (December 31, 2022 - $383,748; December 31, 2021- $365,873). (8) Total liabilities as at December 31, 2023 were $73,130 (December 31, 2022 - $106,477; December 31, 2021 - $74,654). 15 AUM summary AUM was $28.7 billion as at December 31, 2023, up $3.3 billion (13%) from September 30, 2023 and up $5.3 billion (23%) from December 31, 2022. On a three and twelve months ended basis, we benefited from strong uranium prices, as well as inflows across the majority of our exchange listed products. We also benefited from capital raises in our private strategies funds. 3 months results (In millions $) Exchange listed products - Physical trusts - Physical Gold Trust - Physical Uranium Trust - Physical Gold and Silver Trust - Physical Silver Trust - Physical Platinum & Palladium Trust - Exchange Traded Funds - Critical Materials ETFs - Precious Metals ETFs Managed equities - Precious metals strategies - Other (3) Private strategies Core AUM Non-core AUM Total AUM (5) 12 months results (In millions $) AUM Sep. 30, 2023 Net inflows (1) Market value changes Other net inflows (1) AUM Dec. 31, 2023 Blended net management fee rate (2) 5,866 4,611 3,916 3,826 114 1,680 316 20,329 1,432 1,023 2,455 2,614 25,398 — 25,398 (5) 55 (75) (27) 5 429 (8) 374 (53) 212 159 (8) 525 — 525 671 1,107 389 271 (3) 34 31 2,500 187 73 260 39 2,799 — 2,799 — — — — — — — — — 16 16 — 16 — 16 6,532 5,773 4,230 4,070 116 2,143 339 23,203 1,566 1,324 2,890 2,645 28,738 — 28,738 0.35% 0.30% 0.40% 0.45% 0.50% 0.59% 0.31% 0.39% 0.86% 1.05% 0.94% 0.91% 0.50% n/a 0.50% AUM Dec. 31, 2022 Net inflows (1) Market value changes Other net inflows (1) AUM Dec. 31, 2023 Blended net management fee rate (2) Exchange listed products - Physical trusts - Physical Gold Trust - Physical Uranium Trust - Physical Gold and Silver Trust - Physical Silver Trust - Physical Platinum & Palladium Trust - Exchange Traded Funds - Critical Materials ETFs - Precious Metals ETFs Managed equities - Precious metals strategies - Other (3) Private strategies Core AUM 5,746 2,876 3,998 4,091 138 857 349 18,055 1,721 1,032 2,753 1,880 22,688 66 269 (75) 36 14 755 (14) 1,051 (147) 207 60 37 1,148 720 2,628 307 (57) (36) 521 4 4,087 (8) 69 61 40 4,188 — — — — — 10 — 10 — 16 16 688 714 (702) (4) 6,532 5,773 4,230 4,070 116 2,143 339 23,203 1,566 1,324 2,890 2,645 28,738 0.35% 0.30% 0.40% 0.45% 0.50% 0.59% 0.31% 0.39% 0.86% 1.05% 0.94% 0.91% 0.50% 745 Non-core AUM Total AUM (5) (1) See "Net inflows" and "Other net inflows" in the key performance indicators and non-IFRS and other financial measures section of this MD&A. Full-year figures were reclassified to conform with current presentation. (2) Management fee rate represents the weighted average fees for all funds in the category, net of trailer, sub-advisor and fund expenses. (3) Includes institutional managed accounts and high net worth discretionary managed accounts in the U.S. (4) We exited our non-core asset management business domiciled in Korea. Historically, Korea was immaterial to our overall operations as it accounted for less than 1% of consolidated net income and adjusted 23,433 28,738 0.50% 4,171 1,122 (26) (17) n/a — 12 base EBITDA. (5) No performance fees are earned on exchange listed products. Performance fees are earned on certain precious metals strategies and are based on returns above relevant benchmarks. Other managed equities strategies primarily earn performance fees on flow-through products. Private strategies LPs earn carried interest calculated as a predetermined net profit over a preferred return. 16 Key revenue lines Key expense lines Management, carried interest and performance fees Compensation Management fees were $34.5 million in the quarter, up $6.1 million (21%) from the quarter ended December 31, 2022 and $132.3 million on a full-year basis, up $16.9 million (15%) from the year ended December 31, 2022. Carried interest and performance fees were $0.5 million in the quarter, down $0.7 million (59%) from the quarter ended December 31, 2022 and $0.9 million on a full-year basis, down $2.4 million (73%) from the year ended December 31, 2022. Net fees were $31.5 million in the quarter, up $4.9 million (18%) from the quarter ended December 31, 2022 and $120.7 million on a full-year basis, up $13.7 million (13%) from the year ended December 31, 2022. Our revenue performance was due to higher average AUM across most of our exchange listed products and higher average AUM in our private strategies funds as a result of two new fund launches. On a full-year basis, these increases were partially offset by lower average AUM in our managed equities segment and lower carried interest crystallization in our private strategies segment. Commission revenues Commission revenues were $1.3 million in the quarter, down $3.7 million (74%) from the quarter ended December 31, 2022 and $8.3 million on a full-year basis, down $22.4 million (73%) from the year ended December 31, 2022. Net commissions were $0.7 million in the quarter, down $2.1 million (75%) from the quarter ended December 31, 2022 and $4.6 million on a full-year basis, down $11.6 million (71%) from the year ended December 31, 2022. Lower commissions were due to lower ATM activity in our physical uranium trust on a full-year basis and the sale of our former Canadian broker-dealer in the second quarter. Finance income Finance income was $1.2 million in the quarter, down $0.2 million (16%) from the quarter ended December 31, 2022 and $4.9 million on a full-year basis, down $0.1 million (3%) from the year ended December 31, 2022. Our results were primarily driven by lower income generation in co-investment positions we hold in LPs managed in our private strategies segment. Net compensation expense was $14.8 million in the quarter, up $2.3 million (18%) from the quarter ended December 31, 2022 and $60.4 million on a full-year basis, up $4.1 million (7%) from the year ended December 31, 2022. The increase in the quarter and on a full-year basis was primarily due to new hires and increased AIP accruals on higher net fee generation. Selling, general & administrative ("SG&A") SG&A was $4.2 million in the quarter, up $0.1 million (3%) from the quarter ended December 31, 2022 and $17.5 million on a full-year basis, up $1.5 million (9%) from the year ended December 31, 2022. The increase in the quarter and on a full-year basis was due to higher marketing and technology costs. Earnings Net income was $9.7 million ($0.38 per share) in the quarter, up 32% from $7.3 million ($0.29 per share) for the quarter ended December 31, 2022. On a full-year basis, net income was $41.8 million ($1.66 per share), up 137% from $17.6 million ($0.70 per share) for the year ended December 31, 2022. Net income in the quarter benefited from higher average AUM across most of our exchange listed products and private strategies. On a full-year basis we benefited from higher average AUM as noted previously, but also from the second quarter realization of an unrecorded contingent asset relating to a prior period acquisition. Adjusted base EBITDA was $18.8 million ($0.75 per share) in the quarter, up 4% from $18.1 million ($0.72 per share) for the quarter ended December 31, 2022. On a full-year basis, adjusted base EBITDA was $71.9 million ($2.85 per share), up 1% from $71 million ($2.83 per share) for the year ended December 31, 2022. The increased management fees generated from higher average AUM on a full-year basis were largely offset by lower commission income due to the sale of our former Canadian broker-dealer during the second quarter of the year. 17 Additional revenues and expenses Balance sheet Total assets were $378.8 million, down $4.9 million from December 31, 2022. The decrease was due to a reduction in cash on the partial repayment of our loan facility, which more than offset the increase in co-investments held by the Company. Total liabilities were $73.1 million, down $33.3 million from December 31, 2022. The decrease was due to the partial pay down of the loan facility mentioned above. Total shareholder's equity was $305.7 million, up $28.4 million from December 31, 2022. Investment gains in the quarter and on a full-year basis were from market value appreciation in our co-investments and equity holdings. Other income was lower in the quarter and higher on a full- year basis. The decrease in the quarter was due to lower miscellaneous income and the increase on a full-year basis was due to the realization of an unrecorded contingent asset in the second quarter. Other expenses were higher on a full-year basis due to costs related to the exit of our non-core businesses (Korea and our former Canadian broker-dealer). See Note 5 of the annual financial statements for further details. Depreciation of property and equipment was lower in the quarter and on a full-year basis due to a decrease in depreciation expense related to cancelled lease agreements on the sale of Korea. 18 Reportable operating segments Exchange listed products (In thousands $) Summary income statement Management fees Trailer, sub-advisory and fund expenses Net fees Commissions Commission expense - internal Commission expense - external Net commissions Gain (loss) on investments Other income Total net revenues Net compensation Severance, new hire accruals and other Selling, general and administrative Interest expense Depreciation and amortization Other expenses Total expenses Income before income taxes Adjusted base EBITDA Operating margin Total AUM Average AUM 3 and 12 months ended 3 months ended 12 months ended Dec. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022 22,744 (1,580) 21,164 947 (66) (441) 440 317 65 21,986 3,518 56 1,565 476 46 2,732 8,393 13,593 17,401 17,544 (826) 16,718 359 (26) (187) 146 634 52 17,550 2,987 164 947 527 27 (56) 4,596 12,954 13,800 81,417 (5,058) 76,359 2,390 (171) (1,186) 1,033 (359) 19,853 96,886 13,422 89 5,831 2,376 161 1,012 22,891 73,995 62,303 67,609 (2,840) 64,769 9,119 (682) (4,588) 3,849 3 88 68,709 12,016 591 3,004 1,315 104 2,081 19,111 49,598 56,948 80 % 81 % 80 % 83 % 23,202,564 21,675,252 18,055,140 17,085,679 23,202,564 19,689,463 18,055,140 16,724,098 Income before income taxes was $13.6 million in the quarter, up $0.6 million (5%) from the quarter ended December 31, 2022 and was $74 million on a full-year basis, up $24.4 million (49%) from the year ended December 31, 2022. Adjusted base EBITDA was $17.4 million in the quarter, up $3.6 million (26%) from the quarter ended December 31, 2022 and was $62.3 million on a full-year basis, up $5.4 million (9%) from the year ended December 31, 2022. Our three and twelve months ended results benefited from higher average AUM across most of our exchange listed products. Income before income taxes on a full- year basis also benefited from the receipt of shares on the realization of an unrecorded contingent asset from a historical acquisition in the second quarter of the year. 19 Managed equities (In thousands $) Dec. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022 3 months ended 12 months ended Summary income statement Management fees Trailer, sub-advisor and fund expenses Direct payouts Carried interest and performance fees Carried interest and performance fee payouts - internal Net fees Gain (loss) on investments Other income Total net revenues Net compensation Severance, new hire accruals and other Selling, general and administrative Interest expense Depreciation and amortization Other expenses Total expenses Income before income taxes Adjusted base EBITDA Operating margin Total AUM Average AUM 3 and 12 months ended 6,606 (350) (824) 253 (108) 5,577 2,359 60 7,996 3,139 95 1,272 333 139 122 5,100 6,386 (355) (694) 559 (240) 5,656 2,851 328 8,835 2,579 74 1,447 507 80 (26) 4,661 28,128 (1,481) (3,520) 641 (344) 23,424 907 504 24,835 12,976 607 4,950 1,470 483 391 20,877 30,577 (1,658) (3,768) 578 (254) 25,475 (2,246) 801 24,030 11,483 288 5,377 1,467 311 1,028 19,954 2,896 1,601 29 % 4,174 1,845 33 % 3,958 7,756 34 % 4,076 9,932 39 % 2,890,060 2,717,386 2,752,700 2,634,818 2,890,060 2,801,864 2,752,700 2,940,192 Income before income taxes was $2.9 million in the quarter, down $1.3 million (31%) from the quarter ended December 31, 2022 and was $4 million on a full-year basis, down $0.1 million (3%) from the year ended December 31, 2022. Adjusted base EBITDA was $1.6 million in the quarter, down $0.2 million (13%) from the quarter ended December 31, 2022 and was $7.8 million on a full-year basis, down $2.2 million (22%) from the year ended December 31, 2022. Our three and twelve months ended results were impacted by market value pressures and modest redemption activities on our managed equities products, coupled with higher compensation expense relating to new hires. 20 Private strategies (In thousands $) Dec. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022 3 months ended 12 months ended Summary income statement Management fees Trailer, sub-advisor and fund expenses Direct payouts Carried interest and performance fees Carried interest and performance fee payouts - internal Carried interest and performance fee payouts - external Net fees Finance income Gain (loss) on investments Other income Total net revenues Net compensation Severance, new hire accruals and other Selling, general and administrative Interest expense Depreciation and amortization Other expenses Total expenses Income (loss) before income taxes Adjusted base EBITDA Operating margin Total AUM Average AUM 3 and 12 months ended 5,304 (35) (459) 250 (114) — 4,946 1,133 212 4 6,295 2,500 — 356 2 7 1,661 4,526 3,599 (23) (420) 660 (327) (121) 3,368 1,319 (4,672) 9 24 1,431 103 264 — — 131 1,929 21,290 (172) (1,764) 250 (114) — 19,490 4,442 2,142 59 26,133 9,917 54 1,576 6 25 1,976 13,554 13,442 (95) (1,123) 2,687 (1,342) (597) 12,972 4,794 (4,007) 68 13,827 6,842 416 1,064 — — 921 9,243 1,769 3,090 52 % (1,905) 2,796 62 % 12,579 12,361 52 % 4,584 9,207 54 % 2,645,118 2,621,471 1,879,840 1,882,378 2,645,118 2,407,990 1,879,840 1,636,178 Income before income taxes was $1.8 million in the quarter, up $3.7 million from the quarter ended December 31, 2022 and was $12.6 million on a full-year basis, up $8 million from the year ended December 31, 2022. Adjusted base EBITDA was $3.1 million in the quarter, up $0.3 million (11%) from the quarter ended December 31, 2022 and was $12.4 million on a full-year basis, up $3.2 million (34%) from the year ended December 31, 2022. Our three and twelve months ended results benefited from a combination of new fund launches and increased capital calls. Our income before income taxes also benefited from market value appreciation of our co-investments. 21 Corporate This segment is a cost center that provides capital, balance sheet management and shared services to the Company's subsidiaries. (In thousands $) Summary income statement Gain (loss) on investments Other income Total revenues Net compensation Severance, new hire accruals and other Selling, general and administrative Interest expense Depreciation and amortization Other expenses Total expenses Income (loss) before income taxes Adjusted base EBITDA 3 and 12 months ended 3 months ended 12 months ended Dec. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022 (296) 39 (257) 5,260 23 659 33 462 765 7,202 118 47 165 4,255 632 491 29 439 502 (321) 123 (198) 20,104 4,746 2,486 127 1,759 4,554 (3,388) 100 (3,288) 18,547 3,329 2,390 125 1,808 5,047 6,348 33,776 31,246 (7,459) (2,954) (6,183) (2,119) (33,974) (11,047) (34,534) (10,518) • Investment losses were experienced from market value depreciation of certain equity holdings. • Net compensation was higher due to salary increases and new hires. • Severance on a full-year basis includes a 3-year LTIP transition payment made to the former CEO that was accelerated upon successful completion of the SCP sale during the second quarter of the year. • Other expenses were higher in the quarter and lower on a full-year basis primarily due to FX translation movements. 22 Dividends The following dividends were declared by the Company during the last three years: Record date Payment date Cash dividend per share Total dividend amount (in thousands $) November 13, 2023 - Regular dividend Q3 2023 November 28, 2023 August 21, 2023 - Regular dividend Q2 2023 September 5, 2023 May 15, 2023 - Regular dividend Q1 2023 March 6, 2023 - Regular dividend Q4 2022 Dividends declared in 2023 (1) May 30, 2023 March 21, 2023 November 14, 2022 - Regular dividend Q3 2022 November 29, 2022 August 12, 2022 - Regular dividend Q2 2022 May 16, 2022 - Regular dividend Q1 2022 March 7, 2022 - Regular dividend Q4 2021 Dividends declared in 2022 August 29, 2022 May 31, 2022 March 22, 2022 November 15, 2021 - Regular dividend Q3 2021 November 30, 2021 August 16, 2021 - Regular dividend Q2 2021 May 17, 2021 - Regular dividend Q1 2021 March 8, 2021 - Regular dividend Q4 2020 Dividends declared in 2021 August 31, 2021 June 1, 2021 March 23, 2021 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 6,458 6,467 6,482 6,489 25,896 6,480 6,484 6,500 6,467 25,931 6,429 6,426 6,426 6,426 25,707 (1) Subsequent to year end, on February 20, 2024, a regular dividend of $0.25 per common share was declared for the quarter ended December 31, 2023. This dividend is payable on March 19, 2024 to shareholders of record at the close of business on March 4, 2024. Capital stock Including the 0.5 million unvested common shares currently held in the EPSP Trust (December 31, 2022 - 0.6 million), total capital stock issued and outstanding was 25.9 million (December 31, 2022 - 26 million). The decrease in the period was due to the repurchase and cancellation of 126,353 shares through the normal course issuer bid. Earnings per share for the current and prior periods have been calculated using the weighted average number of shares outstanding during the respective periods. Basic earnings per share was $0.38 for the quarter and $1.66 on a full-year basis, compared to $0.29 and $0.70 in the prior periods, respectively. Diluted earnings per share was $0.37 in the quarter and $1.60 on a full-year basis compared to $0.28 and $0.67 in the prior periods, respectively. Diluted earnings per share reflects the dilutive effect of in-the-money stock options, unvested shares held in the EPSP Trust and outstanding restricted stock units. A total of 12,500 stock options are outstanding pursuant to our stock option plan, all of which are exercisable. 23 Liquidity and capital resources As at December 31, 2023, the Company had $24.2 million (December 31, 2022 - $54.4 million) outstanding on its credit facility, all of which is due on August 8, 2028. The decrease in the year was due to the repayment of $30.2 million of our loan facility. As at December 31, 2023, the Company was in compliance with all covenants, terms and conditions under the credit facility. The Company has access to a credit facility of $75 million with a major Canadian schedule I chartered bank. Amounts under the facility may be borrowed through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. Key terms under the current credit facility are noted below: Structure • 5-year, $75 million revolver with "bullet maturity" August 8, 2028 Interest rate • • U.S. prime rate + 105 bps; or Canadian prime rate + 55 bps; Covenant terms • • • Minimum AUM: CAD$15.4 billion; Debt to EBITDA less than or equal to 2.5:1; and EBITDA to interest expense more than or equal to 2.5:1 Commitments The Company has commitments to make co-investments in private strategies LPs or commitments to make co-investments in fund strategies in the Company's other segments. As at December 31, 2023, the Company had $4 million in co-investment commitments in private strategies LPs due within one year (December 31, 2022 - $5.7 million) and $1.9 million due after 12 months (December 31, 2022 - $0.4 million). During the year, the Company signed a new lease for its existing Toronto office location that is set to commence on January 1, 2024. The following are the remaining contractual maturities of financial liabilities as at December 31, 2023 (in thousands $): Contractual obligations Operating accounts payable Compensation payable Contingent consideration on URNM acquisition Lease obligation Loan facility Total contractual obligations Carrying Amount 11,749 7,822 4,470 2,096 24,237 50,374 Less than 1 year 11,749 7,822 4,470 765 — 24,806 1-3 years — — — 1,244 — 1,244 4-5 years — — — 87 24,237 24,324 More than 5 years — — — — — — 24 Critical accounting estimates and significant judgments The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions and estimates as they occur. The Company’s material accounting policy information are described in Note 2 of the December 31, 2023 audited annual financial statements. Certain of these accounting policies require management to make key assumptions concerning the future and consider other sources of estimation uncertainty at the reporting date. These accounting estimates are considered critical because they require subjective and/or complex judgments that may have a material impact on the value of our assets, liabilities, revenues and expenses. Critical accounting estimates Impairment of goodwill and intangible assets All indefinite life intangible assets and goodwill are assessed for impairment annually, however, finite life intangibles are only tested for impairment to the extent indicators of impairment exist at the time of a quarterly assessment. In the case of goodwill and indefinite life intangibles, this annual test for impairment augments the quarterly impairment indicator assessments. Values associated with goodwill and intangibles involve estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates, AUM and asset lives. These estimates require significant judgment regarding market growth rates, fund flow assumptions, expected margins and costs, which could affect the Company's future results if estimates of future performance and fair value change. Fair value of financial instruments When the fair value of financial assets and financial liabilities recorded in the consolidated balance sheets cannot be derived from active markets, they are determined using valuation techniques and models. Model inputs are taken from observable markets where possible, but where this is not feasible, unobservable inputs may be used. These unobservable inputs include, but are not limited to, projected cash flows, discount rates, comparable recent transactions, volatility of underlying securities in warrant valuations and extraction recovery rates of mining projects. The use of unobservable inputs can involve significant judgment and materially affect the reported fair value of financial instruments. Contingent consideration The acquisition of the Sprott Uranium Miners ETF in 2022 necessitated the recognition of a contingent consideration for the amounts payable in cash under the terms of the purchase agreement. The consideration is subject to certain financial performance conditions based on the average AUM of the fund over the two-year period from closing of the transaction. The key judgments utilized in the estimation of the contingent consideration were fund flow and market value assumptions. Significant judgments Investments in other entities IFRS 10 Consolidated Financial Statements ("IFRS 10") and IAS 28 Investments in Associates and Joint Ventures ("IAS 28") provide for the use of judgment in determining whether an investee should be included within the consolidated financial statements of the Company and on what basis (subsidiary, joint venture, financial instrument or associate). Significant judgment is applied in evaluating facts and circumstances relevant to the Company and investee, including: (1) the extent of the Company's direct and indirect interest in the investee; (2) the level of compensation to be received from the investee for management and other services provided to it; (3) "kick out rights" available to other investors in the investee; and (4) other indicators of the extent of power that the Company has over the investee. 25 Managing financial risks Market risk The Company separates market risk into three categories: price risk, interest rate risk and foreign currency risk. Price risk Price risk arises from the possibility that changes in the price of the Company's on and off-balance sheet assets and liabilities will result in changes in carrying value or recoverable amounts. The Company's revenues are also exposed to price risk since management fees, carried interest and performance fees are correlated with AUM, which fluctuates with changes in the market values of the assets in the funds and managed accounts managed by the Company. Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will adversely affect the value of, or cash flows from, financial assets and liabilities. The Company’s earnings, particularly through its private strategies segment, are exposed to volatility as a result of sudden changes in interest rates. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed. Foreign currency risk The Company enters into transactions that are denominated primarily in U.S. and Canadian dollars. Foreign currency risk arises from foreign exchange rate movements that could negatively impact either the carrying value of financial assets and liabilities or the related cash flows which are denominated in currencies other than the functional currency of the Company and its subsidiaries. The Company may employ certain hedging strategies to mitigate foreign currency risk. Credit risk Credit risk is the risk that a borrower will not honor its commitments and a loss to the Company may result. Credit risk generally arises in the Company's investments portfolio. Investments The Company incurs credit risk when entering into, settling and financing transactions with counterparties. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed. Other The majority of receivables relate to management fees, carried interest and performance fees receivable from the funds and managed accounts managed by the Company. These receivables are short-term in nature and any credit risk associated with them is managed by dealing with counterparties that the Company believes to be creditworthy and by actively monitoring credit exposure and the financial health of the counterparties. Liquidity risk Liquidity risk is the risk that the Company cannot meet a demand for cash or fund its obligations as they come due. The Company's exposure to liquidity risk is minimal as it maintains sufficient levels of liquid assets to meet its obligations as they come due. Additionally, the Company has access to a $75 million committed line of credit with a major Canadian schedule I chartered bank. 26 The Company's exposure to liquidity risk as it relates to our co-investments in private strategies LPs arises from fluctuations in cash flows from making capital calls and receiving capital distributions. The Company manages its co-investment liquidity risk through the ongoing monitoring of scheduled capital calls and distributions ("match funding") and through its broader treasury risk management program and enterprise capital budgeting. Financial liabilities, including accounts payable and accrued liabilities and compensation payable, are short-term in nature and are generally due within a year. The Company's management team is responsible for reviewing resources to ensure funds are readily available to meet its financial obligations as they come due and ensuring adequate funds exist to support business strategies and operations growth. The Company manages liquidity risk by monitoring cash balances on a daily basis and through its broader treasury risk management program. To meet any liquidity shortfalls, actions taken by the Company could include: drawing on the line of credit; slowing its co-investment activities; liquidating investments; adjusting or otherwise temporarily suspending AIPs; cutting or temporarily suspending its dividend; and/or issuing common shares. Concentration risk A significant portion of the Company's AUM and its investments are focused on the natural resource sector, and in particular, precious metals and critical materials related investments and transactions. In addition, from time-to-time, certain investments may be concentrated to a material degree in a single position or group of positions. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed. Disclosure controls and procedures ("DC&P") and internal control over financial reporting ("ICFR") Management is responsible for the design and operational effectiveness of DC&P and ICFR in order to provide reasonable assurance regarding the disclosure of material information relating to the Company. This includes information required to be disclosed in the Company's annual filings, interim filings and other reports filed under securities legislation, as well as the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Our chief executive officer and chief financial officer, after evaluating the effectiveness of our DC&P and ICFR (as defined in the applicable U.S. and Canadian securities laws), concluded that the Company's DC&P and ICFR were properly designed and were operating effectively as at December 31, 2023. In addition, there were no material changes to ICFR during the year. Managing non-financial risks Confidentiality of information Confidentiality is essential to the success of the Company's business, and it strives to consistently maintain the highest standards of trust, integrity and professionalism. Account information is kept under strict control in compliance with all applicable laws, and physical, procedural, and electronic safeguards are maintained in order to protect this information from access by unauthorized parties. The Company keeps the affairs of its clients confidential and does not disclose the identities of clients (absent expressed client consent to do so). If a prospective client requests a reference, the Company will not provide the name of an existing client before receiving permission from that client to do so. Conflicts of interest The Company established a number of policies with respect to employee personal trading. Employees may not trade any of the securities held or being considered for investment by any of the Company's funds without prior approval. In addition, employees must receive prior approval before they are permitted to buy or sell securities. Speculative trading is strongly discouraged. All employees must comply with the Company's Code of Ethics. The code establishes strict rules for professional conduct including the management of conflicts of interest. 27 Independent review committee National Instrument 81-107 - Independent Review Committee for Investment Funds (“NI 81-107”) requires all publicly offered investment funds in Canada to establish an independent review committee ("IRC") to whom all conflicts of interest matters must be referred for review and approval. The Company established an IRC for its Canadian public funds. As required by NI 81-107, the Company established written policies and procedures for dealing with conflict of interest matters and maintains records in respect of these matters and provides assistance to the IRC in carrying out its functions. The IRC is comprised of three independent members, and is subject to requirements to conduct regular assessments and provide reports to the Company and to the holders of interests in public funds in respect of its functions. Insurance The Company maintains appropriate insurance coverage for general business and liability risks as well as insurance coverage required by regulation. Insurance coverage is reviewed periodically to ensure continued adequacy. Internal controls and procedures Several of the Company's subsidiaries operate in regulated environments and are subject to business conduct rules and other rules and regulations. The Company has internal control policies related to business conduct. They include controls required to ensure compliance with the rules and regulations of relevant regulatory bodies including the OSC, the Canadian Investment Regulatory Organization, FINRA and the U.S. Securities and Exchange Commission ("SEC"). Enterprise risk management The starting point to any enterprise risk management program (“ERM”) is the articulation of a risk appetite, which is the amount and types of risk we are willing to accept in our pursuit of business objectives. A company’s risk appetite is the bedrock upon which an ERM framework is established. Our risk appetite is primarily based on specific regulatory and legal environment considerations; general environmental, social and governance responsibilities; the need for sound capital adequacy and treasury management processes; the preservation of our positive reputation among current and future stakeholders; the natural expectation of our shareholders that we take appropriate and reasonable levels of risk in our various business segments to maximize shareholder returns; and our overall desire to be good corporate citizens as part of our organizational culture and core values. The aforementioned considerations formed the basis for our risk appetite statements noted below: • Regardless of loss probability, we will only accept inherent or residual risks that we have a proven, demonstrable ability to understand, diligently manage on an ongoing basis and thoroughly consider and balance relative to the outcomes; and • Our risk appetite is low around any actions or inactions that could materially jeopardize the Company’s reputation, core values or commitment to its stakeholders. Furthermore, at no point would we ever accept existential inherent or residual risks, regardless of loss probability. The ERM process involves a comprehensive drill down through the organization to its constituent parts to identify all salient risks and evaluate them through the lens of our risk appetite. The following is a summary of the ERM steps used to filter organizational risks through our risk appetite: • • Identify all major processes within each business segment (and enterprise shared services function supporting them); Identify materially relevant inherent risks (both quantitative and qualitative), that may arise in each major process area; 28 • • • • • Rate each inherent risk (in the absence of internal controls) based on the degree of event probability and impact to the organization; Determine our risk tolerance for each inherent risk previously identified and rated; Identify internal controls in place (or needed) to mitigate the inherent risks down to the appropriate “residual level” (i.e. determine the post-controls risk rating and compare it to our predetermined risk tolerance level). NOTE: we stratify our internal controls universe using the “three lines of defense” approach recommended by the Institute of Internal Auditors prior to evaluating the effectiveness of internal controls; Compare all residual risk ratings to their corresponding risk tolerance level to ensure the risk is being appropriately managed (i.e. there are a sufficient number of, and appropriate types of, internal controls in place to manage the risk in light of our risk tolerance), and if not, take further action; and Test, document and report on the effectiveness of the ERM program in managing risks within the boundaries of our risk appetite. Additional information relating to the Company, including the Company's Annual Information Form is available on EDGAR at www.sec.gov and SEDAR+ at www.sedarplus.com. 29 Consolidated Financial Statements Years ended December 31, 2023 and 2022 Management's responsibility for financial reporting The accompanying consolidated financial statements, which consolidate the financial results of Sprott Inc. (the "Company"), were prepared by management, who are responsible for the integrity and fairness of all information presented in the consolidated financial statements and management's discussion and analysis ("MD&A") for the years ended December 31, 2023 and 2022. The consolidated financial statements were prepared by management in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Financial information presented in the MD&A is consistent with that in the consolidated financial statements. In management's opinion, the consolidated financial statements have been properly prepared within reasonable limits of materiality and within the framework of the material accounting policy information summarized in Note 2 of the consolidated financial statements. Management maintains a system of internal controls to meet its responsibilities for the integrity of the consolidated financial statements. The board of directors of the Company appoints the Company's audit and risk management committee annually. Among other things, the mandate of the audit & risk committee includes the review of the consolidated financial statements of the Company on a quarterly basis and the recommendation to the board of directors for approval. The audit & risk committee has access to management and the auditors to review their activities and to discuss the external audit program, internal controls, accounting policies and financial reporting matters. KPMG LLP performed an independent audit of the consolidated financial statements, as outlined in the auditors' report contained herein. KPMG LLP had, and has, full and unrestricted access to management of the Company, the audit & risk committee and the board of directors to discuss their audit and related findings and have the right to request a meeting in the absence of management at any time. Whitney George Chief Executive Officer February 20, 2024 Kevin Hibbert, FCPA, FCA Chief Financial Officer and Senior Managing Partner 31 Management's responsibility for financial controls The management of Sprott Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting, and has designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Management has used the Internal Control – Integrated Framework (2013) to evaluate the effectiveness of internal control over financial reporting, which is a recognized and suitable framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management has evaluated the design and operation of the Company's internal control over financial reporting as of December 31, 2023, and has concluded that such internal control over financial reporting is effective. There are no material weaknesses that have been identified by management in this regard. KPMG LLP, the independent auditors appointed by the shareholders of the Company, who have audited the consolidated financial statements, have also audited internal control over financial reporting and have issued their report below. Whitney George Chief Executive Officer February 20, 2024 Kevin Hibbert, FCPA, FCA Chief Financial Officer and Senior Managing Partner 32 KPMG LLP Bay Adelaide Centre 333 Bay Street, Suite 4600 Toronto, ON M5H 2S5 Canada Tel 416-777-8500 Fax 416-777-8818 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Sprott Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Sprott Inc. and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income, changes in shareholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 20, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. © 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 33 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit and risk management committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate. Valuation of indefinite life fund management contracts As discussed in note 2 to the consolidated financial statements, an annual test for impairment augments the quarterly impairment indicator assessment of impairment for indefinite life intangibles. The recoverable amounts associated with intangibles involve estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates and asset lives, and are determined using the value-in-use method. These estimates require significant judgment regarding market growth rates, discount rates, fund flow assumptions, expected margins and costs which could affect the Company’s future results. As discussed in note 7 to the consolidated financial statements, the Company’s indefinite life fund management contracts totaled $182,902 thousand as of December 31, 2023. We identified the assessment of the recoverable amount of the indefinite-life fund management contracts as a critical audit matter. A higher degree of auditor judgment was required to evaluate the significant assumptions, which were determined to be fund flow assumptions and discount rates, used in determining the recoverable amount. The sensitivity of reasonably possible changes to those assumptions could have had a significant impact on the determination of the recoverable amount of the indefinite-life fund management contracts. 34 The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s impairment testing process, including controls over the development of the significant assumptions. We evaluated the Company’s ability to forecast fund flows by comparing historical forecasts to actual results. We evaluated the forecasted fund flows by considering external market and industry outlook data. We performed a sensitivity analysis over the forecasted fund flows and discount rates to assess the impact to the Company’s determination that the recoverable amount of the indefinite-life fund management contracts exceeded the carrying amount. We involved valuation professionals with specialized skills and knowledge, who assisted in: – – assessing the discount rates used by management by comparing against discount rate ranges that were developed using publicly available market data and independently developed assumptions; and assessing the recoverable amounts determined by management using the forecasted fund flows and discount rates by comparing the implied assets under management (“AUM”) multiple against publicly available AUM multiples multiples for comparable companies. We have served as the Company’s auditor since 2016. Chartered Professional Accountants, Licensed Public Accountants Toronto, Canada February 20, 2024 35 KPMG LLP Bay Adelaide Centre 333 Bay Street, Suite 4600 Toronto, ON M5H 2S5 Canada Tel 416-777-8500 Fax 416-777-8818 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Sprott Inc.: Opinion on Internal Control Over Financial Reporting We have audited Sprott Inc. and its subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements), and our report dated February 20, 2024 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Responsibility for Internal Controls. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. © 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 36 We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Chartered Professional Accountants, Licensed Public Accountants Toronto, Canada February 20, 2024 37 Consolidated balance sheets As at (In thousands of U.S. dollars) Assets Current Cash and cash equivalents Fees receivable Short-term investments Other assets Income taxes recoverable Total current assets Co-investments Other assets Property and equipment, net Intangible assets Goodwill Deferred income taxes Total assets Liabilities and shareholders' equity Current Accounts payable and accrued liabilities Compensation payable Income taxes payable Total current liabilities Other accrued liabilities Loan facility Deferred income taxes Total liabilities Shareholders' equity Capital stock Contributed surplus Deficit Accumulated other comprehensive loss Total shareholders' equity Total liabilities and shareholders' equity Commitments and provisions The accompanying notes form part of the consolidated financial statements "Ron Dewhurst" Director "Graham Birch" Director Dec. 31 2023 Dec. 31 2022 20,658 7,481 2,232 13,496 1,189 45,056 93,528 24,291 10,856 182,902 19,149 3,053 333,779 378,835 12,647 7,822 980 21,449 16,637 24,237 10,807 73,130 51,678 10,967 3,348 8,723 2,247 76,963 73,573 21,271 12,496 178,613 19,149 1,683 306,785 383,748 10,703 12,342 2,707 25,752 18,061 54,437 8,227 106,477 434,764 35,281 (89,402) (74,938) 305,705 378,835 428,475 33,716 (105,305) (79,615) 277,271 383,748 (Notes 3 & 10) (Note 5) (Notes 4 & 10) (Notes 5 & 10) (Note 6) (Note 7) (Note 7) (Note 9) (Note 15) (Note 9) (Note 8) (Note 8) (Note 16) 38 Consolidated statements of operations and comprehensive income (In thousands of U.S. dollars, except for per share amounts) Revenues Management fees Carried interest and performance fees Commissions Finance income Gain (loss) on investments Other income Total revenues Expenses Compensation Trailer, sub-advisor and fund expenses Selling, general and administrative Interest expense Depreciation of property and equipment Other expenses Total expenses Income before income taxes for the year Provision for income taxes Net income for the year Net income per share: Basic Diluted Net income for the year Other comprehensive income (loss) Items that may be reclassified subsequently to profit or loss Foreign currency translation gain (loss) (taxes of $Nil) Total other comprehensive income (loss) Comprehensive income (loss) The accompanying notes form part of the consolidated financial statements For the years ended Dec. 31 2023 Dec. 31 2022 132,257 891 8,301 4,852 1,375 21,345 169,021 115,355 3,265 30,663 4,991 (10,242) 1,150 145,182 (Notes 3, 4 and 5) (Note 5) (Note 8) (Note 6) (Note 5) (Note 9) 74,213 7,916 17,450 4,060 2,843 12,248 118,730 77,117 10,539 15,978 2,923 3,355 10,191 120,103 50,291 8,492 41,799 25,079 7,447 17,632 (Note 8) (Note 8) 1.66 1.60 0.70 0.67 41,799 17,632 4,677 4,677 46,476 (15,058) (15,058) 2,574 39 C o n s o l i d a t e d s t a t e m e n t s o f c h a n g e s i n s h a r e h o d e r s ' l e q u i t y N e t i n c o m e D i v i d e n d s d e c l a r e d B a l a n c e , D e c . 3 1 , 2 0 2 2 S t o c k - b a s e d c o m p e n s a t i o n F o r e g n i c u r r e n c y t r a n s l a t i o n g a n i ( l o s s ) I s s u a n c e a n d l r e e a s e d o n v e s t i n g o f R S U s S h a r e s a c q u i r e d f o r e q u i t y i n c e n t i v e l p a n S h a r e s i s s u e d o n e x e r c i s e o f s t o c k o p t i o n s S h a r e s l r e e a s e d o n v e s t i n g o f e q u i t y i n c e n t i v e l p a n S h a r e s i s s u e d t o p u r c h a s e m a n a g e m e n t c o n t r a c t S h a r e s a c q u i r e d a n d c a n c e e d l u n d e r n o r m a l c o u r s e i s s u e r b d i T h e a c c o m p a n y i n g n o t e s f o r m p a r t o f t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s A t D e c . 3 1 , 2 0 2 1 N e t i n c o m e D i v i d e n d s d e c l a r e d B a l a n c e , D e c . 3 1 , 2 0 2 3 S t o c k - b a s e d c o m p e n s a t i o n A t D e c . 3 1 , 2 0 2 2 F o r e g n i c u r r e n c y t r a n s l a t i o n g a n i ( l o s s ) I s s u a n c e a n d l r e e a s e d o n v e s t i n g o f R S U s S h a r e s a c q u i r e d f o r e q u i t y i n c e n t i v e l p a n S h a r e s l r e e a s e d o n v e s t i n g o f e q u i t y i n c e n t i v e l p a n S h a r e s a c q u i r e d a n d c a n c e e d l u n d e r n o r m a l c o u r s e i s s u e r b d i ( I n t h o u s a n d s o f U . S . d o l l a r s , o t h e r t h a n n u m b e r o f s h a r e s ) ( N o t e 1 2 ) ( N o t e 8 ) ( N o t e 8 ) ( N o t e 8 ) ( N o t e 8 ) ( N o t e 8 ) ( N o t e 8 ) ( N o t e 8 ) ( N o t e 1 2 ) ( N o t e 8 ) ( N o t e 8 ) ( N o t e 8 ) ( N o t e 8 ) ( N o t e 8 ) 2 5 , 3 2 5 , 8 9 4 4 2 8 , 4 7 5 3 3 , 7 1 6 , ( 1 0 5 3 0 5 ) ( 7 9 , 6 1 5 ) 3 , 9 2 7 — ( 8 1 , 5 3 8 ) 7 2 , 4 6 4 8 0 , 3 4 5 — — 3 2 4 , 5 6 8 1 1 5 , 1 0 2 ( 1 8 0 , 5 9 4 ) — 1 5 0 ( 3 , 0 3 6 ) 4 , 0 0 0 2 , 2 1 0 — — 1 2 , 8 6 7 1 , 8 0 7 ( 6 , 9 4 8 ) — — — — 1 7 , 0 4 1 ( 5 , 1 3 5 ) — ( 1 2 , 8 6 7 ) ( 6 8 0 ) — 1 7 , 6 3 2 , ( 2 5 9 3 1 ) — — — — — — — — — — — — — — , ( 1 5 0 5 8 ) — — — 2 7 7 , 2 7 1 1 7 , 6 3 2 ( 2 5 , 7 8 1 ) ( 3 , 0 3 6 ) 4 , 0 0 0 ( 2 , 9 2 5 ) 1 7 , 0 4 1 ( 1 5 , 0 5 8 ) 1 , 1 2 7 ( 6 , 9 4 8 ) — 2 4 , 9 9 1 , 6 2 0 4 1 7 , 4 2 5 3 5 , 3 5 7 ( 9 7 , 0 0 6 ) , ( 6 4 5 5 7 ) 2 9 1 , 2 1 9 2 5 , 4 1 0 , 1 5 1 4 3 4 , 7 6 4 3 5 , 2 8 1 1 , 3 8 9 — — — ( 1 2 6 , 3 5 3 ) 3 3 1 , 6 7 2 ( 1 5 4 , 1 3 1 ) 3 1 , 6 8 0 — 4 9 — — 1 , 4 0 2 ( 4 , 1 5 7 ) 1 4 , 2 4 7 ( 5 , 2 5 2 ) 2 0 , 4 1 1 — ( 4 , 5 9 9 ) — ( 1 4 , 2 4 7 ) — — — ( 8 9 , 4 0 2 ) 4 1 , 7 9 9 , ( 2 5 8 9 6 ) — — — — — — , ( 7 4 9 3 8 ) — — — 4 , 6 7 7 — — — — 3 0 5 , 7 0 5 4 1 , 7 9 9 ( 2 5 , 8 4 7 ) 2 0 , 4 1 1 4 , 6 7 7 ( 3 , 1 9 7 ) ( 4 , 1 5 7 ) ( 5 , 2 5 2 ) — s h a r e s N u m b e r o f o u t s t a n d n g i s t o c k C a p i t a l s u r p u s l C o n t r i b u t e d D e f i c i t i n c o m e ( l o s s ) c o m p r e h e n s i v e o t h e r A c c u m u a t e d l e q u i t y T o t a l 2 5 , 3 2 5 , 8 9 4 4 2 8 , 4 7 5 3 3 , 7 1 6 , ( 1 0 5 3 0 5 ) ( 7 9 , 6 1 5 ) 2 7 7 , 2 7 1 4 0 Consolidated statements of cash flows (In thousands of U.S. dollars) Operating activities Net income for the year Add (deduct) non-cash items: (Gain) loss on investments Stock-based compensation Depreciation of property and equipment Deferred income tax expense Current income tax expense Other items Shares received on recognition of a previously unrecorded contingent asset Income taxes paid Changes in: Fees receivable Other assets Accounts payable, accrued liabilities and compensation payable Cash provided by (used in) operating activities Investing activities Purchase of investments Sale of investments Purchase of property and equipment Proceeds received on exit of non-core businesses Management contract consideration Cash provided by (used in) investing activities Financing activities Acquisition of common shares for equity incentive plan Acquisition of common shares under normal course issuer bid Cash received on exercise of stock options Repayment of lease liabilities Contributions from non-controlling interest Net advances (repayments) from loan facility Dividends paid Cash provided by (used in) financing activities Effect of foreign exchange on cash balances Net increase (decrease) in cash and cash equivalents during the year Cash and cash equivalents, beginning of the year Cash and cash equivalents, end of the year Cash and cash equivalents: Cash Short-term deposits The accompanying notes form part of the consolidated financial statements For the years ended Dec. 31 2023 Dec. 31 2022 41,799 17,632 (1,375) 20,411 2,843 1,002 7,490 (6,961) (18,588) (8,133) 884 (5,144) (4,367) 29,861 (25,474) 27,033 (1,535) 4,583 — 4,607 (5,252) (4,157) — (2,224) 4,216 (30,200) (25,847) (63,464) (2,024) (31,020) 51,678 20,658 10,242 17,041 3,355 — 7,447 (542) — (8,070) 2,216 (7,438) (9,387) 32,496 (25,771) 12,907 (128) — (10,500) (23,492) (6,948) (3,036) 1,127 (2,329) 7,320 25,750 (25,781) (3,897) (3,234) 1,873 49,805 51,678 20,658 — 20,658 51,494 184 51,678 41 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 1 Corporate information Sprott Inc. (the "Company") was incorporated under the Business Corporations Act (Ontario) on February 13, 2008. Its registered office is at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario M5J 2J1. 2 Summary of material accounting policy information Statement of compliance These annual audited consolidated financial statements for the years ended December 31, 2023 and 2022 ("financial statements") have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). They have been authorized for issue by a resolution of the board of directors of the Company on February 20, 2024 and include all subsequent events up to that date. Basis of presentation These financial statements have been prepared on a going concern basis and on a historical cost basis, except for certain financial instruments classified as fair value through profit or loss ("FVTPL") and which are measured at fair value to the extent required or permitted under IFRS and as set out in the relevant accounting policies. The financial statements are presented in U.S. dollars and all values are rounded to the nearest thousand ($000), except when indicated otherwise. Principles of consolidation These financial statements of the Company are prepared on a consolidated basis so as to include the accounts of all limited partnerships and corporations the Company is deemed to control under IFRS. Controlled limited partnerships and corporations ("subsidiaries") are consolidated from the date the Company obtains control. All intercompany balances with subsidiaries are eliminated upon consolidation. Subsidiary financial statements are prepared for the same reporting period as the Company and are based on accounting policies consistent with that of the Company. The Company records third-party interest in the funds which do not qualify to be equity due to redeemable or limited life features, as non-controlling interest liabilities. Such interests are initially recognized at fair value, with any changes recorded in the Other expenses line of the consolidated statements of operations and comprehensive income. Control exists if the Company has power over the entity, exposure or rights to variable returns from its involvement with the entity and the ability to use its power over the entity to affect the amount of returns the Company receives. In many, but not all instances, control will exist when the Company owns more than one half of the voting rights of a corporation, or is the sole limited and general partner of a limited partnership. 42 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 The Company currently controls the following principal subsidiaries: • • • • • Sprott Asset Management LP ("SAM"); Sprott U.S. Holdings Inc. ("SUSHI"), parent of: (1) SGRIL Holdings Inc. ("SGRIL Holdings"); (2) Sprott Global Resource Investments Ltd. ("SGRIL"); (3) Sprott Asset Management USA Inc. ("SAM US"); and (4) Resource Capital Investment Corporation ("RCIC"). Collectively, the interests of SUSHI are referred to as "US entities" in these financial statements; Sprott Resource Streaming and Royalty Corporation and Sprott Private Resource Streaming and Royalty (Management) Corp. ("SRSR"); Sprott Resource Lending Corp. ("SRLC"); and Sprott Inc. 2011 Employee Profit Sharing Plan Trust (the "Trust"). During the year, the Company exited its non-core Canadian broker-dealer (Sprott Capital Partners) and non-core asset management business domiciled in Korea ("Korea"). Details of the transactions can be found in Note 5. Cash and cash equivalents Cash and cash equivalents consist of cash on deposit with banks and with carrying brokers, which are not subject to restrictions, and short-term interest bearing notes and treasury bills with a term to maturity of less than three months from the date of purchase. Investments Investments include equity kickers received as consideration during private strategies, managed equities and broker- dealer activities as well as investments in private companies and are measured at FVTPL. Co-investments Co-investments are investments the Company makes alongside clients of the various fund strategies it manages to demonstrate the commitment and confidence the Company has in investment strategies that they promote and operate. Included in co-investments are the Company's investment in the fund products previously managed by its non-core asset management business domiciled in Korea. Financial instruments Classification and measurement of financial assets Financial assets are measured on initial recognition at fair value, and are classified and subsequently measured at FVTPL, amortized cost or fair value through other comprehensive income ("FVOCI"). Financial assets are measured at amortized cost if the contractual terms of the instrument give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding and it is held within a business model whose objective is to hold assets to collect contractual cash flows. Financial assets are measured at FVOCI if the contractual terms of the instrument give rise to cash flows that are solely for payments of principal and interest on the principal amount outstanding and it is held within a business model whose objective is both to hold assets to collect contractual cash flow and to sell financial assets. For equity instruments that are not held for trading, the Company may also elect to irrevocably elect, on an investment by investment basis, to present changes in the fair value of an investment through other comprehensive income. All financial assets that are not measured at amortized cost or FVOCI are measured at FVTPL. This includes all derivative financial assets the Company may hold. 43 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Valuation of investments Investments include public equities, share purchase warrants, fixed income securities, mutual funds, private companies (including digital gold strategies) and alternative investment strategies, while co-investments are investments held in the funds managed or previously managed by the Company. Public equities, share purchase warrants and fixed income securities are measured at fair value and are accounted for on a trade-date basis. Mutual fund and alternative investment strategy investments are valued using the net asset value per unit of the fund, which represents the underlying net assets at fair values determined using closing market prices. These investments are generally made in the process of launching a new fund and are redeemed (if open-end) or sold (if closed-end) as third party investors subscribe. The balance represents the Company's maximum exposure to loss associated with the investments. Private holdings include private company investments which are classified as FVTPL and carried at fair value based on the value of the Company's interests from financial information provided by management of the private companies, which may include operating results, subsequent rounds of financing and other appropriate information. Any change in fair value is recognized in gain (loss) on investments on the consolidated statements of operations and comprehensive income. Fair value hierarchy All financial instruments recognized at fair value in the consolidated balance sheets are classified into three fair value hierarchy levels as follows: • • Level 1: valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities; Level 2: valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or corroborated by observable market data by correlation or other means; and • Level 3: valuation techniques with significant unobservable market inputs. The Company will transfer financial instruments into or out of levels in the fair value hierarchy on the reporting date to the extent the instrument no longer satisfies the criteria for inclusion in the category in question. Level 3 valuations are prepared by the Company and reviewed and approved by management at each reporting date. Valuation results, including the appropriateness of model inputs, are compared to actual market transactions to the extent readily available. Valuations of level 3 assets are also discussed with the Audit and Risk Management Committee as deemed necessary by the Company. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported on the consolidated balance sheets if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously. Impairment of financial assets Expected credit losses are a probability-weighted estimate of future credit losses. Credit losses are measured as the present value of the difference between the cash flows due to the Company in accordance with the contract and the cash flows the Company expects to receive. 44 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Recognition of income and related expenses The Company receives variable consideration in the form of management fees, which are allocated to distinct time periods in which the management services are being provided. Management fees are recognized when they are no longer susceptible to market factors and no longer subject to a significant reversal in revenue. The Company may also earn variable consideration in the form of carried interest and performance fees. These fees are recognized when they are no longer susceptible to market factors or subject to significant reversal in revenue, which is determined subject to agreements with the underlying funds. Commission income is recognized when the related services are rendered and no longer subject to a significant reversal in revenue. Finance income, which includes co-investment income from private strategies LP units and interest income from brokerage client accounts, is recognized on an accrual basis using the effective interest method. Under the effective interest method, the interest rate realized is not necessarily the same as the stated rate in the loan or debenture documents. The effective interest rate is the rate required to discount the future value of all loan or debenture cash flows to their present value and is adjusted for the receipt of cash and non-cash items in connection with the loan. Costs related to obtaining a contract with clients ("placement fees") are amortized on a systematic basis related to the transfer of services to those clients. Property and equipment Property and equipment are recorded at cost and are amortized on a declining balance basis over the expected useful life which ranges from 1 to 5 years. Leasehold improvements are amortized on a straight-line basis over the term of the lease. Artwork is not amortized since it does not have a determinable useful life. The residual values, useful life and methods of amortization for property and equipment are reviewed at each reporting date and adjusted prospectively, if necessary. Any loss resulting from the impairment of property and equipment is expensed in the period the impairment is identified. Intangible assets The useful life of an intangible asset is either finite or indefinite. Intangible assets other than goodwill are recognized when they are separable or arise from contractual or other legal rights, and have fair values that can be reliably measured. Intangible assets that are purchased are measured at the acquisition date and include the fair value of considerations transferred, and include an estimate for contingent consideration where applicable. Intangible assets with finite lives are amortized over their useful economic life and assessed for impairment indicators at each reporting date, or more frequently if changes in circumstances indicate that the carrying value is greater than its recoverable amount. Intangible assets with finite lives are only tested for impairment if indicators of impairment exist at the time of an impairment assessment. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at each reporting date. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense and any impairment losses on intangible assets with finite lives are recognized in the consolidated statements of operations. Intangible assets with indefinite useful lives are not amortized, but are assessed for impairment indicators at each reporting date, or more frequently if changes in circumstances indicate that the carrying value is greater than its recoverable amount. In addition to impairment indicator assessments, indefinite life intangibles must be tested annually for impairment. The indefinite life of an intangible asset is reviewed annually to determine whether the indefinite life continues to be supportable. If no longer supportable, changes in useful life from indefinite to finite are made prospectively. 45 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Any loss resulting from the impairment of intangible assets is expensed in the period the impairment is identified. Any gain resulting from an impairment reversal of intangible assets is recognized in the period the impairment reversal is identified but cannot exceed the carrying amount that would have been determined (net of amortization and impairment) had no impairment loss been recognized for the intangible asset in prior periods. Business combinations and goodwill The purchase price of an acquisition accounted for under the acquisition method is allocated based on the fair values of the net identifiable assets acquired. The excess of the purchase price over the fair values of such identifiable net assets is recorded as goodwill. Goodwill, which is measured at cost less any accumulated impairment losses, is not amortized, but rather, is assessed for impairment indicators at each reporting date, or more frequently if changes in circumstances indicate that the carrying value may be impaired. In addition to quarterly impairment indicator assessments, goodwill must be tested annually for impairment. For the purpose of impairment testing, goodwill is allocated to each of the Company's cash generating units ("CGUs") that are expected to benefit from the acquisition. The recoverable amount of a CGU is compared to its carrying value plus any goodwill allocated to the CGU. If the recoverable amount of a CGU is less than its carrying value plus allocated goodwill, an impairment charge is recognized, first against the carrying value of the goodwill, with any remaining difference being applied against the carrying value of assets contained in the impacted CGUs. Impairment losses on goodwill are recorded in the consolidated statements of operations and comprehensive income and cannot be subsequently reversed. Income taxes Income tax is comprised of current and deferred tax. Income tax is recognized in the consolidated statements of operations and comprehensive income except to the extent that it relates to items recognized directly in other comprehensive income or elsewhere in equity, in which case, the related taxes are also recognized in other comprehensive income (loss) or elsewhere in equity. Deferred taxes are recognized using the liability method for temporary differences that exist between the carrying amounts of assets and liabilities in the consolidated balance sheets and the amounts attributed to such assets and liabilities for tax purposes. Deferred tax assets and liabilities are determined based on the enacted or substantively enacted tax rates that are expected to apply when the differences related to the assets or liabilities reported for tax purposes are expected to reverse in the future. Deferred tax assets are recognized only when it is probable that sufficient taxable profits will be available or taxable temporary differences reversing in future periods against which deductible temporary differences may be utilized. Deferred taxes liabilities are not recognized on the following temporary differences: • Temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; • Taxable temporary differences related to investments in subsidiaries, associates or joint ventures or joint operations to the extent they are controlled by the Company and they will not reverse in the foreseeable future; and • Taxable temporary differences arising on the initial recognition of goodwill. The Company records a provision for uncertain tax positions if it is probable that the Company will have to make a payment to tax authorities upon their examination of a tax position. This provision is measured at the Company's best estimate of the amount expected to be paid. Provisions are reversed to income in the period in which management assesses they are no longer required or determined by statute. 46 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 The measurement of tax assets and liabilities requires an assessment of the potential tax consequences of items that can only be resolved through agreement with the tax authorities. While the ultimate outcome of such tax audits and discussions cannot be determined with certainty, management estimates the level of provisions required for both current and deferred taxes. Share-based payments The Company uses the fair value method to account for equity settled share-based payments with employees and directors. Compensation expense is determined using the Black-Scholes option valuation model for stock options. Compensation expense for the share incentive program is determined based on the fair value of the benefit conferred on the employee. Compensation expense for deferred stock units ("DSU") is determined based on the value of the Company's common shares at the time of grant. Compensation expense for earn-out shares is determined using appropriate valuation models. Compensation expense related to the Company's Employee Profit Sharing Plan is determined based on the value of the Company's common shares purchased by the Trust as of the grant date. Compensation expense is recognized over the vesting period with a corresponding increase to contributed surplus other than for the Company's DSUs where the corresponding increase is to liabilities. Stock options and common shares held by the Trust vest in installments which may require a graded vesting methodology to account for these share-based awards. On the exercise of stock options for shares, the contributed surplus previously recorded with respect to the exercised options and the consideration paid is credited to capital stock. On the issuance of the earn-out shares, the contributed surplus previously recorded with respect to the issued earn-out shares is credited to capital stock. On the vesting of common shares in the Trust, the contributed surplus previously recorded is credited to capital stock. On the exercise of DSUs, the liability previously recorded is credited to cash. Earnings per share Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period, after applying the treasury stock method to determine the dilutive impact, if any, of stock options and unvested shares purchased for the Trust. The treasury stock method determines the number of incremental common shares by assuming that the number of dilutive securities the Company has granted to employees have been issued. Lease commitments The Company recognizes a right-of-use asset and a lease liability as at the lease commencement date. The right-of-use asset is initially measured at cost and subsequently at cost less any accumulated depreciation and impairment. The lease liability is initially measured at the present value of future lease payments over the anticipated lease term, discounted using the Company's incremental borrowing rate. The right-of-use asset is presented in the property and equipment line of the consolidated balance sheets and the short and long-term portions of the lease liability are presented in the accounts payable and accrued liabilities line and other accrued liabilities line, respectively, of the consolidated balance sheets. The Company used the practical expedient when applying IFRS 16, Leases for short-term leases under 12 months and low-value assets such as IT equipment, with lease payments being expensed as they are incurred. Reportable segments Effective in the first quarter of this year, the brokerage segment no longer met the definition of a reportable segment under IFRS 8, Operating Segments ("IFRS 8"). Consequently, this segment was retroactively included as part of "All other segments" and all comparative balances have been restated. Please refer to Note 14 for segment information. 47 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Contingent consideration The acquisition of the management contracts of the North Shore Global Uranium Mining ETF ("URNM acquisition") in 2022 necessitated the recognition of contingent consideration payable for the amount payable in the future under the terms of the purchase agreement. The consideration is subject to certain financial performance conditions based on the average AUM of the fund over the two-year period from closing of the transaction. The key judgements utilized in the estimation of the contingent consideration were fund flow assumptions. The contingent consideration liability is carried at fair value and included in other accrued liabilities. The contingent consideration estimate as at the acquisition date has been included in the cost of the indefinite life intangible (see Note 7). Foreign currency translation Accounts in the financial statements of the Company's subsidiaries are measured using their functional currency, being the currency of the primary economic environment in which the entity operates. The Company's performance is evaluated and its liquidity is managed in Canadian dollars. Therefore, the Canadian dollar is the functional currency of the Company. The Canadian dollar is also the functional currency of all its subsidiaries, with the exception of U.S. entities, which uses the U.S. dollar as their functional currency. Accordingly, the assets and liabilities of U.S. entities are translated into Canadian dollars using the rate in effect on the date of the consolidated balance sheets. Revenue and expenses are translated at the average rate over the reporting period. Foreign currency translation gains and losses arising from the Company's translation of its net investment in U.S. entities companies, including goodwill and the identified intangible assets, are included in accumulated other comprehensive income or loss as a separate component within shareholders' equity until there has been a realized reduction in the value of the underlying investment. The Company's presentation currency is the U.S. dollar, and as such, all assets and liabilities are translated using the exchange rate as at the reporting date, while equity transactions are translated at the historical exchange rate at the date of the transaction. The statement of operations has been translated at the average exchange rate of the reporting period. Exchange differences arising on translation are presented in the accumulated other comprehensive loss line in shareholders' equity on the balance sheet. Significant accounting judgments and estimates The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below. The Company based its assumptions and estimates on parameters available when these financial statements were prepared. Existing circumstances and assumptions about future developments may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions and estimates as they occur. Fair value of financial instruments When the fair value of financial assets and financial liabilities recorded in the consolidated balance sheets cannot be derived from active markets, they are determined using valuation techniques and models. Model inputs are taken from observable markets where possible, but where this is not feasible, unobservable inputs may be used. These unobservable inputs include, but are not limited to, projected cash flows, discount rates, comparable recent transactions, volatility of underlying securities in warrant valuations and extraction recovery rates of mining projects. The use of unobservable inputs can involve significant judgment and materially affect the reported fair value of financial instruments. 48 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Investments in other entities IFRS 10 Consolidated Financial Statements ("IFRS 10") and IAS 28 Investments in Associates and Joint Ventures ("IAS 28") provide for the use of judgment in determining whether an investee should be included within the consolidated financial statements of the Company and on what basis (subsidiary, joint venture or associate). Significant judgment is applied in evaluating facts and circumstances relevant to the Company and investee, including: (1) the extent of the Company's direct and indirect interests in the investee; (2) the level of compensation to be received from the investee for management and other services provided to it; (3) "kick out rights" available to other investors in the investee; and (4) other indicators of the extent of power that the Company has over the investee. Impairment of goodwill and intangible assets All indefinite life intangible assets and goodwill are assessed for impairment, however, finite life intangibles are only tested for impairment to the extent indications of impairment exist at time of a quarterly assessment. In the case of goodwill and indefinite life intangibles, an annual test for impairment augments the quarterly impairment indicator assessments. The recoverable amounts associated with goodwill and intangibles involve estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates and asset lives, and are determined using the value-in-use method. These estimates require significant judgment regarding market growth rates, discount rates, fund flow assumptions, expected margins and costs which could affect the Company's future results if estimates of future performance and fair value change. Contingent consideration The acquisition of the Sprott Uranium Miners ETF in 2022 necessitated the recognition of contingent consideration for the amounts payable in cash under the terms of the purchase agreement. The consideration is subject to certain financial performance conditions based on the average AUM of the fund over the two-year period from closing of the transaction. The key judgments utilized in the estimation of the contingent consideration were fund flow and market value assumptions. 49 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 3 Short-term investments Primarily consist of equity investments in public and private entities the Company receives as consideration during private strategies, managed equities and broker-dealer activities (in thousands $): Classification and measurement criteria Dec. 31, 2023 Dec. 31, 2022 Public equities and share purchase warrants Private holdings Total short-term investments FVTPL FVTPL 754 1,478 2,232 1,863 1,485 3,348 Gains and losses on financial assets and liabilities classified at FVTPL are included in the gain (loss) on investments line in the consolidated statements of operations and comprehensive income. 4 Co-investments Consists of the following (in thousands $): Co-investments in funds (1) Total co-investments (1) Includes investments in funds managed and previously managed by the Company Classification and measurement criteria Dec. 31, 2023 Dec. 31, 2022 FVTPL 93,528 93,528 73,573 73,573 Gains and losses on co-investments are included in the gain (loss) on investments line in the consolidated statements of operations and comprehensive income. 50 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 5 Other assets, income, expenses and non-controlling interest Other assets Consist of the following (in thousands $): Assets attributable to non-controlling interest Fund recoveries and investment receivables Advance on unrealized carried interest Prepaid expenses Other(1) Digital gold strategies(2) Total other assets (1) Includes miscellaneous third-party receivables. Dec. 31, 2023 Dec. 31, 2022 15,439 6,658 4,517 4,017 3,744 3,412 37,787 11,301 4,617 4,454 3,741 2,103 3,778 29,994 (2) Digital gold strategies are financial instruments classified at FVTPL. Gains and losses are included in the gain (loss) on investments line in the consolidated statements of operations and comprehensive income. Other income Consist of the following (in thousands $): Realization of a previously unrecorded contingent asset (1) Investment income (2) Income attributable to non-controlling interest Total other income For the years ended Dec. 31, 2023 Dec. 31, 2022 18,588 3,691 (934) 21,345 — 1,672 (522) 1,150 (1) In the second quarter, the Company received shares on the realization of an unrecorded contingent asset from a historical acquisition. The Company has no further obligation with respect to these shares. (2) Primarily includes miscellaneous investment fund income, syndication and trailer fee income. Other expenses Consist of the following (in thousands $): Costs related to the exit of non-core businesses (1) Other (2) Foreign exchange (gain) loss Total other expenses For the years ended Dec. 31, 2023 Dec. 31, 2022 5,142 3,894 3,212 12,248 — 5,537 4,654 10,191 (1) During the year, the Company exited its Canadian broker-dealer and its non-core asset management business that was domiciled in Korea. (2) Includes net income (loss) attributable to non-controlling interest of ($0.9) million for the year ended December 31, 2023 (year ended December 31, 2022 - ($0.5) million) as well as non-recurring professional fees and new fund start-up costs. 51 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Non-controlling interest assets and liabilities Non-controlling interest consists of third-party interest in the Company's co-investments. The following table provides a summary of amounts attributable to this non-controlling interest (in thousands $): Assets Liabilities - current(1) Liabilities - long-term(1) Dec. 31, 2023 Dec. 31, 2022 15,439 (133) (15,306) 11,301 (211) (11,090) (1) Current and long-term liabilities attributable to non-controlling interest are included in accounts payable and accrued liabilities and other accrued liabilities, respectively. 52 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 6 Property and equipment Consist of the following (in thousands $): Cost At Dec. 31, 2021 Additions Net exchange differences At Dec. 31, 2022 Additions Disposals Net exchange differences At Dec. 31, 2023 Accumulated depreciation At Dec. 31, 2021 Depreciation charge for the year Net exchange differences At Dec. 31, 2022 Depreciation charge for the year Disposals Net exchange differences At Dec. 31, 2023 Net book value at: Dec. 31, 2022 Dec. 31, 2023 Artwork Furniture and fixtures Computer hardware and software Leasehold improvements Right of use assets Total 7,573 — (484) 7,089 — — 170 7,259 — — — — — — — — 2,981 2 (160) 2,823 154 (591) 404 2,790 (2,579) (98) 164 (2,513) (141) 399 (251) (2,506) 3,036 126 (160) 3,002 224 (189) 59 3,096 (2,882) (93) 153 (2,822) (68) 181 (116) (2,825) 6,026 — (372) 5,654 1,157 (413) 123 6,521 (4,570) (522) 278 (4,814) (521) 201 (134) (5,268) 12,890 — (531) 12,359 1,574 (2,684) 86 11,335 (5,996) (2,642) 356 (8,282) (2,113) 994 (145) (9,546) 32,506 128 (1,707) 30,927 3,109 (3,877) 842 31,001 (16,027) (3,355) 951 (18,431) (2,843) 1,775 (646) (20,145) 7,089 7,259 310 284 180 271 840 1,253 4,077 1,789 12,496 10,856 53 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 7 Goodwill and intangible assets Consist of the following (in thousands $): Cost At Dec. 31, 2021 Additions Transfers Net exchange differences At Dec. 31, 2022 Net exchange differences At Dec. 31, 2023 Accumulated amortization At Dec. 31, 2021 Amortization charge for the year At Dec. 31, 2022 Amortization charge for the year At Dec. 31, 2023 Net book value at: At Dec. 31, 2022 At Dec. 31, 2023 Fund management contracts (indefinite life) Fund management contracts (finite life) Total Goodwill 132,251 — — — 132,251 — 132,251 (113,102) — (113,102) — (113,102) 160,973 20,410 9,088 (11,858) 178,613 4,289 182,902 — — — — — 36,587 — (9,088) — 27,499 — 27,499 (27,499) — (27,499) — (27,499) 329,811 20,410 — (11,858) 338,363 4,289 342,652 (140,601) — (140,601) — (140,601) 19,149 19,149 178,613 182,902 — — 197,762 202,051 54 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Goodwill The Company has identified 5 cash generating units ("CGU") as follows: • • • • • Exchange listed products Managed equities Private strategies Brokerage Corporate As at December 31, 2023, the Company had allocated $19.1 million (December 31, 2022 - $19.1 million) of goodwill between the exchange listed products CGU ($17.9 million) and the managed equities CGU ($1.2 million). Goodwill was allocated on a relative value approach basis. Indefinite life fund management contracts As at December 31, 2023, the Company had indefinite life intangibles related to fund management contracts of $182.9 million (December 31, 2022 - $178.6 million). These contracts are held within the exchange listed products and managed equities CGUs. Impairment assessment of goodwill and indefinite life fund management contracts In the normal course, goodwill and indefinite life fund management contracts are tested for impairment once per annum, which for the Company is during the fourth quarter of each year or earlier if there are indicators of impairment. As part of the Company’s annual impairment testing process, the recoverable amounts associated with goodwill and indefinite life fund management contracts are calculated based on a five year value-in-use model with a terminal multiple. The value-in-use model estimates future earnings based on: (1) external pricing estimates for commodities (gold, silver and uranium), (2) analyst price forecasts for the underlying equity indices; and (3) fund flow assumptions based on historical experience. These inputs are used to estimate future cash flows which are discounted at 9.25% and compared to the CGUs and the intangible assets carrying value. During the annual impairment testing process, there was no impairment in either the exchange listed products or the managed equities CGUs. 55 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 8 Shareholders' equity Capital stock and contributed surplus The authorized and issued share capital of the Company consists of an unlimited number of common shares, without par value. At Dec. 31, 2021 Shares acquired for equity incentive plan Shares issued on exercise of stock options Shares released on vesting of equity incentive plan Shares issued on vesting of RSUs Shares issued to purchase management contracts Shares acquired and canceled under normal course issuer bid Shares issued under dividend reinvestment program At Dec. 31, 2022 Shares acquired for equity incentive plan Shares released on vesting of equity incentive plan Shares acquired and canceled under normal course issuer bid Shares issued on vesting of RSUs Shares issued under dividend reinvestment program At Dec. 31, 2023 Number of shares Stated value (in thousands $) 24,991,620 (180,594) 115,102 324,568 80,345 72,464 (81,538) 3,927 25,325,894 (154,131) 331,672 (126,353) 31,680 1,389 25,410,151 417,425 (6,948) 1,807 12,867 2,210 4,000 (3,036) 150 428,475 (5,252) 14,247 (4,157) 1,402 49 434,764 Contributed surplus consists of stock option expense, earn-out shares expense, equity incentive plans' expense, and additional purchase consideration. At Dec. 31, 2021 Shares issued on exercise of stock options Shares released on vesting of equity incentive plan Stock-based compensation Released on vesting of RSUs At Dec. 31, 2022 Shares released on vesting of equity incentive plan Released on vesting of RSUs Stock-based compensation At Dec. 31, 2023 Stated value (in thousands $) 35,357 (680) (12,867) 17,041 (5,135) 33,716 (14,247) (4,599) 20,411 35,281 56 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Stock option plan The Company has an option plan (the "Plan") intended to provide incentives to directors, officers and employees of the Company and its wholly owned subsidiaries. The aggregate number of shares issuable upon the exercise of all options granted under the Plan and under all other stock-based compensation arrangements including the Trust and Equity Incentive Plan ("EIP") cannot exceed 10% of the issued and outstanding shares of the Company as at the date of grant. The options may be granted at a price that is not less than the market price of the Company's common shares at the time of grant. The options typically vest annually over a three-year period and may be exercised during a period not to exceed 10 years from the date of grant. There were no stock options issued during the year ended December 31, 2023 (year ended December 31, 2022 - Nil). There were no stock options exercised during the year ended December 31, 2023 (year ended December 31, 2022 - 150,000). For valuing share option grants, the fair value method of accounting is used. The fair value of option grants is determined using the Black-Scholes option-pricing model, which takes into account the exercise price of the option, the current share price, the risk-free interest rate, the expected volatility of the share price over the life of the option and other relevant factors. Compensation cost is recognized over the vesting period, assuming an estimated forfeiture rate, with an offset to contributed surplus. When exercised, amounts originally recorded against contributed surplus as well as any consideration paid by the option holder is credited to capital stock. As at December 31, 2023, there are 12,500 options outstanding (December 31, 2022 - 12,500) with a weighted average exercise price of CAD$27.30 and 2.4 years remaining on their contractual life. Equity incentive plan For employees in Canada, the Trust has been established and the Company will fund the Trust with cash, which will be used by the trustee to purchase: (1) on the open market, common shares of the Company that will be held in the Trust until the awards vest and are distributed to eligible members; and (2) from treasury, common shares of the Company that will be held in the Trust until the awards vest and are distributed to eligible employees. For employees in the U.S. under the EIP plan, the Company will allot common shares of the Company as either: (1) restricted stock; (2) unrestricted stock; or (3) restricted stock units ("RSUs"), the resulting common shares of which will be issued from treasury. There were 63,128 RSUs granted during the year ended December 31, 2023 (year ended December 31, 2022 - 372,000). Unvested common shares held by the Trust, Dec. 31, 2021 Acquired Released on vesting Unvested common shares held by the Trust, Dec. 31, 2022 Acquired Released on vesting Unvested common shares held by the Trust, Dec. 31, 2023 Number of common shares 774,405 180,594 (324,568) 630,431 154,131 (331,672) 452,890 Included in the compensation line of the consolidated statements of operations and comprehensive income is $20.4 million of stock-based compensation for the year ended December 31, 2023 (year ended December 31, 2022 - $17 million). 57 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Basic and diluted earnings per share The following table presents the calculation of basic and diluted earnings per common share: Numerator (in thousands $): Net income - basic and diluted Denominator (number of shares in thousands): Weighted average number of common shares Weighted average number of unvested shares purchased by the Trust Weighted average number of common shares - basic Weighted average number of dilutive stock options Weighted average number of unvested shares under EIP Weighted average number of common shares - diluted Net income per common share Basic Diluted Capital management The Company's objectives when managing capital are: For the years ended Dec. 31, 2023 Dec. 31, 2022 41,799 17,632 25,892 (662) 25,230 13 827 26,070 25,923 (857) 25,066 13 1,107 26,186 1.66 1.60 0.70 0.67 • • • • • to meet regulatory requirements and other contractual obligations; to safeguard the Company's ability to continue as a going concern so that it can continue to provide returns to shareholders; to provide financial flexibility to fund possible acquisitions; to provide adequate seed capital for the Company's new product offerings; and to provide an adequate return to shareholders through growth in assets under management, growth in management fees, carried interest and performance fees and return on the Company's invested capital that will result in dividend payments to shareholders. The Company's capital is comprised of equity, including capital stock, contributed surplus, retained earnings (deficit) and accumulated other comprehensive income (loss). SAM is a registrant of the Ontario Securities Commission ("OSC") and the U.S. Securities and Exchange Commission ("SEC") and SGRIL is a member of the Financial Industry Regulatory Authority ("FINRA"). As a result, all of these entities are required to maintain a minimum level of regulatory capital. To ensure compliance, management monitors regulatory and working capital on a regular basis. SAM US and RCIC are also registered with the SEC. As at December 31, 2023 and 2022, all entities were in compliance with their respective capital requirements. 58 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 9 Income taxes The major components of income tax expense are as follows (in thousands $): Current income tax expense Based on taxable income of the current period Adjustments in respect to previous years Total current income tax expense Deferred income tax expense (recovery) Origination and reversal of temporary differences Adjustments in respect to previous years Total deferred income tax expense (recovery) Income tax expense reported in the consolidated statements of operations For the years ended Dec. 31, 2023 Dec. 31, 2022 8,060 (570) 7,490 1,148 (146) 1,002 8,492 8,096 (649) 7,447 (187) 187 — 7,447 Taxes calculated on the Company's earnings differs from the theoretical amount that would arise using the weighted average tax rate applicable to earnings of the Company as follows (in thousands $): Income before income taxes Tax calculated at domestic tax rates applicable to profits in the respective countries Tax effects of: Non-deductible stock-based compensation Non-taxable capital (gains) and losses Adjustments in respect to previous years Temporary differences not currently utilized and (not benefited previously) Rate differences and other Tax charge For the years ended Dec. 31, 2023 Dec. 31, 2022 50,291 25,079 13,408 6,679 71 (3,377) (716) (981) 87 8,492 (21) 884 (462) 318 49 7,447 The weighted average statutory tax rate was 26.7% (December 31, 2022 - 26.6%). The Company has $1.8 million (December 31, 2022 - $1.1 million) of capital losses from prior years that will begin to expire in 2024. The benefit of these capital losses has not been recognized. 59 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are recognized for tax loss carry-forwards to the extent that the realization of the related tax benefit through future taxable profits is probable. The ability to realize the tax benefits of these losses is dependent upon a number of factors, including the future profitability of operations in the jurisdictions in which the tax losses arose. The movement in significant components of the Company's deferred income tax assets and liabilities is as follows (in thousands $): For the year ended December 31, 2023 Deferred income tax assets Stock-based compensation Non-capital and capital losses Other Total deferred income tax assets Deferred income tax liabilities Fund management contracts Unrealized gains (losses) Advance on unrealized carried interest Fixed assets and other Total deferred income tax liabilities Net deferred income tax assets (liabilities) (1) For the year ended December 31, 2022 Deferred income tax assets Stock-based compensation Non-capital and capital losses Other Total deferred income tax assets Deferred income tax liabilities Fund management contracts Unrealized gains (losses) Advance on unrealized carried interest Fixed assets and other Total deferred income tax liabilities Net deferred income tax assets (liabilities) (1) Dec. 31, 2022 Recognized in income Exchange rate differences Dec. 31, 2023 5,768 1,324 614 7,706 14,796 (2,249) 1,180 523 14,250 (6,544) 1,090 2,742 (27) 3,805 1,445 3,197 (12) 177 4,807 (1,002) 160 113 4 277 598 10 28 (151) 485 (208) 7,018 4,179 591 11,788 16,839 958 1,196 549 19,542 (7,754) Dec. 31, 2021 Recognized in income Exchange rate differences Dec. 31, 2022 4,177 1,061 1,007 6,245 13,732 (978) — 519 13,273 (7,028) 1,928 344 (635) 1,637 2,231 (1,337) 1,231 (488) 1,637 — (337) (81) 242 (176) (1,167) 66 (51) 492 (660) 484 5,768 1,324 614 7,706 14,796 (2,249) 1,180 523 14,250 (6,544) (1) Deferred tax assets of $3.1 million (December 31, 2022 - $1.7 million) and deferred tax liabilities of $10.8 million (December 31, 2022- $8.2 million) are presented on the balance sheet net by legal jurisdiction. 60 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 10 Fair value measurements The following tables present the Company's recurring fair value measurements within the fair value hierarchy. The Company did not have non-recurring fair value measurements as at December 31, 2023 and December 31, 2022 (in thousands $). Short-term investments Dec. 31, 2023 Level 1 Level 2 Level 3 Total Public equities and share purchase warrants Private holdings Total recurring fair value measurements 708 — 708 44 — 44 2 1,478 1,480 754 1,478 2,232 Dec. 31, 2022 Level 1 Level 2 Level 3 Total Public equities and share purchase warrants Private holdings Total recurring fair value measurements 1,012 — 1,012 804 — 804 47 1,485 1,532 1,863 1,485 3,348 Co-investments Dec. 31, 2023 Level 1 Level 2 Level 3 Total Co-investments (1) Total recurring fair value measurements 15,357 15,357 78,171 78,171 — — 93,528 93,528 Dec. 31, 2022 Level 1 Level 2 Level 3 Total Co-investments (1) Total recurring fair value measurements 10,279 10,279 63,294 63,294 — — 73,573 73,573 (1) Co-investments also include investments made in funds which the Company consolidates that directly hold publicly traded equities or precious metals. 61 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Other assets Dec. 31, 2023 Digital gold strategies Assets attributable to non-controlling interest Total recurring fair value measurements Level 1 Level 2 Level 3 Total — 1,706 1,706 — 13,733 13,733 3,412 — 3,412 3,412 15,439 18,851 Dec. 31, 2022 Level 1 Level 2 Level 3 Total Digital gold strategies Assets attributable to non-controlling interest Total recurring fair value measurements — 3,248 3,248 — 8,053 8,053 3,778 — 3,778 3,778 11,301 15,079 The following tables provides a summary of changes in the fair value of Level 3 financial assets (in thousands $): Short-term investments Changes in the fair value of Level 3 measurements - Dec. 31, 2023 Share purchase warrants Private holdings Total Dec. 31, 2022 47 1,485 1,532 Purchases and reclassifications 48 — 48 Sales (37) — (37) Net unrealized gains (losses) included in net income (56) (7) (63) Dec. 31, 2023 2 1,478 1,480 Changes in the fair value of Level 3 measurements - Dec. 31, 2022 Dec. 31, 2021 Purchases and reclassifications Share purchase warrants Private holdings Total 135 2,020 2,155 (44) — (44) Net unrealized gains (losses) included in net income (44) (535) (579) Dec. 31, 2022 47 1,485 1,532 Sales — — — 62 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Other assets Changes in the fair value of Level 3 measurements - Dec. 31, 2023 Dec. 31, 2022 Purchases and reclassifications Digital gold strategies Total 3,778 3,778 — — Net unrealized gains (losses) included in net income (366) (366) Dec. 31, 2023 3,412 3,412 Sales — — Changes in the fair value of Level 3 measurements - Dec. 31, 2022 Dec. 31, 2021 Purchases and reclassifications Digital gold strategies Total 7,060 7,060 — — Net unrealized gains (losses) included in net income (3,282) (3,282) Dec. 31, 2022 3,778 3,778 Sales — — During the year ended December 31, 2023, the Company transferred public equities of $0.1 million (December 31, 2022 - $0.8 million) from Level 2 to Level 1 within the fair value hierarchy. The following table presents the valuation techniques used by the Company in measuring fair values: Type Public equities, precious metals and share purchase warrants Alternative funds and private equity funds Fixed income securities Private holdings (including digital gold strategies) Valuation technique Fair values are determined using publicly available prices or pricing models which incorporate all available market-observable inputs. Fair values are based on the last available net asset value. Fair values are based on independent market data providers or third-party broker quotes. Fair values based on variety of valuation techniques, including discounted cash flows, comparable recent transactions and other techniques used by market participants. The Company’s Level 3 securities consist of private holdings and share purchase warrants. The significant unobservable inputs used in these valuation techniques can vary considerably over time, and include gray market financing prices, volatility and discount rates. A significant change in any of these inputs in isolation would result in a material impact in fair value measurement. The potential impact of a 5% change in the significant unobservable inputs on profit or loss would be approximately $0.2 million (December 31, 2022 - $0.3 million). Financial instruments not carried at fair value The carrying amounts of fees receivable, other assets, accounts payable and accrued liabilities and compensation payable represent a reasonable approximation of fair value. 63 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 11 Related party transactions The remuneration of directors and other key management personnel of the Company for employment services rendered are as follows (in thousands $): Fixed salaries and benefits Variable incentive-based compensation Share-based compensation For the years ended Dec. 31, 2023 Dec. 31, 2022 4,655 6,139 9,915 20,709 4,998 7,913 11,881 24,792 The DSU plan for independent directors of the Company vests annually over a three-year period and may only be settled in cash upon retirement. DSUs issued in lieu of directors' fees and dividends vest immediately. There were 15,782 DSUs issued during the year (December 31, 2022 - 16,820). In the second quarter of the year, the Company completed the sale of its Canadian broker-dealer to its former management team. The net assets of the Canadian broker-dealer at the time of the transaction were $6.3 million. In the third quarter, the Company completed the sale of its non-core asset management business in Korea to its management teams. The total charge taken on the exit of Korea was $3.6 million, the majority of which pertains to its historical book value. Details of the transactions can be found in Note 5. 12 Dividends The following dividends were declared by the Company during the year ended December 31, 2023: Record date November 13, 2023 - Regular dividend Q3 2023 August 21, 2023 - Regular dividend Q2 2023 May 15, 2023 - Regular dividend Q1 2023 March 6, 2023 - Regular dividend Q4 2022 Dividends declared in 2023 (1) Payment date November 28, 2023 September 5, 2023 May 30, 2023 March 21, 2023 Cash dividend per share Total dividend amount (in thousands $) $0.25 $0.25 $0.25 $0.25 6,458 6,467 6,482 6,489 25,896 (1) Subsequent to year end, on February 20, 2024, a regular dividend of $0.25 per common share was declared for the quarter ended December 31, 2023. This dividend is payable on March 19, 2024 to shareholders of record at the close of business on March 4, 2024. 64 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 13 Risk management activities The Company's exposure to market, credit, liquidity and concentration are described below: Market risk Market risk refers to the risk that a change in the level of one or more of market prices, interest rates, foreign exchange rates, indices, volatilities, correlations or other market factors, such as liquidity, will result in a change in the fair value of an asset. The Company's financial instruments are classified as FVTPL. Therefore, certain changes in fair value or permanent impairment, if any, affect reported earnings as they occur. The maximum risk resulting from financial instruments is determined by the fair value of the financial instruments. The Company manages market risk through regular monitoring of its investments and co-investments. The Company separates market risk into three categories: price risk, interest rate risk and foreign currency risk. Price risk Price risk arises from the possibility that changes in the price of the Company's investments and co-investments will result in changes in carrying value. If the market values of investments and co-investments classified as FVTPL increased or decreased by 5%, with all other variables held constant, this would have resulted in an increase or decrease in net income before tax of approximately $5 million for the year (December 31, 2022 - $4 million). For more details about the Company's investments and co-investments, refer to Note 3, Note 4 and Note 5. The Company's revenues are also exposed to price risk since management fees, carried interest and performance fees are all correlated with assets under management, which fluctuates with changes in the market values of the assets in the funds and managed accounts managed by SAM, SRLC, SRSR, SAM US and RCIC. Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will adversely affect the value of, or cash flows from, financial assets and liabilities. The Company’s earnings, particularly through its co-investment in private strategies LPs and outstanding balance on the Company's line of credit, are exposed to volatility as a result of sudden changes in interest rates. As at December 31, 2023, the Company had no fixed income securities (December 31, 2022 - $Nil). Foreign currency risk Foreign currency risk arises from foreign exchange rate movements that could negatively impact either the carrying value of financial assets and liabilities or the related cash flows when translating those balances into the Company's functional currency, Canadian dollars. The Company's primary foreign currency is the U.S. dollar. The Company may employ certain hedging strategies to mitigate foreign currency risk. The US entities assets are all denominated in U.S. dollars with their translation impact being reported as part of other comprehensive income in the financial statements. Excluding the impact of the US entities, as at December 31, 2023, approximately $73.2 million (December 31, 2022 - $55.2 million) of total Canadian assets were invested in proprietary investments priced in U.S. dollars. A total of $9.7 million (December 31, 2022 - $12.9 million) of cash, $6.8 million (December 31, 2022 -$4 million) of accounts receivable and $8.2 million (December 31, 2022 - $5.4 million) of other assets were denominated in USD. As at December 31, 2023, if the exchange rate between the U.S. dollar and the Canadian dollar increased or decreased by 5%, with all other variables held constant, the increase or decrease in net income would have been approximately $4.9 million for the year (December 31, 2022 - $3.9 million). 65 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Credit risk Credit risk is the risk that a borrower will not honor its commitments and a loss to the Company may result. Loans receivable The Company incurs credit risk indirectly through co-investments made in the private strategies LPs managed by SRLC and SRSR. During the loan origination process, management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately mitigated. These include: • emphasis on first priority and/or secured financings; • the investigation of the creditworthiness of borrowers; • the employment of qualified and experienced loan professionals; • a review of the sufficiency of the borrower’s business plans including plans that will enhance the value of the underlying security; • frequent and documented status updates provided on business plans; • engagement of qualified independent advisors (e.g. lawyers, engineers and geologists) to protect the Company's interests; and • legal reviews that are performed to ensure that all due diligence requirements are met prior to funding. The Company may syndicate loans in certain circumstances if it wishes to reduce its exposure to a borrower or comply with loan exposure maximums. The Company reviews its policies regarding its lending limits on an ongoing basis. Investments The Company incurs credit risk when entering into, settling and financing various proprietary transactions. As at December 31, 2023 and 2022, the Company's most significant proprietary investments counterparty was Royal Bank of Canada ("RBC") which acts as a custodian for most of the Company's proprietary investments. RBC is registered as an investment dealer subject to regulation by the Canadian Investment Regulatory Organization; and as a result, it is required to maintain minimum levels of regulatory capital at all times. Other The majority of accounts receivable relate to management, carried interest and performance fees receivable from the funds and managed accounts managed by the Company. Credit risk is managed in this regard by dealing with counterparties that the Company believes to be creditworthy and by actively monitoring credit exposure and the financial health of the counterparties. The US entities incur credit risk when entering into, settling and financing various proprietary transactions. As at December 31, 2023 and 2022, the US entities' most significant counterparty was RBC Capital Markets, LLC ("RBCCM"), the carrying broker of SGRIL and custodian of the net assets of the funds managed by RCIC and SAM US. RBCCM is registered as a broker-dealer and registered investment advisor subject to regulation by FINRA and the SEC; as a result, it is required to maintain minimal levels of regulatory capital at all times. 66 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 Liquidity risk Liquidity risk is the risk that the Company cannot meet a demand for cash or fund its obligations as they come due. The Company's exposure to liquidity risk is minimal as it maintains sufficient levels of liquid assets to meet its obligations as they come due. Additionally, the Company has access to a $75 million committed line of credit with a major Canadian Schedule I bank. As at December 31, 2023, the Company had $20.7 million or 5% (December 31, 2022 - $51.7 million or 13%) of its total assets in cash and cash equivalents. In addition, approximately $39.7 million or 40% (December 31, 2022 - $32 million or 40%) of proprietary investments held by the Company are readily marketable and are recorded at their fair value. The Company's exposure to liquidity risk as it relates to its' co-investments in private strategies LPs arises from fluctuations in cash flows from making capital calls and receiving capital distributions. The Company manages its co- investment liquidity risk through the ongoing monitoring of scheduled capital calls and distributions ("match funding") and through its broader treasury risk management program and enterprise capital budgeting. As at December 31, 2023, the Company had $5.9 million in co-investment commitments from the private strategies segment (December 31, 2022 - $6.1 million). Financial liabilities, including accounts payable and accrued liabilities and compensation and employee bonuses payable, are short-term in nature and are generally due within a year. The following are the remaining contractual maturities of financial liabilities as at December 31, 2023 (in thousands $): Contractual obligations Operating accounts payable Compensation payable Contingent consideration on URNM acquisition Lease obligation Loan facility Total contractual obligations Carrying Amount 11,749 7,822 4,470 2,096 24,237 50,374 Less than 1 year 11,749 7,822 4,470 765 — 24,806 1-3 years — — — 1,244 — 1,244 4-5 years — — — 87 24,237 24,324 More than 5 years — — — — — — The Company's management team is responsible for reviewing resources to ensure funds are readily available to meet its financial obligations as they come due, as well as ensuring adequate funds exist to support business strategies and operations growth. The Company manages liquidity risk by monitoring cash balances on a daily basis. To meet any liquidity shortfalls, actions taken by the Company could include: drawing on the line of credit; liquidating investments and co-investments and/or issuing common shares. Concentration risk The majority of the Company's AUM, as well as its investments and co-investments are focused on the natural resource sector, and in particular, precious metals and critical materials. 67 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 14 Segmented information For management purposes, the Company is organized into business units based on its products, services and geographical locations and has four reportable segments as follows: • Exchange listed products (reportable), which provides management services to the Company's closed-end physical trusts and exchange traded funds ("ETFs"), both of which are actively traded on public securities exchanges; • Managed equities (reportable), which provides management services to the Company's alternative investment strategies managed in-house and on a sub-advisory basis; • Private strategies (reportable), which provides lending and streaming activities through limited partnership vehicles; • Corporate (reportable), which provides capital, balance sheet management and enterprise shared services to the Company's subsidiaries; and • All other segments (non-reportable), which do not meet the definition of reportable segments per IFRS 8. Effective in the first quarter of this year, the brokerage segment no longer met the definition of a reportable segment. Consequently, this segment was retroactively included as part of "All other segments". Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on earnings before interest expense, income taxes, amortization and impairment of intangible assets and goodwill, gains and losses on investments (as if such gains and losses had not occurred), other (income) and expenses, amortization of stock-based compensation, carried interest and performance fees and carried interest and performance fee payouts (adjusted base EBITDA). Adjusted base EBITDA is not a measurement in accordance with IFRS and should not be considered as an alternative to net income or any other measure of performance under IFRS. Transfer pricing between operating segments is performed on an arm's length basis in a manner similar to transactions with third parties. The following tables present the operations of the Company's segments (in thousands $): For the year ended December 31, 2023 Total revenue Total expenses Income (loss) before income taxes Adjusted base EBITDA Exchange listed products 103,301 29,306 73,995 62,303 Managed equities Private strategies 30,180 26,222 3,958 7,756 28,183 15,604 12,579 12,361 Corporate (198) 33,776 (33,974) (11,047) Consolidation, elimination and all other segments 7,555 13,822 (6,267) 514 Consolidated 169,021 118,730 50,291 71,887 68 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 For the year ended December 31, 2022 Total revenue Total expenses Income (loss) before income taxes Adjusted base EBITDA Exchange listed products 76,819 27,221 49,598 56,948 Managed equities Private strategies 29,710 25,634 4,076 9,932 16,984 12,400 4,584 9,207 Corporate (3,288) 31,246 (34,534) (10,518) Consolidation, elimination and all other segments 24,957 23,602 1,355 5,433 Consolidated 145,182 120,103 25,079 71,002 For geographic reporting purposes, transactions are primarily recorded in the location that corresponds with the underlying subsidiary's country of domicile that generates the revenue. The following table presents the revenue of the Company by geographic location (in thousands $): Canada United States 15 Loan facility For the years ended Dec. 31, 2023 Dec. 31, 2022 154,941 14,080 169,021 130,397 14,785 145,182 As at December 31, 2023, the Company had $24.2 million (December 31, 2022 - $54.4 million) outstanding on its credit facility, all of which is due on August 8, 2028. The decrease in the year was due to the repayment of $30.2 million of the loan facility. As at December 31, 2023, the Company was in compliance with all covenants, terms and conditions under the credit facility. The Company has access to a credit facility of $75 million with a major Canadian schedule I chartered bank. Amounts under the facility may be borrowed through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. Key terms under the current credit facility are noted below: Structure • 5-year, $75 million revolver with "bullet maturity" August 8, 2028 Interest rate • • U.S. prime rate + 105 bps; or Canadian prime rate + 55 bps; Covenant terms • • • Minimum AUM: CAD$15.4 billion; Debt to EBITDA less than or equal to 2.5:1; and EBITDA to interest expense more than or equal to 2.5:1 69 SPROTT INC. Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 16 Commitments and provisions The Company has commitments to make co-investments in private strategies LPs or commitments to make co- investments in fund strategies in the Company's other segments. As at December 31, 2023, the Company had $4 million in co-investment commitments in private strategies LPs due within one year (December 31, 2022 - $5.7 million), and $1.9 million due after 12 months (December 31, 2022 - $0.4 million). During the year, the Company signed a new lease for its existing Toronto office location that is set to commence on January 1, 2024. . 70 Corporate Information Head Office Sprott Inc. Royal Bank Plaza, South Tower 200 Bay Street, Suite 2600 Toronto, Ontario M5J 2J1, Canada T: 416.943.8099 1.855.943.8099 Directors & Officers Ronald Dewhurst, Chairman Graham Birch, Director Barbara Connolly Keady, Director Catherine Raw, Director Judith W. O’Connell, Director Whitney George, Chief Executive Officer and Director Kevin Hibbert, FCPA, FCA, Chief Financial Officer Arthur Einav, Corporate Secretary US Transfer Agent and Registrar Continental Stock Transfer & Trust Company 1 State Street 30th Floor New York, NY 10004-1561 212.509.4000 continentalstock.com Canadian Transfer Agent and Registrar TMX Equity Transfer Services 200 University Avenue, Suite 300 Toronto, Ontario M5H 4H1 Toll Free: 1.866.393.4891 www.tmxequitytransferservices.com Legal Counsel Stikeman Elliot LLP 5300 Commerce Court West 199 Bay Street Toronto, Ontario M5L 1B9 Auditors KPMG LLP Bay Adelaide Centre 333 Bay Street, Suite 4600 Toronto, Ontario M5H 2S5 Investor Relations Shareholder requests may be directed to Investor Relations by e-mail at ir@sprott.com or via telephone at 416.943.8099 or toll free at 1.855.943.8099 Stock Information Sprott Inc. common shares are traded on the New York Stock Exchange and Toronto Stock Exchange under the symbol “SII” Annual General Meeting Wednesday, May 8, 2024 at 12pm 71 sprott.com 

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