40FR12B

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 40-F

x  REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

or

¨ ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended Commission File Number

Sprott Inc.

(Exact name of Registrant as specified in its charter)

Ontario	6199, 6282	Not Applicable
(Province or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Suite 2600, 200 Bay Street

Royal Bank Plaza, South Tower

Toronto, Ontario

Canada, M5J 2J1

(416) 945-3279

(Address and telephone number of Registrant’s principal executive offices)

CT Corporation System
28 Liberty Street
New York, New York 10005
(212) 894-8940
(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Shares without par value	SII	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
For annual reports, indicate by check mark the information filed with this Form:

¨ Annual information form ¨ Audited annual financial statements

Indicate the number of outstanding shares of each of the Registrant’s classes of capital or common stock as of the close of the period covered by this annual report:

N/A

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes  ¨            No  x

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes  ¨            No  ¨

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company.  x

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ¨

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ¨ 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Registration Statement on Form 40-F and the exhibits attached hereto (this “Registration Statement”) are forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are subject to risks, uncertainties and contingencies that could cause actual results to differ materially from those expressed or implied. Investors are cautioned not to put undue reliance on forward-looking statements. Applicable risks and uncertainties include, but are not limited to, those identified under the heading “Risk Factors” on page 20 of the Annual Information Form for the year ended December 31, 2019 (the “2019 AIF”) of Sprott Inc. (the “Registrant”), attached as Exhibit 99.21 to this Registration Statement and incorporated herein by reference, and under the headings “Managing Risk: Financial” and “Managing Risk: Non-Financial” on pages 24 and 25 of the Registrant’s Management’s Discussion & Analysis for the three months ended March 31, 2020 (the “Q1 2020 MD&A”), respectively, attached as Exhibit 99.29 to this Registration Statement and incorporated herein by reference, and in other filings that the Registrant has made and may make with applicable securities authorities in the future. Additionally, the safe harbor provided in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), applies to forward-looking information provided pursuant to “Off-Balance Sheet Arrangements” and “Tabular Disclosure of Contractual Obligations” in this Registration Statement. Please also see “Forward-Looking Statements” on page 2 of the 2019 AIF and page 2 of the Q1 2020 MD&A. Except as required by applicable law, the Registrant does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events, or otherwise.

DOCUMENTS FILED AS PART OF THIS REGISTRATION STATEMENT

The documents filed as Exhibits 99.1 through 99.44 contain all information material to an investment decision that the Registrant, since January 1, 2019: (i) made or was required to make public pursuant to the laws of any Canadian jurisdiction; (ii) filed or was required to file with the Toronto Stock Exchange (the “TSX”) and which was made public by the TSX; or (iii) distributed or was required to distribute to its security holders. The Registrant has filed the consent of KPMG LLP (“KPMG”) as Exhibit 99.45.

DESCRIPTION OF COMMON SHARES

The required disclosure containing a description of the securities to be registered is included under the headings “Capital Structure—Common Shares”, beginning on page 35 of the 2019 AIF, and “Dividends”, on page 34 of the 2019 AIF.

DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES

The Registrant is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this report in accordance with Canadian disclosure requirements, which are different from those of the United States. The Registrant prepares its consolidated financial statements, which are filed with this report on Form 40-F in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and the audit is subject to Canadian auditing and auditor independence standards.

CURRENCY

Unless otherwise indicated, all dollar amounts in this Registration Statement are in Canadian dollars. The exchange rate of Canadian dollars into United States dollars, on December 31, 2019, based upon the daily average closing rate as quoted by the Bank of Canada, was U.S.$1.00 = Cdn$1.3269. The exchange rate of Canadian dollars into United States dollars, on May 25, 2020, based upon the daily average closing rate as quoted by the Bank of Canada, was US$1.00 = Cdn$1.3984.

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TAX MATTERS

Purchasing, holding, or disposing of securities of the Registrant may have tax consequences under the laws of the United States and Canada that are not described in this Registration Statement.

OFF-BALANCE SHEET ARRANGEMENTS

The Registrant does not have any “off-balance sheet arrangements” (as that term is defined in paragraph 11(ii) of General Instruction B to Form 40-F) that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following is a summary of the Registrant’s contractual obligations as of December 31, 2019:

	Payments due by period (Cdn$ in thousands)
Contractual Obligations	Total	Less than 1 year	1-3 years	3-5 years	More than 5 years
Long-Term Debt Obligations	20,000	5,000	15,000	-	-
Capital (Finance) Lease Obligations	-	-	-
Operating Lease Obligations	7,679	2,133	5,546	-	-
Purchase Obligations	8,600	8,600	-	-	-
Other Long-Term Liabilities Reflected on the Registrant’s Balance Sheet	5,500		5,500	-	-
Total	41,779	15,733	26,046	-	-

COMPLIANCE WITH AUDITOR INDEPENDENCE REQUIREMENTS

Compliance with Rule 2-01(c)(1)(ii)(A) of Regulation S-X – the “Loan Rule”

The Loan Rule under Rule 2-01 of Regulation S-X provides that an accountant is not independent when the accounting firm, any covered person in the firm, or any of his or her immediate family members has any loan to or from an audit client, or an audit client's officers, directors, or record or beneficial owners of more than ten percent of the audit client’s equity securities or capital, except for certain types of permitted loans specified in the rule.

Through its independence evaluation procedures, KPMG identified a situation where a greater than ten percent record owner of an affiliated fund of the Registrant had a lending relationship with a KPMG member firm, resulting in a violation of the above noted rule. The record owner did not have the ability to exercise significant influence over the financing or operating policies of the Registrant.

Although the lending relationship described above resulted in a violation of the Loan Rule, KPMG concluded that the relationship could not and did not have any impact on their ability to remain objective and impartial with respect to their audit of the Registrant. In addition, they concluded that a reasonable investor, with knowledge of all relevant facts and circumstances, would reach the same conclusion. The Audit and Risk Management Committee of the Registrant agrees with this conclusion.

Amended Loan Rule (amendments appear in bold)

On June 18, 2019, the Commission adopted amendments to the Loan Rule under Rule 2-01 of Regulation S-X (the “Amended Loan Rule”). The Amended Loan Rule provides that an accountant is not independent when the accounting firm, any covered person in the firm, or any of his or her immediate family members has any loan to or from an audit client, or an audit client’s officers, directors, or beneficial owners (known through reasonable inquiry) of the audit client’s equity securities, where such beneficial owner has significant influence over the audit client, except for certain types of permitted loans specified in the rule. The Amended Loan Rule is effective as of October 3, 2019.

Based on KPMG’s analysis of the information provided by management of the Registrant under the Amended Loan Rule, no beneficial owners of the Registrant who have significant influence over the Registrant that have a lending relationship with KPMG or covered persons have been identified.

Based on discussions with management and a review of the governing documents of the Registrant, management and KPMG has concluded that the financial institution previously identified as an owner of more than ten percent of the equity securities of the affiliated fund is not a beneficial owner that can significantly influence the operating or financial policies of the Registrant.

As such, the above noted violation of the Loan Rule for the Registrant has been resolved and no longer exists as of this date.

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

A. Undertaking

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

B. Consent to Service of Process

A Form F-X signed by the Registrant and its agent for service of process is being filed with the Commission together with this Registration Statement.

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Annual Information Form for the year ended December 31, 2018
99.2	2018 Annual Report
99.3	Management’s Discussion & Analysis for the year ended December 31, 2018
99.4	Audited Consolidated Financial Statements for the year ended December 31, 2018
99.5	Form 13-502F1 Participation Fee Management Certification for the year ended December 31, 2018, dated February 28, 2019
99.6	Form 13-501F1 Participation Fee Management Certification for the year ended December 31, 2018, dated February 28, 2019
99.7	Chief Executive Officer Certification of Annual Filings, dated February 28, 2019
99.8	Chief Financial Officer Certification of Annual Filings, dated February 28, 2019
99.9	Management’s Discussion & Analysis for the three months ended March 31, 2019
99.10	Interim Condensed Consolidated Financial Statements for the three months ended March 31, 2019
99.11	Chief Executive Officer Certification of Interim Filings, dated May 10, 2019
99.12	Chief Financial Officer Certification of Interim Filings, dated May 10, 2019
99.13	Management’s Discussion & Analysis for the three and six months ended June 30, 2019
99.14	Interim Condensed Consolidated Financial Statements for the three and six months ended June 30, 2019
99.15	Chief Executive Officer Certification of Interim Filings, dated August 9, 2019
99.16	Chief Financial Officer Certification of Interim Filings, dated August 9, 2019
99.17	Management’s Discussion & Analysis for the three and nine months ended September 30, 2019
99.18	Interim Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2019
99.19	Chief Executive Officer Certification of Interim Filings, dated November 8, 2019
99.20	Chief Financial Officer Certification of Interim Filings, dated November 8, 2019
99.21	Annual Information Form for the year ended December 31, 2019
99.22	2019 Annual Report
99.23	Management’s Discussion & Analysis for the year ended December 31, 2019
99.24	Audited Consolidated Financial Statements for the year ended December 31, 2019
99.25	Form 13-502F1 Participation Fee Management Certification for the year ended December 31, 2019, dated February 28, 2020

Exhibit Number	Description
99.26	Form 13-501F1 Participation Fee Management Certification for the year ended December 31, 2019, dated February 28, 2020
99.27	Chief Executive Officer Certification of Annual Filings, dated February 28, 2020
99.28	Chief Financial Officer Certification of Annual Filings, dated February 28, 2020
99.29	Management’s Discussion & Analysis for the three months ended March 31, 2020
99.30	Interim Condensed Consolidated Financial Statements for the three months ended March 31, 2020
99.31	Chief Executive Officer Certification of Interim Filings, dated May 8, 2020
99.32	Chief Financial Officer Certification of Interim Filings, dated May 8, 2020
99.33	Notice of Annual and Special Meeting of Shareholders, dated March 20, 2019
99.34	Management Information Circular, dated March 20, 2019
99.35	Form of Proxy for the Annual and Special Meeting to be held on May 10, 2019
99.36	Report of Voting Results, dated May 10, 2019
99.37	Notice of Annual and Special Meeting of Shareholders, dated March 18, 2020
99.38	Management Information Circular, dated March 18, 2020
99.39	Form of Proxy for the Annual and Special Meeting to be held on May 8, 2020
99.40	Report of Voting Results, dated May 8, 2020
99.41	Asset Purchase Agreement by and among Tocqueville Asset Management LP, Sprott Asset Management LP and Sprott Inc., dated August 6, 2019
99.42	Material Change Report, dated August 16, 2019
99.43	Material Change Report, dated January 23, 2020
99.44	Articles of Amendment
99.45	Consent of KPMG LLP

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized.

Date: May 26, 2020	SPROTT INC.
	By:	/s/	Kevin Hibbert
	Name:		Kevin Hibbert
	Title:		Senior Managing Director and Chief Financial Officer

EX-99.1

Exhibit 99.1

TABLE OF CONTENTS

DEFINED TERMS	1
FORWARD LOOKING STATEMENTS	2
KEY PERFORMANCE INDICATORS (NON-IFRS FINANCIAL MEASURES)	4
CORPORATE STRUCTURE	5
GENERAL DEVELOPMENT OF THE BUSINESS	6
DESCRIPTION OF THE BUSINESS	9
COMPETITION AND INDUSTRY OUTLOOK	16
ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY	18
RISK MANAGEMENT	19
RISK FACTORS	22
DIVIDENDS	37
CAPITAL STRUCTURE	38
MARKET FOR SECURITIES	39
ESCROWED SECURITIES	41
DIRECTORS AND EXECUTIVE OFFICERS	42
LEGAL PROCEEDINGS AND REGULATORY ACTIONS	44
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	45
TRANSFER AGENT AND REGISTRAR	46
MATERIAL CONTRACTS	47
AUDIT AND RISK MANAGEMENT COMMITTEE INFORMATION	48
INTERESTS OF EXPERTS	50
ADDITIONAL INFORMATION	51
APPENDIX A - AUDIT AND RISK MANAGEMENT COMMITTEE MANDATE	A-1

DEFINED TERMS

As used in this annual information form (“AIF”), unless the context indicates or requires otherwise, the following terms have the following meanings:

• “Corporation” means Sprott Inc. and, where applicable, its subsidiaries and joint ventures.

• “Investment Products” means the Corporation’s investment funds (the “Funds”), discretionary managed accounts (the “Managed Accounts”), fixed term limited partnerships (the “Limited Partnerships”) and managed companies.

• “SAM” means Sprott Asset Management LP, a wholly-owned subsidiary of the Corporation, registered as a portfolio manager, an investment fund manager and an exempt market dealer.

• "SCP" means Sprott Capital Partners LP (formerly "Sprott Private Wealth LP"), a wholly-owned subsidiary of the Corporation, registered as an investment dealer and a member of the Investment Industry Regulatory Organization of Canada (“IIROC”).

• “Sprott U.S.” means Sprott U.S. Holdings Inc. (and its subsidiaries), a wholly-owned subsidiary of the Corporation through which the Corporation holds Rule Investment, Inc. (“RII”), Resource Capital Investment Corp. (“RCIC”), Sprott Global Resource Investments, Ltd. (“SGRIL”) and Sprott Asset Management USA Inc. (formerly, Terra Resource Investment Management) (“SAM USA” and together with RII, RCIC and SGRIL, “Global”).

• “SRLC” or “Sprott Resource Lending” means Sprott Resource Lending Corp. (and its subsidiaries), a wholly-owned subsidiary of the Corporation which provides debt financing to companies in the resource sector and is the general partner of Sprott Private Resource Lending Fund (the "Lending Fund I"), Sprott Private Resource Lending Fund II (the "Lending Fund II") and certain other lending vehicles (together with Lending Fund I and Lending Fund II, the "Lending Funds").

In this AIF, unless otherwise indicated, all dollar amounts are expressed in Canadian dollars. References to “$” are to Canadian dollars and references to “U.S.$” and "USD$" are to United States dollars. All United States dollar amounts that are expressed in Canadian dollars in this AIF have been converted from U.S. dollars at the Bank of Canada average exchange rate for the year ended December 31, 2018 of $1.2957 per U.S.$1.00. The information in this AIF is presented as at December 31, 2018 unless otherwise indicated.

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FORWARD LOOKING STATEMENTS

This AIF contains certain forward-looking information and statements (collectively referred to herein as “Forward-Looking Statements”) within the meaning of applicable securities laws. Wherever possible, words such as “may”, “would”, “could”, “will”, “anticipate”, “believe”, “plan”, “expect”, “intend”, “estimate”, “aim”, “endeavour” and similar expressions have been used to identify these Forward-Looking Statements. The Forward-Looking Statements herein are based upon the current internal expectations, estimates, projections, assumptions and beliefs of the Corporation as of the date of such information or statements, including, among other things, assumptions with respect to future growth, results of operations, performance and business prospects and opportunities. The reader is cautioned that the expectations, estimates, projections, assumptions and/or beliefs used in the preparation of such information may prove to be incorrect. The Forward-Looking Statements included in this AIF are not guarantees of future performance and should not be unduly relied upon. Such information and statements, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors, which may cause actual results or events to differ materially from those anticipated in the Forward-Looking Statements. In addition, this AIF may contain Forward-Looking Statements attributed to third-party industry sources.

The Forward-Looking Statements contained in this AIF are expressly qualified by the cautionary statements provided for herein. The Corporation does not assume any obligation to publicly update or revise any of the included Forward-Looking Statements after the date of this AIF, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

Forward-Looking Statements contained in this AIF include, but are not limited to, statements with respect to:

• Diversification of the Merchant Bank Division's (as defined below) sector coverage.

• Ongoing growth of the Corporation's merchant banking and advisory business.

• SAM's continued consideration of strategic acquisitions which will allow it to build scale, improve profitability or enter new markets and investment categories.

• Intentions to grow the Corporation's business, including by increasing AUM, and creating new investment products and businesses.

• Expectations regarding continued consolidation of the asset management business, with bifurcation between large general managers and specialized boutique managers.

• Expectations regarding continued price compression in the asset management industry, particularly in the exchange traded funds segment as players compete for market share.

• Expected benefits from economic and demographic trends over the next decade.

• Expectations regarding recovery of legal costs.

• Potential acquisitions and the addition of new investment products.

• Commitment to being at the forefront of technological innovation in the sector.

• The launch of a new venture called OneGold.

• Future purchases by the Corporation of Common Shares pursuant to the 2018 - 2019 NCIB (as defined below).

Although the Corporation believes the expectations, estimates, projections, assumptions and beliefs reflected in the Forward-Looking Statements are reasonable, undue reliance should not be placed on Forward-Looking Statements because the Corporation can give no assurance that such expectations, estimates, projections, assumptions and beliefs will prove to be correct. The Corporation cannot guarantee future results, levels of activity, performance or achievements. Consequently, there is no representation by the Corporation that actual results achieved will be the same in whole or in part as those set out in the Forward-Looking Statements. Some of the risks and other factors, some of which are beyond the control of the Corporation, that could cause results to differ materially from those expressed in the Forward-Looking Statements contained in this AIF, include, but are not limited to:

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• Difficult market conditions.

• Poor investment performance.

• Failure to continue to retain and attract qualified staff.

• Employee errors or misconduct resulting in regulatory sanctions or reputational harm.

• Performance fee fluctuations.

• A business segment or another counterparty failing to pay its financial obligation.

• Failure of the Corporation to meet its demand for cash or fund obligations as they come due.

• Changes in the investment management industry.

• Failure to implement effective information security policies, procedures and capabilities.

• Lack of investment opportunities.

• Risks relating to regulatory compliance.

• Failure to deal appropriately with conflicts of interest.

• Competitive pressures.

• Corporate growth which may be difficult to sustain and may place significant demands on existing administrative, operational and financial resources.

• Failure to comply with privacy laws.

• Failure to execute the Corporation’s succession plan.

• Foreign exchange risk relating to the relative value of the U.S. dollar.

• Litigation risk.

• Risks related to maintaining minimum regulatory capital requirements.

• Failure to develop effective business resiliency plans.

• Failure to obtain or maintain sufficient insurance coverage on favourable economic terms.

• Historical financial information being not necessarily indicative of future performance.

• Risks related to the Corporation's investment products.

• Risks related to the Corporation's proprietary investments.

• Risks relating to the Corporation's lending business.

• Risks relating to the Corporation's merchant bank and advisory business.

• Risks related to the Corporation’s organization, corporate structure and its common shares (the “Common Shares”).

• The other risk factors disclosed in this AIF.

The foregoing list of factors should not be considered exhaustive. See also “Risk Factors”. Should one or more of the risks or uncertainties listed above or in “Risk Factors” in this AIF materialize, or should the expectations, estimates, projections, assumptions and/or beliefs underlying the Forward-Looking Statements prove incorrect, future results, levels of activity, performance or achievements could vary materially from those expressed or implied by Forward-Looking Statements contained in this AIF. With respect to Forward-Looking Statements contained in this AIF, the Corporation has made the following assumptions, among others: (i) the impact of increasing competition in each business in which the Corporation operates will not be material; (ii) quality management will be available; and (iii) the effects of regulation and tax laws of governmental agencies will be consistent with the current environment.

The above summary of assumptions and risks related to Forward-Looking Statements has been provided in this AIF in order to provide readers with a more complete perspective on the future operations of the Corporation. Readers are cautioned that such Forward-Looking Statements may not be appropriate for other purposes.

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KEY PERFORMANCE INDICATORS (NON-IFRS FINANCIAL MEASURES)

The Corporation measures the success of its business using a number of key performance indicators that are not measurements in accordance with International Financial Reporting Standards (“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.

The Corporation’s key performance indicators disclosed in this AIF include:

Assets Under Management

Assets Under Management ("AUM") refers to the total net assets managed by the Corporation through its various Investment Products, managed accounts and managed companies.

Net Sales & Capital calls

Sales and capital calls, net of redemptions and distributions, are key performance indicators as the amount of new net assets being added to the total AUM of the Corporation will lead to higher management fees and can potentially lead to increased carried interest and performance fee generation given that AUM is also the basis upon which carried interest and performance fees are calculated.

Net Fees

Management fees, carried interest and performance fees, net of trailer fees, sub-advisor fees, carried interest and performance fee payouts, is a key revenue indicator as it represents the net revenue contribution after directly associated costs that we generate from our AUM.

Net Commissions

Commissions, net of commission expenses, arise from the transaction based service offerings of our Canadian and U.S broker-dealers.

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CORPORATE STRUCTURE

Sprott Inc. was incorporated under the Business Corporations Act (Ontario) (the "Act") by Articles of Incorporation dated February 13, 2008. The Corporation’s registered and head office is located at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, M5J 2J1.

On March 1, 2018, the Corporation announced the adoption by its board of directors (the “Board”) of amendments to its By-Law No. 1 (the “Amendments”) to include advance notice provisions (the “Advance Notice Provisions”) requiring that advance notice be provided to the Corporation in circumstances where nominations of persons for election to the Board are made by shareholders other than pursuant to: (i) a requisition to call a shareholders meeting; or (ii) a shareholder proposal, in each case as made in accordance with the provisions of the Act. Among other things, the Advance Notice Provisions fix a deadline by which shareholders must notify the Corporation of nominations of persons for election to the Board and set forth the information that a shareholder must include in the notice for it to be valid. The Amendments are effective as of March 1, 2018 and were confirmed by shareholders at the annual and special meeting of shareholders of the Corporation held on May 11, 2018.

The corporate structure of the Corporation and its material subsidiaries are as indicated in the following chart:

Notes:

(1) Sprott Resource Lending is the general partner of the Lending Funds and exists under the federal laws of Canada.

(2) Sprott Asset Management GP Inc. is the general partner of SAM, which exists under the laws of the Province of Ontario.

(3) Sprott GenPar Ltd. exists under the laws of the Province of Ontario.

(4) Sprott Capital Partners GP Inc. is the general partner of SCP, which exists under the laws of the Province of Ontario.

(5) Sprott U.S. was formed to acquire RII (which in turn owns SGRIL), SAM USA and RCIC. Sprott U.S. exists under the laws of the State of Delaware. RII, SGRIL and SAM USA exist under the laws of the State of California. RCIC exists under the laws of the State of Nevada.

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GENERAL DEVELOPMENT OF THE BUSINESS

On January 20, 2015, as part of its transition and succession strategy, Eric Sprott stepped down as senior portfolio manager at SAM and Chief Investment Officer of the Corporation. On May 10, 2017, Mr. Sprott stepped down as Chairman of the Board and did not stand for re-election as a director. Mr. Sprott currently holds the title of Chairman Emeritus. On May 10, 2017, Jack C. Lee was appointed as Chairman of the Board.

On May 27, 2015, SAM together with Sprott Physical Gold Trust ("PHYS") and Sprott Physical Silver Trust (the "PSLV") initiated exchange offers for Central GoldTrust and Silver Bullion Trust. On January 16, 2016, the exchange offer for the Silver Bullion Trust expired, and on January 15, 2016, the Corporation successfully completed its exchange offer to acquire all of the outstanding units of Central GoldTrust on a net asset value to net asset value exchange basis. At the time of closing, the transaction added more than $1.1 billion to the Corporation's total AUM and provided access to 20,000 new clients based largely in the U.S. In April 2016, PSLV, a trust managed by SAM, completed a follow-on offering of 14.1 million units for gross proceeds of $108 million. On May 6, 2016, PHYS and SAM entered into a sales agreement with Cantor Fitzgerald & Co. whereby PHYS can offer and sell trust units through an “at-the-market” offering program (the “ATM Program”) which is still in effect. On June 24, 2016, PSLV, the Sprott Physical Platinum and Palladium Trust (the "SPPP") and SAM entered into similar arrangements with Cantor Fitzgerald & Co. The ATM Program has raised additional assets in PHYS, PSLV and SPPP.

In 2016, the Corporation established a resource-focused merchant bank business and brokerage as a new division of SCP.

On June 8, 2016, Alex Adamson resigned as a director of the Corporation.

Effective January 9, 2017, Ronald Dewhurst was appointed to the Board.

On April 10, 2017, as a result of a strategic repositioning, SAM and SCP entered into an asset purchase agreement (the "Purchase Agreement") to sell the Corporation's Canadian diversified asset management contracts and certain of the client accounts of its Canadian private wealth business to a management group (the "Buyer") led by John Wilson, the then Chief Executive Officer (the "CEO") of SAM, and James Fox, the then President of SAM, for an aggregate purchase price of approximately $46 million (the "Sale Transaction"). The Corporation entered into the Purchase Agreement in order to realign resources to focus on its core competencies in precious metals, natural resources and real assets and therefore capitalize on global market opportunities in those areas. The Sale Transaction occurred in two phases. On August 1, 2017, the Corporation completed the first phase of the Sale Transaction, successfully closing the sale of its management agreements related to certain investment funds and accounts together totaling $3.0 billion in AUM and concurrently entering into new agreements with the Buyer to provide sub-advisory services for $865 million of those assets. The Corporation retained all management contracts for its exchange-listed products business and the entire team managing PHYS, PSLV, SPPP and the exchange traded funds ("ETFs") remained intact. In addition, the Corporation retained the management contracts for its institutional precious metals strategies and the SAM precious metals investment team remained with the Corporation. On January 29, 2018, the Corporation completed the second phase of the Sale Transaction, closing the sale of certain of the client accounts of its Canadian private wealth business to the Buyer. The Corporation retained certain accounts of clients interested in resource-focused investment opportunities.

On June 16, 2017, the Corporation completed the final closing of Lending Fund I, bringing total firm capital commitments for the Lending Fund I and certain other lending vehicles to over USD$640 million, USD$385 million of which was deployed as of December 31, 2018.

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On June 29, 2017, the Corporation completed a secondary offering (the "Secondary Offering") of Common Shares held by 2176423 Ontario Ltd. (the "Selling Shareholder"), a company controlled and beneficially owned by Eric Sprott. Peter Grosskopf, the CEO and a director of the Corporation, is an officer and non-voting shareholder of the Selling Shareholder. An aggregate of 21,500,000 Common Shares were sold pursuant to an underwriting agreement dated June 21, 2017 between the Corporation, the Selling Shareholder, and a syndicate of underwriters led by TD Securities Inc. and including RBC Dominion Securities Inc., BMO Nesbitt Burns Inc., Canaccord Genuity Corp., CIBC World Markets Inc., GMP Securities L.P., Scotia Capital Inc., SCP and Desjardins Securities Inc. at a price of $2.20 per Common Share (the “Issue Price”) for gross proceeds of $47,300,000, including the full exercise of the underwriters’ over-allotment option to purchase additional Common Shares. In addition to the Secondary Offering, the Selling Shareholder sold, on a non-brokered private placement basis, 7,500,000 Common Shares at the Issue Price to the Sprott Inc. 2011 Employee Profit Sharing Plan Trust (the “Private Placement”). $5,500,000 of the proceeds owed to Mr. Eric Sprott is outstanding as at December 31, 2018. The Corporation also purchased 5,000,000 Common Shares at the Issue Price from the Selling Shareholder for cancellation (the “Exempt Issuer Bid”). Prior to the Secondary Offering, Mr. Sprott held, directly and indirectly through the Selling Shareholder, 61,598,078 Common Shares, representing approximately 24.76% of the then outstanding Common Shares. Immediately after giving effect to the Secondary Offering, the Private Placement and the Exempt Issuer Bid, Mr. Sprott held, directly and indirectly through the Selling Shareholder, 27,598,078 Common Shares, representing approximately 11.32% of the then outstanding Common Shares.

On October 1, 2017, the Corporation entered into an arrangement agreement (the "Arrangement Agreement") with Central Fund of Canada Limited ("CFCL"), Central Group Alberta Ltd. (“CGAL”), CGAL’s shareholders (Philip M. Spicer and J.C. Stefan Spicer) and 2070140 Alberta Ltd. (the “Administrator”), to acquire the common shares of CFCL, the right to administer and manage CFCL's assets, and move CFCL's class A shareholders to the Sprott Physical Gold and Silver Trust (the "CEF Trust"), a new Sprott-managed trust (the "CFCL Transaction"). On January 16, 2018, the Corporation completed the CFCL Transaction, which, at the time of closing, doubled the size of the Corporation's exchange-listed products franchise and increased the Corporation's AUM to more than $11.5 billion. Pursuant to the CFCL Transaction, all or substantially all of the assets and liabilities of CFCL, other than the amended and restated administrative and consulting agreement between CFCL and CGAL dated November 1, 2005 (the "Administration Agreement"), which agreement was terminated after the arrangement became effective, were transferred to the CEF Trust and CFCL’s class A shareholders received units of the CEF Trust (the "CEF Trust Units") in exchange for their CFCL class A shares on the basis of one CEF Trust Unit for each CFCL class A share. Separately, the Corporation acquired all of the common shares of CFCL for $500 in cash per share and CFCL was subsequently liquidated and dissolved. The Corporation also acquired from CGAL all of the shares of the Administrator, a newly formed entity holding all rights and obligations under the Administration Agreement, for an aggregate purchase price consisting of $105 million in cash and 6,997,387 Common Shares, plus a cash earnout payment in accordance with the terms of the earnout agreement dated October 1, 2017 between the Corporation and CGAL (the “Earnout Agreement”). Pursuant to the Earnout Agreement, the Corporation agreed to pay CGAL an amount equal to the greater of (1) $5 million and (2) an amount based on a formula related to the legacy assets of CFCL held by the CEF Trust on the first anniversary of the CFCL Transaction. On January 16, 2018, the CEF Trust began trading on the NYSE Arca under the symbol "CEF" and on the Toronto Stock Exchange (the "TSX") under the symbols "CEF.U" and CEF. The ongoing operation of the CEF Trust is managed by SAM.

On October 17, 2017, Markus Faber resigned as a director of the Corporation.

On November 9, 2017, the Corporation announced that the TSX approved the notice of its intention to make a normal course issuer bid (the “2017 - 2018 NCIB”). The Corporation did not purchase any Common Shares under the 2017 - 2018 NCIB.

Effective March 1, 2018, the Corporation adopted amendments to its By-Law No. 1 to include the Advance Notice Provisions, which were confirmed by shareholders at the annual and special meeting of shareholders of the Corporation held on May 11, 2018.

On March 6, 2018, James Roddy resigned as a director of the Corporation.

On November 12, 2018, the Corporation announced that it is committed to being at the forefront of technological innovation in the sector and has made two investments in fintech companies using blockchain technology to digitize gold. On the same date, the Corporation also announced that it has partnered with APMEX, Inc., North America's largest online coin dealer, to launch a new venture called OneGold, the first dedicated online platform for investing in digital bullion.

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On November 12, 2018, the Corporation announced that the TSX approved the notice of its intention to make a normal course issuer bid (“2018 - 2019 NCIB”). Pursuant to the terms of the 2018 - 2019 NCIB, the Corporation may purchase its own Common Shares for cancellation through the facilities of the TSX at the prevailing market price of the Common Shares. It is expected that the maximum number of Common Shares which may be purchased by the Corporation during the 2018 - 2019 NCIB will not exceed 12,633,752, being approximately 5% of 252,675,049 (representing the number of issued and outstanding Common Shares as of October 31, 2018). The average daily trading volume of the Common Shares on the TSX for the six-month period ended October 31, 2018 was 403,474. Under the rules of the TSX, the Corporation is entitled to repurchase during the same trading day on the TSX up to 25% of the average daily trading volume of the Common Shares, being 100,868 Common Shares, except where such purchases are made in accordance with the “block purchase” exemption under applicable TSX policy. The Corporation will effect purchases at varying times commencing on November 15, 2018 and ending on November 14, 2019. To facilitate repurchases under the NCIB, the Corporation entered into an automatic repurchase plan with TD Securities Inc. The automatic repurchase plan allows for purchases by the Corporation of the Common Shares when the Corporation would ordinarily be prevented from making purchases due to regulatory restriction or self-imposed blackout periods. Purchases will be made by TD Securities Inc. based upon the parameters prescribed by the TSX and the terms of the parties’ written agreement. As of December 31, 2018, the Corporation had not purchased any Common Shares under the 2018-2019 NCIB.

As of December 31, 2018, the Corporation closed on total capital commitments to Lending Fund II of USD$282 million. In January 2019, the Corporation closed additional capital commitments to Lending Fund II of USD$150 million. None of the capital commitments have been deployed as of the date hereof.

On January 4, 2019, Sprott Private Wealth LP received approval from IIROC to formally change its name to SCP.

On January 29, 2019, Whitney George was appointed President of the Corporation. In addition to this new role, Mr. George continues to serve as Chairman of Sprott. U.S. and Chief Investment Officer ("CIO") of SAM.

On February 1, 2019, Neil Adshead joined Sprott U.S. as Portfolio Manager to work alongside Rick Rule to manage the resource Exploration Partnerships offered by RCIC.

On February 6, 2019, the Corporation and Tocqueville Asset Management (“Tocqueville”) announced that the Corporation, via Sprott U.S., and Tocqueville entered into a joint-venture agreement to co-manage a new gold equities investment strategy. The objective of the strategy is to invest in low risk/high reward opportunities through a concentrated portfolio of public gold mining companies where the co-managers can help bridge the gap in access to financing, value realization and market perception.

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DESCRIPTION OF THE BUSINESS

The Corporation's operating segments are as follows:

^{* These operating segments collectively form our "Private Resource Investments" Platform}

Exchange Listed Products

• This operating segment houses the Corporation's closed-end physical trusts and ETFs.

Alternative Asset Management

• This operating segment houses the Corporation's alternative investment strategies and sub-advised products.

Global

• This operating segment houses the Corporation's U.S operations, including: (1) fixed-term limited partnership vehicles through RCIC; (2) Managed Accounts through SAM USA; and (3) U.S.-based broker-dealer through SGRIL.

Lending

• The Corporation's lending activities occur through limited partnership vehicles. Balance sheet lending continues to wind down as the Corporation grows the AUM in its suite of limited partnership vehicles constituting the Lending Funds.

Merchant Banking & Advisory Services

• This operating segment houses the Corporation's Canadian merchant banking and advisory services activities through SCP.

Corporate

• This business platform provides the Corporation's various operating segments with capital, balance sheet management and other shared services.

As at December 31, 2018, the Corporation had 124 employees.

The Corporation has developed a core team of professionals who provide services to some or all of the operating entities within the Sprott group of companies. These “shared services” include corporate finance, investment operations, treasury, information technology, marketing and administrative services.

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The Corporation's Brand

The Sprott brand is recognized internationally for expertise in resource investing, particularly in the precious metals area. The importance of this brand recognition resides primarily in the role it plays in attracting new investors and employees to the Corporation. Protection of this brand by delivering investment performance and industry-leading thought leadership is important to the continued success of the Corporation's business.

Summary of AUM

Breakdown of AUM by investment product type:
	December 31, 2018					December 31, 2017
Product Type	$ (in millions)		% AUM			$ (in millions)		% AUM
Exchange Listed Products
Physical Trusts		7,927		75	%		4,200		57	%
ETFs		237		2	%		434		6	%
		8,164		77	%		4,634		63	%
Alternative Asset Management:
In-house		295		3	%		405		6	%
Sub-advised		505		5	%		710		10	%
		800		8	%		1,115		16	%
Private Resource Investments:
Managed Companies		606		6	%		706		10	%
Private Resource Lending LPs		498		5	%		252		3	%
Fixed Term LPs		243		2	%		308		4	%
Separately Managed Accounts		267		2	%		308		4	%
		1,614		15	%		1,574		21	%
Total Enterprise AUM		10,578		100	%		7,323		100	%

The Corporation’s Revenues

The Corporation derives its revenues principally from management fees earned from the management of its Investment Products and from performance fees earned from the investment of the AUM of its Investment Products. Accordingly, growth in the Corporation’s management fees is based on growth in AUM while growth in its carried interest and performance fees is based on both the growth in AUM and the absolute or relative return, as applicable, earned by its Investment Products. In addition, the Corporation derives revenues from commissions earned on placement and advisory fees and interest income from co-investments in lending funds and on-balance sheet loans. The Corporation manages and reports its wholly-owned principal subsidiaries across the seven reporting segments.

For the year ended December 31, 2018, the Corporation's total revenue was $109.3 million compared to $144.2 million for the fiscal year ended December 31, 2017.

Exchange Listed Products and Alternative Asset Management

Sprott Asset Management LP

SAM is the manager of Sprott’s exchange-traded products, alternative investment strategies and Managed Accounts. SAM is registered as a portfolio manager and an exempt market dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, and Newfoundland and Labrador and as an investment fund manager in Ontario, Quebec, and Newfoundland and Labrador. SAM is also registered as an exempt market dealer in Quebec and as a Commodity Trading Manager in Ontario. SAM is registered as a Registered Investment Advisor with the U.S. Securities and Exchange Commission (the "SEC"). The majority of the Corporation’s revenues are generated through SAM in the form of management fees and performance fees earned through the management of select Funds and Managed Accounts.

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SAM offers investors access to best-in-class precious metals and real asset strategies. SAM’s team of portfolio managers have a deep understanding of precious metals and natural resource investments and a long track record investing in the sector. By taking a consistent, disciplined approach to investing, based on sound fundamental analysis and independent research, SAM’s investment management team carefully assembles the best portfolio of holdings to meet its investment objectives. SAM takes a team-based approach to its investment decision-making process. Themes and opportunities are discussed daily among its investment team.

SAM’s offerings include unique physical bullion trusts, mining ETFs and actively managed equity strategies. During the year ended December 31, 2018, SAM managed Funds comprised of a number of exchange listed products and institutional accounts.

SAM is the manager of the following Funds

• CEF (this Fund was launched on January 16, 2018 with the acquisition of CFCL)

• PHYS

• PSLV

• SPPP

• Sprott Gold Miners ETF

• Sprott Junior Gold Miners ETF

• Sprott Focus Trust

• Sprott Privet Fund (this Fund was closed on December 31, 2018)

SAM is the sub-advisor to the following funds:

• Sprott Bull/Bear RSP Fund (this Fund was closed on July 31, 2018)

• Sprott Gold and Precious Minerals Fund

• Sprott Gold Bullion Fund

• Sprott Hedge Fund LP (this Fund was closed on July 31, 2018)

• Sprott Hedge Fund LP II (this Fund was closed on July 31, 2018)

• Sprott Resource Class

• Sprott Silver Bullion Fund

• Sprott Silver Equities Class

• Sprott 2016-II Flow-Through Limited Partnership (this Fund was closed on January 26, 2018)

• Sprott 2017 Flow-Through Limited Partnership

• Sprott 2017-II Flow-Through Limited Partnership

• Sprott 2018 Flow-Through Limited Partnership

• Sprott 2018-II Flow-Through Limited Partnership

As at December 31, 2018, SAM had approximately $9.0 billion in AUM. As at December 31, 2018, SAM had 19 employees.

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SAM’s Revenues

Except as detailed below, all of SAM’s products (including those sub-advised by SAM) have a fee structure that consists of both a management fee component and a performance fee component. SAM collects management fees calculated as a percentage of AUM, and may earn performance fees calculated, depending on the Fund or Managed Account, as a percentage of: (i) excess performance over the relevant benchmark; (ii) the increase in net asset value over a predetermined hurdle, if any; or (iii) the net profit over the performance period.

The Sprott Gold Bullion Fund, Sprott Silver Bullion Fund, CEF, PHYS, PSLV, SPPP, Sprott Gold Miners ETF and the Sprott Junior Gold Miners ETF only charge a management fee. There are no performance fees associated with the foregoing Funds.

For the year ended December 31, 2018, SAM's total net revenue was $42.6 million compared to $90.9 million for the fiscal year ended December 31, 2017.

Selling and Distribution

As part of the Sale Transaction, the sales force for SAM moved to the Buyer.

The Corporation now focuses its distribution primarily in the United States through its family of exchange traded products. Exchange listed products also provide broader distribution to investors in many countries including Canada, the United Kingdom, as well as countries in Europe and Asia.

The Corporation actively promotes its offerings through its sales team, public and investor relations, marketing, social and traditional media platforms and conferences.

Global

The companies within the Global segment are leading experts in the natural resource investing sector providing asset management services to the Corporation's branded funds and managed accounts in the U.S. as well as securities trading and other transactional services to clients in the U.S. Global is led by Arthur Richards “Rick” Rule IV, a natural resources investor with over 40 years of experience in the investment industry. Global has a team of resource investing experts, including geologists and mining engineers, who offer their expertise through pooled investment vehicles, Managed Accounts and brokerage accounts. Global is based in Carlsbad, California but invests globally. Global administers approximately $1.3 billion and manages over $397 million in client assets across the three business lines referenced below:

• RCIC manages assets for pooled investment vehicles that invest in natural resource companies. The pooled investment vehicles managed by RCIC generate management fees and carried interests and have a remaining duration of between one to eight years. At December 31, 2018, the limited partnerships had a total AUM of approximately $244 million.

• SAM USA (formerly Terra Resource Investment Management) is a registered investment advisor that provides segregated Managed Accounts for institutional and high-net worth clients looking for distinctive and personalized wealth management. SAM USA offers clients the option of investing in nine different managed retail account programs (Diversified Resource; Precious Metals; Energy; Resource Income; Real Asset Value; Technically Driven Opportunities; All Weather Diversified Growth; All Weather Diversified; and Sprott Gold & Precious Metals Portfolio) and one institutional managed account program (Institutional Gold & Precious Metal Strategy). SAM USA also has a retail separately managed account platform (Sprott Global Gold Separately Managed Account). At December 31, 2018, SAM USA's AUM was approximately $153 million.

• SGRIL is a full service U.S. brokerage firm providing personalized brokerage services to investors in the natural resource sector. SGRIL is a broker-dealer regulated by the Financial Industry National Regulatory Authority (“FINRA”). Many of SGRIL’s financial advisors worked in various natural resource industries before they began their financial services career, enabling them to provide specialized advice. SGRIL has approximately 4,949 client accounts. At December 31, 2018, SGRIL had approximately $1.3 of assets under administration.

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As of December 31, 2018, Global had 44 employees.

Global Revenues

RCIC earns revenue in the form of management fees and carried interests through the management of the Limited Partnerships. SAM USA earns revenue in the form of management fees and performance fees from the management of Managed Accounts. SGRIL earns commissions and other fees from the sale and purchase of stocks by its clients, from new and follow-on offerings of Limited Partnerships managed by RCIC and from the sale of private placements to its clients.

For the year ended December 31, 2018, Global's total revenue was $14.6 million compared to $20.4 million for the fiscal year ended December 31, 2017.

Lending

Sprott Resource Lending is focused on providing financing to companies within the natural resource sector, primarily through the Lending Funds.

SRLC is the general partner and RCIC is the manager of Lending Fund I. Pursuant to a sub-management agreement, RCIC has delegated to Sprott Resource Lending Partnership ("SRLP") all aspects of the management of investments of Lending Fund I, including investigating, analyzing, structuring and negotiating potential investments, monitoring the performance of loan investments and portfolio companies and making determinations as to disposition and other opportunities in respect of the investments of Lending Fund I.

SRLC is the general partner and SRLP is the manager of Lending Fund II. SRLP provides certain administrative services to, and will manage the investments of, Lending Fund II, including investigating, analyzing, structuring and negotiating potential investments, monitoring the performance of loan investments and portfolio companies and making determinations as to disposition and other opportunities in respect of the investments of Lending Fund II.

The Lending Funds have been established to primarily provide loan facilities to, and invest in, debt instruments ("Loan Investments") of companies in the mining, agricultural mineral, resource infrastructure, resource service and energy production sectors on a global basis. Loan Investments may include a committed or revolving credit facility that has not yet been drawn down by the relevant borrower and any loan, note, bond debenture or other debt instruments. The Lending Funds may also invest in, receive rights in respect of or otherwise acquire shares, options, warrants, commodity price appreciation rights, royalties and other contingent purchase rights, including upon the exercise of any such right or as a result of the conversion of debt. The Lending Funds are subject to certain investment restrictions, including limits on investments in any one portfolio company based on a specified percentage of capital commitments, limits on non-senior debt or other investments, or other restrictions, without approval of the Lending Funds' respective limited partners or advisory committee, as the case may be.

In addition to the Loan Investments made through the Lending Funds, the Corporation provides certain direct financing to companies within the natural resource sector, primarily through credit facilities.

As at December 31, 2018, AUM in the Lending Funds stood at $498 million (USD$365 million). This was due to $246 million (USD$164 million) of new capital calls into our Lending Funds during the year. Subsequent to December 31, 2018, total uncalled capital (i.e. committed but not yet called into our Lending Funds) stood at $965 million (USD$707 million), resulting primarily from the December 2018 and January 2019 closings of an additional $590 million (USD$432 million) in capital commitments.

As at December 31, 2018, SRLC had approximately $36 million in resource loans outside of the Lending Funds and had 15 employees.

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Lending Revenues

Sprott Resource Lending, through SRLP, earns revenue in the form of management fees calculated as a percentage of the Lending Funds aggregate capital commitments used to fund investments that have not been fully realized and may earn carried interest calculated as a percentage of cumulative net realized profits.

With respect to co-investment in the Lending Funds and direct financing, Sprott Resource Lending earns revenue in the form of interest income. Also, on direct financing, SRLC earns other fees on its lending activities as well as realizing on the upside potential of bonus arrangements with resource borrowers which are generally tied to the revenue or the value of the common shares of the borrower. SRLC’s revenues are subject to the return it is able to generate on its capital, its ability to reinvest funds as financings mature and are repaid, the nature and credit quality of its loan portfolio, including the quality of the collateral security and the overall resource and commodity markets.

For the year ended December 31, 2018, SRLC's total revenue, through SRLP, was $27.7 million compared to $11 million for the fiscal year ended December 31, 2017.

Merchant Banking & Advisory Services

Merchant Banking

Starting in 2017, the Corporation established a merchant banking/investment banking group as a new division within SCP (the "Merchant Banking Division"). The Merchant Banking Division generates investment ideas within the Corporation's core areas of expertise and provides focused advice and capital raising services to corporate clients. The Merchant Banking Division is led by a team of seasoned resource banking professionals and benefits from the Corporation's deal-flow and brand recognition in the natural resource sector. While the Merchant Banking Division's area of focus is currently in the natural resource sector, it may diversify sector coverage in the future.

Advisory Services

Through the advisory services division of SCP (the "Advisory Services Division"), the Corporation provides investment management and administrative services to high net worth individuals and institutions. The Advisory Services Division focuses on providing a high level of service to its direct private clients. Whether dealing with high net worth individuals or institutional investors, the Advisory Services Division attempts to inform its clients of the Corporation’s market outlook as well as each investment professional’s approach to allocating capital within their respective Fund strategies. The Advisory Services Division provides investors with monthly reports, email updates and web postings. Clients also have the ability to contact an informed customer service representative. As of December 31, 2018, the Advisory Services Division’s private client base represented approximately $619 million of client assets.

SCP is a member of IIROC and the Canadian Investor Protection Fund. SCP is registered as an investment dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island, New Brunswick, Nova Scotia, and Newfoundland and Labrador.

As of December 31, 2018, SCP had 17 employees.

SCP's Revenues

The Merchant Banking Division's primary revenue streams are commissions earned on capital raising services and fees earned on advisory deals.

The Advisory Services Division has revenue streams including: 1) structured fees from charity flow-through transactions, 2) commissions from trading, private placements and underwriting; and 3) interest income from retail accounts.

For the year ended December 31, 2018, Merchant Banking and Advisory Services' total net revenue was $22.1 million compared to $21.6 million for the fiscal year ended December 31, 2017.

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Corporate

The Corporate operating segment provides capital, balance sheet management and shared services to the Corporation's subsidiaries. As at December 31, 2018, Corporate had 29 employees.

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COMPETITION AND INDUSTRY OUTLOOK

The Corporation is fairly unique as an alternative asset management organization in terms of the breadth of its various investing platforms. However, each business line operates in a very competitive environment where there is much competition for investors’ assets.

Exchange Listed Products and Alternative Asset Management

The North American asset management industry is highly competitive and is dominated by a small number of larger players. As at December 31, 2018, SAM managed approximately $9.0 billion of AUM, concentrated mainly in its physical bullion trusts as well as sub-advisory agreements for actively-managed resource funds. SAM has historically been a manager of specialized, focused funds where the Corporation believes that (i) it has a competitive advantage due to its investment management expertise; and (ii) it is able to add value as compared to a benchmark or index.

Following the completion of the Sale Transaction, including the sale of its mutual fund business, SAM’s primary focus is in the precious metals and mining sectors. Most competitors in these sectors are larger and more diversified asset managers that do not focus exclusively in these areas. SAM's focus provides an advantage, allowing it to compete with larger organizations. SAM also has developed world-renown expertise and brand equity in precious metals and mining which allows it to promote its offerings to a variety of investors.

The Corporation expects that the asset management business will continue to consolidate, with the industry bifurcating between large general managers and specialized boutique managers. The Corporation also expects that price compression will continue in the asset management industry, particularly in the ETF segment as players compete for market share. As a result, the Corporation believes that asset managers without differentiated offerings and access to distribution and capital will be at a disadvantage.

In January 2018, SAM completed the CFCL Transaction. See "General Development of the Business". After giving effect to the completion of such transaction and the launch of the CEF Trust, the physical trusts account for approximately $7.9 billion of SAM’s AUM as of December 31, 2018. In addition, as a result of the CFCL Transaction, SAM acquired approximately 90,000 new investors and enhanced the scale and competitiveness of its physical bullion trusts. As at December 31, 2018, the majority of those new investors have been retained. SAM will continue to consider strategic acquisitions which will allow it to build scale, improve profitability or enter new markets and investment categories.

Global

The U.S. asset management industry - both broker-dealers and asset managers - is highly competitive but fragmented. Both SGRIL and SAM USA operate specialized “niche” businesses. SGRIL provides brokerage services to clients focused on small capitalization stocks in the natural resource sector. SAM USA offers a managed account program for investors seeking a personalized wealth management program focused on investments in natural resources.

The Corporation believes that the specialized focus that both SGRIL and SAM USA offer to clients is a distinct competitive advantage for both SGRIL and SAM USA. Each of these companies seeks to increase its client base through expanded marketing and sales efforts across selected geographic markets in the U.S.

Lending

Sprott Resource Lending operates in the specialized lending industry, carrying out lending activities on a global basis. SRLC’s competition includes other unconventional lenders, bank loans, high yield note offerings, investment funds and money managers, and public and private equity financings carried out by those institutions. As markets in the resource sector improve, potential borrowers may opt for equity or bank loans for their financing needs rather than SRLC’s product offering.

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Merchant Banking & Advisory Services

Merchant Banking

SCP's Merchant Banking Division competes with large domestic and international securities firms, securities subsidiaries of major chartered banks, major regional firms, smaller niche-oriented companies as well as institutional and strategic investors. The Corporation believes that the expertise of the Merchant Banking Division's team, their extensive background in natural resources and their access to the deal flow and expertise of the broader Sprott group network provides SCP's Merchant Banking Division with a competitive advantage within its operating niche.

Advisory Services

SCP's Advisory Services Division is focused on providing private client solutions to clients interested in natural resource investment opportunities. The Corporation believes that the Advisory Services Division can be competitive in this segment through its access to private placement opportunities generated by the Merchant Banking Division as well as resource-focused Investment Products managed by the SAM investment team.

Corporate

The Corporate segment provides treasury and shared services to the Corporation's subsidiaries.

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY

In 2018, the Corporation implemented an Environmental, Social and Governance ("ESG") Policy.

The Corporation believes it is part of its corporate responsibility to deliver returns by being a responsible investor and that integrating ESG matters into its investment decision-making process and active ownership practices are key tenets to being a responsible investor.

ESG Principles

The United Nations Principles for Responsible Investment (“UNPRI”) was launched in 2006 with the aim of ensuring that ESG matters are considered during the investment process and subsequent management of investments. The UNPRI framework has become the standard for global best practice in responsible investing. Although the UNPRI framework is voluntary, the Corporation has committed to incorporating ESG matters into its investment decision making and active ownership practices.

The Corporation will endeavour to observe the following UNPRI principles:

• The Corporation will incorporate ESG issues into investment analysis and decision-making processes.

• The Corporation will be an active owner and incorporate ESG issues into its ownership policies and procedures.

• The Corporation will seek appropriate disclosure on ESG issues by the entities in which it invests.

• The Corporation will promote acceptance and implementation of the principles within the investment industry.

• The Corporation will work to enhance its effectiveness in implementing the principles.

• The Corporation will report on its activities and progress towards implementing the principles.

The Corporation has created an ESG Committee which has been tasked with the creation and ongoing implementation of the Corporation’s ESG program. Furthermore, the Corporation undertakes to use reasonable endeavours to:

• Comply with relevant regulations governing the protection of human rights, occupational health and safety, the environment and the labour and business practices of the jurisdictions in which it conducts business.

• Adhere to the highest standards of conduct intended to avoid even the appearance of negligent, unfair or corrupt business practices.

• Regard implementation of its ESG program as an integral part of how it does business.

• Instruct its investment professionals in the identification and management of ESG risks and opportunities.

• Recognise that its ESG responsibilities are of an ongoing nature and to encourage the continual improvement in the execution of the Corporation's ESG program.

The ESG Committee will periodically review the effectiveness of the Corporation's ESG program and report relevant findings to the CEO and Board.

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RISK MANAGEMENT

The Corporation monitors, evaluates and manages the principal risks associated with the conduct of its business. These risks include external market risks to which all investors are subject and internal risks resulting from the nature of the Corporation’s business.

The Corporation conducts an enterprise risk assessment on all of its major operating business units at least annually.  Through the risk assessment process, the Corporation identifies the significant risk factors present in each business unit, and subjectively determines the likelihood of the risk occurring and the financial and/or non-financial impact to such business if the risk occurs.  The Board and/or the management of each business unit monitors the significant risk factors identified by the Corporation and, where deemed necessary, adopts an appropriate risk optimization strategy.

The Corporation has internal control policies related to its business conduct. Such polices are intended to ensure conformity with the rules and regulations of the Canadian Securities Administrators, IIROC, the Ontario Securities Commission, the SEC, FINRA and any other regulator, as applicable.   The policies focus on multiple areas, including employee code of ethics, conflict of interest management, as well as, compliance and risk monitoring of all business processes.   Each policy has a defined control objective and applicable procedures to ensure adherence to sound business practices, regulatory requirements and high ethical standards, including capital adequacy, insurance, segregation of clients’ securities, safeguarding of securities and cash, and pricing of securities.

The Corporation has also established a number of policies with respect to its employees’ personal trading. Employees may not trade any of the securities held or being considered for investment by any of the Funds without prior approval. All of the Corporation’s employees must comply with the Corporation’s written policies and procedures, including the Corporation's Code of Business Conduct and Ethics, which establish strict rules for professional conduct and management of conflicts of interest, and the Corporation's Insider Trading Policy, which fosters and facilitates compliance with applicable laws, including applicable securities laws.

The Corporation believes that confidentiality is essential to the success of its business and, as such, 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 Corporation keeps the affairs of its investors/clients confidential and does not disclose the identities of its investors/clients (absent express investor/client consent to do so). If a prospective client or investor requests a reference, the Corporation will not furnish the name of an existing client or investor before receiving permission from such client or investor to reveal their business relationship with the Corporation. See “Risk Management - Privacy Policy”.

Regulatory Matters

SCP is registered as an investment dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island, New Brunswick, Nova Scotia, and Newfoundland and Labrador. SCP is also a member of IIROC. SAM is registered as a portfolio manager and an exempt market dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia and Newfoundland and Labrador and as an investment fund manager in Ontario, Quebec and Newfoundland and Labrador. SAM is also registered as an exempt market dealer in Quebec and as a Commodity Trading Manager in Ontario.

The Corporation is subject to extensive regulation in Canada. As a matter of public policy, regulatory bodies in Canada are charged with safeguarding the integrity of the securities and other financial markets and with protecting the interests of investors participating in those markets. The Corporation’s operations are subject to the securities legislation of eight Canadian provinces, the Universal Market Integrity Rules, and the rules, regulations and by-laws of IIROC. The distribution of the Funds is also subject to regulations under the securities legislation of those jurisdictions where its Funds are sold.

Securities brokerage, trading, advisory and investment banking activities are conducted in SGRIL, a U.S.-registered broker-dealer affiliate. The SEC, state securities regulators and FINRA regulate this broker-dealer affiliate.

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SAM and SAM USA are involved in the business of investment management in the U.S. or to U.S. persons. These activities require that SAM and SAM USA be registered with the SEC as investment advisers under the U.S. Investment Advisers Act of 1940 (the “Advisers Act”). The Advisers Act and related rules regulate the registration and activities of investment advisers. Certain activities of SAM are also subject to regulation by the U.S. Commodity Futures Trading Commission and the National Futures Association.

The Corporation is subject to regulations that cover all aspects of the securities business, including sales methods, trading practices among investment dealers, use and safekeeping of funds and securities, capital structure, record-keeping, conflicts of interest and the conduct of directors, officers and employees. The various government agencies and self-regulatory organizations having jurisdiction over registrants are empowered to conduct administrative proceedings that can result in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of a registrant or its directors, officers or employees. A registrant is subject to rules respecting the maintenance of minimum regulatory capital. Compliance with regulatory capital requirements can limit a registrant’s operations and also restrict its ability to withdraw capital from its regulated affiliates, which in turn can limit its ability to repay debt or pay dividends on its shares.

Since the Corporation’s ability to carry on its business is dependent upon its continued registration under applicable laws, the Corporation regularly reviews its policies, practices and procedures to ensure that they comply with current regulatory requirements and employees are routinely updated on relevant legal requirements. In addition, external legal advice is obtained, as required, to ensure that the Corporation is informed of new regulatory requirements that may be applicable. All of the Corporation’s registrations are in good standing. SCP has retained National Bank Independent Network (“NBIN”) under a written introducing/carrying broker agreement to provide certain record-keeping and operational services in respect of its client accounts which may include execution and settlement of securities transactions, custody of securities and cash balances, and extension of credit on margin transactions. The fees payable to NBIN as carrying broker are not considered material to the Corporation or NBIN.

There are certain regulatory restrictions on the ownership and holding of shares of investment dealers and their parent companies. Notably, the direct or indirect ownership or holding of an interest in an investment dealer by the public is subject to approval by IIROC, other self-regulatory organizations, stock exchanges and certain securities commissions. See “Risk Factors” and “Capital Structure”.

Privacy Policy

The Corporation is also subject to Canadian federal and provincial privacy laws regarding the collection, use, disclosure and protection of client information. The Personal Information Protection and Electronic Documents Act (“PIPEDA”), the federal privacy legislation governing the private sector, requires that organizations only use personal information for purposes that a reasonable person would consider appropriate in the circumstances and for the purposes for which it is collected. The Corporation complies with the applicable requirements of PIPEDA and all applicable provincial personal information laws. The Corporation collects personal information directly from investors or through their financial advisor and/or dealer in order to provide such investor with services in connection with his or her investment, to meet legal and regulatory requirements and for any other purposes to which such investor may consent.

In addition, in the European Union, some of the Corporation’s operations are subject to the European Union’s General Data Protection Regulation (“GDPR”) which took effect on May 25, 2018. The GDPR establishes new, and in some cases more stringent, requirements for data protection in Europe, which provides for substantial penalties for non-compliance. The GDPR introduces a number of new obligations for subject companies including obligations relating to: expanded disclosures about what personal data is collected and how it is used, a more narrow definition of consent, new rights afforded to data subjects in respect of their personal data, limitations on retention of personal data and mandatory breach notifications. Additionally, the GDPR places companies under new obligations relating to data transfers and the security of the personal data they possess. The GDPR will also be adopted into English law if the United Kingdom leaves the European Union. The impact of the GDPR on the Corporation’s business is still under review. However, the Corporation has made certain modifications to its policies and procedures in order to comply with these requirements.

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The Corporation does not sell, lease, barter or otherwise deal with personal information collected by the Corporation with third parties. The Corporation carefully safeguards all personal information collected and retained by it and, to that end, restricts access to personal information to those employees and other persons who need to know the information to enable the Corporation to provide its services. The Corporation’s employees are responsible for ensuring the confidentiality of all personal information they may access. Annually, each of the Corporation’s employees is required to sign a code of conduct, which contains policies on the protection of confidential information.

The Corporation’s Privacy Policy is provided to every prospective client and sets out the Corporation’s commitment to the protection of the privacy of its clients.

Anti-Money Laundering Laws

In order to comply with federal legislation aimed at the prevention of money laundering, the Corporation sometimes requires additional information concerning a purchaser of securities of any Investment Products. If, as a result of any information or other matter which comes to the attention of any of its directors, officers or employees, or its professional advisors, the Corporation knows or suspects that an investor is engaged in money laundering, it is required to report such information or other matter to the Financial Transactions and Reports Analysis Centre of Canada and such report shall not be treated as a breach of any restriction upon the disclosure of information imposed by law or otherwise.

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RISK FACTORS

An investment in the securities of the Corporation involves a number of risks. In addition to the other information contained in this AIF, investors should carefully consider the risks described below before making an investment decision. The Corporation’s business, financial condition, revenues and profitability could be materially adversely affected by any of these risks. The trading price of the Common Shares could decline due to any of these risks, and investors may lose all or part of their investment. The risks described below are not the only ones facing the Corporation and holders of Common Shares. Additional risks not currently known to the Corporation or that management currently considers immaterial may also impair the Corporation’s business operations should such risks arise or become material to the Corporation.

This AIF contains Forward-Looking Statements that involve significant known and unknown risks, uncertainties and assumptions. The Corporation’s actual results could differ materially from those expressed, anticipated or implied in these Forward-Looking Statements as a result of certain factors, including the risks faced by the Corporation described below and elsewhere in this AIF. See “Forward Looking Statements”.

Risks Related to the Business

Difficult Market Conditions

The success of the Corporation’s business lines is highly dependent upon conditions in the Canadian and global equity and financial markets and economic conditions throughout the world that are outside the Corporation’s control and difficult to predict. Factors such as interest rates, availability of credit, inflation rates, economic uncertainty, cyclical factors, changes in laws (including laws relating to taxation), trade barriers, commodity prices, currency exchange rates and controls, and national and international political circumstances (including wars, terrorist acts, security operations, demonstrations or protests), government policies, securities offerings and M&A activity, expenses associated with establishing and expanding new and existing business units and product offerings and performance of businesses and industry sectors can have a material negative impact on the Corporation's revenues and profitability.

Unpredictable or unstable market conditions and adverse economic conditions may result in reduced opportunities to find suitable risk-adjusted investments to deploy capital and make it more difficult to exit and realize value from existing investments, which could materially adversely affect the Corporation’s ability to raise new funds and sustain profitability and growth.

The majority of the Corporation's Investment Products are focused on precious metals and the natural resource industry. The natural resource industry is notoriously cyclical and the Corporation’s performance is effected by the various stages in the resource investment cycle. In particular, investment performance, financial results and the ability to attract assets may be adversely affected by falling precious metals and commodity prices.

Poor Investment Performance

Management believes that investment performance is one of the most important factors explaining the historical growth of the Corporation’s AUM. Poor investment performance (relative to its competitors or otherwise) could impair revenues and growth as existing clients might withdraw funds in favour of better performing products and the ability of the Corporation to attract funds from existing and new clients would be reduced. All of the foregoing could result in lower AUM and could impact the Corporation’s ability to earn management fees. In addition, the ability to earn performance fees is directly related to investment performance and therefore poor investment performance may cause the Corporation to earn lower performance fees.

There is no assurance that the Corporation will be able to achieve or maintain any particular level of AUM, which may have a material negative impact on its ability to attract and retain clients, management fees and potential performance fees, and overall profitability. The Corporation’s Investment Products tend to be more volatile than general market indices as the Corporation's investment team strives for exceptional performance and returns rather than attempting to mirror or follow the market indices. This volatility combined with negative or poor performance could combine to lead to a reduction in AUM and lower management fees and performance fees as a result. See "Risk Factors - Risks Related to the Corporation's Investment Products" regarding various risks to the performance of the Corporation's Investment Products.

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Key Management and Staff

The Corporation’s business is dependent on the highly skilled and often highly specialized individuals employed by the Corporation. The contribution of these individuals to the investment management, client service, sales, marketing, capital markets and operational teams is important to attracting and retaining clients. The Corporation aims to establish relationships with prospective clients in advance of any transaction, and to maintain such relationships over the long-term. Such relationships depend in part on the individual employees who represent the Corporation in its dealings with such clients. Management devotes considerable resources to recruiting, training and compensating these individuals. However, the competition in the market and the reliance on performance results have increased the demand for high quality professionals in the industries in which the Corporation operates.

Management has taken, and will continue to take, steps to retain key employees, including incentive programs such as the Corporation’s employee bonus pool, revenue share program, the Corporation’s stock option plan (the "Option Plan"), employee profit sharing plan (“EPSP”) and equity incentive plan ("EIP"). The Corporation has also entered into employment agreements with certain key employees. However, not all of the investment professionals have employment agreements or are subject to non-competition or non-solicitation restrictions. There can be no assurance that the steps taken to retain key individuals will be sufficient in light of the increasing competition for experienced professionals in the industry or that management will be able to recruit a sufficient number of new employees with the desired qualifications in a timely manner, if required. The failure to retain key employees and to recruit new employees could lead to a decline in revenues.

Employee Error or Misconduct

Misconduct by employees could include binding the Corporation to transactions that exceed authorized limits or present unacceptable risks, or concealing from the Corporation unauthorized or unsuccessful activities, which, in either case, may result in unknown and unmanaged risks or losses. Employee misconduct could also involve the improper use of confidential information, which could result in regulatory enforcement proceedings, sanctions and serious reputational harm. The Corporation is also susceptible to loss as a result of employee error. While management proactively takes extensive measures to deter employee misconduct or prevent employee error, the precautions management takes to prevent and detect this activity may not be effective in all cases, which could materially adversely affect the business, financial condition or profitability of the Corporation.

Performance Fee Fluctuations

The Corporation is entitled to performance fees only if performance exceeds pre-specified performance hurdles. If these hurdles are not exceeded, performance fees will not be payable for the relevant period. Moreover, any failure to meet or exceed a performance hurdle is carried forward indefinitely until such time as such deficit is made up. Performance fees will vary from period to period in relation to, among other things, volatility in investment returns, causing revenues to be more volatile. The volatility in revenues may decrease the Common Share price. In addition, most of the Investment Products have a December 31 performance year end, at which time performance fees (other than crystallized performance fees) for that 12-month period are determined. The Limited Partnerships have a carried interest generally received upon certain monetizing events in the Limited Partnership. Performance fees are generally received only once per portfolio performance year and determined based on the difference between the net asset value of the particular Investment Product on the first day of its performance year and on the last day of its performance year. The performance fees could be significantly impacted by events or factors beyond the Corporation’s control that affect the net asset value on one of those days. For example, the markets generally could suffer a significant decline in value on or near the last day of a performance year as a result of a market or world event that could cause the Corporation to earn lower or no performance fees for that performance year despite a prior overall increase in the net asset value of those Investment Products over the course of the year.

Moreover, there may be increased volatility in the price of Common Shares during the period leading up to the announcement of performance fees and/or the declaration by the Board of special dividends, if any.

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Counterparty Risk

The majority of the Corporation's receivables are from management fees, carried interest and performance fees from the business segments and funds. A business segment or another counterparty failing to pay its financial obligation could cause a decline in revenues for the Corporation.

Liquidity risk

The Corporation has a risk that it cannot meet its demand for cash or fund obligations as they come due. This includes exposure to liquidity risk through its loan advances (both directly via balance sheet loans and indirectly via borrowers of the Lending Funds the Corporation co-invests with) and other financial liabilities. The Corporation manages its liquidity risk my maintaining sufficient levels of liquid assets to meet its obligations as they come due. Additionally, the Corporation has access to a $90 million committed line of credit with a major Canadian Schedule I chartered bank.

Industry Changes

The historical growth of the financial services industry may not continue and adverse economic conditions and other factors, including a protracted or precipitous decline in the Canadian, international or global financial markets or a change in the acceptance of fees typically charged by industry participants, could affect the popularity of the Corporation’s services or result in clients withdrawing from the markets or decreasing their level and/or rate of investment. A decline in the growth of the industries in which the Corporation operates or other changes to the industries that discourage investors could affect the Corporation’s ability to attract clients or could lead to redemptions of the Investment Products, as applicable, for reasons that may be unrelated to their performance but would nonetheless result in a decline in revenues.

Information Security Policies

The Corporation is dependent on the effectiveness of its information security policies, procedures and capabilities to protect its computer and telecommunications systems, and the data that resides on or is transmitted through them. Although the Corporation takes protective measures and tries to modify them as circumstances warrant, computer systems, sensitive data, software and networks may be vulnerable to cyberattacks, unauthorized access, computer viruses or other malicious code and events that could have a security impact. If one or more of these events occur, this could potentially jeopardize the Corporation’s, or its clients’ or counterparties’ confidential and other personal information processed and stored in, and transmitted through, computer systems and networks, or otherwise cause interruptions or malfunctions in clients’, counterparties, or third parties’ operations. The Corporation may be required to expend significant additional resources to modify protective measures or to investigate and remediate vulnerabilities or other exposures. As a result, the Corporation may be subject to financial losses, litigation, fines and/or liability for failure to comply with privacy and data security laws and regulations as well as regulatory investigations and heightened regulatory scrutiny. These all may lead to reputational harm affecting client and investor confidence, which in turn could materially adversely affect the Corporation’s business, financial condition or profitability.

A cyberattack could also compromise any proprietary, confidential or sensitive information or systems that the Corporation maintains for the purpose of competitive advantage (e.g. confidential corporate finance deal details) and such a compromise could lead to lost revenues while the Corporation attempts to recover or replace the lost information or systems.

The increased use of smartphones and other mobile devices, as well as enabling employees to securely access the Corporation’s network remotely, may also heighten these risks.

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Use of Technology

The Corporation is dependent on the efficiency and effectiveness of the technologies it uses. Any failure or interruptions of the Corporation’s systems, or those of third parties such as service providers, clearing corporations and exchanges, could cause delays or other problems in the Corporation’s sales, trading, clearing, settlement and other client services. Improper functioning of any of the technologies could materially interrupt the Corporation’s business operations and cause material financial loss, regulatory actions, breach of client contracts, reputational harm or legal liability, which in turn, could materially adversely affect the business, financial condition or profitability of the Corporation. Although the Corporation has back-up procedures, duplicate systems and business continuity plans in place, there is no assurances that procedures and plans will be sufficient or adequate in the event of a failure or interruption.

Lack of Investment Opportunities

An important component of investment performance is the availability of appropriate investment opportunities for the Corporation, new clients and new client assets. If the Corporation is not able to find sufficient investments in a timely manner, investment performance could be materially adversely affected. Alternatively, if there are insufficient investment opportunities, management may elect to limit the Corporation’s growth and reduce the rate of intake of new clients and new client assets. Historically, depending on, among other factors, prevailing market conditions, the Corporation has taken opportunities to invest in smaller market capitalization companies and other more thinly traded securities in which relatively smaller investments are typically made. As the Corporation’s AUM increases, the Corporation may not be able to exploit the investment opportunities that have historically been available to the Corporation or find sufficient investment opportunities for producing the absolute returns targeted. If the Corporation is not able to identify sufficient appropriate investment opportunities for itself, new clients and new client assets, the Corporation’s investment performance and management’s decision to continue to grow may be materially adversely affected.

Regulatory Compliance

The Corporation’s ability to carry on its business is dependent upon its compliance with and continued registration under securities legislation in the jurisdictions in which it carries on business. See “Risk Management - Regulatory Matters”. The securities business is subject to extensive regulation under securities laws in Canada, the U.S. and elsewhere. Compliance with many of the regulations applicable to the Corporation involves a number of risks, particularly in areas where applicable regulations may be subject to interpretation. In the event of non-compliance with an applicable regulation, securities regulators, IIROC and FINRA may institute administrative or judicial proceedings that may result in censure, fine, civil penalties, issuance of cease-and-desist orders, deregistration or suspension of the non-compliant investment dealer or investment adviser, suspension or disqualification of the investment dealer’s officers or employees, or other adverse consequences. The imposition of any such penalties or orders on the Corporation regardless of duration or any subsequent appellate results could have a material adverse effect on the Corporation’s operating results and financial condition.

Additional regulation, changes in existing laws and rules, or changes in interpretations or enforcement of existing laws and rules often affect directly the method of operation and profitability of securities firms. It is not possible to predict with any certainty as to what effect any such changes might have on the Corporation’s business. Furthermore, its business may be materially affected not only by regulations applicable to the Corporation as a financial market intermediary, but also by regulations of general application. For example, returns on investments in a given time period could be affected by, among other things, existing and proposed tax legislation, competition policy and other governmental regulations and policies, including the interest rate policies of the Bank of Canada, the Federal Reserve or other global central banks and changes in interpretation or enforcement of existing laws and rules that affect the business and financial communities or industry-specific legislation or regulations.

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Risk Management

Management uses its best efforts to monitor, evaluate and manage the principal risks associated with the conduct of the Corporation’s business. These risks include external market risks to which all investors are subject and internal risks resulting from the nature of the business. See “Risk Management”. Some of the methods of managing risk used are based upon the use of observed historical market behaviour. As a result, these methods may not predict future risk exposures, which may be significantly greater than the historical measures indicated. Other risk management methods depend upon evaluation of information regarding markets, clients or other matters that is publicly available or otherwise accessible. This information may not in all cases be accurate, complete, up-to-date or properly evaluated. Management of operational, legal and regulatory risk requires, among other things, policies and procedures to record properly and verify a large number of transactions and events, and these policies and procedures may not be fully effective. A failure in management’s ability to manage risks could materially adversely affect the business, financial condition or profitability of the Corporation.

Conflicts of Interest

Certain of the Corporation’s Investment Products have overlapping investment objectives and potential conflicts may arise with respect to decisions regarding how to allocate investment opportunities among them. Pursuant to the Corporation’s fair allocation policy, if an investment opportunity is suitable for more than one Investment Product, such investment opportunity is equitably allocated in order to ensure that the Investment Products have equal access to the same quality and quantity of investment opportunities. Management consistently seeks to negotiate the best possible price through a broker, and when allocating block trades, allocations are made on a pro rata basis, with consideration given to the objective, strategy, restriction, portfolio composition and cash availability of each Investment Product. Therefore an Investment Product may not be able to participate fully in an investment opportunity, which may have a negative impact on its investment strategy and accordingly may affect its performance.

It is possible that actual, potential or perceived conflicts could give rise to investor dissatisfaction or litigation or regulatory enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult and the Corporation’s reputation could be damaged if there is a failure to deal appropriately with one or more potential or actual conflict of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse effect on the Corporation’s business in a number of ways, including as a result of redemptions by investors, an inability to raise additional funds and a reluctance of counterparties to do business with the Corporation.

Competitive Pressures

The industries in which the Corporation operate are highly competitive. Some of the Corporation’s competitors have, and potential future competitors could have, substantially greater technical, financial, marketing, personnel, distribution and other resources. There can be no assurance that the Corporation will be able to achieve or maintain any particular level of AUM or revenues in this competitive environment. The Corporation's merchant bank competes with large domestic and international securities firms, securities subsidiaries of major chartered banks, major regional firms, smaller niche-oriented companies as well as institutional and strategic investors. Competition could have a material adverse effect on profitability and there can be no assurance that the Corporation will be able to compete effectively. In addition, the ability to maintain the management fee and performance fee structure is dependent on the ability to provide clients with products and services that are competitive. Investors have become more price and value conscious for a variety of reasons, including the current state of the capital markets, low interest rates and reduced investment return expectations, increased regulatory and media focus on fees (particularly for mutual funds), inconsistent investment performance and the availability of lower cost investment products. There can be no assurance that the Corporation will be able to retain the current fee structure or, with such fee structure, retain clients in the future. A significant reduction in management fees or performance fees would have a material adverse effect on revenues.

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Sustaining and Managing Growth

Management is required to continuously develop the Corporation’s systems and infrastructure in response to the increasing sophistication of the market and legal, accounting and regulatory developments.

Future growth will depend on, among other things, the ability to maintain an operating platform and management systems sufficient to address growth and will require the Corporation to incur additional expenses and to commit additional senior management and operational resources. As a result, management faces challenges in: (i) maintaining adequate financial and business controls; (ii) implementing new or updated information and financial systems and procedures; and (iii) training, managing and appropriately sizing the work force and other components of the business on a timely and cost-effective basis. There can be no assurance that the Corporation will be able to manage growth effectively or that it will be able to continue to grow, and any failure to do so could adversely affect the ability to generate revenue and control expenses.

The Corporation may enter into new businesses, make future strategic investments or acquisitions or enter into joint ventures, each of which may result in additional risks and uncertainties in its business.

Management intends, to the extent that market conditions warrant and regulatory conditions permit, to grow the Corporation’s business, including by increasing AUM, and creating new investment products and businesses. Accordingly, management may pursue growth through strategic investments, acquisitions or joint ventures, including co-management relationships with other investment managers and entering into new lines of business. Risks associated with such activities include: (i) exposure to unknown or unforeseen liabilities of co-managers or acquired companies; (ii) higher than anticipated acquisition or start-up costs and expenses; (iii) increased investments in management and operational personnel, financial management systems and facilities; (iv) difficulty with efficiently co-managing with others or integrating operations and personnel of acquired companies; (v) disruption of ongoing business; (vi) diversion of management’s time and attention; (vii) possible dilution to shareholders; and (viii) loss of investors in existing Investment Products or other direct clients due to the perception that management is no longer focusing on the Corporation’s core business lines. Entry into certain lines of business may also subject the Corporation to new laws and regulations and may lead to increased litigation and regulatory risk. There can be no assurance that the creation of new investment products or new lines of business or any strategic investments, acquisitions or joint ventures will prove to be successful. If a new business, strategic investment, acquisition or joint venture generates insufficient returns or if management is unable to efficiently manage expanded operations, the Corporation’s results of operations will be materially adversely affected.

Privacy Laws

The Corporation is subject to laws and regulations with respect to privacy laws regarding the collection, use, disclosure and protection of client information. These laws and regulations are subject to frequent modifications and updates and require ongoing supervision. The functional and operational requirements and costs of compliance with such laws and regulations may adversely impact the Corporation’s business and failure to comply with such laws and regulations could lead to significant fines and penalties imposed by regulators, as well as claims by the Corporation’s clients or third parties.

Succession Planning

Arthur Richards “Rick” Rule IV is the founder of SGRIL, SAM USA and RCIC and the CEO of Sprott U.S. Some of the Corporation’s clients have invested in the Corporation, including the Investment Products, because of the personal reputation of Mr. Rule. While management believes Mr. Rule has created a strong team at Sprott U.S., if he is unable or unwilling in the future to continue to have as active a role, retires, becomes incapacitated or suffers from a long-term disability or dies before the Corporation's succession plan is fully executed, the Corporation may not be able to retain some of its existing clients or employees, which could lead to a decline in revenues.

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Foreign Exchange Risk

Some of the expenses and revenues of the Corporation and various subsidiaries and Investment Products of the Corporation are denominated in U.S. dollars. As a result, the Corporation is subject to foreign exchange risks relating to the relative value of the U.S. dollar as compared to the Canadian dollar. A decline in the U.S. dollar would result in a decrease in the real value of the Corporation’s revenues and adversely impact financial performance.

Litigation Risk

In general, the Corporation will be exposed to risk of litigation by its clients if the management of any Investment Product is alleged to constitute gross negligence or willful misconduct. The Corporation may also be subject to litigation arising from client dissatisfaction with the performance of an Investment Product or from allegations that management improperly exercised control or influence over companies in which the Investment Products have large investments. The Corporation is exposed to the risk of litigation if an Investment Product suffers catastrophic losses due to the failure of a particular investment strategy or due to the trading activity of an employee who has violated market rules and regulations. The Corporation may also be exposed to risks of litigation or investigation relating to transactions which presented conflicts of interest that were not properly addressed.

In such actions the Corporation would be obligated to bear legal, settlement and other costs (which may be in excess of available insurance coverage). In addition, although the Corporation may be indemnified, its rights to indemnification may be challenged. If the Corporation is required to incur all or a portion of the costs arising out of litigation or investigations as a result of inadequate insurance proceeds or a failure to obtain or defend a challenge to its indemnification entitlement, the Corporation’s results of operations, financial condition and liquidity would be materially adversely affected.

Minimum Regulatory Capital Requirements

SCP and SAM are required to maintain a minimum amount of regulatory capital calculated in accordance with the rules of IIROC and of the Ontario Securities Commission, respectively. In addition, SGRIL is registered with FINRA in the United States and is required to maintain a minimum amount of regulatory capital calculated in accordance with the rules of FINRA and the SEC. Historically, such entities have satisfied such requirements with internally generated funds. There can be no assurance that sufficient, or any, funding will continue to be available in the future on acceptable terms. The Corporation monitors the level of regulatory capital required in each of its regulated entities on an ongoing basis to ensure minimum requirements are satisfied. Although each the Corporation's regulated entities currently has sufficient capital as of the date hereof, growth of the business may require additional capital. Failure to maintain required regulatory capital may subject the Corporation to fines, suspension or revocation of registration or could prohibit expansion of its businesses.

Business Resiliency Plans

The Corporation is dependent on the availability of its personnel, its office facilities and the proper functioning of its computer and telecommunications systems. While management has implemented a business continuity program, which is reviewed and updated annually, there can be no assurance that the Corporation’s business will not be interrupted and materially adversely affected during a disaster such as a severe weather event, fire, significant water damage, a prolonged loss of electricity or explosion or being collaterally damaged by any of the foregoing occurring to neighbouring businesses. The Corporation’s policy is to ensure the continued ability to serve clients and protect their assets and account information, in addition to the people and assets of the Corporation. While management believes the business continuity program has been developed to minimize any disruption, there can be no assurance of business continuity in the event that there are disruptions of normal operations. A disaster could materially interrupt business operations and if the disaster recovery plans prove to be ineffective, it could cause material financial loss, loss of human capital, reputational harm or legal liability, which, in turn, could materially adversely affect the business, financial condition or profitability of the Corporation.

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Insurance Coverage

The Corporation has various types of insurance, including general commercial liability insurance and financial institution bonds. The adequacy of insurance coverage is evaluated on an ongoing basis, including the cost relative to the benefits. However, there can be no assurance that claims will not exceed the limits of available insurance coverage or that any claim or claims will be ultimately satisfied by an insurer. A judgment against the Corporation in excess of available insurance or in respect of which insurance is not available could have a material adverse effect on the Corporation’s business, financial condition or profitability. There can be no assurance that the Corporation will be able to obtain or maintain its current insurance coverage on favourable economic terms in the future.

Historical Financial Information

The historical growth rates in the Corporation’s revenue, net income and AUM are not necessarily indicative of future growth rates. The historical returns of the Investment Products should not be considered indicative of the future results that should be expected from such Investment Products or from any future Investment Products. Returns to date have been as a result of investment opportunities and general market conditions that may not repeat themselves, and there can be no assurance that current or future Investment Products will be able to avail themselves of favourable market conditions and/or profitable investment opportunities. The historical rates of return reflect the Corporation’s historical cost structure, which may vary in the future due to factors beyond management’s control, including changes in securities, tax and other laws. In addition, future returns will be affected by the applicable risks described elsewhere in this AIF, including risks of the industries and businesses in which a particular Investment Product invests.

Risks Related to the Corporation’s Investment Products

The Corporation’s results of operations are dependent on the performance of its Investment Products. Poor performance of any of the Investment Products will result in reduced management fee and performance fee revenues and reduced returns on the Corporation’s proprietary investments therein. In addition, poor performance of the Investment Products will make it difficult for the Corporation to retain or attract investors and grow its business. Each Investment Product is subject to some or all of the following risks:

(a) external market and economic conditions beyond the Corporation’s control such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws, and national and international political circumstances, have an effect on their respective performance and net asset value;

(b) fluctuation in the frequency and size of redemptions could have a negative impact on their respective value, including substantial redemptions of units, which could require the liquidation of positions more rapidly than otherwise desirable in order to raise the necessary cash to fund such redemptions and achieve a market position appropriately reflecting a smaller asset base. A significant amount of redemptions can have a materially adverse effect, which in turn will affect the management fees and performance fees payable to the Corporation;

(c) certain of the Investment Products have a limited operating history, and historical performance of any of them individually or collectively is not intended to be, nor should it be construed as an indication or forecast of future performance or an indication as to the future value or return on investment;

(d) the competitive environment for investments means there can be uncertainty in identifying and completing investment transactions which can result in less favourable investment terms than would otherwise be the case;

(e) investment objectives, strategies, restrictions and/or portfolios are subject to changes over time;

(f) investments made in commodities will have prices which are subject to large fluctuations and potential declines in value;

(g) investments significantly concentrated in precious metals and the resource sector will be subject to larger fluctuations than the fluctuations that occur in the general market;

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(h) investments which are focused primarily or exclusively on small capitalization companies tend to be less stable and potentially less able to withstand market fluctuations;

(i) some of the special investment techniques employed include short selling, leveraging, hedging, using derivatives or options, and concentration of investment holdings, all of which are subject to their own inherent risks;

(j) assets may be exposed to currency risk and foreign investment risk when invested in securities that are denominated in foreign currencies and/or in securities of foreign issuers;

(k) investments in bonds, preferred shares and/or money market securities will be affected by changes in the general level of interest rates;

(l) the inability to pay the expenses of one class or series of units may result in an increase in the expenses of the other classes or series of such Fund, Managed Account or Limited Partnership, the effect of which could be to lower the investment returns of the other class(es) or series that have been affected, even though the value of the investments of the Fund, Managed Account or Limited Partnership may have increased;

(m) some investment strategies use securities lending, which involves risk of potential loss if the other party to such lending transactions is unable to fulfill its obligations;

(n) there may be difficulty in selling due to illiquidity of some of the securities they have invested in;

(o) securities exchanges typically have the right to suspend or limit trading, which could render it impossible to liquidate positions and lead to significant unanticipated losses;

(p) there may be uncertainty as to whether certain Funds will qualify as “mutual fund trusts” under the Income Tax Act (Canada) and this may result in certain adverse tax consequences to the Fund if certain investment strategies are employed;

(q) the positions taken by the Corporation on the tax treatment related to certain Funds and Limited Partnerships are subject to potential challenge and may not be upheld;

(r) there are various expenses incurred from time to time regardless of whether any profits are realized and such expenses or costs may negatively impact the net asset value of a Fund, which in turn will affect the management fees and performance fees;

(s) they may be subject to losses due to indemnification obligations for which they are not insured;

(t) there is no guarantee that foreign jurisdictions will recognize the limited liability of limited partners or unitholders;

(u) the valuation of investments is subject to uncertainty as certain investments, such as investments in private companies, may be difficult to value accurately. Independent pricing information may not always be available in relation to such securities and other investments. While audits are conducted by independent auditors in order to assess whether the financial statements are fairly stated in accordance with Canadian generally accepted accounting principles or IFRS, as applicable, the valuations may involve judgment determinations and, if such valuations should prove to be incorrect, their net asset value could be misstated. Accordingly, the Corporation may incur substantial costs in rectifying pricing errors caused by the misstatement of such valuations;

(v) the due diligence process undertaken in connection with a particular investment may not reveal all the facts that may be relevant to whether such investment will be successful and there can be no assurance that management will correctly evaluate the risks of making certain investments; and

(w) investments are made in issuers that the Corporation does not control and accordingly such investments will be subject to the risk that the issuer of the securities may make business, financial or management decisions with which the Corporation does not agree or that the majority stakeholders or the management of the issuer may take risks or otherwise act in a manner that does not serve the Corporation’s interests.

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Administrative Services

Administrative services provided by the Corporation depend in some cases on software and services provided by third parties. The loss of these suppliers’ products or services, or problems or errors related to such products could have an adverse effect on the ability of the Corporation to effectively provide these administrative services. Significant changes to the pricing arrangements with such third parties could materially adversely affect operating results. There can be no assurance that the systems of key third party service providers will operate without interruption or that the providers will be able to prevent extended service interruptions in the event of a systems failure, natural disaster or outage, any of which could materially adversely affect the Corporation’s business, operations and profitability.

Risks Relating to the Corporation’s Proprietary Investments

The Corporation’s financial condition and profitability are dependent, in part, on the performance of its proprietary investment portfolio. Reduced returns on these proprietary investments may have a material adverse impact on the Corporation. Additional risks associated with the Corporation’s proprietary investments include the following risks.

Reliance on Management

Success of these investments depends on, among other things, the Corporation’s ability to manage its respective investments and assets. There is no guarantee that particular strategies employed will be successful, or that the Corporation will be able to continue to rely on the key personnel it depends on in this role.

Investments in the Corporation’s Investment Products

A significant portion of the Corporation’s proprietary investments are invested in the Corporation’s Investment Products. The value of the proprietary investments is dependent on the performance of the Investment Products. The performance of the Investment Products are subject to a number of risks, including those identified above in “Risk Factors - Risks Related to the Corporation’s Investment Products”, any of which may materially decrease the value of the proprietary investments.

Competitive Environment

The competitive environment for investments means there can be uncertainty in identifying and completing investment transactions which can result in less favourable investment terms than would otherwise be the case.

Concentration in Resource Sector

Investments made in commodities will have prices which are subject to large fluctuations and potential declines in value. Therefore, the Corporation’s proprietary investments that are concentrated in the resource sector are subject to larger fluctuations than the fluctuations that occur in the general market.

Illiquidity of Securities

The Corporation may experience difficulty liquidating its investments in securities of private and/or small capitalization companies due to the lack of a market or other restrictions on trading. In addition, securities exchanges typically have the right to suspend or limit trading which could render it impossible to liquidate positions in publicly traded companies. Either circumstance could lead to significant unanticipated losses.

Risks Related to the Lending Business

The Corporation’s results of operations are dependent, in part, on its lending business. The nature and credit quality of the Corporation’s and the Lending Funds' respective loan portfolios, including the quality of the collateral security that they each obtain, will impact upon the return they are each able to generate. Risks associated with the Corporation’s lending business include the following risks.

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Credit Risk and Default in Repayment Obligations by Borrowers

Credit risk is the risk that a borrower will not honour its commitments and a loss to the Corporation may result. In the event of a default by a borrower, there can be no assurance that the Corporation (either directly or indirectly via borrowers of the Lending Funds the Corporation co-invest with) or the Lending Funds, as applicable, will be able to secure repayment of the principal amount or interest accruing under the loan. If the Corporation or Lending Funds cannot realize on an outstanding loan due to a default by a borrower, the Corporation's financial condition and operating results will be adversely impacted.

Decline in the Value of Natural Resource Commodities

The Corporation is exposed to adverse changes in conditions which affect commodity prices and energy prices for its and the Lending Funds' resource loans. These market changes may be regional, national or international in nature and scope or may revolve around a specific asset. Risk is increased if the values of the underlying assets securing the Corporation’s or the Lending Funds' loans fall to levels approaching or below the loan amounts. Any decrease in commodity or energy prices may delay the development of the underlying security or business plans a borrower and will adversely affect the value of the Corporation’s or the Lending Funds' security. Additionally, the value of the Corporation’s or the Lending Funds' respective underlying security in a resource loan can be negatively affected if the actual amount or quality of the commodity proves to be less than that estimated or the ability to extract the commodity proves to be more difficult or more costly than estimated. If the underlying resource commodity against which the Corporation or the Lending Funds hold security declines in value, then the Corporation or the Lending Funds, as applicable, may not be able to recover the amount of all of an outstanding loan plus expenses in the event of a default by a borrower. If the Corporation or Lending Funds are unable to realize on their security to recover the principal amounts plus amounts on account of accrued interest and expenses in the event of a loan default or defaults, then the Corporation's financial condition and operating results will be adversely impacted. In addition, a general decline in the natural resource sector can materially reduce the value of any shares or warrants received in connection with loans made to borrowers.

Inability to Realize on or Dispose of Security Granted by Borrowers on a Defaulted Loan

The Corporation and the Lending Funds generally obtain security for their loans. This security may be in a variety of forms including, but not limited to, direct charges on mineral rights, mortgages, general security agreements, assignments of interests in property, pledges of shares and corporate guarantees. In addition, if the Corporation or the Lending Funds are required to enforce their respective security, the Corporation or the Lending Funds, as applicable, may incur significant expenses of sale, including legal and other expenses. There is no assurance that the net proceeds obtained from the enforcement of any security held by the Corporation or Lending Funds will be sufficient to recover the outstanding principal and accrued interest due under the relevant loan. If the Corporation or Lending Funds suffer a shortfall, then the Corporation's financial condition and operating results may be adversely impacted. There is no assurance that the Corporation or Lending Funds will be able to dispose of security on a timely basis and, as such, the Corporation's financial condition may be adversely affected.

Ability to Identify and Assess Candidates for Loans

The Corporation and Lending Funds rely on management to properly assess and identify qualified candidates for loans. Management undertakes an analysis of the fundamental business characteristics of all prospective borrowers and uses professionals in this assessment. Management researches factors that affect the credit risk of the borrower and the ability of the borrower to repay the loan. If management’s assessment of the ability of a borrower to repay a loan or the value of a borrower’s security is not correct, then the Corporation’s or Lending Funds' loans and revenues may be at greater risk than estimated by management with the result that the Corporation's financial condition and operating results may be adversely impacted.

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Leveraged Nature of Companies

The companies in the natural resource sector in which the Corporation and Lending Funds will invest may have leveraged capital structures. The Corporation or Lending Funds may be subject to increased exposure to adverse economic factors such as a rise in interest rates, fluctuations in the debt market, a downturn in the economy or deterioration in the condition of such company or its industry. As a result, these companies’ flexibility to respond to changing business and economic conditions may be limited. In the event that a company is unable to generate sufficient cash flow to meet principal and interest payments on its indebtedness, high leverage will magnify the adverse effect on the value of the Corporation’s, Lending Fund I's, Lending Fund II's or other lending vehicle's loan to such company. In the event any company cannot generate adequate cash flow to meet, service or repay its loan, the Corporation or Lending Funds, as applicable, may suffer a partial or total loss, which could adversely affect the returns of the Corporation.

Commodity Price Fluctuations

Future market values and the amount of future income is uncertain due to the fluctuation in the price of specific commodities. The Corporation or Lending Funds may each, from time to time, enter into certain precious metal loans, where the repayment is notionally tied to a specific commodity spot price at the time of the loan and downward changes to the price of the commodity can reduce the value of the loan and the amounts ultimately repaid to the Corporation or the Lending Funds.

Foreign Country and Political Risk

The Corporation or Lending Funds may enter into lending agreements with resource companies operating in various international locations. There are a number of risks that borrowers may face in foreign jurisdictions including, but not limited to, uncertain political or economic environments, terrorism or military action, civil disruption, changes to law or regulations, and government expropriation of property. Any of these risks could potentially adversely affect the borrower’s ability to repay its respective indebtedness with the Corporation or the Lending Funds. Changes in governments or policies could also adversely affect the Corporation and Lending Funds or potentially result in difficulty or an inability to realize on or dispose of security granted by borrowers. There is no assurance that governments will allow the transfer or sale of the underlying security.

Environmental

Operations of a resource company borrower will be subject to a variety of operating risks peculiar to the environment, such as forest fires, hurricanes or other adverse weather conditions, to more extensive governmental regulation, including regulations that may, in certain circumstances, impose strict liability for pollution damage, and to interruption or termination of operations by governmental authorities based on environmental or other considerations. Such operations could result in liability for personal injuries, property damage, oil spills, discharge of hazardous materials, remediation and clean-up costs and other environmental damages. A borrower (and, potentially, the Corporation or Lending Funds) could be liable for environmental damages caused by previous property owners. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could have material adverse effect on a borrower’s financial condition, results of operations and ability to repay the Corporation or Lending Funds, as applicable.

Syndication of Loans

The Corporation has, from time to time, entered into strategic relationships to syndicate certain loans as part of its strategy to diversify and manage risks associated with its loan portfolio, its liquidity position and to generate syndication fees. No assurance can be given that such existing strategic relationships will continue or that the terms and conditions of such relationships will not be modified in a way that renders them uneconomic. Furthermore, there can be no assurance that the Corporation will be able to enter into such relationships in the future. The inability to do so may adversely affect the Corporation’s ability to continue to service existing and prospective clients and manage its liquidity position.

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Interest Rate Fluctuations

Decreases in prevailing interest rates may reduce the interest rates that the Corporation or Lending Funds are able to charge borrowers. Increases in prevailing interest rates may result in fewer borrowers being able to afford the cost of a loan. Accordingly, fluctuations in interest rates may adversely impact the Corporation’s profitability.

Change in Environmental Laws and Regulations

Changes in environmental laws and regulations can adversely impact a borrower’s ability to repay its indebtedness with the Corporation or Lending Funds or obtain additional financing which could result in the Corporation’s business and operating or financial results being adversely impacted. If a borrower fails to meet applicable environmental laws and regulations or such laws or regulations are revised, a borrower’s licenses could be revoked or suspended; thereby reducing the value of the underlying security of the loan and/or the borrower’s ability to repay its indebtedness. In exchange for the loans they make, the Corporation or the Lending Funds may take security in the form of real property mortgages. If environmental issues were to arise where the Corporation, Lending Fund I, Lending Fund II or other lending vehicles are deemed to be in possession or acquires ownership of the property, the Corporation, Lending Fund I, Lending Fund II or other lending vehicles may be liable for remediation costs or other environmental liabilities.

Risks Relating to the Corporation’s Merchant Banking Division and Advisory Services Division

The Corporation’s financial condition and profitability are dependent, in part, on the performance of its Merchant Banking Division and Advisory Services Division, including capital markets activities. Reduced returns on these business lines may have a material adverse impact on the Corporation. Additional risks associated with the Corporation’s Merchant Banking Division and Advisory Services Division include the following risks.

Securities Law Liability

The merchant bank and advisory services business involves substantial risk of liability. An underwriter is exposed to substantial liability under securities laws, other laws and court decisions, including decisions with respect to underwriters’ liability and limitations on indemnification of underwriters by issuers. For example, a firm that acts as an underwriter may be held liable for misstatements or omissions of fact in a prospectus used in connection with the securities being offered or for statements made by its securities analysts or other personnel.

In such actions, similar to litigation risk, SCP would be obligated to bear legal, settlement and other costs (which may be in excess of available insurance coverage). In addition, although SCP may be indemnified, its rights to indemnification may be challenged. If SCP is required to incur all or a portion of the costs arising out of litigation or investigations as a result of inadequate insurance proceeds or a failure to obtain or defend a challenge to its indemnification entitlement, the Corporation’s results of operations, financial condition and liquidity would be materially adversely affected.

Industry Focus

Although SCP has taken steps to diversify their business by product and geography, it continues to be particularly dependent on the market for security offerings and M&A activity by issuers in the natural resources sector. The foregoing industry represented nearly all of the Corporation’s 2018 investment banking revenue. Volatility or uncertainty in the business environment or the market for the securities of issuers in this sector, will materially adversely affect the Corporation’s financial results and financial condition. The Corporation also derives a portion of its revenue from institutional brokerage transactions related to the securities of issuers in this sector. Revenue from such institutional brokerage transactions can be expected to decline when underwriting activities in this industry sector declines, the volume of trading on listed marketplaces declines, or industry sectors or individual issuers reported results below investor expectations.

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Fair Value Risk

The Corporation is exposed to fair value risk through its underwriting transactions and client trade facilitation. SCP may incur losses in connection with underwriting activities if it is unable to resell the securities it has committed to purchase or if it is forced to liquidate such securities at less than the agreed purchase price. Fair value risk may arise from SCP’s trading activities. While SCP holds a security, it is vulnerable to price fluctuations and may experience financial losses to the extent the value of the security decreases and it is unable to divest of its trading position in such security on a timely basis. In addition, SCP may retain significant concentrated positions in individual securities.

Risks Related to Organization, Structure and Common Shares

Share Price Fluctuation

The market price of the Common Shares could fluctuate significantly as a result of many factors, including the following: (i) economic and stock market conditions generally and specifically as they may impact participants in the investment management industry; (ii) the Corporation’s earnings and results of operations and other developments affecting the Corporation’s business; (iii) sales of additional Common Shares into the market by the shareholders who are a part of management of the Corporation (“Management Shareholders”), significant shareholders of the Corporation ("Significant Shareholders") and/or other employees of the Corporation; (iv) changes in financial estimates and recommendations by securities analysts following the Common Shares; (v) earnings and other announcements by, and changes in market evaluations of, participants in the investment management industry; (vi) changes in business or regulatory conditions affecting participants in the investment management industry; and (vii) trading volume of the Common Shares.

In addition, the financial markets have experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of companies and that have often been unrelated to the operating performance of such companies. Accordingly, the market price of the Common Shares may decline even if the Corporation’s operating results or prospects have improved or not changed.

Dilution and/or Consolidation

The Corporation may sell or issue additional Common Shares (or securities convertible or exchangeable into Common Shares) in the future to finance future activities. The Corporation cannot predict the size of future issuances of securities or the effect, if any, that future issuances and sales of securities will have on the market price of the Common Shares. Issuances of substantial numbers of Common Shares, or the perception that such issuances could occur, may adversely affect prevailing market prices of the Common Shares. With any additional issuance of Common Shares (or securities convertible or exchangeable into Common Shares), investors will suffer dilution to their voting power and the Corporation may experience dilution in its earnings per share.

On May 11, 2018, the Shareholders approved a future consolidation of the Corporation’s Common Shares on a basis of one post-consolidation Common Share for up to five pre-consolidation Common Share, if and at such time, as the Board in its sole discretion may determine. If the Corporation so consolidates the Common Shares, there can be no assurances that the market price of the consolidated Common Shares will increase as a result of a consolidation. The marketability and trading liquidity of the Common Shares may not improve after consolidation. Moreover, the consolidation may result in some Shareholders owning “odd lots” or less than 100 or 1,000 Common Shares, which may make it more difficult for such Shareholders to sell their Common Shares or which may make Shareholders to incur greater transaction costs per Common Share to sell.

Sales by Management Shareholders or Significant Shareholders

Subject to compliance with applicable securities laws, Management Shareholders and/or Significant Shareholders may sell some or all of their Common Shares in the future. No prediction can be made as to the effect, if any, such future sales of Common Shares by Management Shareholders and/or Significant Shareholders will have on the market price of the Common Shares prevailing from time to time. However, the future sale of a substantial number of Common Shares by Management Shareholders and/or Significant Shareholders, or the perception that such sales could occur, could adversely affect prevailing market prices for the Common Shares.

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Restrictions on Share Ownership and Transfer

The ownership of the Common Shares is subject to certain restrictions under legislation applicable to certain of the Corporation's subsidiaries and rules and regulations established by securities regulatory authorities and certain self-regulatory organizations. If any person (together with its associates and affiliates and any person acting jointly or in concert with it) controls or acquires control of, 10% or more of the issued and outstanding Common Shares (after giving effect to the conversion or exchange of any securities convertible or exchangeable into Common Shares that are controlled by such person, its associates and affiliates and any person acting jointly or in concert with it), the Corporation and/or its subsidiaries may be required to provide notice to, or require approval from, such securities regulatory authorities and self-regulatory organizations. The failure of the Corporation and/or its subsidiaries to so notify, or receive approval from, such entities may result in sanctions or the termination of memberships and/or registrations necessary for the operation of their business. The imposition of such sanctions or the termination of such memberships and/or registrations could have a material adverse effect on the business, financial results, financial condition and general business prospects of the Corporation and/or its subsidiaries. As a result of these restrictions, the market for significant blocks of Common Shares may be limited.

Dividends and DRIP

The payment of dividends is not guaranteed and the amount and timing of any dividends payable by the Corporation will be at the discretion of the Board and will be established on the basis of the Corporation’s earnings, the satisfaction of solvency tests imposed by applicable corporate law for the declaration and payment of dividends, and other relevant factors. In addition, the Corporation reserves the right to amend, suspend or terminate the dividend reinvestment plan (the "DRIP") at any time, but such action shall have no retroactive effect that would prejudice the interests of the participants.

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DIVIDENDS

All dividends are subject to declaration by the Board. Whether to declare any dividends and the amount of any such dividends are determined by the Board, in its sole discretion, after considering general business conditions, the Corporation’s financial results, including the level of performance fees paid to the Corporation, the Corporation’s solvency position and working capital requirements, and other factors it determines to be relevant at the time. The Corporation’s dividend policy currently provides that the Board will declare, and the Corporation will pay, quarterly dividends on its Common Shares in the amount of $0.03 per Common Share. In addition, the Board may annually declare a special dividend on each of its Common Shares following receipt of performance fees, if any. The amount and timing of such special dividend, if any, will be determined by the Board in its sole discretion. There is no certainty that any dividends will be declared or paid; however there is not currently any intention to change the Corporation's dividend policy. Any dividend policy established by the Board can be changed at any time and such policy is not binding on the Corporation.

Total dividends paid during the year ended December 31, 2018 were $30.3 million. During the last three financial years, the Corporation has declared and paid cash dividends per Common Share as noted below:

Dividend per Common Share	Record Date	Payment Date
$0.03	March 22, 2016	April 5, 2016
$0.03	May 25, 2016	June 8, 2016
$0.03	August 23, 2016	September 6, 2016
$0.03	November 21, 2016	December 6, 2016
$0.03	March 10, 2017	March 27, 2017
$0.03	May 18, 2017	June 2, 2017
$0.03	August 21, 2017	September 5, 2017
$0.03	November 17, 2017	December 4, 2017
$0.03	March 12, 2018	March 27, 2018
$0.03	May 21, 2018	June 5, 2018
$0.03	August 20, 2018	September 4, 2018
$0.03	November 19, 2018	December 4, 2018

No special dividend was declared in relation to performance fees earned in 2016, 2017 or 2018.

Unless indicated otherwise, all dividends on Common Shares will be designated as “eligible dividends” under the Income Tax Act (Canada).

In November 2016, the Corporation instituted a DRIP for Canadian shareholders. The DRIP provides a convenient and cost-effective method for eligible shareholders in Canada to maximize their investment in the Corporation by reinvesting their cash dividends to acquire additional Common Shares. Under the DRIP, the Corporation has the discretion to issue Common Shares from treasury at a discount of up to 5% in the Average Market Price (as defined in the DRIP). Any applicable discounts on dividend reinvestment common share purchases are announced at the time the Corporation declares a dividend. The DRIP is administered by the Plan Agent, TSX Trust Company.

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CAPITAL STRUCTURE

The authorized share capital of the Corporation consists of an unlimited number of shares designated as common shares, of which 252,994,590 Common Shares are issued and outstanding as of the date hereof.

Common Shares

Each Common Share entitles the holder thereof to receive notice of any meetings of shareholders of the Corporation, and to attend and cast one vote per Common Share at all such meetings. Holders of Common Shares are entitled to receive on a pro-rata basis (i) such dividends, if any, as and when declared by the Board at its discretion from funds legally available therefore; and (ii) upon the liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation after payment of debts and other liabilities (in each case subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares ranking senior in priority to, or on a pro rata basis with, the holders of Common Shares with respect to dividends or liquidation). The Common Shares do not carry any pre-emptive, subscription, redemption or conversion rights, nor do they contain any sinking or purchase fund provisions. See also “Dividends”.

Restriction on Share Ownership

The Corporation may not, without regulatory approval, permit an investor, alone or together with its associates and affiliates, to own voting securities carrying 10% or more of the votes carried by all voting securities in SAM, SCP or the Corporation, 10% or more of the outstanding participating securities of SAM, SCP or the Corporation, or an interest of 10% or more in the total equity of the Corporation.

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MARKET FOR SECURITIES

Trading Price and Volume

The Common Shares are listed and posted for trading on the TSX under the stock symbol “SII”. Information concerning the trading prices and aggregate volume of the Common Shares on the TSX during each month of fiscal 2018 is set out below:

Month	High ($)	Low ($)	Aggregate Volume
January	3.26	2.42	14,835,483
February	3.36	2.83	13,695,606
March	3.55	2.98	26,895,202
April	3.62	3.07	17,931,994
May	3.45	3.11	10,173,471
June	3.27	3.03	6,863,368
July	3.18	2.96	5,492,016
August	3.48	2.82	10,890,525
September	3.3	2.95	7,316,263
October	3.24	2.96	10,330,184
November	3.18	2.455	10,458,674
December	2.89	2.33	10,549,047

Prior Sales

The Corporation granted no stock options under the Option Plan during the most recently completed financial year.

The Corporation has granted the following restricted share units ("RSUs") under the EIP since January 1, 2018:

Date of Grant	Number of RSUs
March 7, 2018	1,900,000
May 31, 2018	200,000
August 17, 2018	100,000
November 16, 2018	168,820
December 4, 2018	27,718

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The Corporation has granted the following deferred share units (“DSUs”) under its Deferred Share Unit Plan since January 1, 2018:

Date of Grant	Number of DSUs	Issue Price ($)
March 27, 2018	7,023	3.06
April 13, 2018	20,397	3.34
June 5, 2018	7,107	3.14
July 13, 2018	22,841	3.07
September 4, 2018	7,209	3.22
October 15, 2018	22,541	3.05
December 4, 2018	8,961	2.69
January 15, 2019	26,856	2.56
Total DSUs Granted:	122,935

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ESCROWED SECURITIES

There were no securities of the Corporation held, to the knowledge of the Corporation, in escrow or that were subject to a contractual restriction on transfer during the Corporation’s most recently completed financial year.

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DIRECTORS AND EXECUTIVE OFFICERS

The Board consists of six directors. All directors were elected or appointed to serve until the next annual meeting of shareholders of the Corporation, subject to earlier resignation or removal. The following table sets forth the name; province or state and country of residence; position(s) held with the Corporation; principal occupation; period of directorship with the Corporation; and shareholdings of each of the directors and executive officers of the Corporation.

Name, Province/State and Country of Residence	Position(s) held with the Corporation	Principal Occupation	Director Since	Number of Voting Securities Owned or Controlled or Directed(1)	Percentage of Issued and Outstanding Voting Securities
Jack C. Lee(2)(3) Alberta, Canada	Chairman of the Board	Private Investor and President of Facet Resources Ltd. (private investment firm)	2008	260,504	0.10%
Ronald Dewhurst(3) Victoria, Australia	Director	Corporate Director	2017	—	—%
Sharon Ranson(2) Ontario, Canada	Director	President of The Ranson Group Inc. (executive coaching and consulting services firm)	2014	250,000	0.10%
Rosemary Zigrossi(2)(3) Ontario, Canada	Director	President, Odaamis Inc. (consulting services firm)	2014	35,000	0.01%
Arthur Richards Rule IV (4) California, United States	Director	President and CEO of Sprott USA	2011	26,370,827	10.40%
Peter Grosskopf(5) Ontario, Canada	CEO and Director	CEO of the Corporation and CEO of Sprott Resource Lending	2010	5,659,425	2.24%
Whitney George(6) Connecticut, United States	President	President of the Corporation, Chairman of Sprott. U.S. and CIO of SAM	N/A	11,207,240	4.43%
Kevin Hibbert(7) Ontario, Canada	Chief Financial Officer and Senior Managing Director	Chief Financial Officer and Co-Head, Enterprise Shared Services	N/A	908,189	0.36%
Arthur Einav(8) Ontario, Canada	General Counsel,  Corporate Secretary and Senior Managing Director	General Counsel, Co-Head, Enterprise Shared Services	N/A	1,037,074	0.41%
John Ciampaglia(9) Ontario, Canada	Senior Managing Director	CEO of SAM	N/A	930,282	0.37%
Steve Yuzpe(10) Ontario, Canada	Senior Managing Director	CEO of SRHI	N/A	1,045,432	0.41%

Notes:

(1) The information as to the number of Common Shares beneficially owned, directly or indirectly, or over which control or direction is exercised, by the directors and executive officers, not being within the knowledge of the Corporation, has been obtained from the System for Electronic Disclosure by Insiders.

(2) Member of the Audit and Risk Management Committee.

(3) Member of the Corporate Governance and Compensation Committee.

(4) 273,963 of the 26,370,827 Common Shares owned or controlled or directed by Mr. Rule were granted under the EIP and vested prior to December 31, 2018.

(5) 777,425 of the 5,659,425 Common Shares of Mr. Grosskopf's Common Shares were granted under the EPSP. 265,971 of the 777,425 Common Shares granted under the EPSP have not yet vested.

(6) 731,011 of the 11,207,240 Common Shares owned or controlled or directed by Mr. George were granted under the EIP and vested prior to December 31, 2018.

(7) All of Mr. Hibbert's 908,189 Common Shares were granted under the EPSP. 645,756 of 908,189 Common Shares granted under the EPSP have not yet vested.

(8) All of Mr. Einav's 1,037,074 Common Shares were granted under the EPSP. 637,500 of 1,037,074 Common Shares granted under the EPSP have not yet vested.

(9) All of Mr. Ciampaglia's 930,282 Common Shares were granted under the EPSP. 642,074 of 930,282 Common Shares granted under the EPSP have not yet vested.

(10) 1,036,682 of Mr. Yuzpe's 1,045,432 Common Shares were granted under the EPSP. 637,500 of 1,045,432 Common Shares granted under the EPSP have not yet vested.

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Each of the foregoing individuals have been engaged in the principal occupation set forth opposite his or her name during the past five years or in a similar capacity with a predecessor organization except for: (i) Whitney George, who prior to January 2016 served as Senior Portfolio Manager of Sprott U.S. and, prior to March 2015, served as Managing Director and Portfolio Manager of Royce & Associates LLC (asset manager); (ii) Kevin Hibbert, who, from January 2014 to December 4, 2015 served as the Vice-President, Finance of the Corporation and prior thereto, served as the Director, Finance of the Royal Bank of Canada; (iii) John Ciampaglia, who, from April 2010 to September 2014 served as Chief Operating Officer of SAM and from September 2014 to March 2018 served as Executive Vice-President, Corporate Development of the Corporation; and (iv) Steve Yuzpe, who, prior to February 2017, was the CEO and President of Sprott Resource Corp.

The directors and executive officers of the Corporation, as a group directly or indirectly, beneficially own, or control or direct 47,703,973 Common Shares, being 18.86% of the total issued and outstanding Common Shares.

Corporate Cease Trade Orders, Bankruptcies or Penalties or Sanctions

No director, officer or executive officer of the Corporation is, as of the date of this AIF, or was within ten years before the date of this AIF, a director, CEO or chief financial officer of any company (including the Corporation), that:

(a) was the subject of a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, (an “order”) that was issued while the director or executive officer was acting in the capacity as director, CEO or chief financial officer; or

(b) was subject to an order that was issued after the director or executive officer ceased to be a director, CEO or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, CEO or chief financial officer.

No director or executive officer of the Corporation, or a shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation:

(a) is, as of the date of this AIF, or has been within the ten years before the date of this AIF, a director or executive officer of any company (including the Corporation) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, other than Jack C. Lee who was a director of an Alberta-based private company at the time it sought protection under the Companies’ Creditors Arrangement Act; or

(b) has, within ten years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or become subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

No director or executive officer of the Corporation, or a shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation has been subject to:

(a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

All of the above disclosure also applies to any personal holding companies of any of the persons referred to above.

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LEGAL PROCEEDINGS AND REGULATORY ACTIONS

In June 2013, the Corporation and certain subsidiaries were named as defendants in a legal proceeding filed with the Ontario Superior Court of Justice relating to the Flatiron Market Neutral Limited Partnership ("Flatiron Fund") by Performance Diversified Fund, as plaintiff. The proceeding is in respect of a claim relating to an investment by the plaintiff in the Flatiron Fund. The plaintiff was a limited partner in the Flatiron Fund from 2006 until February 2013. The Corporation indirectly acquired the shares of the manager of the Flatiron Fund in August 2012. The orderly liquidation of the Flatiron Fund was announced in November 2012 and completed in February 2013.

Performance Diversified Fund claims damages in the amount of $60 million from the Corporation and certain subsidiaries and $5 million in other damages from the Corporation, certain subsidiaries and other defendants not related to the Corporation.

The Corporation denies any liability in connection with this claim and will vigorously defend the claim.

The Corporation has incurred nominal expenses in relation to this claim as at December 31, 2018 and expects most legal costs will be recoverable under its insurance policies and other contractual arrangements.

Management of the Corporation is not aware of any other material litigation or regulatory action that the Corporation may be a party to.

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INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Other than as described elsewhere herein, to the knowledge of the Corporation, no (i) director or executive officer of the Corporation, (ii) person or company who beneficially owns, or controls or directs, directly or indirectly, more than 10% of any class or series of outstanding voting securities of the Corporation; or (iii) associate or affiliate of any of the persons or companies referred to in (i) or (ii), has any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year that has materially affected or is reasonably expected to materially affect the Corporation.

The Corporation’s directors and officers are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosure by directors and officers of conflicts of interest and the fact that the Corporation will rely upon such laws in respect of any director’s or officer’s conflicts of interest or in respect of breaches of duty by any of its directors or officers. All such conflicts must be disclosed by such directors or officers in accordance with the Act, and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.

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TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Shares is TSX Trust Company at its principal office located at 100 Adelaide Street West, Suite 301, Toronto, Ontario, Canada M5H 4H1.

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MATERIAL CONTRACTS

Except for contracts entered into in the ordinary course of business, there were no contracts entered into during the 12-month period ended December 31, 2018 which are material or entered into before the 12-month period ended December 31, 2018, but are still in effect, and which are required to be filed with the Canadian securities regulatory authorities in accordance with Section 12.2 of National Instrument 51-102 - Continuous Disclosure Obligations.

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AUDIT AND RISK MANAGEMENT COMMITTEE INFORMATION

The Board has established an audit and risk management committee (the “Audit Committee”) comprised of Sharon Ranson (Chair), Jack C. Lee and Rosemary Zigrossi. All members of the Audit Committee are independent and non-executive directors of the Corporation. All members of the Audit Committee meet the independence and financial literacy requirements of National Instrument 52-110 Audit Committees. Ms. Ranson was an Adjunct Professor for the Master of Finance program at the Smith School of Business at Queen's University. Prior to founding her current business in 2002, Ms. Ranson spent over 20 years in the Financial Services industry in various executive positions. Ms. Ranson is a Fellow Chartered Accountant and has a Bachelor of Commerce and a Masters of Business Administration. Mr. Lee is President of Facet Resources Ltd., a private investment company. He is currently Chairman of the Corporation and also serves as Chairman of Alaris Royalty Corp. and Gryphon Petroleum Corp. He was previously Chairman of Ithaca Energy Inc., Chairman of Canetic Resources Trust (“Canetic”), President and CEO of Acclaim Energy Trust (“Acclaim”), a predecessor of Canetic, and Chairman of CanEra Energy Corp. Prior thereto, Mr. Lee was President and CEO of Danoil Energy Ltd., a predecessor of Acclaim. Mr. Lee has a Bachelor of Arts and a Bachelor of Commerce, is a member of the Institute of Corporate Directors and holds the ICD.D designation. Prior to establishing Odaamis Inc. in 2014, Ms. Zigrossi was a Director at Promontory Financial Group (a financial services consulting firm) from 2011 to 2014, and prior to that held various positions at the Ontario Teachers’ Pension Plan including Vice President, Asset Mix and Risk; Vice President, Venture Capital; and Controller. In addition, Ms. Zigrossi was an Assistant Vice President at J.P. Morgan (Canada). Ms. Zigrossi has a Bachelor of Commerce and is a Chartered Accountant and CFA charter holder.

The Board has adopted a written mandate for the Audit Committee, which sets out the Audit Committee’s responsibility in overseeing enterprise risk management, the accounting and financial reporting processes of the Corporation, audits of the financial statements of the Corporation, and the appointment, compensation, and oversight of the work of any registered external auditor employed by the Corporation for the purpose of preparing or issuing an audit report or related work. This mandate is reviewed and assessed at least annually or otherwise, as deemed appropriate, by the Board with the assistance of the Corporate Governance and Compensation Committee and the Audit Committee. A copy of this mandate is attached hereto as Appendix “A”.

At no time since January 1, 2017 has a recommendation of the Audit Committee to nominate or compensate an external auditor not been adopted by the Board.

Pre-Approval Policies and Procedures

The Audit Committee is responsible for the oversight of the work of the external auditor. As part of this responsibility, the Audit Committee is required to pre-approve the audit and non-audit services performed by the external auditor in order to assure that they do not impair the external auditor's independence from the Corporation. Accordingly, on May 12, 2016, the Audit Committee adopted an Audit and Non-Audit Pre-Approval Policy (the "Pre-Approval Policy"), which sets forth the procedures and the conditions pursuant to which services proposed to be performed by the external auditor may be pre-approved.

Unless a type of service has received the pre-approval of the Audit Committee for the fiscal year pursuant to the Pre-Approval Policy, it requires specific pre-approval by the Audit Committee if it is to be provided by the external auditor. Any proposed services exceeding the pre-approved cost levels or budgeted amounts for the fiscal year as specified in the Pre-Approval Policy, will also require specific pre-approval by the Audit Committee.

The Audit Committee considers whether such services raise any issue regarding the independence of the external auditor. For this purpose, the Audit Committee also takes into account whether the external auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Corporation's business, people, culture, accounting, systems, risk profile and other factors and whether the service might enhance the Corporation's ability to manage or control risk or improve audit quality. All such factors are considered as a whole, and no one factor is necessarily determinative.

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The Audit Committee is also mindful of the relationship between fees for audit and non-audit services in deciding whether to pre-approve any such services and may determine, for each fiscal year, the appropriate ratio between the total amount of fees for audit services, and audit-related services and the total amount of fees for tax services and for certain permissible non-audit services classified as all other services.

The Pre-Approval Policy describes the audit, audit-related, tax and all other services that have been granted the pre-approval of the Audit Committee. The term of such pre-approval is 12 months from the date of pre-approval, unless the Audit Committee considers a different period and states otherwise. The Audit Committee annually reviews and pre-approves the services that may be provided by the external auditor without obtaining specific pre-approval from the Audit Committee. The Audit Committee can add or subtract to the list of pre-approved services from time to time, based on subsequent determinations.

The Pre-Approval Policy also outlines a list of prohibited non-audit services which may not be provided by the Corporation's external auditor.

On August 9, 2018, the Audit Committee amended the Pre-Approval Policy to provide the CFO with the authority to review and approve services to be provided by an external audit firm that is not the Corporation's external auditor. On the same date, the Audit Committee also granted pre-approval for all audit, audit-related, tax and all other services to be provided to the Corporation by the external auditor as specified in the Pre-Approval Policy to an aggregate annual (fiscal year) maximum of $600,000 (other than specifically pre-approved audit services).

External Auditor Fees

KPMG LLP was appointed as the Corporation's auditors effective January 1, 2016.

For the fiscal years ended December 31, 2018 and December 31, 2017, the fees received and accrued by KPMG LLP are summarized below for each category:

Service(1)	Fees Incurred 2018	Fees Incurred 2017
Audit and Audit-Related Fees(2)	$544,132	$783,349
Tax Fees(3)	$145,100	$104,400
All Other Fees	—	—
Total Fees Paid	$689,232	$887,749

Notes:

(1) Fees do not include any fees related to services provided with respect to the funds managed by SAM. Fees for services related to the funds include: Audit and Audit-Related Fees - $922,160 (2017 - $488,427), Tax Fees - $24,450 (2017 - $66,505).

(2) Audit-related services include quarterly reviews, year-end audit fees and other audit and assurance related engagements.

(3) Tax services include tax return review, tax planning, GST work, tax research and other tax services.

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INTERESTS OF EXPERTS

KPMG LLP, the auditors of the Corporation, who have prepared an independent auditors’ report dated February 27, 2019 with respect to the consolidated financial statements of the Corporation for its fiscal year ended December 31, 2018, have advised that they are independent of the Corporation within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario.

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ADDITIONAL INFORMATION

Additional information relating to the Corporation may be found on SEDAR at www.sedar.com.

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Corporation’s securities and securities authorized for issuance under equity compensation plans, if applicable, is contained in the Corporation’s information circular for its most recent annual meeting of security holders involving the election of directors.

Additional financial information is provided in the Corporation’s financial statements and management’s discussion and analysis for its most recently completed financial year.

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APPENDIX A

SPROTT INC.

AUDIT AND RISK MANAGEMENT COMMITTEE MANDATE

General

The board of directors (the “Board”) of Sprott Inc. (the “Corporation”) has delegated the responsibilities, authorities and duties described below to the audit and risk management committee (the “Committee”). For the purpose of these terms of reference, the term “Corporation” shall include the Corporation and its subsidiaries.

The Committee shall be directly responsible for overseeing the accounting and financial reporting processes of the Corporation and audits of the financial statements of the Corporation, and the Committee shall be directly responsible for the appointment, compensation, and oversight of the work of any registered external auditor employed by the Corporation (including resolution of disagreements between management of the Corporation and the external auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. In so doing, the Committee will comply with all applicable Canadian securities laws, rules and guidelines, any applicable stock exchange requirements or guidelines and any other applicable regulatory rules.

Members

1. The Committee will be comprised of a minimum of three directors. Each Committee member shall satisfy the independence, financial literacy and experience requirements of applicable Canadian securities laws, rules and guidelines, any applicable stock exchange requirements or guidelines and any other applicable regulatory rules. In particular, each member shall be “independent” and “financially literate” within the meaning of Multilateral Instrument 52-110 Audit Committees (except as otherwise set forth in the limited exemptions contained therein). Determinations as to whether a particular director satisfies the requirements for membership on the Committee shall be made by the Board.

2. Members of the Committee shall be appointed annually by the Board at the first meeting of the Board after the annual general meeting of shareholders. Each member shall serve until such member’s successor is appointed, unless that member resigns or is removed by the Board or otherwise ceases to be a director of the Corporation. The Board shall fill any vacancy if the membership of the Committee is less than three directors.

3. The Chair of the Committee will be designated by the Board, on the recommendation of the Corporate Governance and Compensation Committee, or, if it does not do so, the members of the Committee may elect a Chair by vote of a majority of the full Committee membership. The Chair of the Committee shall, among other things, have the following duties and responsibilities:

(a) overseeing the structure, effectiveness of the Committee, membership and activities delegated to the Committee;

(b) chairing meetings of the Committee and encouraging free and open discussion at such meetings, including encouraging members to ask questions and express viewpoints during meetings;

(c) scheduling and setting the agenda for meetings of the Committee with input from other members of the Committee, the Board and management as appropriate;

(d) facilitating the timely, accurate and proper flow of information to and from the Committee, including reporting periodically to the Board;

(e) arranging sufficient time during meetings of the Committee to discuss agenda items;

(f) taking reasonable steps to ensure the duties of the Committee are understood by members; and

(g) carrying out such other duties as may reasonably be requested by the Board.

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Meetings

4. The Committee will meet at least quarterly and at such times and at such locations as the Chair of the Committee shall determine, provided that meetings shall be scheduled so as to permit the timely review of the Corporation’s quarterly and annual financial statements and related management discussion and analysis, if applicable. Notice of every meeting shall be given to the external auditor, who shall, at the expense of the Corporation, be entitled to attend and to be heard thereat. The external auditor or any member of the Committee may also request a meeting of the Committee. The Committee shall have an in-camera session without non-independent directors and management as a regular feature of each regularly scheduled meeting. The external auditor and management employees of the Corporation shall, when required by the Committee, attend any meeting of the Committee. Any director of the Corporation may request the Chair of the Committee to call a meeting of the Committee and may attend at such meeting or inform the Committee of a specific matter of concern to such director, and may participate in such meeting to the extent permitted by the Chair of the Committee.

5. Meetings of the Committee shall be validly constituted if a majority of the members of the Committee is present in person or by telephone conference. A resolution in writing signed by all the members of the Committee entitled to vote on that resolution at a meeting of the Committee is as valid as if it had been passed at a meeting of the Committee.

6. The Committee shall submit the minutes of all meetings to the Board, and when requested to, shall discuss the matters discussed at each Committee meeting with the Board.

Committee Charter and Performance

7. The Committee shall have a written charter that sets out its mandate and responsibilities and the Committee shall review and assess the adequacy of such charter and the effectiveness of the Committee at least annually or otherwise, as it deems appropriate, and propose recommended changes to the Corporate Governance and Compensation Committee who will do same and recommend changes to the Board for its approval. Unless and until replaced or amended, this mandate constitutes that charter.

Committee Authority and Responsibilities

8. General

The overall duties of the Committee shall be to:

(i) assist the Board in the discharge of its duties relating to the Corporation’s accounting policies and practices, reporting practices and internal controls;

(ii) establish and maintain a direct line of communication with the Corporation’s external auditor and assess their performance;

(iii) oversee the work of the external auditor engaged to prepare or issue an auditor’s report or to prepare other audit, review or attest services for the Corporation, including resolution of disagreements between management and the external auditor regarding financial reporting;

(iv) ensure that management has designed, implemented and is maintaining an effective system of internal controls and disclosure controls and procedures;

(v) monitor the credibility and objectivity of the Corporation’s financial reports;

(vi) report regularly to the Board on the fulfillment of the Committee’s duties, including any issues that arise with respect to the quality or integrity of the Corporation’s financial statements, the Corporation’s compliance with legal or regulatory requirements, the performance and independence of the external auditor or the internal audit function;

(vii) assist, with the assistance of the Corporation’s legal counsel, the Board in the discharge of its duties relating to the Corporation’s compliance with legal and regulatory requirements; and

(viii) assist the Board in the discharge of its duties relating to risk assessment and risk management.

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9. External Auditor

The external auditor will report directly to the Committee and the Committee should have a clear understanding with the external auditor that such auditor must maintain an open and transparent relationship with the Committee and that ultimate accountability of the auditor is to the shareholders of the Corporation. The duties of the Committee as they relate to the external auditor shall be to:

(i) review management’s recommendations for the appointment of the external auditor, and in particular their qualifications and independence, and recommend to the Board a firm of external auditors to be engaged and the compensation of such external auditor;

(ii) review the performance of the external auditor, including the fee, scope and timing of the audit, and make recommendations to the Board regarding the appointment or termination of the external auditor;

(iii) review, where there is to be a change of external auditor, all issues related to the change, including the information to be included in the notice of change of auditor called for under National Instrument 51-102 Continuous Disclosure Obligations or any successor legislation (“NI 51-102”), and the planned steps for an orderly transition;

(iv) review all reportable events, including disagreements, unresolved issues and consultations, as defined in NI 51-102, on a routine basis, whether or not there is to be a change of external auditor;

(v) ensure the rotation of partners on the audit engagement team of the external auditor in accordance with applicable law, standards or rules;

(vi) review and pre-approve non-audit services to be provided to the Corporation by the external auditor;

(vii) review and approve the engagement letters of the external auditor, both for audit and permissible non-audit services, including the fees to be paid for such services;

(viii) review the nature of and fees for any non-audit services performed for the Corporation by the external auditor and consider whether the nature and extent of such services could detract from the external auditor’s independence in carrying out the audit function; and

(ix) meet with the external auditor, as the Committee may deem appropriate, to consider any matter which the Committee or external auditor believes should be brought to the attention of the Board or shareholders of the Corporation.

10. Audits and Financial Reporting

The duties of the Committee as they relate to audits and financial reporting shall be to:

(i) review the audit plan with the external auditor and management;

(ii) review with the external auditor and management all critical accounting policies and practices of the Corporation (including any proposed changes in accounting policies), the presentation of the impact of significant risks and uncertainties, all material alternative accounting treatments that the external auditor has discussed with management, other material written communications between the external auditor and management (such as any management letter or schedule of unadjusted differences), and key estimates and judgments of management that may in any such case be material to financial reporting;

(iii) review the contents of the audit report;

(iv) question the external auditor and management regarding significant financial reporting issues discussed during the fiscal period and the method of resolution;

(v) review the scope and quality of the audit work performed;

(vi) review the adequacy of the Corporation’s financial and auditing personnel;

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(vii) review the co-operation received by the external auditor from the Corporation’s personnel during the audit, any problems encountered by the external auditor and any restrictions on the external auditor’s work;

(viii) review the evaluation of internal controls by the persons performing the internal audit function and the external auditor, together with management’s response to the recommendations, including subsequent follow-up of any identified weaknesses. Particular emphasis will be given to the adequacy of internal controls to prevent or detect any payments, transactions or procedures that might be deemed illegal or otherwise improper;

(ix) review the appointments of the Chief Financial Officer, persons performing the internal audit function and any key financial executives involved in the financial reporting process;

(x) review with management and the external auditor the Corporation’s interim unaudited financial statements and the annual audited financial statements in conjunction with the report of the external auditor thereon, and obtain an explanation from management of all significant variances between comparative reporting periods before recommending approval by the Board and the release thereof to the public; and

(xi) review the terms of reference for an internal auditor or internal audit function.

11. Accounting and Disclosure Policies

The duties of the Committee as they relate to accounting and disclosure policies and practices shall be to:

(i) review the effect of regulatory and accounting initiatives and changes to accounting principles of the Canadian Institute of Chartered Accountants or any successor thereto, which would have a significant impact on the Corporation’s financial reporting as reported to the Committee by management and the external auditor;

(ii) review the appropriateness of the accounting policies used in the preparation of the Corporation’s financial statements and consider recommendations for any material change to such policies;

(iii) review the status of material contingent liabilities as reported to the Committee by management;

(iv) review the status of income tax returns and potentially significant tax problems as reported to the Committee by management;

(v) review any errors or omissions in the current or prior years’ financial statements;

(vi) review and recommend approval by the Board before their release all public disclosure documents containing audited or unaudited financial results, including all press releases containing financial results, offering documents, annual reports, annual information forms and management’s discussion and analysis containing such results; and

(vii) satisfy itself that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements other than the public disclosure referred to in clause (vi), above, and periodically assess the adequacy of these procedures.

12. Risk Management

The duties of the Committee as they relate to risk management shall be to:

(i) review the design and effectiveness of the Corporation’s risk management systems and policies (including with respect to corporate reporting and disclosure, accounting and auditing controls and procedures, securities compliance and other matters pertaining to fraud against the Corporation and its shareholders) and, if considered appropriate, recommend such systems or policies to the Board for approval;

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(ii) review and consider with management the Corporation’s risk capacity, risk taking philosophy and approach to determining an appropriate balance between risk and reward, including remuneration policies in respect of performance objectives;

(iii) review and evaluate the Corporation’s significant financial risk exposures, including currency, interest rate, credit, and market risks, and the steps management has taken or has proposed to take to monitor and manage such risk exposures (through hedges, swaps, other financial instruments, and otherwise), in compliance with applicable policies;

(iv) review and discuss with management the Corporation’s significant non-financial risk exposures, including strategic, reputational, operational, regulatory, and business risks, and the steps management has taken or proposes to take to monitor and control such risk exposures in compliance with applicable policies;

(v) review and confirm with management that material non-financial information about the Corporation and its subsidiaries that is required to be disclosed under applicable law or stock exchange rules is disclosed;

(vi) review with management the quality and competence of management appointed to administer risk management functions;

(vii) review with management the Corporation’s compliance programs;

(viii) review the Corporation’s insurance coverage and deductible levels;

(ix) review, with legal counsel where required, such litigation, claims, tax assessments and other tax-related matters, transactions, material inquiries from regulators and governmental agencies or other contingencies which may have a material impact on financial results, the Corporation’s reputation or which may otherwise adversely affect the financial well-being of the Corporation;

(x) review and evaluate the Corporation’s susceptibility to fraud and corruption and management’s processes for identifying and managing the risks of fraud and corruption;

(xi) review complaints or concerns submitted to the Chair of the Committee with respect questionable treatment or alleged violations of financial reporting and other risk related matters in accordance with the Corporation’s Whistleblower Policy;

(xii) review and approve the statements to be included in the annual report, annual information form and any other disclosure documents concerning risk management; and

(xiii) consider other matters of a risk management nature as directed by the Board.

13. Other

The other duties of the Committee shall include:

(i) reviewing any inquiries, investigations or audits of a financial nature by governmental, regulatory or taxing authorities;

(ii) reviewing annual operating and capital budgets;

(iii) reviewing and reporting to the Board on difficulties and problems with regulatory agencies which are likely to have a significant financial impact;

(iv) establishing procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters; and the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters;

(v) reviewing and approving the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the Corporation;

(vi) inquiring of management and the external auditor as to any activities that may be or may appear to be illegal or unethical; and

(vii) at the request of the Board, investigating and reporting on such other matters as it considers necessary or appropriate in the circumstances.

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Authority to engage independent counsel and outside advisors

14. The Committee has the authority to engage independent counsel and other advisors it determines necessary to carry out its duties, to set and pay the compensation for any advisors employed by the Committee and to communicate directly with the internal and external auditors.

15. The Corporation shall provide appropriate funding, as determined by the Committee, in its capacity as a committee of the Board, for payment (a) of compensation to the external auditors employed by the issuer for the purposes of rendering or issuing an audit report and to any advisors engaged by the committee, and (b) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

March 6, 2018

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EX-99.2

Exhibit 99.2

Table of Contents

Letter to Shareholders	2
Management's Discussion and Analysis	3
Management's Responsibility for Financial Reporting	28
Independent Auditors' Report	29
Consolidated Financial Statements	33
Notes to the Consolidated Financial Statements	37

February 27, 2019

Dear Shareholders,

The fourth quarter of 2018 was difficult for investors as trade tensions and growth fears caused steep declines in equity markets and led most major asset classes into negative territory for the year. Amid broadly negative returns for the year, gold and silver were rare outliers, admirably performing their traditional roles as safe havens and portfolio diversifiers, returning 8% and 7% respectively during the quarter. Early in 2019, the outlook for precious metals improved further when, after three years of gradual tightening, the Fed finally blinked by not raising rates at its January meeting and signaling patience going forward. We believe that precious metals and their related equities are now poised for a multi-year uptrend, triggered by a growing realization that the Fed’s tightening cycle is reaching its conclusion.

Due largely to the strong late-year performance of gold and silver, Sprott’s assets under management (“AUM”) increased by approximately $0.5 billion during the fourth quarter to close the year at $10.6 billion. Adjusted base EBITDA for the quarter was $10.1 million or $0.04 per share, up $2.6 million (34%) from the prior period. The increase in earnings was due to higher net fees generated on the acquired CFCL assets and newly called capital and higher co-investment income generated in our lending LPs. These increases were partially offset by lower contributions from our Canadian and U.S broker-dealers. For the year ended December 31, 2018, we reported adjusted base EBITDA of $40.5 million or $0.16 per share.

With approximately 90% of our AUM concentrated in precious metal-related investments, we are pleased with our positioning and continue to focus on using this specialty to achieve profitable long-term growth.

In recent years, we have remained true to our contrarian roots by investing in the business while others in the precious metals space have retreated. We have strengthened our management team with the appointment of Whitney George as President of Sprott and deepened our mining and portfolio management expertise with the addition of Dr. Neil Adshead at Sprott US. Looking ahead, we are focused on growing our business by increasing the scale of key units such as Private Lending and our Exchange-Listed products. We are also rebuilding our managed equities platform and recently took another step in this direction by launching a new joint venture with John Hathaway and the Tocqueville precious metals team.

At Sprott we are committed to being at the forefront of innovation in the precious metals sector and have made early stage investments in a number of digital gold platforms. With investor sentiment towards the sector improving, we believe these platforms could be poised for widespread adoption in the years ahead.

Thank you for your continued support. We look forward to reporting to you on our progress throughout the year.

Sincerely,

 

Peter Grosskopf

Chief Executive Officer

     2 

Management's Discussion and Analysis

Year ended December 31, 2018

     3 

FORWARD LOOKING STATEMENTS

Certain statements in this Management's Discussion & Analysis ("MD&A"), and in particular the "Business Highlights and Growth Initiatives" section and "Outlook" subsection, contain forward-looking information (collectively referred to herein as the "Forward-Looking Statements") within the meaning of applicable 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) expectations regarding continued wind-down of balance sheet lending as we grow the AUM in our suite of lending LPs, including that balance sheet run-off will reach a conclusion by the end of 2019, leading to material increases in lending LP management fees in 2020 and onwards; (ii) expectations regarding deployment of capital called into our lending LPs in 2019; (iii) expectation that the strong finish to the price of gold in the year will carry forward to 2019; (iv) expectation that there will be a lower redemption experience for exchange listed products in 2019; (v) expectation that the average AUM for exchange listed products will likely be lower in 2019; (vi) expectation that, to the extent that loan repayments outpace capital deployments, declines in 2019 interest income could outpace increases in management fees from our lending LPs; (vii) anticipation that earnings from the alternative asset management business will be relatively flat to slightly positive year-over-year; (viii) expectation that equity origination and placement fee activities will continue to come under pressure in 2019 as it did in 2018; (ix) expectation that we will see a material decrease in compensation expense in 2019 and the primary reasons causing such decrease as described under the heading “Outlook - Corporate”; (x) our belief that management fees and interest income will continue to be sufficient to satisfy ongoing operating needs and that we hold sufficient cash and liquid securities to meet any other operating and capital requirements; and (xi) the declaration, payment and designation of dividends.

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; and (iv) those assumptions disclosed herein under the heading "Significant Accounting Judgments, Estimates and Changes in Accounting Policies". 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 favourable 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 lending business; (xxvii) risks relating to the Company’s merchant bank and advisory business; (xxviii) those risks described under the heading "Risk Factors" in the Company’s annual information form dated February 27, 2019; and (xxix) those risks described under the headings "Managing Risk: Financial" and "Managing Risk: Non-Financial" 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 Canadian securities laws.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This MD&A of financial condition and results of operations, dated February 27, 2019, presents an analysis of the consolidated financial condition of the Company and its subsidiaries as at December 31, 2018, compared with December 31, 2017, and the consolidated results of operations for the three and twelve months ended December 31, 2018, compared with the three and twelve months ended December 31, 2017. The Board of Directors approved this MD&A on February 27, 2019. All note references in this MD&A are to the notes to the Company's December 31, 2018 audited consolidated financial statements ("financial statements"), unless otherwise noted. The Company was incorporated under the Business Corporations Act (Ontario) on February 13, 2008.

PRESENTATION OF FINANCIAL INFORMATION

The 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 financial statements. The Canadian dollar is the Company's functional and reporting currency for purposes of preparing the financial statements given that the Company conducts most of its operations in that currency. Accordingly, all dollar references in this MD&A are in Canadian dollars, unless otherwise specified. The use of the term "prior period" refers to the three and twelve months ended December 31, 2017.

     4 

KEY PERFORMANCE INDICATORS (NON-IFRS 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 include:

Assets Under Management

Assets Under Management ("AUM") refers to the total net assets managed by the Company through its various investment product offerings, managed accounts and managed companies.

Net Sales & Capital Calls

Sales and capital calls, net of redemptions and distributions, are key performance indicators as the amount of new net assets being added to the total AUM of the Company will lead to higher management fees and can potentially lead to increased carried interest and performance fee generation given that AUM is also the basis upon which carried interest and performance fees are calculated.

Net Fees

Management fees, carried interest and performance fees, net of trailer fees, sub-advisor fees, carried interest and performance fee payouts, is a key revenue indicator as it represents the net revenue contribution after directly associated costs that we generate from our AUM.

Net Commissions

Commissions, net of commission expenses, arise from the transaction based service offerings of our Canadian and U.S broker-dealers.

     5 

EBITDA, Adjusted EBITDA and Adjusted base EBITDA

EBITDA in its most basic form is defined as earnings before interest expense, income taxes, depreciation and amortization. EBITDA 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.

Neither EBITDA, adjusted EBITDA or adjusted base EBITDA have 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 measures are determined:

	3 months ended						12 months ended
(in thousands $)	Dec. 31, 2018			Dec. 31, 2017			Dec. 31, 2018			Dec. 31, 2017
Net income (loss) for the periods		9,831			2,519			31,379			37,532
Adjustments:
Interest expense		312			22			419			201
Provision (recovery) for income taxes		3,383			(1,234	)		1,278			5,774
Depreciation and amortization		598			1,386			2,199			6,427
EBITDA		14,124			2,693			35,275			49,934
Other adjustments:
(Gains) losses on proprietary investments		(3,912	)		63			5,782			5,189
(Gains) losses on foreign exchange		(2,026	)		(340	)		(2,310	)		7,412
Non-cash stock-based compensation		1,738			1,275			5,199			1,662
Net proceeds from Sale Transaction		—			915			(4,200	)		(31,691	)
Unamortized placement fees		(279	)		349			(1,093	)		5,057
Other expenses(1)		447			3,886			2,746			4,788
Adjusted EBITDA		10,092			8,841			41,399			42,351
Other adjustments:
Carried interest and performance fees		—			(3,584	)		(1,802	)		(4,676	)
Carried interest and performance fee related expenses		—			2,267			915			2,489
Adjusted base EBITDA		10,092			7,524			40,512			40,164

⁽¹⁾ See Other Expenses in Note 7 of the financial statements. In addition to the items outlined in Note 7, Other also includes severance accruals of $Nil for the 3 months ended (2017 - $2.2 million) and $0.5 million for the 12 months ended (2017 - $2.5 million).

     6 

BUSINESS OVERVIEW

Our reportable operating segments are as follows:

             ^{* These reportable operating segments substantially form our "Private Resource Investments" Platform. Previously, we separately disclosed the results of our Consulting segment.}

Exchange Listed Products

• The Company's closed-end physical trusts and exchange traded funds ("ETFs").

Alternative Asset Management

• The Company's alternative investment strategies and sub-advised products.

Global

• The Company's U.S operations, including: 1) fixed-term limited partnership vehicles, 2) discretionary managed accounts; and 3) U.S.-based broker-dealer.

Lending

• The Company's lending activities occur through limited partnership vehicles ("lending LPs"). Balance sheet lending continues to wind-down as we grow the AUM in our suite of lending LPs.

Merchant Banking & Advisory Services

• The Company's Canadian merchant banking and advisory services activities through Sprott Capital Partners ("SCP"), a division of Sprott Private Wealth LP ("SPW").

Corporate

• Provides the Company's various operating segments with capital, balance sheet management and other shared services.

All Other Segments

• Given its immateriality relative to the three quantitative tests of IFRS 8, effective Q1 2018, the Consulting segment no longer met the definition of a reportable segment. Consequently, this segment is now included as part of "All Other Segments" in Note 14 of the financial statements. Consulting is the only segment in this category as all other Company segments are reportable.

For a detailed account of the underlying principal subsidiaries within our reportable business segments, refer to the Company's Annual Information Form and Note 2 of the financial statements.

     7 

BUSINESS HIGHLIGHTS AND GROWTH INITIATIVES

Investment Performance

Market value appreciation was $929 million during the quarter, and on a full year basis was down $16 million. Strong precious metals prices in the fourth quarter offset a significant amount of market value depreciation experienced earlier in the year.

Product and Business Line Expansion

• AUM in our lending LPs stood at $498 million (US$365 million) as of December 31, 2018. This was due to $246 million (US$164 million) of new capital calls into our lending LPs (net of capital distributions) during the year. Subsequent to year-end, total uncalled capital (i.e. committed but not yet called into our lending LPs) stood at $965 million (US$707 million). The $625 million (US$449 million) increase from September 30, 2018 was primarily due to the December and January closings of an additional $590 million (US$432 million) in capital commitments.

• On January 29, 2018, the Company completed the sale of its non-core private wealth client business (together with the August 1, 2017 sale of its non-core Canadian diversified funds business, referred to as the "Sale Transaction").

• On January 16, 2018, the Company successfully closed on the acquisition of Central Fund of Canada Limited ("CFCL") for $120 million, plus a contingent earn-out. This transaction added $4.3 billion to Company AUM at the time. Upon closing, the assets of CFCL were transfered to the Sprott Physical Gold & Silver Trust ("CEF").

Outlook

Exchange Listed Products

• We expect the strong finish to the price of gold in the year to carry forward to 2019, however, the benefit of higher gold prices will be somewhat offset by starting 2019 with a lower AUM base given our 2018 redemption experience (15% of acquired CFCL assets).

Lending

• We expect a relatively steady deployment of called capital (AUM growth) into our lending LPs in 2019, ranging from US$200 million - US$400 million by end of that year. Over that same time period, we expect our legacy balance sheet loans to continue running off at about the same pace it has historically. However, to the extent that loan repayments outpace capital deployments, declines in 2019 interest income could outpace increases in 2019 management fees from our lending LPs. We anticipate the balance sheet run-off to reach a conclusion by end of 2019.

Alternative Asset Management

• We anticipate earnings from this business to be relatively flat to slightly positive year-over-year.

Canadian & U.S. broker-dealer businesses

• We expect the pace of equity origination and placement fee activity to be similar in 2019 to what it was in 2018.

Corporate

• We expect to see a material decrease in corporate expenses in 2019, primarily due to: (1) lower LTIP amortization as the graded vesting schedule of the 2017 grants reach the low points of the amortization schedule; and (2) slightly flat to lower SG&A as we continue our cost containment efforts.

     8 

SUMMARY FINANCIAL INFORMATION

(In thousands $)	Q4 2018			Q3 2018			Q2 2018			Q1 2018			Q4 2017			Q3 2017			Q2 2017			Q1 2017
SUMMARY INCOME STATEMENT
Management fees		13,182			13,722			14,559			14,056			10,247			13,597			20,460			20,677
Carried interest and performance fees		—			—			685			1,117			3,584			835			126			131
less: Trailer fees		38			45			49			47			225			617			2,762			2,944
less: Sub-advisor fees		—			—			—			—			—			426			1,124			1,060
less: Carried interest and performance fee payouts		—			—			356			559			2,267			—			12			16
Net Fees		13,144			13,677			14,839			14,567			11,339			13,389			16,688			16,788
Commissions		6,414			4,573			7,516			8,857			7,366			4,746			8,878			8,200
less: Commission expense		2,704			2,447			2,701			3,667			2,855			1,553			3,364			3,208
Net Commissions		3,710			2,126			4,815			5,190			4,511			3,193			5,514			4,992
Interest income		4,244			4,824			3,293			2,775			3,588			2,789			3,387			5,829
Gains (losses) on proprietary investments		3,912			(4,765	)		(3,050	)		(1,879	)		(63	)		(3,770	)		613			(1,969	)
Gains (losses) on long-term investments		3,007			(151	)		(72	)		56			3,639			—			—			—
Other income (loss)		2,453			(275	)		3,683			6,533			1,144			31,487			(2,648	)		1,338
Total Net Revenues		30,470			15,436			23,508			27,242			24,158			47,088			23,554			26,978
Compensation (1)		11,163			8,167			10,634			9,485			10,631			5,655			11,784			12,461
Compensation - severance accruals		38			359			—			149			2,193			62			196			1
Placement and referral fees		368			223			148			204			833			782			4,628			68
Selling, general and administrative		4,483			3,430			4,920			4,652			5,761			5,208			6,163			6,566
Expected credit loss provisions (recoveries) (2)		—			—			—			—			—			—			—			(4,942	)
Amortization and impairment charges		598			457			456			688			1,386			1,473			1,778			1,790
Other expenses		606			790			802			1,179			2,069			703			289			934
Total Expenses		17,256			13,426			16,960			16,357			22,873			13,883			24,838			16,878
Net Income (Loss)		9,831			1,975			5,916			13,657			2,519			29,804			(3,606	)		8,815
Net Income (Loss) per share		0.04			0.01			0.02			0.06			0.01			0.12			(0.01	)		0.04
Adjusted base EBITDA		10,092			9,707			10,686			10,027			7,524			8,007			8,751			15,882
Adjusted base EBITDA per share		0.04			0.04			0.04			0.04			0.03			0.03			0.04			0.06
SUMMARY BALANCE SHEET
Total Assets		428,215			401,366			403,985			407,177			409,849			408,093			387,636			426,647
Total Liabilities		55,094			36,486			36,372			42,417			65,985			61,707			62,925			64,113
Cash		47,252			41,452			37,974			52,097			156,120			152,952			96,572			113,882
less: syndicate cash holdings		(10,421	)		(967	)		(796	)		(932	)		(776	)		(649	)		(477	)		(3,838	)
Net cash		36,831			40,485			37,178			51,165			155,344			152,303			96,095			110,044
Proprietary and long-term investments		129,271			115,744			120,853			96,352			114,327			134,306			137,505			156,097
less: obligations related to securities sold short		(255	)		—			(2,927	)		(8,543	)		(24,993	)		(25,988	)		(26,577	)		(30,157	)
Net investments		129,016			115,744			117,926			87,809			89,334			108,318			110,928			125,940
Loans receivable		36,021			36,532			40,208			50,467			48,673			46,215			67,804			73,336
Investable Capital		201,868			192,761			195,312			189,441			293,351			306,836			274,827			309,320
ASSETS UNDER MANAGEMENT
Exchange Listed Products		8,164,136			7,560,651			8,530,082			9,014,378			4,634,068			4,539,751			4,591,479			4,758,403
Alternative Asset Management		799,942			868,003			1,009,007			1,054,745			1,115,114			1,177,214			3,323,611			3,529,068
Private Resource Investments (3)		1,614,348			1,637,458			1,586,953			1,522,090			1,574,200			1,474,547			1,391,367			1,404,955
Total Enterprise AUM		10,578,426			10,066,112			11,126,042			11,591,213			7,323,382			7,191,512			9,306,457			9,692,426

⁽¹⁾ Compensation includes stock-based compensation, but excludes commission expense, carried interest and performance fee payouts, which are reported net of commission revenue, carried interest and performance fees, respectively.

⁽²⁾ Starting Q1, 2018, in order to comply with the new IFRS 9 accounting standard, an expected loss model was used. In the periods prior to Jan 1, 2018, an incurred loss model was used as per IAS 39. See Changes in accounting policies in Note 2 of the annual financial statements.

⁽³⁾ Primarily includes the AUM of our Consulting, Global and Lending segments.

     9 

RESULTS OF OPERATIONS

AUM SUMMARY

AUM was $10.6 billion as at December 31, 2018, up $0.5 billion (5%) from September 30, 2018 and up $3.3 billion (44%) from December 31, 2017. The increase on a three months ended basis was primarily due to higher precious metal prices in our physical trusts net of redemptions. The increase on a full year basis was primarily due to the successful acquisition of CFCL and higher capital calls activity (AUM) in our lending LPs. These increases more than offset the redemption activity in our physical trusts and sub-advised product offerings.  

3 months results

In millions $	AUM Sept. 30, 2018		Net Sales  & Capital Calls			Market Value Change			Distributions, Acquisitions  & Divestitures			AUM Dec. 31, 2018
Exchange Listed Products
- Physical Trusts		7,320		(300	)(1)		907			—		7,927
- ETFs		241		(41	)		37			—		237
		7,561		(341	)		944			—		8,164
Alternative Asset Management
- In-house		376		—			(30	)		(51	)	295
- Sub-advised		492		(3	)		16			—		505
		868		(3	)		(14	)		(51	)	800
Private Resource Investments
- Managed Companies		595		—			11			—		606
- Private Resource Lending LPs		493		35			27			(57	)(2)	498
- Fixed Term LPs		270		—			(27	)		—		243
- Separately Managed Accounts		279		—			(12	)		—		267
		1,637		35			(1	)		(57	)	1,614
Total		10,066		(309	)		929			(108	)	10,578

^{(1) Total CFCL units acquired on January 16, 2018 were 252 million. For the 3 months ended December 31, 2018, 9 million units ($139 million or 4%) were redeemed.}

^{(2) Distributions of principal receipts to clients of our lending LPs.}

12 months results

In millions $	AUM Dec. 31, 2017		Net Sales & Capital Calls			Market Value Change			Distributions, Acquisitions & Divestitures			AUM Dec. 31, 2018
Exchange Listed Products
- Physical Trusts		4,200		(883	)(1)		273			4,337		7,927
- ETFs		434		(131	)		(66	)		—		237
		4,634		(1,014	)		207			4,337		8,164
Alternative Asset Management
- In-house		405		(10	)		(49	)		(51	)	295
- Sub-advised		710		(92	)		(113	)		—		505
		1,115		(102	)		(162	)		(51	)	800
Private Resource Investments
- Managed Companies		706		—			(2	)		(98	)	606
- Private Resource Lending LPs		252		320			47			(121	)(2)	498
- Fixed Term LPs		308		—			(65	)		—		243
- Separately Managed Accounts		308		—			(41	)		—		267
		1,574		320			(61	)		(219	)	1,614
Total		7,323		(796	)		(16	)		4,067		10,578

⁽¹⁾ Total CFCL units acquired on January 16, 2018 were 252 million. For the 12 months ended December 31, 2018, 37 million units ($616 million or 15%) were redeemed.

⁽²⁾ Distributions of principal receipts to clients of our lending LPs.

     10 

MANAGEMENT FEES BREAKDOWN

Below is a detailed list of management fee rates on our fund products as at December 31, 2018 (in thousands $):

FUND	AUM		BLENDED NET MANAGEMENT FEE RATE			CARRIED INTEREST AND PERFORMANCE FEE CRITERIA
Exchange Listed Products
Sprott Physical Gold and Silver Trust		3,830,912		0.40	%	N/A (1)
Sprott Physical Gold Trust		2,763,268		0.35	%	N/A (1)
Sprott Physical Silver Trust		1,194,220		0.45	%	N/A (1)
Sprott Gold Miner's ETF		179,440		0.57	%	N/A (1)
Sprott Physical Platinum & Palladium Trust		138,562		0.50	%	N/A (1)
Sprott Jr. Gold Miner's ETF		57,734		0.57	%	N/A (1)
Total		8,164,136		0.40	%
Alternative Asset Management: In-house
Sprott U.S. Value Strategies		248,570		1.00	%	15% of all net profits in excess of the HWM
Separately Managed Accounts (2)		45,970		1.00	%	N/A
Total		294,540		1.00	%
Alternative Asset Management: Sub-advised
Bullion Funds (3)		311,261		0.51	%	10% excess over applicable benchmark indices
Corporate Class Funds (3)		106,789		0.75	%	10% excess over applicable benchmark indices
Flow-through LPs (3)		87,352		0.70	%	20% of all net profits in excess of the HWM
Total		505,402		0.59	%
Private Resource Investments
Managed Companies (4)		605,598		0.50	%	N/A
Sprott Private Resource Lending LPs		498,231		1.23	%	15-70% of net profits over guaranteed return
Separately Managed Accounts (5)		267,068		0.61	%	20% of net profits over guaranteed return
Fixed Term Limited Partnerships		243,451		1.70	%	15-30% over guaranteed return
Total		1,614,348		0.92	%
Total AUM		10,578,426		0.51	%

⁽¹⁾ Exchange listed products do not attract performance fees, however the management fees they generate are closely correlated to precious metals prices.

⁽²⁾ Institutional managed accounts.

⁽³⁾ Management fee rate represents the net amount received by the Company as sub-advisor for these products.

⁽⁴⁾ Includes Sprott Resource Holdings Inc. and Sprott Korea Corp.

⁽⁵⁾ Includes our private equity strategy in Sprott Asia and high net worth discretionary managed accounts in the U.S.

     11 

KEY REVENUE LINES

Net Fees in the quarter were $13.1 million, up $1.8 million (16%) from the prior period and were $56.2 million on a full year basis, down $2.0 million (3%). The increase on a three months ended basis was due to management fee generation on the newly acquired CFCL assets in our Exchange Listed Products platform. We also experienced increased fee generation from our lending LPs as we continue to deploy called capital as fee earning AUM. On a full year basis, excluding net fees that were earned last year on the diversified assets sold as part of the Sale Transaction, Net Fees were up $14.9 million (36%). The increase on a normalized basis was due to management fee generation on the newly acquired CFCL assets in our Exchange Listed Products platform. We also experienced increased fee generation from our lending LPs as we continue to deploy called capital as fee earning AUM.

^{(1) Excludes fees generated from the non-core assets sold in August 2017.}

Interest Income in the quarter was $4.2 million, up $0.7 million (18%) from the prior period and was $15.1 million on a full year basis, down $0.5 million (3%). The increase on a three months ended basis was primarily due to increased co-investments in our lending LPs. Excluding last year's impact of catch-up interest recorded on a previously impaired loan, interest income on a full year basis was up $2.2 million (17%). The full year increase on a normalized basis was primarily due to the early settlement of loans and income generation from our co-investments in lending LPs.

⁽¹⁾ $965 million (US$707 million) of committed capital remains uncalled (future AUM).

Net Commissions in the quarter were $3.7 million, down $0.8 million (18%) from the prior period and were $15.8 million on a full year basis, down $2.4 million (13%). The decline was due to lower equity origination and placement activities in both our Canadian and U.S broker-dealers.

     12 

KEY EXPENSE LINES

Compensation, excluding commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance accruals which are non-recurring, was $11.2 million, up $0.5 million (5%) from the prior period and was $39.4 million on a full year basis, which was down $1.1 million (3%).The increase on a three months ended basis was mainly due to year-end incentive accrual true-ups. The decrease on a full year basis was primarily due to lower head count as a result of last year's Sale Transaction which more than offset the higher equity amortization.

SG&A was $4.5 million in the quarter, down $1.3 million (22%) from the prior period and was $17.5 million on a full year basis, down $6.2 million (26%). This was largely due to lower rent, marketing, sales, professional fees, technology and fund operating expenses as a result of last year's Sale Transaction, and to a lesser extent, our on-going cost containment program.

ADDITIONAL REVENUE AND EXPENSE HIGHLIGHTS

Proprietary investments gains during the quarter and losses on a full year basis were due to market value movements of certain resource equity holdings and bullion investments.

Gains on long-term investments were due to market value appreciation of our strategic long-term investments.

Other income was higher in the quarter and lower on a full year basis. The increase in the quarter was mainly from foreign exchange gains on U.S dollar dominated cash, receivables and loans. The decrease on a full year basis was primarily due to net sales proceeds received on last year's Sale Transaction in the prior period.

Placement and referral fees were lower in the quarter and on a full year basis due to less usage of placement agents in our lending business.

Expected credit loss provisions ("ECL") were $Nil in the quarter, however on transition to IFRS 9 in the first quarter of this year, a Stage 1 ECL provision of $50 thousand was charged to opening retained earnings (December 31, 2017 - $Nil).

Amortization of intangibles was lower due to finite life fund management contracts in our Global segment being fully amortized in the first quarter of this year.

Amortization of property and equipment had a nominal increase on a three months ended basis and was flat on a full year basis.

Other expenses were lower in the quarter and on a full year basis, due to lower costs related to our energy assets.

     13 

Adjusted Base EBITDA

3 months results

Adjusted base EBITDA in the quarter was $10.1 million, up $2.6 million (34%) from the prior period. The increase in earnings was due to higher net fees generated on the newly acquired CFCL assets and newly called capital (AUM) and higher co-investment income generated in our lending LPs. These increases were partially offset by lower fees earned on U.S. based fixed-term LPs and lower net commissions due to lower equity origination and placement activities in both our Canadian and U.S broker-dealers.

12 months results

Adjusted base EBITDA on a full year basis was $40.5 million, up $0.3 million (1%). Excluding the impact of last year's Sale Transaction, catch-up interest and loan loss reversal, adjusted base EBITDA was up $13.7 million (51%). The increase in earnings on a normalized basis was due to higher net fees generated on the newly acquired CFCL assets and newly called capital (AUM) and higher co-investment income generated in our lending LPs. These increases were partially offset by lower fees earned on U.S. based fixed-term LPs and lower net commissions due to lower equity origination and placement activities in both our Canadian and U.S broker-dealers.

^{(1) Net of consolidation eliminations and non-reportable segments. See Note 14 of the annual financial statements.}

^{(2) Excludes EBITDA generated in 2017 from: 1) non-core assets sold in our Alternative Asset Management segment; and 2) loan loss provision reversal and related catch-up interest in our Lending segment.}

     14 

Balance Sheet

Investable Capital was $202 million, down $91 million (31%) from December 31, 2017. The decrease was primarily due to the purchase of CFCL assets in January of this year.

Total Assets were $428 million, up $18 million (4%) from December 31, 2017. The slight increase was primarily due to increased intangible assets attributable to the CFCL transaction, offset by the deployment of investable capital previously described.

Total Liabilities were $55 million, down $11 million (17%) from December 31, 2017. The decrease was largely due to lower obligations related to securities sold short as we unwind certain hedge positions in our proprietary investments.

Total Shareholder's Equity was $373 million, up $29 million (9%) from December 31, 2017. The increase was primarily due to the issuance of share capital on purchase of CFCL.

     15 

REPORTABLE OPERATING SEGMENTS

Exchange Listed Products

	3 months ended				12 months ended
(In thousands $)	Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2018		Dec. 31, 2017
SUMMARY INCOME STATEMENT
Management fees		7,511		4,672		32,652		18,579
Other income (loss)		719		94		827		(595	)
Total Revenues		8,230		4,766		33,479		17,984
Compensation		1,047		1,708		4,473		3,669
Selling, general and administrative		802		588		3,295		2,655
Amortization and impairment charges		316		340		1,259		1,369
Other expenses		—		—		30		—
Total Expenses		2,165		2,636		9,057		7,693
Net Income before income taxes		6,065		2,130		24,422		10,291
Adjusted base EBITDA		5,675		2,376		24,924		12,255
Total AUM		8,164,136		4,634,068		8,164,136		4,634,068

3 and 12 months ended

Adjusted base EBITDA in the quarter was $5.7 million, up $3.3 million from the prior period and $24.9 million on a full year basis, up $12.7 million:

• The increase was primarily due to higher management fees generated on new AUM from the CFCL acquisition. This increase was partially offset by higher compensation expense on a full year basis as a result of higher LTIP amortization.

Non-EBITDA highlights:

• Other income during the quarter and on a full year basis was mainly driven by FX movements on U.S dollar dominated cash and receivables.

     16 

Alternative Asset Management

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2018		Dec. 31, 2017			Dec. 31, 2018		Dec. 31, 2017
SUMMARY INCOME STATEMENT
Management fees		1,596		2,078			7,199		32,901
Carried interest and performance fees		—		3,584			1,061		4,676
less: Trailer fees		38		40			179		7,594
less: Sub-advisor fees		—		—			—		2,611
less: Carried interest and performance fee payouts		—		2,267			559		2,295
Net Fees		1,558		3,355			7,522		25,077
Gains (losses) on proprietary investments		—		(34	)		5		532
Other income (loss)		359		(294	)		878		34,833
Total Net Revenues		1,917		3,027			8,405		60,442
Compensation		955		1,585			4,530		11,120
Selling, general and administrative		641		1,810			1,949		8,030
Amortization and impairment charges		72		37			275		1,105
Other expenses		—		9			11		52
Total Expenses		1,668		3,441			6,765		20,307
Net Income (Loss) before income taxes		249		(414	)		1,640		40,135
Adjusted base EBITDA		471		376			1,686		7,614
Total AUM		799,942		1,115,114			799,942		1,115,114

3 and 12 months ended

Adjusted base EBITDA in the quarter was $0.5 million, up $0.1 million (25%) from the prior period and was $1.7 million on a full year basis, down $5.9 million (78%). Excluding the impact of last year's Sale Transaction, adjusted base EBITDA was down $0.2 million (11%) on a full year basis primarily due to fund redemptions and market value depreciation.

Non-EBITDA highlights:

• Other income increased during the quarter due to FX movements on U.S dollar dominated cash and receivables. However, Other income was lower on a full year basis due to net sales proceeds received on last year's Sale Transaction.

     17 

Global*

	3 months ended						12 months ended
(In thousands $)	Dec. 31, 2018			Dec. 31, 2017			Dec. 31, 2018			Dec. 31, 2017
SUMMARY INCOME STATEMENT
Management fees		1,426			1,804			6,429			7,097
less: Sub-advisor fees		42			46			179			183
Net Fees		1,384			1,758			6,250			6,914
Commissions		2,298			1,632			9,685			11,487
less: Commission expense		949			519			3,341			4,073
Net Commissions		1,349			1,113			6,344			7,414
Gains (losses) on proprietary investments		(565	)		(242	)		(730	)		770
Gains (losses) on long-term investments		(172	)		199			(434	)		199
Other income (loss)		(144	)		54			(400	)		863
Total Net Revenues		1,852			2,882			11,030			16,160
Compensation (1)		2,021			683			8,154			4,749
Placement and referral fees		9			39			102			157
Selling, general and administrative		1,121			1,120			4,316			4,430
Amortization and impairment charges		22			990			328			3,849
Other expenses		140			17			503			114
Total Expenses		3,313			2,849			13,403			13,299
Net Income (Loss) before income taxes		(1,461	)		33			(2,373	)		2,861
Adjusted base EBITDA		375			1,304			3,037			5,655
Total AUM		396,698			474,550			396,698			474,550

* This segment, along with our Lending segment substantially forms our "Private Resource Investments" platform.

⁽¹⁾ Compensation is presented excluding commission expense, which is reported net of commission revenue.

3 and 12 months ended

Adjusted base EBITDA in the quarter was $0.4 million, down $0.9 million (71%) from the prior period, and was $3.0 million on a full year basis, down $2.6 million (46%):

• On a three months ended basis, lower EBITDA was due to lower net fee generation on lower AUM in fixed-term LP products.

• On a full year basis, lower EBITDA was due to lower net commissions on reduced private placement activity in the U.S. broker-dealer portion of this segment, as well as lower net fee generation on lower AUM in fixed-term LPs as previously noted.

Non-EBITDA highlights:

• Proprietary investment losses were due to market value depreciation on warrants and other equity kickers received in certain transactions of our U.S. broker-dealer.

• Other losses were mainly driven by FX movements on Canadian dollar denominated cash and receivables.

• Compensation increased due to higher restricted stock unit ("RSU") issuance.

• Other expenses related primarily to non-recurring professional fees.

     18 

Lending*

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2018		Dec. 31, 2017			Dec. 31, 2018		Dec. 31, 2017
SUMMARY INCOME STATEMENT
Management fees		1,420		622			4,929		1,323
Carried interest and performance fees		—		—			685		—
less: Carried interest and performance fee payouts		—		—			356		—
Net Fees		1,420		622			5,258		1,323
Interest income (1)		3,619		3,079			13,884		13,860
Gains (losses) on proprietary investments		3,488		(302	)		1,871		(488	)
Gains on long-term investments		27		491			43		491
Other income (loss)		1,666		511			6,290		(4,150	)
Total Revenues		10,220		4,401			27,346		11,036
Compensation		1,291		2,855			5,173		4,947
Placement and referral fees		49		617			157		5,888
Selling, general and administrative		595		324			1,522		1,003
Expected credit loss provisions (recoveries)		—		—			—		(4,942	)
Amortization and impairment charges		37		2			78		6
Other expenses		—		—			30		—
Total Expenses		1,972		3,798			6,960		6,902
Net Income before income taxes		8,248		603			20,386		4,134
Adjusted base EBITDA		3,300		3,014			15,437		16,962
Total AUM (2)		498,231		252,151			498,231		252,151

* This segment, along with our Global segment, substantially forms our "Private Resource Investments" platform.

⁽¹⁾ Includes interest income from: (1) on-balance sheet loans; and (2) co-investment income from lending LP units.

⁽²⁾ During the quarter, the Company's Lending segment AUM grew by $5 million (US$3 million) and on a full year basis by $246 million (US$164 million). This brings our total Lending segment AUM to $498 million (US$365 million). $965 million (US$707 million) of committed capital remains uncalled (future AUM).

3 and 12 months ended

Adjusted base EBITDA in the quarter was $3.3 million, up $0.3 million (9%) from the prior period. The increase was primarily due to higher management fees and co-investment income from our lending LPs.

On a full year basis, adjusted base EBITDA was $15.4 million, down $1.5 million (9%). Excluding the impact of last year's loan loss reversal and catch-up interest, adjusted base EBITDA was up $6.1 million (65%). The increase in earnings on a normalized basis was primarily due to higher management fees and co-investment income from our lending LPs. We also benefited from the acceleration of deferred interest income on the early settlement of loans.

Non-EBITDA highlights:

• Carried interest net of related payouts was $Nil on a three months ended basis and $0.3 million on a full year basis as a result of certain crystallization events in Q2 2018.

• Gains on proprietary investments were due to market value appreciation on equity kickers received on certain loan arrangements.

• Other income was mainly driven by FX movements on U.S dollar dominated cash, receivables and loans.

     19 

Merchant Banking and Advisory Services

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2018			Dec. 31, 2017		Dec. 31, 2018			Dec. 31, 2017
SUMMARY INCOME STATEMENT
Commissions		3,929			5,118		17,453			17,321
less: Commission Expense		1,871			1,951		8,619			8,214
Net Commissions		2,058			3,167		8,834			9,107
Interest income		625			509		1,252			1,733
Gains (losses) on proprietary investments		(256	)		376		(939	)		118
Other income (loss)		(171	)		597		4,350			2,383
Total Net Revenues		2,256			4,649		13,497			13,341
Compensation (1)		990			2,011		3,877			4,977
Placement and referral fees		291			142		564			191
Selling, general and administrative		625			833		2,415			2,948
Amortization and impairment charges		2			4		12			19
Other expenses		—			21		301			137
Total Expenses		1,908			3,011		7,169			8,272
Net Income (Loss) before income taxes		348			1,638		6,328			5,069
Adjusted base EBITDA		1,094			1,434		4,474			5,699

⁽¹⁾ Compensation is presented excluding commission expense, which is reported net of commission revenue.

3 and 12 months ended

Adjusted base EBITDA in the quarter was $1.1 million, down $0.3 million (24%) from the prior period, and was $4.5 million on a full year basis, down $1.2 million (21%):

• Lower compensation expense was more than offset by lower net commissions and lower trailer fee income on assets under administration attributable to Sprott products as a result of the Sale Transaction.

• On a full year basis, results were also impacted by lower interest income.

Non-EBITDA highlights:

• Losses on proprietary investments were the result of market value depreciation on equity kickers earned on private placement transactions.

• Other income on a full year basis was primarily related to the net sale proceeds received on the Sale Transaction. See Note 7 of the annual financial statements.

     20 

Corporate

This segment is primarily a cost centre that provides capital, balance sheet management and shared services to the Company's subsidiaries.

	3 months ended						12 months ended
(In thousands $)	Dec. 31, 2018			Dec. 31, 2017			Dec. 31, 2018			Dec. 31, 2017
SUMMARY INCOME STATEMENT
Gains (losses) on proprietary investments		2,196			135			(897	)		(6,473	)
Gains (losses) on long-term investments		3,152			2,949			3,231			2,949
Other income (loss)		(149	)		(303	)		138			(2,244	)
Total Revenues		5,199			2,781			2,472			(5,768	)
Compensation		4,022			3,103			10,308			8,409
Selling, general and administrative		340			725			2,723			3,308
Amortization and impairment charges		59			8			142			51
Other expenses		159			765			1,355			1,183
Total Expenses		4,580			4,601			14,528			12,951
Net Income (Loss) before income taxes		619			(1,820	)		(12,056	)		(18,719	)
Adjusted base EBITDA		(1,020	)		(840	)		(8,982	)		(8,188	)

3 and 12 months ended

• Proprietary investments gains during the quarter and losses on a full year basis were due to market value movements of certain resource equity holdings and bullion investments.

• Long-term investment gains were due to market value appreciation of our strategic long-term investments.

• Other loss during the quarter and other income on a year-to-date basis was mainly driven by FX movements on U.S dollar dominated cash and receivables.

• Higher compensation expense was largely a result of higher LTIP amortization.

• Lower SG&A was largely due to our on-going cost containment program.

• Other expenses related primarily to non-recurring professional fees.

     21 

Dividends

The following dividends were declared by the Company during the 12 months ended December 31, 2018:

Record date	Payment Date	Cash dividend per share ($)	Total dividend amount (in thousands $)
March 12, 2018 - Regular Dividend Q4 - 2017	March 27, 2018	0.03	7,553
May 21, 2018 - Regular Dividend Q1 - 2018	June 5, 2018	0.03	7,553
August 20, 2018 - Regular Dividend Q2 - 2018	September 4, 2018	0.03	7,566
November 19, 2018 - Regular Dividend Q3 - 2018	December 4, 2018	0.03	7,586
Dividends (1)			30,258

⁽¹⁾ Subsequent to the year-end, on February 27, 2019, a regular dividend of $0.03 per common share was declared for the quarter ended December 31, 2018. This dividend is payable on March 25, 2019 to shareholders of record at the close of business on March 8, 2019.

Capital Stock

Including the 9.9 million unvested common shares currently held in the EPSP Trust (December 31, 2017 - 10.4 million), total capital stock issued and outstanding was 253.0 million (December 31, 2017 - 244.5 million). The increase from December 31, 2017 was primarily due to the issuance of shares as part of the purchase of CFCL on January 16, 2018.

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 $0.04 and $0.13 for the three and twelve months ended respectively compared to $0.01 and $0.16 in the respective prior periods. Diluted earnings per share was $0.04 and $0.12 for the three and twelve months ended respectively compared to $0.01 and $0.15 in the respective prior periods. 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 3.3 million stock options are outstanding pursuant to our stock option plan, of which 1.9 million are exercisable.

Liquidity and Capital Resources

Management fees and interest income can be projected and forecasted with a higher degree of certainty than commission income, carried interest and performance fees, and are therefore used as a base for budgeting and planning by the Company. Management fees and interest income are generally collected monthly or quarterly, which aids the Company's ability to manage cash flow. The Company believes that management fees and interest income will continue to be sufficient to satisfy ongoing operating needs, including expenditures on corporate infrastructure, business development and information systems. In addition, the Company holds sufficient cash and liquid securities to meet any other operating and capital requirements, if any, including its contractual commitments.

As at December 31 2018, the Company had a $90 million undrawn credit facility with a major Canadian schedule I chartered bank. Amounts may be borrowed under the facility through prime rate loans, or bankers' acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans.

Sprott Private Wealth LP ("SPW") and Sprott Asset Management ("SAM") are required to maintain a minimum amount of regulatory capital calculated in accordance with the rules of the Investment Industry Regulatory Organization of Canada ("IIROC") and of the Ontario Securities Commission ("OSC"), respectively. In addition, Sprott Global Resource Investment Ltd. is registered with the Financial Industry Regulatory Authority ("FINRA") in the United States and is required to maintain a minimum amount of regulatory capital calculated in accordance with the rules of FINRA and the Securities Exchange Commission ("SEC").

Commitments

Besides the Company's long-term lease agreements, there may be commitments to provide loans or make co-investments in lending LPs arising from our Lending segment or commitments to make investments in the net investments portfolio of the Company. As at December 31, 2018, the Company had no direct on-balance sheet loan commitments (December 31, 2017 - $9.9 million) and $38.7 million in co-investment commitments from the Lending segment (December 31, 2017 - $7.8 million).

     22 

Significant Accounting Judgments, Estimates and Changes in Accounting Policies

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 annual 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. The use of unobservable inputs can involve significant judgment and materially affect the reported fair value of financial instruments.

Loan loss provisions

Due to the nature of provisions, a considerable part of their determination is based on estimates and judgments, including assumptions concerning the likelihood of future events occurring. The actual outcome of these uncertain events may be materially different from the initial provision in the Company's financial statements. Management exercises judgment to determine the expected credit loss, the probability of default and loss given default.

Share-based payments

The Company measures the cost of share-based payments to employees by reference to the fair value of the equity instruments at the date on which they are granted. Estimating fair value for share-based payments requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including (in the case of options grants) the expected life of the option, volatility, and dividend yields, (and in the case of performance-based equity grants), the probability of a subsidiary or executive attaining certain performance targets, the future stock price of the Company and the future employment of a senior employee.

Deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent it is probable that sufficient taxable profit will be generated in order to utilize the losses. In addition, taxable income is subject to estimation as a portion of performance fee revenue is an allocation of partnership income. Such allocations involve a certain degree of estimation and income tax estimates could change as a result of: (i) changes in tax laws and regulations, both domestic and foreign; (ii) an amendment to the calculation of partnership income allocation; or (iii) a change in foreign affiliate rules. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized based on the likely timing and the level of future taxable profits together with future tax planning strategies.

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.

     23 

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. Values associated with goodwill and intangibles involve estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates 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.

Change in accounting policies

In Q1, 2018 the Company adopted IFRS 9 Financial Instruments (“IFRS 9”) and IFRS 15 Revenue from Contracts with Customers (“IFRS 15”). As a result, the Company changed its accounting policies. As permitted by the transition provision of both IFRS 9 and IFRS 15, the Company elected not to restate comparative period results. Accordingly, all comparative period information is presented in accordance with previous accounting policies.

Managing Risk: Financial

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 interests 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 instrument assets. The Company’s earnings, particularly through its Lending 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

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 Canadian dollars. The Company's primary foreign currency is the United States Dollar ("USD"). 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 on balance sheet loans, co-investments in lending LPs and its net investments portfolio.

Loans receivable

The Company incurs credit risk primarily in the on-balance sheet loans of Sprott Resource Lending Corporation ("SRLC") and through co-investments made in the lending LPs managed by SRLC. In addition to the relative default probability of SRLC borrowers (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with), credit risk is also dependent on loss given default, which can increase credit risk if the values of the underlying assets securing the Company's loans and co-investments decline to levels approaching or below the loan amounts. A decrease in commodity prices may delay the development of the underlying security or business plans of the borrower and could adversely affect the value of the Company's security against a loan. Additionally, the value of the Company's underlying security in a loan can be negatively affected if the actual amount or quality of the commodity proves to be less than originally estimated, or the ability to extract the commodity proves to be more difficult or more costly than originally estimated. 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 managed.

     24 

Collectability of loans

Besides the above noted measures we take to manage credit risk, the Company will report on credit risk in the notes to the annual financial statements and records expected credit loss provisions to ensure the loans are recorded at their estimated recoverable amount (i.e. net of impairment risk we believe to exist as at the balance sheet date and in accordance with IFRS). Actual losses incurred in the loan portfolio could differ materially from our provisions. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed.

Net 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 accounts receivable relate to management fees, carried interest and performance fees receivable from the funds, managed accounts and managed companies 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 $90 million committed line of credit with a major Canadian Schedule I chartered bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months.

The Company's exposure to liquidity risk as it relates to loans receivable arises from fluctuations in cash flows from making loan advances and receiving loan repayments (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with). The Company manages its loan commitment liquidity risk through the ongoing monitoring of scheduled loan fundings and repayments ("match funding") and through its broader treasury risk management program and enterprise capital budgeting.

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 Company's management team is responsible for reviewing resources to ensure funds are readily available to meet its financial obligations (e.g. dividend payments) 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 and through its broader treasury risk management program. To meet any liquidity shortfalls, actions taken by the Company could include: syndicating a portion of its loans; slowing its lending activities; cutting its dividend; drawing on the line of credit; liquidating net investments; and/or issuing common shares.

Concentration risk

A significant portion of the Company's AUM as well as its net investments and loans are focused on the natural resource sector, and in particular, precious metals related investments and transactions. In addition, from time-to-time, certain net investment and loan positions 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.

Consistent with National Instrument 52-109, the Company's CEO and CFO evaluate quarterly the DC&P and ICFR. As of December 31, 2018, the Company's CEO and CFO concluded that the Company's DC&P and ICFR were properly designed and were operating effectively. In addition, there were no material changes to ICFR during the quarter.

     25 

Managing Risk: Non-financial

Managing Risk: Non-financial

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. While employees are permitted to have investments managed by third parties on a discretionary basis, they generally choose to invest in funds managed by the Company. 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.

Independent Review Committee

National Instrument 81-107 - Independent Review Committee for Investment Funds (“NI 81-107”) requires all publicly offered investment funds 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 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 mutual 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, IIROC, FINRA and the U.S. Securities and Exchange Commission ("SEC").

Additional information relating to the Company, including the Company's Annual Information Form is available on SEDAR at www.sedar.com

     26 

Consolidated Financial Statements

Year ended December 31, 2018

 

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 year ended December 31, 2018. The consolidated financial statements were prepared by management in accordance with International Financial Reporting Standards. 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 significant accounting policies 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 (the "Board of Directors") of the Company appoints the Company's audit and risk committee (the "Audit & Risk 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.

Peter Grosskopf	Kevin Hibbert
Chief Executive Officer	Chief Financial Officer and Senior Managing Director

February 27, 2019

     28 

 

 

Independent Auditors' Report

To the Shareholders of Sprott Inc.

Opinion

We have audited the consolidated financial statements of Sprott Inc. (the "Company"), which comprise:

• the consolidated balance sheets as at December 31, 2018 and 2017;

• the consolidated statements of operations and comprehensive income for the years then ended;

• the consolidated statements of changes in shareholders’ equity for the years then ended;

• the consolidated statements of cash flows for the years then ended;

• and notes to the consolidated financial statements, including a summary of significant accounting policies.

(hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the "Auditors’ Responsibilities for the Audit of the Financial Statements" section of our auditors’ report.

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

     29 

 

Information Other than the Financial Statements and Auditor’s Report Thereon

Management is responsible for the other information. Other information comprises:

• the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions.

• the information, other than the financial statements and the auditors’ report thereon, included in a document likely to be entitled “Annual Report 2018”.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We obtained the information, other than the financial statements and the auditors’ report thereon, included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions and the “Annual Report 2018” as at the date of this auditor’s report.

If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditors’ report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company‘s financial reporting process.

     30 

 

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are/is free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control;

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

• conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern;

     31 

 

• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represents the underlying transactions and events in a manner that achieves fair presentation;

• communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit;

• provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards; and

• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion;

 

Chartered Professional Accountants, Licensed Public Accountants

The engagement partner on the audit resulting in this auditors’ report is James Loewen.

February 27, 2019

Toronto, Canada

     32 

CONSOLIDATED BALANCE SHEETS

As at		Dec. 31			Dec. 31
(In thousands of Canadian dollars)		2018			2017
Assets
Current
Cash and cash equivalents			47,252			156,120
Fees receivable			8,635			13,776
Loans receivable	(Note 6)		15,275			17,218
Proprietary investments	(Note 3)		26,711			64,564
Other assets	(Note 7)		10,774			23,161
Income taxes recoverable			2,379			1,356
Total current assets			111,026			276,195
Loans receivable	(Note 6)		20,746			31,455
Long-term investments	(Note 3)		102,560			49,763
Other assets	(Note 7)		1,214			1,448
Property and equipment, net	(Note 4)		12,334			5,299
Intangible assets	(Note 5)		148,324			16,452
Goodwill	(Note 5)		26,115			24,023
Deferred income taxes	(Note 9)		5,896			5,214
			317,189			133,654
Total assets			428,215			409,849
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities			36,141			15,812
Compensation payable			9,466			10,667
Obligations related to securities sold short	(Note 3)		255			24,993
Note payable	(Note 11)		5,500			9,900
Income taxes payable			607			3,179
Total current liabilities			51,969			64,551
Deferred income taxes	(Note 9)		3,125			1,434
Total liabilities			55,094			65,985
Shareholders' equity
Capital stock	(Note 8)		412,938			392,556
Contributed surplus	(Note 8)		43,383			39,907
Deficit			(117,201	)		(118,272	)
Accumulated other comprehensive income			34,001			29,673
Total shareholders' equity			373,121			343,864
Total liabilities and shareholders' equity			428,215			409,849
Commitments and provisions	(Note 15)

The accompanying notes form part of the financial statements                

"Jack C. Lee"	"Sharon Ranson"
Director	Director

     33 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

		For the years ended
		Dec. 31			Dec. 31
(In thousands of Canadian dollars, except for per share amounts)		2018			2017
Revenues
Management fees			55,519			64,981
Carried interest and performance fees			1,802			4,676
Commissions			27,360			29,190
Interest income			15,136			15,593
Loss on proprietary investments	(Note 3)		(5,782	)		(5,189	)
Gains on long-term investments	(Note 3)		2,840			3,639
Other income	(Note 7)		12,394			31,321
Total revenue			109,269			144,211
Expenses
Compensation			40,072			49,566
Stock-based compensation	(Note 8)		12,358			6,692
Trailer fees			179			6,548
Sub-advisor fees			—			2,610
Placement and referral fees			943			6,311
Expected credit loss provisions (recoveries)	(Note 6)		—			(4,942	)
Selling, general and administrative			17,485			23,698
Amortization of intangibles	(Note 5)		1,431			5,600
Amortization of property and equipment	(Note 4)		768			827
Other expenses	(Note 7)		3,376			3,995
Total expenses			76,612			100,905
Income before income taxes for the period			32,657			43,306
Provision for income taxes	(Note 9)		1,278			5,774
Net income for the period			31,379			37,532
Basic earnings per share	(Note 8)	$	0.13		$	0.16
Diluted earnings per share	(Note 8)	$	0.12		$	0.15
Net income for the period			31,379			37,532
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation gain (loss) on foreign operations (taxes of $Nil)			4,328			(3,872	)
Total other comprehensive income (loss)			4,328			(3,872	)
Comprehensive income			35,707			33,660

The accompanying notes form part of the financial statements      

     34 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(In thousands of Canadian dollars, other than number of shares)		Number of Shares Outstanding			Capital Stock			Contributed Surplus			Deficit			Accumulated Other Comprehensive Income			Total  Equity
At Dec. 31, 2017			234,098,634			392,556			39,907			(118,272	)		29,673			343,864
IFRS 9 transition adjustment			—			—			—			(50	)		—			(50	)
Shares acquired for equity incentive plan	(Note 8)		(2,402,500	)		(7,161	)		—			—			—			(7,161	)
Shares released on vesting of equity incentive plan	(Note 8)		2,836,201			6,446			(6,446	)		—			—			—
Shares released on exercise of stock option plan	(Note 8)		558,048			1,217			(1,217	)		—			—			—
Foreign currency translation gain on foreign operations			—			—			—			—			4,328			4,328
Issuance of share capital on purchase of management contracts	(Note 8)		6,997,387			17,284			—			—			—			17,284
Stock-based compensation	(Note 8)		—			—			12,358			—			—			12,358
Issuance of share capital on conversion of RSUs and other share based considerations	(Note 8)		635,939			1,581			(1,219	)		—			—			362
Dividends declared	(Note 12)		338,628			1,015			—			(30,258	)		—			(29,243	)
Net income			—			—			—			31,379			—			31,379
Balance, Dec. 31, 2018			243,062,337			412,938			43,383			(117,201	)		34,001			373,121
At Dec. 31, 2016			243,190,293			411,231			41,802			(126,264	)		33,545			360,314
Shares acquired for equity incentive plan			(8,100,000	)		(17,882	)		—			—			—			(17,882	)
Shares released on vesting of equity incentive plan			3,021,795			7,938			(7,938	)		—			—			—
Foreign currency translation loss on foreign operations			—			—			—			—			(3,872	)		(3,872	)
Cancellation of repurchased shares			(5,000,000	)		(11,000	)		—			—			—			(11,000	)
Stock-based compensation			—			—			6,692			—			—			6,692
Issuance of share capital on conversion of RSUs and other share based considerations			755,413			1,728			(649	)		—			—			1,079
Dividends declared			231,133			541			—			(29,540	)		—			(28,999	)
Net income			—			—			—			37,532			—			37,532
Balance, Dec. 31, 2017			234,098,634			392,556			39,907			(118,272	)		29,673			343,864

The accompanying notes form part of the financial statements                                        

     35 

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the years ended
	Dec. 31			Dec. 31
(In thousands of Canadian dollars, other than number of shares)	2018			2017
Operating Activities
Net income for the period		31,379			37,532
Add (deduct) non-cash items:
Losses on proprietary investments		5,782			5,189
Gains on Long-term investments		(2,840	)		(3,639	)
Stock-based compensation		12,358			6,692
Amortization of property, equipment and intangible assets		2,199			6,427
Sale of property, equipment and intangible assets		—			2,063
Expected credit loss provision (recoveries)		—			(4,942	)
Deferred income tax recovery		1,022			(2,055	)
Current income tax expense		256			7,829
Other items		(435	)		(3,028	)
Income taxes paid		(3,852	)		(13,140	)
Changes in:
Fees receivable		5,141			12,294
Loans receivable		12,652			23,943
Accounts payable, accrued liabilities and compensation payable		19,128			(11,251	)
Other assets		12,621			(11,760	)
Cash provided by operating activities		95,411			52,154
Investing Activities
Purchase of investments		(79,267	)		(61,282	)
Sale of investments		37,077			90,033
Purchase of property and equipment		(7,805	)		(860	)
Deferred sales commissions paid		—			(165	)
Purchase of intangible assets		(115,719	)		—
Cash provided by (used in) investing activities		(165,714	)		27,726
Financing Activities
Acquisition of common shares for equity incentive plan		(7,161	)		(7,982	)
Acquisition of common shares for cancellation		—			(11,000	)
Note payable repayment		(4,400	)		—
Dividends paid		(29,243	)		(28,999	)
Cash used in financing activities		(40,804	)		(47,981	)
Effect of foreign exchange on cash balances		2,239			266
Net increase (decrease) in cash and cash equivalents during the year		(108,868	)		32,165
Cash and cash equivalents, beginning of the year		156,120			123,955
Cash and cash equivalents, end of the period		47,252			156,120
Cash and cash equivalents:
Cash		41,999			156,108
Short-term deposits		5,253			12
		47,252			156,120
Supplementary disclosure of cash flow information
Amount of interest received during the year		8,689			5,442

The accompanying notes form part of the financial statements                

     36 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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 SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

These annual audited consolidated financial statements for the years ended December 31, 2018 and 2017 ("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 27, 2019 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 financial assets and financial liabilities classified as fair value through profit or loss ("FVTPL") or fair value through other comprehensive income ("FVOCI"), both of which have been measured at fair value. The financial statements are presented in Canadian 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 over the same reporting period as the Company's and are based on accounting policies consistent with that of the Company.

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.

The Company currently controls the following principal subsidiaries:

• Sprott Asset Management LP ("SAM");

• Sprott Private Wealth LP ("SPW");

• Sprott Consulting LP ("SC");

• Sprott Asia LP ("Sprott Asia") and Sprott Korea Corporation ("Sprott Korea");

• Sprott U.S. Holdings Inc. ("SUSHI"), parent of: (1) Rule Investments Inc. ("RII") (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 "Global" in these financial statements;

• Sprott Resource Lending Corp. ("SRLC");

• Sprott Genpar Ltd.; and

• Sprott Inc. 2011 Employee Profit Sharing Plan Trust (the "Trust")

     37 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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.

Proprietary investments

Proprietary investments are investments held with the primary intention of short-term liquidity and capital management.

Long-term investments

Long-term investments are investments held for strategic purposes rather than for short-term liquidity and capital management purposes. Long-term investments classification reflects strategic positions held with the intention of seeding and building the next generation of investment products and services consistent with the long-term strategic objectives of the Company. These investments primarily include co-investments in strategically important investment funds, joint-venture interests or equity stakes in other entities.

Financial Instruments

Changes in accounting policies

In the first quarter of the current year, the Company adopted IFRS 9 Financial Instruments (“IFRS 9”). As a result, the Company changed its accounting policies in the areas outlined below. As permitted by the transition provisions of IFRS 9, the Company elected not to restate comparative period results. Accordingly, any adjustments to the carrying amounts of financial assets and liabilities at the date of transition were recognized in the opening retained earnings of the current period. See "Expected credit losses" section of Note 6 for further details.

Classification and measurement of Financial Assets

Under IFRS 9, financial assets are measured at initial recognition at fair value, and are classified and subsequently measured at FVTPL, amortized cost or 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 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 OCI.

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.

The adoption of IFRS 9 required the following reclassifications of financial assets and liabilities:

	IFRS 9	IAS 39
Cash and Cash equivalents	Amortized Cost	Held for Trading
Fees Receivable and Loans receivable	Amortized Cost	Loans and Receivable
Proprietary investments:
- Public equities	FVTPL	Held for Trading
- Co-investments in funds	FVTPL	Held for Trading
- Private Holdings	FVTPL	Held for Trading
Accounts payable and accrued liabilities	Other Financial Liabilities	Other Financial Liabilities

     38 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Valuation of Investments

Both Proprietary investments and Long-term investments include public equities, share purchase warrants, fixed income securities, mutual fund and alternative investment strategies, and private holdings. 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 which 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 in the private companies determined 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 on the consolidated statements of operations.

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 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 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.

At each reporting date, management assesses the probability of default and the loss given default using economic and market trends, quoted credit rating of the borrower, market value of the asset, and appraisals, if any, of the security underlying the loan. The impairment is then classified into three stages:

     39 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

• Stage 1 - For Loans where credit risk has not increased significantly, an impairment is recognized equal to the credit losses expected to result from defaults occurring over the following twelve months.

• Stage 2 - For Loans where credit risk has increased significantly, an impairment is recognized equal to the credit losses expected to result from defaults occurring over the life of the loan.

• Stage 3 - For Loans which are credit impaired, a loss allowance is recognized equal to the expected lifetime of the Loan. Any subsequent recognition of interest income for which an expected credit loss provision exists, is calculated at the discount rate used in determining the provision, which may differ from the contractual rate of interest.

Loans receivable

Loans receivable are financial assets with fixed or determinable payments that are held solely for payments of principal and interest on the principal amount outstanding and are held within a business model whose objective is to hold assets to collect contractual cash flows. Loans receivable are measured at amortized cost.

Fees received for originating loans are considered an integral part of the yield earned on the loan and are recognized in interest income over the term of the loan using the effective interest method. Fees received may include cash payments and/or securities in the borrower.

Recognition of income and related expenses

Changes in accounting policy

In the first quarter of the current year, the Company adopted IFRS 15 Revenue from Contracts with Customers (“IFRS 15”). As a result, the Company changed its accounting policies in the areas outlined below. As permitted by the transition provisions of IFRS 15, the Company elected not to restate comparative period results. Accordingly, any adjustments to the carrying amounts of financial assets and liabilities at the date of transition were recognized in the opening retained earnings of the current period. There was no material transitional impact on conversion to IFRS 15.

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 in the underlying funds.

Commission income is recognized when the related services are rendered and no longer subject to a significant reversal in revenue.

Interest income 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 impairment of property and equipment is expensed in the period the impairment is identified.

     40 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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 with finite lives are amortized over the useful economic life and assessed for impairment indicators at each reporting date, or more frequently if changes in circumstances indicate that the carrying value may be impaired. 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 may be impaired. 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.

Any loss resulting from 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 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 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 the consolidated statements of 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 sheet 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.

     41 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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;

• 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.

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 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 and diluted earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the period.

The Company applies 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.

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 Global Companies, which uses the U.S. dollar as its functional currency. Accordingly, the assets and liabilities of Global Companies 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 Global 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.

     42 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to management. Management is responsible for allocating resources and assessing performance of the operating segments to make strategic decisions.

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. The use of unobservable inputs can involve significant judgment and materially affect the reported fair value of financial instruments.

Loan loss provisions

Due to the nature of provisions, a considerable part of their determination is based on estimates and judgments, including assumptions concerning the likelihood of future events occurring. The actual outcome of these uncertain events may be materially different from provisions recorded on the Company's financial statements. With regard to loan impairments, management exercises judgment to determine the expected credit loss, the probability of default and loss given default.

Share-based payments

The Company measures the cost of share-based payments to employees by reference to the fair value of the equity instruments at the date on which they are granted. Estimating fair value for share-based payments requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including (in the case of options grants) the expected life of the option, volatility, and dividend yields, (and in the case of performance-based equity grants), the probability of a subsidiary or executive attaining certain performance targets, the future stock price of the Company and the future employment of senior employees.

Deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent it is probable that sufficient taxable profit will be generated in order to utilize the losses. In addition, taxable income is subject to estimation as a portion of performance fee revenue is an allocation of partnership income. Such allocations involve a certain degree of estimation and income tax estimates could change as a result of: (i) changes in tax laws and regulations, both domestic and foreign; (ii) an amendment to the calculation of partnership income allocation; or (iii) a change in foreign affiliate rules. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized based on the likely timing and the level of future taxable profits together with future tax planning strategies.

     43 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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. Values associated with goodwill and intangibles involve estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates 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.

Future Accounting Standards

IFRS 16, Leases (“IFRS 16”)

IFRS 16 was issued by IASB in January 2016 and is effective for annual periods beginning on or after January 1, 2019. IFRS 16 establishes principals for the recognition, measurement, presentation and disclosure of leases. The standard introduces a single lessee accounting model that requires, generally speaking, the recognition of most lease assets on the balance sheet as opposed to off-balance sheet in the financial statement notes.

Based on current estimates, the adoption of IFRS 16 is not expected to have a material impact to our consolidated financial statements.

IFRIC 23, Uncertainty over Income Tax Treatements ("IFRIC 23")

IFRIC 23 was issued by IASB in June 27 and is effective for annual periods beginning on or after January 1, 2019. IFRIC 23 clarifies the accounting treatment for income tax items that have yet to be accepted by tax authorities in order to enhance transparency. IFRIC 23 does not introduce new disclosures but reinforces the need to comply with existing requirements about judgments made, the assumptions used and other estimates, along with the potential impact of uncertainties.

Based on current estimates, the adoption of IFRIC 23 is not expected to have a material impact to our consolidated financial statements.

     44 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

3      PROPRIETARY INVESTMENTS, OBLIGATIONS RELATED TO SECURITIES SOLD SHORT AND LONG-TERM INVESTMENTS

Proprietary investments and Obligations related to securities sold short

Consist of the following (in thousands $):

	Classification and measurement criteria	December 31, 2018		Dec. 31, 2017
Public equities and share purchase warrants	FVTPL		19,066		55,578
Fixed income securities	FVTPL		2,796		249
Private holdings:
- Private investments	FVTPL		2,830		4,269
- Energy contracts	Non-financial instrument		2,019		4,468
Total proprietary investments			26,711		64,564
Obligations related to securities sold short	FVTPL		255		24,993

Long-term investments

Consists of the following (in thousands $):

	Classification and measurement criteria	December 31, 2018		Dec. 31, 2017
Public equities and share purchase warrants	FVTPL		—		1,639
Co-investments in funds	FVTPL		72,739		35,972
Private holdings
- Private investments	FVTPL		29,821		12,152
Total long-term investments			102,560		49,763

Realized gains and losses on financial assets classified at FVTPL are included in the gains (loss) on proprietary investments and Long-term investments on the consolidated statements of operations.

     45 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

4 PROPERTY AND EQUIPMENT 

Consist of the following (in thousands $):

	Artwork		Furniture and fixtures			Computer hardware and software			Leasehold improvements			Total
Cost
At December 31, 2016		2,622		3,255			2,652			8,479			17,008
Disposal on Sale Transaction		—		(82	)		(462	)		(4,532	)		(5,076	)
Additions		374		10			465			11			860
Net exchange differences		—		(35	)		(36	)		(19	)		(90	)
At December 31, 2017		2,996		3,148			2,619			3,939			12,702
Additions		6,605		2			946			252			7,805
Disposals		—		(28	)		(54	)		(28	)		(110	)
Net exchange differences		—		44			53			34			131
At December 31, 2018		9,601		3,166			3,564			4,197			20,528
Accumulated amortization
At December 31, 2016		—		(3,084	)		(2,417	)		(5,196	)		(10,697	)
Disposal on Sale Transaction		—		30			86			3,925			4,041
Charge for the year		—		(60	)		(266	)		(501	)		(827	)
Net exchange differences		—		37			33			10			80
At December 31, 2017		—		(3,077	)		(2,564	)		(1,762	)		(7,403	)
Charge for the year		—		(27	)		(297	)		(444	)		(768	)
Disposals				28			44			18			90
Net exchange differences		—		(44	)		(46	)		(23	)		(113	)
At December 31, 2018		—		(3,120	)		(2,863	)		(2,211	)		(8,194	)
Net book value at:
December 31, 2017		2,996		71			55			2,177			5,299
December 31, 2018		9,601		46			701			1,986			12,334

     46 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

5 GOODWILL AND INTANGIBLE ASSETS

Consist of the following (in thousands $):

	Goodwill			Fund management contracts - indefinite life		Fund management contracts- finite life			Deferred sales commissions			Total
Cost
At December 31, 2016		177,749			—		49,371			10,171			237,291
Net additions and (disposals)		—			—		—			(10,171	)		(10,171	)
Net exchange differences		(10,867	)		—		(1,955	)		—			(12,822	)
At December 31, 2017		166,882			—		47,416			—			214,298
Net additions and (disposals)		—			133,303		—			—			133,303
Net exchange differences		13,482			—		—			—			13,482
At December 31, 2018		180,364			133,303		47,416			—			361,083
Accumulated amortization
At December 31, 2016		(152,039	)		—		(27,794	)		(8,689	)		(188,522	)
Amortization charge for the year		—			—		(4,980	)		(620	)		(5,600	)
Disposals in the year		—			—		—			9,309			9,309
Net exchange differences		9,180			—		1,810			—			10,990
At December 31, 2017		(142,859	)		—		(30,964	)		—			(173,823	)
Amortization charge for the year		—			—		(1,431	)		—			(1,431	)
Net exchange differences		(11,390	)		—		—			—			(11,390	)
At December 31, 2018		(154,249	)		—		(32,395	)		—			(186,644	)
Net book value at:
December 31, 2017		24,023			—		16,452			—			40,475
December 31, 2018		26,115			133,303		15,021			—			174,439

     47 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Impairment assessment of goodwill

The Company identified seven cash generating units ("CGUs") for goodwill impairment and testing purposes: Exchange Listed Products, Alternative Asset Management, Global, Lending, Consulting, Merchant Banking & Advisory and Corporate.

As at December 31, 2018, the Company had allocated $26.1 million (December 31, 2017 - $24.0 million) of goodwill on a relative value approach basis to the Exchange Listed Products and Alternative Asset Management CGUs.

In the normal course, goodwill is tested for impairment once per annum, which for the Company is during the fourth quarter of each year. During the impairment testing process, there was no impairment in either the Exchange Listed Products CGU or the Alternative Asset Management CGU.

Impairment assessment of indefinite life fund management contracts

As at December 31, 2018, the Company had an exchange listed fund management contract within the Exchange Listed Products CGU of $133.3 million related to the purchase of the Central Fund of Canada in the first quarter of the current year. There was no impairment as at December 31, 2018.

Impairment assessment of finite life fund management contracts

As at December 31, 2018, the Company had no fixed-term limited partnerships within the Global CGU (December 31, 2017 - $0.4 million) and exchange listed funds within the Exchange Listed Products CGU of $15.0 million (December 31, 2017 - $16.1 million). There was no impairment as at December 31, 2018.

     48 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

6       LOANS RECEIVABLE

Components of loans receivable

Loans are reported at their amortized cost using the effective interest method. Loans are reported net of any expected credit loss loss provisions on the expected credit loss provisions line of the consolidated statements of operations. Total carrying value consists of the following (in thousands $):

	Dec. 31, 2018			Dec. 31, 2017
Loans
Loan principal		37,873			53,272
Accrued interest		14			252
Deferred revenue		(1,816	)		(4,851	)
Amortized cost		36,071			48,673
Loan loss provisions		(50	)		—
Less: current portion		(15,275	)		(17,218	)
Total carrying value of non-current loans receivable		20,746			31,455

Expected credit losses ("ECL")

When a loan is classified as impaired, the original expected timing and amount of future cash flows may be revised to reflect new circumstances. These revised cash flows are discounted using the original effective interest rate to determine the net realizable value of the loan. Interest income is thereafter recognized on this net realizable value using the original effective interest rate. Additional changes to the amount or timing of future cash flows could result in further losses, or the reversal of previous losses, which would also impact the amount of subsequent interest income recognized.

On transition to IFRS 9, a Stage 1 ECL provision of $50 thousand (December 31, 2017 - $Nil) was recorded through opening retained earnings under the transitional provision of IFRS 9. As at December 31, 2018, the Company performed a comprehensive review of each loan measured at amortized cost in its portfolio to determine the requirement for an ECL provision. There were no credit events in the year.

Interest income on impaired loans and the changes in expected credit loss provisions are as follows (in thousands $):

	For the years ended
	Dec. 31, 2018		Dec. 31, 2017 (1)
Interest on impaired loans		—		—
Expected credit loss provisions
Balance, beginning of the year		—		4,993
Transition adjustment		50		—
Revised balance, beginning of the year		50		4,993
Expected credit loss provision (recovery)		—		(4,942	)
Net exchange differences		—		(51	)
Balance, end of period		50		—

(1) With the transition to IFRS 9, an expected loss model was used. In the prior period, an incurred loss model was used. See Changes in Accounting Policy in Note 2.

     49 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Sector distribution of loan principal

Distribution of Company outstanding loan principal balances by sector:

	Dec. 31, 2018				Dec. 31, 2017
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Metals and mining		1		34,931		3		41,961
Energy and other		2		2,942		4		11,311
Total loan principal		3		37,873		7		53,272

Geographic distribution of loan principal

Distribution of Company outstanding loan principal balances by geographic location of the underlying security:

	December 31, 2018				December 31, 2017
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Canada		1		1,578		2		8,578
United States of America		2		36,295		3		31,310
Peru		—		—		1		1,505
South Africa		—		—		1		11,879
Total loan principal		3		37,873		7		53,272

     50 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

7       OTHER ASSETS, INCOME AND EXPENSES

Other assets

Consist of the following (in thousands $):

	Dec. 31, 2018		Dec. 31, 2017
Fund recoveries and investment receivables		4,722		17,168
Deferred CFCL acquisition charges (1)		—		4,751
Prepaid expenses		5,369		1,947
Other (2)		1,897		743
Total Other assets		11,988		24,609

^{(1) Includes legal, proxy, solicitation and investor relations costs.}

^{(2) Other includes miscellaneous third-party receivables.}

Other income

Consist of the following (in thousands $):

	For the years ended
	Dec. 31, 2018		Dec. 31, 2017
Net proceeds from Sale Transaction (1)		4,200		31,691
Other investment income (2)		4,708		5,383
Foreign exchange gain (losses)		2,310		(7,412	)
Total Other income (3)		11,218		29,662

⁽¹⁾ Gross proceeds of $5.0 million, net of transaction costs of $0.8 million. This relates to the January 29, 2018 closing of the sale of our non-core private wealth client business. For 2017 income, gross proceeds of $41.3 million, net of transaction costs of $9.6 million. This relates to the August 1, 2017 closing of the sale of Canadian diversified funds business.

⁽²⁾ Primarily includes investment fund income, syndication and trailer fee income.

⁽³⁾ Excludes royalty income of $1.2 million (December 31, 2017 - $1.7 million), which is presented net of operating, depletion and impairment charges below.

Other expenses

Consist of the following (in thousands $):

	For the years ended
	Dec. 31, 2018			Dec. 31, 2017
Costs (recoveries) related to energy assets (1)		(28	)		888
Other (2)		2,228			1,448
Total Other expenses		2,200			2,336

^{(1) Includes operating, depletion and impairment charges, net of royalty income of $1.2 million (December 31, 2017 - $1.7 million).}

^{(2) Primarily includes non-recurring professional fees.}

     51 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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.

	Number of shares			Stated value  (in thousands $)
At Dec. 31, 2016		243,190,293			411,231
Issuance of share capital under dividend reinvestment program		231,133			541
Issuance of share capital on conversion of RSU		755,413			1,728
Cancellation of repurchased shares		(5,000,000	)		(11,000	)
Acquired for equity incentive plan		(8,100,000	)		(17,882	)
Released on vesting of equity incentive plan		3,021,795			7,938
At Dec. 31, 2017		234,098,634			392,556
Issuance of share capital under dividend reinvestment program		338,628			1,015
Issuance of share capital on purchase of management contracts		6,997,387			17,284
Issuance of share capital on conversion of RSU		635,939			1,581
Acquired for equity incentive plan		(2,402,500	)		(7,161	)
Released on exercise of stock option plan		558,048			1,217
Released on vesting of equity incentive plan		2,836,201			6,446
At Dec. 31, 2018		243,062,337			412,938

Contributed surplus consists of: stock option expense; earn-out shares expense; equity incentive plans' expense; and additional purchase consideration.

	Stated value (in thousands $)
At Dec. 31, 2016		41,802
Expensing of Sprott Inc. stock options over the vesting period		(73	)
Expensing of Stock-based compensation over the vesting period		6,765
Issuance of share capital on conversion of RSUs		(1,667	)
Release of GTU shares		675
Expensing of EPSP as referral fees		343
Released on vesting of common shares for equity incentive plan		(7,938	)
At Dec. 31, 2017		39,907
Expensing of Stock-based compensation over the vesting period		12,358
Issuance of share capital on conversion of RSU		(1,219	)
Released on exercise of stock option plan		(1,217	)
Released on vesting of common shares for equity incentive plan		(6,446	)
At Dec. 31, 2018		43,383

     52 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Stock option plan

The Company has an option plan (the "Plan") intended to provide incentives to directors, officers, employees and consultants 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 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 750,000 stock options issued for the year ended ended December 31, 2018 (year ended December 31, 2017 - nil). There were 2,000,000 options exercised in the year ended December 31, 2018 (year ended December 31, 2017 - nil)

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.

A summary of the changes in the Plan is as follows:

	Number of options (in thousands)			Weighted average exercise price ($)
Options outstanding, December 31, 2016		10,900			4.16
Options exercisable, December 31, 2016		4,100			7.10
Options forfeited		(3,925	)		2.42
Options outstanding, December 31, 2017		6,975			5.14
Options exercisable, December 31, 2017		5,625			5.79
Options issued		750			2.33
Options exercised		(2,000	)		2.33
Options expired		(2,450	)		10.00
Options outstanding, December 31, 2018		3,275			2.57
Options exercisable, December 31, 2018		1,875			2.70

Options outstanding and exercisable as at December 31, 2018 are as follows:

Exercise price ($)	Number of outstanding options (in thousands)		Weighted average remaining contractual life (years)		Number of options exercisable (in thousands)
6.60		150		1.9		150
2.33		3,000		7.1		1,600
2.73		125		7.4		125
2.33 to 6.60		3,275		6.9		1,875

     53 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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; or (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; and (3) from time-to-time, purchases from 2176423 Ontario Ltd., a company controlled by Eric Sprott, pursuant to the terms and conditions of a previously announced share transaction. 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 2,396,538 RSUs issued during the year ended December 31, 2018 (year ended December 31, 2017 - 755,413). The Trust purchased 2.4 million shares in the year ended December 31, 2018 (year ended December 31, 2017 - 8.1 million).

	Number of common shares
Common shares held by the Trust, December 31, 2016		5,287,752
Acquired		8,100,000
Released on vesting		(3,021,795	)
Unvested common shares held by the Trust, December 31, 2017		10,365,957
Acquired		2,402,500
Released on vesting		(2,836,201	)
Unvested common shares held by the Trust, December 31, 2018		9,932,256

The table below provides a breakdown of the share-based compensation expense and the corresponding increase to contributed surplus:

	For the years ended
	Dec. 31, 2018		Dec. 31, 2017
Stock option plan		424		(73	)
EPSP / EIP		11,934		6,765
		12,358		6,692

     54 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Basic and diluted earnings per share

The following table presents the calculation of basic and diluted earnings (loss) per common share:

	For the years ended
	Dec. 31, 2018			Dec. 31, 2017
Numerator (in thousands $):
Net income (loss) - basic and diluted		31,379			37,532
Denominator (Number of shares in thousands):
Weighted average number of common shares		251,848			246,205
Weighted average number of unvested shares purchased by the Trust		(11,656	)		(7,143	)
Weighted average number of common shares - basic		240,192			239,062
Weighted average number of dilutive stock options		3,125			—
Weighted average number of unvested shares purchased by the Trust		11,656			7,143
Weighted average number of common shares - diluted		254,973			246,205
Net income per common share
Basic	$	0.13		$	0.16
Diluted	$	0.12		$	0.15

Capital management

The Company's objectives when managing capital are:

• 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 for 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). SPW is a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), SAM is a registrant of the Ontario Securities Commission ("OSC") and the U.S. Securities and Exchange Commission ("SEC"), SAM US is registered with the 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. As at December 31, 2018 and 2017, all entities were in compliance with their respective capital requirements.

     55 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

9       INCOME TAXES

The major components of income tax expense are as follows (in thousands $):

	For the years ended
	Dec. 31, 2018			Dec. 31, 2017
Current income tax expense (recovery)
Based on taxable income of the current period		393			9,003
Other		(137	)		(1,174	)
		256			7,829
Deferred income tax expense (recovery)
Total deferred income tax expense		1,022			(2,055	)
Income tax expense reported in the statements of operations		1,278			5,774

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 $):

	For the years ended
	Dec. 31, 2018			Dec. 31, 2017
Income before income taxes		32,657			43,306
Tax calculated at domestic tax rates applicable to profits in the respective countries		8,631			11,851
Tax effects of:
Non-deductible stock-based compensation		153			1,815
Non-taxable capital (gains) and losses		(559	)		(5,275	)
Capital losses not benefited		—			27
Intangibles		(388	)		130
Adjustments in respect of previous periods		(137	)		(1,356	)
Other temporary differences not benefited		(279	)		(1,425	)
Non-capital losses not benefited previously		(6,680	)		91
Rate differences and other		537			(84	)
Tax charge		1,278			5,774

The weighted average statutory tax rate was 26.4% (December 31, 2017 - 27.4%). This decrease was mainly due to decreased profitability of our Global segment, which is U.S based. The Company has $6 million of non-capital tax losses and $12 million of capital tax losses from prior years that will begin to expire in 2027 and 2019, respectively. The benefit of these capital and non-capital tax losses has not been recognized.

     56 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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, 2018

	Dec. 31, 2017			Recognized in income			Recognized in other comprehensive income		Dec. 31, 2018
Deferred income tax assets
Other stock-based compensation		2,588			1,712			—		4,300
Non-capital losses		820			4,185			13		5,018
Unrealized gains		481			(95	)				386
Other		485			28			—		513
Total deferred income tax assets		4,374			5,830			13		10,217
Deferred income tax liabilities
Fund management contracts		431			6,886			—		7,317
Proceeds receivable		279			(209	)		—		70
Other		(116	)		175			—		59
Total deferred income tax liabilities		594			6,852			—		7,446
Net deferred income tax assets		3,780			(1,022	)		13		2,771

For the year ended December 31, 2017

	Dec. 31, 2016			Recognized in income			Recognized in other comprehensive income			Dec. 31, 2017
Deferred income tax assets
Other stock-based compensation		4,223			(1,635	)		—			2,588
Non-capital losses		553			267			—			820
Unrealized gains		(186	)		667			—			481
Other		571			(86	)		—			485
Total deferred income tax assets		5,161			(787	)		—			4,374
Deferred income tax liabilities
Fund management contracts		2,039			(1,547	)		(61	)		431
Deferred sales commissions		392			(392	)		—			—
Proceeds receivable		993			(714	)		—			279
Other		73			(189	)		—			(116	)
Total deferred income tax liabilities		3,497			(2,842	)		(61	)		594
Net deferred income tax assets (liabilities)		1,664			2,055			61			3,780

     57 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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, 2018 and December 31, 2017 (in thousands $).

Proprietary Investments

Dec. 31, 2018	Level 1			Level 2		Level 3		Total
Public equities and share purchase warrants		13,680			5,386		—		19,066
Fixed income securities		—			1,796		1,000		2,796
Private holdings		—			—		2,830		2,830
Obligations related to securities sold short		(255	)		—		—		(255	)
Total net recurring fair value measurements		13,425			7,182		3,830		24,437
Dec. 31, 2017		Level 1			Level 2		Level 3		Total
Public equities and share purchase warrants		47,417			8,161		—		55,578
Fixed income securities		—			249		—		249
Private holdings		—			—		4,269		4,269
Obligations related to securities sold short		(24,993	)		—		—		(24,993	)
Total net recurring fair value measurements		22,424			8,410		4,269		35,103

Long-term investments

Dec. 31, 2018	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		72,739		—		72,739
Private holdings		—		—		29,821		29,821
Total net recurring fair value measurements		—		72,739		29,821		102,560

Dec. 31, 2017	Level 1		Level 2		Level 3		Total
Public equities and share purchase warrants		—		1,639		—		1,639
Co-investments in funds		—		35,972		—		35,972
Private holdings		—		—		12,152		12,152
Total net recurring fair value measurements		—		37,611		12,152		49,763

     58 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

The following tables provides a summary of changes in the fair value of Level 3 financial assets (in thousands $):

Proprietary Investments

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		4,269		2,135		(3,680	)		106		2,830
Fixed income securities		—		1,000		—			—		1,000
		4,269		3,135		(3,680	)		106		3,830
	Changes in the fair value of Level 3 measurements - Dec. 31, 2017
	Dec. 31, 2016		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income		Dec. 31, 2017
Private holdings		3,984		272		(16	)		29		4,269
Fixed income securities		1,264		—		(1,264	)		—		—
		5,248		272		(1,280	)		29		4,269

Long-term investments

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		12,152		13,145		—		4,524		29,821
		12,152		13,145		—		4,524		29,821
	Changes in the fair value of Level 3 measurements - Dec. 31, 2017
	Dec. 31, 2016		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income		Dec. 31, 2017
Private holdings		8,830		—		—		3,322		12,152
		8,830		—		—		3,322		12,152

During the year ended December 31, 2018, the Company transferred public equities of $0.7 million (Dec. 31, 2017 - $2.9 million) from Level 2 to Level 1 within the fair value hierarchy due to the release of trading restrictions by the issuer. The Company purchased level 3 investments of $16.3 million and transferred $Nil (Dec. 31, 2017 - $3.3 million) from Level 3 to Level 1 within the fair value hierarchy.

     59 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

The following table presents the valuation techniques used by the Company in measuring fair values:

Type	Valuation Technique
Public equities and share purchase warrants	Fair values are determined using pricing models which incorporate all available market-observable inputs.
Co-investments in funds	Fair values are based on the last available Net Asset Value.
Fixed income securities	Fair values are based on independent market data providers or third-party broker quotes.

The Company’s Level 3 securities consists of private holdings and fixed income securities of private companies. The Company determines fair value using a variety of valuation techniques, including discounted cash flows, comparable recent transactions and other techniques used by market participants. The significant unobservable input used in these valuation techniques can vary considerably over time, and include grey market financing prices, discount rates and extraction recovery rates of mining projects. 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 $1.2 million (December 31, 2017 - $0.5 million)

Financial instruments not carried at fair value

For fees receivable, other assets, accounts payable and accrued liabilities and compensation payable, the carrying amount represents a reasonable approximation of fair value due to their short term maturity.

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 $):

	For the years ended
	Dec. 31, 2018		Dec. 31, 2017
Fixed salaries and benefits		3,186		4,197
Variable incentive-based compensation		4,976		2,818
Share-based compensation		4,344		3,268
		12,506		10,283

The deferred stock unit ("DSU") plan for independent directors of the Company vests annually over a three-year period and may only be settled in cash upon retirement. DSU's issued in lieu of directors' fees and dividends vest immediately. There were 123,660 DSUs issued during the year (December 31, 2017 - 213,727). DSU expense is included in "compensation and benefits" line in the consolidated statements of operations and is recognized over the three-year vesting period with an offset to accrued liabilities.

On June 29, 2017, the Company participated in the secondary offering of 2176423 Ontario Ltd., a company beneficially owned by Mr. Eric Sprott. As part of the offering, the Sprott Inc. 2011 Employee Profit Sharing Trust purchased 7,500,000 shares for a total price of $16.5 million, which included a $9.9 million note payable over four years. As at December 31, 2018, the balance of the note payable is $5.5 million.

     60 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

12     DIVIDENDS

The following dividends were declared by the Company during the year ended December 31, 2018:

Record date	Payment Date	Cash dividend per share ($)		Total dividend amount (in thousands $)
March 12, 2018 - Regular Dividend Q4 - 2017	March 27, 2018		0.03		7,553
May 21, 2018 - Regular Dividend Q1 - 2018	June 5, 2018		0.03		7,553
August 20, 2018 - Regular Dividend Q2 - 2018	September 4, 2018		0.03		7,566
November 19, 2018 - Regular Dividend Q3 - 2018	December 4, 2018		0.03		7,586
Dividends (1)					30,258

^{(1) Subsequent to the quarter-end, on February 27, 2019, a regular dividend of $0.03 per common share was declared for the quarter ended December 31, 2018. This dividend is payable on March 25, 2019 to shareholders of record at the close of business on March 8, 2019.}

     61 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

13     RISK MANAGEMENT ACTIVITIES

The Company's exposure to market, credit, liquidity and concentration risk is 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 HFT, designated as FVTPL, HTM, AFS, or as loans and receivables. 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 proprietary investments and loans receivable. 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 proprietary investments and long-term investments will result in changes in carrying value. If the market values of proprietary investments and long-term investments classified as HFT increased or decreased by 5%, with all other variables held constant, this would have resulted in an increase or decrease in net income of approximately $6.4 million for the year (December 31, 2017 - $1.7 million). For more details about the Company's proprietary investments and long-term investments, refer to Note 3.

The Company's revenues are also exposed to price risk since management fees, performance fees and carried interests are 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, SC, RCIC and SAM US.

As at December 31, 2018 and 2017 the Company did not hold any precious metal loans and was not exposed to price risk as the fair value of these loans is dependent on future gold prices.

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 instrument assets. The Company’s earnings, particularly through its on balance sheet loans and co-investment in lending LPs, are exposed to volatility as a result of sudden changes in interest rates. As a mitigating factor, the Company from time-to-time sets minimum interest rates or an interest rate floor in its variable rate loans. As at December 31, 2018 the Company's loan portfolio consisted of only fixed-rate loans. The Company is also exposed to changes in the value of a loan when that loan’s interest rate is at a rate other than current market rates.

As at December 31, 2018, the Company's on balance sheet loan portfolio had 3 fixed-rate resource based loans and no floating-rate resource based loan (December 31, 2017 - 6 fixed-rate loans and 1 floating-rate loan) with an aggregate carrying value of $36.0 million (December 31, 2017 - $48.7 million). The Company's 3 loans range in maturity dates from 1 to 3 years.

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 Canadian dollars. The Company's primary foreign currency is the United States dollar ("USD"). The Company may employ certain hedging strategies to mitigate foreign currency risk.

     62 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

The Global Companies' assets are all denominated in USD with their translation impact being reported as part of other comprehensive income in the financial statements. Excluding the impact of the Global Companies, as at December 31, 2018, approximately $103.3 million (December 31, 2017 - $59.6 million) of total Canadian assets were invested in proprietary investments priced in USD. A total of $17.3 million (December 31, 2017 - $55.5 million) of cash, $1.3 million (December 31, 2017 -$1.2 million) of accounts receivable, $34.5 million (December 31, 2017 - $42.1 million) of loans receivable and $2.6 million (December 31, 2017 - $10.9 million) of other assets were denominated in USD. As at December 31, 2018, if the exchange rate between USD 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 $7.9 million for the year (December 31, 2017 - $6.9 million) and there would be $Nil impact to OCI (December 31, 2017 - $Nil).

Credit risk

Credit risk is the risk that a borrower will not honour its commitments and a loss to the Company may result.

Loans receivable

The Company incurs credit risk primarily in the on-balance sheet loans of SRLC and through co-investments made in the lending LPs managed by SRLC. In addition to the relative default probability of SRLC borrowers (both directly via on balance sheet loans and indirectly via borrowers in the lending LPs we co-invest with), credit risk is also dependent on loss given default, which can increase credit risk if the values of the underlying assets securing the Company's loans decline to levels approaching or below the loan amounts. A decrease in commodity prices may delay the development of the underlying security or business plans of the borrower and will adversely affect the value of the Company's security against a loan. Additionally, the value of the Company's underlying security in a loan can be negatively affected if the actual amount or quality of the commodity proves to be less than that originally estimated, or the ability to extract the commodity proves to be more difficult or more costly than originally estimated. 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 Company interests;

• legal reviews that are performed to ensure that all due diligence requirements are met prior to funding.

As at December 31, 2018, the Company’s net exposure to credit risk in the on-balance sheet loans of SRLC and through the loan portfolio of the lending LPs was $36.0 million (December 31, 2017 - $48.7 million) and the Company had no exposure to off-balance sheet credit risk (loan commitments) (December 31, 2017 - $nil). As at December 31, 2018, the largest loan in the Company’s on-balance sheet loan portfolio was a resource loan with a carrying value of $33.2 million or 92% of the Company’s loans receivable (December 31, 2017 - $26.3 million or 54% of the Company’s loans receivable). The Company will 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. For precious metal loans, the Company performs the same due diligence procedures as it would for its resource loans and resource debentures.

     63 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Collectability of loans

Besides the above noted measures we take to manage credit risk, the Company will report on credit risk in the notes to the annual financial statements and records expected credit loss to ensure the loans are recorded at their estimated recoverable amount (i.e. net of impairment risk we believe to exist as at the balance sheet date and in accordance with IFRS). Actual losses incurred in the loan portfolio could differ materially from our provisions.

Proprietary investments

The Company incurs credit risk when entering into, settling and financing various proprietary transactions. As at December 31, 2018 and 2017, the Company's most significant proprietary investments counterparty was National Bank Correspondent Network Inc. ("NBCN"), the carrying broker of SPW, which also acts as a custodian for most of the Company's proprietary investments. NBCN is registered as an investment dealer subject to regulation by IIROC; 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, managed accounts and managed companies 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 Global Companies incur credit risk when entering into, settling and financing various proprietary transactions. As at December 31, 2018 and 2017, the Global Companies' 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. 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.

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 $90 million committed line of credit with a major Canadian Schedule I bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months. As at December 31, 2018, the Company had $47.3 million or 11% (December 31, 2017 - $156.1 million or 38%) of its total assets in cash and cash equivalents. In addition, approximately $19.1 million or 19% (December 31, 2017 - $27.3 million or 69%) 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 loans receivable and co-investments in lending LPs arises from fluctuations in cash flows from making loan advances and receiving loan repayments. The Company manages its loan commitment liquidity risk through the ongoing monitoring of scheduled loan fundings and repayments ("match funding") and through its broader treasury risk management program and enterprise capital budgeting. As at December 31, 2018, the Company had no loan funding commitments and $38.7 million in co-investment commitments from the Lending segment (December 31, 2017 - $9.9 million and $7.8 million respectively) . 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.

     64 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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: syndicating a portion of its loans; slowing its lending activities; drawing on the line of credit; liquidating proprietary investments and/or issuing common shares.

Concentration risk

The majority of the Company's AUM, as well as its proprietary investments and loans receivables are focused on the natural resource sector, and in particular, precious metals & mining.

     65 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

14     SEGMENTED INFORMATION

For management purposes, the Company is organized into business units based on its products, services and geographical location and has six 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;

• Alternative Asset Management (reportable), which provides asset management and sub-advisory services to the Company's branded funds and managed accounts;

• Global (reportable), which provides asset management services to the Company's branded funds and managed accounts in the U.S. and also provides securities trading services to its clients through the Company's U.S. broker-dealer;

• Lending (reportable), which provides lending activities through limited partnership vehicles as well as through direct lending activities using the Company's balance sheet;

• Merchant Banking and Advisory Services (reportable), which includes the activities of Sprott Capital Partners, a division of SPW. Effective this year, the results of our Canadian broker-dealer are presented separately from Corporate;

• Corporate (reportable), which provides capital, balance sheet management and enterprise shared services to the Company's subsidiaries. Effective this year, the results of this segment are presented separately from Merchant Banking and Advisory Services;

• All Other Segments (non-reportable), which do not meet the definition of reportable segments as per IFRS 8. Effective Q1, 2018, the Consulting segment is now part of "All Other Segments" as it no longer constitutes a reportable operating segment on its own, given its immateriality relative to the three quantitative tests of IFRS 8. Consulting is the only segment in this category as all other Company segments are reportable.

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 proprietary investments (as if such gains and losses had not occurred), foreign exchange gains and losses, one time non-recurring expenses, non-cash and non-recurring 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.

     66 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

The following tables present the operations of the Company's reportable segments (in thousands $):

For the year ended December 31, 2018

	Exchange Listed Products		Alternative Asset Management		Global			Lending		Merchant Banking & Advisory Services		Corporate (1)			Eliminations and All Other Segments (2)			Consolidated
Total revenue		33,479		9,143		14,550			27,702		22,116		2,472			(193	)		109,269
Total expenses		9,057		7,503		16,923			7,316		15,788		14,528			5,497			76,612
Pre-tax Income (loss)		24,422		1,640		(2,373	)		20,386		6,328		(12,056	)		(5,690	)		32,657
Adjusted base EBITDA		24,924		1,686		3,037			15,437		4,474		(8,982	)		(64	)		40,512

^{(1) Historically, this reportable segment included losses on proprietary investments relating to the Company's investment in Sprott Resource Holdings Inc. ("SRHI"). This has been reclassified to "All Other Segments" as SRHI is a managed company of the non-reportable Consulting segment.}

^{(2) Inter-segment revenues and expenses are eliminated on consolidation and reflected in the Eliminations column. Effective Q1, 2018, the former Consulting segment no longer met the definition of a reportable segment as per IFRS 8.}

For the year ended December 31, 2017

	Exchange Listed Products		Alternative Asset Management		Global		Lending		Merchant Banking & Advisory Services		Corporate (1)			Eliminations and All Other Segments (2)			Consolidated
Total revenue		17,984		72,942		20,416		11,036		21,555		(5,768	)		6,046			144,211
Total expenses		7,693		32,807		17,555		6,902		16,486		12,951			6,511			100,905
Pre-tax Income (loss)		10,291		40,135		2,861		4,134		5,069		(18,719	)		(465	)		43,306
Adjusted base EBITDA		12,255		7,614		5,655		16,962		5,699		(8,188	)		167			40,164

^{(1) Historically, this reportable segment included losses on proprietary investments relating to the Company's investment in Sprott Resource Holdings Inc. ("SRHI"). This has been reclassified to "All Other Segments" as SRHI is a managed company of the non-reportable Consulting segment.}

^{(2) Inter-segment revenues and expenses are eliminated on consolidation and reflected in the Eliminations column. Effective Q1, 2018, the former Consulting segment no longer met the definition of a reportable segment as per IFRS 8.}

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 $):

	For the years ended
	Dec. 31, 2018		Dec. 31, 2017
Canada		94,719		123,795
United States		14,550		20,416
		109,269		144,211

     67 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

15     COMMITMENTS AND PROVISIONS

Besides the Company's long-term lease agreement, there may be commitments to provide loans arising from the Lending business or commitments to make investments in the net investments portfolio of the Company. As at December 31, 2018, the Company had no loan commitments (December 31, 2017 - $9.9 million) and $38.7 million in co-investment commitments from the Lending segment (December 31, 2017 - $7.8 million).

Future minimum annual rental payments under non-cancellable leases, including operating costs, are as follows ($ thousands):

2019	2,580
2020	2,606
2021	2,632
2022	2,153
2023	1,847
Thereafter	1,866
	13,684

Contingent loss provisions are recorded when it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated.  The Company makes provisions based on current information and the probable resolution of any such proceedings and claims. As at December 31, 2018, no provisions were recognized.

     68 

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

Jack C. Lee, Chairman

Peter Grosskopf, Chief Executive Officer and Director

Rick Rule, Director

Sharon Ranson, FCPA, FCA, Director

Rosemary Zigrossi, Director

Ronald Dewhurst, Director

Kevin Hibbert, Chief Financial Officer

Arthur Einav, Corporate Secretary

Transfer Agent & 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

Baker & McKenzie LLP

Brookfield Place, Suite 2100

181 Bay Street, P.O. Box 874

Toronto, Ontario, Canada M5J 2T3

Auditors

KPMG LLP

Bay Adelaide Centre

333 Bay Street, Suite 4600

Toronto, ON 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

Toronto Stock Exchange under the symbol ‘‘SII’’

Annual General Meeting

Friday, May 10, 2019 12:00 pm

Baker & Mackenzie LLP

Brookfield Place, Bay/Wellington Tower

181 Bay Street, Suite 2100

Toronto, Ontario

 

www.sprott.com

EX-99.3

Exhibit 99.3

Management's Discussion and Analysis

Year ended December 31, 2018

     1 

FORWARD LOOKING STATEMENTS

Certain statements in this Management's Discussion & Analysis ("MD&A"), and in particular the "Business Highlights and Growth Initiatives" section and "Outlook" subsection, contain forward-looking information (collectively referred to herein as the "Forward-Looking Statements") within the meaning of applicable 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) expectations regarding continued wind-down of balance sheet lending as we grow the AUM in our suite of lending LPs, including that balance sheet run-off will reach a conclusion by the end of 2019, leading to material increases in lending LP management fees in 2020 and onwards; (ii) expectations regarding deployment of capital called into our lending LPs in 2019; (iii) expectation that the strong finish to the price of gold in the year will carry forward to 2019; (iv) expectation that there will be a lower redemption experience for exchange listed products in 2019; (v) expectation that the average AUM for exchange listed products will likely be lower in 2019; (vi) expectation that, to the extent that loan repayments outpace capital deployments, declines in 2019 interest income could outpace increases in management fees from our lending LPs; (vii) anticipation that earnings from the alternative asset management business will be relatively flat to slightly positive year-over-year; (viii) expectation that equity origination and placement fee activities will continue to come under pressure in 2019 as it did in 2018; (ix) expectation that we will see a material decrease in compensation expense in 2019 and the primary reasons causing such decrease as described under the heading “Outlook - Corporate”; (x) our belief that management fees and interest income will continue to be sufficient to satisfy ongoing operating needs and that we hold sufficient cash and liquid securities to meet any other operating and capital requirements; and (xi) the declaration, payment and designation of dividends.

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; and (iv) those assumptions disclosed herein under the heading "Significant Accounting Judgments, Estimates and Changes in Accounting Policies". 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 favourable 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 lending business; (xxvii) risks relating to the Company’s merchant bank and advisory business; (xxviii) those risks described under the heading "Risk Factors" in the Company’s annual information form dated February 27, 2019; and (xxix) those risks described under the headings "Managing Risk: Financial" and "Managing Risk: Non-Financial" 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 Canadian securities laws.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This MD&A of financial condition and results of operations, dated February 27, 2019, presents an analysis of the consolidated financial condition of the Company and its subsidiaries as at December 31, 2018, compared with December 31, 2017, and the consolidated results of operations for the three and twelve months ended December 31, 2018, compared with the three and twelve months ended December 31, 2017. The Board of Directors approved this MD&A on February 27, 2019. All note references in this MD&A are to the notes to the Company's December 31, 2018 audited consolidated financial statements ("financial statements"), unless otherwise noted. The Company was incorporated under the Business Corporations Act (Ontario) on February 13, 2008.

PRESENTATION OF FINANCIAL INFORMATION

The 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 financial statements. The Canadian dollar is the Company's functional and reporting currency for purposes of preparing the financial statements given that the Company conducts most of its operations in that currency. Accordingly, all dollar references in this MD&A are in Canadian dollars, unless otherwise specified. The use of the term "prior period" refers to the three and twelve months ended December 31, 2017.

     2 

KEY PERFORMANCE INDICATORS (NON-IFRS 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 include:

Assets Under Management

Assets Under Management ("AUM") refers to the total net assets managed by the Company through its various investment product offerings, managed accounts and managed companies.

Net Sales & Capital Calls

Sales and capital calls, net of redemptions and distributions, are key performance indicators as the amount of new net assets being added to the total AUM of the Company will lead to higher management fees and can potentially lead to increased carried interest and performance fee generation given that AUM is also the basis upon which carried interest and performance fees are calculated.

Net Fees

Management fees, carried interest and performance fees, net of trailer fees, sub-advisor fees, carried interest and performance fee payouts, is a key revenue indicator as it represents the net revenue contribution after directly associated costs that we generate from our AUM.

Net Commissions

Commissions, net of commission expenses, arise from the transaction based service offerings of our Canadian and U.S broker-dealers.

     3 

EBITDA, Adjusted EBITDA and Adjusted base EBITDA

EBITDA in its most basic form is defined as earnings before interest expense, income taxes, depreciation and amortization. EBITDA 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.

Neither EBITDA, adjusted EBITDA or adjusted base EBITDA have 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 measures are determined:

	3 months ended						12 months ended
(in thousands $)	Dec. 31, 2018			Dec. 31, 2017			Dec. 31, 2018			Dec. 31, 2017
Net income (loss) for the periods		9,831			2,519			31,379			37,532
Adjustments:
Interest expense		312			22			419			201
Provision (recovery) for income taxes		3,383			(1,234	)		1,278			5,774
Depreciation and amortization		598			1,386			2,199			6,427
EBITDA		14,124			2,693			35,275			49,934
Other adjustments:
(Gains) losses on proprietary investments		(3,912	)		63			5,782			5,189
(Gains) losses on foreign exchange		(2,026	)		(340	)		(2,310	)		7,412
Non-cash stock-based compensation		1,738			1,275			5,199			1,662
Net proceeds from Sale Transaction		—			915			(4,200	)		(31,691	)
Unamortized placement fees		(279	)		349			(1,093	)		5,057
Other expenses(1)		447			3,886			2,746			4,788
Adjusted EBITDA		10,092			8,841			41,399			42,351
Other adjustments:
Carried interest and performance fees		—			(3,584	)		(1,802	)		(4,676	)
Carried interest and performance fee related expenses		—			2,267			915			2,489
Adjusted base EBITDA		10,092			7,524			40,512			40,164

⁽¹⁾ See Other Expenses in Note 7 of the financial statements. In addition to the items outlined in Note 7, Other also includes severance accruals of $Nil for the 3 months ended (2017 - $2.2 million) and $0.5 million for the 12 months ended (2017 - $2.5 million).

     4 

BUSINESS OVERVIEW

Our reportable operating segments are as follows:

^{* These reportable operating segments substantially form our "Private Resource Investments" Platform. Previously, we separately disclosed the results of our Consulting segment.}

Exchange Listed Products

• The Company's closed-end physical trusts and exchange traded funds ("ETFs").

Alternative Asset Management

• The Company's alternative investment strategies and sub-advised products.

Global

• The Company's U.S operations, including: 1) fixed-term limited partnership vehicles, 2) discretionary managed accounts; and 3) U.S.-based broker-dealer.

Lending

• The Company's lending activities occur through limited partnership vehicles ("lending LPs"). Balance sheet lending continues to wind-down as we grow the AUM in our suite of lending LPs.

Merchant Banking & Advisory Services

• The Company's Canadian merchant banking and advisory services activities through Sprott Capital Partners ("SCP"), a division of Sprott Private Wealth LP ("SPW").

Corporate

• Provides the Company's various operating segments with capital, balance sheet management and other shared services.

All Other Segments

• Given its immateriality relative to the three quantitative tests of IFRS 8, effective Q1 2018, the Consulting segment no longer met the definition of a reportable segment. Consequently, this segment is now included as part of "All Other Segments" in Note 14 of the financial statements. Consulting is the only segment in this category as all other Company segments are reportable.

For a detailed account of the underlying principal subsidiaries within our reportable business segments, refer to the Company's Annual Information Form and Note 2 of the financial statements.

     5 

BUSINESS HIGHLIGHTS AND GROWTH INITIATIVES

Investment Performance

Market value appreciation was $929 million during the quarter, and on a full year basis was down $16 million. Strong precious metals prices in the fourth quarter offset a significant amount of market value depreciation experienced earlier in the year.

Product and Business Line Expansion

• AUM in our lending LPs stood at $498 million (US$365 million) as of December 31, 2018. This was due to $246 million (US$164 million) of new capital calls into our lending LPs (net of capital distributions) during the year. Subsequent to year-end, total uncalled capital (i.e. committed but not yet called into our lending LPs) stood at $965 million (US$707 million). The $625 million (US$449 million) increase from September 30, 2018 was primarily due to the December and January closings of an additional $590 million (US$432 million) in capital commitments.

• On January 29, 2018, the Company completed the sale of its non-core private wealth client business (together with the August 1, 2017 sale of its non-core Canadian diversified funds business, referred to as the "Sale Transaction").

• On January 16, 2018, the Company successfully closed on the acquisition of Central Fund of Canada Limited ("CFCL") for $120 million, plus a contingent earn-out. This transaction added $4.3 billion to Company AUM at the time. Upon closing, the assets of CFCL were transfered to the Sprott Physical Gold & Silver Trust ("CEF").

Outlook

Exchange Listed Products

• We expect the strong finish to the price of gold in the year to carry forward to 2019, however, the benefit of higher gold prices will be somewhat offset by starting 2019 with a lower AUM base given our 2018 redemption experience (15% of acquired CFCL assets).

Lending

• We expect a relatively steady deployment of called capital (AUM growth) into our lending LPs in 2019, ranging from US$200 million - US$400 million by end of that year. Over that same time period, we expect our legacy balance sheet loans to continue running off at about the same pace it has historically. However, to the extent that loan repayments outpace capital deployments, declines in 2019 interest income could outpace increases in 2019 management fees from our lending LPs. We anticipate the balance sheet run-off to reach a conclusion by end of 2019.

Alternative Asset Management

• We anticipate earnings from this business to be relatively flat to slightly positive year-over-year.

Canadian & U.S. broker-dealer businesses

• We expect the pace of equity origination and placement fee activity to be similar in 2019 to what it was in 2018.

Corporate

• We expect to see a material decrease in corporate expenses in 2019, primarily due to: (1) lower LTIP amortization as the graded vesting schedule of the 2017 grants reach the low points of the amortization schedule; and (2) slightly flat to lower SG&A as we continue our cost containment efforts.

     6 

SUMMARY FINANCIAL INFORMATION

(In thousands $)	Q4 2018			Q3 2018			Q2 2018			Q1 2018			Q4 2017			Q3 2017			Q2 2017			Q1 2017
SUMMARY INCOME STATEMENT
Management fees		13,182			13,722			14,559			14,056			10,247			13,597			20,460			20,677
Carried interest and performance fees		—			—			685			1,117			3,584			835			126			131
less: Trailer fees		38			45			49			47			225			617			2,762			2,944
less: Sub-advisor fees		—			—			—			—			—			426			1,124			1,060
less: Carried interest and performance fee payouts		—			—			356			559			2,267			—			12			16
Net Fees		13,144			13,677			14,839			14,567			11,339			13,389			16,688			16,788
Commissions		6,414			4,573			7,516			8,857			7,366			4,746			8,878			8,200
less: Commission expense		2,704			2,447			2,701			3,667			2,855			1,553			3,364			3,208
Net Commissions		3,710			2,126			4,815			5,190			4,511			3,193			5,514			4,992
Interest income		4,244			4,824			3,293			2,775			3,588			2,789			3,387			5,829
Gains (losses) on proprietary investments		3,912			(4,765	)		(3,050	)		(1,879	)		(63	)		(3,770	)		613			(1,969	)
Gains (losses) on long-term investments		3,007			(151	)		(72	)		56			3,639			—			—			—
Other income (loss)		2,453			(275	)		3,683			6,533			1,144			31,487			(2,648	)		1,338
Total Net Revenues		30,470			15,436			23,508			27,242			24,158			47,088			23,554			26,978
Compensation (1)		11,163			8,167			10,634			9,485			10,631			5,655			11,784			12,461
Compensation - severance accruals		38			359			—			149			2,193			62			196			1
Placement and referral fees		368			223			148			204			833			782			4,628			68
Selling, general and administrative		4,483			3,430			4,920			4,652			5,761			5,208			6,163			6,566
Expected credit loss provisions (recoveries) (2)		—			—			—			—			—			—			—			(4,942	)
Amortization and impairment charges		598			457			456			688			1,386			1,473			1,778			1,790
Other expenses		606			790			802			1,179			2,069			703			289			934
Total Expenses		17,256			13,426			16,960			16,357			22,873			13,883			24,838			16,878
Net Income (Loss)		9,831			1,975			5,916			13,657			2,519			29,804			(3,606	)		8,815
Net Income (Loss) per share		0.04			0.01			0.02			0.06			0.01			0.12			(0.01	)		0.04
Adjusted base EBITDA		10,092			9,707			10,686			10,027			7,524			8,007			8,751			15,882
Adjusted base EBITDA per share		0.04			0.04			0.04			0.04			0.03			0.03			0.04			0.06
SUMMARY BALANCE SHEET
Total Assets		428,215			401,366			403,985			407,177			409,849			408,093			387,636			426,647
Total Liabilities		55,094			36,486			36,372			42,417			65,985			61,707			62,925			64,113
Cash		47,252			41,452			37,974			52,097			156,120			152,952			96,572			113,882
less: syndicate cash holdings		(10,421	)		(967	)		(796	)		(932	)		(776	)		(649	)		(477	)		(3,838	)
Net cash		36,831			40,485			37,178			51,165			155,344			152,303			96,095			110,044
Proprietary and long-term investments		129,271			115,744			120,853			96,352			114,327			134,306			137,505			156,097
less: obligations related to securities sold short		(255	)		—			(2,927	)		(8,543	)		(24,993	)		(25,988	)		(26,577	)		(30,157	)
Net investments		129,016			115,744			117,926			87,809			89,334			108,318			110,928			125,940
Loans receivable		36,021			36,532			40,208			50,467			48,673			46,215			67,804			73,336
Investable Capital		201,868			192,761			195,312			189,441			293,351			306,836			274,827			309,320
ASSETS UNDER MANAGEMENT
Exchange Listed Products		8,164,136			7,560,651			8,530,082			9,014,378			4,634,068			4,539,751			4,591,479			4,758,403
Alternative Asset Management		799,942			868,003			1,009,007			1,054,745			1,115,114			1,177,214			3,323,611			3,529,068
Private Resource Investments (3)		1,614,348			1,637,458			1,586,953			1,522,090			1,574,200			1,474,547			1,391,367			1,404,955
Total Enterprise AUM		10,578,426			10,066,112			11,126,042			11,591,213			7,323,382			7,191,512			9,306,457			9,692,426

⁽¹⁾ Compensation includes stock-based compensation, but excludes commission expense, carried interest and performance fee payouts, which are reported net of commission revenue, carried interest and performance fees, respectively.

⁽²⁾ Starting Q1, 2018, in order to comply with the new IFRS 9 accounting standard, an expected loss model was used. In the periods prior to Jan 1, 2018, an incurred loss model was used as per IAS 39. See Changes in accounting policies in Note 2 of the annual financial statements.

⁽³⁾ Primarily includes the AUM of our Consulting, Global and Lending segments.

     7 

RESULTS OF OPERATIONS

AUM SUMMARY

AUM was $10.6 billion as at December 31, 2018, up $0.5 billion (5%) from September 30, 2018 and up $3.3 billion (44%) from December 31, 2017. The increase on a three months ended basis was primarily due to higher precious metal prices in our physical trusts net of redemptions. The increase on a full year basis was primarily due to the successful acquisition of CFCL and higher capital calls activity (AUM) in our lending LPs. These increases more than offset the redemption activity in our physical trusts and sub-advised product offerings.  

3 months results

In millions $	AUM Sept. 30, 2018		Net Sales & Capital Calls			Market Value Change			Distributions, Acquisitions & Divestitures			AUM Dec. 31, 2018
Exchange Listed Products
- Physical Trusts		7,320		(300	)(1)		907			—			7,927
- ETFs		241		(41	)		37			—			237
		7,561		(341	)		944			—			8,164
Alternative Asset Management
- In-house		376		—			(30	)		(51	)		295
- Sub-advised		492		(3	)		16			—			505
		868		(3	)		(14	)		(51	)		800
Private Resource Investments
- Managed Companies		595		—			11			—			606
- Private Resource Lending LPs		493		35			27			(57	)(2)		498
- Fixed Term LPs		270		—			(27	)		—			243
- Separately Managed Accounts		279		—			(12	)		—			267
		1,637		35			(1	)		(57	)		1,614
Total		10,066		(309	)		929			(108	)		10,578

⁽¹⁾ Total CFCL units acquired on January 16, 2018 were 252 million. For the 3 months ended December 31, 2018, 9 million units ($139 million or 4%) were redeemed.

⁽²⁾ Distributions of principal receipts to clients of our lending LPs.

12 months results

In millions $	AUM Dec. 31, 2017		Net Sales & Capital Calls			Market Value Change			Distributions, Acquisitions & Divestitures			AUM Dec. 31, 2018
Exchange Listed Products
- Physical Trusts		4,200		(883	)(1)		273			4,337			7,927
- ETFs		434		(131	)		(66	)		—			237
		4,634		(1,014	)		207			4,337			8,164
Alternative Asset Management
- In-house		405		(10	)		(49	)		(51	)		295
- Sub-advised		710		(92	)		(113	)		—			505
		1,115		(102	)		(162	)		(51	)		800
Private Resource Investments
- Managed Companies		706		—			(2	)		(98	)		606
- Private Resource Lending LPs		252		320			47			(121	)(2)		498
- Fixed Term LPs		308		—			(65	)		—			243
- Separately Managed Accounts		308		—			(41	)		—			267
		1,574		320			(61	)		(219	)		1,614
Total		7,323		(796	)		(16	)		4,067			10,578

⁽¹⁾ Total CFCL units acquired on January 16, 2018 were 252 million. For the 12 months ended December 31, 2018, 37 million units ($616 million or 15%) were redeemed.

⁽²⁾ Distributions of principal receipts to clients of our lending LPs.

     8 

MANAGEMENT FEES BREAKDOWN

Below is a detailed list of management fee rates on our fund products as at December 31, 2018 (in thousands $):

FUND	AUM		BLENDED NET MANAGEMENT FEE RATE			CARRIED INTEREST AND PERFORMANCE FEE CRITERIA
Exchange Listed Products
Sprott Physical Gold and Silver Trust		3,830,912		0.40	%	N/A (1)
Sprott Physical Gold Trust		2,763,268		0.35	%	N/A (1)
Sprott Physical Silver Trust		1,194,220		0.45	%	N/A (1)
Sprott Gold Miner's ETF		179,440		0.57	%	N/A (1)
Sprott Physical Platinum & Palladium Trust		138,562		0.50	%	N/A (1)
Sprott Jr. Gold Miner's ETF		57,734		0.57	%	N/A (1)
Total		8,164,136		0.40	%
Alternative Asset Management: In-house
Sprott U.S. Value Strategies		248,570		1.00	%	15% of all net profits in excess of the HWM
Separately Managed Accounts (2)		45,970		1.00	%	N/A
Total		294,540		1.00	%
Alternative Asset Management: Sub-advised
Bullion Funds (3)		311,261		0.51	%	10% excess over applicable benchmark indices
Corporate Class Funds (3)		106,789		0.75	%	10% excess over applicable benchmark indices
Flow-through LPs (3)		87,352		0.70	%	20% of all net profits in excess of the HWM
Total		505,402		0.59	%
Private Resource Investments
Managed Companies (4)		605,598		0.50	%	N/A
Sprott Private Resource Lending LPs		498,231		1.23	%	15-70% of net profits over guaranteed return
Separately Managed Accounts (5)		267,068		0.61	%	20% of net profits over guaranteed return
Fixed Term Limited Partnerships		243,451		1.70	%	15-30% over guaranteed return
Total		1,614,348		0.92	%
Total AUM		10,578,426		0.51	%

⁽¹⁾ Exchange listed products do not attract performance fees, however the management fees they generate are closely correlated to precious metals prices.

⁽²⁾ Institutional managed accounts.

⁽³⁾ Management fee rate represents the net amount received by the Company as sub-advisor for these products.

⁽⁴⁾ Includes Sprott Resource Holdings Inc. and Sprott Korea Corp.

⁽⁵⁾ Includes our private equity strategy in Sprott Asia and high net worth discretionary managed accounts in the U.S.

     9 

KEY REVENUE LINES

Net Fees in the quarter were $13.1 million, up $1.8 million (16%) from the prior period and were $56.2 million on a full year basis, down $2.0 million (3%). The increase on a three months ended basis was due to management fee generation on the newly acquired CFCL assets in our Exchange Listed Products platform. We also experienced increased fee generation from our lending LPs as we continue to deploy called capital as fee earning AUM. On a full year basis, excluding net fees that were earned last year on the diversified assets sold as part of the Sale Transaction, Net Fees were up $14.9 million (36%). The increase on a normalized basis was due to management fee generation on the newly acquired CFCL assets in our Exchange Listed Products platform. We also experienced increased fee generation from our lending LPs as we continue to deploy called capital as fee earning AUM.

⁽¹⁾ Excludes fees generated from the non-core assets sold in August 2017.

Interest Income in the quarter was $4.2 million, up $0.7 million (18%) from the prior period and was $15.1 million on a full year basis, down $0.5 million (3%). The increase on a three months ended basis was primarily due to increased co-investments in our lending LPs. Excluding last year's impact of catch-up interest recorded on a previously impaired loan, interest income on a full year basis was up $2.2 million (17%). The full year increase on a normalized basis was primarily due to the early settlement of loans and income generation from our co-investments in lending LPs.

⁽¹⁾ $965 million (US$707 million) of committed capital remains uncalled (future AUM).

Net Commissions in the quarter were $3.7 million, down $0.8 million (18%) from the prior period and were $15.8 million on a full year basis, down $2.4 million (13%). The decline was due to lower equity origination and placement activities in both our Canadian and U.S broker-dealers.

     10 

KEY EXPENSE LINES

Compensation, excluding commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance accruals which are non-recurring, was $11.2 million, up $0.5 million (5%) from the prior period and was $39.4 million on a full year basis, which was down $1.1 million (3%).The increase on a three months ended basis was mainly due to year-end incentive accrual true-ups. The decrease on a full year basis was primarily due to lower head count as a result of last year's Sale Transaction which more than offset the higher equity amortization.

SG&A was $4.5 million in the quarter, down $1.3 million (22%) from the prior period and was $17.5 million on a full year basis, down $6.2 million (26%). This was largely due to lower rent, marketing, sales, professional fees, technology and fund operating expenses as a result of last year's Sale Transaction, and to a lesser extent, our on-going cost containment program.

ADDITIONAL REVENUE AND EXPENSE HIGHLIGHTS

Proprietary investments gains during the quarter and losses on a full year basis were due to market value movements of certain resource equity holdings and bullion investments.

Gains on long-term investments were due to market value appreciation of our strategic long-term investments.

Other income was higher in the quarter and lower on a full year basis. The increase in the quarter was mainly from foreign exchange gains on U.S dollar dominated cash, receivables and loans. The decrease on a full year basis was primarily due to net sales proceeds received on last year's Sale Transaction in the prior period.

Placement and referral fees were lower in the quarter and on a full year basis due to less usage of placement agents in our lending business.

Expected credit loss provisions ("ECL") were $Nil in the quarter, however on transition to IFRS 9 in the first quarter of this year, a Stage 1 ECL provision of $50 thousand was charged to opening retained earnings (December 31, 2017 - $Nil).

Amortization of intangibles was lower due to finite life fund management contracts in our Global segment being fully amortized in the first quarter of this year.

Amortization of property and equipment had a nominal increase on a three months ended basis and was flat on a full year basis.

Other expenses were lower in the quarter and on a full year basis, due to lower costs related to our energy assets.

     11 

Adjusted Base EBITDA

3 months results

Adjusted base EBITDA in the quarter was $10.1 million, up $2.6 million (34%) from the prior period. The increase in earnings was due to higher net fees generated on the newly acquired CFCL assets and newly called capital (AUM) and higher co-investment income generated in our lending LPs. These increases were partially offset by lower fees earned on U.S. based fixed-term LPs and lower net commissions due to lower equity origination and placement activities in both our Canadian and U.S broker-dealers.

12 months results

Adjusted base EBITDA on a full year basis was $40.5 million, up $0.3 million (1%). Excluding the impact of last year's Sale Transaction, catch-up interest and loan loss reversal, adjusted base EBITDA was up $13.7 million (51%). The increase in earnings on a normalized basis was due to higher net fees generated on the newly acquired CFCL assets and newly called capital (AUM) and higher co-investment income generated in our lending LPs. These increases were partially offset by lower fees earned on U.S. based fixed-term LPs and lower net commissions due to lower equity origination and placement activities in both our Canadian and U.S broker-dealers.

⁽¹⁾ Net of consolidation eliminations and non-reportable segments. See Note 14 of the annual financial statements.

⁽²⁾ Excludes EBITDA generated in 2017 from: 1) non-core assets sold in our Alternative Asset Management segment; and 2) loan loss provision reversal and related catch-up interest in our Lending segment.

     12 

Balance Sheet

Investable Capital was $202 million, down $91 million (31%) from December 31, 2017. The decrease was primarily due to the purchase of CFCL assets in January of this year.

Total Assets were $428 million, up $18 million (4%) from December 31, 2017. The slight increase was primarily due to increased intangible assets attributable to the CFCL transaction, offset by the deployment of investable capital previously described.

Total Liabilities were $55 million, down $11 million (17%) from December 31, 2017. The decrease was largely due to lower obligations related to securities sold short as we unwind certain hedge positions in our proprietary investments.

Total Shareholder's Equity was $373 million, up $29 million (9%) from December 31, 2017. The increase was primarily due to the issuance of share capital on purchase of CFCL.

     13 

REPORTABLE OPERATING SEGMENTS

Exchange Listed Products

	3 months ended				12 months ended
(In thousands $)	Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2018		Dec. 31, 2017
SUMMARY INCOME STATEMENT
Management fees		7,511		4,672		32,652		18,579
Other income (loss)		719		94		827		(595	)
Total Revenues		8,230		4,766		33,479		17,984
Compensation		1,047		1,708		4,473		3,669
Selling, general and administrative		802		588		3,295		2,655
Amortization and impairment charges		316		340		1,259		1,369
Other expenses		—		—		30		—
Total Expenses		2,165		2,636		9,057		7,693
Net Income before income taxes		6,065		2,130		24,422		10,291
Adjusted base EBITDA		5,675		2,376		24,924		12,255
Total AUM		8,164,136		4,634,068		8,164,136		4,634,068

3 and 12 months ended

Adjusted base EBITDA in the quarter was $5.7 million, up $3.3 million from the prior period and $24.9 million on a full year basis, up $12.7 million:

• The increase was primarily due to higher management fees generated on new AUM from the CFCL acquisition. This increase was partially offset by higher compensation expense on a full year basis as a result of higher LTIP amortization.

Non-EBITDA highlights:

• Other income during the quarter and on a full year basis was mainly driven by FX movements on U.S dollar dominated cash and receivables.

     14 

Alternative Asset Management

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2018		Dec. 31, 2017			Dec. 31, 2018		Dec. 31, 2017
SUMMARY INCOME STATEMENT
Management fees		1,596		2,078			7,199		32,901
Carried interest and performance fees		—		3,584			1,061		4,676
less: Trailer fees		38		40			179		7,594
less: Sub-advisor fees		—		—			—		2,611
less: Carried interest and performance fee payouts		—		2,267			559		2,295
Net Fees		1,558		3,355			7,522		25,077
Gains (losses) on proprietary investments		—		(34	)		5		532
Other income (loss)		359		(294	)		878		34,833
Total Net Revenues		1,917		3,027			8,405		60,442
Compensation		955		1,585			4,530		11,120
Selling, general and administrative		641		1,810			1,949		8,030
Amortization and impairment charges		72		37			275		1,105
Other expenses		—		9			11		52
Total Expenses		1,668		3,441			6,765		20,307
Net Income (Loss) before income taxes		249		(414	)		1,640		40,135
Adjusted base EBITDA		471		376			1,686		7,614
Total AUM		799,942		1,115,114			799,942		1,115,114

3 and 12 months ended

Adjusted base EBITDA in the quarter was $0.5 million, up $0.1 million (25%) from the prior period and was $1.7 million on a full year basis, down $5.9 million (78%). Excluding the impact of last year's Sale Transaction, adjusted base EBITDA was down $0.2 million (11%) on a full year basis primarily due to fund redemptions and market value depreciation.

Non-EBITDA highlights:

• Other income increased during the quarter due to FX movements on U.S dollar dominated cash and receivables. However, Other income was lower on a full year basis due to net sales proceeds received on last year's Sale Transaction.

     15 

Global*

	3 months ended						12 months ended
(In thousands $)	Dec. 31, 2018			Dec. 31, 2017			Dec. 31, 2018			Dec. 31, 2017
SUMMARY INCOME STATEMENT
Management fees		1,426			1,804			6,429			7,097
less: Sub-advisor fees		42			46			179			183
Net Fees		1,384			1,758			6,250			6,914
Commissions		2,298			1,632			9,685			11,487
less: Commission expense		949			519			3,341			4,073
Net Commissions		1,349			1,113			6,344			7,414
Gains (losses) on proprietary investments		(565	)		(242	)		(730	)		770
Gains (losses) on long-term investments		(172	)		199			(434	)		199
Other income (loss)		(144	)		54			(400	)		863
Total Net Revenues		1,852			2,882			11,030			16,160
Compensation (1)		2,021			683			8,154			4,749
Placement and referral fees		9			39			102			157
Selling, general and administrative		1,121			1,120			4,316			4,430
Amortization and impairment charges		22			990			328			3,849
Other expenses		140			17			503			114
Total Expenses		3,313			2,849			13,403			13,299
Net Income (Loss) before income taxes		(1,461	)		33			(2,373	)		2,861
Adjusted base EBITDA		375			1,304			3,037			5,655
Total AUM		396,698			474,550			396,698			474,550

* This segment, along with our Lending segment substantially forms our "Private Resource Investments" platform.

⁽¹⁾ Compensation is presented excluding commission expense, which is reported net of commission revenue.

3 and 12 months ended

Adjusted base EBITDA in the quarter was $0.4 million, down $0.9 million (71%) from the prior period, and was $3.0 million on a full year basis, down $2.6 million (46%):

• On a three months ended basis, lower EBITDA was due to lower net fee generation on lower AUM in fixed-term LP products.

• On a full year basis, lower EBITDA was due to lower net commissions on reduced private placement activity in the U.S. broker-dealer portion of this segment, as well as lower net fee generation on lower AUM in fixed-term LPs as previously noted.

Non-EBITDA highlights:

• Proprietary investment losses were due to market value depreciation on warrants and other equity kickers received in certain transactions of our U.S. broker-dealer.

• Other losses were mainly driven by FX movements on Canadian dollar denominated cash and receivables.

• Compensation increased due to higher restricted stock unit ("RSU") issuance.

• Other expenses related primarily to non-recurring professional fees.

     16 

Lending*

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2018		Dec. 31, 2017			Dec. 31, 2018		Dec. 31, 2017
SUMMARY INCOME STATEMENT
Management fees		1,420		622			4,929		1,323
Carried interest and performance fees		—		—			685		—
less: Carried interest and performance fee payouts		—		—			356		—
Net Fees		1,420		622			5,258		1,323
Interest income (1)		3,619		3,079			13,884		13,860
Gains (losses) on proprietary investments		3,488		(302	)		1,871		(488	)
Gains on long-term investments		27		491			43		491
Other income (loss)		1,666		511			6,290		(4,150	)
Total Revenues		10,220		4,401			27,346		11,036
Compensation		1,291		2,855			5,173		4,947
Placement and referral fees		49		617			157		5,888
Selling, general and administrative		595		324			1,522		1,003
Expected credit loss provisions (recoveries)		—		—			—		(4,942	)
Amortization and impairment charges		37		2			78		6
Other expenses		—		—			30		—
Total Expenses		1,972		3,798			6,960		6,902
Net Income before income taxes		8,248		603			20,386		4,134
Adjusted base EBITDA		3,300		3,014			15,437		16,962
Total AUM (2)		498,231		252,151			498,231		252,151

* This segment, along with our Global segment, substantially forms our "Private Resource Investments" platform.

⁽¹⁾ Includes interest income from: (1) on-balance sheet loans; and (2) co-investment income from lending LP units.

⁽²⁾ During the quarter, the Company's Lending segment AUM grew by $5 million (US$3 million) and on a full year basis by $246 million (US$164 million). This brings our total Lending segment AUM to $498 million (US$365 million). $965 million (US$707 million) of committed capital remains uncalled (future AUM).

3 and 12 months ended

Adjusted base EBITDA in the quarter was $3.3 million, up $0.3 million (9%) from the prior period. The increase was primarily due to higher management fees and co-investment income from our lending LPs.

On a full year basis, adjusted base EBITDA was $15.4 million, down $1.5 million (9%). Excluding the impact of last year's loan loss reversal and catch-up interest, adjusted base EBITDA was up $6.1 million (65%). The increase in earnings on a normalized basis was primarily due to higher management fees and co-investment income from our lending LPs. We also benefited from the acceleration of deferred interest income on the early settlement of loans.

Non-EBITDA highlights:

• Carried interest net of related payouts was $Nil on a three months ended basis and $0.3 million on a full year basis as a result of certain crystallization events in Q2 2018.

• Gains on proprietary investments were due to market value appreciation on equity kickers received on certain loan arrangements.

• Other income was mainly driven by FX movements on U.S dollar dominated cash, receivables and loans.

     17 

Merchant Banking and Advisory Services

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2018			Dec. 31, 2017		Dec. 31, 2018			Dec. 31, 2017
SUMMARY INCOME STATEMENT
Commissions		3,929			5,118		17,453			17,321
less: Commission Expense		1,871			1,951		8,619			8,214
Net Commissions		2,058			3,167		8,834			9,107
Interest income		625			509		1,252			1,733
Gains (losses) on proprietary investments		(256	)		376		(939	)		118
Other income (loss)		(171	)		597		4,350			2,383
Total Net Revenues		2,256			4,649		13,497			13,341
Compensation (1)		990			2,011		3,877			4,977
Placement and referral fees		291			142		564			191
Selling, general and administrative		625			833		2,415			2,948
Amortization and impairment charges		2			4		12			19
Other expenses		—			21		301			137
Total Expenses		1,908			3,011		7,169			8,272
Net Income (Loss) before income taxes		348			1,638		6,328			5,069
Adjusted base EBITDA		1,094			1,434		4,474			5,699

⁽¹⁾ Compensation is presented excluding commission expense, which is reported net of commission revenue.

3 and 12 months ended

Adjusted base EBITDA in the quarter was $1.1 million, down $0.3 million (24%) from the prior period, and was $4.5 million on a full year basis, down $1.2 million (21%):

• Lower compensation expense was more than offset by lower net commissions and lower trailer fee income on assets under administration attributable to Sprott products as a result of the Sale Transaction.

• On a full year basis, results were also impacted by lower interest income.

Non-EBITDA highlights:

• Losses on proprietary investments were the result of market value depreciation on equity kickers earned on private placement transactions.

• Other income on a full year basis was primarily related to the net sale proceeds received on the Sale Transaction. See Note 7 of the annual financial statements.

     18 

Corporate

This segment is primarily a cost centre that provides capital, balance sheet management and shared services to the Company's subsidiaries.

	3 months ended						12 months ended
(In thousands $)	Dec. 31, 2018			Dec. 31, 2017			Dec. 31, 2018			Dec. 31, 2017
SUMMARY INCOME STATEMENT
Gains (losses) on proprietary investments		2,196			135			(897	)		(6,473	)
Gains (losses) on long-term investments		3,152			2,949			3,231			2,949
Other income (loss)		(149	)		(303	)		138			(2,244	)
Total Revenues		5,199			2,781			2,472			(5,768	)
Compensation		4,022			3,103			10,308			8,409
Selling, general and administrative		340			725			2,723			3,308
Amortization and impairment charges		59			8			142			51
Other expenses		159			765			1,355			1,183
Total Expenses		4,580			4,601			14,528			12,951
Net Income (Loss) before income taxes		619			(1,820	)		(12,056	)		(18,719	)
Adjusted base EBITDA		(1,020	)		(840	)		(8,982	)		(8,188	)

3 and 12 months ended

• Proprietary investments gains during the quarter and losses on a full year basis were due to market value movements of certain resource equity holdings and bullion investments.

• Long-term investment gains were due to market value appreciation of our strategic long-term investments.

• Other loss during the quarter and other income on a year-to-date basis was mainly driven by FX movements on U.S dollar dominated cash and receivables.

• Higher compensation expense was largely a result of higher LTIP amortization.

• Lower SG&A was largely due to our on-going cost containment program.

• Other expenses related primarily to non-recurring professional fees.

     19 

Dividends

The following dividends were declared by the Company during the 12 months ended December 31, 2018:

Record date	Payment Date	Cash dividend per share ($)		Total dividend amount (in thousands $)
March 12, 2018 - Regular Dividend Q4 - 2017	March 27, 2018		0.03		7,553
May 21, 2018 - Regular Dividend Q1 - 2018	June 5, 2018		0.03		7,553
August 20, 2018 - Regular Dividend Q2 - 2018	September 4, 2018		0.03		7,566
November 19, 2018 - Regular Dividend Q3 - 2018	December 4, 2018		0.03		7,586
Dividends (1)					30,258

⁽¹⁾ Subsequent to the year-end, on February 27, 2019, a regular dividend of $0.03 per common share was declared for the quarter ended December 31, 2018. This dividend is payable on March 25, 2019 to shareholders of record at the close of business on March 8, 2019.

Capital Stock

Including the 9.9 million unvested common shares currently held in the EPSP Trust (December 31, 2017 - 10.4 million), total capital stock issued and outstanding was 253.0 million (December 31, 2017 - 244.5 million). The increase from December 31, 2017 was primarily due to the issuance of shares as part of the purchase of CFCL on January 16, 2018.

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 $0.04 and $0.13 for the three and twelve months ended respectively compared to $0.01 and $0.16 in the respective prior periods. Diluted earnings per share was $0.04 and $0.12 for the three and twelve months ended respectively compared to $0.01 and $0.15 in the respective prior periods. 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 3.3 million stock options are outstanding pursuant to our stock option plan, of which 1.9 million are exercisable.

Liquidity and Capital Resources

Management fees and interest income can be projected and forecasted with a higher degree of certainty than commission income, carried interest and performance fees, and are therefore used as a base for budgeting and planning by the Company. Management fees and interest income are generally collected monthly or quarterly, which aids the Company's ability to manage cash flow. The Company believes that management fees and interest income will continue to be sufficient to satisfy ongoing operating needs, including expenditures on corporate infrastructure, business development and information systems. In addition, the Company holds sufficient cash and liquid securities to meet any other operating and capital requirements, if any, including its contractual commitments.

As at December 31 2018, the Company had a $90 million undrawn credit facility with a major Canadian schedule I chartered bank. Amounts may be borrowed under the facility through prime rate loans, or bankers' acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans.

Sprott Private Wealth LP ("SPW") and Sprott Asset Management ("SAM") are required to maintain a minimum amount of regulatory capital calculated in accordance with the rules of the Investment Industry Regulatory Organization of Canada ("IIROC") and of the Ontario Securities Commission ("OSC"), respectively. In addition, Sprott Global Resource Investment Ltd. is registered with the Financial Industry Regulatory Authority ("FINRA") in the United States and is required to maintain a minimum amount of regulatory capital calculated in accordance with the rules of FINRA and the Securities Exchange Commission ("SEC").

Commitments

Besides the Company's long-term lease agreements, there may be commitments to provide loans or make co-investments in lending LPs arising from our Lending segment or commitments to make investments in the net investments portfolio of the Company. As at December 31, 2018, the Company had no direct on-balance sheet loan commitments (December 31, 2017 - $9.9 million) and $38.7 million in co-investment commitments from the Lending segment (December 31, 2017 - $7.8 million).

     20 

Significant Accounting Judgments, Estimates and Changes in Accounting Policies

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 annual 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. The use of unobservable inputs can involve significant judgment and materially affect the reported fair value of financial instruments.

Loan loss provisions

Due to the nature of provisions, a considerable part of their determination is based on estimates and judgments, including assumptions concerning the likelihood of future events occurring. The actual outcome of these uncertain events may be materially different from the initial provision in the Company's financial statements. Management exercises judgment to determine the expected credit loss, the probability of default and loss given default.

Share-based payments

The Company measures the cost of share-based payments to employees by reference to the fair value of the equity instruments at the date on which they are granted. Estimating fair value for share-based payments requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including (in the case of options grants) the expected life of the option, volatility, and dividend yields, (and in the case of performance-based equity grants), the probability of a subsidiary or executive attaining certain performance targets, the future stock price of the Company and the future employment of a senior employee.

Deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent it is probable that sufficient taxable profit will be generated in order to utilize the losses. In addition, taxable income is subject to estimation as a portion of performance fee revenue is an allocation of partnership income. Such allocations involve a certain degree of estimation and income tax estimates could change as a result of: (i) changes in tax laws and regulations, both domestic and foreign; (ii) an amendment to the calculation of partnership income allocation; or (iii) a change in foreign affiliate rules. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized based on the likely timing and the level of future taxable profits together with future tax planning strategies.

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.

     21 

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. Values associated with goodwill and intangibles involve estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates 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.

Change in accounting policies

In Q1, 2018 the Company adopted IFRS 9 Financial Instruments (“IFRS 9”) and IFRS 15 Revenue from Contracts with Customers (“IFRS 15”). As a result, the Company changed its accounting policies. As permitted by the transition provision of both IFRS 9 and IFRS 15, the Company elected not to restate comparative period results. Accordingly, all comparative period information is presented in accordance with previous accounting policies.

Managing Risk: Financial

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 interests 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 instrument assets. The Company’s earnings, particularly through its Lending 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

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 Canadian dollars. The Company's primary foreign currency is the United States Dollar ("USD"). 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 on balance sheet loans, co-investments in lending LPs and its net investments portfolio.

Loans receivable

The Company incurs credit risk primarily in the on-balance sheet loans of Sprott Resource Lending Corporation ("SRLC") and through co-investments made in the lending LPs managed by SRLC. In addition to the relative default probability of SRLC borrowers (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with), credit risk is also dependent on loss given default, which can increase credit risk if the values of the underlying assets securing the Company's loans and co-investments decline to levels approaching or below the loan amounts. A decrease in commodity prices may delay the development of the underlying security or business plans of the borrower and could adversely affect the value of the Company's security against a loan. Additionally, the value of the Company's underlying security in a loan can be negatively affected if the actual amount or quality of the commodity proves to be less than originally estimated, or the ability to extract the commodity proves to be more difficult or more costly than originally estimated. 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 managed.

     22 

Collectability of loans

Besides the above noted measures we take to manage credit risk, the Company will report on credit risk in the notes to the annual financial statements and records expected credit loss provisions to ensure the loans are recorded at their estimated recoverable amount (i.e. net of impairment risk we believe to exist as at the balance sheet date and in accordance with IFRS). Actual losses incurred in the loan portfolio could differ materially from our provisions. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed.

Net 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 accounts receivable relate to management fees, carried interest and performance fees receivable from the funds, managed accounts and managed companies 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 $90 million committed line of credit with a major Canadian Schedule I chartered bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months.

The Company's exposure to liquidity risk as it relates to loans receivable arises from fluctuations in cash flows from making loan advances and receiving loan repayments (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with). The Company manages its loan commitment liquidity risk through the ongoing monitoring of scheduled loan fundings and repayments ("match funding") and through its broader treasury risk management program and enterprise capital budgeting.

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 Company's management team is responsible for reviewing resources to ensure funds are readily available to meet its financial obligations (e.g. dividend payments) 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 and through its broader treasury risk management program. To meet any liquidity shortfalls, actions taken by the Company could include: syndicating a portion of its loans; slowing its lending activities; cutting its dividend; drawing on the line of credit; liquidating net investments; and/or issuing common shares.

Concentration risk

A significant portion of the Company's AUM as well as its net investments and loans are focused on the natural resource sector, and in particular, precious metals related investments and transactions. In addition, from time-to-time, certain net investment and loan positions 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.

Consistent with National Instrument 52-109, the Company's CEO and CFO evaluate quarterly the DC&P and ICFR. As of December 31, 2018, the Company's CEO and CFO concluded that the Company's DC&P and ICFR were properly designed and were operating effectively. In addition, there were no material changes to ICFR during the quarter.

     23 

Managing Risk: Non-financial

Managing Risk: Non-financial

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. While employees are permitted to have investments managed by third parties on a discretionary basis, they generally choose to invest in funds managed by the Company. 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.

Independent Review Committee

National Instrument 81-107 - Independent Review Committee for Investment Funds (“NI 81-107”) requires all publicly offered investment funds 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 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 mutual 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, IIROC, FINRA and the U.S. Securities and Exchange Commission ("SEC").

Additional information relating to the Company, including the Company's Annual Information Form is available on SEDAR at www.sedar.com

     24 

EX-99.4

Exhibit 99.4

Consolidated Financial Statements

Year ended December 31, 2018

 

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 year ended December 31, 2018. The consolidated financial statements were prepared by management in accordance with International Financial Reporting Standards. 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 significant accounting policies 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 (the "Board of Directors") of the Company appoints the Company's audit and risk committee (the "Audit & Risk 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.

Peter Grosskopf	Kevin Hibbert
Chief Executive Officer	Chief Financial Officer and Senior Managing Director
February 27, 2019

     2 

 

 

Independent Auditors' Report

To the Shareholders of Sprott Inc.

Opinion

We have audited the consolidated financial statements of Sprott Inc. (the "Company"), which comprise:

• the consolidated balance sheets as at December 31, 2018 and 2017;

• the consolidated statements of operations and comprehensive income for the years then ended;

• the consolidated statements of changes in shareholders’ equity for the years then ended;

• the consolidated statements of cash flows for the years then ended;

• and notes to the consolidated financial statements, including a summary of significant accounting policies.

(hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the "Auditors’ Responsibilities for the Audit of the Financial Statements" section of our auditors’ report.

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

     3 

 

Page 2

Information Other than the Financial Statements and Auditor’s Report Thereon

Management is responsible for the other information. Other information comprises:

• the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions.

• the information, other than the financial statements and the auditors’ report thereon, included in a document likely to be entitled “Annual Report 2018”.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We obtained the information, other than the financial statements and the auditors’ report thereon, included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions and the “Annual Report 2018” as at the date of this auditor’s report.

If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditors’ report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing as applicable,

matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company‘s financial reporting process.

     4 

 

Page 3

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are/is free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control;

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

• conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern;

     5 

 

Page 4

• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represents the underlying transactions and events in a manner that achieves fair presentation;

• communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit;

• provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards; and

• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion;

 

Chartered Professional Accountants, Licensed Public Accountants

The engagement partner on the audit resulting in this auditors’ report is James Loewen.

February 27, 2019

Toronto, Canada

     6 

CONSOLIDATED BALANCE SHEETS

As at		Dec. 31			Dec. 31
(In thousands of Canadian dollars)		2018			2017
Assets
Current
Cash and cash equivalents			47,252			156,120
Fees receivable			8,635			13,776
Loans receivable	(Note 6)		15,275			17,218
Proprietary investments	(Note 3)		26,711			64,564
Other assets	(Note 7)		10,774			23,161
Income taxes recoverable			2,379			1,356
Total current assets			111,026			276,195
Loans receivable	(Note 6)		20,746			31,455
Long-term investments	(Note 3)		102,560			49,763
Other assets	(Note 7)		1,214			1,448
Property and equipment, net	(Note 4)		12,334			5,299
Intangible assets	(Note 5)		148,324			16,452
Goodwill	(Note 5)		26,115			24,023
Deferred income taxes	(Note 9)		5,896			5,214
			317,189			133,654
Total assets			428,215			409,849
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities			36,141			15,812
Compensation payable			9,466			10,667
Obligations related to securities sold short	(Note 3)		255			24,993
Note payable	(Note 11)		5,500			9,900
Income taxes payable			607			3,179
Total current liabilities			51,969			64,551
Deferred income taxes	(Note 9)		3,125			1,434
Total liabilities			55,094			65,985
Shareholders' equity
Capital stock	(Note 8)		412,938			392,556
Contributed surplus	(Note 8)		43,383			39,907
Deficit			(117,201	)		(118,272	)
Accumulated other comprehensive income			34,001			29,673
Total shareholders' equity			373,121			343,864
Total liabilities and shareholders' equity			428,215			409,849
Commitments and provisions	(Note 15)

The accompanying notes form part of the financial statements

"Jack C. Lee"	"Sharon Ranson"
Director	Director

     7 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

		For the years ended
		Dec. 31			Dec. 31
(In thousands of Canadian dollars, except for per share amounts)		2018			2017
Revenues
Management fees			55,519			64,981
Carried interest and performance fees			1,802			4,676
Commissions			27,360			29,190
Interest income			15,136			15,593
Loss on proprietary investments	(Note 3)		(5,782	)		(5,189	)
Gains on long-term investments	(Note 3)		2,840			3,639
Other income	(Note 7)		12,394			31,321
Total revenue			109,269			144,211
Expenses
Compensation			40,072			49,566
Stock-based compensation	(Note 8)		12,358			6,692
Trailer fees			179			6,548
Sub-advisor fees			—			2,610
Placement and referral fees			943			6,311
Expected credit loss provisions (recoveries)	(Note 6)		—			(4,942	)
Selling, general and administrative			17,485			23,698
Amortization of intangibles	(Note 5)		1,431			5,600
Amortization of property and equipment	(Note 4)		768			827
Other expenses	(Note 7)		3,376			3,995
Total expenses			76,612			100,905
Income before income taxes for the period			32,657			43,306
Provision for income taxes	(Note 9)		1,278			5,774
Net income for the period			31,379			37,532
Basic earnings per share	(Note 8)	$	0.13		$	0.16
Diluted earnings per share	(Note 8)	$	0.12		$	0.15
Net income for the period			31,379			37,532
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation gain (loss) on foreign operations (taxes of $Nil)			4,328			(3,872	)
Total other comprehensive income (loss)			4,328			(3,872	)
Comprehensive income			35,707			33,660

The accompanying notes form part of the financial statements      

     8 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(In thousands of Canadian dollars, other than number of shares)		Number of Shares Outstanding			Capital Stock			Contributed Surplus			Deficit			Accumulated Other Comprehensive Income			Total Equity
At Dec. 31, 2017			234,098,634			392,556			39,907			(118,272	)		29,673			343,864
IFRS 9 transition adjustment			—			—			—			(50	)		—			(50	)
Shares acquired for equity incentive plan	(Note 8)		(2,402,500	)		(7,161	)		—			—			—			(7,161	)
Shares released on vesting of equity incentive plan	(Note 8)		2,836,201			6,446			(6,446	)		—			—			—
Shares released on exercise of stock option plan	(Note 8)		558,048			1,217			(1,217	)		—			—			—
Foreign currency translation gain on foreign operations			—			—			—			—			4,328			4,328
Issuance of share capital on purchase of management contracts	(Note 8)		6,997,387			17,284			—			—			—			17,284
Stock-based compensation	(Note 8)		—			—			12,358			—			—			12,358
Issuance of share capital on conversion of RSUs and other share based considerations	(Note 8)		635,939			1,581			(1,219	)		—			—			362
Dividends declared	(Note 12)		338,628			1,015			—			(30,258	)		—			(29,243	)
Net income			—			—			—			31,379			—			31,379
Balance, Dec. 31, 2018			243,062,337			412,938			43,383			(117,201	)		34,001			373,121
At Dec. 31, 2016			243,190,293			411,231			41,802			(126,264	)		33,545			360,314
Shares acquired for equity incentive plan			(8,100,000	)		(17,882	)		—			—			—			(17,882	)
Shares released on vesting of equity incentive plan			3,021,795			7,938			(7,938	)		—			—			—
Foreign currency translation loss on foreign operations			—			—			—			—			(3,872	)		(3,872	)
Cancellation of repurchased shares			(5,000,000	)		(11,000	)		—			—			—			(11,000	)
Stock-based compensation			—			—			6,692			—			—			6,692
Issuance of share capital on conversion of RSUs and other share based considerations			755,413			1,728			(649	)		—			—			1,079
Dividends declared			231,133			541			—			(29,540	)		—			(28,999	)
Net income			—			—			—			37,532			—			37,532
Balance, Dec. 31, 2017			234,098,634			392,556			39,907			(118,272	)		29,673			343,864

The accompanying notes form part of the financial statements

     9 

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the years ended
	Dec. 31			Dec. 31
(In thousands of Canadian dollars, other than number of shares)	2018			2017
Operating Activities
Net income for the period		31,379			37,532
Add (deduct) non-cash items:
Losses on proprietary investments		5,782			5,189
Gains on Long-term investments		(2,840	)		(3,639	)
Stock-based compensation		12,358			6,692
Amortization of property, equipment and intangible assets		2,199			6,427
Sale of property, equipment and intangible assets		—			2,063
Expected credit loss provision (recoveries)		—			(4,942	)
Deferred income tax recovery		1,022			(2,055	)
Current income tax expense		256			7,829
Other items		(435	)		(3,028	)
Income taxes paid		(3,852	)		(13,140	)
Changes in:
Fees receivable		5,141			12,294
Loans receivable		12,652			23,943
Accounts payable, accrued liabilities and compensation payable		19,128			(11,251	)
Other assets		12,621			(11,760	)
Cash provided by operating activities		95,411			52,154
Investing Activities
Purchase of investments		(79,267	)		(61,282	)
Sale of investments		37,077			90,033
Purchase of property and equipment		(7,805	)		(860	)
Deferred sales commissions paid		—			(165	)
Purchase of intangible assets		(115,719	)		—
Cash provided by (used in) investing activities		(165,714	)		27,726
Financing Activities
Acquisition of common shares for equity incentive plan		(7,161	)		(7,982	)
Acquisition of common shares for cancellation		—			(11,000	)
Note payable repayment		(4,400	)		—
Dividends paid		(29,243	)		(28,999	)
Cash used in financing activities		(40,804	)		(47,981	)
Effect of foreign exchange on cash balances		2,239			266
Net increase (decrease) in cash and cash equivalents during the year		(108,868	)		32,165
Cash and cash equivalents, beginning of the year		156,120			123,955
Cash and cash equivalents, end of the period		47,252			156,120
Cash and cash equivalents:
Cash		41,999			156,108
Short-term deposits		5,253			12
		47,252			156,120
Supplementary disclosure of cash flow information
Amount of interest received during the year		8,689			5,442

The accompanying notes form part of the financial statements

     10 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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 SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

These annual audited consolidated financial statements for the years ended December 31, 2018 and 2017 ("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 27, 2019 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 financial assets and financial liabilities classified as fair value through profit or loss ("FVTPL") or fair value through other comprehensive income ("FVOCI"), both of which have been measured at fair value. The financial statements are presented in Canadian 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 over the same reporting period as the Company's and are based on accounting policies consistent with that of the Company.

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.

The Company currently controls the following principal subsidiaries:

• Sprott Asset Management LP ("SAM");

• Sprott Private Wealth LP ("SPW");

• Sprott Consulting LP ("SC");

• Sprott Asia LP ("Sprott Asia") and Sprott Korea Corporation ("Sprott Korea");

• Sprott U.S. Holdings Inc. ("SUSHI"), parent of: (1) Rule Investments Inc. ("RII") (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 "Global" in these financial statements;

• Sprott Resource Lending Corp. ("SRLC");

• Sprott Genpar Ltd.; and

• Sprott Inc. 2011 Employee Profit Sharing Plan Trust (the "Trust")

     11 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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.

Proprietary investments

Proprietary investments are investments held with the primary intention of short-term liquidity and capital management.

Long-term investments

Long-term investments are investments held for strategic purposes rather than for short-term liquidity and capital management purposes. Long-term investments classification reflects strategic positions held with the intention of seeding and building the next generation of investment products and services consistent with the long-term strategic objectives of the Company. These investments primarily include co-investments in strategically important investment funds, joint-venture interests or equity stakes in other entities.

Financial Instruments

Changes in accounting policies

In the first quarter of the current year, the Company adopted IFRS 9 Financial Instruments (“IFRS 9”). As a result, the Company changed its accounting policies in the areas outlined below. As permitted by the transition provisions of IFRS 9, the Company elected not to restate comparative period results. Accordingly, any adjustments to the carrying amounts of financial assets and liabilities at the date of transition were recognized in the opening retained earnings of the current period. See "Expected credit losses" section of Note 6 for further details.

Classification and measurement of Financial Assets

Under IFRS 9, financial assets are measured at initial recognition at fair value, and are classified and subsequently measured at FVTPL, amortized cost or 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 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 OCI.

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.

The adoption of IFRS 9 required the following reclassifications of financial assets and liabilities:

	IFRS 9	IAS 39
Cash and Cash equivalents	Amortized Cost	Held for Trading
Fees Receivable and Loans receivable	Amortized Cost	Loans and Receivable
Proprietary investments:
- Public equities	FVTPL	Held for Trading
- Co-investments in funds	FVTPL	Held for Trading
- Private Holdings	FVTPL	Held for Trading
Accounts payable and accrued liabilities	Other Financial Liabilities	Other Financial Liabilities

     12 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Valuation of Investments

Both Proprietary investments and Long-term investments include public equities, share purchase warrants, fixed income securities, mutual fund and alternative investment strategies, and private holdings. 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 which 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 in the private companies determined 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 on the consolidated statements of operations.

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 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 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.

At each reporting date, management assesses the probability of default and the loss given default using economic and market trends, quoted credit rating of the borrower, market value of the asset, and appraisals, if any, of the security underlying the loan. The impairment is then classified into three stages:

     13 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

• Stage 1 - For Loans where credit risk has not increased significantly, an impairment is recognized equal to the credit losses expected to result from defaults occurring over the following twelve months.

• Stage 2 - For Loans where credit risk has increased significantly, an impairment is recognized equal to the credit losses expected to result from defaults occurring over the life of the loan.

• Stage 3 - For Loans which are credit impaired, a loss allowance is recognized equal to the expected lifetime of the Loan. Any subsequent recognition of interest income for which an expected credit loss provision exists, is calculated at the discount rate used in determining the provision, which may differ from the contractual rate of interest.

Loans receivable

Loans receivable are financial assets with fixed or determinable payments that are held solely for payments of principal and interest on the principal amount outstanding and are held within a business model whose objective is to hold assets to collect contractual cash flows. Loans receivable are measured at amortized cost.

Fees received for originating loans are considered an integral part of the yield earned on the loan and are recognized in interest income over the term of the loan using the effective interest method. Fees received may include cash payments and/or securities in the borrower.

Recognition of income and related expenses

Changes in accounting policy

In the first quarter of the current year, the Company adopted IFRS 15 Revenue from Contracts with Customers (“IFRS 15”). As a result, the Company changed its accounting policies in the areas outlined below. As permitted by the transition provisions of IFRS 15, the Company elected not to restate comparative period results. Accordingly, any adjustments to the carrying amounts of financial assets and liabilities at the date of transition were recognized in the opening retained earnings of the current period. There was no material transitional impact on conversion to IFRS 15.

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 in the underlying funds.

Commission income is recognized when the related services are rendered and no longer subject to a significant reversal in revenue.

Interest income 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 impairment of property and equipment is expensed in the period the impairment is identified.

     14 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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 with finite lives are amortized over the useful economic life and assessed for impairment indicators at each reporting date, or more frequently if changes in circumstances indicate that the carrying value may be impaired. 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 may be impaired. 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.

Any loss resulting from 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 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 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 the consolidated statements of 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 sheet 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.

     15 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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;

• 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.

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 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 and diluted earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the period.

The Company applies 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.

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 Global Companies, which uses the U.S. dollar as its functional currency. Accordingly, the assets and liabilities of Global Companies 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 Global 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.

     16 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017 

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to management. Management is responsible for allocating resources and assessing performance of the operating segments to make strategic decisions.

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. The use of unobservable inputs can involve significant judgment and materially affect the reported fair value of financial instruments.

Loan loss provisions

Due to the nature of provisions, a considerable part of their determination is based on estimates and judgments, including assumptions concerning the likelihood of future events occurring. The actual outcome of these uncertain events may be materially different from provisions recorded on the Company's financial statements. With regard to loan impairments, management exercises judgment to determine the expected credit loss, the probability of default and loss given default.

Share-based payments

The Company measures the cost of share-based payments to employees by reference to the fair value of the equity instruments at the date on which they are granted. Estimating fair value for share-based payments requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including (in the case of options grants) the expected life of the option, volatility, and dividend yields, (and in the case of performance-based equity grants), the probability of a subsidiary or executive attaining certain performance targets, the future stock price of the Company and the future employment of senior employees.

Deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent it is probable that sufficient taxable profit will be generated in order to utilize the losses. In addition, taxable income is subject to estimation as a portion of performance fee revenue is an allocation of partnership income. Such allocations involve a certain degree of estimation and income tax estimates could change as a result of: (i) changes in tax laws and regulations, both domestic and foreign; (ii) an amendment to the calculation of partnership income allocation; or (iii) a change in foreign affiliate rules. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized based on the likely timing and the level of future taxable profits together with future tax planning strategies.

     17 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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. Values associated with goodwill and intangibles involve estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates 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.

Future Accounting Standards

IFRS 16, Leases (“IFRS 16”)

IFRS 16 was issued by IASB in January 2016 and is effective for annual periods beginning on or after January 1, 2019. IFRS 16 establishes principals for the recognition, measurement, presentation and disclosure of leases. The standard introduces a single lessee accounting model that requires, generally speaking, the recognition of most lease assets on the balance sheet as opposed to off-balance sheet in the financial statement notes.

Based on current estimates, the adoption of IFRS 16 is not expected to have a material impact to our consolidated financial statements.

IFRIC 23, Uncertainty over Income Tax Treatements ("IFRIC 23")

IFRIC 23 was issued by IASB in June 27 and is effective for annual periods beginning on or after January 1, 2019. IFRIC 23 clarifies the accounting treatment for income tax items that have yet to be accepted by tax authorities in order to enhance transparency. IFRIC 23 does not introduce new disclosures but reinforces the need to comply with existing requirements about judgments made, the assumptions used and other estimates, along with the potential impact of uncertainties.

Based on current estimates, the adoption of IFRIC 23 is not expected to have a material impact to our consolidated financial statements.

     18 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

3 PROPRIETARY INVESTMENTS, OBLIGATIONS RELATED TO SECURITIES SOLD SHORT AND LONG-TERM INVESTMENTS

Proprietary investments and Obligations related to securities sold short

Consist of the following (in thousands $):

	Classification and measurement criteria	Dec. 31, 2018		Dec. 31, 2017
Public equities and share purchase warrants	FVTPL		19,066		55,578
Fixed income securities	FVTPL		2,796		249
Private holdings:
- Private investments	FVTPL		2,830		4,269
- Energy contracts	Non-financial instrument		2,019		4,468
Total proprietary investments			26,711		64,564
Obligations related to securities sold short	FVTPL		255		24,993

Long-term investments

Consists of the following (in thousands $):

	Classification and measurement criteria	Dec. 31, 2018		Dec. 31, 2017
Public equities and share purchase warrants	FVTPL		—		1,639
Co-investments in funds	FVTPL		72,739		35,972
Private holdings
- Private investments	FVTPL		29,821		12,152
Total long-term investments			102,560		49,763

Realized gains and losses on financial assets classified at FVTPL are included in the gains (loss) on proprietary investments and Long-term investments on the consolidated statements of operations.

     19 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

4 PROPERTY AND EQUIPMENT

Consist of the following (in thousands $):

	Artwork		Furniture and fixtures			Computer hardware and software			Leasehold improvements			Total
Cost
At December 31, 2016		2,622		3,255			2,652			8,479			17,008
Disposal on Sale Transaction		—		(82	)		(462	)		(4,532	)		(5,076	)
Additions		374		10			465			11			860
Net exchange differences		—		(35	)		(36	)		(19	)		(90	)
At December 31, 2017		2,996		3,148			2,619			3,939			12,702
Additions		6,605		2			946			252			7,805
Disposals		—		(28	)		(54	)		(28	)		(110	)
Net exchange differences		—		44			53			34			131
At December 31, 2018		9,601		3,166			3,564			4,197			20,528
Accumulated amortization
At December 31, 2016		—		(3,084	)		(2,417	)		(5,196	)		(10,697	)
Disposal on Sale Transaction		—		30			86			3,925			4,041
Charge for the year		—		(60	)		(266	)		(501	)		(827	)
Net exchange differences		—		37			33			10			80
At December 31, 2017		—		(3,077	)		(2,564	)		(1,762	)		(7,403	)
Charge for the year		—		(27	)		(297	)		(444	)		(768	)
Disposals				28			44			18			90
Net exchange differences		—		(44	)		(46	)		(23	)		(113	)
At December 31, 2018		—		(3,120	)		(2,863	)		(2,211	)		(8,194	)
Net book value at:
December 31, 2017		2,996		71			55			2,177			5,299
December 31, 2018		9,601		46			701			1,986			12,334

     20 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

5 GOODWILL AND INTANGIBLE ASSETS

Consist of the following (in thousands $):

	Goodwill			Fund management contracts - indefinite life		Fund management contracts -finite life			Deferred sales commissions			Total
Cost
At December 31, 2016		177,749			—		49,371			10,171			237,291
Net additions and (disposals)		—			—		—			(10,171	)		(10,171	)
Net exchange differences		(10,867	)		—		(1,955	)		—			(12,822	)
At December 31, 2017		166,882			—		47,416			—			214,298
Net additions and (disposals)		—			133,303		—			—			133,303
Net exchange differences		13,482			—		—			—			13,482
At December 31, 2018		180,364			133,303		47,416			—			361,083
Accumulated amortization
At December 31, 2016		(152,039	)		—		(27,794	)		(8,689	)		(188,522	)
Amortization charge for the year		—			—		(4,980	)		(620	)		(5,600	)
Disposals in the year		—			—		—			9,309			9,309
Net exchange differences		9,180			—		1,810			—			10,990
At December 31, 2017		(142,859	)		—		(30,964	)		—			(173,823	)
Amortization charge for the year		—			—		(1,431	)		—			(1,431	)
Net exchange differences		(11,390	)		—		—			—			(11,390	)
At December 31, 2018		(154,249	)		—		(32,395	)		—			(186,644	)
Net book value at:
December 31, 2017		24,023			—		16,452			—			40,475
December 31, 2018		26,115			133,303		15,021			—			174,439

     21 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Impairment assessment of goodwill

The Company identified seven cash generating units ("CGUs") for goodwill impairment and testing purposes: Exchange Listed Products, Alternative Asset Management, Global, Lending, Consulting, Merchant Banking & Advisory and Corporate.

As at December 31, 2018, the Company had allocated $26.1 million (December 31, 2017 - $24.0 million) of goodwill on a relative value approach basis to the Exchange Listed Products and Alternative Asset Management CGUs.

In the normal course, goodwill is tested for impairment once per annum, which for the Company is during the fourth quarter of each year. During the impairment testing process, there was no impairment in either the Exchange Listed Products CGU or the Alternative Asset Management CGU.

Impairment assessment of indefinite life fund management contracts

As at December 31, 2018, the Company had an exchange listed fund management contract within the Exchange Listed Products CGU of $133.3 million related to the purchase of the Central Fund of Canada in the first quarter of the current year. There was no impairment as at December 31, 2018.

Impairment assessment of finite life fund management contracts

As at December 31, 2018, the Company had no fixed-term limited partnerships within the Global CGU (December 31, 2017 - $0.4 million) and exchange listed funds within the Exchange Listed Products CGU of $15.0 million (December 31, 2017 - $16.1 million). There was no impairment as at December 31, 2018.

     22 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

6 LOANS RECEIVABLE

Components of loans receivable

Loans are reported at their amortized cost using the effective interest method. Loans are reported net of any expected credit loss loss provisions on the expected credit loss provisions line of the consolidated statements of operations. Total carrying value consists of the following (in thousands $):

	Dec. 31, 2018			Dec. 31, 2017
Loans
Loan principal		37,873			53,272
Accrued interest		14			252
Deferred revenue		(1,816	)		(4,851	)
Amortized cost		36,071			48,673
Loan loss provisions		(50	)		—
Less: current portion		(15,275	)		(17,218	)
Total carrying value of non-current loans receivable		20,746			31,455

Expected credit losses ("ECL")

When a loan is classified as impaired, the original expected timing and amount of future cash flows may be revised to reflect new circumstances. These revised cash flows are discounted using the original effective interest rate to determine the net realizable value of the loan. Interest income is thereafter recognized on this net realizable value using the original effective interest rate. Additional changes to the amount or timing of future cash flows could result in further losses, or the reversal of previous losses, which would also impact the amount of subsequent interest income recognized.

On transition to IFRS 9, a Stage 1 ECL provision of $50 thousand (December 31, 2017 - $Nil) was recorded through opening retained earnings under the transitional provision of IFRS 9. As at December 31, 2018, the Company performed a comprehensive review of each loan measured at amortized cost in its portfolio to determine the requirement for an ECL provision. There were no credit events in the year.

Interest income on impaired loans and the changes in expected credit loss provisions are as follows (in thousands $):

	For the years ended
	Dec. 31, 2018		Dec. 31, 2017 (1)
Interest on impaired loans		—		—
Expected credit loss provisions
Balance, beginning of the year		—		4,993
Transition adjustment		50		—
Revised balance, beginning of the year		50		4,993
Expected credit loss provision (recovery)		—		(4,942	)
Net exchange differences		—		(51	)
Balance, end of period		50		—

(1) With the transition to IFRS 9, an expected loss model was used. In the prior period, an incurred loss model was used. See Changes in Accounting Policy in Note 2.

     23 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Sector distribution of loan principal

Distribution of Company outstanding loan principal balances by sector:

	Dec. 31, 2018				Dec. 31,2017
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Metals and mining		1		34,931		3		41,961
Energy and other		2		2,942		4		11,311
Total loan principal		3		37,873		7		53,272

Geographic distribution of loan principal

Distribution of Company outstanding loan principal balances by geographic location of the underlying security:

	Dec. 31, 2018				Dec. 31, 2017
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Canada		1		1,578		2		8,578
United States of America		2		36,295		3		31,310
Peru		—		—		1		1,505
South Africa		—		—		1		11,879
Total loan principal		3		37,873		7		53,272

     24 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

7 OTHER ASSETS, INCOME AND EXPENSES

Other assets

Consist of the following (in thousands $):

	Dec. 31, 2018		Dec. 31, 2017
Fund recoveries and investment receivables		4,722		17,168
Deferred CFCL acquisition charges (1)		—		4,751
Prepaid expenses		5,369		1,947
Other (2)		1,897		743
Total Other assets		11,988		24,609

(1) Includes legal, proxy, solicitation and investor relations costs.

(2) Other includes miscellaneous third-party receivables.

Other income

Consist of the following (in thousands $):

	For the years ended
	Dec. 31, 2018		Dec. 31, 2017
Net proceeds from Sale Transaction (1)		4,200		31,691
Other investment income (2)		4,708		5,383
Foreign exchange gain (losses)		2,310		(7,412	)
Total Other income (3)		11,218		29,662

(1) Gross proceeds of $5.0 million, net of transaction costs of $0.8 million. This relates to the January 29, 2018 closing of the sale of our non-core private wealth client business. For 2017 income, gross proceeds of $41.3 million, net of transaction costs of $9.6 million. This relates to the August 1, 2017 closing of the sale of Canadian diversified funds business.

(2) Primarily includes investment fund income, syndication and trailer fee income.

(3) Excludes royalty income of $1.2 million (December 31, 2017 - $1.7 million), which is presented net of operating, depletion and impairment charges below.

Other expenses

Consist of the following (in thousands $):

	For the years ended
	Dec. 31, 2018			Dec. 31, 2017
Costs (recoveries) related to energy assets (1)		(28	)		888
Other (2)		2,228			1,448
Total Other expenses		2,200			2,336

(1) Includes operating, depletion and impairment charges, net of royalty income of $1.2 million (December 31, 2017 - $1.7 million).

(2) Primarily includes non-recurring professional fees.

     25 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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.

	Number of shares			Stated value  (in thousands $)
At Dec. 31, 2016		243,190,293			411,231
Issuance of share capital under dividend reinvestment program		231,133			541
Issuance of share capital on conversion of RSU		755,413			1,728
Cancellation of repurchased shares		(5,000,000	)		(11,000	)
Acquired for equity incentive plan		(8,100,000	)		(17,882	)
Released on vesting of equity incentive plan		3,021,795			7,938
At Dec. 31, 2017		234,098,634			392,556
Issuance of share capital under dividend reinvestment program		338,628			1,015
Issuance of share capital on purchase of management contracts		6,997,387			17,284
Issuance of share capital on conversion of RSU		635,939			1,581
Acquired for equity incentive plan		(2,402,500	)		(7,161	)
Released on exercise of stock option plan		558,048			1,217
Released on vesting of equity incentive plan		2,836,201			6,446
At Dec. 31, 2018		243,062,337			412,938

Contributed surplus consists of: stock option expense; earn-out shares expense; equity incentive plans' expense; and additional purchase consideration.

	Stated value (in thousands $)
At Dec. 31, 2016		41,802
Expensing of Sprott Inc. stock options over the vesting period		(73	)
Expensing of Stock-based compensation over the vesting period		6,765
Issuance of share capital on conversion of RSUs		(1,667	)
Release of GTU shares		675
Expensing of EPSP as referral fees		343
Released on vesting of common shares for equity incentive plan		(7,938	)
At Dec. 31, 2017		39,907
Expensing of Stock-based compensation over the vesting period		12,358
Issuance of share capital on conversion of RSU		(1,219	)
Released on exercise of stock option plan		(1,217	)
Released on vesting of common shares for equity incentive plan		(6,446	)
At Dec. 31, 2018		43,383

     26 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017 

Stock option plan

The Company has an option plan (the "Plan") intended to provide incentives to directors, officers, employees and consultants 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 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 750,000 stock options issued for the year ended ended December 31, 2018 (year ended December 31, 2017 - nil). There were 2,000,000 options exercised in the year ended December 31, 2018 (year ended December 31, 2017 - nil)

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.

A summary of the changes in the Plan is as follows:

	Number of options (in thousands)			Weighted average exercise price ($)
Options outstanding, December 31, 2016		10,900			4.16
Options exercisable, December 31, 2016		4,100			7.10
Options forfeited		(3,925	)		2.42
Options outstanding, December 31, 2017		6,975			5.14
Options exercisable, December 31, 2017		5,625			5.79
Options issued		750			2.33
Options exercised		(2,000	)		2.33
Options expired		(2,450	)		10.00
Options outstanding, December 31, 2018		3,275			2.57
Options exercisable, December 31, 2018		1,875			2.70

Options outstanding and exercisable as at December 31, 2018 are as follows:

Exercise price ($)	Number of outstanding options (in thousands)		Weighted average remaining contractual life (years)		Number of options exercisable (in thousands)
6.60		150		1.9		150
2.33		3,000		7.1		1,600
2.73		125		7.4		125
2.33 to 6.60		3,275		6.9		1,875

     27 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017 

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; or (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; and (3) from time-to-time, purchases from 2176423 Ontario Ltd., a company controlled by Eric Sprott, pursuant to the terms and conditions of a previously announced share transaction. 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 2,396,538 RSUs issued during the year ended December 31, 2018 (year ended December 31, 2017 - 755,413). The Trust purchased 2.4 million shares in the year ended December 31, 2018 (year ended December 31, 2017 - 8.1 million).

	Number of common shares
Common shares held by the Trust, December 31, 2016		5,287,752
Acquired		8,100,000
Released on vesting		(3,021,795	)
Unvested common shares held by the Trust, December 31, 2017		10,365,957
Acquired		2,402,500
Released on vesting		(2,836,201	)
Unvested common shares held by the Trust, December 31, 2018		9,932,256

The table below provides a breakdown of the share-based compensation expense and the corresponding increase to contributed surplus:

	For the years ended
	Dec. 31, 2018		Dec. 31, 2017
Stock option plan		424		(73	)
EPSP / EIP		11,934		6,765
		12,358		6,692

     28 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Basic and diluted earnings per share

The following table presents the calculation of basic and diluted earnings (loss) per common share:

	For the years ended
	Dec. 31, 2018			Dec. 31, 2017
Numerator (in thousands $):
Net income (loss) - basic and diluted		31,379			37,532
Denominator (Number of shares in thousands):
Weighted average number of common shares		251,848			246,205
Weighted average number of unvested shares purchased by the Trust		(11,656	)		(7,143	)
Weighted average number of common shares - basic		240,192			239,062
Weighted average number of dilutive stock options		3,125			—
Weighted average number of unvested shares purchased by the Trust		11,656			7,143
Weighted average number of common shares - diluted		254,973			246,205
Net income per common share
Basic	$	0.13		$	0.16
Diluted	$	0.12		$	0.15

Capital management

The Company's objectives when managing capital are:

• 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 for 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). SPW is a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), SAM is a registrant of the Ontario Securities Commission ("OSC") and the U.S. Securities and Exchange Commission ("SEC"), SAM US is registered with the 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. As at December 31, 2018 and 2017, all entities were in compliance with their respective capital requirements.

     29 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

9 INCOME TAXES

The major components of income tax expense are as follows (in thousands $):

	For the years ended
	Dec. 31, 2018			Dec. 31, 2017
Current income tax expense (recovery)
Based on taxable income of the current period		393			9,003
Other		(137	)		(1,174	)
		256			7,829
Deferred income tax expense (recovery)
Total deferred income tax expense		1,022			(2,055	)
Income tax expense reported in the statements of operations		1,278			5,774

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 $):

	For the years ended
	Dec. 31, 2018			Dec. 31, 2017
Income before income taxes		32,657			43,306
Tax calculated at domestic tax rates applicable to profits in the respective countries		8,631			11,851
Tax effects of:
Non-deductible stock-based compensation		153			1,815
Non-taxable capital (gains) and losses		(559	)		(5,275	)
Capital losses not benefited		—			27
Intangibles		(388	)		130
Adjustments in respect of previous periods		(137	)		(1,356	)
Other temporary differences not benefited		(279	)		(1,425	)
Non-capital losses not benefited previously		(6,680	)		91
Rate differences and other		537			(84	)
Tax charge		1,278			5,774

The weighted average statutory tax rate was 26.4% (December 31, 2017 - 27.4%). This decrease was mainly due to decreased profitability of our Global segment, which is U.S based. The Company has $6 million of non-capital tax losses and $12 million of capital tax losses from prior years that will begin to expire in 2027 and 2019, respectively. The benefit of these capital and non-capital tax losses has not been recognized.

     30 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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, 2018

	Dec. 31, 2017			Recognized in income			Recognized in other comprehensive income		Dec. 31, 2018
Deferred income tax assets
Other stock-based compensation		2,588			1,712			—		4,300
Non-capital losses		820			4,185			13		5,018
Unrealized gains		481			(95	)				386
Other		485			28			—		513
Total deferred income tax assets		4,374			5,830			13		10,217
Deferred income tax liabilities
Fund management contracts		431			6,886			—		7,317
Proceeds receivable		279			(209	)		—		70
Other		(116	)		175			—		59
Total deferred income tax liabilities		594			6,852			—		7,446
Net deferred income tax assets		3,780			(1,022	)		13		2,771

For the year ended December 31, 2017

	Dec. 31, 2016			Recognized in income			Recognized in other comprehensive income			Dec. 31, 2017
Deferred income tax assets
Other stock-based compensation		4,223			(1,635	)		—			2,588
Non-capital losses		553			267			—			820
Unrealized gains		(186	)		667			—			481
Other		571			(86	)		—			485
Total deferred income tax assets		5,161			(787	)		—			4,374
Deferred income tax liabilities
Fund management contracts		2,039			(1,547	)		(61	)		431
Deferred sales commissions		392			(392	)		—			—
Proceeds receivable		993			(714	)		—			279
Other		73			(189	)		—			(116	)
Total deferred income tax liabilities		3,497			(2,842	)		(61	)		594
Net deferred income tax assets (liabilities)		1,664			2,055			61			3,780

     31 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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, 2018 and December 31, 2017 (in thousands $).

Proprietary Investments

Dec. 31, 2018	Level 1			Level 2		Level 3		Total
Public equities and share purchase warrants		13,680			5,386		—		19,066
Fixed income securities		—			1,796		1,000		2,796
Private holdings		—			—		2,830		2,830
Obligations related to securities sold short		(255	)		—		—		(255	)
Total net recurring fair value measurements		13,425			7,182		3,830		24,437

Dec. 31,2017	Level 1			Level 2		Level 3		Total
Public equities and share purchase warrants		47,417			8,161		—		55,578
Fixed income securities		—			249		—		249
Private holdings		—			—		4,269		4,269
Obligations related to securities sold short		(24,993	)		—		—		(24,993	)
Total net recurring fair value measurements		22,424			8,410		4,269		35,103

Long-term investments

Dec. 31, 2018	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		72,739		—		72,739
Private holdings		—		—		29,821		29,821
Total net recurring fair value measurements		—		72,739		29,821		102,560

Dec. 31,2017	Level 1		Level 2		Level 3		Total
Public equities and share purchase warrants		—		1,639		—		1,639
Co-investments in funds		—		35,972		—		35,972
Private holdings		—		—		12,152		12,152
Total net recurring fair value measurements		—		37,611		12,152		49,763

     32 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

The following tables provides a summary of changes in the fair value of Level 3 financial assets (in thousands $):

Proprietary Investments

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		4,269		2,135		(3,680	)		106		2,830
Fixed income securities		—		1,000		—			—		1,000
		4,269		3,135		(3,680	)		106		3,830

	Changes in the fair value of Level 3 measurements - Dec. 31, 2017
	Dec. 31, 2016		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income		Dec. 31, 2017
Private holdings		3,984		272		(16	)		29		4,269
Fixed income securities		1,264		—		(1,264	)		—		—
		5,248		272		(1,280	)		29		4,269

Long-term investments

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		12,152		13,145		—		4,524		29,821
		12,152		13,145		—		4,524		29,821

	Changes in the fair value of Level 3 measurements - Dec. 31, 2017
	Dec. 31, 2016		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income		Dec. 31, 2017
Private holdings		8,830		—		—		3,322		12,152
		8,830		—		—		3,322		12,152

During the year ended December 31, 2018, the Company transferred public equities of $0.7 million (Dec. 31, 2017 - $2.9 million) from Level 2 to Level 1 within the fair value hierarchy due to the release of trading restrictions by the issuer. The Company purchased level 3 investments of $16.3 million and transferred $Nil (Dec. 31, 2017 - $3.3 million) from Level 3 to Level 1 within the fair value hierarchy.

     33 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

The following table presents the valuation techniques used by the Company in measuring fair values:

Type	Valuation Technique
Public equities and share purchase warrants	Fair values are determined using pricing models which incorporate all available market-observable inputs.
Co-investments in funds	Fair values are based on the last available Net Asset Value.
Fixed income securities	Fair values are based on independent market data providers or third-party broker quotes.

The Company’s Level 3 securities consists of private holdings and fixed income securities of private companies. The Company determines fair value using a variety of valuation techniques, including discounted cash flows, comparable recent transactions and other techniques used by market participants. The significant unobservable input used in these valuation techniques can vary considerably over time, and include grey market financing prices, discount rates and extraction recovery rates of mining projects. 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 $1.2 million (December 31, 2017 - $0.5 million)

Financial instruments not carried at fair value

For fees receivable, other assets, accounts payable and accrued liabilities and compensation payable, the carrying amount represents a reasonable approximation of fair value due to their short term maturity.

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 $):

	For the years ended
	Dec. 31, 2018		Dec. 31, 2017
Fixed salaries and benefits		3,186		4,197
Variable incentive-based compensation		4,976		2,818
Share-based compensation		4,344		3,268
		12,506		10,283

The deferred stock unit ("DSU") plan for independent directors of the Company vests annually over a three-year period and may only be settled in cash upon retirement. DSU's issued in lieu of directors' fees and dividends vest immediately. There were 123,660 DSUs issued during the year (December 31, 2017 - 213,727). DSU expense is included in "compensation and benefits" line in the consolidated statements of operations and is recognized over the three-year vesting period with an offset to accrued liabilities.

On June 29, 2017, the Company participated in the secondary offering of 2176423 Ontario Ltd., a company beneficially owned by Mr. Eric Sprott. As part of the offering, the Sprott Inc. 2011 Employee Profit Sharing Trust purchased 7,500,000 shares for a total price of $16.5 million, which included a $9.9 million note payable over four years. As at December 31, 2018, the balance of the note payable is $5.5 million.

     34 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

12 DIVIDENDS

The following dividends were declared by the Company during the year ended December 31, 2018:

Record date	Payment Date	Cash dividend per share ($)		Total dividend amount (in thousands $)
March 12, 2018 - Regular Dividend Q4 - 2017	March 27, 2018		0.03		7,553
May 21, 2018 - Regular Dividend Q1 - 2018	June 5, 2018		0.03		7,553
August 20, 2018 - Regular Dividend Q2 - 2018	September 4, 2018		0.03		7,566
November 19, 2018 - Regular Dividend Q3 - 2018	December 4, 2018		0.03		7,586
Dividends (1)					30,258

(1) Subsequent to the quarter-end, on February 27, 2019, a regular dividend of $0.03 per common share was declared for the quarter ended December 31, 2018. This dividend is payable on March 25, 2019 to shareholders of record at the close of business on March 8, 2019.

     35 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

13 RISK MANAGEMENT ACTIVITIES

The Company's exposure to market, credit, liquidity and concentration risk is 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 HFT, designated as FVTPL, HTM, AFS, or as loans and receivables. 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 proprietary investments and loans receivable. 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 proprietary investments and long-term investments will result in changes in carrying value. If the market values of proprietary investments and long-term investments classified as HFT increased or decreased by 5%, with all other variables held constant, this would have resulted in an increase or decrease in net income of approximately $6.4 million for the year (December 31, 2017 - $1.7 million). For more details about the Company's proprietary investments and long-term investments, refer to Note 3.

The Company's revenues are also exposed to price risk since management fees, performance fees and carried interests are 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, SC, RCIC and SAM US.

As at December 31, 2018 and 2017 the Company did not hold any precious metal loans and was not exposed to price risk as the fair value of these loans is dependent on future gold prices.

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 instrument assets. The Company’s earnings, particularly through its on balance sheet loans and co-investment in lending LPs, are exposed to volatility as a result of sudden changes in interest rates. As a mitigating factor, the Company from time-to-time sets minimum interest rates or an interest rate floor in its variable rate loans. As at December 31, 2018 the Company's loan portfolio consisted of only fixed-rate loans. The Company is also exposed to changes in the value of a loan when that loan’s interest rate is at a rate other than current market rates.

As at December 31, 2018, the Company's on balance sheet loan portfolio had 3 fixed-rate resource based loans and no floating-rate resource based loan (December 31, 2017 - 6 fixed-rate loans and 1 floating-rate loan) with an aggregate carrying value of $36.0 million (December 31, 2017 - $48.7 million). The Company's 3 loans range in maturity dates from 1 to 3 years.

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 Canadian dollars. The Company's primary foreign currency is the United States dollar ("USD"). The Company may employ certain hedging strategies to mitigate foreign currency risk.

     36 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

The Global Companies' assets are all denominated in USD with their translation impact being reported as part of other comprehensive income in the financial statements. Excluding the impact of the Global Companies, as at December 31, 2018, approximately $103.3 million (December 31, 2017 - $59.6 million) of total Canadian assets were invested in proprietary investments priced in USD. A total of $17.3 million (December 31, 2017 - $55.5 million) of cash, $1.3 million (December 31, 2017 -$1.2 million) of accounts receivable, $34.5 million (December 31, 2017 - $42.1 million) of loans receivable and $2.6 million (December 31, 2017 - $10.9 million) of other assets were denominated in USD. As at December 31, 2018, if the exchange rate between USD 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 $7.9 million for the year (December 31, 2017 - $6.9 million) and there would be $Nil impact to OCI (December 31, 2017 - $Nil).

Credit risk

Credit risk is the risk that a borrower will not honour its commitments and a loss to the Company may result.

Loans receivable

The Company incurs credit risk primarily in the on-balance sheet loans of SRLC and through co-investments made in the lending LPs managed by SRLC. In addition to the relative default probability of SRLC borrowers (both directly via on balance sheet loans and indirectly via borrowers in the lending LPs we co-invest with), credit risk is also dependent on loss given default, which can increase credit risk if the values of the underlying assets securing the Company's loans decline to levels approaching or below the loan amounts. A decrease in commodity prices may delay the development of the underlying security or business plans of the borrower and will adversely affect the value of the Company's security against a loan. Additionally, the value of the Company's underlying security in a loan can be negatively affected if the actual amount or quality of the commodity proves to be less than that originally estimated, or the ability to extract the commodity proves to be more difficult or more costly than originally estimated. 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 Company interests;

• legal reviews that are performed to ensure that all due diligence requirements are met prior to funding.

As at December 31, 2018, the Company’s net exposure to credit risk in the on-balance sheet loans of SRLC and through the loan portfolio of the lending LPs was $36.0 million (December 31, 2017 - $48.7 million) and the Company had no exposure to off-balance sheet credit risk (loan commitments) (December 31, 2017 - $nil). As at December 31, 2018, the largest loan in the Company’s on-balance sheet loan portfolio was a resource loan with a carrying value of $33.2 million or 92% of the Company’s loans receivable (December 31, 2017 - $26.3 million or 54% of the Company’s loans receivable). The Company will 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. For precious metal loans, the Company performs the same due diligence procedures as it would for its resource loans and resource debentures.

     37 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

Collectability of loans

Besides the above noted measures we take to manage credit risk, the Company will report on credit risk in the notes to the annual financial statements and records expected credit loss to ensure the loans are recorded at their estimated recoverable amount (i.e. net of impairment risk we believe to exist as at the balance sheet date and in accordance with IFRS). Actual losses incurred in the loan portfolio could differ materially from our provisions.

Proprietary investments

The Company incurs credit risk when entering into, settling and financing various proprietary transactions. As at December 31, 2018 and 2017, the Company's most significant proprietary investments counterparty was National Bank Correspondent Network Inc. ("NBCN"), the carrying broker of SPW, which also acts as a custodian for most of the Company's proprietary investments. NBCN is registered as an investment dealer subject to regulation by IIROC; 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, managed accounts and managed companies 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 Global Companies incur credit risk when entering into, settling and financing various proprietary transactions. As at December 31, 2018 and 2017, the Global Companies' 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. 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.

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 $90 million committed line of credit with a major Canadian Schedule I bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months. As at December 31, 2018, the Company had $47.3 million or 11% (December 31, 2017 - $156.1 million or 38%) of its total assets in cash and cash equivalents. In addition, approximately $19.1 million or 19% (December 31, 2017 - $27.3 million or 69%) 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 loans receivable and co-investments in lending LPs arises from fluctuations in cash flows from making loan advances and receiving loan repayments. The Company manages its loan commitment liquidity risk through the ongoing monitoring of scheduled loan fundings and repayments ("match funding") and through its broader treasury risk management program and enterprise capital budgeting. As at December 31, 2018, the Company had no loan funding commitments and $38.7 million in co-investment commitments from the Lending segment (December 31, 2017 - $9.9 million and $7.8 million respectively) . 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.

     38 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

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: syndicating a portion of its loans; slowing its lending activities; drawing on the line of credit; liquidating proprietary investments and/or issuing common shares.

Concentration risk

The majority of the Company's AUM, as well as its proprietary investments and loans receivables are focused on the natural resource sector, and in particular, precious metals & mining.

     39 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

14 SEGMENTED INFORMATION

For management purposes, the Company is organized into business units based on its products, services and geographical location and has six 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;

• Alternative Asset Management (reportable), which provides asset management and sub-advisory services to the Company's branded funds and managed accounts;

• Global (reportable), which provides asset management services to the Company's branded funds and managed accounts in the U.S. and also provides securities trading services to its clients through the Company's U.S. broker-dealer;

• Lending (reportable), which provides lending activities through limited partnership vehicles as well as through direct lending activities using the Company's balance sheet;

• Merchant Banking and Advisory Services (reportable), which includes the activities of Sprott Capital Partners, a division of SPW. Effective this year, the results of our Canadian broker-dealer are presented separately from Corporate;

• Corporate (reportable), which provides capital, balance sheet management and enterprise shared services to the Company's subsidiaries. Effective this year, the results of this segment are presented separately from Merchant Banking and Advisory Services;

• All Other Segments (non-reportable), which do not meet the definition of reportable segments as per IFRS 8. Effective Q1, 2018, the Consulting segment is now part of "All Other Segments" as it no longer constitutes a reportable operating segment on its own, given its immateriality relative to the three quantitative tests of IFRS 8. Consulting is the only segment in this category as all other Company segments are reportable.

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 proprietary investments (as if such gains and losses had not occurred), foreign exchange gains and losses, one time non-recurring expenses, non-cash and non-recurring 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.

     40 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

The following tables present the operations of the Company's reportable segments (in thousands $):

For the year ended December 31, 2018

	Exchange Listed Products		Alternative Asset Management		Global			Lending		Merchant Banking & Advisory Services		Corporate (1)			Eliminations and All Other Segments (2)			Consolidated
Total revenue		33,479		9,143		14,550			27,702		22,116		2,472			(193	)		109,269
Total expenses		9,057		7,503		16,923			7,316		15,788		14,528			5,497			76,612
Pre-tax Income (loss)		24,422		1,640		(2,373	)		20,386		6,328		(12,056	)		(5,690	)		32,657
Adjusted base EBITDA		24,924		1,686		3,037			15,437		4,474		(8,982	)		(64	)		40,512

(1) Historically, this reportable segment included losses on proprietary investments relating to the Company's investment in Sprott Resource Holdings Inc. ("SRHI"). This has been reclassified to "All Other Segments" as SRHI is a managed company of the non-reportable Consulting segment.

(2) Inter-segment revenues and expenses are eliminated on consolidation and reflected in the Eliminations column. Effective Q1, 2018, the former Consulting segment no longer met the definition of a reportable segment as per IFRS 8.

For the year ended December 31, 2017

	Exchange Listed Products		Alternative Asset Management		Global		Lending		Merchant Banking & Advisory Services		Corporate (1)			Eliminations and All Other Segments (2)			Consolidated
Total revenue		17,984		72,942		20,416		11,036		21,555		(5,768	)		6,046			144,211
Total expenses		7,693		32,807		17,555		6,902		16,486		12,951			6,511			100,905
Pre-tax Income (loss)		10,291		40,135		2,861		4,134		5,069		(18,719	)		(465	)		43,306
Adjusted base EBITDA		12,255		7,614		5,655		16,962		5,699		(8,188	)		167			40,164

(1) Historically, this reportable segment included losses on proprietary investments relating to the Company's investment in Sprott Resource Holdings Inc. ("SRHI"). This has been reclassified to "All Other Segments" as SRHI is a managed company of the non-reportable Consulting segment.

(2) Inter-segment revenues and expenses are eliminated on consolidation and reflected in the Eliminations column. Effective Q1, 2018, the former Consulting segment no longer met the definition of a reportable segment as per IFRS 8.

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 $):

	For the years ended
	Dec. 31, 2018		Dec. 31, 2017
Canada		94,719		123,795
United States		14,550		20,416
		109,269		144,211

     41 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017

15 COMMITMENTS AND PROVISIONS

Besides the Company's long-term lease agreement, there may be commitments to provide loans arising from the Lending business or commitments to make investments in the net investments portfolio of the Company. As at December 31, 2018, the Company had no loan commitments (December 31, 2017 - $9.9 million) and $38.7 million in co-investment commitments from the Lending segment (December 31, 2017 - $7.8 million).

Future minimum annual rental payments under non-cancellable leases, including operating costs, are as follows ($ thousands):

2019	2,580
2020	2,606
2021	2,632
2022	2,153
2023	1,847
Thereafter	1,866
	13,684

Contingent loss provisions are recorded when it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated.  The Company makes provisions based on current information and the probable resolution of any such proceedings and claims. As at December 31, 2018, no provisions were recognized.

     42 

EX-99.5

Exhibit 99.5

FORM 13-502F1 CLASS 1 AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE MANAGEMENT CERTIFICATION I, Kevin Hibbert, an officer of the reporting issuer noted below have examined this Form 13-502F1 (the Form) being submitted hereunder to the Ontario Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate. (s) “Kevin Hibbert” February 28, 2019 Kevin Hibbert Date: Chief Financial Officer Reporting Issuer Name: Sprott Inc. End date of previous financial year: December 31, 2018 Type of Reporting Issuer: Class 1 Reporting Issuer Class 3B Reporting Issuer Highest Trading Marketplace: TSX (refer to the definition of “highest trading marketplace” under OSC Rule 13-502 Fees) Market value of listed or quoted equity securities: (in Canadian Dollars - refer to section 7.1 of OSC Rule 13-502 Fees) Equity Symbol SII 1st Specified Trading Period (dd/mm/yy) (refer to the definition of “specified trading period” under OSC Rule 01/01/2018 to 03/31/2018 13-502 Fees) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $3.11 (i) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period 251,783,140 (ii) Market value of class or series (i) x (ii) $ 783,045,565.40 (A) 2nd Specified Trading Period (dd/mm/yy) (refer to the definition of “specified trading period” under OSC Rule 04/01/2018 to 06/30/2018 13-502 Fees)

2 Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $3.03 (iii) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period 252,088,812 (iv) Market value of class or series (iii) x (iv) $ 763,829,100.30 (B) 3rd Specified Trading Period (dd/mm/yy) (refer to the definition of “specified trading period” under OSC Rule 13-502 Fees) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period Market value of class or series (v) x (vi) 4th Specified Trading Period (dd/mm/yy) (refer to the definition of “specified trading period” under OSC Rule 13-502 Fees) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period Market value of class or series (vii) x (viii) 5th Specified Trading Period (dd/mm/yy) (if applicable - refer to the definition of “specified trading period” under OSC Rule 13-502 Fees) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace 07/01/2018 to 09/30/2018 $2.99 (v) 252,675,049 (vi) $ 755,498,396.5 (C) 10/01/2018 to 12/30/2018 $2.57 (vii) 252,994,590 (viii) $ 650,196,096.30 (D) to (ix)

3 Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period (x) Market value of class or series (ix) x (x) $ (E) Average Market Value of Class or Series (Calculate the simple average of the market value of the class or series of security for each applicable specified trading period (i.e. A through E above)) $ 738,142,289.20 (1) (Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary pursuant to paragraph 2.8(1)(c) of OSC Rule 13-502 Fees, if applicable) that was listed or quoted on a marketplace at the end of the previous financial year) Fair value of outstanding debt securities: $ (2) (See paragraph 2.8(1)(b), and if applicable, paragraph 2.8(1)(c) of OSC Rule 13-502 Fees) (Provide details of how value was determined) $ Capitalization for the previous financial year (1) + (2) $ 738,142,289.20 Participation Fee (For Class 1 reporting issuers, from Appendix A of OSC Rule 13-502 Fees, select the participation fee) $ 40,950.00 (For Class 3B reporting issuers, from Appendix A.1 of OSC Rule 13-502 Fees, select the participation fee) $ Late Fee, if applicable (As determined under section 2.7 of OSC Rule 13-502 Fees) $ Total Fee Payable (Participation Fee plus Late Fee) $ 40,950.00 3046903-v1\TORDMS 

EX-99.6

Exhibit 99.6

 Note: [01 Mar 2017] – The following is a consolidation of 13-501F1. It incorporates amendments to this document that came into effect on March 1, 2017. This consolidation is provided for your convenience and should not be relied on as authoritative. FORM 13-501F1 CLASS 1 REPORTING ISSUERS AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE MANAGEMENT CERTIFICATION Kevin Hibbert I, , an officer of the reporting issuer noted below have examined this Form 13-501F1 (the Form) being submitted hereunder to the Alberta Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate. Kevin Hibbert February 28, 2020 Name: Kevin Hibbert Date: Title: Chief Financial Officer Reporting Issuer Name: Sprott Inc. End date of previous financial year: December 31, 2019 Type of Reporting Issuer: [ ] Class 1 reporting [ ] Class 3B reporting issuer issuer Highest Trading Marketplace: TSX Market value of listed or quoted equity securities: Equity Symbol 1st Specified Trading Period (dd/mm/yy) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace SII 01/01/19 31/03/19 to 3.03 $ (i)

Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period (i) x (ii) Market value of class or series 253,485,943 (ii) 768,062,407.29 $ (A) 2nd Specified Trading Period (dd/mm/yy) 01/04/19 30/06/19 to Closing price of the security in the class or series on the last trading day of the specified trading period in which 3.37 such security was listed or quoted on the highest trading $ marketplace (iii) Number of securities in the class or series of such 253,501,512 security outstanding at the end of the last trading day of the specified trading period (iv) 854,300,095.44 (iii) x (iv) $ Market value of class or series (B) 3rd Specified Trading Period (dd/mm/yy) 01/07/19 30/09/19 to Closing price of the security in the class or series on the last trading day of the specified trading period in which 3.12 such security was listed or quoted on the highest trading $ marketplace (v) Number of securities in the class or series of such 253,804,511 security outstanding at the end of the last trading day of the specified trading period (vi) 791,870,074.32 (v) x (vi) $ Market value of class or series (C)

4th Specified Trading Period (dd/mm/yy) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period 01/10/2019 31/12/19 to 2.98 $ (vii) 253,130,798 (viii) 754,329,778.04 (vii) x (viii) $ Market value of class or series (D) 5th Specified Trading Period (dd/mm/yy) to Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading $ marketplace (ix) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period (x) (ix) x (x) $ Market value of class or series (E) Average Market Value of Class or Series (Calculate the simple average of the market value of the class or 792,140,588.77 series of security for each applicable specified trading $ period (i.e. A through E above)) (1) (Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary, if applicable) that was listed or quoted on a marketplace at the end of the previous financial year)

 Fair value of outstanding debt securities: (Provide details of how value was determined) $ (2) Capitalization for the previous financial year 792,140,588.77 (1) + (2) $ Participation Fee 19,000.00 $ Late Fee, if applicable $ Total Fee Payable 19,000.00 $ (Participation Fee plus Late Fee)

EX-99.7

Exhibit 99.7

FORM 52 – 109F1

CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

I, Peter Grosskopf, Chief Executive Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the AIF, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Sprott Inc. (the “issuer”) for the financial year ended December 31, 2018;

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings;

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings;

4. Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the financial year end:

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer and I have:

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b)       evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s

ICFR at the financial year end and the issuer has disclosed in its annual MD&A:

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) N/A

7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on October 1, 2018 and ended on December 31, 2018 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

8. Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

Date: February 28, 2019
“Peter Grosskopf”
Name:	Peter Grosskopf
Title:	Chief Executive Officer

- 2 -

EX-99.8

Exhibit 99.8

FORM 52 – 109F1

CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

I, Kevin Hibbert, Chief Financial Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the AIF, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Sprott Inc. (the “issuer”) for the financial year ended December 31, 2018;

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings;

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings;

4. Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the financial year end:

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer and I have:

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A:

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) N/A

7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on October 1, 2018 and ended on December 31, 2018 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

8. Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

Date: February 28, 2019
 

“Kevin Hibbert”
Name:	Kevin Hibbert
Title:	Chief Financial Officer

- 2 -

EX-99.9

Exhibit 99.9

Management's Discussion and Analysis 

Three months ended March 31, 2019

  1

FORWARD LOOKING STATEMENTS

Certain statements in this Management's Discussion & Analysis ("MD&A"), and in particular the "Business Highlights and Growth Initiatives" section and "Outlook" subsection, contain forward-looking information (collectively referred to herein as the "Forward-Looking Statements") within the meaning of applicable 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) expectations regarding deployment of capital called into our lending LPs in 2019; (ii) expectation that Lending net capital calls will occur over the mid-to-long term life of our funds; (iii) expectation that the strong finish to the price of gold last year will carry forward to 2019; (iv) expectations regarding our legacy balance sheet loans; (v) anticipation that earnings from the managed equities business will be relatively flat to slightly positive year-over-year; (vi) expectation of a challenging equity origination and placement fee environment, similar to what was experienced in 2018; (vii) expectation that we will see a material decrease in corporate expenses in 2019 and the primary reasons causing such decrease as described under the heading “Outlook - Corporate”; and (viii) the declaration, payment and designation of dividends.

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; and (iv) those assumptions disclosed herein under the heading "Significant Accounting Judgments, Estimates and Changes in Accounting Policies". 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 favourable 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 lending business; (xxvii) risks relating to the Company’s merchant bank and advisory business; (xxviii) those risks described under the heading "Risk Factors" in the Company’s annual information form dated February 27, 2019; and (xxix) those risks described under the headings "Managing Risk: Financial" and "Managing Risk: Non-Financial" 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 Canadian securities laws.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This MD&A of financial condition and results of operations, dated May 9, 2019, presents an analysis of the consolidated financial condition of the Company and its subsidiaries as at March 31, 2019, compared with December 31, 2018, and the consolidated results of operations for the three months ended March 31, 2019, compared with the three months ended March 31, 2018. The Board of Directors approved this MD&A on May 9, 2019. All note references in this MD&A are to the notes to the Company's March 31, 2019 unaudited interim condensed consolidated financial statements ("interim financial statements"), unless otherwise noted. The Company was incorporated under the Business Corporations Act (Ontario) on February 13, 2008.

PRESENTATION OF FINANCIAL INFORMATION

The interim 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 interim financial statements. The Canadian dollar is the Company's functional and reporting currency for purposes of preparing the interim financial statements given that the Company conducts most of its operations in that currency. Accordingly, all dollar references in this MD&A are in Canadian dollars, unless otherwise specified. The use of the term "prior period" refers to the three months ended March 31, 2018.

  2

KEY PERFORMANCE INDICATORS (NON-IFRS 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 include:

Assets Under Management

Assets Under Management ("AUM") refers to the total net assets managed by the Company through its various investment product offerings, managed accounts and managed companies.

Net Sales

Fund sales (net of redemptions) are a key performance indicator as new assets being managed will lead to higher management fees and can potentially lead to increased carried interest and performance fee generation given that AUM is also the basis upon which carried interest and performance fees are calculated.

Capital calls and distributions

Capital calls into our lending LPs is a key source of AUM creation, and ultimately, earnings for the Company. Once committed capital is called into our lending LPs, it is included within the AUM of the Company as it will now earn a management fee (note that it is possible for some forms of committed capital to earn a commitment fee, in which case, it will also be included in AUM at that time). Conversely, once loans in our lending LPs are repaid, capital may be returned to investors in the form of a distribution, thereby reducing our AUM.

Net Fees

Management fees, carried interest and performance fees, net of trailer and sub-advisor fees, carried interest and performance fee payouts, is a key revenue indicator as it represents the net revenue contribution after directly associated costs that we generate from our AUM.

Net Commissions

Commissions, net of commission expenses, arise from the transaction based service offerings of our brokerage segment.

  3

EBITDA, Adjusted EBITDA and Adjusted base EBITDA

EBITDA in its most basic form is defined as earnings before interest expense, income taxes, depreciation and amortization. EBITDA 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.

Neither EBITDA, adjusted EBITDA or adjusted base EBITDA have 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 measures are determined:

	3 months ended
(in thousands $)	Mar. 31, 2019			Mar. 31, 2018
Net income (loss) for the periods		3,784			13,657
Adjustments:
Interest expense		324			66
Provision (recovery) for income taxes		877			(2,772	)
Depreciation and amortization		1,101			688
EBITDA		6,086			11,639
Other adjustments:
(Gains) losses on proprietary investments		(73	)		1,879
(Gains) losses on foreign exchange		1,025			(857	)
Non-cash stock-based compensation		1,658			1,418
Net proceeds from Sale Transaction		—			(4,200	)
Unamortized placement fees (1)		—			(268	)
Other expenses(2)		488			974
Adjusted EBITDA		9,184			10,585
Other adjustments:
Carried interest and performance fees		—			(1,117	)
Carried interest and performance fee related expenses		—			559
Adjusted base EBITDA		9,184			10,027

⁽¹⁾ The March 31, 2018 comparative figure contained a placement fee amortization adjustment to ensure the 2018 results were comparable to 2017 in light of the 2018 adoption of IFRS 15.

⁽²⁾ See Other Expenses in Note 6 of the interim financial statements. In addition to the items outlined in Note 6, Other expenses also includes severance and new hire accruals of $0.1 million for the 3 months ended (3 months ended March 31, 2018 - $0.1 million).

  4

BUSINESS OVERVIEW

Our reportable operating segments are as follows:

 

Exchange Listed Products

• The Company's closed-end physical trusts and exchange traded funds ("ETFs").

Lending

• The Company's lending activities primarily occur through limited partnership vehicles ("lending LPs").

Managed Equities

• The Company's alternative investment strategies (open-end, closed-end, fixed-term LPs, etc.) managed in-house and on a sub-advised basis. Prior to Q1 2019, the Company's fixed-term LP vehicles formed part of the "Global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, Global no longer satisfied the qualitative tests of IFRS 8 as the geographic location of the U.S businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, Global has been deconstructed and its fixed-term LP assets and earnings reallocated to the managed equities segment given that it is now at the managed equities level that the allocation of resources and assessment of product and service performance occurs by management.

Brokerage

• Formerly "Merchant Banking & Advisory Services", this segment has been renamed to reflect the inclusion of our U.S. broker-dealer alongside our Canada based broker-dealer as the Company's "brokerage segment". Prior to Q1 2019 , the Company's U.S. broker-dealer formed part of the "Global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, Global no longer satisfied the qualitative tests of IFRS 8 as the geographic location of the U.S. businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, Global has been deconstructed and its U.S. broker-dealer assets and earnings reallocated to the brokerage segment given that it is now at the brokerage level (independent of geography) that the allocation of resources and assessment of product and service performance occurs by management.

Corporate

• Provides the Company's various operating segments with capital, balance sheet management and other shared services.

All Other Segments

• Contains all non-reportable segments as per IFRS 8. See note 11 of the interim financial statements for further details.

For a detailed account of the underlying principal subsidiaries within our reportable business segments, refer to the Company's Annual Information Form and Note 2 of the annual financial statements.

  5

BUSINESS HIGHLIGHTS AND GROWTH INITIATIVES

Investment Performance

Market value depreciation was $133 million during the quarter. A weaker US dollar and slightly lower silver prices in our exchange listed products segment more than offset market value appreciation experienced in our managed equities and other AUM in the quarter.

Product and Business Line Expansion

• AUM in our lending LPs stood at $731 million (US$547 million) as of March 31, 2019. The $233 million (US$182 million) increase in the quarter was primarily due to additional new AUM arising from fee earning committed capital in a new lending LP and new capital calls into existing LPs.

• On January 11, 2019, the Company launched a new Korean co-managed private equity fund with KB Securities (KB Solar fund), raising $75 million in commitment fee earning AUM in the process.

• On February 6, 2019, the Company announced a joint venture with Tocqueville Asset Management to co-manage a new gold equities investment strategy (Sprott Hathaway Special Situations Fund), raising $27 million in initial AUM in the process.

Outlook

Exchange Listed Products

• We continue to expect the strong finish to the price of gold last year to carry forward to 2019, however, the benefit of higher gold prices will be somewhat offset by starting 2019 with a lower AUM base given our 2018 redemption experience which continued in the first quarter of 2019.

Lending

• We continue to expect a relatively steady deployment of called capital (AUM growth) into our lending LPs in 2019, ranging from US$200 million - US$400 million by end of this year. Over that same time period, we expect our legacy balance sheet loans to continue running off at about the same pace it has historically. However, to the extent that loan repayments outpace capital deployments, declines in 2019 interest income could outpace increases in 2019 management fees from our lending LPs. There is also the risk of capital distributions outpacing capital calls in the near term, however, we do expect net capital calls to occur over the mid-to-long term life of our funds. We anticipate the balance sheet run-off to reach a conclusion by end of 2019.

Managed Equities

• We continue to anticipate earnings from this business to be relatively flat to slightly positive year-over-year.

Brokerage

• We continue to expect a challenging equity origination and placement fee environment, similar to what was experienced in 2018.

Corporate

• We continue to expect to see a material decrease in corporate expenses in 2019, primarily due to: (1) lower LTIP amortization as the graded vesting schedule of the 2017 grants reach the low points of the amortization schedule; and (2) slightly flat to lower SG&A as we continue our cost containment efforts.

  6

SUMMARY FINANCIAL INFORMATION

(In thousands $)	Q1 2019			Q4 2018			Q3 2018			Q2 2018			Q1 2018			Q4 2017			Q3 2017			Q2 2017
SUMMARY INCOME STATEMENT
Management fees		13,558			13,182			13,722			14,559			14,056			10,247			13,597			20,460
Carried interest and performance fees		—			—			—			685			1,117			3,584			835			126
less: Trailer and sub-advisor fees		—			38			45			49			47			225			1,043			3,886
less: Carried interest and performance fee payouts		—			—			—			356			559			2,267			—			12
Net Fees		13,558			13,144			13,677			14,839			14,567			11,339			13,389			16,688
Commissions		4,409			6,414			4,573			7,516			8,857			7,366			4,746			8,878
less: Commission expense		1,844			2,704			2,447			2,701			3,667			2,855			1,553			3,364
Net Commissions		2,565			3,710			2,126			4,815			5,190			4,511			3,193			5,514
Interest income		3,918			4,244			4,824			3,293			3,066			3,588			2,789			3,387
Gains (losses) on proprietary investments		73			3,912			(4,765	)		(3,050	)		(1,879	)		(63	)		(3,770	)		613
Gains (losses) on long-term investments		(67	)		3,007			(151	)		(72	)		56			3,639			—			—
Other income (loss)		(644	)		2,453			(275	)		3,683			6,242			1,144			31,487			(2,648	)
Total Net Revenues		19,403			30,470			15,436			23,508			27,242			24,158			47,088			23,554
Compensation (1)		8,387			11,163			8,167			10,634			9,485			10,631			5,655			11,784
Compensation - severance and new hire accruals		146			38			359			—			149			2,193			62			196
Placement and referral fees		78			368			223			148			204			833			782			4,628
Selling, general and administrative		4,069			4,171			3,404			4,905			4,586			5,739			5,084			6,112
Interest Expense		324			312			26			15			66			22			124			51
Amortization and impairment charges (2)		1,101			598			457			456			688			1,386			1,473			1,778
Other expenses		637			606			790			802			1,179			2,069			703			289
Total Expenses		14,742			17,256			13,426			16,960			16,357			22,873			13,883			24,838
Net Income (Loss)		3,784			9,831			1,975			5,916			13,657			2,519			29,804			(3,606	)
Net Income (Loss) per share		0.02			0.04			0.01			0.02			0.06			0.01			0.12			(0.01	)
Adjusted base EBITDA		9,184			10,092			9,707			10,686			10,027			7,524			8,007			8,751
Adjusted base EBITDA per share		0.04			0.04			0.04			0.04			0.04			0.03			0.03			0.04
SUMMARY BALANCE SHEET
Total Assets		444,325			428,215			401,366			403,985			407,177			409,849			408,093			387,636
Total Liabilities		72,172			55,094			36,486			36,372			42,417			65,985			61,707			62,925
Cash		48,193			47,252			41,452			37,974			52,097			156,120			152,952			96,572
less: syndicate cash holdings		(12,218	)		(10,421	)		(967	)		(796	)		(932	)		(776	)		(649	)		(477	)
Net cash		35,975			36,831			40,485			37,178			51,165			155,344			152,303			96,095
Proprietary and long-term investments		134,681			129,271			115,744			120,853			96,352			114,327			134,306			137,505
less: obligations related to securities sold short		—			(255	)		—			(2,927	)		(8,543	)		(24,993	)		(25,988	)		(26,577	)
Net investments		134,681			129,016			115,744			117,926			87,809			89,334			108,318			110,928
Loans receivable		32,360			36,021			36,532			40,208			50,467			48,673			46,215			67,804
Investable Capital		203,016			201,868			192,761			195,312			189,441			293,351			306,836			274,827
Total Enterprise AUM		10,569,449			10,578,426			10,066,112			11,126,042			11,591,213			7,323,382			7,191,512			9,306,457

⁽¹⁾ Compensation includes stock-based compensation, but excludes commission expense, carried interest and performance fee payouts, which are reported net of commission revenue, carried interest and performance fees, respectively.

⁽²⁾ Starting Q1, 2019, in order to comply with the new IFRS 16 accounting standard, certain lease assets have now been capitalized and depreciated over their expected lease term. See Note 2, Changes in Accounting Policies of the interim financial statements.

  7

SUMMARY MANAGEMENT FEE BREAKDOWN

Below is a detailed list of management fee rates on our fund products as at March 31, 2019 (in millions $):

FUND	AUM		BLENDED NET MANAGEMENT FEE RATE			CARRIED INTEREST AND PERFORMANCE FEE CRITERIA
Exchange Listed Products
Sprott Physical Gold and Silver Trust		3,466		0.40	%	N/A (1)
Sprott Physical Gold Trust		2,745		0.35	%	N/A (1)
Sprott Physical Silver Trust		1,131		0.45	%	N/A (1)
Sprott Gold Miner's ETF		197		0.57	%	N/A (1)
Sprott Physical Platinum & Palladium Trust		139		0.50	%	N/A (1)
Sprott Jr. Gold Miner's ETF		72		0.57	%	N/A (1)
Total		7,750		0.40	%
Lending
Sprott Private Resource Lending LPs		731		1.11	%	15-70% of net profits over guaranteed return
Managed Equities: In-house
Sprott U.S. Value Strategies		305		0.98	%	15% of all net profits in excess of the HWM
Fixed Term Limited Partnerships		241		1.70	%	15-30% over guaranteed return
Separately Managed Accounts (2)		48		1.00	%	N/A
Total		594		1.27	%
Managed Equities: Sub-advised
Bullion Funds (3)		319		0.51	%	5% excess over applicable benchmark indices
Corporate Class Funds (3)		130		0.75	%	5% excess over applicable benchmark indices
Flow-through LPs (3)		74		0.70	%	10% of all net profits in excess of the HWM
Total		523		0.60	%
Other
Managed Companies (4)		686		0.50	%	N/A
Separately Managed Accounts (5)		285		0.61	%	20% of net profits over guaranteed return
Total		971		0.53	%
Total AUM		10,569		0.52	%

⁽¹⁾ Exchange listed products do not attract performance fees, however the management fees they generate are closely correlated to precious metals prices.

⁽²⁾ Institutional managed accounts.

⁽³⁾ Management fee rate represents the net amount received by the Company as sub-advisor for these products.

⁽⁴⁾ Includes Sprott Resource Holdings Inc. and Sprott Korea Corp.

⁽⁵⁾ Includes our private equity strategy in Sprott Asia and high net worth discretionary managed accounts in the U.S.

  8

RESULTS OF OPERATIONS

AUM SUMMARY

AUM was $10.6 billion as at March 31, 2019, down slightly from December 31, 2018. We benefited from $264 million of additional AUM arising from a combination of new commitment fee earning assets and new capital calls in our lending LPs. We also benefited from $118 million in new AUM from fund launches in our managed equities segment and our Korea based business (included in the "other" section below). However, these net sales items were more than offset by physical trust redemptions, a weaker US dollar and lower silver prices in our exchange listed products segment.  

In millions $	AUM Dec. 31, 2018		Net Sales & Capital Calls			Market Value Change			Distributions, Acquisitions & Divestitures			AUM Mar. 31, 2019
Exchange Listed Products
- Physical Trusts		7,927		(260	)		(186	)		—			7,481
- ETFs		237		17			15			—			269
		8,164		(243	)		(171	)		—			7,750
Lending		498		264			(16	)		(15	)(1)		731
Managed Equities
- In-house		295		27			31			—			353
- Sub-advised		505		19			(1	)		—			523
- Fixed Term LPs		243		—			(2	)		—			241
		1,043		46			28			—			1,117
Other		873		72			26			—			971
Total		10,578		139			(133	)		(15	)		10,569

⁽¹⁾ Distributions of principal receipts to clients of our lending LPs.

  9

KEY REVENUE LINES

Net Fees in the quarter were $13.6 million, down $1.0 million (7%) from the prior period. Excluding net performance fees generated in the prior period ($0.6 million), the decrease on a three months ended basis was 3% and was due to lower average AUM in our exchange listed products and managed equities segments. This decline more than offset the increased fee generation from our lending LPs as we continue to grow our lending AUM.

Interest Income in the quarter was $3.9 million, up $0.9 million (28%) from the prior period. The increase on a three months ended basis was primarily due to increased income from co-investments made in our lending LPs.

^{(1) $1,137 million (US$851 million) of committed capital remains uncalled, of which $240 million (US$180 million) earns a commitment fee (AUM), and $897 million (US$671 million) does not (future AUM).}

Net Commissions in the quarter were $2.6 million, down $2.6 million (51%) from the prior period. The decline was due to weak equity origination and placement activities in our brokerage segment.

  10

KEY EXPENSE LINES

Compensation, excluding commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance and new hire accruals which are non-recurring, was $8.4 million, down $1.1 million (12%) from the prior period.The decrease was primarily due to lower equity amortization as well as lower salaries on lower head count.

SG&A was $4.1 million in the quarter, down $0.5 million (11%) from the prior period. This was largely due to adoption of IFRS 16 and our on-going cost containment program.

ADDITIONAL REVENUE AND EXPENSE HIGHLIGHTS

Proprietary investments gains during the quarter were due to market value movements of certain resource equity holdings.

Loss on long-term investments was due to market value depreciation of certain long-term investments.

Other income was lower in the quarter. The decrease was primarily due to net sales proceeds received on last year's Sale Transaction and from FX losses on U.S dollar dominated cash, receivables and loans.

Placement and referral fees were lower in the quarter due to less usage of placement agents in our lending business.

Interest expense was higher in the quarter due to the draw down of our loan facility (see Note 12 of the interim financial statements) and interest accruals on leases from the adoption of IFRS 16.

Amortization of intangibles was lower due to finite life fund management contracts related to fixed term LPs in our managed equities segment being fully amortized by the end of the first quarter of the prior period.

Amortization of property and equipment was higher during the quarter due to increased depreciation expense related to leases that were capitalized on the adoption of IFRS 16.

Other expenses were lower in the quarter due to lower non-recurring professional fees and costs related to our energy assets.

  11 

Adjusted Base EBITDA

Adjusted base EBITDA in the quarter was $9.2 million, down $0.8 million (8%) from the prior period. The decrease was primarily due to lower net commissions on lower equity origination and placement activities in our brokerage segment and lower fee income earned in our exchange listed products and managed equities segments. These decreases more than offset higher management fees, commitment fees and co-investment income in our lending segment, lower LTIP amortization and lower SG&A.

Balance Sheet

Investable Capital was $203 million, up $1 million (1%) from December 31, 2018.

Total Assets were $444 million, up $16 million (4%) from December 31, 2018. The increase was primarily due to increased long term investments made in the quarter, as well as the capitalization of leases on adoption of IFRS 16.

Total Liabilities were $72 million, up $17 million (31%) from December 31, 2018. The increase was primarily due to the draw down of $23.8 million on our loan facility to help fund current and anticipated co-investments in our lending LPs over the next 12-18 months. The increase is also due to the recording of a lease liability on adoption of IFRS 16. These increases were partially offset by the payment of prior year's accrued liabilities in the quarter.

Total Shareholder's Equity was $372 million, down $1 million from December 31, 2018.

  12 

REPORTABLE OPERATING SEGMENTS

Exchange Listed Products

	3 months ended
(In thousands $)	Mar. 31, 2019			Mar. 31, 2018
SUMMARY INCOME STATEMENT
Management fees		7,650			8,191
Other income (loss)		(357	)		(264	)
Total Revenues		7,293			7,927
Compensation		1,051			1,324
Selling, general and administrative		900			835
Interest expense		274			—
Amortization and impairment charges		317			314
Total Expenses		2,542			2,473
Net Income before income taxes		4,751			5,454
Adjusted base EBITDA		5,699			6,032
Total AUM		7,750,030			9,014,378

3 months ended

Adjusted base EBITDA in the quarter was $5.7 million, down $0.3 million (6%) from the prior period. The decrease was primarily due to lower management fees given redemption experience in our physical trusts. This was only partially offset by lower LTIP amortization.

Non-EBITDA highlights:

• Other loss during the quarter was mainly driven by FX movements on U.S dollar dominated cash and receivables.

  13 

Lending

	3 months ended
(In thousands $)	Mar. 31, 2019			Mar. 31, 2018
SUMMARY INCOME STATEMENT
Management fees		2,146			1,062
Interest income (1)		3,310			2,775
Gains (losses) on proprietary investments		(1,421	)		1,171
Gains on long-term investments		(11	)		14
Other income (loss)		(642	)		1,783
Total Revenues		3,382			6,805
Compensation		1,360			1,099
Placement and referral fees		8			31
Selling, general and administrative		119			468
Amortization and impairment charges		36			2
Total Expenses		1,523			1,600
Net Income before income taxes		1,859			5,205
Adjusted base EBITDA		4,042			2,757
Total AUM (2)		731,237			282,421

⁽¹⁾ Includes: (1) interest income from on-balance sheet loans; and (2) co-investment income from lending LP units held as part of our long-term investments portfolio.

⁽²⁾ $1,137 million (US$851 million) of committed capital remains uncalled, of which $240 million (US$180 million) earns a commitment fee (AUM), and $897 million (US$671 million) does not (future AUM).

3 months ended

Adjusted base EBITDA in the quarter was $4.0 million, up $1.3 million (47%) from the prior period. The increase was primarily due to higher management fees (including commitment fees) and co-investment income on increased capital calls and new commitment fee earning AUM.

Non-EBITDA highlights:

• Losses on proprietary investments were due to market value depreciation on equity kickers received on certain loan arrangements.

• Other loss was mainly driven by FX movements on U.S dollar dominated cash, receivables and loans.

  14 

Managed Equities*

	3 months ended
(In thousands $)	Mar. 31, 2019		Mar. 31, 2018
SUMMARY INCOME STATEMENT
Management fees		2,419		3,172
Carried interest and performance fees		—		1,061
less: Trailer and sub-advisor fees		41		94
less: Carried interest and performance fee payouts		—		559
Net Fees		2,378		3,580
Gains (losses) on proprietary investments		545		9
Gains (losses) on long-term investments		59		(27	)
Other income (loss)		211		(467	)
Total Net Revenues		3,193		3,095
Compensation		2,184		1,505
Selling, general and administrative		569		344
Amortization and impairment charges		73		331
Total Expenses		2,826		2,180
Net Income before income taxes		367		915
Adjusted base EBITDA		915		1,314
Total AUM		1,117,211		1,366,661

*See "Managed Equities" in the business overview section on page 7 of this MD&A.

3 months ended

Adjusted base EBITDA in the quarter was $0.9 million, down $0.4 million (30%) from the prior period. The decrease was primarily due to lower market valuation in our fixed-term LPs which led to lower management fee income.

Non-EBITDA highlights: 

• Compensation increased due to non-recurring stock based compensation expense on a new hire.

  15 

Brokerage*

	3 months ended
(In thousands $)	Mar. 31, 2019			Mar. 31, 2018
SUMMARY INCOME STATEMENT
Commissions		4,306			8,263
less: Commission Expense		1,864			3,701
Net Commissions		2,442			4,562
Management fees		372			475
Interest income		608			291
Gains (losses) on proprietary investments		297			(649	)
Other income (loss)		65			4,261
Total Net Revenues		3,784			8,940
Compensation (1)		2,408			2,839
Placement and referral fees		59			142
Selling, general and administrative		1,485			1,323
Interest expense		21			—
Amortization and impairment charges		186			13
Other expenses		—			72
Total Expenses		4,159			4,389
Net Income (Loss) before income taxes		(375	)		4,551
Adjusted base EBITDA		3			2,127

*See "Brokerage" in the business overview section on page 7 of this MD&A.

⁽¹⁾ Compensation is presented excluding commission expense, which is reported net of commission revenue.

3 months ended

Adjusted base EBITDA in the quarter was nominal, down $2.1 million from the prior period. The decrease was primarily due to lower net commissions on weak equity origination and placement activity.

Non-EBITDA highlights:

• Gains on proprietary investments were the result of market value appreciation on equity kickers earned on private placements.

• Other income in the prior period was primarily related to net sales proceeds received on last year's Sale Transaction. See Note 6 of the interim financial statements.

  16 

Corporate

This segment is primarily a cost centre that provides capital, balance sheet management and shared services to the Company's subsidiaries.

	3 months ended
(In thousands $)	Mar. 31, 2019			Mar. 31, 2018
SUMMARY INCOME STATEMENT
Gains (losses) on proprietary investments		(155	)		(782	)
Gains (losses) on long-term investments		(115	)		69
Other income (loss)		118			553
Total Revenues		(152	)		(160	)
Compensation		886			1,752
Selling, general and administrative		803			1,114
Interest expense		29			66
Amortization and impairment charges		483			20
Other expenses		334			722
Total Expenses		2,535			3,674
Net Income (Loss) before income taxes		(2,687	)		(3,834	)
Adjusted base EBITDA		(1,691	)		(2,428	)

3 months ended

• Proprietary investments losses during the quarter were due to market value depreciation of certain resource equity holdings.

• Long-term investment losses were due to market value depreciation of our long-term investments.

• Lower compensation expense was largely a result of lower LTIP amortization.

• Lower SG&A was largely due to our on-going cost containment program.

  17 

Dividends

The following dividends were declared by the Company during the 3 months ended March 31, 2019:

Record date	Payment Date	Cash dividend per share ($)		Total dividend amount (in thousands $)
March 08, 2019 - Regular Dividend Q4 - 2018	March 25, 2019		0.03		7,602
Dividends (1)					7,602

⁽¹⁾ Subsequent to quarter-end, on May 9, 2019, a regular dividend of $0.03 per common share was declared for the quarter ended March 31, 2019. This dividend is payable on June 5, 2019 to shareholders of record at the close of business on May 21, 2019.

Capital Stock

Including the 9.1 million unvested common shares currently held in the EPSP Trust (December 31, 2018 - 9.9 million), total capital stock issued and outstanding was 253.5 million (December 31, 2018 - 253.0 million).

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 $0.02 for the three months ended compared to $0.06 in the prior period. Diluted earnings per share was $0.01 for the three months ended compared to $0.05 in the prior period. 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 3.3 million stock options are outstanding pursuant to our stock option plan, of which 2.6 million are exercisable.

  18 

Liquidity and Capital Resources

As at March 31, 2019, the Company had $23.8 million (December 31, 2018 - $Nil) outstanding on its credit facility, $5 million of which is due within 12 months and $18.8 million is due after 12 months (December 31, 2018 - $Nil and $Nil respectively).

The Company has a 5 year, $90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a $25 million term loan and a $65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. During the quarter, the Company drew $23.8 million on the term loan portion of the credit facility to avoid its expiry and to partially fund near-term anticipated growth in the business, in particular, the anticipated pace of capital calls over the next 12-18 months in its lending LPs. Key terms under the credit facility are noted below:

Structure

◦ 5-year, $65 million revolver with "bullet maturity" December 31, 2022

◦ 5-year, $25 million term loan with 5% of principal amortizing quarterly

Interest Rate

◦ Prime rate + 0 bps or;

◦ Banker Acceptance Rate + 170 bps

Covenant Terms

◦ AUM more than 70% of AUM at origination date (compliant at March 31, 2019)

◦ Debt to EBITDA less than 3.25:1 for first 18 months, after which, debt to EBITDA less than 2.50:1

(compliant at March 31, 2019)

◦ EBITDA to interest expense more than 2.50:1 (compliant at March 31, 2019)

Commitments

Besides the Company's long-term lease agreements, there may be commitments to provide loans or make co-investments in lending LPs arising from our Lending segment or commitments to make investments in the net investments portfolio of the Company. As at March 31, 2019, the Company had $5.7 million in co-investment commitments from the Lending segment (December 31, 2018 - $38.7 million).

  19 

Significant Accounting Judgments, Estimates and Changes in Accounting Policies

The interim financial statements have been prepared in accordance with IFRS standards in effect as at March 31, 2019, specifically, IAS 34 Interim Financial Reporting.

Compliance with IFRS requires the Company to exercise judgment, make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may vary. Except as otherwise noted, significant accounting judgments and estimates are described in Note 2 of the December 31, 2018 annual audited financial statements and have been applied consistently to the interim financial statements as at and for the three ended March 31, 2019.

In Q1, 2019 the Company adopted IFRS 16 Leases (“IFRS 16”) and IFRIC 23 Uncertainty over Income Tax Treatments ("IFRIC 23"). As a result, the Company changed its accounting policies. As permitted by the transition provision of IFRS 16, the Company elected not to restate comparative period results. Accordingly, all comparative period information is presented in accordance with previous accounting policies. The adoption of IFRIC 23 did not have a material impact on the Company's financial statements.

Managing Risk: Financial

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 interests 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 instrument assets. The Company’s earnings, particularly through its Lending 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

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 Canadian dollars. The Company's primary foreign currency is the United States Dollar ("USD"). 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 on balance sheet loans, co-investments in lending LPs and its net investments portfolio.

Loans receivable

The Company incurs credit risk primarily in the on-balance sheet loans of Sprott Resource Lending Corporation ("SRLC") and through co-investments made in the lending LPs managed by SRLC. In addition to the relative default probability of SRLC borrowers (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with), credit risk is also dependent on loss given default, which can increase credit risk if the values of the underlying assets securing the Company's loans and co-investments decline to levels approaching or below the loan amounts. A decrease in commodity prices may delay the development of the underlying security or business plans of the borrower and could adversely affect the value of the Company's security against a loan. Additionally, the value of the Company's underlying security in a loan can be negatively affected if the actual amount or quality of the commodity proves to be less than originally estimated, or the ability to extract the commodity proves to be more difficult or more costly than originally estimated. 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 managed.

  20 

Collectability of loans

Besides the above noted measures we take to manage credit risk, the Company will report on credit risk in the notes to the annual financial statements and records expected credit loss provisions to ensure the loans are recorded at their estimated recoverable amount (i.e. net of impairment risk we believe to exist as at the balance sheet date and in accordance with IFRS). Actual losses incurred in the loan portfolio could differ materially from our provisions. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed.

Net 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 accounts receivable relate to management fees, carried interest and performance fees receivable from the funds, managed accounts and managed companies 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 $90 million committed line of credit with a major Canadian schedule I chartered bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months.

The Company's exposure to liquidity risk as it relates to loans receivable arises from fluctuations in cash flows from making loan advances and receiving loan repayments (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with). The Company manages its loan commitment liquidity risk through the ongoing monitoring of scheduled loan fundings and repayments ("match funding") and through its broader treasury risk management program and enterprise capital budgeting.

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 Company's management team is responsible for reviewing resources to ensure funds are readily available to meet its financial obligations (e.g. dividend payments) 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 and through its broader treasury risk management program. To meet any liquidity shortfalls, actions taken by the Company could include: syndicating a portion of its loans; slowing its lending activities; cutting its dividend; drawing on the line of credit; liquidating net investments; and/or issuing common shares.

Concentration risk

A significant portion of the Company's AUM as well as its net investments and loans are focused on the natural resource sector, and in particular, precious metals related investments and transactions. In addition, from time-to-time, certain net investment and loan positions 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.

  21 

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.

Consistent with National Instrument 52-109, the Company's CEO and CFO evaluate quarterly the DC&P and ICFR. As of March 31, 2019, the Company's CEO and CFO concluded that the Company's DC&P and ICFR were properly designed and were operating effectively. In addition, there were no material changes to ICFR during the quarter.

Managing Risk: Non-financial

For details around other risks managed by the Company (e.g. confidentiality of information, conflicts of interest, etc.) refer to the Company's annual report as well as the Annual Information Form available on SEDAR at www.sedar.com.

Additional information relating to the Company, including the Company's Annual Information Form is available on SEDAR at www.sedar.com 

  22 

EX-99.10

Exhibit 99.10

Consolidated Financial Statements

Three months ended March 31, 2019

 

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As at		Mar. 31			Dec. 31
(In thousands of Canadian dollars)		2019			2018
Assets
Current
Cash and cash equivalents			48,193			47,252
Fees receivable			7,816			8,635
Loans receivable	(Note 5)		14,967			15,275
Proprietary investments	(Note 3)		20,574			26,711
Other assets	(Note 6)		12,038			10,774
Income taxes recoverable			2,688			2,379
Total current assets			106,276			111,026
Loans receivable	(Note 5)		17,393			20,746
Long-term investments	(Note 3)		114,107			102,560
Other assets	(Note 6)		1,446			1,214
Property and equipment, net			23,626			12,334
Intangible assets	(Note 4)		149,855			148,324
Goodwill	(Note 4)		25,590			26,115
Deferred income taxes	(Note 8)		6,032			5,896
			338,049			317,189
Total assets			444,325			428,215
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities			32,465			41,641
Compensation payable			4,268			9,466
Obligations related to securities sold short	(Note 3)		—			255
Loan facility	(Note 12)		5,000			—
Income taxes payable			605			607
Total current liabilities			42,338			51,969
Other accrued liabilities			7,305			—
Loan facility	(Note 12)		18,750			—
Deferred income taxes	(Note 8)		3,779			3,125
Total liabilities			72,172			55,094
Shareholders' equity
Capital stock	(Note 7)		415,952			412,938
Contributed surplus	(Note 7)		44,140			43,383
Deficit			(121,019	)		(117,201	)
Accumulated other comprehensive income			33,080			34,001
Total shareholders' equity			372,153			373,121
Total liabilities and shareholders' equity			444,325			428,215
Commitments and provisions	(Note 13)

The accompanying notes form part of the financial statements      

"Jack C. Lee"	"Sharon Ranson"
Director	Director

    26

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

		For the three months ended
		Mar. 31			Mar. 31
(In thousands of Canadian dollars, except for per share amounts)		2019			2018
Revenues
Management fees			13,558			14,056
Carried interest and performance fees			—			1,117
Commissions			4,409			8,857
Interest income			3,918			3,066
Gain (loss) on proprietary investments	(Note 3)		73			(1,879	)
Gain (loss) on long-term investments	(Note 3)		(67	)		56
Other income (loss)	(Note 6)		(644	)		6,242
Total revenue			21,247			31,515
Expenses
Compensation			8,118			10,902
Stock-based compensation	(Note 7)		2,259			2,958
Trailer and sub-advisor fees			—			47
Placement and referral fees			78			204
Selling, general and administrative			4,069			4,586
Interest expense			324			66
Amortization of intangibles	(Note 4)		292			555
Amortization of property and equipment			809			133
Other expenses	(Note 6)		637			1,179
Total expenses			16,586			20,630
Income before income taxes for the period			4,661			10,885
Provision (recovery) for income taxes	(Note 8)		877			(2,772	)
Net income for the period			3,784			13,657
Basic earnings per share	(Note 7)	$	0.02		$	0.06
Diluted earnings per share	(Note 7)	$	0.01		$	0.05

Net income for the period	3,784		13,657
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation gain (loss) on foreign operations (taxes of $Nil)	(921	)	1,559
Total other comprehensive income (loss)	(921	)	1,559
Comprehensive income	2,863		15,216

The accompanying notes form part of the financial statements      

    27

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)

(In thousands of Canadian dollars, other than number of shares)		Number of Shares Outstanding			Capital Stock			Contributed Surplus			Deficit			Accumulated Other Comprehensive Income			Total  Equity
At Dec. 31, 2018			243,062,337			412,938			43,383			(117,201	)		34,001			373,121
Shares acquired for equity incentive plan	(Note 7)		(130,000	)		(405	)		—			—			—			(405	)
Shares released on vesting of equity incentive plan	(Note 7)		968,967			2,285			(2,285	)		—			—			—
Foreign currency translation gain on foreign operations			—			—			—			—			(921	)		(921	)
Stock-based compensation	(Note 7)		—			—			2,259			—			—			2,259
Issuance of share capital on conversion of RSUs and other share based considerations	(Note 7)		476,030			1,086			783			—			—			1,869
Dividends declared	(Note 10)		15,323			48			—			(7,602	)		—			(7,554	)
Net income			—			—			—			3,784			—			3,784
Balance, Mar. 31, 2019			244,392,657			415,952			44,140			(121,019	)		33,080			372,153
At Dec. 31, 2017			234,098,634			392,556			39,907			(118,272	)		29,673			343,864
IFRS 9 transition adjustment			—			—			—			(50	)		—			(50	)
Shares acquired for equity incentive plan			(2,362,500	)		(7,058	)		—			—			—			(7,058	)
Shares released on vesting of equity incentive plan			675,656			1,656			(1,656	)		—			—			—
Foreign currency translation loss on foreign operations			—			—			—			—			1,559			1,559
Issuance of share capital on purchase of management contracts			6,997,387			17,284			—			—			—			17,284
Stock-based compensation			—			—			2,958			—			—			2,958
Issuance of share capital on conversion of RSUs and other share based considerations			309,401			664			(601	)		—			—			63
Dividends declared			11,762			36			—			(7,553	)		—			(7,517	)
Net income			—			—			—			13,657			—			13,657
Balance, Mar. 31, 2018			239,730,340			405,138			40,608			(112,218	)		31,232			364,760

The accompanying notes form part of the financial statements   

    28

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the three months ended
	Mar. 31			Mar. 31
(In thousands of Canadian dollars, other than number of shares)	2019			2018
Operating Activities
Net income for the period		3,784			13,657
Add (deduct) non-cash items:
Loss (gain) on proprietary investments		(73	)		1,879
Loss (gain) on Long-term investments		67			(56	)
Stock-based compensation		2,259			2,958
Amortization of property, equipment and intangible assets		1,101			688
Current portion of lease liability		(1,962	)		—
Deferred income tax recovery		500			(568	)
Current income tax expense		377			(2,204	)
Other items		440			(735	)
Income taxes paid		(750	)		(520	)
Changes in:
Fees receivable		819			2,492
Loans receivable		3,661			(1,845	)
Accounts payable, accrued liabilities and compensation payable		(14,374	)		(4,485	)
Other assets		(1,496	)		13,697
Cash provided by operating activities		(5,647	)		24,958
Investing Activities
Purchase of investments		(13,366	)		(12,645	)
Sale of investments		7,323			13,117
Purchase of property and equipment		(2,833	)		(870	)
Purchase of intangible assets		—			(114,995	)
Cash provided by (used in) investing activities		(8,876	)		(115,393	)
Financing Activities
Acquisition of common shares for equity incentive plan		(405	)		(7,058	)
Net advances from loan facility		23,750			—
Dividends paid		(7,554	)		(7,517	)
Cash used in financing activities		15,791			(14,575	)
Effect of foreign exchange on cash balances		(327	)		987
Net increase (decrease) in cash and cash equivalents during the period		941			(104,023	)
Cash and cash equivalents, beginning of the period		47,252			156,120
Cash and cash equivalents, end of the period		48,193			52,097
Cash and cash equivalents:
Cash		42,930			52,097
Short-term deposits		5,263			—
		48,193			52,097
Supplementary disclosure of cash flow information
Amount of interest received during the period		1,588			1,143

The accompanying notes form part of the financial statements   

    29

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

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 SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The interim financial statements have been prepared in accordance with IFRS standards in effect as at March 31, 2019, specifically, IAS 34 Interim Financial Reporting.

Compliance with IFRS requires the Company to exercise judgment, make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may vary. Except as otherwise noted, significant accounting judgments and estimates are described in Note 2 of the December 31, 2018 annual audited financial statements and have been applied consistently to the interim financial statements as at and for the three months ended March 31, 2019.

Basis of presentation

These interim financial statements have been prepared on a going concern basis and on a historical cost basis, except for financial assets and financial liabilities classified as fair value through profit or loss ("FVTPL") or fair value through other comprehensive income ("FVOCI"), both of which have been measured at fair value. The financial statements are presented in Canadian dollars and all values are rounded to the nearest thousand ($000), except when indicated otherwise.

Principles of consolidation

These interim 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 over the same reporting period as the Company and are based on accounting policies consistent with that of the Company.

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.

The Company currently controls the following principal subsidiaries:

• Sprott Asset Management LP ("SAM");

• Sprott Capital Partners LP ("SCP");

• Sprott Consulting LP ("SC");

• Sprott Asia LP ("Sprott Asia") and Sprott Korea Corporation ("Sprott Korea");

• Sprott U.S. Holdings Inc. ("SUSHI"), parent of: (1) Rule Investments Inc. ("RII") (2) Sprott Global Resource Investments Ltd. ("SGRIL"); (3) Sprott Asset Management USA Inc. ("SAM US"); and (4) Resource Capital Investment Corporation ("RCIC");

• Sprott Resource Lending Corp. ("SRLC");

• Sprott Genpar Ltd.; and

• Sprott Inc. 2011 Employee Profit Sharing Plan Trust (the "Trust")

    30

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

Changes in accounting policies

In the first quarter of the year, the Company adopted IFRS 16 Leases (“IFRS 16”) and IFRIC 23 Uncertainty over Income Tax Treatments ("IFRIC 23"). As a result, the Company changed its accounting policies in the areas outlined below. As permitted by the transition provisions of IFRS 16, the Company applied a modified retrospective approach. Accordingly, the Company elected not to restate comparative period results and there was no impact to opening retained earnings. The adoption of IFRIC 23 did not have a material effect on the Company's financial statement.

Lease Commitments

The Company recognizes a right-to-use asset and a lease liability as at the lease commencement date. The right-to-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. Upon transition to IFRS 16, a right-to-use asset and lease liability of $9.8 million were recorded. The right-to-use asset is presented on the property and equipment line of the consolidated balance sheet and the short and long-term portions of the lease liability are presented on the accounts payable and accrued liabilities line and other accrued liabilities line, respectively, of the consolidated balance sheet.

The Company used the practical expedient when applying IFRS 16 for short-term leases under 12 months and low-value assets such as IT equipment, with lease payments being expensed as they are occurred.

Prior to the adoption of IFRS 16, the Company classified its lease obligation as operating leases, with the lease payments being presented as selling, general and administrative line of the statement of operations. Upon transition to IFRS 16, the right-to-use asset is amortized on a straight-line basis over the term of the lease with the amortization expense being presented on the amortization of property and equipment line of the statement of operations. The lease liability is subsequently remeasured at amortized cost using the effective interest rate method, with the interest charge on the incremental borrowing rate being presented on the interest expense line of the statement of operations.

Other accounting policies

All other accounting policies, judgments, and estimates described in the annual audited financial statements have been applied consistently to these financial statements unless otherwise noted.

    31

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

3 PROPRIETARY INVESTMENTS, OBLIGATIONS RELATED TO SECURITIES SOLD SHORT AND LONG-TERM INVESTMENTS

Proprietary investments and Obligations related to securities sold short

Consist of the following (in thousands $):

	Classification and measurement criteria	March 31, 2019		Dec. 31, 2018
Public equities and share purchase warrants	FVTPL		13,093		19,066
Fixed income securities	FVTPL		2,777		2,796
Private holdings:
- Private investments	FVTPL		2,766		2,830
- Energy contracts	Non-financial instrument		1,938		2,019
Total proprietary investments			20,574		26,711
Obligations related to securities sold short	FVTPL		—		255

Long-term investments

Consists of the following (in thousands $):

	Classification and measurement criteria	March 31, 2019		Dec. 31, 2018
Co-investments in funds	FVTPL		84,976		72,739
Private holdings
- Private investments	FVTPL		29,131		29,821
Total long-term investments			114,107		102,560

Realized gains and losses on financial assets classified at FVTPL are included in the gains (loss) on proprietary investments and Long-term investments on the consolidated statements of operations.

    32

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

4 GOODWILL AND INTANGIBLE ASSETS

Consist of the following (in thousands $):

	Goodwill			Fund management contracts - indefinite life			Fund management contracts - finite life			Total
Cost
At December 31, 2017		166,882			—			47,416			214,298
Additions		—			133,303			—			133,303
Net exchange differences		13,482			—			—			13,482
At December 31, 2018		180,364			133,303			47,416			361,083
Additions		—			1,830			—			1,830
Net exchange differences		(3,391	)		(7	)		—			(3,398	)
At March 31, 2019		176,973			135,126			47,416			359,515
Accumulated amortization
At December 31, 2017		(142,859	)		—			(30,964	)		(173,823	)
Amortization charge for the period		—			—			(1,431	)		(1,431	)
Net exchange differences		(11,390	)		—			—			(11,390	)
At December 31, 2018		(154,249	)		—			(32,395	)		(186,644	)
Amortization charge for the period		—			—			(292	)		(292	)
Net exchange differences		2,866			—			—			2,866
At March 31, 2019		(151,383	)		—			(32,687	)		(184,070	)
Net book value at:
December31, 2018		26,115			133,303			15,021			174,439
March 31, 2019		25,590			135,126			14,729			175,445

    33

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

Impairment assessment of goodwill

Previously, the Company reported seven cash generating units ("CGU") for goodwill impairment assessment and testing purposes:

• Exchange Listed Products

• Alternative Asset Management

• Global

• Lending

• Consulting

• Merchant Banking & Advisory

• Corporate

During the period, as the Company completed the reorganization of its reportable segments, the assets that were previously aggregated to create the Global CGU no longer met the requirements of a CGU as they no longer generated independent cash flows. As a result, these assets were disaggregated from the Global CGU, and were reallocated to existing CGUs with similar assets that generate largely independent cash flows (brokerage assets within the Brokerage CGU and fixed term LP assets within the Managed Equities CGU). Following this change, as at March 31, 2019, the Company CGUs are as follows:

• Exchange Listed Products

• Lending

• Managed Equities

• Brokerage

• Corporate

As at March 31, 2019, the Company had allocated $25.6 million (December 31, 2018 - $26.1 million) of goodwill on a relative value approach basis to the Exchange Listed Products and Managed Equities CGUs (previously called the Alternative Asset Management CGU).

In the normal course, goodwill is tested for impairment once per annum, which for the Company is during the fourth quarter of each year. During the first quarter impairment assessment process, there was no indicators of impairment in either the Exchange Listed Products CGU or the Managed Equities CGU.

Impairment assessment of indefinite life fund management contracts

As at March 31, 2019, the Company had an exchange listed fund management contract within the Exchange Listed Products CGU of $135.1 million related to Central Fund of Canada (December 31, 2018 - $133.3 million). There was no indicators of impairment as at March 31, 2019.

Impairment assessment of finite life fund management contracts

As at March 31, 2019, the Company had exchange listed fund management contracts within the Exchange Listed Products CGU of $14.7 million (December 31, 2018 - $15.0 million). There was no indicators of impairment as at March 31, 2019.

    34

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

5 LOANS RECEIVABLE

Components of loans receivable

Loans are reported at their amortized cost using the effective interest method. Loans are reported net of any expected credit loss provisions on the expected credit loss provisions line of the consolidated statements of operations. Total carrying value consists of the following (in thousands $):

	Mar. 31, 2019			Dec. 31, 2018
Loans
Loan principal		33,935			37,873
Accrued interest		48			14
Deferred revenue		(1,573	)		(1,816	)
Amortized cost		32,410			36,071
Loan loss provisions		(50	)		(50	)
Less: current portion		(14,967	)		(15,275	)
Total carrying value of non-current loans receivable		17,393			20,746

Expected credit losses ("ECL")

When a loan is classified as impaired, the original expected timing and amount of future cash flows may be revised to reflect new circumstances. These revised cash flows are discounted using the original effective interest rate to determine the net realizable value of the loan. Interest income is thereafter recognized on this net realizable value using the original effective interest rate. Additional changes to the amount or timing of future cash flows could result in further losses, or the reversal of previous losses, which would also impact the amount of subsequent interest income recognized.

As at March 31, 2019, the Company performed a comprehensive review of each loan measured at amortized cost in its portfolio to determine the requirement for an ECL provision. There were no credit events in the period.

Interest income on impaired loans and the changes in expected credit loss provisions are as follows (in thousands $):

	For the three months ended
	March 31, 2019		Mar. 31, 2018
Interest on impaired loans		—		—
Expected credit loss provisions
Balance, beginning of the year		50		—
Transition adjustment		—		50
Revised balance, beginning of the year		50		50
Expected credit loss provision (recovery)		—		—
Net exchange differences		—		—
Balance, end of period		50		50

    35

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

Sector distribution of loan principal

Distribution of Company outstanding loan principal balances by sector:

	March 31, 2019				12/31/2018
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Metals and mining		1		31,020		1		34,931
Energy and other		2		2,915		2		2,942
Total loan principal		3		33,935		3		37,873

Geographic distribution of loan principal

Distribution of Company outstanding loan principal balances by geographic location of the underlying security:

	March 31, 2019				December 31, 2018
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Canada		1		1,578		1		1,578
United States of America		2		32,357		2		36,295
Total loan principal		3		33,935		3		37,873

    36

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

6 OTHER ASSETS, INCOME AND EXPENSES

Other assets

Consist of the following (in thousands $):

	Mar. 31, 2019		Dec. 31, 2018
Fund recoveries and investment receivables		7,855		4,722
Prepaid expenses		4,017		5,369
Other (1)		1,612		1,897
Total Other assets		13,484		11,988

^{(1) Other includes miscellaneous third-party receivables.}

Other income (loss)

Consist of the following (in thousands $):

	For the three months ended
	Mar. 31, 2019			Mar. 31, 2018
Net proceeds from Sale Transaction (1)		—			4,200
Other investment income (2)		86			831
Foreign exchange gain (losses)		(1,025	)		857
Total Other income (loss) (3)		(939	)		5,888

^{(1) Gross proceeds of $5.0 million, net of transaction costs of $0.8 million. This relates to the January 29, 2018 closing of the sale of our non-core private wealth client business.}

^{(2) Primarily includes investment fund income, syndication and trailer fee income.}

^{(3) Excludes royalty income of $0.3 million (March 31, 2018 - $0.4 million), which is presented net of operating, depletion and impairment charges below.}

Other expenses

Consist of the following (in thousands $):

	For the three months ended
	Mar. 31, 2019		Mar. 31, 2018
Costs (recoveries) related to energy assets (1)		11		30
Other		331		795
Total Other expenses		342		825

^{(1) Includes operating, depletion and impairment charges, net of royalty income of $0.3 million (March 31, 2018 - $0.4 million).}

    37

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

7      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.

	Number of shares			Stated value  (in thousands $)
At Dec. 31, 2017		234,098,634			392,556
Issuance of share capital under dividend reinvestment program		338,628			1,015
Issuance of share capital on purchase of management contracts		6,997,387			17,284
Released on exercise of stock option plan		558,048			1,217
Issuance of share capital on conversion of RSU		635,939			1,581
Acquired for equity incentive plan		(2,402,500	)		(7,161	)
Released on vesting of equity incentive plan		2,836,201			6,446
At Dec. 31, 2018		243,062,337			412,938
Issuance of share capital under dividend reinvestment program		15,323			48
Issuance of share capital on conversion of RSU and other share based considerations		476,030			1,086
Acquired for equity incentive plan		(130,000	)		(405	)
Released on vesting of equity incentive plan		968,967			2,285
At Mar. 31, 2019		244,392,657			415,952

Contributed surplus consists of: stock option expense; earn-out shares expense; equity incentive plans' expense; and additional purchase consideration.

	Stated value (in thousands $)
At Dec. 31, 2017		39,907
Expensing of Stock-based compensation over the vesting period		12,358
Issuance of share capital on conversion of RSUs		(1,219	)
Released on exercise of stock option plan		(1,217	)
Released on vesting of common shares for equity incentive plan		(6,446	)
At Dec. 31, 2018		43,383
Expensing of Stock-based compensation over the vesting period		2,259
Issuance of share capital on conversion of RSU and other share based considerations		783
Released on vesting of common shares for equity incentive plan		(2,285	)
At Mar. 31, 2019		44,140

    38

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

Stock option plan

The Company has an option plan (the "Plan") intended to provide incentives to directors, officers, employees and consultants 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 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 for the quarter ended ended March 31, 2019 (three months ended March 31, 2018 - 750,000). There were no options exercised or forfeited in the quarter ended March 31, 2019 (three months ended March 31, 2018 - nil).

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.

A summary of the changes in the Plan is as follows:

	Number of options (in thousands)			Weighted average exercise price ($)
Options outstanding, December 31, 2017		6,975			5.14
Options exercisable, December 31, 2017		5,625			5.79
Options issued		750			2.33
Options exercised		(2,000	)		2.33
Options expired		(2,450	)		10.00
Options outstanding, December 31, 2018		3,275			2.57
Options exercisable, December 31, 2018		1,875			2.70
Options outstanding, March 31, 2019		3,275			2.57
Options exercisable, March 31, 2019		2,575			2.60

Options outstanding and exercisable as at March 31, 2019 are as follows:

Exercise price ($)	Number of outstanding options (in thousands)		Weighted average remaining contractual life (years)		Number of options exercisable (in thousands)
6.60		150		1.6		150
2.33		3,000		6.8		2,300
2.73		125		7.1		125
2.33 to 6.60		3,275		6.6		2,575

    39

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

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; or (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; and (3) from time-to-time, purchases from 2176423 Ontario Ltd., a company controlled by Eric Sprott, pursuant to the terms and conditions of a previously announced share transaction. 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 256,719 RSUs granted during the quarter ended ended March 31, 2019 (three months ended March 31, 2018 - 309,401). The Trust purchased 0.1 million shares in the quarter ended March 31, 2019 (three months ended March 31, 2018 - 2.4 million).

	Number of common shares
Common shares held by the Trust, December 31, 2017		10,365,957
Acquired		2,402,500
Released on vesting		(2,836,201	)
Unvested common shares held by the Trust, December 31, 2018		9,932,256
Acquired		130,000
Released on vesting		(968,967	)
Unvested common shares held by the Trust, March 31, 2019		9,093,289

The table below provides a breakdown of the share-based compensation expense and the corresponding increase to contributed surplus:

    40

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

	For the three months ended
	March 31, 2019		March 31, 2018
Stock option plan		74		235
EPSP / EIP		2,185		2,723
		2,259		2,958

Basic and diluted earnings per share

The following table presents the calculation of basic and diluted earnings (loss) per common share:

	For the three months ended
Numerator (in thousands $):	March 31, 2019			March 31, 2018
Net income (loss) - basic and diluted		3,784			13,657
Denominator (Number of shares in thousands):
Weighted average number of common shares		253,417			251,391
Weighted average number of unvested shares purchased by the Trust		(9,238	)		(10,481	)
Weighted average number of common shares - basic		244,179			240,910
Weighted average number of dilutive stock options		3,125			1,201
Weighted average number of unvested shares purchased by the Trust		9,238			10,481
Weighted average number of common shares - diluted		256,542			252,592
Net income per common share
Basic	$	0.02		$	0.06
Diluted	$	0.01		$	0.05

    41

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

Capital management

The Company's objectives when managing capital are:

• 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 for 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). SCP is a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), SAM is a registrant of the Ontario Securities Commission ("OSC") and the U.S. Securities and Exchange Commission ("SEC"), SAM US is registered with the 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. As at March 31, 2019 and 2018, all entities were in compliance with their respective capital requirements.

    42

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended March 31, 2019 and 2018

8        INCOME TAXES

The major components of income tax expense are as follows (in thousands $):

	For the three months ended
	Mar. 31, 2019		Mar. 31, 2018
Current income tax expense (recovery)
Based on taxable income of the current period		377		(2,204	)
		377		(2,204	)
Deferred income tax expense (recovery)
Total deferred income tax expense		500		(568	)
Income tax expense reported in the consolidated statements of operations		877		(2,772	)

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 $):

	For the three months ended
	Mar. 31, 2019			Mar. 31, 2018
Income before income taxes		4,661			10,885
Tax calculated at domestic tax rates applicable to profits in the respective countries		1,246			2,873
Tax effects of:
Non-deductible stock-based compensation		45			103
Non-taxable capital (gains) and losses		(152	)		(458	)
Intangibles		28			(4,794	)
Other temporary differences not benefited		64			(334	)
Non-capital losses not benefited previously		(476	)		(1,014	)
Rate differences and other		122			852
Tax charge		877			(2,772	)

The weighted average statutory tax rate was 26.7% (March 31, 2018 - 26.4%). This increase was primarily due to increased profitability of our Canadian businesses. The Company has $12 million of capital tax losses and $4 million of non-capital tax losses from prior years that will begin to expire in 2019 and 2027, respectively. The benefit of these capital and non-capital tax losses has not been recognized.

    43

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

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 three months ended March 31, 2019

	Dec. 31, 2018		Recognized in income			Recognized in other comprehensive income			Mar. 31, 2019
Deferred income tax assets
Other stock-based compensation		4,300		(151	)		—			4,149
Non-capital losses		5,018		219			(18	)		5,219
Unrealized gains		386		(256	)					130
Other		513		65			—			578
Total deferred income tax assets		10,217		(123	)		(18	)		10,076
Deferred income tax liabilities
Fund management contracts		7,317		347			—			7,664
Proceeds receivable		70		—			—			70
Other		59		30			—			89
Total deferred income tax liabilities		7,446		377			—			7,823
Net deferred income tax assets		2,771		(500	)		(18	)		2,253

For the year ended December 31, 2018

    44

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2019 and 2018

	Dec. 31, 2017			Recognized in income			Recognized in other comprehensive income		Dec. 31, 2018
Deferred income tax assets
Other stock-based compensation		2,588			1,712			—		4,300
Non-capital losses		820			4,185			13		5,018
Unrealized gains		481			(95	)		—		386
Other		485			28			—		513
Total deferred income tax assets		4,374			5,830			13		10,217
Deferred income tax liabilities
Fund management contracts		431			6,886			—		7,317
Proceeds receivable		279			(209	)		—		70
Other		(116	)		175			—		59
Total deferred income tax liabilities		594			6,852			—		7,446
Net deferred income tax assets		3,780			(1,022	)		13		2,771

    45

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended March 31, 2019 and 2018 

9            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 March 31, 2019 and December 31, 2018 (in thousands $).

Proprietary Investments

March 31, 2019	Level 1		Level 2		Level 3		Total
Public equities and share purchase warrants		11,280		1,813		—		13,093
Fixed income securities		—		1,777		1,000		2,777
Private holdings		—		—		2,766		2,766
Total net recurring fair value measurements		11,280		3,590		3,766		18,636

Dec. 31, 2018	Level 1			Level 2		Level 3		Total
Public equities and share purchase warrants		13,680			5,386		—		19,066
Fixed income securities		—			1,796		1,000		2,796
Private holdings		—			—		2,830		2,830
Obligations related to securities sold short		(255	)		—		—		(255	)
Total net recurring fair value measurements		13,425			7,182		3,830		35,103

Long-term investments

March 31, 2019	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		84,976		—		84,976
Private holdings		—		—		29,131		29,131
Total net recurring fair value measurements		—		84,976		29,131		114,107

Dec 31, 2018	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		72,739		—		72,739
Private holdings		—		—		29,821		29,821
Total net recurring fair value measurements		—		72,739		29,821		102,560

    46

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended March 31, 2019 and 2018 

The following tables provides a summary of changes in the fair value of Level 3 financial assets (in thousands $):

Proprietary Investments

	Changes in the fair value of Level 3 measurements - Mar. 31, 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Mar. 31, 2019
Private holdings		2,830		—		—		(64	)		2,766
Fixed income securities		1,000		—		—		—			1,000
		3,830		—		—		(64	)		3,766

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		4,269		2,135		(3,680	)		106		2,830
Fixed income securities		—		1,000		—			—		1,000
		4,269		3,135		(3,680	)		106		3,830

Long-term investments

	Changes in the fair value of Level 3 measurements - Mar. 31, 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Mar. 31, 2019
Private holdings		29,821		—		—		(690	)		29,131
		29,821		—		—		(690	)		29,131

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		12,152		13,145		—		4,524		29,821
		12,152		13,145		—		4,524		29,821

During the three months ended March 31, 2019, the Company transferred public equities of $3.6 million (December 31, 2018 - $0.7 million) from Level 2 to Level 1 within the fair value hierarchy due to the release of trading restrictions by the issuer. For the three months ended March 31, 2019, the Company purchased level 3 investments of $Nil (December 31, 2018 - $16.3 million). For the three months ended March 31, 2019, the Company transferred $Nil (December 31, 2018 - $Nil) from Level 3 to Level 1 within the fair value hierarchy.

    47

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended March 31, 2019 and 2018 

The following table presents the valuation techniques used by the Company in measuring fair values:

Type	Valuation Technique
Public equities and share purchase warrants	Fair values are determined using pricing models which incorporate all available market-observable inputs.
Co-investments in funds	Fair values are based on the last available Net Asset Value.
Fixed income securities	Fair values are based on independent market data providers or third-party broker quotes.

The Company’s Level 3 securities consists of private holdings and fixed income securities of private companies. The Company determines fair value using a variety of valuation techniques, including discounted cash flows, comparable recent transactions and other techniques used by market participants. The significant unobservable input used in these valuation techniques can vary considerably over time, and include grey market financing prices, discount rates and extraction recovery rates of mining projects. 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 $1.2 million (December 31, 2018 - $1.2 million).

Financial instruments not carried at fair value

For fees receivable, other assets, accounts payable and accrued liabilities and compensation payable, the carrying amount represents a reasonable approximation of fair value due to their short term maturity.

10        DIVIDENDS

The following dividends were declared by the Company during the three months ended March 31, 2019:

Record date	Payment Date		Cash dividend per share ($)		Total dividend amount (in thousands $)
March 08, 2019 - Regular Dividend Q4 - 2018		March 25, 2019		0.03		7,602
Dividends (1)						7,602

⁽¹⁾ Subsequent to the quarter-end, on May 9, 2019, a regular dividend of $0.03 per common share was declared for the quarter ended March 31, 2019. This dividend is payable on June 5, 2019 to shareholders of record at the close of business on May 21, 2019.

    48

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended March 31, 2019 and 2018  

11        SEGMENTED INFORMATION

For management purposes, the Company is organized into business units based on its products, services and geographical location and has five 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;

· Lending (reportable), which provides lending activities through limited partnership vehicles as well as through direct lending activities using the Company's balance sheet;

· Managed Equities (reportable), which provides asset management and sub-advisory services to the Company's branded funds, fixed-term LPs and managed accounts;

· Brokerage (reportable), which includes the activities of our Canadian and U.S broker-dealers;

· Corporate (reportable), which provides capital, balance sheet management and enterprise shared services to the Company's subsidiaries;

· All Other Segments (non-reportable), which do not meet the definition of reportable segments as per IFRS 8.

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 proprietary investments (as if such gains and losses had not occurred), foreign exchange gains and losses, one time non-recurring expenses, non-cash and non-recurring 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.

    49

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended March 31, 2019 and 2018

The following tables present the operations of the Company's segments (in thousands $):

For the three months ended March 31, 2019

	Exchange Listed Products		Lending		Managed Equities		Brokerage			Corporate			Elimination and all other segments		Consolidated
Total revenue		7,293		3,382		3,234		5,648			(152	)		1,842		21,247
Total expenses		2,542		1,523		2,867		6,023			2,535			1,096		16,586
Pre-tax Income (loss)		4,751		1,859		367		(375	)		(2,687	)		746		4,661
Adjusted base EBITDA		5,699		4,042		915		3			(1,691	)		216		9,184

For the three months ended March 31, 2018

	Exchange Listed Products		Lending		Managed       Equities (1)		Brokerage (1)		Corporate			Elimination and all other segments (1)			Consolidated
Total revenue		7,927		6,805		3,748		12,641		(160	)		554			31,515
Total expenses		2,473		1,600		2,833		8,090		3,674			1,960			20,630
Pre-tax Income (loss)		5,454		5,205		915		4,551		(3,834	)		(1,406	)		10,885
Adjusted base EBITDA		6,032		2,757		1,314		2,127		(2,428	)		225			10,027

^{(1) Prior year figures have been restated to reflect the changes in operating segments implemented in the quarter.}

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 $):

	For the three months ended
	Mar. 31, 2019		Mar. 31, 2018
Canada		17,594		27,976
United States		3,653		3,539
		21,247		31,515

    50

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended March 31, 2019 and 2018 

12            LOAN FACILITY

As at March 31, 2019 the Company had $23.8 million (December 31, 2018 - $Nil) outstanding on its credit facility, $5 million of which is due within 12 months and $18.8 million is due after 12 months (December 31, 2018 - $Nil and $Nil respectively).

The Company has a 5 year, $90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a $25 million term loan and a $65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. During the quarter, the Company drew $23.8 million on the term loan portion of the credit facility to avoid its expiry and to partially fund near-term anticipated growth in the business, in particular, the anticipated pace of capital calls over the next 12-18 months in its lending LPs. Key terms under the credit facility are noted below:

Structure

◦            5-year, $65 million revolver with "bullet maturity" December 31, 2022

◦            5-year, $25 million term loan with 5% of principal amortizing quarterly

Interest Rate

◦            Prime rate + 0 bps or;

◦            Banker Acceptance Rate + 170 bps

Covenant Terms

◦            AUM more than 70% of AUM at origination date (compliant at March 31, 2019)

◦            Debt to EBITDA less than 3.25:1 for first 18 months, after which, debt to EBITDA less than 2.50:1

(compliant at March 31, 2019)

◦            EBITDA to interest expense more than 2.50:1 (compliant at March 31, 2019)

13         COMMITMENTS AND PROVISIONS

Besides the Company's long-term lease agreement, there may be commitments to provide loans arising from the Lending business or commitments to make investments in the net investments portfolio of the Company. As at March 31, 2019, the Company had $5.7 million in co-investment commitments from the Lending segment (December 31, 2018 - $38.7 million).

    51

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	Legal Counsel Baker & McKenzie LLP Brookfield Place, Suite 2100 181 Bay Street, P.O. Box 874 Toronto, Ontario, Canada M5J 2T3
	Auditors
Directors & Officers Jack C. Lee, Chairman Peter Grosskopf, Chief Executive Officer and Director Rick Rule, Director Sharon Ranson, FCPA, FCA, Director Rosemary Zigrossi, Director Ronald Dewhurst, Director Whitney George, President Kevin Hibbert, Chief Financial Officer Arthur Einav, Corporate Secretary	KPMG LLP Bay Adelaide Centre 333 Bay Street, Suite 4600 Toronto, ON 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
Transfer Agent & Registrar TMX Equity Transfer Services 200 University Avenue, Suite 30 Toronto, Ontario M5H 4H1 Toll Free: 1.866.393.4891 www.tmxequitytransferservices.com	Sprott Inc. common shares are traded on the Toronto Stock Exchange under the symbol ‘‘SII’’

 

www.sprott.com

EX-99.11

Exhibit 99.11

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Peter Grosskopf, Chief Executive Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Sprott Inc. (the “issuer”) for the interim period ended March 31, 2019.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2019 and ended on March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 10, 2019

“Peter Grosskopf”

Peter Grosskopf

Chief Executive Officer

EX-99.12

Exhibit 99.12

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Kevin Hibbert, Chief Financial Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Sprott Inc. (the “issuer”) for the interim period ended March 31, 2019.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2019 and ended on March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 10, 2019

“Kevin Hibbert”

Kevin Hibbert

Chief Financial Officer

EX-99.13

Exhibit 99.13

Management's Discussion and Analysis

Three and six months ended June 30, 2019

     1 

FORWARD LOOKING STATEMENTS

Certain statements in this Management's Discussion & Analysis ("MD&A"), and in particular the "Business Highlights and Growth Initiatives" section and "Outlook" subsection, contain forward-looking information (collectively referred to herein as the "Forward-Looking Statements") within the meaning of applicable 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) expectations regarding deployment of capital called into our lending LPs in 2019; (ii) expectation that Lending net capital calls will occur over the mid-to-long term life of our funds; (iii) expectation that the strong finish to the price of gold last year will carry forward to 2019; (iv) expectations regarding our legacy balance sheet loans; (v) anticipation that earnings from the managed equities business will be relatively flat year-over-year; (vi) expectation of a challenging equity origination and placement fee environment, similar to what was experienced in 2018; (vii) expectation that we will see a material decrease in corporate expenses in 2019; (viii) the acquisition of the Tocqueville gold strategies asset management business, including that the acquisition will be completed and the timing thereof, the AUM to be added as a result of the acquisition, certain portfolio managers joining Sprott upon the completion of the acquisition and the impact of the acquisition on the Company’s business and strategies; and (ix) the declaration, payment and designation of dividends.

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; and (iv) those assumptions disclosed herein under the heading "Significant Accounting Judgments, Estimates and Changes in Accounting Policies". 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 favourable 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 lending business; (xxvii) risks relating to the Company’s merchant bank and advisory business; (xxviii) those risks described under the heading "Risk Factors" in the Company’s annual information form dated February 27, 2019; and (xxix) those risks described under the headings "Managing Risk: Financial" and "Managing Risk: Non-Financial" 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. There are also risks that are inherent in the nature of a transaction such as the acquisition of the Tocqueville gold strategies asset management business, including: failure to realize anticipated synergies; risks regarding integration; incorrect assessments of the values of the acquired assets; and failure to obtain any required security holder, regulatory, stock exchange and other approvals (or to do so in a timely manner). The anticipated timeline for completion of the acquisition of the Tocqueville gold strategies asset management business may change for a number of reasons, including the inability to secure necessary security holder, regulatory, stock exchange and other approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the acquisition. As a result of the foregoing, readers should not place undue reliance on the forward-looking statements contained in this MD&A concerning the completion of the acquisition or the timing thereof. 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 Canadian securities laws.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This MD&A of financial condition and results of operations, dated August 8, 2019, presents an analysis of the consolidated financial condition of the Company and its subsidiaries as at June 30, 2019, compared with December 31, 2018, and the consolidated results of operations for the three and six months ended June 30, 2019, compared with the three and six months ended June 30, 2018. The Board of Directors approved this MD&A on August 8, 2019. All note references in this MD&A are to the notes to the Company's June 30, 2019 unaudited interim condensed consolidated financial statements ("interim financial statements"), unless otherwise noted. The Company was incorporated under the Business Corporations Act (Ontario) on February 13, 2008.

PRESENTATION OF FINANCIAL INFORMATION

The interim 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 interim financial statements. The Canadian dollar is the Company's functional and reporting currency for purposes of preparing the interim financial statements given that the Company conducts most of its operations in that currency. Accordingly, all dollar references in this MD&A are in Canadian dollars, unless otherwise specified. The use of the term "prior period" refers to the three and six months ended June 30, 2018.

     2 

KEY PERFORMANCE INDICATORS (NON-IFRS 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 include:

Assets Under Management

Assets Under Management ("AUM") refers to the total net assets managed by the Company through its various investment product offerings, managed accounts and managed companies.

Net Inflows

Net Inflows (consisting of net sales, capital calls and fee earning capital commitments) result in increases or decreases to AUM and are described individually below:

Net Sales

Fund sales (net of redemptions), including 'at-the-market' transactions and secondary offerings of our physical trusts and new 'creations' of ETF units, are a key performance indicator as new assets being managed will lead to higher management fees and can potentially lead to increased carried interest and performance fee generation (as applicable) given that AUM is also the basis upon which carried interest and performance fees are calculated.

Capital calls and commitments

Capital calls into our lending LPs is a key source of AUM creation, and ultimately, earnings for the Company. Once capital is called into our lending LPs, it is included within the AUM of the Company as it will now earn a management fee (note: it is possible for some forms of committed capital to earn a commitment fee despite being uncalled, in which case, it will also be included in AUM at that time). Conversely, once loans in our lending LPs are repaid, capital may be returned to investors in the form of a distribution, thereby reducing our AUM.

Net Fees

Management fees (net of trailer and sub-advisor fees) and carried interest and performance fees (net of carried interest and performance fee payouts), is a key revenue indicator as it represents the net revenue contribution after directly associated costs that we generate from our AUM.

Net Commissions

Commissions, net of commission expenses, arise from the transaction based service offerings of our brokerage segment.

     3 

EBITDA, Adjusted EBITDA and Adjusted base EBITDA

EBITDA in its most basic form is defined as earnings before interest expense, income taxes, depreciation and amortization. EBITDA 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.

Neither EBITDA, adjusted EBITDA or adjusted base EBITDA have 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 measures are determined:

	3 months ended						6 months ended
(in thousands $)	Jun. 30, 2019			Jun. 30, 2018			Jun. 30, 2019		Jun. 30, 2018
Net income (loss) for the periods		2,116			5,916			5,900		19,573
Adjustments:
Interest expense		302			15			626		81
Provision (recovery) for income taxes		(454	)		632			423		(2,140	)
Depreciation and amortization		1,097			456			2,198		1,143
EBITDA		3,061			7,019			9,147		18,657
Other adjustments:
(Gains) losses on net investments (1)		386			3,050			313		4,929
(Gains) losses on foreign exchange		883			(236	)		1,908		(1,092	)
Non-cash stock-based compensation		1,011			1,018			2,669		2,436
Net proceeds from Sale Transaction		—			—			—		(4,200	)
Unamortized placement fees (2)		—			(273	)		—		(541	)
Other expenses(3)		4,068			437			4,556		1,411
Adjusted EBITDA		9,409			11,015			18,593		21,600
Other adjustments:
Carried interest and performance fees		—			(685	)		—		(1,802	)
Carried interest and performance fee related expenses		—			356			—		915
Adjusted base EBITDA		9,409			10,686			18,593		20,713

⁽¹⁾ This adjustment removes the income effects of certain gains or losses on proprietary and long-term investments to ensure the reporting objectives of our EBITDA metric as described above are met.

⁽²⁾ The prior period comparative figures contained a placement fee amortization adjustment to ensure the 2018 results were comparable to 2017 in light of the 2018 adoption of IFRS 15.

⁽³⁾ See Other Expenses in Note 6 of the interim financial statements. In addition to the items outlined in Note 6, Other expenses also includes severance and new hire accruals of $0.9 million for the 3 months ended (3 months ended June 30, 2018 - $Nil) and $1 million for the 6 months ended (6 months ended Jun 30, 2018 - $0.1 million).

     4 

BUSINESS OVERVIEW

Our reportable operating segments are as follows:

Exchange Listed Products

• The Company's closed-end physical trusts and exchange traded funds ("ETFs").

Lending

• The Company's lending activities primarily occur through limited partnership vehicles ("lending LPs").

Managed Equities

• The Company's alternative investment strategies (open-end, closed-end, fixed-term LPs, etc.) managed in-house and on a sub-advised basis. Prior to Q1 2019, the Company's fixed-term LP vehicles formed part of the "Global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, Global no longer satisfied the qualitative tests of IFRS 8 as the geographic location of the U.S businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, Global has been deconstructed and its fixed-term LP assets and earnings reallocated to the managed equities segment given that it is now at the managed equities level that the allocation of resources and assessment of product and service performance occurs by management.

Brokerage

• Formerly "Merchant Banking & Advisory Services", this segment has been renamed to reflect the inclusion of our U.S. broker-dealer alongside our Canada based broker-dealer as the Company's "brokerage segment". Prior to Q1 2019 , the Company's U.S. broker-dealer formed part of the "Global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, Global no longer satisfied the qualitative tests of IFRS 8 as the geographic location of the U.S. businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, Global has been deconstructed and its U.S. broker-dealer assets and earnings reallocated to the brokerage segment given that it is now at the brokerage level (independent of geography) that the allocation of resources and assessment of product and service performance occurs by management.

Corporate

• Provides the Company's various operating segments with capital, balance sheet management and other shared services.

All Other Segments

• Contains all non-reportable segments as per IFRS 8. See Note 11 of the interim financial statements for further details.

For a detailed account of the underlying principal subsidiaries within our reportable business segments, refer to the Company's Annual Information Form and Note 2 of the annual consolidated financial statements.

     5 

BUSINESS HIGHLIGHTS AND GROWTH INITIATIVES

Investment Performance

Market value appreciation was $276 million during the quarter as the company benefited from stronger precious metals prices. On a full year basis, market value appreciation was $143 million.

Product and Business Line Expansion

• Subsequent to quarter-end, the company (via its wholly-owned subsidiary, Sprott Asset Management LP) entered into a definitive agreement regarding the purchase of Tocqueville Asset Management’s gold strategy asset management business. The transaction cost is US$15 million (US$10 million in cash and Sprott Inc. common shares valued at US$5 million). Contingent consideration valued up to an additional US$35 million in cash and Sprott Inc. shares is payable subject to the achievement of certain financial performance conditions over two years following the closing of the transaction.

Based on current asset levels, the transaction will add over $2.5 billion to Sprott’s AUM. On closing of the transaction, Senior Portfolio Manager, John Hathaway and Portfolio Managers, Douglas Groh and Ryan McIntyre will join the company.

Outlook

Exchange Listed Products

• We continue to expect the strong finish to the price of gold from last year to carry forward to 2019. However, the benefit of higher gold prices will be somewhat offset by starting 2019 with a lower AUM base given our 2018 redemption experience, which continues in 2019 albeit at a much slower pace than 2018.

Lending

• We anticipate coming in at the low end of our previously communicated range of net capital deployments this year (US$200 million - US$400 million). This updated outlook is primarily the result of higher than anticipated capital distributions on early loan repayments in our lending LPs in the first half of this year. Our long-term view on lending fund AUM continues to be constructive as we work through the eventual deployment of more than US$957 million of committed capital. We continue to expect the majority of our legacy balance sheet loans to run-off by the end of this year.

Managed Equities

• We continue to anticipate earnings from this business being relatively flat year-over-year.

Brokerage

• We continue to expect a challenging equity origination and placement fee environment, similar to what was experienced in 2018.

Corporate

• We continue to expect to see a material decrease in corporate expenses in 2019, primarily due to: (1) lower LTIP amortization as the graded vesting schedule of the 2017 grants reach the low points of the amortization schedule; and (2) slightly flat to lower SG&A as we continue our cost containment efforts.

     6 

SUMMARY FINANCIAL INFORMATION

(In thousands $)	Q2 2019			Q1 2019			Q4 2018			Q3 2018			Q2 2018			Q1 2018			Q4 2017			Q3 2017
SUMMARY INCOME STATEMENT
Management fees		13,329			13,558			13,182			13,722			14,559			14,056			10,247			13,597
Carried interest and performance fees		—			—			—			—			685			1,117			3,584			835
less: Trailer and sub-advisor fees		89			—			38			45			49			47			225			1,043
less: Carried interest and performance fee payouts		—			—			—			—			356			559			2,267			—
Net Fees		13,240			13,558			13,144			13,677			14,839			14,567			11,339			13,389
Commissions		4,406			4,409			6,414			4,573			7,516			8,857			7,366			4,746
less: Commission expense		1,814			1,844			2,704			2,447			2,701			3,667			2,855			1,553
Net Commissions		2,592			2,565			3,710			2,126			4,815			5,190			4,511			3,193
Interest income		4,595			3,918			4,244			4,824			3,293			3,066			3,588			2,789
Gains (losses) on proprietary investments		(2,160	)		73			3,912			(4,765	)		(3,050	)		(1,879	)		(63	)		(3,770	)
Gains (losses) on long-term investments		1,614			(67	)		3,007			(151	)		(72	)		56			3,639			—
Other income (loss)		(559	)		(644	)		2,453			(275	)		3,683			6,242			1,144			31,487
Total Net Revenues		19,322			19,403			30,470			15,436			23,508			27,242			24,158			47,088
Compensation (1)		7,317			8,387			11,163			8,167			10,634			9,485			10,631			5,655
Compensation - severance and new hire accruals		855			146			38			359			—			149			2,193			62
Placement and referral fees		336			78			368			223			148			204			833			782
Selling, general and administrative		4,354			4,069			4,171			3,404			4,905			4,586			5,739			5,084
Interest Expense		302			324			312			26			15			66			22			124
Amortization and impairment charges (2)		1,097			1,101			598			457			456			688			1,386			1,473
Other expenses		3,399			637			606			790			802			1,179			2,069			703
Total Expenses		17,660			14,742			17,256			13,426			16,960			16,357			22,873			13,883
Net Income (Loss)		2,116			3,784			9,831			1,975			5,916			13,657			2,519			29,804
Net Income (Loss) per share		0.01			0.02			0.04			0.01			0.02			0.06			0.01			0.12
Adjusted base EBITDA		9,409			9,184			10,092			9,707			10,686			10,027			7,524			8,007
Adjusted base EBITDA per share		0.04			0.04			0.04			0.04			0.04			0.04			0.03			0.03
SUMMARY BALANCE SHEET
Total Assets		445,776			444,325			428,215			401,366			403,985			407,177			409,849			408,093
Total Liabilities		79,019			72,172			55,094			36,486			36,372			42,417			65,985			61,707
Cash		60,593			48,193			47,252			41,452			37,974			52,097			156,120			152,952
less: syndicate cash holdings		(10,119	)		(12,218	)		(10,421	)		(967	)		(796	)		(932	)		(776	)		(649	)
Net cash		50,474			35,975			36,831			40,485			37,178			51,165			155,344			152,303
Proprietary and long-term investments		122,607			134,681			129,271			115,744			120,853			96,352			114,327			134,306
less: obligations related to securities sold short		—			—			(255	)		—			(2,927	)		(8,543	)		(24,993	)		(25,988	)
Net investments		122,607			134,681			129,016			115,744			117,926			87,809			89,334			108,318
Loans receivable		32,011			32,360			36,021			36,532			40,208			50,467			48,673			46,215
Investable Capital		205,092			203,016			201,868			192,761			195,312			189,441			293,351			306,836
Total Enterprise AUM		10,670,982			10,569,449			10,578,426			10,066,112			11,126,042			11,591,213			7,323,382			7,191,512

⁽¹⁾ Compensation includes stock-based compensation, but excludes commission expense, carried interest and performance fee payouts, which are reported net of commission revenue, carried interest and performance fees, respectively.

⁽²⁾ Starting Q1, 2019, in order to comply with the new IFRS 16 Leases ("IFRS 16") accounting standard, certain lease assets have now been capitalized and depreciated over their expected lease term. See Note 2, Changes in Accounting Policies of the interim financial statements.

     7 

SUMMARY MANAGEMENT FEE BREAKDOWN

Below is a detailed list of management fee rates on our fund products as at June 30, 2019 (in millions $):

FUND	AUM		BLENDED NET MANAGEMENT FEE RATE			CARRIED INTEREST AND PERFORMANCE FEE CRITERIA
Exchange Listed Products
Sprott Physical Gold and Silver Trust		3,523		0.40	%	N/A (1)
Sprott Physical Gold Trust		2,938		0.35	%	N/A (1)
Sprott Physical Silver Trust		1,120		0.45	%	N/A (1)
Sprott Gold Miner's ETF		223		0.57	%	N/A (1)
Sprott Physical Platinum & Palladium Trust		133		0.50	%	N/A (1)
Sprott Jr. Gold Miner's ETF		78		0.57	%	N/A (1)
Total		8,015		0.40	%
Lending
Sprott Private Resource Lending LPs		646		1.11	%	15-70% of net profits over preferred return
Managed Equities: In-house
Sprott U.S. Value Strategies		274		1.00	%	N/A
Fixed Term Limited Partnerships		229		1.70	%	15-30% over preferred return
Separately Managed Accounts (2)		49		1.00	%	N/A
Sprott Hathaway Special Situations Fund (3)		34		0.75	%	20% of net profits over preferred return
Total		586		1.22	%
Managed Equities: Sub-advised
Bullion Funds (3)		306		0.51	%	5% excess over applicable benchmark indices
Corporate Class Funds (3)		131		0.75	%	5% excess over applicable benchmark indices
Flow-through LPs (3)		74		0.70	%	10% of all net profits in excess of the HWM
Total		511		0.60	%
Other
Managed Companies (4)		646		0.50	%	20% of net profits over preferred return
Separately Managed Accounts (5)		267		0.61	%	20% of net profits over preferred return
Total		913		0.53	%
Total AUM		10,671		0.51	%

⁽¹⁾ Exchange listed products do not attract performance fees, however the management fees they generate are closely correlated to precious metals prices.

⁽²⁾ Institutional managed accounts.

⁽³⁾ Management fee rate represents the net amount received by the Company.

⁽⁴⁾ Includes Sprott Resource Holdings Inc. and Sprott Korea Corp.

⁽⁵⁾ Includes our private equity strategy in Sprott Asia and high net worth discretionary managed accounts in the U.S.

     8 

RESULTS OF OPERATIONS

AUM SUMMARY

AUM was $10.7 billion as at June 30, 2019, up $0.1 billion (1%) from March 31, 2019 and up $0.1 billion (1%) from December 31, 2018. On a three and six months ended basis, our Exchange Listed Products segment benefited from strong gold price appreciation. We also benefited from new commitment fee earning assets being added to our lending LPs throughout the year, which more than offset capital distributions on a year-to-date basis.

3 months results

In millions $	AUM Mar. 31, 2019		Net       Inflows (1)			Market Value   Changes			Other (2)			AUM Jun. 30, 2019
Exchange Listed Products
- Physical Trusts		7,481		(80	)		313			—			7,714
- ETFs		269		(3	)		35			—			301
		7,750		(83	)		348			—			8,015
Lending		731		67			(13	)		(139	)		646	(3)
Managed Equities
- In-house		594		2			(10	)		—			586
- Sub-advised		523		(17	)		5			—			511
		1,117		(15	)		(5	)		—			1,097
Other		971		(4	)		(54	)		—			913
Total		10,569		(35	)		276			(139	)		10,671

6 months results

In millions $	AUM Dec. 31, 2018		Net Inflows (1)			Market Value Changes			Other (2)			AUM Jun. 30, 2019
Exchange Listed Products
- Physical Trusts		7,927		(340	)		127			—			7,714
- ETFs		237		14			50			—			301
		8,164		(326	)		177			—			8,015
Lending		498		331			(29	)		(154	)		646	(3)
Managed Equities
- In-house		538		29			19			—			586
- Sub-advised		505		2			4			—			511
		1,043		31			23			—			1,097
Other		873		68			(28	)		—			913
Total		10,578		104			143			(154	)		10,671

⁽¹⁾ Includes net sales, called capital into our lending LPs and uncalled committed capital for lending LPs to the extent that it earns a commitment fee.

⁽²⁾ Includes new AUM from fund acquisitions, lost AUM from fund divestitures and lost AUM from distributions of principal receipts to clients of our lending LPs.

⁽³⁾ $1,252 million (US$957 million) of committed capital remains uncalled, of which $301 million (US$230 million) earns a commitment fee (AUM), and $951 million (US$727 million) does not (future AUM).

     9 

KEY REVENUE LINES

Net Fees in the quarter were $13.2 million, down $1.6 million (11%) from the prior period and were $26.8 million on a year-to-date basis, down $2.6 million (9%). Excluding net performance fees generated in the prior periods, the decrease on a three months ended basis was 9% and on a year-to-date basis was 6%. The decrease on a three and six months ended basis was due to lower average AUM in our exchange listed products and managed equities segments (down 12% and 13%, respectively). These declines more than offset the increased fee generation from our lending LPs as we continue to grow our lending AUM.

Interest Income in the quarter was $4.6 million, up $1.3 million (40%) from the prior period and was $8.5 million on a year-to-date basis, up $2.2 million (34%). The increase was primarily due to higher co-investment income earned in our lending LPs as a result of ongoing co-investment activity since the second half of 2018.

Net Commissions in the quarter were $2.6 million, down $2.2 million (46%) from the prior period and were $5.2 million on a year-to-date basis, down $4.8 million (48%). The decline was due to weak equity origination and placement activities in our brokerage segment.

KEY EXPENSE LINES

Compensation, excluding commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance and new hire accruals which are non-recurring, was $7.3 million, down $3.3 million (31%) from the prior period and was $15.7 million on a year-to-date basis, down $4.4 million (22%).The decrease was primarily due to lower LTIP amortization as well as lower annual incentive accruals. Severance accruals relating to the exit of certain employees was recorded in the quarter.

SG&A was $4.4 million in the quarter, down $0.6 million (11%) from the prior period and was $8.4 million on a year-to-date basis, down $1.1 million (11%). This was largely due to the adoption of IFRS 16 and our on-going cost containment program.

     10 

ADDITIONAL REVENUE AND EXPENSE HIGHLIGHTS

Proprietary investments losses were due to market value depreciation of certain resource equity holdings.

Long-term investments gains were due to market value appreciation of certain long-term investments.

Other income was lower in the quarter and on a year-to-date basis. The decrease in the quarter was mainly due to income earned on the early settlement of a loan in the prior period and FX losses on U.S dollar dominated cash, receivables and loans in the current period. On a year-to-date basis, the decrease was due to net sales proceeds received on last year's Sale Transaction in the fist quarter of 2018, income earned on the early settlement of a loan in the prior period and from FX losses on U.S dollar dominated cash, receivables and loans in the current period.

Placement and referral fees were higher in the quarter and on a year-to-date basis mainly due to referral fees paid in our brokerage segment.

Interest expense was higher in the quarter and on a year-to-date basis due to interest accruals on leases from the adoption of IFRS 16 and the draw down of our loan facility in the first quarter of this year (see Note 12 of the interim financial statements).

Amortization of intangibles did not change in the quarter and was lower on a year-to-date basis due to finite life fund management contracts related to fixed term LPs in our managed equities segment being fully amortized by the end of the first quarter of the prior period.

Amortization of property and equipment was higher in the quarter and on a year-to-date basis mainly due to increased depreciation expense related to leases that were capitalized on the adoption of IFRS 16.

Other expenses were higher in the quarter and on a year-to-date basis due to higher non-recurring professional fees and transaction costs.

Adjusted Base EBITDA

3 and 6 months results

Adjusted base EBITDA in the quarter was $9.4 million, down $1.3 million (12%) from the prior period and was $18.6 million on a year-to-date basis, down $2.1 million (10%).The decrease was primarily due to lower net commissions on lower equity origination and placement activities in our brokerage segment, lower fee income earned in our exchange listed products and managed equities segments given lower average AUM year-over-year; and lower income in our lending segment given last year's fees generated on the early settlement of a loan. These decreases more than offset expense savings arising from lower annual incentive accruals, LTIP amortization and SG&A.

     11 

Balance Sheet

Investable Capital was $205 million, up $3 million (2%) from December 31, 2018.

Total Assets were $446 million, up $18 million (4%) from December 31, 2018. The increase was primarily due to higher undeployed cash balances from the draw down of our loan facility, as well as the capitalization of leases on adoption of IFRS 16.

Total Liabilities were $79 million, up $24 million (43%) from December 31, 2018. The increase was primarily due to the draw down of $22.5 million on our loan facility to help fund anticipated investment activities of the company over the next 12-18 months. The increase was also due to the recording of a lease liability on adoption of IFRS 16. These increases were partially offset by the payment of prior year's accrued liabilities.

Total Shareholder's Equity was $367 million, down $6 million (2%) from December 31, 2018.

     12 

REPORTABLE OPERATING SEGMENTS

Exchange Listed Products

	3 months ended					6 months ended
(In thousands $)	Jun. 30, 2019			Jun. 30, 2018		Jun. 30, 2019			Jun. 30, 2018
SUMMARY INCOME STATEMENT
Management fees		7,644			8,833		15,294			17,024
Other income (loss)		(324	)		550		(681	)		286
Total Revenues		7,320			9,383		14,613			17,310
Compensation		1,165			1,121		2,216			2,445
Selling, general and administrative		1,031			820		1,931			1,655
Interest expense		218			—		492			—
Amortization and impairment charges		316			314		633			628
Other expenses		—			30		—			30
Total Expenses		2,730			2,285		5,272			4,758
Net Income before income taxes		4,590			7,098		9,341			12,552
Adjusted base EBITDA		5,532			6,892		11,231			12,924
Total AUM		8,014,740			8,530,082		8,014,740			8,530,082

3 and 6 months ended

Adjusted base EBITDA in the quarter was $5.5 million, down $1.4 million (20%) from the prior period and was $11.2 million on a year-to-date basis, down $1.7 million (13%). The decrease was primarily due to lower management fees given redemption experience in our physical trusts which led to lower average AUM year-over-year.

Non-EBITDA highlights:

• Other loss during the quarter was mainly driven by FX movements on U.S dollar dominated cash and receivables.

     13 

Lending

	3 months ended						6 months ended
(In thousands $)	Jun. 30, 2019			Jun. 30, 2018			Jun. 30, 2019			Jun. 30, 2018
SUMMARY INCOME STATEMENT
Management fees		1,630			1,143			3,776			2,205
Carried interest and performance fees		—			685			—			685
less: Carried interest and performance fee payouts		—			356			—			356
Net Fees		1,630			1,472			3,776			2,534
Interest income (1)		4,023			3,083			7,333			5,858
Gains (losses) on proprietary investments		(609	)		(1,646	)		(2,030	)		(475	)
Gains on long-term investments		(11	)		11			(22	)		25
Other income (loss)		(817	)		3,510			(1,459	)		5,293
Total Net Revenues		4,216			6,430			7,598			13,235
Compensation		1,767			1,259			3,127			2,358
Placement and referral fees		20			31			28			62
Selling, general and administrative		384			281			503			749
Interest expense		35			—			35			—
Amortization and impairment charges		35			2			71			4
Other expenses		—			30			—			30
Total Expenses		2,241			1,603			3,764			3,203
Net Income before income taxes		1,975			4,827			3,834			10,032
Adjusted base EBITDA		3,832			5,381			7,874			8,138
Total AUM (2)		645,603			389,459			645,603			389,459

⁽¹⁾ Includes: (1) interest income from on-balance sheet loans; and (2) co-investment income from lending LP units held as part of our long-term investments portfolio.

⁽²⁾ $1,252 million (US$957 million) of committed capital remains uncalled, of which $301 million (US$230 million) earns a commitment fee (AUM), and $951 million (US$727 million) does not (future AUM).

3 and 6 months ended

Adjusted base EBITDA in the quarter was $3.8 million, down $1.5 million (29%) from the prior period and was $7.9 million on a year-to-date basis, down $0.3 million (3%). The decrease was primarily due to income earned on the early settlement of a loan in the prior period. This decrease was only partially offset by higher management fees (including commitment fees) and co-investment income on increased capital calls and new commitment fee earning AUM.

Non-EBITDA highlights:

• Losses on proprietary investments were due to market value depreciation on equity kickers received on certain loan arrangements.

• Other loss was mainly driven by FX movements on U.S dollar dominated cash, receivables and loans.

     14 

Managed Equities*

	3 months ended						6 months ended
(In thousands $)	Jun. 30, 2019			Jun. 30, 2018			Jun. 30, 2019		Jun. 30, 2018
SUMMARY INCOME STATEMENT
Management fees		2,674			3,238			5,093		6,410
Carried interest and performance fees		—			—			—		1,061
less: Trailer and sub-advisor fees		132			95			173		189
less: Carried interest and performance fee payouts		—			—			—		559
Net Fees		2,542			3,143			4,920		6,723
Gains (losses) on proprietary investments		(368	)		9			177		18
Gains (losses) on long-term investments		1,741			(137	)		1,800		(164	)
Other income (loss)		160			(45	)		371		(512	)
Total Net Revenues		4,075			2,970			7,268		6,065
Compensation		1,256			1,570			3,440		3,076
Selling, general and administrative		425			665			994		1,009
Amortization and impairment charges		72			68			145		399
Other expenses		338			(2	)		338		(2	)
Total Expenses		2,091			2,301			4,917		4,482
Net Income before income taxes		1,984			669			2,351		1,583
Adjusted base EBITDA		1,056			1,150			1,971		2,464
Total AUM		1,097,419			1,300,792			1,097,419		1,300,792

^* See "Managed Equities" in the business overview section on page 7 of this MD&A.

3 and 6 months ended

Adjusted base EBITDA in the quarter was $1.1 million, down $0.1 million (8%) from the prior period, and was $2.0 million on a year-to-date basis, down $0.5 million (20%). The decrease was primarily due to lower market valuations in our fixed-term LPs which led to lower average AUM and management fee income.

Non-EBITDA highlights:

• Compensation increased on a year-to-date basis due to non-recurring stock based compensation expense on a new hire in the first quarter.

• Proprietary investments losses in the quarter and gains on a year-to-date basis were due to market value movements of certain holdings.

• Long-term investments gains were due to market value appreciation of certain long-term investments.

     15 

Brokerage*

	3 months ended						6 months ended
(In thousands $)	Jun. 30, 2019			Jun. 30, 2018			Jun. 30, 2019			Jun. 30, 2018
SUMMARY INCOME STATEMENT
Commissions		4,363			7,374			8,669			15,637
less: Commission Expense		1,801			2,746			3,665			6,447
Net Commissions		2,562			4,628			5,004			9,190
Management fees		422			377			794			852
Interest income		572			210			1,180			501
Gains (losses) on proprietary investments		(214	)		(188	)		83			(837	)
Other income (loss)		52			122			117			4,383
Total Net Revenues		3,394			5,149			7,178			14,089
Compensation (1)		2,195			2,820			4,603			5,659
Placement and referral fees		252			84			311			226
Selling, general and administrative		1,602			1,827			3,087			3,150
Interest expense		20			—			41			—
Amortization and impairment charges		105			14			291			27
Other expenses		7			270			7			342
Total Expenses		4,181			5,015			8,340			9,404
Net Income (Loss) before income taxes		(787	)		134			(1,162	)		4,685
Adjusted base EBITDA		230			1,396			233			3,523

* See "Brokerage" in the business overview section on page 7 of this MD&A.

⁽¹⁾ Compensation is presented excluding commission expense, which is reported net of commission revenue.

3 and 6 months ended

Adjusted base EBITDA in the quarter was $0.2 million, down $1.2 million (84%) from the prior period, and was $0.2 million on a year-to-date basis, down $3.3 million (93%). The decrease was primarily due to lower net commissions on weak equity origination and placement activity. This decrease in net commissions more than offset lower salaries, annual incentive accruals and LTIP amortization.

Non-EBITDA highlights:

• Losses in the quarter and gains on a year-to-date basis on proprietary investments were the result of market value movement on equity kickers earned on private placements.

• Other income in the prior period was primarily related to net sales proceeds received on last year's Sale Transaction in the first quarter of 2018. See Note 6 of the interim financial statements.

     16 

Corporate

This segment is primarily a cost centre that provides capital, balance sheet management and shared services to the Company's subsidiaries.

	3 months ended						6 months ended
(In thousands $)	Jun. 30, 2019			Jun. 30, 2018			Jun. 30, 2019			Jun. 30, 2018
SUMMARY INCOME STATEMENT
Gains (losses) on proprietary investments		(436	)		(507	)		(591	)		(1,289	)
Gains (losses) on long-term investments		(116	)		54			(231	)		123
Other income (loss)		386			(244	)		504			309
Total Revenues		(166	)		(697	)		(318	)		(857	)
Compensation		2,122			2,938			3,008			4,690
Selling, general and administrative		833			1,076			1,636			2,190
Interest expense		29			15			58			81
Amortization and impairment charges		557			53			1,040			73
Other expenses		262			246			596			968
Total Expenses		3,803			4,328			6,338			8,002
Net Income (Loss) before income taxes		(3,969	)		(5,025	)		(6,656	)		(8,859	)
Adjusted base EBITDA		(2,981	)		(3,897	)		(4,672	)		(6,325	)

3 and 6 months ended

• Proprietary investments losses were due to market value depreciation of certain resource equity holdings.

• Long-term investment losses were due to market value depreciation of our long-term investments.

• Lower compensation expense was largely a result of lower LTIP amortization and lower annual incentive accruals.

• Lower SG&A was largely due to the adoption of IFRS 16 and our on-going cost containment program.

• Higher amortization was due to increased depreciation expense related to leases that were capitalized on the adoption of IFRS 16.

     17 

Dividends

The following dividends were declared by the Company during the 6 months ended June 30, 2019:

Record date	Payment Date	Cash dividend per share ($)		Total dividend amount (in thousands $)
March 08, 2019 - Regular Dividend Q4 - 2018	March 25, 2019		0.03		7,602
May 21, 2019 - Regular Dividend Q1 - 2019	June 5, 2019		0.03		7,605
Dividends (1)					15,207

⁽¹⁾ Subsequent to quarter-end, on August 8, 2019, a regular dividend of $0.03 per common share was declared for the quarter ended June 30, 2019. This dividend is payable on September 3, 2019 to shareholders of record at the close of business on August 19, 2019.

Capital Stock

Including the 9.5 million unvested common shares currently held in the EPSP Trust (December 31, 2018 - 9.9 million), total capital stock issued and outstanding was 253.5 million (December 31, 2018 - 253.0 million).

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 $0.01 and $0.02 for the quarter and six months ended respectively, compared to $0.02 and $0.08 in the respective prior periods. Diluted earnings per share was $0.01 and $0.02 for the quarter and six months ended respectively, compared to $0.02 and $0.08 in the respective prior periods. 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 3.3 million stock options are outstanding pursuant to our stock option plan, of which 2.6 million are exercisable.

     18 

Liquidity and Capital Resources

As at June 30, 2019, the Company had $22.5 million (December 31, 2018 - $Nil) outstanding on its credit facility, $5 million of which is due within 12 months and $17.5 million is due after 12 months (December 31, 2018 - $Nil and $Nil respectively).

The Company has a 5 year, $90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a $25 million term loan and a $65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. In the first quarter, the Company drew $25 million on the term loan portion of the credit facility to avoid its expiry and to partially fund anticipated growth in the business over the next 12-18 months. As at June 30, 2019, the Company was in compliance with all covenants, terms and conditions under the credit facility. Key terms under the credit facility are noted below:

Structure

◦ 5-year, $65 million revolver with "bullet maturity" December 31, 2022

◦ 5-year, $25 million term loan with 5% of principal amortizing quarterly

Interest Rate

◦ Prime rate + 0 bps or;

◦ Banker Acceptance Rate + 170 bps

Covenant Terms

◦ Minimum AUM: $8.2 billion

◦ Debt to EBITDA less than 3.25:1 for first 18 months, after which, debt to EBITDA less than 2.50:1

◦ EBITDA to interest expense more than 2.50:1

Commitments

Besides the Company's long-term lease agreements, there may be commitments to provide loans or make co-investments in lending LPs arising from our Lending segment or commitments to make investments in the net investments portfolio of the Company. As at June 30, 2019, the Company had $22.5 million in co-investment commitments from the Lending segment (December 31, 2018 - $38.7 million).

     19 

Significant Accounting Judgments, Estimates and Changes in Accounting Policies

The interim financial statements have been prepared in accordance with IFRS standards in effect as at June 30, 2019, specifically, IAS 34 Interim Financial Reporting.

Compliance with IFRS requires the Company to exercise judgment, make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may vary. Except as otherwise noted, significant accounting judgments and estimates are described in Note 2 of the December 31, 2018 annual audited financial statements and have been applied consistently to the interim financial statements as at and for the three and six months ended June 30, 2019.

In Q1, 2019 the Company adopted IFRS 16 and IFRIC 23 Uncertainty over Income Tax Treatments ("IFRIC 23"). As a result, the Company changed its accounting policies. As permitted by the transition provision of IFRS 16, the Company elected not to restate comparative period results. Accordingly, all comparative period information is presented in accordance with previous accounting policies. The adoption of IFRS 16 and IFRIC 23 did not have a material impact on the Company's consolidated financial statements.

Managing Risk: Financial

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 interests 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 instrument assets. The Company’s earnings, particularly through its Lending 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

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 Canadian dollars. The Company's primary foreign currency is the United States Dollar ("USD"). The Company may employ certain hedging strategies to mitigate foreign currency risk.

     20 

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 on balance sheet loans, co-investments in lending LPs and its net investments portfolio.

Loans receivable

The Company incurs credit risk primarily in the on-balance sheet loans of Sprott Resource Lending Corporation ("SRLC") and through co-investments made in the lending LPs managed by SRLC. In addition to the relative default probability of SRLC borrowers (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with), credit risk is also dependent on loss given default, which can increase credit risk if the values of the underlying assets securing the Company's loans and co-investments decline to levels approaching or below the loan amounts. A decrease in commodity prices may delay the development of the underlying security or business plans of the borrower and could adversely affect the value of the Company's security against a loan. Additionally, the value of the Company's underlying security in a loan can be negatively affected if the actual amount or quality of the commodity proves to be less than originally estimated, or the ability to extract the commodity proves to be more difficult or more costly than originally estimated. 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 managed.

Collectability of loans

Besides the above noted measures we take to manage credit risk, the Company will report on credit risk in the notes to the annual consolidated financial statements and records expected credit loss provisions to ensure the loans are recorded at their estimated recoverable amount (i.e. net of impairment risk we believe to exist as at the balance sheet date and in accordance with IFRS). Actual losses incurred in the loan portfolio could differ materially from our provisions. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed.

Net 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 accounts receivable relate to management fees, carried interest and performance fees receivable from the funds, managed accounts and managed companies 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 $90 million committed line of credit with a major Canadian schedule I chartered bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months.

The Company's exposure to liquidity risk as it relates to loans receivable arises from fluctuations in cash flows from making loan advances and receiving loan repayments (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with). The Company manages its loan commitment liquidity risk through the ongoing monitoring of scheduled loan fundings and repayments ("match funding") and through its broader treasury risk management program and enterprise capital budgeting.

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.

     21 

The Company's management team is responsible for reviewing resources to ensure funds are readily available to meet its financial obligations (e.g. dividend payments) 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 and through its broader treasury risk management program. To meet any liquidity shortfalls, actions taken by the Company could include: syndicating a portion of its loans; slowing its lending activities; cutting its dividend; drawing on the line of credit; liquidating net investments; and/or issuing common shares.

Concentration risk

A significant portion of the Company's AUM as well as its net investments and loans are focused on the natural resource sector, and in particular, precious metals related investments and transactions. In addition, from time-to-time, certain net investment and loan positions 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.

Consistent with National Instrument 52-109, the Company's CEO and CFO evaluate quarterly the DC&P and ICFR. As of June 30, 2019, the Company's CEO and CFO concluded that the Company's DC&P and ICFR were properly designed and were operating effectively. In addition, there were no material changes to ICFR during the quarter.

Managing Risk: Non-financial

For details around other risks managed by the Company (e.g. confidentiality of information, conflicts of interest, etc.) refer to the Company's annual report as well as the Annual Information Form available on SEDAR at www.sedar.com.

Additional information relating to the Company, including the Company's Annual Information Form is available on SEDAR at www.sedar.com

     22 

EX-99.14

Exhibit 99.14

Consolidated Financial Statements

Three and six months ended June 30, 2019

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As at		Jun. 30			Dec. 31
(In thousands of Canadian dollars)		2019			2018
Assets
Current
Cash and cash equivalents			60,593			47,252
Fees receivable			8,491			8,635
Loans receivable	(Note 5)		29,203			15,275
Proprietary investments	(Note 3)		20,328			26,711
Other assets	(Note 6)		11,679			10,774
Income taxes recoverable			4,214			2,379
Total current assets			134,508			111,026
Loans receivable	(Note 5)		2,808			20,746
Long-term investments	(Note 3)		102,279			102,560
Other assets	(Note 6)		1,711			1,214
Property and equipment, net			23,177			12,334
Intangible assets	(Note 4)		149,557			148,324
Goodwill	(Note 4)		25,061			26,115
Deferred income taxes	(Note 8)		6,675			5,896
			311,268			317,189
Total assets			445,776			428,215
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities			40,911			41,641
Compensation payable			4,098			9,466
Obligations related to securities sold short	(Note 3)		—			255
Loan facility	(Note 12)		5,000			—
Income taxes payable			457			607
Total current liabilities			50,466			51,969
Other accrued liabilities			6,792			—
Loan facility	(Note 12)		17,500			—
Deferred income taxes	(Note 8)		4,261			3,125
Total liabilities			79,019			55,094
Shareholders' equity
Capital stock	(Note 7)		415,137			412,938
Contributed surplus	(Note 7)		45,974			43,383
Deficit			(126,508	)		(117,201	)
Accumulated other comprehensive income			32,154			34,001
Total shareholders' equity			366,757			373,121
Total liabilities and shareholders' equity			445,776			428,215
Commitments and provisions	(Note 13)

The accompanying notes form part of the financial statements  

"Ron Dewhurst"	"Sharon Ranson"
Director	Director

    26

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

		For the three months ended						For the six months ended
		Jun. 30			Jun. 30			Jun. 30			Jun. 30
(In thousands of Canadian dollars, except for per share amounts)		2019			2018			2019			2018
Revenues
Management fees			13,329			14,559			26,887			28,615
Carried interest and performance fees			—			685			—			1,802
Commissions			4,406			7,516			8,815			16,373
Interest income			4,595			3,293			8,513			6,359
Gain (loss) on proprietary investments	(Note 3)		(2,160	)		(3,050	)		(2,087	)		(4,929	)
Gain (loss) on long-term investments	(Note 3)		1,614			(72	)		1,547			(16	)
Other income (loss)	(Note 6)		(559	)		3,683			(1,203	)		9,925
Total revenue			21,225			26,614			42,472			58,129
Expenses
Compensation			8,917			10,715			17,035			21,618
Stock-based compensation	(Note 7)		1,069			2,976			3,328			5,934
Trailer and sub-advisor fees			89			49			89			96
Placement and referral fees			336			148			414			352
Selling, general and administrative			4,354			4,905			8,423			9,491
Interest expense			302			15			626			81
Amortization of intangibles	(Note 4)		291			291			583			846
Amortization of property and equipment			806			165			1,615			297
Other expenses	(Note 6)		3,399			802			4,036			1,981
Total expenses			19,563			20,066			36,149			40,696
Income before income taxes for the period			1,662			6,548			6,323			17,433
Provision (recovery) for income taxes	(Note 8)		(454	)		632			423			(2,140	)
Net income for the period			2,116			5,916			5,900			19,573
Basic earnings per share	(Note 7)	$	0.01		$	0.02		$	0.02		$	0.08
Diluted earnings per share	(Note 7)	$	0.01		$	0.02		$	0.02		$	0.08

Net income for the period	2,116		5,916	5,900		19,573
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation gain (loss) on foreign operations (taxes of $Nil)	(926	)	1,224	(1,847	)	2,783
Total other comprehensive income (loss)	(926	)	1,224	(1,847	)	2,783
Comprehensive income	1,190		7,140	4,053		22,356

The accompanying notes form part of the financial statements        

    27

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)

(In thousands of Canadian dollars, other than number of shares)		Number of Shares Outstanding			Capital Stock			Contributed Surplus			Deficit			Accumulated Other Comprehensive Income			Total  Equity
At Dec. 31, 2018			243,062,337			412,938			43,383			(117,201	)		34,001			373,121
Shares acquired for equity incentive plan	(Note 7)		(162,265	)		(503	)		—			—			—			(503	)
Shares released on vesting of equity incentive plan	(Note 7)		606,467			1,520			(1,520	)		—			—			—
Foreign currency translation gain on foreign operations			—			—			—			—			(1,847	)		(1,847	)
Stock-based compensation	(Note 7)		—			—			3,328			—			—			3,328
Issuance of share capital on conversion of RSUs and other share based considerations	(Note 7)		476,030			1,086			783			—			—			1,869
Dividends declared	(Note 10)		30,892			96			—			(15,207	)		—			(15,111	)
Net income			—			—			—			5,900			—			5,900
Balance, Jun. 30, 2019			244,013,461			415,137			45,974			(126,508	)		32,154			366,757
At Dec. 31, 2017			234,098,634			392,556			39,907			(118,272	)		29,673			343,864
IFRS 9 transition adjustment			—			—			—			(50	)		—			(50	)
Shares acquired for equity incentive plan			(2,362,500	)		(7,058	)		—			—			—			(7,058	)
Shares released on vesting of equity incentive plan			675,656			1,656			(1,656	)		—			—			—
Shares released on exercise of stock option plan			172,835			406			(406	)								—
Foreign currency translation loss on foreign operations			—			—			—			—			2,783			2,783
Issuance of share capital on purchase of management contracts			6,997,387			17,284			—			—			—			17,284
Stock-based compensation			—			—			5,934			—			—			5,934
Issuance of share capital on conversion of RSUs and other share based considerations			339,401			727			(604	)		—			—			123
Dividends declared			114,601			267			—			(15,107	)		—			(14,840	)
Net income			—			—			—			19,573			—			19,573
Balance, Jun. 30, 2018			240,036,014			405,838			43,175			(113,856	)		32,456			367,613

The accompanying notes form part of the financial statements              

    28

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the six months ended
	Jun. 30			Jun. 30
(In thousands of Canadian dollars, other than number of shares)	2019			2018
Operating Activities
Net income for the period		5,900			19,573
Add (deduct) non-cash items:
Loss (gain) on proprietary investments		2,087			4,929
Loss (gain) on Long-term investments		(1,547	)		16
Stock-based compensation		3,328			5,934
Amortization of property, equipment and intangible assets		2,198			1,143
Current portion of lease liability		(1,969	)		—
Deferred income tax recovery		310			(1,678	)
Current income tax expense		113			(462	)
Other items		660			(1,748	)
Income taxes paid		(2,098	)		(1,757	)
Changes in:
Fees receivable		144			3,881
Loans receivable		4,010			8,464
Other assets		(1,402	)		17,722
Accounts payable, accrued liabilities and compensation payable		(6,098	)		(4,984	)
Cash provided by operating activities		5,636			51,033
Investing Activities
Purchase of investments		(23,367	)		(51,983	)
Sale of investments		28,577			19,192
Purchase of property and equipment		(3,750	)		(1,127	)
Purchase of intangible assets		—			(115,032	)
Cash provided by (used in) investing activities		1,460			(148,950	)
Financing Activities
Acquisition of common shares for equity incentive plan		(503	)		(7,058	)
Net advances from loan facility		22,500			—
Dividends paid		(15,111	)		(14,840	)
Cash provided by (used in) financing activities		6,886			(21,898	)
Effect of foreign exchange on cash balances		(641	)		1,669
Net increase (decrease) in cash and cash equivalents during the period		13,341			(118,146	)
Cash and cash equivalents, beginning of the period		47,252			156,120
Cash and cash equivalents, end of the period		60,593			37,974
Cash and cash equivalents:
Cash		55,304			37,713
Short-term deposits		5,289			261
		60,593			37,974
Supplementary disclosure of cash flow information
Amount of interest received during the period		6,324			2,256

The accompanying notes form part of the financial statements 

    29

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and six months ended June 30, 2019 and 2018

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 SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The interim financial statements have been prepared in accordance with IFRS standards in effect as at June 30, 2019, specifically, IAS 34 Interim Financial Reporting.

Compliance with IFRS requires the Company to exercise judgment and make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may vary. Except as otherwise noted, significant accounting judgments and estimates are described in Note 2 of the December 31, 2018 annual audited financial statements and have been applied consistently to the interim financial statements as at and for the three and six months ended June 30, 2019.

Basis of presentation

These interim financial statements have been prepared on a going concern basis and on a historical cost basis, except for financial assets and financial liabilities classified as fair value through profit or loss ("FVTPL") or fair value through other comprehensive income ("FVOCI"), both of which have been measured at fair value. The financial statements are presented in Canadian dollars and all values are rounded to the nearest thousand ($000), except when indicated otherwise.

Principles of consolidation

These interim 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 over the same reporting period as the Company and are based on accounting policies consistent with that of the Company.

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.

The Company currently controls the following principal subsidiaries:

· Sprott Asset Management LP ("SAM");

· Sprott Capital Partners LP ("SCP");

· Sprott Consulting LP ("SC");

· Sprott Asia LP ("Sprott Asia") and Sprott Korea Corporation ("Sprott Korea");

· Sprott U.S. Holdings Inc. ("SUSHI"), parent of: (1) Rule Investments Inc. ("RII") (2) Sprott Global Resource Investments Ltd. ("SGRIL"); (3) Sprott Asset Management USA Inc. ("SAM US"); and (4) Resource Capital Investment Corporation ("RCIC");

· Sprott Resource Lending Corp. ("SRLC");

· Sprott Inc. 2011 Employee Profit Sharing Plan Trust (the "Trust")

    30

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and six months ended June 30, 2019 and 2018

Changes in accounting policies

In the first quarter of the year, the Company adopted IFRS 16 Leases (“IFRS 16”) and IFRIC 23 Uncertainty over Income Tax Treatments ("IFRIC 23"). The adoption of IFRIC 23 did not have a material effect on the Company's consolidated financial statements. As permitted by the transition provisions of IFRS 16, the Company applied a modified retrospective approach. Accordingly, the Company elected not to restate comparative period results and there was no impact to opening retained earnings. Below is a summary of the IFRS 16 impacts.

Lease Commitments

The Company recognizes a right-to-use asset and a lease liability as at the lease commencement date. The right-to-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. Upon transition to IFRS 16, a right-to-use asset and lease liability of $9.8 million were recorded. The right-to-use asset is presented on the property and equipment line of the consolidated balance sheet and the short and long-term portions of the lease liability are presented on the accounts payable and accrued liabilities line and other accrued liabilities line, respectively, of the consolidated balance sheet.

The Company used the practical expedient when applying IFRS 16 for short-term leases under 12 months and low-value assets such as IT equipment, with lease payments being expensed as they are occurred.

Prior to the adoption of IFRS 16, the Company classified its lease obligation as operating leases, with the lease payments being presented as selling, general and administrative line of the consolidated statements of operations. Upon transition to IFRS 16, the right-to-use asset is amortized on a straight-line basis over the term of the lease with the amortization expense being presented on the amortization of property and equipment line of the consolidated statements of operations. The lease liability is subsequently remeasured at amortized cost using the effective interest rate method, with the interest charge on the incremental borrowing rate being presented on the interest expense line of the consolidated statements of operations.

Other accounting policies

All other accounting policies, judgments, and estimates described in the annual audited financial statements have been applied consistently to these consolidated financial statements unless otherwise noted.

    31

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and six months ended June 30, 2019 and 2018

3 PROPRIETARY INVESTMENTS, OBLIGATIONS RELATED TO SECURITIES SOLD SHORT AND LONG-TERM INVESTMENTS

Proprietary investments and Obligations related to securities sold short

Consist of the following (in thousands $):

	Classification and measurement criteria	June 30, 2019		Dec. 31, 2018
Public equities and share purchase warrants	FVTPL		12,984		19,066
Fixed income securities	FVTPL		2,627		2,796
Private holdings:
- Private investments	FVTPL		2,839		2,830
- Energy contracts	Non-financial instrument		1,878		2,019
Total proprietary investments			20,328		26,711
Obligations related to securities sold short	FVTPL		—		255

Long-term investments

Consists of the following (in thousands $):

	Classification and measurement criteria	June 30, 2019		Dec. 31, 2018
Co-investments in funds	FVTPL		74,918		72,739
Private holdings
- Private investments	FVTPL		27,361		29,821
Total long-term investments			102,279		102,560

Realized gains and losses on financial assets classified at FVTPL are included in the gain (loss) on proprietary investments and gain (loss) on long-term investments, as applicable, on the consolidated statements of operations.

    32

SPROTT INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017 

4        GOODWILL AND INTANGIBLE ASSETS

Consist of the following (in thousands $):

	Goodwill			Fund management contracts- (indefinite life)			Fund management contracts - (finite life)			Total
Cost
At December 31, 2017		166,882			—			47,416			214,298
Additions		—			133,303			—			133,303
Net exchange differences		13,482			—			—			13,482
At December 31, 2018		180,364			133,303			47,416			361,083
Additions		—			1,830			—			1,830
Net exchange differences		(6,796	)		(14	)		—			(6,810	)
At June 30, 2019		173,568			135,119			47,416			356,103
Accumulated amortization
At December 31, 2017		(142,859	)		—			(30,964	)		(173,823	)
Amortization charge for the period		—			—			(1,431	)		(1,431	)
Net exchange differences		(11,390	)		—			—			(11,390	)
At December 31, 2018		(154,249	)		—			(32,395	)		(186,644	)
Amortization charge for the period		—			—			(583	)		(583	)
Net exchange differences		5,742			—			—			5,742
At June 30, 2019		(148,507	)		—			(32,978	)		(181,485	)
Net book value at:
December31, 2018		26,115			133,303			15,021			174,439
June 30, 2019		25,061			135,119			14,438			174,618

    33

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and six months ended June 30, 2019 and 2018

Impairment assessment of goodwill

Previously, the Company reported seven cash generating units ("CGU") for goodwill impairment assessment and testing purposes:

·       Exchange Listed Products

·       Alternative Asset Management

·       Global

·       Lending

·       Consulting

·       Merchant Banking & Advisory

·       Corporate

During the first quarter of 2019, as the Company completed the reorganization of its reportable segments, the assets that were previously aggregated to create the Global CGU no longer met the requirements of a CGU as they no longer generated independent cash flows. As a result, these assets were disaggregated from the Global CGU, and were reallocated to existing CGUs with similar assets that generate largely independent cash flows (brokerage assets within the Brokerage CGU and fixed term LP assets within the Managed Equities CGU). The Company CGUs are now as follows:

·       Exchange Listed Products

·       Lending

·       Managed Equities

·       Brokerage

·       Corporate

As at June 30, 2019, the Company had allocated $25.1 million (December 31, 2018 - $26.1 million) of goodwill on a relative value approach basis to the Exchange Listed Products and Managed Equities CGUs (previously called the Alternative Asset Management CGU).

In the normal course, goodwill is 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 impairement. During the quarter, there were no indicators of impairment in either the Exchange Listed Products CGU or the Managed Equities CGU.

Impairment assessment of indefinite life fund management contracts

As at June 30, 2019, the Company had an exchange listed fund management contract within the Exchange Listed Products CGU of $135.1 million related to Central Fund of Canada (December 31, 2018 - $133.3 million). There were no indicators of impairment as at June 30, 2019.

Impairment assessment of finite life fund management contracts

As at June 30, 2019, the Company had exchange listed fund management contracts within the Exchange Listed Products CGU of $14.4 million (December 31, 2018 - $15.0 million). There were no indicators of impairment as at June 30, 2019.

    34

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended March 31, 2019 and 2018

5        LOANS RECEIVABLE

Components of loans receivable

Loans are reported at their amortized cost using the effective interest method. Loans are reported net of any expected credit loss provisions on the expected credit loss provisions line of the consolidated statements of operations. Total carrying value consists of the following (in thousands $):

	Jun. 30, 2019			Dec. 31, 2018
Loans
Loan principal		33,266			37,873
Accrued interest		48			14
Deferred revenue		(1,253	)		(1,816	)
Amortized cost		32,061			36,071
Loan loss provisions		(50	)		(50	)
Less: current portion		(29,203	)		(15,275	)
Total carrying value of non-current loans receivable		2,808			20,746

Expected credit losses ("ECL")

When a loan is classified as impaired, the original expected timing and amount of future cash flows may be revised to reflect new circumstances. These revised cash flows are discounted using the original effective interest rate to determine the net realizable value of the loan. Interest income is thereafter recognized on this net realizable value using the original effective interest rate. Additional changes to the amount or timing of future cash flows could result in further losses, or the reversal of previous losses, which would also impact the amount of subsequent interest income recognized.

As at June 30, 2019, the Company performed a comprehensive review of each loan measured at amortized cost in its portfolio to determine the requirement for an ECL provision. There was no increase in credit risk in the period and therefore, no further credit loss provision was required.

Interest income on impaired loans and the changes in expected credit loss provisions are as follows (in thousands $):

	For the six months ended
	June 30, 2019		Jun. 30, 2018
Interest on impaired loans		—		—
Expected credit loss provisions
Balance, beginning of the year		50		—
Transition adjustment		—		50
Revised balance, beginning of the year		50		50
Expected credit loss provision (recovery)		—		—
Net exchange differences		—		—
Balance, end of period		50		50

    35

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended March 31, 2019 and 2018

Sector distribution of loan principal

Distribution of Company outstanding loan principal balances by sector:

	June 30, 2019				12/31/2018
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Metals and mining		1		30,379		1		34,931
Energy and other		2		2,887		2		2,942
Total loan principal		3		33,266		3		37,873

Geographic distribution of loan principal

Distribution of Company outstanding loan principal balances by geographic location of the underlying security:

	June 30, 2019				December 31, 2018
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Canada		1		1,578		1		1,578
United States of America		2		31,688		2		36,295
Total loan principal		3		33,266		3		37,873

    36

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and six months ended June 30, 2019 and 2018

6 OTHER ASSETS, INCOME AND EXPENSES

Other assets

Consist of the following (in thousands $):

	Jun. 30, 2019		Dec. 31, 2018
Fund recoveries and investment receivables		7,333		4,722
Prepaid expenses		4,358		5,369
Other (1)		1,699		1,897
Total Other assets		13,390		11,988

^{(1) Other includes miscellaneous third-party receivables.}

Other income (loss)

Consist of the following (in thousands $):

	For the three months ended					For the six months ended
	Jun. 30, 2019			Jun. 30, 2018		Jun. 30, 2019			Jun. 30, 2018
Net proceeds from Sale Transaction (1)		—			—		—			4,200
Other investment income (2)		138			3,082		224			3,914
Foreign exchange gain (losses)		(883	)		236		(1,908	)		1,092
Total Other income (loss) (3)		(745	)		3,318		(1,684	)		9,206

^{(1) Gross proceeds of $5.0 million, net of transaction costs of $0.8 million. This relates to the January 29, 2018 closing of the sale of our non-core private wealth client business.}

^{(2) Primarily includes investment fund income, syndication and trailer fee income.}

^{(3) Excludes royalty income of $0.2 million on a three month ended basis (June 30, 2018 - $0.4 million) and $0.5 million on a six month ended basis (June 30, 2018 - $0.7 million), which is presented net of operating, depletion and impairment charges below.}

Other expenses

Consist of the following (in thousands $):

	For the three months ended						For the six months ended
	Jun. 30, 2019			Jun. 30, 2018			Jun. 30, 2019		Jun. 30, 2018
Costs (recoveries) related to energy assets (1)		(5	)		(136	)		3		(104	)
Other (2)		3,218			573			3,552		1,366
Total Other expenses		3,213			437			3,555		1,262

^{(1) Includes operating, depletion and impairment charges, net of royalty income of $0.2 million on a three month ended basis (June 30, 2018 - $0.4 million) and $0.5 million on a six month ended basis (June 30, 2018 - $0.7 million).}

^{(2) Includes non-recurring professional fees and transaction costs.}

    37

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and six months ended June 30, 2019 and 2018

7 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.

	Number			Stated value
	of shares			(in thousands $)
At Dec. 31, 2017		234,098,634			392,556
Issuance of share capital under dividend reinvestment program		338,628			1,015
Issuance of share capital on purchase of management contracts		6,997,387			17,284
Released on exercise of stock option plan		558,048			1,217
Issuance of share capital on conversion of RSUs		635,939			1,581
Acquired for equity incentive plan		(2,402,500	)		(7,161	)
Released on vesting of equity incentive plan		2,836,201			6,446
At Dec. 31, 2018		243,062,337			412,938
Issuance of share capital under dividend reinvestment program		30,892			96
Issuance of share capital on conversion of RSUs and other share based considerations		476,030			1,086
Acquired for equity incentive plan		(162,265	)		(503	)
Released on vesting of equity incentive plan		606,467			1,520
At Jun. 30, 2019		244,013,461			415,137

Contributed surplus consists of: stock option expense; earn-out shares expense; equity incentive plans' expense; and additional purchase consideration.

	Stated value (in thousands $)
At Dec. 31, 2017		39,907
Expensing of Stock-based compensation over the vesting period		12,358
Issuance of share capital on conversion of RSUs		(1,219	)
Released on exercise of stock option plan		(1,217	)
Released on vesting of common shares for equity incentive plan		(6,446	)
At Dec. 31, 2018		43,383
Expensing of Stock-based compensation over the vesting period		3,328
Issuance of share capital on conversion of RSUs and other share based considerations		783
Released on vesting of common shares for equity incentive plan		(1,520	)
At Jun. 30, 2019		45,974

    38

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and six months ended June 30, 2019 and 2018

Stock option plan

The Company has an option plan (the "Plan") intended to provide incentives to directors, officers, employees and consultants 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 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 for the three and six months ended June 30, 2019 (three months ended June 30, 2018 - nil, six months ended June 30, 2018 - 750,000). There were no options exercised for the three and six months ended June 30, 2019 (three and six months ended June 30, 2018 - 670,000). There were no options forfeited for the three and six months ended June 30, 2019 (three and six months ended June 30, 2018 - nil).

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.

A summary of the changes in the Plan is as follows:

	Number of options (in thousands)			Weighted average exercise price ($)
Options outstanding, December 31, 2017		6,975			5.14
Options exercisable, December 31, 2017		5,625			5.79
Options issued		750			2.33
Options exercised		(2,000	)		2.33
Options expired		(2,450	)		10.00
Options outstanding, December 31, 2018		3,275			2.57
Options exercisable, December 31, 2018		1,875			2.70
Options outstanding, June 30, 2019		3,275			2.57
Options exercisable, June 30, 2019		2,575			2.60

Options outstanding and exercisable as at June 30, 2019 are as follows:

Exercise price ($)	Number of outstanding options (in thousands)		Weighted average remaining contractual life (years)		Number of options exercisable (in thousands)
6.60		150		1.4		150
2.33		3,000		6.6		2,300
2.73		125		6.9		125
2.33 to 6.60		3,275		6.4		2,575

    39

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017 

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; or (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; and (3) from time-to-time, purchases from 2176423 Ontario Ltd., a company controlled by Eric Sprott, pursuant to the terms and conditions of a previously announced share transaction. 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 419,687 RSUs granted during the three months ended ended June 30, 2019 (three months ended June 30, 2018 - 30,000) and 676,406 RSUs granted during the six months ended June 30, 2019 (six months ended June 30, 2018 - 339,401) . The Trust purchased 0.1 million shares in the three months ended June 30, 2019 (three months ended June 30, 2018 - nil) and 0.2 million shares in the six months ended June 30, 2019 (six months ended June 30, 2018 - 2.4 million shares).

	Number of common shares
Common shares held by the Trust, December 31, 2017		10,365,957
Acquired		2,402,500
Released on vesting		(2,836,201	)
Unvested common shares held by the Trust, December 31, 2018		9,932,256
Acquired		162,265
Released on vesting		(606,467	)
Unvested common shares held by the Trust, June 30, 2019		9,488,054

The table below provides a breakdown of the share-based compensation expense and the corresponding increase to contributed surplus:

	For the three months ended				For the six months ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Stock option plan		57		58		131		292
EPSP / EIP		1,012		2,918		3,197		5,642
		1,069		2,976		3,328		5,934

    40

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2018 and 2017 

Basic and diluted earnings per share

The following table presents the calculation of basic and diluted earnings (loss) per common share:

	For the three months ended						For the six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Numerator (in thousands $):
Net income (loss) - basic and diluted		2,116			5,916			5,900			19,573
Denominator (Number of shares in thousands):
Weighted average number of common shares		254,856			251,882			252,919			251,104
Weighted average number of unvested shares purchased by the Trust		(9,234	)		(12,053	)		(9,236	)		(11,273	)
Weighted average number of common shares - basic		245,622			239,829			243,683			239,831
Weighted average number of dilutive stock options		3,125			4,455			3,125			4,455
Weighted average number of unvested shares purchased by the Trust		9,234			12,053			9,236			11,273
Weighted average number of common shares - diluted		257,981			256,337			256,044			255,559
Net income per common share
Basic	$	0.01			0.02		$	0.02		$	0.08
Diluted	$	0.01			0.02		$	0.02		$	0.08

Capital management

The Company's objectives when managing capital are:

• 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 for 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). SCP is a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), SAM is a registrant of the Ontario Securities Commission ("OSC") and the U.S. Securities and Exchange Commission ("SEC"), SAM US is registered with the 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. As at June 30, 2019 and 2018, all entities were in compliance with their respective capital requirements.

    41

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and six months ended June 30, 2019 and 2018

8        INCOME TAXES 

The major components of income tax expense are as follows (in thousands $):

	For the six months ended
	Jun. 30, 2019		Jun. 30, 2018
Current income tax expense (recovery)
Based on taxable income of the current period		113		(462	)
		113		(462	)
Deferred income tax expense (recovery)
Total deferred income tax expense		310		(1,678	)
Income tax expense reported in the consolidated statements of operations		423		(2,140	)

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 $):

	For the six months ended
	Jun. 30, 2019			Jun. 30, 2018
Income before income taxes		6,323			17,433
Tax calculated at domestic tax rates applicable to profits in the respective countries		1,701			4,621
Tax effects of:
Non-deductible stock-based compensation		60			78
Non-taxable capital (gains) and losses		(212	)		(439	)
Intangibles		57			(4,843	)
Other temporary differences not benefited		(236	)		(314	)
Non-capital losses not benefited previously		(1,069	)		(2,198	)
Rate differences and other		122			955
Tax charge		423			(2,140	)

The weighted average statutory tax rate was 26.9% (June 30, 2018 - 26.5%). This increase was primarily due to increased profitability of our Canadian businesses. The Company has $12 million of capital tax losses and $2 million of non-capital tax losses from prior years that will begin to expire in 2019 and 2027, respectively. The benefit of these capital and non-capital tax losses has not been recognized.

    42

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and six months ended June 30, 2019 and 2018

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 six months ended June 30, 2019

	Dec. 31, 2018		Recognized in income			Recognized in other comprehensive income			Jun. 30, 2019
Deferred income tax assets
Other stock-based compensation		4,300		292			—			4,592
Non-capital losses		5,018		880			(47	)		5,851
Unrealized gains		386		(330	)					56
Other		513		26			—			539
Total deferred income tax assets		10,217		868			(47	)		11,038
Deferred income tax liabilities
Fund management contracts		7,317		1,179			—			8,496
Proceeds receivable		70		(70	)		—			—
Other		59		69			—			128
Total deferred income tax liabilities		7,446		1,178			—			8,624
Net deferred income tax assets		2,771		(310	)		(47	)		2,414

For the year ended December 31, 2018

	Dec. 31, 2017			Recognized in income			Recognized in other comprehensive income		Dec. 31, 2018
Deferred income tax assets
Other stock-based compensation		2,588			1,712			—		4,300
Non-capital losses		820			4,185			13		5,018
Unrealized gains		481			(95	)		—		386
Other		485			28			—		513
Total deferred income tax assets		4,374			5,830			13		10,217
Deferred income tax liabilities
Fund management contracts		431			6,886			—		7,317
Proceeds receivable		279			(209	)		—		70
Other		(116	)		175			—		59
Total deferred income tax liabilities		594			6,852			—		7,446
Net deferred income tax assets		3,780			(1,022	)		13		2,771

    43

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and six months ended June 30, 2019 and 2018

9        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 June 30, 2019 and December 31, 2018 (in thousands $).

Proprietary Investments

June 30, 2019	Level 1			Level 2		Level 3		Total
Public equities and share purchase warrants		11,188			1,796		—		12,984
Fixed income securities		—			1,627		1,000		2,627
Private holdings		—			—		2,839		2,839
Total net recurring fair value measurements		11,188			3,423		3,839		18,450
12/31/2018		Level 1			Level 2		Level 3		Total
Public equities and share purchase warrants		13,680			5,386		—		19,066
Fixed income securities		—			1,796		1,000		2,796
Private holdings		—			—		2,830		2,830
Obligations related to securities sold short		(255	)		—		—		(255	)
Total net recurring fair value measurements		13,425			7,182		3,830		24,437

Long-term investments

June 30, 2019	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		70,177		4,741		74,918
Private holdings		—		—		27,361		27,361
Total net recurring fair value measurements		—		70,177		32,102		102,279

12/31/2018	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		72,739		—		72,739
Private holdings		—		—		29,821		29,821
Total net recurring fair value measurements		—		72,739		29,821		102,560

    44

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and six months ended June 30, 2019 and 2018

The following tables provides a summary of changes in the fair value of Level 3 financial assets (in thousands $):

Proprietary Investments

	Changes in the fair value of Level 3 measurements - Jun. 30 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Jun. 30, 2019
Private holdings		2,830		100		—		(91	)		2,839
Fixed income securities		1,000		—		—		—			1,000
		3,830		100		—		(91	)		3,839

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		4,269		2,135		(3,680	)		106		2,830
Fixed income securities		—		1,000		—			—		1,000
		4,269		3,135		(3,680	)		106		3,830

Long-term investments

	Changes in the fair value of Level 3 measurements - Jun. 30, 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Jun. 30, 2019
Private holdings		24,945		3,424		—		(1,008	)		27,361
Co-investments in funds		4,876		—		—		(135	)		4,741
		29,821		3,424		—		(1,143	)		32,102

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		12,152		13,145		—		4,524		29,821
		12,152		13,145		—		4,524		29,821

During the six months ended June 30, 2019, the Company transferred public equities of $3.6 million (December 31, 2018 - $0.7 million) from Level 2 to Level 1 within the fair value hierarchy due to the release of trading restrictions by the issuer. For the six months ended June 30, 2019, the Company purchased level 3 investments of $3.5 million (December 31, 2018 - $16.3 million). For the six months ended June 30, 2019, the Company transferred $Nil (December 31, 2018 - $Nil) from Level 3 to Level 1 within the fair value hierarchy.

    45

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and six months ended June 30, 2019 and 2018

The following table presents the valuation techniques used by the Company in measuring fair values:

Type	Valuation Technique
Public equities and share purchase warrants	Fair values are determined using pricing models which incorporate all available market-observable inputs.
Co-investments in funds	Fair values are based on the last available Net Asset Value.
Fixed income securities	Fair values are based on independent market data providers or third-party broker quotes.

The Company’s Level 3 securities consists of private holdings, co-investment in funds and fixed income securities of private companies. The Company determines fair value using a variety of valuation techniques, including discounted cash flows, comparable recent transactions and other techniques used by market participants. The significant unobservable input used in these valuation techniques can vary considerably over time, and include grey market financing prices, discount rates and extraction recovery rates of mining projects. 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 $1.2 million (December 31, 2018 - $1.2 million).

Financial instruments not carried at fair value

For fees receivable, other assets, accounts payable and accrued liabilities and compensation payable, the carrying amount represents a reasonable approximation of fair value due to their short term maturity.

10        DIVIDENDS

The following dividends were declared by the Company during the six months ended June 30, 2019:

Record date	Payment Date		Cash dividend per share ($)		Total dividend amount (in thousands $)
March 08, 2019 - Regular Dividend Q4 - 2018		March 25, 2019		0.03		7,602
May 21, 2019 - Regular Dividend Q1 - 2019		June 5, 2019		0.03		7,605
Dividends (1)						15,207

⁽¹⁾ Subsequent to the quarter-end, on August 8, 2019, a regular dividend of $0.03 per common share was declared for the quarter ended June 30, 2019. This dividend is payable on September 3, 2019 to shareholders of record at the close of business on August 19, 2019.

    46

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and six months ended June 30, 2019 and 2018

11        SEGMENTED INFORMATION

For management purposes, the Company is organized into business units based on its products, services and geographical location and has five 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;

• Lending (reportable), which provides lending activities through limited partnership vehicles as well as through direct lending activities using the Company's balance sheet;

• Managed Equities (reportable), which provides asset management and sub-advisory services to the Company's branded funds, fixed-term LPs and managed accounts;

• Brokerage (reportable), which includes the activities of our Canadian and U.S broker-dealers;

• Corporate (reportable), which provides capital, balance sheet management and enterprise shared services to the Company's subsidiaries;

• All Other Segments (non-reportable), which do not meet the definition of reportable segments as per IFRS 8.

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 proprietary investments (as if such gains and losses had not occurred), foreign exchange gains and losses, one time non-recurring expenses, non-cash and non-recurring 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.

    47

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and six months ended June 30, 2019 and 2018

The following tables present the operations of the Company's segments (in thousands $):

For the three months ended June 30, 2019

	Exchange Listed Products		Lending		Managed Equities		Brokerage			Corporate			Elimination and all other segments			Consolidated
Total revenue		7,320		4,216		4,207		5,195			(166	)		453			21,225
Total expenses		2,730		2,241		2,223		5,982			3,803			2,584			19,563
Pre-tax Income (loss)		4,590		1,975		1,984		(787	)		(3,969	)		(2,131	)		1,662
Adjusted base EBITDA		5,532		3,832		1,056		230			(2,981	)		1,740			9,409

For the three months ended June 30, 2018

	Exchange Listed Products		Lending		Managed Equities (1)		Brokerage (1)		Corporate			Elimination and all other segments (1)			Consolidated
Total revenue		9,383		6,786		3,065		7,895		(697	)		182			26,614
Total expenses		2,285		1,959		2,396		7,761		4,328			1,337			20,066
Pre-tax Income (loss)		7,098		4,827		669		134		(5,025	)		(1,155	)		6,548
Adjusted base EBITDA		6,892		5,381		1,150		1,396		(3,897	)		(236	)		10,686

^{(1) Prior year figures have been restated to reflect the changes in operating segments.}

For the six months ended June 30, 2019

	Exchange Listed Products		Lending		Managed Equities		Brokerage			Corporate			Elimination and all other segments			Consolidated
Total revenue		14,613		7,598		7,441		10,843			(318	)		2,295			42,472
Total expenses		5,272		3,764		5,090		12,005			6,338			3,680			36,149
Pre-tax Income (loss)		9,341		3,834		2,351		(1,162	)		(6,656	)		(1,385	)		6,323
Adjusted base EBITDA		11,231		7,874		1,971		233			(4,672	)		1,956			18,593

For the six months ended June 30, 2018

	Exchange Listed Products		Lending		Managed Equities (1)		Brokerage (1)		Corporate			Elimination and all other segments (1)			Consolidated
Total revenue		17,310		13,591		6,813		20,536		(857	)		736			58,129
Total expenses		4,758		3,559		5,230		15,851		8,002			3,296			40,696
Pre-tax Income (loss)		12,552		10,032		1,583		4,685		(8,859	)		(2,560	)		17,433
Adjusted base EBITDA		12,924		8,138		2,464		3,523		(6,325	)		(11	)		20,713

^{(1) Prior year figures have been restated to reflect the changes in operating segments.}

    48

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and six months ended June 30, 2019 and 2018

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 $):

	For the three months ended				For the six months ended
	Jun. 30, 2019		June 30, 2018		Jun. 30, 2019		Jun. 30, 2018
Canada		18,408		22,591		36,002		50,567
United States		2,817		4,023		6,470		7,562
		21,225		26,614		42,472		58,129

12        LOAN FACILITY

As at June 30, 2019, the Company had $22.5 million (December 31, 2018 - $Nil) outstanding on its credit facility, $5 million of which is due within 12 months and $17.5 million is due after 12 months (December 31, 2018 - $Nil and $Nil respectively).

The Company has a 5 year, $90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a $25 million term loan and a $65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. In the first quarter, the Company drew $25 million on the term loan portion of the credit facility to avoid its expiry and to partially fund anticipated growth in the business over the next 12-18 months. As at June 30, 2019, the Company was in compliance with all covenants, terms and conditions under the credit facility. Key terms under the credit facility are noted below:

Structure

◦                     5-year, $65 million revolver with "bullet maturity" December 31, 2022

◦                     5-year, $25 million term loan with 5% of principal amortizing quarterly

Interest Rate

◦                     Prime rate + 0 bps or;

◦                     Banker Acceptance Rate + 170 bps

Covenant Terms

◦                     Minimum AUM: $8.2 billion

◦                     Debt to EBITDA less than 3.25:1 for first 18 months, after which, debt to EBITDA less than 2.50:1

◦                     EBITDA to interest expense more than 2.50:1

13        COMMITMENTS AND PROVISIONS

Besides the Company's long-term lease agreement, there may be commitments to provide loans arising from the Lending business or commitments to make investments in the net investments portfolio of the Company. As at June 30, 2019, the Company had $22.5 million in co-investment commitments from the Lending segment (December 31, 2018 - $38.7 million).

    49

Corporate Information 

Head Office	Legal Counsel
Sprott Inc.	Baker & McKenzie LLP
Royal Bank Plaza, South Tower	Brookfield Place, Suite 2100
200 Bay Street, Suite 2600	181 Bay Street, P.O. Box 874
Toronto, Ontario M5J 2J1, Canada	Toronto, Ontario, Canada M5J 2T3
T: 416.943.8099
1.855.943.8099	Auditors
	KPMG LLP
Directors & Officers	Bay Adelaide Centre
Ronald Dewhurst, Chairman	333 Bay Street, Suite 4600
Peter Grosskopf, Chief Executive Officer and Director	Toronto, ON M5H 2S5
Rick Rule, Director
Sharon Ranson, FCPA, FCA, Director	Investor Relations
Rosemary Zigrossi, Director	Shareholder requests may be directed to
Whitney George, President	Investor Relations by e-mail at ir@sprott.com
Kevin Hibbert, CPA, CA, Chief Financial Officer	or via telephone at 416.943.8099
Arthur Einav, Corporate Secretary	or toll free at 1.855.943.8099
Transfer Agent & Registrar	Stock Information
TMX Equity Transfer Services	Sprott Inc. common shares are traded on the
200 University Avenue, Suite 300	Toronto Stock Exchange under the symbol ‘‘SII’’
Toronto, Ontario M5H 4H1
Toll Free: 1.866.393.4891
www.tmxequitytransferservices.com

www.sprott.com

EX-99.15

Exhibit 99.15

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Peter Grosskopf, Chief Executive Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Sprott Inc. (the “issuer”) for the interim period ended June 30, 2019.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2019 and ended on June 30, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: August 9, 2019

“Peter Grosskopf”

Peter Grosskopf

Chief Executive Officer

EX-99.16

Exhibit 99.16

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Kevin Hibbert, Chief Financial Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Sprott Inc. (the “issuer”) for the interim period ended June 30, 2019.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2019 and ended on June 30, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: August 9, 2019

“Kevin Hibbert”

Kevin Hibbert

Chief Financial Officer

EX-99.17

Exhibit 99.17

Management's Discussion and Analysis

Three and nine months ended September 30, 2019

     1 

FORWARD LOOKING STATEMENTS

Certain statements in this Management's Discussion & Analysis ("MD&A"), and in particular the "Business Highlights and Growth Initiatives" section and "Outlook" subsection, contain forward-looking information (collectively referred to herein as the "Forward-Looking Statements") within the meaning of applicable 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) expectations regarding deployment of capital called into our lending LPs in 2019; (ii) expectation that Lending net capital calls will occur over the mid-to-long term life of our funds; (iii) expectation that the strong finish to the price of gold last year will carry forward to 2019; (iv) expectations regarding our legacy balance sheet loans; (v) anticipation that earnings from the managed equities business will be relatively flat year-over-year; (vi) expectation of a challenging equity origination environment, similar to what was experienced in 2018; (vii) expectation that we will see a material decrease in corporate expenses in 2019; (viii) the acquisition of the Tocqueville gold strategies asset management business, including that the acquisition will be completed and the timing thereof, the AUM to be added as a result of the acquisition, certain portfolio managers joining Sprott upon the completion of the acquisition and the impact of the acquisition on the Company’s business and strategies; and (ix) the declaration, payment and designation of dividends.

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; and (iv) those assumptions disclosed herein under the heading "Significant Accounting Judgments, Estimates and Changes in Accounting Policies". 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 favourable 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 lending business; (xxvii) risks relating to the Company’s merchant bank and advisory business; (xxviii) those risks described under the heading "Risk Factors" in the Company’s annual information form dated February 27, 2019; and (xxix) those risks described under the headings "Managing Risk: Financial" and "Managing Risk: Non-Financial" 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. There are also risks that are inherent in the nature of a transaction such as the acquisition of the Tocqueville gold strategies asset management business, including: failure to realize anticipated synergies; risks regarding integration; incorrect assessments of the values of the acquired assets; and failure to obtain any required security holder, regulatory, stock exchange and other approvals (or to do so in a timely manner). The anticipated timeline for completion of the acquisition of the Tocqueville gold strategies asset management business may change for a number of reasons, including the inability to secure necessary security holder, regulatory, stock exchange and other approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the acquisition. As a result of the foregoing, readers should not place undue reliance on the forward-looking statements contained in this MD&A concerning the completion of the acquisition or the timing thereof. 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 Canadian securities laws.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This MD&A of financial condition and results of operations, dated November 7, 2019, presents an analysis of the consolidated financial condition of the Company and its subsidiaries as at September 30, 2019, compared with December 31, 2018, and the consolidated results of operations for the three and nine months ended September 30, 2019, compared with the three and nine months ended September 30, 2018. The Board of Directors approved this MD&A on November 7, 2019. All note references in this MD&A are to the notes to the Company's September 30, 2019 unaudited interim condensed consolidated financial statements ("interim financial statements"), unless otherwise noted. The Company was incorporated under the Business Corporations Act (Ontario) on February 13, 2008.

PRESENTATION OF FINANCIAL INFORMATION

The interim 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 interim financial statements. The Canadian dollar is the Company's functional and reporting currency for purposes of preparing the interim financial statements given that the Company conducts most of its operations in that currency. Accordingly, all dollar references in this MD&A are in Canadian dollars, unless otherwise specified. The use of the term "prior period" refers to the three and nine months ended September 30, 2018.

     2 

KEY PERFORMANCE INDICATORS (NON-IFRS 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 include:

Assets Under Management

Assets Under Management ("AUM") refers to the total net assets managed by the Company through its various investment product offerings, managed accounts and managed companies.

Net Inflows

Net Inflows (consisting of net sales, capital calls and fee earning capital commitments) result in changes to AUM and are described individually below:

Net Sales

Fund sales (net of redemptions), including 'at-the-market' transactions and secondary offerings of our physical trusts and new 'creations' of ETF units, are a key performance indicator as new assets being managed will lead to higher management fees and can potentially lead to increased carried interest and performance fee generation (as applicable) given that AUM is also the basis upon which carried interest and performance fees are calculated.

Capital calls and commitments

Capital calls into our lending LPs is a key source of AUM creation, and ultimately, earnings for the Company. Once capital is called into our lending LPs, it is included within the AUM of the Company as it will now earn a management fee (note: it is possible for some forms of committed capital to earn a commitment fee despite being uncalled, in which case, it will also be included in AUM at that time). Conversely, once loans in our lending LPs are repaid, capital may be returned to investors in the form of a distribution, thereby reducing our AUM ("capital distributions").

Net Fees

Management fees (net of trailer and sub-advisor fees) and carried interest and performance fees (net of carried interest and performance fee payouts), 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, arise from the transaction based service offerings of our brokerage segment.

Compensation

Compensation excludes commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance and new hire accruals which are non-recurring.

     3 

EBITDA, Adjusted EBITDA and Adjusted base EBITDA

EBITDA in its most basic form is defined as earnings before interest expense, income taxes, depreciation and amortization. EBITDA 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.

Neither EBITDA, adjusted EBITDA or adjusted base EBITDA have 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 measures are determined:

	3 months ended						9 months ended
(in thousands $)	Sept. 30, 2019			Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018
Net income (loss) for the periods		5,723			1,975			11,623			21,547
Adjustments:
Interest expense		393			26			1,019			107
Provision (recovery) for income taxes		1,945			35			2,368			(2,105	)
Depreciation and amortization		1,180			457			3,378			1,601
EBITDA		9,241			2,493			18,388			21,150
Other adjustments:
(Gains) losses on net investments (1)		(791	)		4,765			(478	)		9,694
(Gains) losses on foreign exchange		(426	)		809			1,482			(283	)
Non-cash stock-based compensation		1,597			1,025			4,266			3,461
Net proceeds from sale transaction		—			—			—			(4,200	)
Unamortized placement fees (2)		—			(273	)		—			(814	)
Other expenses(3)		428			888			4,984			2,299
Adjusted EBITDA		10,049			9,707			28,642			31,307
Other adjustments:
Carried interest and performance fees		—			—			—			(1,802	)
Carried interest and performance fee related expenses		—			—			—			915
Adjusted base EBITDA		10,049			9,707			28,642			30,420

⁽¹⁾ This adjustment removes the income effects of certain gains or losses on proprietary and long-term investments to ensure the reporting objectives of our EBITDA metric as described above are met.

⁽²⁾ The prior period comparative figures contained a placement fee amortization adjustment to ensure the 2018 results were comparable to 2017 in light of the 2018 adoption of IFRS 15.

⁽³⁾ See Other expenses in Note 6 of the interim financial statements. In addition to the items outlined in Note 6, Other expenses also includes severance and new hire accruals of $0.2 million for the 3 months ended (3 months ended September 30, 2018 - $0.4 million) and $1.2 million for the 9 months ended (9 months ended September 30, 2018 - $0.5 million).

     4 

BUSINESS OVERVIEW

Our reportable operating segments are as follows:

 

Exchange Listed Products

• The Company's closed-end physical trusts and exchange traded funds ("ETFs").

Lending

• The Company's lending activities primarily occur through limited partnership vehicles ("lending LPs").

Managed Equities

• The Company's alternative investment strategies (open-end, closed-end, etc.) managed in-house and on a sub-advised basis. Prior to Q1 2019, the Company's fixed-term LP vehicles formed part of the "global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, the global segment no longer satisfied the qualitative tests of IFRS 8 as the geographic location of the U.S. businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, the global segment has been deconstructed and its fixed-term LP assets and earnings reallocated to the managed equities segment given that it is now at the managed equities level that the allocation of resources and assessment of product and service performance occurs by management.

Brokerage

• Formerly "Merchant Banking & Advisory Services", this segment has been renamed to reflect the inclusion of our U.S. broker-dealer alongside our Canada based broker-dealer as the Company's "brokerage segment". Prior to Q1 2019 , the Company's U.S. broker-dealer formed part of the "global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, the global segment no longer satisfied the qualitative tests of IFRS 8 as the geographic location of the U.S. businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, the global segment has been deconstructed and its U.S. broker-dealer assets and earnings reallocated to the brokerage segment given that it is now at the brokerage level (independent of geography) that the allocation of resources and assessment of product and service performance occurs by management.

Corporate

• Provides the Company's various operating segments with capital, balance sheet management and other shared services.

All Other Segments

• Contains all non-reportable segments as per IFRS 8. See Note 11 of the interim financial statements for further details.

For a detailed account of the underlying principal subsidiaries within our reportable business segments, refer to the Company's Annual Information Form and Note 2 of the annual consolidated financial statements.

     5 

BUSINESS HIGHLIGHTS AND GROWTH INITIATIVES

Investment Performance

Market value appreciation was $640 million during the quarter and $783 million on a year-to-date basis as the Company benefited from stronger precious metals prices throughout the year.

Product and Business Line Expansion

On August 7, the Company (via its wholly-owned subsidiary, Sprott Asset Management LP) entered into a definitive agreement regarding the purchase of Tocqueville Asset Management’s gold strategies. The transaction cost is US$15 million (US$10 million in cash and Sprott Inc. common shares valued at US$5 million). Contingent consideration valued up to an additional US$35 million in cash and Sprott Inc. shares is payable subject to the achievement of certain financial performance conditions over two years following the closing of the transaction.

Based on current asset levels, the transaction will add over $2 billion to Sprott’s AUM. On closing of the transaction, Senior Portfolio Manager, John Hathaway and Portfolio Managers, Douglas Groh and Ryan McIntyre will join the company. Subject to security holder approval for certain acquired strategies, regulatory and stock exchange approvals and other customary conditions to closing, the transaction is expected to close in January 2020.

Outlook

Exchange Listed Products

We continue to expect the strong finish to the price of gold from last year to carry forward to 2019. However, the benefit of higher gold prices will be somewhat offset by starting 2019 with a lower AUM base given our 2018 redemption experience, which continued through to the first quarter of 2019.

Lending

We continue to anticipate coming in at the low end of our previously communicated range of net capital deployments this year (US$200 million - US$400 million). This is primarily the result of higher than anticipated capital distributions on early loan repayments in our lending LPs. Higher capital distributions ended up offsetting capital calls more than anticipated this year. Our long-term view on lending fund AUM continues to be constructive as we work through the eventual deployment of more than US$990 million of committed capital. Once this occurs, we expect the volatility of this segment's AUM to dissipate. As expected, the majority of our legacy balance sheet loans have now run-off.

Managed Equities

We continue to expect flat earnings from this business year-over-year.

Brokerage

We continue to expect a challenging equity origination environment, similar to what was experienced in 2018.

Corporate

We continue to expect a material decrease in corporate expenses in 2019, primarily due to: (1) lower LTIP amortization as the graded vesting schedule of the 2017 grants reach the low points of the amortization schedule; and (2) slightly flat to lower SG&A as we continue our cost containment efforts.

     6 

SUMMARY FINANCIAL INFORMATION

(In thousands $)	Q3 2019		Q2 2019		Q1 2019		Q4 2018		Q3 2018		Q2 2018		Q1 2018		Q4 2017
SUMMARY INCOME STATEMENT
Management fees	13,964		13,329		13,558		13,182		13,722		14,559		14,056		10,247
Carried interest and performance fees	—		—		—		—		—		685		1,117		3,584
less: Trailer and sub-advisor fees	65		89		—		38		45		49		47		225
less: Carried interest and performance fee payouts	—		—		—		—		—		356		559		2,267
Net Fees	13,899		13,240		13,558		13,144		13,677		14,839		14,567		11,339
Commissions	7,995		4,406		4,409		6,414		4,573		7,516		8,857		7,366
less: Commission expense	3,505		1,814		1,844		2,704		2,447		2,701		3,667		2,855
Net Commissions	4,490		2,592		2,565		3,710		2,126		4,815		5,190		4,511
Interest income	3,381		4,595		3,918		4,244		4,824		3,293		3,066		3,588
Gains (losses) on proprietary investments	(474	)	(2,160	)	73		3,912		(4,765	)	(3,050	)	(1,879	)	(63	)
Gains (losses) on long-term investments	1,265		1,614		(67	)	3,007		(151	)	(72	)	56		3,639
Other income (loss)	604		(559	)	(644	)	2,453		(275	)	3,683		6,242		1,144
Total Net Revenues	23,165		19,322		19,403		30,470		15,436		23,508		27,242		24,158
Compensation (1)	9,098		7,317		8,387		11,163		8,167		10,634		9,485		10,631
Compensation - severance and new hire accruals	222		855		146		38		359		—		149		2,193
Placement and referral fees	150		336		78		368		223		148		204		833
Selling, general and administrative	4,191		4,354		4,069		4,171		3,404		4,905		4,586		5,739
Interest expense	393		302		324		312		26		15		66		22
Amortization and impairment charges (2)	1,180		1,097		1,101		598		457		456		688		1,386
Other expenses	263		3,399		637		606		790		802		1,179		2,069
Total Expenses	15,497		17,660		14,742		17,256		13,426		16,960		16,357		22,873
Net Income (Loss)	5,723		2,116		3,784		9,831		1,975		5,916		13,657		2,519
Net Income (Loss) per share	0.02		0.01		0.02		0.04		0.01		0.02		0.06		0.01
Adjusted base EBITDA	10,049		9,409		9,184		10,092		9,707		10,686		10,027		7,524
Adjusted base EBITDA per share	0.04		0.04		0.04		0.04		0.04		0.04		0.04		0.03
SUMMARY BALANCE SHEET
Total Assets	431,178		445,776		444,325		428,215		401,366		403,985		407,177		409,849
Total Liabilities	68,596		79,019		72,172		55,094		36,486		36,372		42,417		65,985
Cash	89,431		60,593		48,193		47,252		41,452		37,974		52,097		156,120
less: syndicate cash holdings	(154	)	(10,119	)	(12,218	)	(10,421	)	(967	)	(796	)	(932	)	(776	)
Net cash	89,277		50,474		35,975		36,831		40,485		37,178		51,165		155,344
Proprietary and long-term investments	110,699		122,607		134,681		129,271		115,744		120,853		96,352		114,327
less: obligations related to securities sold short	—		—		—		(255	)	—		(2,927	)	(8,543	)	(24,993	)
Net investments	110,699		122,607		134,681		129,016		115,744		117,926		87,809		89,334
Loans receivable	2,871		32,011		32,360		36,021		36,532		40,208		50,467		48,673
Investable Capital	202,847		205,092		203,016		201,868		192,761		195,312		189,441		293,351
Total Enterprise AUM	11,326,546		10,670,982		10,569,449		10,578,426		10,066,112		11,126,042		11,591,213		7,323,382

⁽¹⁾ See 'Compensation' in the key performance indicators (non-IFRS financial measures) section of this MD&A.

⁽²⁾ Starting Q1 2019, in order to comply with the new IFRS 16 Leases accounting standard ("IFRS 16"), certain lease assets have now been capitalized and depreciated over their expected lease term. See Note 2, Changes in Accounting Policies of the interim financial statements.

     7 

SUMMARY MANAGEMENT FEE BREAKDOWN

Below is a detailed list of management fee rates on our fund products as at September 30, 2019 (in millions $):

FUND	AUM	BLENDED NET MANAGEMENT FEE RATE		CARRIED INTEREST AND PERFORMANCE FEE CRITERIA
Exchange Listed Products
Sprott Physical Gold and Silver Trust	3,750	0.40	%	N/A (1)
Sprott Physical Gold Trust	3,143	0.35	%	N/A (1)
Sprott Physical Silver Trust	1,347	0.45	%	N/A (1)
Sprott Gold Miner's ETF	239	0.35	%	N/A (1)
Sprott Physical Platinum & Palladium Trust	136	0.50	%	N/A (1)
Sprott Jr. Gold Miner's ETF	75	0.35	%	N/A (1)
Total	8,690	0.39	%
Lending
Sprott Private Resource Lending LPs	586	1.25	%	15-70% of net profits over preferred return
Managed Equities: In-house
Sprott U.S. Value Strategies	281	1.00	%	N/A
Fixed Term Limited Partnerships	220	1.70	%	15-30% over preferred return
Separately Managed Accounts (2)	53	1.00	%	N/A
Sprott Hathaway Special Situations Fund (3)	38	0.75	%	20% of net profits over preferred return
Total	592	1.20	%
Managed Equities: Sub-advised
Bullion Funds (3)	320	0.51	%	5% excess over applicable benchmark indices
Corporate Class Funds (3)	143	0.75	%	5% excess over applicable benchmark indices
Flow-through LPs (3)	72	0.70	%	10% of all net profits in excess of the HWM
Total	535	0.60	%
Other
Managed Companies (4)	626	0.50	%	20% of net profits over preferred return
Separately Managed Accounts (5)	298	0.61	%	20% of net profits over preferred return
Total	924	0.54	%
Total AUM	11,327	0.50	%

⁽¹⁾ Exchange listed products do not generate performance fees, however the management fees they generate are closely correlated to precious metals prices.

⁽²⁾ Institutional managed accounts.

⁽³⁾ Management fee rate represents the net amount received by the Company.

⁽⁴⁾ Includes Sprott Resource Holdings Inc. and Sprott Korea Corp.

⁽⁵⁾ Includes our private equity strategy in Sprott Asia and high net worth discretionary managed accounts in the U.S.

     8 

RESULTS OF OPERATIONS

AUM SUMMARY

AUM was $11.3 billion as at September 30, 2019, up $0.7 billion (6%) from June 30, 2019 and up $0.7 billion (7%) from December 31, 2018. On a three and nine months ended basis we benefited from strong precious metals price appreciation in our exchange listed products segment. We also benefited from capital calls and new commitment fee earning assets being added to our lending LPs throughout the year, which more than offset capital distributions on a year-to-date basis.

3 months results

(In millions $)	AUM Jun. 30, 2019		Net       Inflows (1)			Market Value   Changes		Other (2)			AUM Sep. 30, 2019
Exchange Listed Products
- Physical Trusts		7,714		92			570		—			8,376
- ETFs		301		4			9		—			314
		8,015		96			579		—			8,690
Lending		646		53			12		(125	)		586	(3)
Managed Equities
- In-house		586		2			4		—			592
- Sub-advised		511		(10	)		34		—			535
		1,097		(8	)		38		—			1,127
Other		913		—			11		—			924
Total		10,671		141			640		(125	)		11,327

9 months results

(In millions $)	AUM Dec. 31, 2018		Net Inflows (1)			Market Value Changes			Other (2)			AUM Sep. 30, 2019
Exchange Listed Products
- Physical Trusts		7,927		(248	)		697			—			8,376
- ETFs		237		18			59			—			314
		8,164		(230	)		756			—			8,690
Lending		498		384			(17	)		(279	)		586	(3)
Managed Equities
- In-house		538		31			23			—			592
- Sub-advised		505		(8	)		38			—			535
		1,043		23			61			—			1,127
Other		873		68			(17	)		—			924
Total		10,578		245			783			(279	)		11,327

⁽¹⁾ See 'Net Inflows' in the key performance indicators (non-IFRS financial measures) section of this MD&A.

⁽²⁾ Includes new AUM from fund acquisitions and lost AUM from fund divestitures and capital distributions of our lending LPs.

⁽³⁾ $1,311 million (US$990 million) of committed capital remains uncalled, of which $277 million (US$209 million) earns a commitment fee (AUM), and $1,034 million (US$781 million) does not (future AUM).

     9 

KEY REVENUE LINES

Net Fees in the quarter were $13.9 million, up $0.2 million (2%) from the prior period and were $40.7 million on a year-to-date basis, down $2.4 million (6%).       Net fees increased in the quarter due to higher average AUM in our exchange listed products segment given strong precious metals price appreciation. We also benefited from higher fees in our lending segment as we continue to grow AUM in this area.       Net fees decreased on a year-to-date basis despite strong precious metals price appreciation in the quarter as redemptions of our exchange listed products throughout last year and the first quarter of this year, lead to lower average AUM year-to-date from this segment. In addition, lower AUM valuations were experienced in our managed equities segment. These declines more than offset increased fee generation in our lending segment.  Interest Income in the quarter was $3.4 million, down $1.4 million (30%) from the prior period and was $11.9 million on a year-to-date basis, up $0.7 million (6%).   The decrease in the quarter was due to accelerated deferred interest income being included in last year's results relating to the early repayment of a loan. The increase on a year-to-date basis was due to interest income earned in certain legacy managed accounts of our brokerage segment.   Net Commissions in the quarter were $4.5 million, up $2.4 million from the prior period and were $9.6 million on a year-to-date basis, down $2.5 million.   The increase in the quarter was due to improved equity origination activity in our brokerage segment. The decrease on a year-to-date basis was due to lower equity origination activity in the first half of the year that over shadowed the recent increase in origination activity this quarter.    

     10 

KEY EXPENSE LINES

  Compensation, excluding commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance and new hire accruals which are non-recurring, was $9.1 million, up $0.9 million (11%) from the prior period and was $24.8 million on a year-to-date basis, down $3.5 million (12%).       Compensation increased in the quarter due to higher AIP accruals in the quarter. We now accrue AIP earlier in the year versus our previous practice of truing up AIP accruals at year end. Higher AIP accruals in the quarter more than offset lower LTIP amortization.       Compensation decreased on a year-to-date basis due to lower LTIP amortization.   SG&A was $4.2 million in the quarter, up $0.8 million (23%) from the prior period and was $12.6 million on a year-to-date basis, down $0.3 million (2%). The increase in the quarter was due to lower than normal operating expenses this time last year. Our current quarter SG&A is consistent with our run rate quarterly SG&A. The decrease on a year-to-date basis was due primarily to the adoption of IFRS 16. ADJUSTED BASED EBITDA Adjusted base EBITDA in the quarter was $10.0 million, up $0.3 million (4%) from the prior period and was $28.6 million on a year-to-date basis, down $1.8 million (6%). Our quarterly results benefited from higher fee income in our exchange listed products segment as average AUM in this area was positively impacted by the strong precious metals pricing environment. We also experienced higher net commissions in our brokerage segment given the improved equity origination environment this quarter. These increases were partially offset by lower income in our lending segment given the inclusion of accelerated deferred interest income in last year's results relating to the early repayment of a loan.   Our year-to-date results were primarily impacted by lower fee income earned in our exchange listed products segment due to last year's redemption experience that continued through to the first quarter of this year. Additional challenges to this year include lower net commissions from our brokerage segment as the weak equity origination environment in the first half of the year weighed down our year-to-date results, lower AUM valuations in our managed equities segment and lower income in our lending segment as last year's results were positively impacted by accelerated interest accruals and fee payments on the early settlement of loans.  

     11 

ADDITIONAL REVENUES AND EXPENSES

Proprietary investments losses were due to market value depreciation of certain resource equity holdings.

Long-term investments gains were due to market value appreciation of certain long-term investments.

Other income was higher in the quarter and lower on a year-to-date basis. The increase in the quarter was mainly due to FX translation gains (USD-to-CAD). On a year-to-date basis, the decrease was due to net sales proceeds received on last year's sale transaction in the fist quarter of 2018, income earned on the early settlement of a loan last year and FX translation losses (USD-to-CAD) in the current period.

Placement and referral fees were lower in the quarter and on a year-to-date basis. They mainly include referral fees paid in our brokerage segment.

Interest expense was higher in the quarter and on a year-to-date basis due to interest accruals on leases from the adoption of IFRS 16 and the draw down of our loan facility in the first quarter of this year (see Note 12 of the interim financial statements).

Amortization of intangibles did not change in the quarter and was lower on a year-to-date basis due to finite life fund management contracts related to fixed term LPs in our managed equities segment being fully amortized by the end of the first quarter of the prior period.

Amortization of property and equipment was higher in the quarter and on a year-to-date basis mainly due to increased depreciation expense related to leases that were capitalized on the adoption of IFRS 16.

Other expenses were lower in the quarter and higher on a year-to-date basis. The decrease in the quarter was mainly due to lower costs related to our energy assets. The increase on a year-to-date basis was due to higher non-recurring professional fees and transaction costs accrued in the second quarter.

BALANCE SHEET

Investable Capital was $203 million, up $1 million from December 31, 2018.

Total Assets were $431 million, up $3 million (1%) from December 31, 2018. The increase was primarily due to higher undeployed cash balances from the draw down of our loan facility, as well as the capitalization of leases on adoption of IFRS 16.

Total Liabilities were $69 million, up $14 million (25%) from December 31, 2018. The increase was primarily due to the draw down of our loan facility to help fund anticipated investment activities of the Company over the next 12-18 months. The increase was also due to the recording of a lease liability on adoption of IFRS 16. These increases were partially offset by the payment of prior year's accrued liabilities.

Total Shareholder's Equity was $363 million, down $11 million (3%) from December 31, 2018.

     12 

REPORTABLE OPERATING SEGMENTS

Exchange Listed Products

	3 months ended					9 months ended
(In thousands $)	Sept. 30, 2019		Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018
SUMMARY INCOME STATEMENT
Management fees		8,505		8,117			23,799			25,141
Other income (loss)		265		(178	)		(416	)		108
Total Revenues		8,770		7,939			23,383			25,249
Compensation		1,355		981			3,571			3,426
Selling, general and administrative		854		838			2,785			2,493
Interest expense		336		—			828			—
Amortization and impairment charges		315		315			948			943
Other expenses		—		—			—			30
Total Expenses		2,860		2,134			8,132			6,892
Net Income before income taxes		5,910		5,805			15,251			18,357
Adjusted base EBITDA		6,593		6,324			17,824			19,248
Total AUM		8,689,979		7,560,651			8,689,979			7,560,651

3 and 9 months ended

Adjusted base EBITDA in the quarter was $6.6 million, up $0.3 million (4%) from the prior period and was $17.8 million on a year-to-date basis, down $1.4 million (7%).

Our three months ended results were positively impacted by higher average AUM given strong precious metals price appreciation this quarter. However on a year-to-date basis, the strong pricing environment of the third quarter was more than offset by the redemption experience we encountered last year which continued through to the first quarter of this year.

Non-EBITDA highlights:

• Other income in the quarter and other loss on a year-to-date basis were due to FX translation movements (USD-to-CAD).

• Interest expense relates to the draw down of our loan facility in the first quarter of this year (see Note 12 of the interim financial statements).

     13 

Lending

	3 months ended					9 months ended
(In thousands $)	Sept. 30, 2019		Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018
SUMMARY INCOME STATEMENT
Management fees		1,883		1,304			5,659			3,509
Carried interest and performance fees		—		—			—			685
less: Carried interest and performance fee payouts		—		—			—			356
Net Fees		1,883		1,304			5,659			3,838
Interest income (1)		2,911		4,407			10,244			10,265
Gains (losses) on proprietary investments		638		(1,142	)		(1,392	)		(1,617	)
Gains on long-term investments		6		(9	)		(16	)		16
Other income (loss)		609		(669	)		(850	)		4,624
Total Net Revenues		6,047		3,891			13,645			17,126
Compensation		1,858		1,524			4,985			3,882
Placement and referral fees		10		46			38			108
Selling, general and administrative		236		178			739			927
Interest expense		6		—			41			—
Amortization and impairment charges		36		36			107			41
Other expenses		—		—			—			30
Total Expenses		2,146		1,784			5,910			4,988
Net Income before income taxes		3,901		2,107			7,735			12,138
Adjusted base EBITDA		3,115		3,999			10,989			12,137
Total AUM (2)		585,926		492,968			585,926			492,968

⁽¹⁾ Includes: (1) interest income from on-balance sheet loans; and (2) co-investment income from lending LP units held as part of our long-term investments portfolio.

⁽²⁾ $1,311 million (US$990 million) of committed capital remains uncalled, of which $277 million (US$209 million) earns a commitment fee (AUM), and $1,034 million (US$781 million) does not (future AUM).

3 and 9 months ended

Adjusted base EBITDA in the quarter was $3.1 million, down $0.9 million (22%) from the prior period and was $11.0 million on a year-to-date basis, down $1.1 million (9%).

Our three and nine months ended results were primarily impacted by the inclusion of accelerated deferred interest income and early loan repayment fees in last year's results (interest income and other income lines, respectively). This more than offset increased management fees and co-investment income as we continue to grow AUM in this segment.

Non-EBITDA highlights:

• Proprietary investment gains in the quarter and losses on a year-to-date basis were due to equity kicker valuations.

• Other income in the quarter and other loss on a year-to-date basis were due to FX translation movements (USD-to-CAD).

     14 

Managed Equities*

	3 months ended					9 months ended
(In thousands $)	Sept. 30, 2019		Sept. 30, 2018			Sept. 30, 2019		Sept. 30, 2018
SUMMARY INCOME STATEMENT
Management fees		2,622		2,884			7,715		9,294
Carried interest and performance fees		—		—			—		1,061
less: Trailer and sub-advisor fees		109		89			282		278
less: Carried interest and performance fee payouts		—		—			—		559
Net Fees		2,513		2,795			7,433		9,518
Gains (losses) on proprietary investments		—		13			177		31
Gains (losses) on long-term investments		1,191		(98	)		2,991		(262	)
Other income (loss)		414		398			785		(114	)
Total Net Revenues		4,118		3,108			11,386		9,173
Compensation		1,234		1,566			4,674		4,642
Selling, general and administrative		682		477			1,676		1,486
Amortization and impairment charges		68		68			213		467
Other expenses		—		362			338		360
Total Expenses		1,984		2,473			6,901		6,955
Net Income before income taxes		2,134		635			4,485		2,218
Adjusted base EBITDA		1,187		1,012			3,158		3,476
Total AUM		1,126,938		1,137,885			1,126,938		1,137,885

*See "Managed Equities" in the business overview section on page 7 of this MD&A.

3 and 9 months ended

Adjusted base EBITDA in the quarter was $1.2 million, up $0.2 million (17%) from the prior period, and was $3.2 million on a year-to-date basis, down $0.3 million (9%).

Our three months ended results were higher year-over-year despite lower management fees on lower average AUM (mainly due to lower fixed-term LP valuations) as compensation expense accruals were lower in the quarter. On a year-to-date basis, the impact of lower fixed-term LP valuations was more pronounced.

Non-EBITDA highlights:

• Proprietary investments gains on a year-to-date basis were due to market value appreciation of certain holdings.

• Long-term investments gains were due to market value appreciation of certain long-term investments.

• Year-to-date compensation includes a non-recurring stock based compensation expense on a new hire in the first quarter.

     15 

Brokerage*

	3 months ended						9 months ended
(In thousands $)	Sept. 30, 2019			Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018
SUMMARY INCOME STATEMENT
Commissions		7,552			4,717			16,221			20,354
less: Commission expense		3,469			2,694			7,134			9,141
Net Commissions		4,083			2,023			9,087			11,213
Management fees		456			449			1,250			1,301
Interest income		470			417			1,650			918
Gains (losses) on proprietary investments		(450	)		(35	)		(367	)		(872	)
Other income (loss)		5			258			122			4,641
Total Net Revenues		4,564			3,112			11,742			17,201
Compensation (1)		2,320			2,182			6,923			7,841
Placement and referral fees		114			140			425			366
Selling, general and administrative		1,516			1,463			4,603			4,613
Interest expense		19			—			60			—
Amortization and impairment charges		181			24			472			51
Other expenses		—			2			7			344
Total Expenses		4,150			3,811			12,490			13,215
Net Income (Loss) before income taxes		414			(699	)		(748	)		3,986
Adjusted base EBITDA		1,861			(37	)		2,094			3,486

*See "Brokerage" in the business overview section on page 7 of this MD&A.

⁽¹⁾ Compensation is presented excluding commission expense, which is reported net of commission revenue.

3 and 9 months ended

Adjusted base EBITDA in the quarter was $1.9 million, up $1.9 million from the prior period, and was $2.1 million on a year-to-date basis, down $1.4 million.

Our three months ended results were positively impacted by an improved equity origination environment this quarter. However, the weak equity origination environment encountered in the first half of the year over shadowed the recent increase in origination activity on a year-to-date basis.

Non-EBITDA highlights:

• Proprietary investment losses in the quarter and on a year-to-date basis were the result of equity kicker valuations.

• Other income in the prior period was primarily related to net sales proceeds received on last year's sale transaction in the first quarter of 2018. See Note 6 of the interim financial statements.

     16 

Corporate

This segment is primarily a cost centre that provides capital, balance sheet management and shared services to the Company's subsidiaries.

	3 months ended						9 months ended
(In thousands $)	Sept. 30, 2019			Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018
SUMMARY INCOME STATEMENT
Gains (losses) on proprietary investments		9			(1,804	)		(582	)		(3,093	)
Gains (losses) on long-term investments		68			(44	)		(163	)		79
Other income (loss)		(131	)		(22	)		373			287
Total Revenues		(54	)		(1,870	)		(372	)		(2,727	)
Compensation		2,063			1,596			5,071			6,286
Selling, general and administrative		434			112			2,070			2,302
Interest expense		32			—			90			81
Amortization and impairment charges		571			10			1,611			83
Other expenses		146			228			742			1,196
Total Expenses		3,246			1,946			9,584			9,948
Net Income (Loss) before income taxes		(3,300	)		(3,816	)		(9,956	)		(12,675	)
Adjusted base EBITDA		(2,303	)		(1,637	)		(6,975	)		(7,962	)

3 and 9 months ended

• Proprietary investments gains in the quarter and losses on a year-to-date basis were due to market value fluctuations of certain resource equity holdings.

• Long-term investments gains in the quarter and losses on a year-to-date basis were due to market value fluctuations of certain long-term investments.

• Compensation was higher in the quarter primarily due to AIP accruals. We now accrue AIP earlier in the year versus our previous practice of truing up AIP accruals at year end. This increase in AIP accruals more than offset lower LTIP amortization. The decrease on a year-to-date basis was primarily due to lower LTIP amortization.

• SG&A increased in the quarter due to lower than normal operating expenses this time last year. Our current quarter SG&A is consistent with our run rate quarterly SG&A. The decrease on a year-to-date basis was primarily due to the adoption of IFRS 16.

• Higher amortization was due to increased depreciation expense related to capitalized leases on the adoption of IFRS 16.

     17 

Dividends

The following dividends were declared by the Company during the 9 months ended September 30, 2019:

Record date	Payment Date	Cash dividend per share ($)		Total dividend amount (in thousands $)
March 08, 2019 - Regular Dividend Q4 - 2018	March 25, 2019		0.03		7,602
May 21, 2019 - Regular Dividend Q1 - 2019	June 5, 2019		0.03		7,605
August 19, 2019 - Regular Dividend Q2 - 2019	September 3, 2019		0.03		7,614
Dividends (1)					22,821

⁽¹⁾ Subsequent to quarter-end, on November 7, 2019, a regular dividend of $0.03 per common share was declared for the quarter ended September 30, 2019. This dividend is payable on December 3, 2019 to shareholders of record at the close of business on November 18, 2019.

Capital Stock

Including the 10.5 million unvested common shares currently held in the EPSP Trust (December 31, 2018 - 9.9 million), total capital stock issued and outstanding was 253.8 million (December 31, 2018 - 253.0 million).

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 and diluted earnings per share were $0.02 and $0.05 for the quarter and nine months ended respectively, compared to $0.01 and $0.09 in the respective prior periods. 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 3.3 million stock options are outstanding pursuant to our stock option plan, of which 2.6 million are exercisable.

     18 

Liquidity and Capital Resources

As at September 30, 2019, the Company had $21.3 million (December 31, 2018 - $Nil) outstanding on its credit facility, $5 million of which is due within 12 months and $16.3 million is due after 12 months (December 31, 2018 - $Nil and $Nil respectively).

The Company has a 5 year, $90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a $25 million term loan and a $65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. In the first quarter, the Company drew $25 million on the term loan portion of the credit facility to avoid its expiry and to partially fund anticipated growth in the business over the next 12-18 months. As at September 30, 2019, the Company was in compliance with all covenants, terms and conditions under the credit facility. Key terms under the credit facility are noted below:

Structure

◦ 5-year, $65 million revolver with "bullet maturity" December 31, 2022

◦ 5-year, $25 million term loan with 5% of principal amortizing quarterly

Interest Rate

◦ Prime rate + 0 bps or;

◦ Banker Acceptance Rate + 170 bps

Covenant Terms

◦ Minimum AUM: $8.2 billion

◦ Debt to EBITDA less than 2.5:1

◦ EBITDA to interest expense more than 2.5:1

Commitments

Besides the Company's long-term lease agreements, there may be commitments to provide loans or make co-investments in lending LPs arising from our lending segment or commitments to make investments in the net investments portfolio of the Company. As at September 30, 2019, the Company had $15.2 million in co-investment commitments from the lending segment (December 31, 2018 - $38.7 million).

     19 

Significant Accounting Judgments, Estimates and Changes in Accounting Policies

The interim financial statements have been prepared in accordance with IFRS standards in effect as at September 30, 2019, specifically, IAS 34 Interim Financial Reporting.

Compliance with IFRS requires the Company to exercise judgment, make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may vary. Except as otherwise noted, significant accounting judgments and estimates are described in Note 2 of the December 31, 2018 annual audited financial statements and have been applied consistently to the interim financial statements as at and for the three and nine months ended September 30, 2019.

In Q1, 2019 the Company adopted IFRS 16 and IFRIC 23 Uncertainty over Income Tax Treatments ("IFRIC 23"). As a result, the Company changed its accounting policies. As permitted by the transition provision of IFRS 16, the Company elected not to restate comparative period results. Accordingly, all comparative period information is presented in accordance with previous accounting policies. The adoption of IFRS 16 and IFRIC 23 did not have a material impact on the Company's consolidated financial statements.

Managing Risk: Financial

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 interests 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 instrument assets. The Company’s earnings, particularly through its lending 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

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 Canadian dollars. The Company's primary foreign currency is the United States Dollar ("USD"). The Company may employ certain hedging strategies to mitigate foreign currency risk.

     20 

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 on balance sheet loans, co-investments in lending LPs and its net investments portfolio.

Loans receivable

The Company incurs credit risk primarily in the on-balance sheet loans of its lending segment and through co-investments made in the lending LPs of the lending segment. In addition to the relative default probability of SRLC borrowers (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with), credit risk is also dependent on loss given default, which can increase credit risk if the values of the underlying assets securing the Company's loans and co-investments decline to levels approaching or below the loan amounts. A decrease in commodity prices may delay the development of the underlying security or business plans of the borrower and could adversely affect the value of the Company's security against a loan. Additionally, the value of the Company's underlying security in a loan can be negatively affected if the actual amount or quality of the commodity proves to be less than originally estimated, or the ability to extract the commodity proves to be more difficult or more costly than originally estimated. 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 managed.

Collectability of loans

Besides the above noted measures we take to manage credit risk, the Company will report on credit risk in the notes to the annual consolidated financial statements and records expected credit loss provisions to ensure that on-balance sheet loans are recorded at their estimated recoverable amount (i.e. net of impairment risk we believe to exist as at the balance sheet date and in accordance with IFRS). Actual losses incurred in the on-balance sheet loan portfolio could differ materially from our provisions. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed.

Net 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 accounts receivable relate to management fees, carried interest and performance fees receivable from the funds, managed accounts and managed companies 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 $90 million committed line of credit with a major Canadian schedule I chartered bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months.

The Company's exposure to liquidity risk as it relates to loans receivable arises from fluctuations in cash flows from making loan advances and receiving loan repayments (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with). The Company manages its loan commitment liquidity risk through the ongoing monitoring of scheduled loan fundings and repayments ("match funding") and through its broader treasury risk management program and enterprise capital budgeting.

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.

     21 

The Company's management team is responsible for reviewing resources to ensure funds are readily available to meet its financial obligations (e.g. dividend payments) 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 and through its broader treasury risk management program. To meet any liquidity shortfalls, actions taken by the Company could include: syndicating a portion of its loans; slowing its lending activities; cutting its dividend; drawing on the line of credit; liquidating net investments; and/or issuing common shares.

Concentration risk

A significant portion of the Company's AUM as well as its net investments and loans are focused on the natural resource sector, and in particular, precious metals related investments and transactions. In addition, from time-to-time, certain net investment and loan positions 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.

Consistent with National Instrument 52-109, the Company's CEO and CFO evaluate quarterly the DC&P and ICFR. As at September 30, 2019, the Company's CEO and CFO concluded that the Company's DC&P and ICFR were properly designed and were operating effectively. In addition, there were no material changes to ICFR during the quarter.

Managing Risk: Non-financial

For details around other risks managed by the Company (e.g. confidentiality of information, conflicts of interest, etc.) refer to the Company's annual report as well as the Annual Information Form available on SEDAR at www.sedar.com.

Additional information relating to the Company, including the Company's Annual Information Form is available on SEDAR at www.sedar.com

     22 

EX-99.18

Exhibit 99.18

Consolidated Financial Statements

Three and nine months ended September 30, 2019

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As at		Sept. 30			Dec. 31
(In thousands of Canadian dollars)		2019			2018
Assets
Current
Cash and cash equivalents			89,431			47,252
Fees receivable			8,802			8,635
Loans receivable	(Note 5)		—			15,275
Proprietary investments	(Note 3)		18,358			26,711
Other assets	(Note 6)		11,270			10,774
Income taxes recoverable			3,072			2,379
Total current assets			130,933			111,026
Loans receivable	(Note 5)		2,871			20,746
Long-term investments	(Note 3)		92,341			102,560
Other assets	(Note 6)		1,765			1,214
Property and equipment, net			22,504			12,334
Intangible assets	(Note 4)		149,269			148,324
Goodwill	(Note 4)		25,371			26,115
Deferred income taxes	(Note 8)		6,124			5,896
			300,245			317,189
Total assets			431,178			428,215
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities			30,105			41,641
Compensation payable			6,612			9,466
Obligations related to securities sold short	(Note 3)		—			255
Loan facility	(Note 12)		5,000			—
Income taxes payable			47			607
Total current liabilities			41,764			51,969
Other accrued liabilities			6,112			—
Loan facility	(Note 12)		16,250			—
Deferred income taxes	(Note 8)		4,470			3,125
Total liabilities			68,596			55,094
Shareholders' equity
Capital stock	(Note 7)		411,805			412,938
Contributed surplus	(Note 7)		46,482			43,383
Deficit			(128,399	)		(117,201	)
Accumulated other comprehensive income			32,694			34,001
Total shareholders' equity			362,582			373,121
Total liabilities and shareholders' equity			431,178			428,215
Commitments and provisions	(Note 13)

The accompanying notes form part of the financial statements

"Ron Dewhurst"	"Sharon Ranson, FCPA, FCA"
Director	Director

  26

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

		For the three months ended						For the nine months ended
		Sept. 30			Sept. 30			Sept. 30			Sept. 30
(In thousands of Canadian dollars, except for per share amounts)		2019			2018			2019			2018
Revenues
Management fees			13,964			13,722			40,851			42,337
Carried interest and performance fees			—			—			—			1,802
Commissions			7,995			4,573			16,810			20,946
Interest income			3,381			4,824			11,894			11,183
Gain (loss) on proprietary investments	(Note 3)		(474	)		(4,765	)		(2,561	)		(9,694	)
Gain (loss) on long-term investments	(Note 3)		1,265			(151	)		2,812			(167	)
Other income (loss)	(Note 6)		604			(275	)		(599	)		9,650
Total revenue			26,735			17,928			69,207			76,057
Expenses
Compensation			10,671			7,993			27,706			29,611
Stock-based compensation	(Note 7)		2,154			2,980			5,482			8,914
Trailer and sub-advisor fees			65			45			154			141
Placement and referral fees			150			223			564			575
Selling, general and administrative			4,191			3,404			12,614			12,895
Interest expense			393			26			1,019			107
Amortization of intangibles	(Note 4)		292			292			875			1,139
Amortization of property and equipment			888			165			2,503			462
Other expenses	(Note 6)		263			790			4,299			2,771
Total expenses			19,067			15,918			55,216			56,615
Income before income taxes for the period			7,668			2,010			13,991			19,442
Provision (recovery) for income taxes	(Note 8)		1,945			35			2,368			(2,105	)
Net income for the period			5,723			1,975			11,623			21,547
Basic earnings per share	(Note 7)	$	0.02		$	0.01		$	0.05		$	0.09
Diluted earnings per share	(Note 7)	$	0.02		$	0.01		$	0.05		$	0.09
Net income for the period			5,723			1,975			11,623			21,547
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation gain (loss) on foreign operations (taxes of $Nil)			540			(779	)		(1,307	)		2,004
Total other comprehensive income (loss)			540			(779	)		(1,307	)		2,004
Comprehensive income			6,263			1,196			10,316			23,551

The accompanying notes form part of the financial statements                              

  27

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)

(In thousands of Canadian dollars, other than number of shares)		Number of Shares Outstanding		Capital Stock		Contributed Surplus		Deficit		Accumulated Other Comprehensive Income		Total  Equity
At Dec. 31, 2018		243,062,337		412,938		43,383		(117,201	)	34,001		373,121
Shares acquired for equity incentive plan	(Note 7)	(1,498,124	)	(5,530	)	—		—		—		(5,530	)
Shares released on vesting of equity incentive plan	(Note 7)	915,136		2,199		(2,199	)	—		—		—
Foreign currency translation gain on foreign operations		—		—		—		—		(1,307	)	(1,307	)
Stock-based compensation	(Note 7)	—		—		5,482		—		—		5,482
Issuance of share capital on conversion of RSUs and other share based considerations	(Note 7)	765,735		2,053		(184	)	—		—		1,869
Dividends declared	(Note 10)	44,186		145		—		(22,821	)	—		(22,676	)
Net income		—		—		—		11,623		—		11,623
Balance, Sep. 30, 2019		243,289,270		411,805		46,482		(128,399	)	32,694		362,582
At Dec. 31, 2017		234,098,634		392,556		39,907		(118,272	)	29,673		343,864
IFRS 9 transition adjustment		—		—		—		(50	)	—		(50	)
Shares acquired for equity incentive plan		(2,362,500	)	(7,058	)	—		—		—		(7,058	)
Shares released on vesting of equity incentive plan		678,815		1,666		(1,666	)	—		—		—
Shares released on exercise of stock option plan		558,048		1,217		(1,217	)					—
Foreign currency translation loss on foreign operations		—		—		—		—		2,004		2,004
Issuance of share capital on purchase of management contracts		6,997,387		17,284		—		—		—		17,284
Stock-based compensation		—		—		8,914		—		—		8,914
Issuance of share capital on conversion of RSUs and other share based considerations		439,401		1,025		(662	)	—		—		363
Dividends declared		215,625		684		—		(22,672	)	—		(21,988	)
Net income		—		—		—		21,547		—		21,547
Balance, Sep. 30, 2018		240,625,410		407,374		45,276		(119,447	)	31,677		364,880

The accompanying notes form part of the financial statements        

  28

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the nine months ended
	Sept. 30			Sept. 30
(In thousands of Canadian dollars)	2019			2018
Operating Activities
Net income for the period		11,623			21,547
Add (deduct) non-cash items:
Loss (gain) on proprietary investments		2,561			9,694
Loss (gain) on Long-term investments		(2,812	)		167
Stock-based compensation		5,482			8,914
Amortization of property, equipment and intangible assets		3,378			1,601
Current portion of lease liability		(2,133	)		—
Deferred income tax recovery		1,090			(3,133	)
Current income tax expense		1,278			1,028
Other items		550			(190	)
Income taxes paid		(2,523	)		(3,196	)
Changes in:
Fees receivable		(167	)		3,838
Loans receivable		33,150			12,141
Other assets		(1,047	)		14,899
Accounts payable, accrued liabilities and compensation payable		(14,390	)		(1,748	)
Cash provided by operating activities		36,040			65,562
Investing Activities
Purchase of investments		(30,700	)		(61,909	)
Sale of investments		48,718			25,826
Purchase of property and equipment		(3,965	)		(1,139	)
Purchase of intangible assets		—			(115,221	)
Cash provided by (used in) investing activities		14,053			(152,443	)
Financing Activities
Acquisition of common shares for equity incentive plan		(5,530	)		(7,058	)
Net advances from loan facility		21,250			—
Dividends paid		(22,676	)		(21,988	)
Cash provided by (used in) financing activities		(6,956	)		(29,046	)
Effect of foreign exchange on cash balances		(958	)		1,259
Net increase (decrease) in cash and cash equivalents during the period		42,179			(114,668	)
Cash and cash equivalents, beginning of the period		47,252			156,120
Cash and cash equivalents, end of the period		89,431			41,452
Cash and cash equivalents:
Cash		84,154			41,191
Short-term deposits		5,277			261
		89,431			41,452
Supplementary disclosure of cash flow information
Amount of interest received during the period		4,779			3,355

The accompanying notes form part of the financial statements

  29

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and nine months ended September 30, 2019 and 2018

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 SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The interim financial statements have been prepared in accordance with IFRS standards in effect as at September 30, 2019, specifically, IAS 34 Interim Financial Reporting.

Compliance with IFRS requires the Company to exercise judgment and make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may vary. Except as otherwise noted, significant accounting judgments and estimates are described in Note 2 of the December 31, 2018 annual audited financial statements and have been applied consistently to the interim financial statements as at and for the three and nine months ended September 30, 2019.

Basis of presentation

These interim financial statements have been prepared on a going concern basis and on a historical cost basis, except for financial assets and financial liabilities classified as fair value through profit or loss ("FVTPL") or fair value through other comprehensive income ("FVOCI"), both of which have been measured at fair value. The financial statements are presented in Canadian dollars and all values are rounded to the nearest thousand ($000), except when indicated otherwise.

Principles of consolidation

These interim 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 over the same reporting period as the Company and are based on accounting policies consistent with that of the Company.

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.

The Company currently controls the following principal subsidiaries:

• Sprott Asset Management LP ("SAM");

• Sprott Capital Partners LP ("SCP");

• Sprott Consulting LP ("SC");

• Sprott Asia LP ("Sprott Asia") and Sprott Korea Corporation ("Sprott Korea");

• Sprott U.S. Holdings Inc. ("SUSHI"), parent of: (1) Rule Investments Inc. ("RII") (2) Sprott Global Resource Investments Ltd. ("SGRIL"); (3) Sprott Asset Management USA Inc. ("SAM US"); and (4) Resource Capital Investment Corporation ("RCIC");

• Sprott Resource Lending Corp. ("SRLC");

• Sprott Inc. 2011 Employee Profit Sharing Plan Trust (the "Trust")

  30

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and nine months ended September 30, 2019 and 2018

Changes in accounting policies

In the first quarter of the year, the Company adopted IFRS 16 Leases (“IFRS 16”) and IFRIC 23 Uncertainty over Income Tax Treatments ("IFRIC 23"). The adoption of IFRIC 23 did not have a material effect on the Company's consolidated financial statements. As permitted by the transition provisions of IFRS 16, the Company applied a modified retrospective approach. Accordingly, the Company elected not to restate comparative period results and there was no impact to opening retained earnings. Below is a summary of the IFRS 16 impacts.

Lease Commitments

The Company recognizes a right-to-use asset and a lease liability as at the lease commencement date. The right-to-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. Upon transition to IFRS 16, a right-to-use asset and lease liability of $9.8 million were recorded. The right-to-use asset is presented on the property and equipment line of the consolidated balance sheet and the short and long-term portions of the lease liability are presented on the accounts payable and accrued liabilities line and other accrued liabilities line, respectively, of the consolidated balance sheet.

The Company used the practical expedient when applying IFRS 16 for short-term leases under 12 months and low-value assets such as IT equipment, with lease payments being expensed as they are occurred.

Prior to the adoption of IFRS 16, the Company classified its lease obligation as operating leases, with the lease payments being presented within the selling, general and administrative line of the consolidated statements of operations. Upon transition to IFRS 16, the right-to-use asset is amortized on a straight-line basis over the term of the lease with the amortization expense being presented on the amortization of property and equipment line of the consolidated statements of operations. The lease liability is subsequently remeasured at amortized cost using the effective interest rate method, with the interest charge on the incremental borrowing rate being presented on the interest expense line of the consolidated statements of operations.

Other accounting policies

All other accounting policies, judgments, and estimates described in the annual audited financial statements have been applied consistently to these consolidated interim financial statements unless otherwise noted.

  31

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and nine months ended September 30, 2019 and 2018

3 PROPRIETARY INVESTMENTS, OBLIGATIONS RELATED TO SECURITIES SOLD SHORT AND LONG-TERM INVESTMENTS

Proprietary investments and Obligations related to securities sold short

Consist of the following (in thousands $):

	Classification and measurement criteria	Sept. 30, 2019		Dec. 31, 2018
Public equities and share purchase warrants	FVTPL		11,156		19,066
Fixed income securities	FVTPL		2,627		2,796
Private holdings:
- Private investments	FVTPL		2,750		2,830
- Energy contracts	Non-financial instrument		1,825		2,019
Total proprietary investments			18,358		26,711
Obligations related to securities sold short	FVTPL		—		255

Long-term investments

Consists of the following (in thousands $):

	Classification and measurement criteria	Sept. 30, 2019		Dec. 31, 2018
Co-investments in funds	FVTPL		64,684		72,739
Private holdings
- Private investments	FVTPL		27,657		29,821
Total long-term investments			92,341		102,560

Realized gains and losses on financial assets classified at FVTPL are included in the gain (loss) on proprietary investments and gain (loss) on long-term investments, as applicable, on the consolidated statements of operations.

  32

SPROTT INC. NOTES
TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and nine months ended September 30, 2019 and 2018

4        GOODWILL AND INTANGIBLE ASSETS

Consist of the following (in thousands $):

	Goodwill			Fund management contracts (indefinite life)			Fund management contracts (finite life)			Total
Cost
At December 31, 2017		166,882			—			47,416			214,298
Additions		—			133,303			—			133,303
Net exchange differences		13,482			—			—			13,482
At December 31, 2018		180,364			133,303			47,416			361,083
Additions		—			1,830			—			1,830
Net exchange differences		(4,798	)		(10	)		—			(4,808	)
At September 30, 2019		175,566			135,123			47,416			358,105
Accumulated amortization
At December 31, 2017		(142,859	)		—			(30,964	)		(173,823	)
Amortization charge for the period		—			—			(1,431	)		(1,431	)
Net exchange differences		(11,390	)		—			—			(11,390
At December 31, 2018		(154,249	)		—			(32,395	)		(186,644	)
Amortization charge for the period		—			—			(875	)		(875	)
Net exchange differences		4,054			—			—			4,054
At September 30, 2019		(150,195	)		—			(33,270	)		(183,465	)
Net book value at:
December 31, 2018		26,115			133,303			15,021			174,439
September 30, 2019		25,371			135,123			14,146			174,640

  33

SPROTT INC. NOTES
TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and nine months ended September 30, 2019 and 2018

Impairment assessment of goodwill

Previously, the Company reported seven cash generating units ("CGU") for goodwill impairment assessment and testing purposes:

•        Exchange Listed Products

•        Alternative Asset Management

•        Global

•        Lending

•        Consulting

•        Merchant Banking & Advisory

•        Corporate

During the first quarter of 2019, as the Company completed the reorganization of its reportable segments, the assets that were previously aggregated to create the global CGU no longer met the requirements of a CGU as they no longer generated independent cash flows. As a result, these assets were disaggregated from the global CGU, and were reallocated to existing CGUs with similar assets that generate largely independent cash flows (brokerage assets within the brokerage CGU and fixed term LP assets within the managed equities CGU). The Company CGUs are now as follows:

•        Exchange Listed Products

•        Lending

•        Managed Equities

•        Brokerage

•        Corporate

As at September 30, 2019, the Company had allocated $25.4 million (December 31, 2018 - $26.1 million) of goodwill on a relative value approach basis to the exchange listed products and managed equities CGUs (previously called the alternative asset management CGU).

In the normal course, goodwill is 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 impairement. During the quarter, there were no indicators of impairment in either the exchange listed products CGU or the managed equities CGU.

Impairment assessment of indefinite life fund management contracts

As at September 30, 2019, the Company had an exchange listed fund management contract within the exchange listed products CGU of $135.1 million related to Central Fund of Canada (December 31, 2018 - $133.3 million). There were no indicators of impairment as at September 30, 2019.

Impairment assessment of finite life fund management contracts

As at September 30, 2019, the Company had exchange listed fund management contracts within the exchange listed products CGU of $14.1 million (December 31, 2018 - $15.0 million). There were no indicators of impairment as at September 30, 2019.

  34

SPROTT INC. NOTES
TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and nine months ended September 30, 2019 and 2018

5        LOANS RECEIVABLE

Components of loans receivable

Loans are reported at their amortized cost using the effective interest method. Loans are reported net of any expected credit loss provisions on the expected credit loss provisions line of the consolidated statements of operations. Total carrying value consists of the following (in thousands $):

	Sept. 30, 2019			Dec. 31, 2018
Loans
Loan principal		2,903			37,873
Accrued interest		89			14
Deferred revenue		(71	)		(1,816	)
Amortized cost		2,921			36,071
Expected credit loss provision		(50	)		(50	)
Less: current portion		—			(15,275	)
Total carrying value of non-current loans receivable		2,871			20,746

Expected credit losses ("ECL")

When a loan is classified as impaired, the original expected timing and amount of future cash flows may be revised to reflect new circumstances. These revised cash flows are discounted using the original effective interest rate to determine the net realizable value of the loan. Interest income is thereafter recognized on this net realizable value using the original effective interest rate. Additional changes to the amount or timing of future cash flows could result in further losses, or the reversal of previous losses, which would also impact the amount of subsequent interest income recognized.

As at September 30, 2019, the Company performed a comprehensive review of each loan measured at amortized cost in its portfolio to determine the requirement for an ECL provision. There was no increase in credit risk in the period and therefore, no further credit loss provision was required.

Interest income on impaired loans and the changes in expected credit loss provisions are as follows (in thousands $):

	For the nine months ended
	Sept. 30, 2019		Sept. 30, 2018
Interest on impaired loans		—		—
Expected credit loss provisions
Balance, beginning of the year		50		—
Transition adjustment		—		50
Revised balance, beginning of the year		50		50
Expected credit loss provision (recovery)		—		—
Net exchange differences		—		—
Balance, end of period		50		50

  35

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and nine months ended September 30, 2019 and 2018

Sector distribution of loan principal

Distribution of the Company's outstanding loan principal balances by sector:

	Sept. 30, 2019				Dec. 31, 2018
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Metals and mining		—		—		1		34,931
Energy and other		2		2,903		2		2,942
Total loan principal		2		2,903		3		37,873

Geographic distribution of loan principal

Distribution of the Company's outstanding loan principal balances by geographic location of the underlying security:

	Sept. 30, 2019				Dec. 31, 2018
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Canada		1		1,578		1		1,578
United States of America		1		1,325		2		36,295
Total loan principal		2		2,903		3		37,873

  36

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and nine months ended September 30, 2019 and 2018

6 OTHER ASSETS, INCOME AND EXPENSES

Other assets

Consist of the following (in thousands $):

	Sept. 30, 2019		Dec. 31, 2018
Fund recoveries and investment receivables		6,396		4,722
Prepaid expenses		4,948		5,369
Other (1)		1,691		1,897
Total Other assets		13,035		11,988

^{(1) Other includes miscellaneous third-party receivables.}

Other income (loss)

Consist of the following (in thousands $):

	For the three months ended					For the nine months ended
	Sep. 30, 2019		Sep. 30, 2018			Sept. 30, 2019			Sept. 30, 2018
Net proceeds from sale transaction (1)		—		—			—			4,200
Other investment income (2)		121		273			345			4,187
Foreign exchange gain (losses)		426		(809	)		(1,482	)		283
Total Other income (loss) (3)		547		(536	)		(1,137	)		8,670

^{(1) Gross proceeds of $5.0 million, net of transaction costs of $0.8 million. This relates to the January 29, 2018 closing of the sale of our non-core private wealth client business.}

^{(2) Primarily includes investment fund income, syndication and trailer fee income.}

^{(3) Excludes royalty income of $0.1 million on a three month ended basis (September 30, 2018 - $0.3 million) and $0.5 million on a nine month ended basis (September 30, 2018 - $1.0 million), which is presented net of operating, depletion and impairment charges below.}

Other expenses

Consist of the following (in thousands $):

	For the three months ended					For the nine months ended
	Sep. 30, 2019		Sep. 30, 2018			Sept. 30, 2019		Sept. 30, 2018
Costs (recoveries) related to energy assets (1)		60		(34	)		62		(138	)
Other (2)		146		563			3,699		1,929
Total Other expenses		206		529			3,761		1,791

^{(1) Includes operating, depletion and impairment charges, net of royalty income of $0.1 million on a three month ended basis (September 30, 2018 - $0.3 million) and $0.5 million on a nine month ended basis (September 30, 2018 - $1.0 million).}

^{(2) Includes non-recurring professional fees and transaction costs.}

  37

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and nine months ended September 30, 2019 and 2018

7 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.

	Number of shares			Stated value  (in thousands $)
At Dec. 31, 2017		234,098,634			392,556
Issuance of share capital under dividend reinvestment program		338,628			1,015
Issuance of share capital on purchase of management contracts		6,997,387			17,284
Released on exercise of stock option plan		558,048			1,217
Issuance of share capital on conversion of RSUs		635,939			1,581
Acquired for equity incentive plan		(2,402,500	)		(7,161	)
Released on vesting of equity incentive plan		2,836,201			6,446
At Dec. 31, 2018		243,062,337			412,938
Issuance of share capital under dividend reinvestment program		44,186			145
Issuance of share capital on conversion of RSUs and other share based considerations		765,735			2,053
Acquired for equity incentive plan		(1,498,124	)		(5,530	)
Released on vesting of equity incentive plan		915,136			2,199
At Sept. 30, 2019		243,289,270			411,805

Contributed surplus consists of: stock option expense; earn-out shares expense; equity incentive plans' expense; and additional purchase consideration.

	Stated value (in thousands $)
At Dec. 31, 2017		39,907
Expensing of Stock-based compensation over the vesting period		12,358
Issuance of share capital on conversion of RSUs		(1,219	)
Released on exercise of stock option plan		(1,217	)
Released on vesting of common shares for equity incentive plan		(6,446	)
At Dec. 31, 2018		43,383
Expensing of Stock-based compensation over the vesting period		5,482
Issuance of share capital on conversion of RSUs and other share based considerations		(184	)
Released on vesting of common shares for equity incentive plan		(2,199	)
At Sept. 30, 2019		46,482

  38

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and nine months ended September 30, 2019 and 2018

Stock option plan

The Company has an option plan (the "Plan") intended to provide incentives to directors, officers, employees and consultants 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 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 for the three and nine months ended September 30, 2019 (three months ended September 30, 2018 - Nil and nine months ended September 30, 2018 - 750,000). There were no options exercised for the three and nine months ended September 30, 2019 (three months ended September 30, 2018 - 1,330,000 options and nine months ended September 30, 2018 - 2,000,000 options). There were no options forfeited for the three and nine months ended September 30, 2019 (three and nine months ended September 30, 2018 - Nil).

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.

A summary of the changes in the Plan is as follows:

	Number of options (in thousands)			Weighted average exercise price ($)
Options outstanding, December 31, 2017		6,975			5.14
Options exercisable, December 31, 2017		5,625			5.79
Options issued		750			2.33
Options exercised		(2,000	)		2.33
Options expired		(2,450	)		10.00
Options outstanding, December 31, 2018		3,275			2.57
Options exercisable, December 31, 2018		1,875			2.70
Options outstanding, September 30, 2019		3,275			2.57
Options exercisable, September 30, 2019		2,575			2.60

Options outstanding and exercisable as at September 30, 2019 are as follows:

Exercise price ($)	Number of outstanding options (in thousands)		Weighted average remaining contractual life (years)		Number of options exercisable (in thousands)
6.60		150		1.1		150
2.33		3,000		6.3		2,300
2.73		125		6.6		125
2.33 to 6.60		3,275		6.1		2,575

  39

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and nine months ended September 30, 2019 and 2018

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; or (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; and (3) from time-to-time, purchases from 2176423 Ontario Ltd., a company controlled by Eric Sprott, pursuant to the terms and conditions of a previously announced share transaction. 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 23,143 RSUs granted during the three months ended September 30, 2019 (three months ended September 30, 2018 - 100,000) and 699,549 RSUs granted during the nine months ended September 30, 2019 (nine months ended September 30, 2018 - 439,401). The Trust purchased 1.3 million shares in the three months ended September 30, 2019 (three months ended September 30, 2018 - nil) and 1.5 million shares in the nine months ended September 30, 2019 (nine months ended September 30, 2018 - 2.4 million shares).

	Number of common shares
Common shares held by the Trust, December 31, 2017		10,365,957
Acquired		2,402,500
Released on vesting		(2,836,201	)
Unvested common shares held by the Trust, December 31, 2018		9,932,256
Acquired		1,498,124
Released on vesting		(915,136	)
Unvested common shares held by the Trust, September 30, 2019		10,515,244

The table below provides a breakdown of the share-based compensation expense and the corresponding increase to contributed surplus:

	For the three months ended				For the nine months ended
	Sept. 30, 2019		Sept. 30, 2018		Sept. 30, 2019		Sept. 30, 2018
Stock option plan		57		58		188		349
EPSP / EIP		2,097		2,922		5,294		8,565
		2,154		2,980		5,482		8,914

  40

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and nine months ended September 30, 2019 and 2018

Basic and diluted earnings per share

The following table presents the calculation of basic and diluted earnings (loss) per common share:

	For the three months ended						For the nine months ended
	Sept. 30, 2019			Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018
Numerator (in thousands $):
Net income (loss) - basic and diluted		5,723			1,975			11,623			21,547
Denominator (Number of shares in thousands):
Weighted average number of common shares		253,656			252,327			253,523			251,516
Weighted average number of unvested shares purchased by the Trust		(9,718	)		(12,051	)		(9,399	)		(11,535	)
Weighted average number of common shares - basic		243,938			240,276			244,124			239,981
Weighted average number of dilutive stock options		3,125			3,125			3,125			3,125
Weighted average number of unvested shares purchased by the Trust		9,718			12,051			9,399			11,535
Weighted average number of common shares - diluted		256,781			255,452			256,648			254,641
Net income per common share
Basic	$	0.02		$	0.01		$	0.05		$	0.09
Diluted	$	0.02		$	0.01		$	0.05		$	0.09

Capital management

The Company's objectives when managing capital are:

• 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 for 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). SCP is a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), SAM is a registrant of the Ontario Securities Commission ("OSC") and the U.S. Securities and Exchange Commission ("SEC"), SAM US is registered with the 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. As at September 30, 2019 and 2018, all entities were in compliance with their respective capital requirements.

  41

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and nine months ended September 30, 2019 and 2018 

8 INCOME TAXES

The major components of income tax expense are as follows (in thousands $):

	For the nine months ended
	Sept. 30, 2019		Sept. 30, 2018
Current income tax expense (recovery)
Based on taxable income of the current period		1,278		1,159
Other		—		(131	)
		1,278		1,028
Deferred income tax expense (recovery)
Total deferred income tax expense		1,090		(3,133	)
Income tax expense reported in the consolidated statements of operations		2,368		(2,105	)

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 $):

	For the nine months ended
	Sept. 30, 2019			Sept. 30, 2018
Income before income taxes		13,991			19,442
Tax calculated at domestic tax rates applicable to profits in the respective countries		3,737			5,183
Tax effects of:
Non-deductible stock-based compensation		120			229
Non-taxable capital (gains) and losses		(217	)		(124	)
Intangibles		85			(5,122	)
Adjustments in respect of previous periods		66			(131	)
Other temporary differences not benefited		(29	)		(341	)
Non-capital losses not benefited previously		(1,427	)		(2,540	)
Rate differences and other		33			741
Tax charge		2,368			(2,105	)

The weighted average statutory tax rate was 26.7% (September 30, 2018 - 26.7%). The Company has $12 million of capital tax losses from prior years that will begin to expire in 2019. The benefit of these capital losses has not been recognized.

  42

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and nine months ended September 30, 2019 and 2018 

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 nine months ended September 30, 2019

	Dec. 31, 2018		Recognized in income			Recognized in other comprehensive income			Sept. 30, 2019
Deferred income tax assets
Stock-based compensation		4,300		465			—			4,765
Non-capital losses		5,018		1			(27	)		4,992
Unrealized gains		386		(364	)					22
Other		513		28			—			541
Total deferred income tax assets		10,217		130			(27	)		10,320
Deferred income tax liabilities
Fund management contracts		7,317		1,526			—			8,843
Proceeds receivable		70		(70	)		—			—
Other		59		(236	)		—			(177	)
Total deferred income tax liabilities		7,446		1,220			—			8,666
Net deferred income tax assets		2,771		(1,090	)		(27	)		1,654

For the year ended December 31, 2018

	Dec. 31, 2017			Recognized in income			Recognized in other comprehensive income		Dec. 31, 2018
Deferred income tax assets
Other stock-based compensation		2,588			1,712			—		4,300
Non-capital losses		820			4,185			13		5,018
Unrealized gains		481			(95	)		—		386
Other		485			28			—		513
Total deferred income tax assets		4,374			5,830			13		10,217
Deferred income tax liabilities
Fund management contracts		431			6,886			—		7,317
Proceeds receivable		279			(209	)		—		70
Other		(116	)		175			—		59
Total deferred income tax liabilities		594			6,852			—		7,446
Net deferred income tax assets		3,780			(1,022	)		13		2,771

  43

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and nine months ended September 30, 2019 and 2018

9 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 September 30, 2019 and December 31, 2018 (in thousands $).

Proprietary Investments

Sept. 30, 2019	Level 1		Level 2		Level 3		Total
Public equities and share purchase warrants		8,792		2,364		—		11,156
Fixed income securities		—		1,627		1,000		2,627
Private holdings		—		—		2,750		2,750
Obligations related to securities sold short		—		—		—		—
Total net recurring fair value measurements		8,792		3,991		3,750		16,533

Dec. 31, 2018	Level 1			Level 2		Level 3		Total
Public equities and share purchase warrants		13,680			5,386		—		19,066
Fixed income securities		—			1,796		1,000		2,796
Private holdings		—			—		2,830		2,830
Obligations related to securities sold short		(255	)		—		—		(255	)
Total net recurring fair value measurements		13,425			7,182		3,830		24,437

Long-term investments

Sept. 30, 2019	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		60,056		4,628		64,684
Private holdings		—		—		27,657		27,657
Total net recurring fair value measurements		—		60,056		32,285		92,341

Dec. 31, 2018	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		72,739		—		72,739
Private holdings		—		—		29,821		29,821
Total net recurring fair value measurements		—		72,739		29,821		102,560

  44

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and nine months ended September 30, 2019 and 2018

The following tables provides a summary of changes in the fair value of Level 3 financial assets (in thousands $):

Proprietary Investments

	Changes in the fair value of Level 3 measurements - Sep. 30 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income			Sept. 30, 2019
Private holdings		2,830		100		(57	)		(123	)		2,750
Fixed income securities		1,000		—		—			—			1,000
		3,830		100		(57	)		(123	)		3,750

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		4,269		2,135		(3,680	)		106		2,830
Fixed income securities		—		1,000		—			—		1,000
		4,269		3,135		(3,680	)		106		3,830

Long-term investments

	Changes in the fair value of Level 3 measurements - Sep. 30, 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Sept. 30, 2019
Private holdings		24,945		3,424		—		(712	)		27,657
Co-investments in funds		4,876		—		—		(248	)		4,628
		29,821		3,424		—		(960	)		32,285

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		12,152		13,145		—		4,524		29,821
		12,152		13,145		—		4,524		29,821

During the nine months ended September 30, 2019, the Company transferred public equities of $3.6 million (December 31, 2018 - $0.7 million) from Level 2 to Level 1 within the fair value hierarchy due to the release of trading restrictions by the issuer. For the nine months ended September 30, 2019, the Company purchased level 3 investments of $3.5 million (December 31, 2018 - $16.3 million). For the nine months ended September 30, 2019, the Company transferred $Nil (December 31, 2018 - $Nil) from Level 3 to Level 1 within the fair value hierarchy.

  45

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and nine months ended September 30, 2019 and 2018

The following table presents the valuation techniques used by the Company in measuring fair values:

Type	Valuation Technique
Public equities and share purchase warrants	Fair values are determined using pricing models which incorporate all available market-observable inputs.
Co-investments in funds	Fair values are based on the last available Net Asset Value.
Fixed income securities	Fair values are based on independent market data providers or third-party broker quotes.

The Company’s Level 3 securities consist of private holdings, co-investment in funds and fixed income securities of private companies. The Company determines fair value using a variety of valuation techniques, including discounted cash flows, comparable recent transactions and other techniques used by market participants. The significant unobservable input used in these valuation techniques can vary considerably over time, and include grey market financing prices, discount rates and extraction recovery rates of mining projects. 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 $1.2 million (December 31, 2018 - $1.2 million).

Financial instruments not carried at fair value

For fees receivable, other assets, accounts payable and accrued liabilities and compensation payable, the carrying amount represents a reasonable approximation of fair value due to their short term maturity.

10 DIVIDENDS

The following dividends were declared by the Company during the nine months ended September 30, 2019:

Record date	Payment Date	Cash dividend per share ($)		Total dividend amount (in thousands $)
March 08, 2019 - Regular Dividend Q4 - 2018	March 25, 2019		0.03		7,602
May 21, 2019 - Regular Dividend Q1 - 2019	June 5, 2019		0.03		7,605
August 19, 2019 - Regular Dividend Q2 - 2019	September 3, 2018		0.03		7,614
Dividends (1)					22,821

⁽¹⁾ Subsequent to the quarter-end, on November 7, 2019, a regular dividend of $0.03 per common share was declared for the quarter ended September 30, 2019. This dividend is payable on December 3, 2019 to shareholders of record at the close of business on November 18, 2019.

  46

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and nine months ended September 30, 2019 and 2018 

11        SEGMENTED INFORMATION

For management purposes, the Company is organized into business units based on its products, services and geographical location and has five 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;

• Lending (reportable), which provides lending activities through limited partnership vehicles as well as through direct lending activities using the Company's balance sheet;

• Managed Equities (reportable), which provides asset management and sub-advisory services to the Company's branded funds, fixed-term LPs and managed accounts;

• Brokerage (reportable), which includes the activities of our Canadian and U.S broker-dealers;

• Corporate (reportable), which provides capital, balance sheet management and enterprise shared services to the Company's subsidiaries;

• All Other Segments (non-reportable), which do not meet the definition of reportable segments as per IFRS 8.

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 proprietary investments (as if such gains and losses had not occurred), foreign exchange gains and losses, one time non-recurring expenses, non-cash and non-recurring 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.

  47

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and nine months ended September 30, 2019 and 2018 

The following tables present the operations of the Company's segments (in thousands $):

For the three months ended September 30, 2019

	Exchange Listed Products		Lending		Managed Equities		Brokerage		Corporate			Elimination and all other segments			Consolidated
Total revenue		8,770		6,047		4,227		8,033		(54	)		(288	)		26,735
Total expenses		2,860		2,146		2,093		7,619		3,246			1,103			19,067
Pre-tax Income (loss)		5,910		3,901		2,134		414		(3,300	)		(1,391	)		7,668
Adjusted base EBITDA		6,593		3,115		1,187		1,861		(2,303	)		(404	)		10,049

For the three months ended September 30, 2018

	Exchange Listed Products		Lending		Managed Equities (1)		Brokerage (1)			Corporate			Elimination and all other segments (1)			Consolidated
Total revenue		7,939		3,891		3,197		5,806			(1,870	)		(1,035	)		17,928
Total expenses		2,134		1,784		2,562		6,505			1,946			987			15,918
Pre-tax Income (loss)		5,805		2,107		635		(699	)		(3,816	)		(2,022	)		2,010
Adjusted base EBITDA		6,324		3,999		1,012		(37	)		(1,637	)		46			9,707

^{(1) Prior year figures have been restated to reflect the changes in operating segments.}

For the nine months ended September 30, 2019

	Exchange Listed Products		Lending		Managed Equities		Brokerage			Corporate			Elimination and all other segments			Consolidated
Total revenue		23,383		13,645		11,668		18,876			(372	)		2,007			69,207
Total expenses		8,132		5,910		7,183		19,624			9,584			4,783			55,216
Pre-tax Income (loss)		15,251		7,735		4,485		(748	)		(9,956	)		(2,776	)		13,991
Adjusted base EBITDA		17,824		10,989		3,158		2,094			(6,975	)		1,552			28,642

For the nine months ended September 30, 2018

	Exchange Listed Products		Lending		Managed   Equities (1)		Brokerage (1)		Corporate			Elimination and all other segments (1)			Consolidated
Total revenue		25,249		17,482		10,010		26,342		(2,727	)		(299	)		76,057
Total expenses		6,892		5,344		7,792		22,356		9,948			4,283			56,615
Pre-tax Income (loss)		18,357		12,138		2,218		3,986		(12,675	)		(4,582	)		19,442
Adjusted base EBITDA		19,248		12,137		3,476		3,486		(7,962	)		35			30,420

^{(1) Prior year figures have been restated to reflect the changes in operating segments.}

  48

SPROTT INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three and nine months ended September 30, 2019 and 2018 

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 $):

	For the three months ended				For the nine months ended
	Sept. 30, 2019		Sept. 30, 2018		Sept. 30, 2019		Sept. 30, 2018
Canada		23,407		13,783		59,409		64,350
United States		3,328		4,145		9,798		11,707
		26,735		17,928		69,207		76,057

12        LOAN FACILITY

As at September 30, 2019, the Company had $21.3 million (December 31, 2018 - $Nil) outstanding on its credit facility, $5 million of which is due within 12 months and $16.3 million is due after 12 months (December 31, 2018 - $Nil and $Nil respectively).

The Company has a 5 year, $90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a $25 million term loan and a $65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. In the first quarter, the Company drew $25 million on the term loan portion of the credit facility to avoid its expiry and to partially fund anticipated growth in the business over the next 12-18 months. As at September 30, 2019, the Company was in compliance with all covenants, terms and conditions under the credit facility. Key terms under the credit facility are noted below:

Structure

◦                     5-year, $65 million revolver with "bullet maturity" December 31, 2022

◦                     5-year, $25 million term loan with 5% of principal amortizing quarterly

Interest Rate

◦                     Prime rate + 0 bps or;

◦                     Banker Acceptance Rate + 170 bps

Covenant Terms

◦                     Minimum AUM: $8.2 billion

◦                     Debt to EBITDA less than 2.5:1

◦                     EBITDA to interest expense more than 2.5:1

13        COMMITMENTS AND PROVISIONS

Besides the Company's long-term lease agreement, there may be commitments to provide loans arising from the lending business or commitments to make investments in the net investments portfolio of the Company. As at September 30, 2019, the Company had $15.2 million in co-investment commitments from the lending segment (December 31, 2018 - $38.7 million).

  49

Corporate Information

Head Office	Legal Counsel
Sprott Inc.	Baker & McKenzie LLP
Royal Bank Plaza, South Tower	Brookfield Place, Suite 2100
200 Bay Street, Suite 2600	181 Bay Street, P.O. Box 874
Toronto, Ontario M5J 2J1, Canada	Toronto, Ontario, Canada M5J 2T3
T: 416.943.8099
1.855.943.8099	Auditors
	KPMG LLP
Directors & Officers	Bay Adelaide Centre
Ronald Dewhurst, Chairman	333 Bay Street, Suite 4600
Peter Grosskopf, Chief Executive Officer and Director	Toronto, ON M5H 2S5
Rick Rule, Director
Sharon Ranson, FCPA, FCA, Director	Investor Relations
Rosemary Zigrossi, Director	Shareholder requests may be directed to
Whitney George, President	Investor Relations by e-mail at ir@sprott.com
Kevin Hibbert, CPA, CA, Chief Financial Officer	or via telephone at 416.943.8099
Arthur Einav, Corporate Secretary	or toll free at 1.855.943.8099
Transfer Agent & Registrar	Stock Information
TMX Equity Transfer Services	Sprott Inc. common shares are traded on the
200 University Avenue, Suite 300	Toronto Stock Exchange under the symbol ‘‘SII’’
Toronto, Ontario M5H 4H1
Toll Free: 1.866.393.4891
www.tmxequitytransferservices.com

www.sprott.com

EX-99.19

Exhibit 99.19

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, Peter Grosskopf, Chief Executive Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Sprott Inc. (the “issuer”) for the interim period ended September 30, 2019.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2019 and ended on September 30, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date:	November 8, 2019
“Peter Grosskopf”
Peter Grosskopf
Chief Executive Officer

EX-99.20

Exhibit 99.20

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS FULL CERTIFICATE

I, Kevin Hibbert, Chief Financial Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Sprott Inc. (the “issuer”) for the interim period ended September 30, 2019.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2019 and ended on September 30, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: November 8, 2019

“Kevin Hibbert”

Kevin Hibbert

Chief Financial Officer

EX-99.21

Exhibit 99.21

TABLE OF CONTENTS

DEFINED TERMS	1
FORWARD LOOKING STATEMENTS	2
KEY PERFORMANCE INDICATORS (NON-IFRS FINANCIAL MEASURES)	4
CORPORATE STRUCTURE	5
GENERAL DEVELOPMENT OF THE BUSINESS	6
DESCRIPTION OF THE BUSINESS	8
COMPETITION AND INDUSTRY OUTLOOK	14
ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY	16
RISK MANAGEMENT	17
RISK FACTORS	20
DIVIDENDS	34
CAPITAL STRUCTURE	35
MARKET FOR SECURITIES	36
ESCROWED SECURITIES	38
DIRECTORS AND EXECUTIVE OFFICERS	39
LEGAL PROCEEDINGS AND REGULATORY ACTIONS	41
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	42
TRANSFER AGENT AND REGISTRAR	43
MATERIAL CONTRACTS	44
AUDIT AND RISK MANAGEMENT COMMITTEE INFORMATION	45
INTERESTS OF EXPERTS	47
ADDITIONAL INFORMATION	48
APPENDIX A - AUDIT AND RISK MANAGEMENT COMMITTEE MANDATE	A-1

DEFINED TERMS

As used in this annual information form (“AIF”), unless the context indicates or requires otherwise, the following terms have the following meanings:

• “Corporation” means Sprott Inc. and, where applicable, its subsidiaries and joint ventures.

• “Investment Products” means the Corporation’s investment funds (the “Funds”), discretionary managed accounts (the “Managed Accounts”), fixed term limited partnerships (the “Limited Partnerships”) and managed companies.

• “SAM” means Sprott Asset Management LP, a wholly-owned subsidiary of the Corporation, registered as a portfolio manager, an investment fund manager and an exempt market dealer.

• "SCP" means Sprott Capital Partners LP (formerly "Sprott Private Wealth LP"), a wholly-owned subsidiary of the Corporation, registered as an investment dealer and a member of the Investment Industry Regulatory Organization of Canada (“IIROC”).

• “Sprott U.S.” means Sprott U.S. Holdings Inc. (and its subsidiaries), a wholly-owned subsidiary of the Corporation through which the Corporation holds Rule Investment, Inc. (“RII”), Resource Capital Investment Corp. (“RCIC”), Sprott Global Resource Investments, Ltd. (“SGRIL”) and Sprott Asset Management USA Inc. (formerly, Terra Resource Investment Management) (“SAM USA” and together with RII, RCIC and SGRIL, “Global”).

• “SRLC” or “Sprott Resource Lending” means Sprott Resource Lending Corp. (and its subsidiaries), a wholly-owned subsidiary of the Corporation which provides debt financing to companies in the resource sector and is the general partner of Sprott Private Resource Lending Fund (the "Lending Fund I"), Sprott Private Resource Lending Fund II (the "Lending Fund II") and certain other lending vehicles (together with Lending Fund I and Lending Fund II, the "Lending Funds").

In this AIF, unless otherwise indicated, all dollar amounts are expressed in Canadian dollars. References to “$” are to Canadian dollars and references to “U.S.$” and "USD$" are to United States dollars. All United States dollar amounts that are expressed in Canadian dollars in this AIF have been converted from U.S. dollars at the Bank of Canada average exchange rate for the year ended December 31, 2019 of $1.3269 per U.S.$1.00. The information in this AIF is presented as at December 31, 2019 unless otherwise indicated.

1

FORWARD LOOKING STATEMENTS

This AIF contains certain forward-looking information and statements (collectively referred to herein as “Forward-Looking Statements”) within the meaning of applicable securities laws. Wherever possible, words such as “may”, “would”, “could”, “will”, “anticipate”, “believe”, “plan”, “expect”, “intend”, “estimate”, “aim”, “endeavour” and similar expressions have been used to identify these Forward-Looking Statements. The Forward-Looking Statements herein are based upon the current internal expectations, estimates, projections, assumptions and beliefs of the Corporation as of the date of such information or statements, including, among other things, assumptions with respect to future growth, results of operations, performance and business prospects and opportunities. The reader is cautioned that the expectations, estimates, projections, assumptions and/or beliefs used in the preparation of such information may prove to be incorrect. The Forward-Looking Statements included in this AIF are not guarantees of future performance and should not be unduly relied upon. Such information and statements, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors, which may cause actual results or events to differ materially from those anticipated in the Forward-Looking Statements. In addition, this AIF may contain Forward-Looking Statements attributed to third-party industry sources.

The Forward-Looking Statements contained in this AIF are expressly qualified by the cautionary statements provided for herein. The Corporation does not assume any obligation to publicly update or revise any of the included Forward-Looking Statements after the date of this AIF, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

Forward-Looking Statements contained in this AIF include, but are not limited to, statements with respect to:

• Diversification of the Merchant Bank Division's (as defined below) sector coverage.

• Ongoing growth of the Corporation's merchant banking and advisory business.

• SAM's continued consideration of strategic acquisitions which will allow it to build scale, improve profitability or enter new markets and investment categories.

• Intentions to grow the Corporation's business, including by increasing AUM, and creating new investment products and businesses.

• Expectations regarding continued consolidation of the asset management business, with bifurcation between large general managers and specialized boutique managers.

• Expectations regarding continued price compression in the asset management industry, particularly in the exchange traded funds segment as players compete for market share.

• Expected benefits from economic and demographic trends over the next decade.

• Expectations regarding recovery of legal costs.

• Potential acquisitions and the addition of new investment products.

• Commitment to being at the forefront of technological innovation in the sector.

• The launch of a new venture called OneGold.

• Future purchases by the Corporation of Common Shares pursuant to the NCIB (as defined below).

• A number of matters relating to the acquisition of Tocqueville (as defined below) gold strategies, including the failure to realize the anticipated benefits of such acquisition.

Although the Corporation believes the expectations, estimates, projections, assumptions and beliefs reflected in the Forward-Looking Statements are reasonable, undue reliance should not be placed on Forward-Looking Statements because the Corporation can give no assurance that such expectations, estimates, projections, assumptions and beliefs will prove to be correct. The Corporation cannot guarantee future results, levels of activity, performance or achievements. Consequently, there is no representation by the Corporation that actual results achieved will be the same in whole or in part as those set out in the Forward-Looking Statements. Some of the risks and other factors, some of which are beyond the control of the Corporation, that could cause results to differ materially from those expressed in the Forward-Looking Statements contained in this AIF, include, but are not limited to:

2

• Difficult market conditions.

• Poor investment performance.

• Failure to continue to retain and attract qualified staff.

• Employee errors or misconduct resulting in regulatory sanctions or reputational harm.

• Performance fee fluctuations.

• A business segment or another counterparty failing to pay its financial obligation.

• Failure of the Corporation to meet its demand for cash or fund obligations as they come due.

• Changes in the investment management industry.

• Failure to implement effective information security policies, procedures and capabilities.

• Lack of investment opportunities.

• Risks relating to regulatory compliance.

• Failure to deal appropriately with conflicts of interest.

• Competitive pressures.

• Corporate growth which may be difficult to sustain and may place significant demands on existing administrative, operational and financial resources.

• Failure to comply with privacy laws.

• Failure to execute the Corporation’s succession plan.

• Foreign exchange risk relating to the relative value of the U.S. dollar.

• Litigation risk.

• Risks related to maintaining minimum regulatory capital requirements.

• Failure to develop effective business resiliency plans.

• Failure to obtain or maintain sufficient insurance coverage on favourable economic terms.

• Historical financial information being not necessarily indicative of future performance.

• Risks related to the Corporation's investment products.

• Risks related to the Corporation's proprietary investments.

• Risks relating to the Corporation's lending business.

• Risks relating to the Corporation's merchant bank and advisory business.

• Risks related to the Corporation’s organization, corporate structure and its common shares (the “Common Shares”).

• The other risk factors disclosed in this AIF.

The foregoing list of factors should not be considered exhaustive. See also “Risk Factors”. Should one or more of the risks or uncertainties listed above or in “Risk Factors” in this AIF materialize, or should the expectations, estimates, projections, assumptions and/or beliefs underlying the Forward-Looking Statements prove incorrect, future results, levels of activity, performance or achievements could vary materially from those expressed or implied by Forward-Looking Statements contained in this AIF. With respect to Forward-Looking Statements contained in this AIF, the Corporation has made the following assumptions, among others: (i) the impact of increasing competition in each business in which the Corporation operates will not be material; (ii) quality management will be available; and (iii) the effects of regulation and tax laws of governmental agencies will be consistent with the current environment.

The above summary of assumptions and risks related to Forward-Looking Statements has been provided in this AIF in order to provide readers with a more complete perspective on the future operations of the Corporation. Readers are cautioned that such Forward-Looking Statements may not be appropriate for other purposes.

3

KEY PERFORMANCE INDICATORS (NON-IFRS FINANCIAL MEASURES)

The Corporation 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 include:

Assets Under Management

Assets Under Management ("AUM") refers to the total net assets managed by the Corporation through its various investment product offerings, managed accounts and managed companies.

Net Inflows

Net Inflows (consisting of net sales, capital calls and fee earning capital commitments) result in changes to AUM and are described individually below:

Net Sales

Fund sales (net of redemptions), including 'at-the-market' transactions and secondary offerings of our physical trusts and new 'creations' of ETF units, are a key performance indicator as new assets being managed will lead to higher management fees and can potentially lead to increased carried interest and performance fee generation (as applicable) given that AUM is also the basis upon which carried interest and performance fees are calculated.

Capital calls and commitments

Capital calls into our lending LPs is a key source of AUM creation, and ultimately, earnings for the Corporation. Once capital is called into our lending LPs, it is included within the AUM of the Corporation as it will now earn a management fee (note: it is possible for some forms of committed capital to earn a commitment fee despite being uncalled, in which case, it will also be included in AUM at that time). Conversely, once loans in our lending LPs are repaid, capital may be returned to investors in the form of a distribution, thereby reducing our AUM ("capital distributions").

Net Fees

Management fees (net of trailer and sub-advisor fees) and carried interest and performance fees (net of carried interest and performance fee payouts), 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, arise from the transaction based service offerings of our brokerage segment.

Compensation

Compensation excludes commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance and new hire accruals which are non-recurring.

Investable Capital

Investable capital includes 1) cash, net of syndicate cash holdings; 2) proprietary investments, net of any obligations for securities sold short; and 3) balance sheet loans.

4

CORPORATE STRUCTURE

Sprott Inc. was incorporated under the Business Corporations Act (Ontario) (the "Act") by Articles of Incorporation dated February 13, 2008. The Corporation’s registered and head office is located at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, M5J 2J1.

The corporate structure of the Corporation and its material subsidiaries are as indicated in the following chart:

Notes:

(1) Sprott Resource Lending is the general partner of the Lending Funds and exists under the federal laws of Canada.

(2) Sprott Asset Management GP Inc. is the general partner of SAM, which exists under the laws of the Province of Ontario.

(3) Sprott Capital Partners GP Inc. is the general partner of SCP, which exists under the laws of the Province of Ontario.

(4) Sprott U.S. Holdings Inc. was formed to acquire RII (which in turn owns SGRIL), SAM USA and RCIC. Sprott U.S. Holdings Inc. exists under the laws of the State of Delaware. RII, SGRIL and SAM USA exist under the laws of the State of California. RCIC exists under the laws of the State of Nevada.

5

GENERAL DEVELOPMENT OF THE BUSINESS

Effective January 9, 2017, Ronald Dewhurst was appointed to the Board.

On April 10, 2017, as a result of a strategic repositioning, SAM and SCP entered into an asset purchase agreement (the "Purchase Agreement") to sell the Corporation's Canadian diversified asset management contracts and certain of the client accounts of its Canadian private wealth business to a management group (the "Buyer") led by John Wilson, the then Chief Executive Officer (the "CEO") of SAM, and James Fox, the then President of SAM, for an aggregate purchase price of approximately $46 million (the "Sale Transaction"). The Sale Transaction occurred in two phases. On August 1, 2017, the Corporation completed the first phase of the Sale Transaction, successfully closing the sale of its management agreements related to certain investment funds and accounts together totaling $3.0 billion in AUM and concurrently entering into new agreements with the Buyer to provide sub-advisory services for $865 million of those assets. The Corporation retained all management contracts for its exchange-listed products business and the entire team managing the Sprott Physical Gold Trust ("PHYS"), Sprott Physical Silver Trust ("PSLV"), Sprott Physical Platinum and Palladium Trust ("SPPP") and the exchange traded funds ("ETFs") remained intact. In addition, the Corporation retained the management contracts for its institutional precious metals strategies and the SAM precious metals investment team remained with the Corporation. On January 29, 2018, the Corporation completed the second phase of the Sale Transaction, closing the sale of certain of the client accounts of its Canadian private wealth business to the Buyer. The Corporation retained certain accounts of clients interested in resource-focused investment opportunities.

On June 16, 2017, the Corporation completed the final closing of Lending Fund I, bringing total firm capital commitments for the Lending Fund I and certain other lending vehicles to over USD$640 million.

On June 29, 2017, the Corporation completed a secondary offering (the "Secondary Offering") of Common Shares held by 2176423 Ontario Ltd. (the "Selling Shareholder"), a company controlled and beneficially owned by Eric Sprott. Peter Grosskopf, the CEO and a director of the Corporation, is an officer and non-voting shareholder of the Selling Shareholder. An aggregate of 21,500,000 Common Shares were sold pursuant to an underwriting agreement dated June 21, 2017 between the Corporation, the Selling Shareholder, and a syndicate of underwriters led by TD Securities Inc. at a price of $2.20 per Common Share (the “Issue Price”) for gross proceeds of $47,300,000. In addition to the Secondary Offering, the Selling Shareholder sold, on a non-brokered private placement basis, 7,500,000 Common Shares at the Issue Price to the Sprott Inc. 2011 Employee Profit Sharing Plan Trust (the “Private Placement”). $5,500,000 of the proceeds owed to Mr. Eric Sprott is outstanding as at December 31, 2018. The Corporation also purchased 5,000,000 Common Shares at the Issue Price from the Selling Shareholder for cancellation (the “Exempt Issuer Bid”). Prior to the Secondary Offering, Mr. Sprott held, directly and indirectly through the Selling Shareholder, 61,598,078 Common Shares, representing approximately 24.76% of the then outstanding Common Shares. Immediately after giving effect to the Secondary Offering, the Private Placement and the Exempt Issuer Bid, Mr. Sprott held, directly and indirectly through the Selling Shareholder, 27,598,078 Common Shares, representing approximately 11.32% of the then outstanding Common Shares.

On October 17, 2017, Markus Faber resigned as a director of the Corporation.

On January 16, 2018, the Corporation completed the acquisition of Central Fund of Canada Limited ("CFCL"). The Corporation acquired all of the common shares of CFCL for $500 in cash per share and CFCL was subsequently liquidated and dissolved and from Central Group Alberta Ltd. (“CGAL”), CFCL also acquired from CGAL the rights and obligations under the administration agreement, to administer and manage CFCL's assets, for an aggregate purchase price consisting of $105 million in cash and 6,997,387 Common Shares, plus a cash earnout payment (“CFCL Transaction”). Pursuant to the CFCL Transaction, all or substantially all of the assets and liabilities of CFCL were transferred to a newly formed trust, Sprott Physical Gold and Silver Trust (the "CEF"). At the time of closing, the CFCL Transaction, doubled the size of the Corporation's exchange-listed products franchise and increased the Corporation's AUM to more than $11.5 billion. On January 16, 2018, the CEF Trust began trading on the NYSE Arca under the symbol "CEF" and on the Toronto Stock Exchange (the "TSX") under the symbols "CEF.U" and CEF. The ongoing operation of the CEF Trust is managed by SAM.

On March 6, 2018, James Roddy resigned as a director of the Corporation.

6

On November 12, 2018, the Corporation announced that it is committed to being at the forefront of technological innovation in the sector and has made two investments in fintech companies using blockchain technology to digitize gold. On the same date, the Corporation also announced that it has partnered with APMEX, Inc., North America's largest online coin dealer, to launch a new venture called OneGold, the first dedicated online platform for investing in digital bullion.

On January 4, 2019, Sprott Private Wealth LP received approval from IIROC to formally change its name to SCP.

On January 29, 2019, Whitney George was appointed President of the Corporation. In addition to this new role, Mr. George continues to serve as Chairman of Sprott. U.S. and Chief Investment Officer ("CIO") of SAM.

On February 1, 2019, Neil Adshead joined Sprott U.S. as Portfolio Manager to work alongside Rick Rule to manage the resource Exploration Partnerships offered by RCIC.

On May 10, 2019, following the resignation of Jack Lee, the Corporation appointed Ron Dewhurst as Chairman of the board of directors.

On January 17, 2020, Corporation completed the acquisition of Tocqueville Asset Management (“Tocqueville”) gold strategies for total consideration of up to US$50 million, comprised of a payment at closing of US$12.5 million and the Corporation's common shares valued at US$2.5 million. Tocqueville is also be eligible to receive contingent consideration valued at up to an additional US$30 million in cash and Sprott common shares valued at US$5 million, subject to the achievement of certain financial performance conditions. The Corporation will take over the responsibility of managing and sub-advising the Tocqueville gold strategies, including the Tocqueville Gold Fund and certain other institutional accounts. The acquisition of Tocqueville gold strategies increased the AUM of the Corporation's managed equities platform by approximately US$1.8 billion.

On November 7, 2019, the Board approved a normal course issuer bid (“NCIB”), pursuant to which the Corporation may repurchase up to 2.5% of its Common Shares over a one-year period commencing on November 15, 2019 and ending on November 14, 2020. To facilitate repurchases under the NCIB, purchases will be made by RBC Capital Markets. As of December 31, 2019, the Corporation had purchased 740,600 Common Shares under the NCIB.

On November 25, 2019, Graham Birch was appointed to the Board.

7

DESCRIPTION OF THE BUSINESS

The Corporation's operating segments are as follows:

Exchange Listed Products

• The Corporation's closed-end physical trusts and exchange traded funds ("ETFs").

Lending

• The Corporation's lending activities primarily occur through limited partnership vehicles ("lending LPs").

Managed Equities

• The Corporation's alternative investment strategies (open-end, closed-end, etc.) managed in-house and on a sub-advised basis. Prior to Q1 2019, the Corporation's fixed-term LP vehicles formed part of the "global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, the global segment no longer satisfied the qualitative tests of IFRS 8 as the geographic location of the U.S. businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, the global segment has been deconstructed and its fixed-term LP assets and earnings reallocated to the managed equities segment given that it is now at the managed equities level that the allocation of resources and assessment of product and service performance occurs by management.

Brokerage

• Formerly "Merchant Banking & Advisory Services", this segment has been renamed to reflect the inclusion of our U.S. broker-dealer alongside our Canada based broker-dealer as the Corporation's "brokerage segment". Prior to Q1 2019 , the Corporation's U.S. broker-dealer formed part of the "global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, the global segment no longer satisfied the qualitative tests of IFRS 8 as the geographic location of the U.S. businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, the global segment has been deconstructed and its U.S. broker-dealer assets and earnings reallocated to the brokerage segment given that it is now at the brokerage level (independent of geography) that the allocation of resources and assessment of product and service performance occurs by management.

Corporate

• Provides the Corporation's various operating segments with capital, balance sheet management and other shared services.

All Other Segments

• Contains all non-reportable segments as per IFRS 8. See Note 14 of the annual financial statements for further details.

8

As at December 31, 2019, the Corporation had 126 employees.

The Corporation has developed a core team of professionals who provide services to some or all of the operating entities within the Sprott group of companies. These “shared services” include corporate finance, investment operations, treasury, information technology, compliance, risk, legal, human resources, facilities and marketing and administrative services.

The Corporation's Brand

The Sprott brand is recognized internationally for expertise in resource investing, particularly in the precious metals area. The importance of this brand recognition resides primarily in the role it plays in attracting new investors and employees to the Corporation. Protection of this brand by delivering investment performance and industry-leading thought leadership is important to the continued success of the Corporation's business.

Summary of AUM

Breakdown of AUM by investment product type:

	December 31, 2019					December 31, 2018
Product Type	$ (in millions)		% AUM			$ (in millions)		% AUM
Exchange Listed Products
Physical Trusts		8,592		71	%		7,927		75	%
ETFs		330		3	%		237		2	%
		8,922		74	%		8,164		77	%
Lending(1)		1,019		8	%		498		5	%
Managed Equities:
In-house		656		5	%		538		5	%
Sub-advised		587		5	%		505		5	%
		1,243		10	%		1,043		10	%
Other		898		7	%		873		8	%
Total Enterprise AUM		12,082		100	%		10,578		100	%

(1) $1.7 billion (US$1,290 million) of committed capital remains uncalled, of which $697 million (US$536 million) earns a commitment fee (AUM), and $980 million (US$754 million) does not (future AUM).

The Corporation’s Revenues

The Corporation derives its revenues principally from management fees earned from the management of its Investment Products and from performance fees earned from the investment of the AUM of its Investment Products. Accordingly, growth in the Corporation’s management fees is based on growth in AUM while growth in its carried interest and performance fees is based on both the growth in AUM and the absolute or relative return, as applicable, earned by its Investment Products. In addition, the Corporation derives revenues from commissions earned on placement and advisory fees and finance income from co-investments in lending funds and on-balance sheet loans. The Corporation manages and reports its wholly-owned principal subsidiaries across the five reporting segments.

For the year ended December 31, 2019, the Corporation's total revenue was $96.2 million compared to $109.3 million for the fiscal year ended December 31, 2018.

9

Exchange Listed Products and Managed Equities

Sprott Asset Management LP

SAM is the manager of Sprott’s exchange-traded products, alternative investment strategies and Managed Accounts. SAM is registered as a portfolio manager and an exempt market dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, and Newfoundland and Labrador and as an investment fund manager in Ontario, Quebec, and Newfoundland and Labrador. SAM is also registered as an exempt market dealer in Quebec and as a Commodity Trading Manager in Ontario. SAM is registered as a Registered Investment Advisor with the U.S. Securities and Exchange Commission (the "SEC"). The majority of the Corporation’s revenues are generated through SAM in the form of management fees and performance fees earned through the management of select Funds and Managed Accounts.

SAM offers investors access to best-in-class precious metals and real asset strategies. SAM’s team of portfolio managers have a deep understanding of precious metals and natural resource investments and a long track record investing in the sector. By taking a consistent, disciplined approach to investing, based on sound fundamental analysis and independent research, SAM’s investment management team carefully assembles the best portfolio of holdings to meet its investment objectives. SAM takes a team-based approach to its investment decision-making process. Themes and opportunities are discussed daily among its investment team.

SAM’s offerings include unique physical bullion trusts, mining ETFs and actively managed equity strategies. During the year ended December 31, 2019, SAM managed Funds comprised of a number of exchange listed products and institutional accounts.

SAM is the manager of the following Funds:

• CEF

• PHYS

• PSLV

• SPPP

• Sprott Gold Miners ETF

• Sprott Junior Gold Miners ETF

• Sprott Focus Trust

• Sprott Hathaway Special Situations Fund

SAM is the sub-advisor to the following funds:

• Ninepoint Gold and Precious Minerals Fund

• Ninepoint Gold Bullion Fund

• Ninepoint Resource Class

• Ninepoint Silver Bullion Fund

• Ninepoint Silver Equities Class

• Ninepoint 2017 Flow-Through Limited Partnership (formerly Sprott 2017 Flow-Through Limited Partnership) (this fund was closed on February 6, 2019)

• Ninepoint 2017-II Flow-Through Limited Partnership (Sprott 2017-II Flow-Through Limited Partnership) (this fund was closed on February 6, 2019)

• Ninepoint 2018 Flow-Through Limited Partnership

• Ninepoint 2018-II Flow-Through Limited Partnership

• Ninepoint 2019 Flow-Through Limited Partnership

• Ninepoint 2019 Short Duration Flow-Through Limited Partnership

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As at December 31, 2019, SAM had approximately $9.9 billion in AUM.

SAM’s Revenues

Except as detailed below, all of SAM’s products (including those sub-advised by SAM) have a fee structure that consists of both a management fee component and a performance fee component. SAM collects management fees calculated as a percentage of AUM, and may earn performance fees calculated, depending on the Fund or Managed Account, as a percentage of: (i) excess performance over the relevant benchmark; (ii) the increase in net asset value over a predetermined hurdle, if any; or (iii) the net profit over the performance period.

The Sprott Gold Bullion Fund, Sprott Silver Bullion Fund, CEF, PHYS, PSLV, SPPP, Sprott Gold Miners ETF and the Sprott Junior Gold Miners ETF only charge a management fee. There are no performance fees associated with the foregoing Funds.

SAM Selling and Distribution

The Corporation focuses its distribution primarily in the United States through its family of exchange traded products. Exchange listed products also provide broader distribution to investors in many countries including Canada, the United Kingdom, as well as countries in Europe and Asia.

The Corporation actively promotes its offerings through its sales team, public and investor relations, marketing, social and traditional media platforms and conferences.

RCIC

RCIC manages assets for pooled investment vehicles that invest in natural resource companies. The pooled investment vehicles managed by RCIC generate management fees and carried interests and have a remaining duration of between one to eight years. At December 31, 2019, the limited partnerships had a total AUM of approximately $242 million.

RCIC Revenues

RCIC earns revenue in the form of management fees and carried interests through the management of the Limited Partnerships. Management fees are calculated as a percentage of AUM, and may earn carried interest depending on the excess performance over the predetermined hurdle.

For the year ended December 31, 2019, Exchange Listed Products and Managed Equities had total revenue of $50.4 million compared to $46.1 million for the fiscal year ended December 31, 2018. As at December 31, 2019, SAM and RCIC had 19 employees.

Lending

Sprott Resource Lending is focused on providing financing to companies within the natural resource sector, primarily through the Lending Funds.

SRLC is the general partner and RCIC is the manager of Lending Fund I. Pursuant to a sub-management agreement, RCIC has delegated to Sprott Resource Lending Partnership ("SRLP") all aspects of the management of investments of Lending Fund I, including investigating, analyzing, structuring and negotiating potential investments, monitoring the performance of loan investments and portfolio companies and making determinations as to disposition and other opportunities in respect of the investments of Lending Fund I.

SRLC is the general partner and SRLP is the manager of Lending Fund II. SRLP provides certain administrative services to, and will manage the investments of, Lending Fund II, including investigating, analyzing, structuring and negotiating potential investments, monitoring the performance of loan investments and portfolio companies and making determinations as to disposition and other opportunities in respect of the investments of Lending Fund II.

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The Lending Funds have been established to primarily provide loan facilities to, and invest in, debt instruments ("Loan Investments") of companies in the mining, agricultural mineral, resource infrastructure, resource service and energy production sectors on a global basis. Loan Investments may include a committed or revolving credit facility that has not yet been drawn down by the relevant borrower and any loan, note, bond debenture or other debt instruments. The Lending Funds may also invest in, receive rights in respect of or otherwise acquire shares, options, warrants, commodity price appreciation rights, royalties and other contingent purchase rights, including upon the exercise of any such right or as a result of the conversion of debt. The Lending Funds are subject to certain investment restrictions, including limits on investments in any one portfolio company based on a specified percentage of capital commitments, limits on non-senior debt or other investments, or other restrictions, without approval of the Lending Funds' respective limited partners or advisory committee, as the case may be.

In addition to the Loan Investments made through the Lending Funds, the Corporation provides certain direct financing to companies within the natural resource sector, primarily through credit facilities.

As at December 31, 2019, AUM in the Lending Funds stood at $1 billion (USD$783 million). This was due to $858 million (USD$660 million) of new capital calls and fee earning committed capital, net of $282 million of capital distributions into our Lending Funds during the year.

As at December 31, 2019, SRLC had 14 employees.

Lending Revenues

Sprott Resource Lending, through SRLP, earns revenue in the form of management fees calculated as a percentage of the Lending Funds aggregate capital commitments used to fund investments that have not been fully realized and may earn carried interest calculated as a percentage of cumulative net realized profits.

With respect to co-investment in the Lending Funds and direct financing, Sprott Resource Lending earns revenue in the form of finance income. Also, on direct financing, SRLC earns other fees on its lending activities as well as realizing on the upside potential of bonus arrangements with resource borrowers which are generally tied to the revenue or the value of the common shares of the borrower. SRLC’s revenues are subject to the return it is able to generate on its capital, its ability to reinvest funds as financings mature and are repaid, the nature and credit quality of its loan portfolio, including the quality of the collateral security and the overall resource and commodity markets.

For the year ended December 31, 2019, SRLC's total revenue, through SRLP, was $18.1 million compared to $27.7 million for the fiscal year ended December 31, 2018.

Brokerage

Canadian Brokerage

Merchant Banking

Starting in 2017, the Corporation established a merchant banking/investment banking group as a new division within SCP (the "Merchant Banking Division"). The Merchant Banking Division generates investment ideas within the Corporation's core areas of expertise and provides focused advice and capital raising services to corporate clients. The Merchant Banking Division is led by a team of seasoned resource banking professionals and benefits from the Corporation's deal-flow and brand recognition in the natural resource sector. While the Merchant Banking Division's area of focus is currently in the natural resource sector, it may diversify sector coverage in the future.

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Advisory Services

Through the advisory services division of SCP (the "Advisory Services Division"), the Corporation provides investment management and administrative services to high net worth individuals and institutions. The Advisory Services Division focuses on providing a high level of service to its direct private clients. Whether dealing with high net worth individuals or institutional investors, the Advisory Services Division attempts to inform its clients of the Corporation’s market outlook as well as each investment professional’s approach to allocating capital within their respective Fund strategies. The Advisory Services Division provides investors with monthly reports, email updates and web postings. Clients also have the ability to contact an informed customer service representative. As of December 31, 2019, the Advisory Services Division’s private client base represented approximately $160.5 million of client assets.

SCP is a member of IIROC and the Canadian Investor Protection Fund. SCP is registered as an investment dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island, New Brunswick, Nova Scotia, and Newfoundland and Labrador.

SCP's Revenues

The Merchant Banking Division's primary revenue streams are commissions earned on capital raising services and fees earned on advisory deals.

The Advisory Services Division has revenue streams including: 1) structured fees from charity flow-through transactions, 2) commissions from trading, private placements and underwriting; and 3) finance income from retail accounts.

US Brokerage

SGRIL

SGRIL is a full service U.S. brokerage firm providing personalized brokerage services to investors in the natural resource sector. SGRIL is a broker-dealer regulated by the Financial Industry National Regulatory Authority (“FINRA”). Many of SGRIL’s financial advisors worked in various natural resource industries before they began their financial services career, enabling them to provide specialized advice. SGRIL has approximately 5,034 client accounts. At December 31, 2019, SGRIL had approximately $1.3 billion of assets under administration.

SAM USA

SAM USA (formerly Terra Resource Investment Management) is a registered investment advisor that provides segregated Managed Accounts for institutional and high-net worth clients looking for distinctive and personalized wealth management. SAM USA offers clients the option of investing in nine different managed retail account programs (Diversified Resource; Precious Metals; Energy; Resource Income; Real Asset Value; Technically Driven Opportunities; All Weather Diversified Growth; All Weather Diversified; and Sprott Gold & Precious Metals Portfolio) and one institutional managed account program (Institutional Gold & Precious Metal Strategy). SAM USA also has a retail separately managed account platform (Sprott Global Gold Separately Managed Account). At December 31, 2019, SAM USA's AUM was approximately $167 million.

US Brokerage Revenues

SGRIL earns commissions and other fees from the sale and purchase of stocks by its clients, from new and follow-on offerings of Limited Partnerships managed by RCIC and from the sale of private placements to its clients. SAM USA earns revenue in the form of management fees and performance fees from the management of Managed Accounts.

For the year ended December 31, 2019, Brokerage has total net revenue was $28.1 million compared to $32.2 million for the fiscal year ended December 31, 2018. As of December 31, 2019, SCP and GRIL had 64 employees.

Corporate

The Corporate operating segment provides capital, balance sheet management and shared services to the Corporation's subsidiaries. As at December 31, 2019, Corporate had 29 employees.

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COMPETITION AND INDUSTRY OUTLOOK

The Corporation is fairly unique as an alternative asset management organization in terms of the breadth of its various investing platforms. However, each business line operates in a very competitive environment where there is much competition for investors’ assets.

Exchange Listed Products and Managed Equities

The North American asset management industry is highly competitive and is dominated by a small number of larger players. As at December 31, 2019, SAM managed approximately $9.9 billion of AUM, concentrated mainly in its physical bullion trusts as well as sub-advisory agreements for actively-managed resource funds. SAM has historically been a manager of specialized, focused funds where the Corporation believes that (i) it has a competitive advantage due to its investment management expertise; and (ii) it is able to add value as compared to a benchmark or index.

Following the completion of the Sale Transaction, including the sale of its mutual fund business, SAM’s primary focus is in the precious metals and mining sectors. Most competitors in these sectors are larger and more diversified asset managers that do not focus exclusively in these areas. SAM's focus provides an advantage, allowing it to compete with larger organizations. SAM also has developed world-renown expertise and brand equity in precious metals and mining which allows it to promote its offerings to a variety of investors.

The Corporation expects that the asset management business will continue to consolidate, with the industry bifurcating between large general managers and specialized boutique managers. The Corporation also expects that price compression will continue in the asset management industry, particularly in the ETF segment as players compete for market share. As a result, the Corporation believes that asset managers without differentiated offerings and access to distribution and capital will be at a disadvantage.

In January 2018, SAM completed the CFCL Transaction. See "General Development of the Business". After giving effect to the completion of such transaction and the launch of the CEF Trust, the physical trusts account for approximately $8.6 billion of SAM’s AUM as of December 31, 2019. In addition, as a result of the CFCL Transaction, SAM acquired approximately 90,000 new investors and enhanced the scale and competitiveness of its physical bullion trusts. As at December 31, 2019, the majority of those new investors have been retained.

In January 2020, SAM successfully completed the acquisition of Tocqueville Asset Management's gold strategies. The addition of these assets grew our AUM by approximately US$1.8 billion (C$2.3 billion) and added meaningful scale to our Managed Equities platform.

SAM will continue to consider strategic acquisitions which will allow it to build scale, improve profitability or enter new markets and investment categories.

Lending

Sprott Resource Lending operates in the specialized lending industry, carrying out lending activities on a global basis. SRLC’s competition includes other unconventional lenders, bank loans, high yield note offerings, investment funds and money managers, and public and private equity financings carried out by those institutions. As markets in the resource sector improve, potential borrowers may opt for equity or bank loans for their financing needs rather than SRLC’s product offering.

Brokerage

Merchant Banking

SCP's Merchant Banking Division competes with large domestic and international securities firms, securities subsidiaries of major chartered banks, major regional firms, smaller niche-oriented companies as well as institutional and strategic investors. The Corporation believes that the expertise of the Merchant Banking Division's team, their extensive background in natural resources and their access to the deal flow and expertise of the broader Sprott group network provides SCP's Merchant Banking Division with a competitive advantage within its operating niche.

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Advisory Services

SCP's Advisory Services Division is focused on providing private client solutions to clients interested in natural resource investment opportunities. The Corporation believes that the Advisory Services Division can be competitive in this segment through its access to private placement opportunities generated by the Merchant Banking Division as well as resource-focused Investment Products managed by the SAM investment team.

U.S Brokerage

The U.S. asset management industry - both broker-dealers and asset managers - is highly competitive but fragmented. Both SGRIL and SAM USA operate specialized “niche” businesses. SGRIL provides brokerage services to clients focused on small capitalization stocks in the natural resource sector. SAM USA offers a managed account program for investors seeking a personalized wealth management program focused on investments in natural resources.

The Corporation believes that the specialized focus that both SGRIL and SAM USA offer to clients is a distinct competitive advantage for both SGRIL and SAM USA. Each of these companies seeks to increase its client base through expanded marketing and sales efforts across selected geographic markets in the U.S.

Corporate

The Corporate segment provides treasury and shared services to the Corporation's subsidiaries.

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY

The Corporation has implemented an Environmental, Social and Governance ("ESG") Policy.

The Corporation believes it is part of its corporate responsibility to deliver returns by being a responsible investor and that integrating ESG matters into its investment decision-making process and active ownership practices are key tenets to being a responsible investor.

ESG Principles

The United Nations Principles for Responsible Investment (“UNPRI”) was launched in 2006 with the aim of ensuring that ESG matters are considered during the investment process and subsequent management of investments. The UNPRI framework has become the standard for global best practice in responsible investing. Although the UNPRI framework is voluntary, the Corporation has committed to incorporating ESG matters into its investment decision making and active ownership practices.

The Corporation will endeavour to observe the following UNPRI principles:

• The Corporation will incorporate ESG issues into investment analysis and decision-making processes.

• The Corporation will be an active owner and incorporate ESG issues into its ownership policies and procedures.

• The Corporation will seek appropriate disclosure on ESG issues by the entities in which it invests.

• The Corporation will promote acceptance and implementation of the principles within the investment industry.

• The Corporation will work to enhance its effectiveness in implementing the principles.

• The Corporation will report on its activities and progress towards implementing the principles.

The Corporation has created an ESG Committee which has been tasked with the creation and ongoing implementation of the Corporation’s ESG program. Furthermore, the Corporation undertakes to use reasonable endeavours to:

• Comply with relevant regulations governing the protection of human rights, occupational health and safety, the environment and the labour and business practices of the jurisdictions in which it conducts business.

• Adhere to the highest standards of conduct intended to avoid even the appearance of negligent, unfair or corrupt business practices.

• Regard implementation of its ESG program as an integral part of how it does business.

• Instruct its investment professionals in the identification and management of ESG risks and opportunities.

• Recognise that its ESG responsibilities are of an ongoing nature and to encourage the continual improvement in the execution of the Corporation's ESG program.

The ESG Committee will periodically review the effectiveness of the Corporation's ESG program and report relevant findings to the CEO and Board.

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RISK MANAGEMENT

The Corporation monitors, evaluates and manages the principal risks associated with the conduct of its business. These risks include external market risks to which all investors are subject and internal risks resulting from the nature of the Corporation’s business.

The Corporation conducts an enterprise risk assessment on all of its major operating business units at least annually.  Through the risk assessment process, the Corporation identifies the significant risk factors present in each business unit, and subjectively determines the likelihood of the risk occurring and the financial and/or non-financial impact to such business if the risk occurs.  The Board and/or the management of each business unit monitors the significant risk factors identified by the Corporation and, where deemed necessary, adopts an appropriate risk optimization strategy.

The Corporation has internal control policies related to its business conduct. Such polices are intended to ensure conformity with the rules and regulations of the Canadian Securities Administrators, IIROC, the Ontario Securities Commission, the SEC, FINRA and any other regulator, as applicable.   The policies focus on multiple areas, including employee code of ethics, conflict of interest management, as well as, compliance and risk monitoring of all business processes.   Each policy has a defined control objective and applicable procedures to ensure adherence to sound business practices, regulatory requirements and high ethical standards, including capital adequacy, insurance, segregation of clients’ securities, safeguarding of securities and cash, and pricing of securities.

The Corporation has also established a number of policies with respect to its employees’ personal trading. Employees may not trade any of the securities held or being considered for investment by any of the Funds without prior approval. All of the Corporation’s employees must comply with the Corporation’s written policies and procedures, including the Corporation's Code of Business Conduct and Ethics, which establish strict rules for professional conduct and management of conflicts of interest, and the Corporation's Insider Trading Policy, which fosters and facilitates compliance with applicable laws, including applicable securities laws.

The Corporation believes that confidentiality is essential to the success of its business and, as such, 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 Corporation keeps the affairs of its investors/clients confidential and does not disclose the identities of its investors/clients (absent express investor/client consent to do so). If a prospective client or investor requests a reference, the Corporation will not furnish the name of an existing client or investor before receiving permission from such client or investor to reveal their business relationship with the Corporation. See “Risk Management - Privacy Policy”.

Regulatory Matters

SCP is registered as an investment dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island, New Brunswick, Nova Scotia, and Newfoundland and Labrador. SCP is also a member of IIROC. SAM is registered as a portfolio manager and an exempt market dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia and Newfoundland and Labrador and as an investment fund manager in Ontario, Quebec and Newfoundland and Labrador. SAM is also registered as an exempt market dealer in Quebec and as a Commodity Trading Manager in Ontario.

The Corporation is subject to extensive regulation in Canada. As a matter of public policy, regulatory bodies in Canada are charged with safeguarding the integrity of the securities and other financial markets and with protecting the interests of investors participating in those markets. The Corporation’s operations are subject to the securities legislation of eight Canadian provinces, the Universal Market Integrity Rules, and the rules, regulations and by-laws of IIROC. The distribution of the Funds is also subject to regulations under the securities legislation of those jurisdictions where its Funds are sold.

Securities brokerage, trading, advisory and investment banking activities are conducted in SGRIL, a U.S.-registered broker-dealer affiliate. The SEC, state securities regulators and FINRA regulate this broker-dealer affiliate.

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SAM and SAM USA are involved in the business of investment management in the U.S. or to U.S. persons. These activities require that SAM and SAM USA be registered with the SEC as investment advisers under the U.S. Investment Advisers Act of 1940 (the “Advisers Act”). The Advisers Act and related rules regulate the registration and activities of investment advisers. Certain activities of SAM are also subject to regulation by the U.S. Commodity Futures Trading Commission and the National Futures Association.

The Corporation is subject to regulations that cover all aspects of the securities business, including sales methods, trading practices among investment dealers, use and safekeeping of funds and securities, capital structure, record-keeping, conflicts of interest and the conduct of directors, officers and employees. The various government agencies and self-regulatory organizations having jurisdiction over registrants are empowered to conduct administrative proceedings that can result in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of a registrant or its directors, officers or employees. A registrant is subject to rules respecting the maintenance of minimum regulatory capital. Compliance with regulatory capital requirements can limit a registrant’s operations and also restrict its ability to withdraw capital from its regulated affiliates, which in turn can limit its ability to repay debt or pay dividends on its shares.

Since the Corporation’s ability to carry on its business is dependent upon its continued registration under applicable laws, the Corporation regularly reviews its policies, practices and procedures to ensure that they comply with current regulatory requirements and employees are routinely updated on relevant legal requirements. In addition, external legal advice is obtained, as required, to ensure that the Corporation is informed of new regulatory requirements that may be applicable. All of the Corporation’s registrations are in good standing. SCP has retained National Bank Independent Network (“NBIN”) under a written introducing/carrying broker agreement to provide certain record-keeping and operational services in respect of its client accounts which may include execution and settlement of securities transactions, custody of securities and cash balances, and extension of credit on margin transactions. The fees payable to NBIN as carrying broker are not considered material to the Corporation or NBIN.

There are certain regulatory restrictions on the ownership and holding of shares of investment dealers and their parent companies. Notably, the direct or indirect ownership or holding of an interest in an investment dealer by the public is subject to approval by IIROC, other self-regulatory organizations, stock exchanges and certain securities commissions. See “Risk Factors” and “Capital Structure”.

Privacy Policy

The Corporation is also subject to Canadian federal and provincial privacy laws regarding the collection, use, disclosure and protection of client information. The Personal Information Protection and Electronic Documents Act (“PIPEDA”), the federal privacy legislation governing the private sector, requires that organizations only use personal information for purposes that a reasonable person would consider appropriate in the circumstances and for the purposes for which it is collected. The Corporation complies with the applicable requirements of PIPEDA and all applicable provincial personal information laws. The Corporation collects personal information directly from investors or through their financial advisor and/or dealer in order to provide such investor with services in connection with his or her investment, to meet legal and regulatory requirements and for any other purposes to which such investor may consent.

In addition, in the European Union, some of the Corporation’s operations are subject to the European Union’s General Data Protection Regulation (“GDPR”) which took effect on May 25, 2018. The GDPR establishes new, and in some cases more stringent, requirements for data protection in Europe, which provides for substantial penalties for non-compliance. The GDPR introduces a number of new obligations for subject companies including obligations relating to: expanded disclosures about what personal data is collected and how it is used, a more narrow definition of consent, new rights afforded to data subjects in respect of their personal data, limitations on retention of personal data and mandatory breach notifications. Additionally, the GDPR places companies under new obligations relating to data transfers and the security of the personal data they possess. The GDPR will also be adopted into English law if the United Kingdom leaves the European Union. The impact of the GDPR on the Corporation’s business is still under review. However, the Corporation has made certain modifications to its policies and procedures in order to comply with these requirements.

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Additionally, some of the Corporation’s operations are subject to the California Consumer Privacy Act (“CCPA”) which took effect on January 1, 2020, but which the California Attorney General may not enforce until July 1, 2020. The CCPA establishes similar requirements as GDPR with respect to how the Corporation may use the personal information of consumers who reside in California and the rights that those consumers have with respect to the personal information in the possession of the Corporation. In general, the CCPA grants consumers the right to know what personal information a business possesses, the right to request that the business provide that personal information to the consumer, the right to request that the business delete that personal information, and the right to request that the business not sell that personal information to third parties.

The Corporation does not sell, lease, barter or otherwise deal with personal information collected by the Corporation with third parties. The Corporation carefully safeguards all personal information collected and retained by it and, to that end, restricts access to personal information to those employees and other persons who need to know the information to enable the Corporation to provide its services. The Corporation’s employees are responsible for ensuring the confidentiality of all personal information they may access. Annually, each of the Corporation’s employees is required to sign a code of conduct, which contains policies on the protection of confidential information.

The Corporation’s Privacy Policy is provided to every prospective client and sets out the Corporation’s commitment to the protection of the privacy of its clients.

Anti-Money Laundering Laws

In order to comply with federal legislation aimed at the prevention of money laundering, the Corporation sometimes requires additional information concerning a purchaser of securities of any Investment Products. If, as a result of any information or other matter which comes to the attention of any of its directors, officers or employees, or its professional advisors, the Corporation knows or suspects that an investor is engaged in money laundering, it is required to report such information or other matter to the Financial Transactions and Reports Analysis Centre of Canada and such report shall not be treated as a breach of any restriction upon the disclosure of information imposed by law or otherwise.

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RISK FACTORS

An investment in the securities of the Corporation involves a number of risks. In addition to the other information contained in this AIF, investors should carefully consider the risks described below before making an investment decision. The Corporation’s business, financial condition, revenues and profitability could be materially adversely affected by any of these risks. The trading price of the Common Shares could decline due to any of these risks, and investors may lose all or part of their investment. The risks described below are not the only ones facing the Corporation and holders of Common Shares. Additional risks not currently known to the Corporation or that management currently considers immaterial may also impair the Corporation’s business operations should such risks arise or become material to the Corporation.

This AIF contains Forward-Looking Statements that involve significant known and unknown risks, uncertainties and assumptions. The Corporation’s actual results could differ materially from those expressed, anticipated or implied in these Forward-Looking Statements as a result of certain factors, including the risks faced by the Corporation described below and elsewhere in this AIF. See “Forward Looking Statements”.

Risks Related to the Business

Difficult Market Conditions

The success of the Corporation’s business lines is highly dependent upon conditions in the Canadian and global equity and financial markets and economic conditions throughout the world that are outside the Corporation’s control and difficult to predict. Factors such as interest rates, availability of credit, inflation rates, economic uncertainty, cyclical factors, changes in laws (including laws relating to taxation), trade barriers, commodity prices, currency exchange rates and controls, and national and international political circumstances (including wars, terrorist acts, security operations, demonstrations or protests), government policies, securities offerings and M&A activity, expenses associated with establishing and expanding new and existing business units and product offerings and performance of businesses and industry sectors can have a material negative impact on the Corporation's revenues and profitability.

Unpredictable or unstable market conditions and adverse economic conditions may result in reduced opportunities to find suitable risk-adjusted investments to deploy capital and make it more difficult to exit and realize value from existing investments, which could materially adversely affect the Corporation’s ability to raise new funds and sustain profitability and growth.

The majority of the Corporation's Investment Products are focused on precious metals and the natural resource industry. The natural resource industry is notoriously cyclical and the Corporation’s performance is effected by the various stages in the resource investment cycle. In particular, investment performance, financial results and the ability to attract assets may be adversely affected by falling precious metals and commodity prices.

Poor Investment Performance

Management believes that investment performance is one of the most important factors explaining the historical growth of the Corporation’s AUM. Poor investment performance (relative to its competitors or otherwise) could impair revenues and growth as existing clients might withdraw funds in favour of better performing products and the ability of the Corporation to attract funds from existing and new clients would be reduced. All of the foregoing could result in lower AUM and could impact the Corporation’s ability to earn management fees. In addition, the ability to earn performance fees is directly related to investment performance and therefore poor investment performance may cause the Corporation to earn lower performance fees.

There is no assurance that the Corporation will be able to achieve or maintain any particular level of AUM, which may have a material negative impact on its ability to attract and retain clients, management fees and potential performance fees, and overall profitability. The Corporation’s Investment Products tend to be more volatile than general market indices as the Corporation's investment team strives for exceptional performance and returns rather than attempting to mirror or follow the market indices. This volatility combined with negative or poor performance could combine to lead to a reduction in AUM and lower management fees and performance fees as a result. See "Risk Factors - Risks Related to the Corporation's Investment Products" regarding various risks to the performance of the Corporation's Investment Products.

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Key Management and Staff

The Corporation’s business is dependent on the highly skilled and often highly specialized individuals employed by the Corporation. The contribution of these individuals to the investment management, client service, sales, marketing, capital markets and operational teams is important to attracting and retaining clients. The Corporation aims to establish relationships with prospective clients in advance of any transaction, and to maintain such relationships over the long-term. Such relationships depend in part on the individual employees who represent the Corporation in its dealings with such clients. Management devotes considerable resources to recruiting, training and compensating these individuals. However, the competition in the market and the reliance on performance results have increased the demand for high quality professionals in the industries in which the Corporation operates.

Management has taken, and will continue to take, steps to retain key employees, including incentive programs such as the Corporation’s employee bonus pool, revenue share program, the Corporation’s stock option plan (the "Option Plan"), employee profit sharing plan (“EPSP”) and equity incentive plan ("EIP"). The Corporation has also entered into employment agreements with certain key employees. However, not all of the investment professionals have employment agreements or are subject to non-competition or non-solicitation restrictions. There can be no assurance that the steps taken to retain key individuals will be sufficient in light of the increasing competition for experienced professionals in the industry or that management will be able to recruit a sufficient number of new employees with the desired qualifications in a timely manner, if required. The failure to retain key employees and to recruit new employees could lead to a decline in revenues.

Employee Error or Misconduct

Misconduct by employees could include binding the Corporation to transactions that exceed authorized limits or present unacceptable risks, or concealing from the Corporation unauthorized or unsuccessful activities, which, in either case, may result in unknown and unmanaged risks or losses. Employee misconduct could also involve the improper use of confidential information, which could result in regulatory enforcement proceedings, sanctions and serious reputational harm. The Corporation is also susceptible to loss as a result of employee error. While management proactively takes extensive measures to deter employee misconduct or prevent employee error, the precautions management takes to prevent and detect this activity may not be effective in all cases, which could materially adversely affect the business, financial condition or profitability of the Corporation.

Performance Fee Fluctuations

The Corporation is entitled to performance fees only if performance exceeds pre-specified performance hurdles. If these hurdles are not exceeded, performance fees will not be payable for the relevant period. Moreover, any failure to meet or exceed a performance hurdle is carried forward indefinitely until such time as such deficit is made up. Performance fees will vary from period to period in relation to, among other things, volatility in investment returns, causing revenues to be more volatile. The volatility in revenues may decrease the Common Share price. In addition, most of the Investment Products have a December 31 performance year end, at which time performance fees (other than crystallized performance fees) for that 12-month period are determined. The Limited Partnerships have a carried interest generally received upon certain monetizing events in the Limited Partnership. Performance fees are generally received only once per portfolio performance year and determined based on the difference between the net asset value of the particular Investment Product on the first day of its performance year and on the last day of its performance year. The performance fees could be significantly impacted by events or factors beyond the Corporation’s control that affect the net asset value on one of those days. For example, the markets generally could suffer a significant decline in value on or near the last day of a performance year as a result of a market or world event that could cause the Corporation to earn lower or no performance fees for that performance year despite a prior overall increase in the net asset value of those Investment Products over the course of the year.

Moreover, there may be increased volatility in the price of Common Shares during the period leading up to the announcement of performance fees and/or the declaration by the Board of special dividends, if any.

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Counterparty Risk

The majority of the Corporation's receivables are from management fees, carried interest and performance fees from the business segments and funds. A business segment or another counterparty failing to pay its financial obligation could cause a decline in revenues for the Corporation.

Liquidity risk

The Corporation has a risk that it cannot meet its demand for cash or fund obligations as they come due. This includes exposure to liquidity risk through its loan advances (both directly via balance sheet loans and indirectly via borrowers of the Lending Funds the Corporation co-invests with) and other financial liabilities. The Corporation manages its liquidity risk my maintaining sufficient levels of liquid assets to meet its obligations as they come due. Additionally, the Corporation has access to a $90 million committed line of credit with a major Canadian Schedule I chartered bank.

Industry Changes

The historical growth of the financial services industry may not continue and adverse economic conditions and other factors, including a protracted or precipitous decline in the Canadian, international or global financial markets or a change in the acceptance of fees typically charged by industry participants, could affect the popularity of the Corporation’s services or result in clients withdrawing from the markets or decreasing their level and/or rate of investment. A decline in the growth of the industries in which the Corporation operates or other changes to the industries that discourage investors could affect the Corporation’s ability to attract clients or could lead to redemptions of the Investment Products, as applicable, for reasons that may be unrelated to their performance but would nonetheless result in a decline in revenues.

Information Security Policies

The Corporation is dependent on the effectiveness of its information security policies, procedures and capabilities to protect its computer and telecommunications systems, and the data that resides on or is transmitted through them. Although the Corporation takes protective measures and tries to modify them as circumstances warrant, computer systems, sensitive data, software and networks may be vulnerable to cyberattacks, unauthorized access, computer viruses or other malicious code and events that could have a security impact. If one or more of these events occur, this could potentially jeopardize the Corporation’s, or its clients’ or counterparties’ confidential and other personal information processed and stored in, and transmitted through, computer systems and networks, or otherwise cause interruptions or malfunctions in clients’, counterparties, or third parties’ operations. The Corporation may be required to expend significant additional resources to modify protective measures or to investigate and remediate vulnerabilities or other exposures. As a result, the Corporation may be subject to financial losses, litigation, fines and/or liability for failure to comply with privacy and data security laws and regulations as well as regulatory investigations and heightened regulatory scrutiny. These all may lead to reputational harm affecting client and investor confidence, which in turn could materially adversely affect the Corporation’s business, financial condition or profitability.

A cyberattack could also compromise any proprietary, confidential or sensitive information or systems that the Corporation maintains for the purpose of competitive advantage (e.g. confidential corporate finance deal details) and such a compromise could lead to lost revenues while the Corporation attempts to recover or replace the lost information or systems.

The increased use of smartphones and other mobile devices, as well as enabling employees to securely access the Corporation’s network remotely, may also heighten these risks.

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Use of Technology

The Corporation is dependent on the efficiency and effectiveness of the technologies it uses. Any failure or interruptions of the Corporation’s systems, or those of third parties such as service providers, clearing corporations and exchanges, could cause delays or other problems in the Corporation’s sales, trading, clearing, settlement and other client services. Improper functioning of any of the technologies could materially interrupt the Corporation’s business operations and cause material financial loss, regulatory actions, breach of client contracts, reputational harm or legal liability, which in turn, could materially adversely affect the business, financial condition or profitability of the Corporation. Although the Corporation has back-up procedures, duplicate systems and business continuity plans in place, there is no assurances that procedures and plans will be sufficient or adequate in the event of a failure or interruption.

Lack of Investment Opportunities

An important component of investment performance is the availability of appropriate investment opportunities for the Corporation, new clients and new client assets. If the Corporation is not able to find sufficient investments in a timely manner, investment performance could be materially adversely affected. Alternatively, if there are insufficient investment opportunities, management may elect to limit the Corporation’s growth and reduce the rate of intake of new clients and new client assets. Historically, depending on, among other factors, prevailing market conditions, the Corporation has taken opportunities to invest in smaller market capitalization companies and other more thinly traded securities in which relatively smaller investments are typically made. As the Corporation’s AUM increases, the Corporation may not be able to exploit the investment opportunities that have historically been available to the Corporation or find sufficient investment opportunities for producing the absolute returns targeted. If the Corporation is not able to identify sufficient appropriate investment opportunities for itself, new clients and new client assets, the Corporation’s investment performance and management’s decision to continue to grow may be materially adversely affected.

Regulatory Compliance

The Corporation’s ability to carry on its business is dependent upon its compliance with and continued registration under securities legislation in the jurisdictions in which it carries on business. See “Risk Management - Regulatory Matters”. The securities business is subject to extensive regulation under securities laws in Canada, the U.S. and elsewhere. Compliance with many of the regulations applicable to the Corporation involves a number of risks, particularly in areas where applicable regulations may be subject to interpretation. In the event of non-compliance with an applicable regulation, securities regulators, IIROC and FINRA may institute administrative or judicial proceedings that may result in censure, fine, civil penalties, issuance of cease-and-desist orders, deregistration or suspension of the non-compliant investment dealer or investment adviser, suspension or disqualification of the investment dealer’s officers or employees, or other adverse consequences. The imposition of any such penalties or orders on the Corporation regardless of duration or any subsequent appellate results could have a material adverse effect on the Corporation’s operating results and financial condition.

Additional regulation, changes in existing laws and rules, or changes in interpretations or enforcement of existing laws and rules often affect directly the method of operation and profitability of securities firms. It is not possible to predict with any certainty as to what effect any such changes might have on the Corporation’s business. Furthermore, its business may be materially affected not only by regulations applicable to the Corporation as a financial market intermediary, but also by regulations of general application. For example, returns on investments in a given time period could be affected by, among other things, existing and proposed tax legislation, competition policy and other governmental regulations and policies, including the interest rate policies of the Bank of Canada, the Federal Reserve or other global central banks and changes in interpretation or enforcement of existing laws and rules that affect the business and financial communities or industry-specific legislation or regulations.

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Risk Management

Management uses its best efforts to monitor, evaluate and manage the principal risks associated with the conduct of the Corporation’s business. These risks include external market risks to which all investors are subject and internal risks resulting from the nature of the business. See “Risk Management”. Some of the methods of managing risk used are based upon the use of observed historical market behaviour. As a result, these methods may not predict future risk exposures, which may be significantly greater than the historical measures indicated. Other risk management methods depend upon evaluation of information regarding markets, clients or other matters that is publicly available or otherwise accessible. This information may not in all cases be accurate, complete, up-to-date or properly evaluated. Management of operational, legal and regulatory risk requires, among other things, policies and procedures to record properly and verify a large number of transactions and events, and these policies and procedures may not be fully effective. A failure in management’s ability to manage risks could materially adversely affect the business, financial condition or profitability of the Corporation.

Conflicts of Interest

Certain of the Corporation’s Investment Products have overlapping investment objectives and potential conflicts may arise with respect to decisions regarding how to allocate investment opportunities among them. Pursuant to the Corporation’s fair allocation policy, if an investment opportunity is suitable for more than one Investment Product, such investment opportunity is equitably allocated in order to ensure that the Investment Products have equal access to the same quality and quantity of investment opportunities. Management consistently seeks to negotiate the best possible price through a broker, and when allocating block trades, allocations are made on a pro rata basis, with consideration given to the objective, strategy, restriction, portfolio composition and cash availability of each Investment Product. Therefore an Investment Product may not be able to participate fully in an investment opportunity, which may have a negative impact on its investment strategy and accordingly may affect its performance.

It is possible that actual, potential or perceived conflicts could give rise to investor dissatisfaction or litigation or regulatory enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult and the Corporation’s reputation could be damaged if there is a failure to deal appropriately with one or more potential or actual conflict of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse effect on the Corporation’s business in a number of ways, including as a result of redemptions by investors, an inability to raise additional funds and a reluctance of counterparties to do business with the Corporation.

Competitive Pressures

The industries in which the Corporation operate are highly competitive. Some of the Corporation’s competitors have, and potential future competitors could have, substantially greater technical, financial, marketing, personnel, distribution and other resources. There can be no assurance that the Corporation will be able to achieve or maintain any particular level of AUM or revenues in this competitive environment. The Corporation's merchant bank competes with large domestic and international securities firms, securities subsidiaries of major chartered banks, major regional firms, smaller niche-oriented companies as well as institutional and strategic investors. Competition could have a material adverse effect on profitability and there can be no assurance that the Corporation will be able to compete effectively. In addition, the ability to maintain the management fee and performance fee structure is dependent on the ability to provide clients with products and services that are competitive. Investors have become more price and value conscious for a variety of reasons, including the current state of the capital markets, low interest rates and reduced investment return expectations, increased regulatory and media focus on fees (particularly for mutual funds), inconsistent investment performance and the availability of lower cost investment products. There can be no assurance that the Corporation will be able to retain the current fee structure or, with such fee structure, retain clients in the future. A significant reduction in management fees or performance fees would have a material adverse effect on revenues.

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Sustaining and Managing Growth

Management is required to continuously develop the Corporation’s systems and infrastructure in response to the increasing sophistication of the market and legal, accounting and regulatory developments.

Future growth will depend on, among other things, the ability to maintain an operating platform and management systems sufficient to address growth and will require the Corporation to incur additional expenses and to commit additional senior management and operational resources. As a result, management faces challenges in: (i) maintaining adequate financial and business controls; (ii) implementing new or updated information and financial systems and procedures; and (iii) training, managing and appropriately sizing the work force and other components of the business on a timely and cost-effective basis. There can be no assurance that the Corporation will be able to manage growth effectively or that it will be able to continue to grow, and any failure to do so could adversely affect the ability to generate revenue and control expenses.

The Corporation may enter into new businesses, make future strategic investments or acquisitions or enter into joint ventures, each of which may result in additional risks and uncertainties in its business. For example, the Corporation may have difficulty integrating and assimilating the operations and personnel of the recently acquired Tocqueville gold strategies and fail to realize its previously anticipated synergies, which could adversely impact the Corporation’s results of operations.

Management intends, to the extent that market conditions warrant and regulatory conditions permit, to grow the Corporation’s business, including by increasing AUM, and creating new investment products and businesses. Accordingly, management may pursue growth through strategic investments, acquisitions or joint ventures, including co-management relationships with other investment managers and entering into new lines of business. Risks associated with such activities include: (i) exposure to unknown or unforeseen liabilities of co-managers or acquired companies; (ii) higher than anticipated acquisition or start-up costs and expenses; (iii) increased investments in management and operational personnel, financial management systems and facilities; (iv) difficulty with efficiently co-managing with others or integrating operations and personnel of acquired companies; (v) disruption of ongoing business; (vi) diversion of management’s time and attention; (vii) possible dilution to shareholders; and (viii) loss of investors in existing Investment Products or other direct clients due to the perception that management is no longer focusing on the Corporation’s core business lines. Entry into certain lines of business may also subject the Corporation to new laws and regulations and may lead to increased litigation and regulatory risk. There can be no assurance that the creation of new investment products or new lines of business or any strategic investments, acquisitions or joint ventures will prove to be successful. If a new business, strategic investment, acquisition or joint venture generates insufficient returns or if management is unable to efficiently manage expanded operations, the Corporation’s results of operations will be materially adversely affected.

Privacy Laws

The Corporation is subject to laws and regulations with respect to privacy laws regarding the collection, use, disclosure and protection of client information. These laws and regulations are subject to frequent modifications and updates and require ongoing supervision. The functional and operational requirements and costs of compliance with such laws and regulations may adversely impact the Corporation’s business and failure to comply with such laws and regulations could lead to significant fines and penalties imposed by regulators, as well as claims by the Corporation’s clients or third parties.

Foreign Exchange Risk

Some of the expenses and revenues of the Corporation and various subsidiaries and Investment Products of the Corporation are denominated in U.S. dollars. As a result, the Corporation is subject to foreign exchange risks relating to the relative value of the U.S. dollar as compared to the Canadian dollar. A decline in the U.S. dollar would result in a decrease in the real value of the Corporation’s revenues and adversely impact financial performance.

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Litigation Risk

In general, the Corporation will be exposed to risk of litigation by its clients if the management of any Investment Product is alleged to constitute gross negligence or willful misconduct. The Corporation may also be subject to litigation arising from client dissatisfaction with the performance of an Investment Product or from allegations that management improperly exercised control or influence over companies in which the Investment Products have large investments. The Corporation is exposed to the risk of litigation if an Investment Product suffers catastrophic losses due to the failure of a particular investment strategy or due to the trading activity of an employee who has violated market rules and regulations. The Corporation may also be exposed to risks of litigation or investigation relating to transactions which presented conflicts of interest that were not properly addressed.

In such actions the Corporation would be obligated to bear legal, settlement and other costs (which may be in excess of available insurance coverage). In addition, although the Corporation may be indemnified, its rights to indemnification may be challenged. If the Corporation is required to incur all or a portion of the costs arising out of litigation or investigations as a result of inadequate insurance proceeds or a failure to obtain or defend a challenge to its indemnification entitlement, the Corporation’s results of operations, financial condition and liquidity would be materially adversely affected.

Minimum Regulatory Capital Requirements

SCP and SAM are required to maintain a minimum amount of regulatory capital calculated in accordance with the rules of IIROC and of the Ontario Securities Commission, respectively. In addition, SGRIL is registered with FINRA in the United States and is required to maintain a minimum amount of regulatory capital calculated in accordance with the rules of FINRA and the SEC. Historically, such entities have satisfied such requirements with internally generated funds. There can be no assurance that sufficient, or any, funding will continue to be available in the future on acceptable terms. The Corporation monitors the level of regulatory capital required in each of its regulated entities on an ongoing basis to ensure minimum requirements are satisfied. Although each the Corporation's regulated entities currently has sufficient capital as of the date hereof, growth of the business may require additional capital. Failure to maintain required regulatory capital may subject the Corporation to fines, suspension or revocation of registration or could prohibit expansion of its businesses.

Business Resiliency Plans

The Corporation is dependent on the availability of its personnel, its office facilities and the proper functioning of its computer and telecommunications systems. While management has implemented a business continuity program, which is reviewed and updated annually, there can be no assurance that the Corporation’s business will not be interrupted and materially adversely affected during a disaster such as a severe weather event, fire, significant water damage, a prolonged loss of electricity or explosion or being collaterally damaged by any of the foregoing occurring to neighbouring businesses. The Corporation’s policy is to ensure the continued ability to serve clients and protect their assets and account information, in addition to the people and assets of the Corporation. While management believes the business continuity program has been developed to minimize any disruption, there can be no assurance of business continuity in the event that there are disruptions of normal operations. A disaster could materially interrupt business operations and if the disaster recovery plans prove to be ineffective, it could cause material financial loss, loss of human capital, reputational harm or legal liability, which, in turn, could materially adversely affect the business, financial condition or profitability of the Corporation.

Insurance Coverage

The Corporation has various types of insurance, including general commercial liability insurance and financial institution bonds. The adequacy of insurance coverage is evaluated on an ongoing basis, including the cost relative to the benefits. However, there can be no assurance that claims will not exceed the limits of available insurance coverage or that any claim or claims will be ultimately satisfied by an insurer. A judgment against the Corporation in excess of available insurance or in respect of which insurance is not available could have a material adverse effect on the Corporation’s business, financial condition or profitability. There can be no assurance that the Corporation will be able to obtain or maintain its current insurance coverage on favourable economic terms in the future.

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Historical Financial Information

The historical growth rates in the Corporation’s revenue, net income and AUM are not necessarily indicative of future growth rates. The historical returns of the Investment Products should not be considered indicative of the future results that should be expected from such Investment Products or from any future Investment Products. Returns to date have been as a result of investment opportunities and general market conditions that may not repeat themselves, and there can be no assurance that current or future Investment Products will be able to avail themselves of favourable market conditions and/or profitable investment opportunities. The historical rates of return reflect the Corporation’s historical cost structure, which may vary in the future due to factors beyond management’s control, including changes in securities, tax and other laws. In addition, future returns will be affected by the applicable risks described elsewhere in this AIF, including risks of the industries and businesses in which a particular Investment Product invests.

Risks Related to the Corporation’s Investment Products

The Corporation’s results of operations are dependent on the performance of its Investment Products. Poor performance of any of the Investment Products will result in reduced management fee and performance fee revenues and reduced returns on the Corporation’s proprietary investments therein. In addition, poor performance of the Investment Products will make it difficult for the Corporation to retain or attract investors and grow its business. Each Investment Product is subject to some or all of the following risks:

(a) external market and economic conditions beyond the Corporation’s control such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws, and national and international political circumstances, have an effect on their respective performance and net asset value;

(b) fluctuation in the frequency and size of redemptions could have a negative impact on their respective value, including substantial redemptions of units, which could require the liquidation of positions more rapidly than otherwise desirable in order to raise the necessary cash to fund such redemptions and achieve a market position appropriately reflecting a smaller asset base. A significant amount of redemptions can have a materially adverse effect, which in turn will affect the management fees and performance fees payable to the Corporation;

(c) certain of the Investment Products have a limited operating history, and historical performance of any of them individually or collectively is not intended to be, nor should it be construed as an indication or forecast of future performance or an indication as to the future value or return on investment;

(d) the competitive environment for investments means there can be uncertainty in identifying and completing investment transactions which can result in less favourable investment terms than would otherwise be the case;

(e) investment objectives, strategies, restrictions and/or portfolios are subject to changes over time;

(f) investments made in commodities will have prices which are subject to large fluctuations and potential declines in value;

(g) investments significantly concentrated in precious metals and the resource sector will be subject to larger fluctuations than the fluctuations that occur in the general market;

(h) investments which are focused primarily or exclusively on small capitalization companies tend to be less stable and potentially less able to withstand market fluctuations;

(i) some of the special investment techniques employed include short selling, leveraging, hedging, using derivatives or options, and concentration of investment holdings, all of which are subject to their own inherent risks;

(j) assets may be exposed to currency risk and foreign investment risk when invested in securities that are denominated in foreign currencies and/or in securities of foreign issuers;

(k) investments in bonds, preferred shares and/or money market securities will be affected by changes in the general level of interest rates;

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(l) the inability to pay the expenses of one class or series of units may result in an increase in the expenses of the other classes or series of such Fund, Managed Account or Limited Partnership, the effect of which could be to lower the investment returns of the other class(es) or series that have been affected, even though the value of the investments of the Fund, Managed Account or Limited Partnership may have increased;

(m) some investment strategies use securities lending, which involves risk of potential loss if the other party to such lending transactions is unable to fulfill its obligations;

(n) there may be difficulty in selling due to illiquidity of some of the securities they have invested in;

(o) securities exchanges typically have the right to suspend or limit trading, which could render it impossible to liquidate positions and lead to significant unanticipated losses;

(p) there may be uncertainty as to whether certain Funds will qualify as “mutual fund trusts” under the Income Tax Act (Canada) and this may result in certain adverse tax consequences to the Fund if certain investment strategies are employed;

(q) the positions taken by the Corporation on the tax treatment related to certain Funds and Limited Partnerships are subject to potential challenge and may not be upheld;

(r) there are various expenses incurred from time to time regardless of whether any profits are realized and such expenses or costs may negatively impact the net asset value of a Fund, which in turn will affect the management fees and performance fees;

(s) they may be subject to losses due to indemnification obligations for which they are not insured;

(t) there is no guarantee that foreign jurisdictions will recognize the limited liability of limited partners or unitholders;

(u) the valuation of investments is subject to uncertainty as certain investments, such as investments in private companies, may be difficult to value accurately. Independent pricing information may not always be available in relation to such securities and other investments. While audits are conducted by independent auditors in order to assess whether the financial statements are fairly stated in accordance with Canadian generally accepted accounting principles or IFRS, as applicable, the valuations may involve judgment determinations and, if such valuations should prove to be incorrect, their net asset value could be misstated. Accordingly, the Corporation may incur substantial costs in rectifying pricing errors caused by the misstatement of such valuations;

(v) the due diligence process undertaken in connection with a particular investment may not reveal all the facts that may be relevant to whether such investment will be successful and there can be no assurance that management will correctly evaluate the risks of making certain investments; and

(w) investments are made in issuers that the Corporation does not control and accordingly such investments will be subject to the risk that the issuer of the securities may make business, financial or management decisions with which the Corporation does not agree or that the majority stakeholders or the management of the issuer may take risks or otherwise act in a manner that does not serve the Corporation’s interests.

Administrative Services

Administrative services provided by the Corporation depend in some cases on software and services provided by third parties. The loss of these suppliers’ products or services, or problems or errors related to such products could have an adverse effect on the ability of the Corporation to effectively provide these administrative services. Significant changes to the pricing arrangements with such third parties could materially adversely affect operating results. There can be no assurance that the systems of key third party service providers will operate without interruption or that the providers will be able to prevent extended service interruptions in the event of a systems failure, natural disaster or outage, any of which could materially adversely affect the Corporation’s business, operations and profitability.

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Risks Relating to the Corporation’s Proprietary Investments

The Corporation’s financial condition and profitability are dependent, in part, on the performance of its proprietary investment portfolio. Reduced returns on these proprietary investments may have a material adverse impact on the Corporation. Additional risks associated with the Corporation’s proprietary investments include the following risks.

Reliance on Management

Success of these investments depends on, among other things, the Corporation’s ability to manage its respective investments and assets. There is no guarantee that particular strategies employed will be successful, or that the Corporation will be able to continue to rely on the key personnel it depends on in this role.

Investments in the Corporation’s Investment Products

A significant portion of the Corporation’s proprietary investments are invested in the Corporation’s Investment Products. The value of the proprietary investments is dependent on the performance of the Investment Products. The performance of the Investment Products are subject to a number of risks, including those identified above in “Risk Factors - Risks Related to the Corporation’s Investment Products”, any of which may materially decrease the value of the proprietary investments.

Competitive Environment

The competitive environment for investments means there can be uncertainty in identifying and completing investment transactions which can result in less favourable investment terms than would otherwise be the case.

Concentration in Resource Sector

Investments made in commodities will have prices which are subject to large fluctuations and potential declines in value. Therefore, the Corporation’s proprietary investments that are concentrated in the resource sector are subject to larger fluctuations than the fluctuations that occur in the general market.

Illiquidity of Securities

The Corporation may experience difficulty liquidating its investments in securities of private and/or small capitalization companies due to the lack of a market or other restrictions on trading. In addition, securities exchanges typically have the right to suspend or limit trading which could render it impossible to liquidate positions in publicly traded companies. Either circumstance could lead to significant unanticipated losses.

Risks Related to the Lending Business

The Corporation’s results of operations are dependent, in part, on its lending business. The nature and credit quality of the Corporation’s and the Lending Funds' respective loan portfolios, including the quality of the collateral security that they each obtain, will impact upon the return they are each able to generate. Risks associated with the Corporation’s lending business include the following risks.

Credit Risk and Default in Repayment Obligations by Borrowers

Credit risk is the risk that a borrower will not honour its commitments and a loss to the Corporation may result. In the event of a default by a borrower, there can be no assurance that the Corporation (either directly or indirectly via borrowers of the Lending Funds the Corporation co-invest with) or the Lending Funds, as applicable, will be able to secure repayment of the principal amount or interest accruing under the loan. If the Corporation or Lending Funds cannot realize on an outstanding loan due to a default by a borrower, the Corporation's financial condition and operating results will be adversely impacted.

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Decline in the Value of Natural Resource Commodities

The Corporation is exposed to adverse changes in conditions which affect commodity prices and energy prices for its and the Lending Funds' resource loans. These market changes may be regional, national or international in nature and scope or may revolve around a specific asset. Risk is increased if the values of the underlying assets securing the Corporation’s or the Lending Funds' loans fall to levels approaching or below the loan amounts. Any decrease in commodity or energy prices may delay the development of the underlying security or business plans a borrower and will adversely affect the value of the Corporation’s or the Lending Funds' security. Additionally, the value of the Corporation’s or the Lending Funds' respective underlying security in a resource loan can be negatively affected if the actual amount or quality of the commodity proves to be less than that estimated or the ability to extract the commodity proves to be more difficult or more costly than estimated. If the underlying resource commodity against which the Corporation or the Lending Funds hold security declines in value, then the Corporation or the Lending Funds, as applicable, may not be able to recover the amount of all of an outstanding loan plus expenses in the event of a default by a borrower. If the Corporation or Lending Funds are unable to realize on their security to recover the principal amounts plus amounts on account of accrued interest and expenses in the event of a loan default or defaults, then the Corporation's financial condition and operating results will be adversely impacted. In addition, a general decline in the natural resource sector can materially reduce the value of any shares or warrants received in connection with loans made to borrowers.

Inability to Realize on or Dispose of Security Granted by Borrowers on a Defaulted Loan

The Corporation and the Lending Funds generally obtain security for their loans. This security may be in a variety of forms including, but not limited to, direct charges on mineral rights, mortgages, general security agreements, assignments of interests in property, pledges of shares and corporate guarantees. In addition, if the Corporation or the Lending Funds are required to enforce their respective security, the Corporation or the Lending Funds, as applicable, may incur significant expenses of sale, including legal and other expenses. There is no assurance that the net proceeds obtained from the enforcement of any security held by the Corporation or Lending Funds will be sufficient to recover the outstanding principal and accrued interest due under the relevant loan. If the Corporation or Lending Funds suffer a shortfall, then the Corporation's financial condition and operating results may be adversely impacted. There is no assurance that the Corporation or Lending Funds will be able to dispose of security on a timely basis and, as such, the Corporation's financial condition may be adversely affected.

Ability to Identify and Assess Candidates for Loans

The Corporation and Lending Funds rely on management to properly assess and identify qualified candidates for loans. Management undertakes an analysis of the fundamental business characteristics of all prospective borrowers and uses professionals in this assessment. Management researches factors that affect the credit risk of the borrower and the ability of the borrower to repay the loan. If management’s assessment of the ability of a borrower to repay a loan or the value of a borrower’s security is not correct, then the Corporation’s or Lending Funds' loans and revenues may be at greater risk than estimated by management with the result that the Corporation's financial condition and operating results may be adversely impacted.

Leveraged Nature of Companies

The companies in the natural resource sector in which the Corporation and Lending Funds will invest may have leveraged capital structures. The Corporation or Lending Funds may be subject to increased exposure to adverse economic factors such as a rise in interest rates, fluctuations in the debt market, a downturn in the economy or deterioration in the condition of such company or its industry. As a result, these companies’ flexibility to respond to changing business and economic conditions may be limited. In the event that a company is unable to generate sufficient cash flow to meet principal and interest payments on its indebtedness, high leverage will magnify the adverse effect on the value of the Corporation’s, Lending Fund I's, Lending Fund II's or other lending vehicle's loan to such company. In the event any company cannot generate adequate cash flow to meet, service or repay its loan, the Corporation or Lending Funds, as applicable, may suffer a partial or total loss, which could adversely affect the returns of the Corporation.

Commodity Price Fluctuations

Future market values and the amount of future income is uncertain due to the fluctuation in the price of specific commodities. The Corporation or Lending Funds may each, from time to time, enter into certain precious metal loans, where the repayment is notionally tied to a specific commodity spot price at the time of the loan and downward changes to the price of the commodity can reduce the value of the loan and the amounts ultimately repaid to the Corporation or the Lending Funds.

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Foreign Country and Political Risk

The Corporation or Lending Funds may enter into lending agreements with resource companies operating in various international locations. There are a number of risks that borrowers may face in foreign jurisdictions including, but not limited to, uncertain political or economic environments, terrorism or military action, civil disruption, changes to law or regulations, and government expropriation of property. Any of these risks could potentially adversely affect the borrower’s ability to repay its respective indebtedness with the Corporation or the Lending Funds. Changes in governments or policies could also adversely affect the Corporation and Lending Funds or potentially result in difficulty or an inability to realize on or dispose of security granted by borrowers. There is no assurance that governments will allow the transfer or sale of the underlying security.

Environmental

Operations of a resource company borrower will be subject to a variety of operating risks peculiar to the environment, such as forest fires, hurricanes or other adverse weather conditions, to more extensive governmental regulation, including regulations that may, in certain circumstances, impose strict liability for pollution damage, and to interruption or termination of operations by governmental authorities based on environmental or other considerations. Such operations could result in liability for personal injuries, property damage, oil spills, discharge of hazardous materials, remediation and clean-up costs and other environmental damages. A borrower (and, potentially, the Corporation or Lending Funds) could be liable for environmental damages caused by previous property owners. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could have material adverse effect on a borrower’s financial condition, results of operations and ability to repay the Corporation or Lending Funds, as applicable.

Syndication of Loans

The Corporation has, from time to time, entered into strategic relationships to syndicate certain loans as part of its strategy to diversify and manage risks associated with its loan portfolio, its liquidity position and to generate syndication fees. No assurance can be given that such existing strategic relationships will continue or that the terms and conditions of such relationships will not be modified in a way that renders them uneconomic. Furthermore, there can be no assurance that the Corporation will be able to enter into such relationships in the future. The inability to do so may adversely affect the Corporation’s ability to continue to service existing and prospective clients and manage its liquidity position.

Interest Rate Fluctuations

Decreases in prevailing interest rates may reduce the interest rates that the Corporation or Lending Funds are able to charge borrowers. Increases in prevailing interest rates may result in fewer borrowers being able to afford the cost of a loan. Accordingly, fluctuations in interest rates may adversely impact the Corporation’s profitability.

Change in Environmental Laws and Regulations

Changes in environmental laws and regulations can adversely impact a borrower’s ability to repay its indebtedness with the Corporation or Lending Funds or obtain additional financing which could result in the Corporation’s business and operating or financial results being adversely impacted. If a borrower fails to meet applicable environmental laws and regulations or such laws or regulations are revised, a borrower’s licenses could be revoked or suspended; thereby reducing the value of the underlying security of the loan and/or the borrower’s ability to repay its indebtedness. In exchange for the loans they make, the Corporation or the Lending Funds may take security in the form of real property mortgages. If environmental issues were to arise where the Corporation, Lending Fund I, Lending Fund II or other lending vehicles are deemed to be in possession or acquires ownership of the property, the Corporation, Lending Fund I, Lending Fund II or other lending vehicles may be liable for remediation costs or other environmental liabilities.

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Risks Relating to the Corporation’s Merchant Banking Division and Advisory Services Division

The Corporation’s financial condition and profitability are dependent, in part, on the performance of its Merchant Banking Division and Advisory Services Division, including capital markets activities. Reduced returns on these business lines may have a material adverse impact on the Corporation. Additional risks associated with the Corporation’s Merchant Banking Division and Advisory Services Division include the following risks.

Securities Law Liability

The merchant bank and advisory services business involves substantial risk of liability. An underwriter is exposed to substantial liability under securities laws, other laws and court decisions, including decisions with respect to underwriters’ liability and limitations on indemnification of underwriters by issuers. For example, a firm that acts as an underwriter may be held liable for misstatements or omissions of fact in a prospectus used in connection with the securities being offered or for statements made by its securities analysts or other personnel.

In such actions, similar to litigation risk, SCP would be obligated to bear legal, settlement and other costs (which may be in excess of available insurance coverage). In addition, although SCP may be indemnified, its rights to indemnification may be challenged. If SCP is required to incur all or a portion of the costs arising out of litigation or investigations as a result of inadequate insurance proceeds or a failure to obtain or defend a challenge to its indemnification entitlement, the Corporation’s results of operations, financial condition and liquidity would be materially adversely affected.

Industry Focus

Although SCP has taken steps to diversify their business by product and geography, it continues to be particularly dependent on the market for security offerings and M&A activity by issuers in the natural resources sector. The foregoing industry represented nearly all of the Corporation’s 2018 investment banking revenue. Volatility or uncertainty in the business environment or the market for the securities of issuers in this sector, will materially adversely affect the Corporation’s financial results and financial condition. The Corporation also derives a portion of its revenue from institutional brokerage transactions related to the securities of issuers in this sector. Revenue from such institutional brokerage transactions can be expected to decline when underwriting activities in this industry sector declines, the volume of trading on listed marketplaces declines, or industry sectors or individual issuers reported results below investor expectations.

Fair Value Risk

The Corporation is exposed to fair value risk through its underwriting transactions and client trade facilitation. SCP may incur losses in connection with underwriting activities if it is unable to resell the securities it has committed to purchase or if it is forced to liquidate such securities at less than the agreed purchase price. Fair value risk may arise from SCP’s trading activities. While SCP holds a security, it is vulnerable to price fluctuations and may experience financial losses to the extent the value of the security decreases and it is unable to divest of its trading position in such security on a timely basis. In addition, SCP may retain significant concentrated positions in individual securities.

Risks Related to Organization, Structure and Common Shares

Share Price Fluctuation

The market price of the Common Shares could fluctuate significantly as a result of many factors, including the following: (i) economic and stock market conditions generally and specifically as they may impact participants in the investment management industry; (ii) the Corporation’s earnings and results of operations and other developments affecting the Corporation’s business; (iii) sales of additional Common Shares into the market by the shareholders who are a part of management of the Corporation (“Management Shareholders”), significant shareholders of the Corporation ("Significant Shareholders") and/or other employees of the Corporation; (iv) changes in financial estimates and recommendations by securities analysts following the Common Shares; (v) earnings and other announcements by, and changes in market evaluations of, participants in the investment management industry; (vi) changes in business or regulatory conditions affecting participants in the investment management industry; and (vii) trading volume of the Common Shares.

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In addition, the financial markets have experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of companies and that have often been unrelated to the operating performance of such companies. Accordingly, the market price of the Common Shares may decline even if the Corporation’s operating results or prospects have improved or not changed.

Dilution and/or Consolidation

The Corporation may sell or issue additional Common Shares (or securities convertible or exchangeable into Common Shares) in the future to finance future activities. The Corporation cannot predict the size of future issuances of securities or the effect, if any, that future issuances and sales of securities will have on the market price of the Common Shares. Issuances of substantial numbers of Common Shares, or the perception that such issuances could occur, may adversely affect prevailing market prices of the Common Shares. With any additional issuance of Common Shares (or securities convertible or exchangeable into Common Shares), investors will suffer dilution to their voting power and the Corporation may experience dilution in its earnings per share.

On May 11, 2018, the Shareholders approved a future consolidation of the Corporation’s Common Shares on a basis of one post-consolidation Common Share for up to five pre-consolidation Common Share, if and at such time, as the Board in its sole discretion may determine. If the Corporation so consolidates the Common Shares, there can be no assurances that the market price of the consolidated Common Shares will increase as a result of a consolidation. The marketability and trading liquidity of the Common Shares may not improve after consolidation. Moreover, the consolidation may result in some Shareholders owning “odd lots” or less than 100 or 1,000 Common Shares, which may make it more difficult for such Shareholders to sell their Common Shares or which may make Shareholders to incur greater transaction costs per Common Share to sell.

Sales by Management Shareholders or Significant Shareholders

Subject to compliance with applicable securities laws, Management Shareholders and/or Significant Shareholders may sell some or all of their Common Shares in the future. No prediction can be made as to the effect, if any, such future sales of Common Shares by Management Shareholders and/or Significant Shareholders will have on the market price of the Common Shares prevailing from time to time. However, the future sale of a substantial number of Common Shares by Management Shareholders and/or Significant Shareholders, or the perception that such sales could occur, could adversely affect prevailing market prices for the Common Shares.

Restrictions on Share Ownership and Transfer

The ownership of the Common Shares is subject to certain restrictions under legislation applicable to certain of the Corporation's subsidiaries and rules and regulations established by securities regulatory authorities and certain self-regulatory organizations. If any person (together with its associates and affiliates and any person acting jointly or in concert with it) controls or acquires control of, 10% or more of the issued and outstanding Common Shares (after giving effect to the conversion or exchange of any securities convertible or exchangeable into Common Shares that are controlled by such person, its associates and affiliates and any person acting jointly or in concert with it), the Corporation and/or its subsidiaries may be required to provide notice to, or require approval from, such securities regulatory authorities and self-regulatory organizations. The failure of the Corporation and/or its subsidiaries to so notify, or receive approval from, such entities may result in sanctions or the termination of memberships and/or registrations necessary for the operation of their business. The imposition of such sanctions or the termination of such memberships and/or registrations could have a material adverse effect on the business, financial results, financial condition and general business prospects of the Corporation and/or its subsidiaries. As a result of these restrictions, the market for significant blocks of Common Shares may be limited.

Dividends and DRIP

The payment of dividends is not guaranteed and the amount and timing of any dividends payable by the Corporation will be at the discretion of the Board and will be established on the basis of the Corporation’s earnings, the satisfaction of solvency tests imposed by applicable corporate law for the declaration and payment of dividends, and other relevant factors. In addition, the Corporation reserves the right to amend, suspend or terminate the dividend reinvestment plan (the "DRIP") at any time, but such action shall have no retroactive effect that would prejudice the interests of the participants.

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DIVIDENDS

All dividends are subject to declaration by the Board. Whether to declare any dividends and the amount of any such dividends are determined by the Board, in its sole discretion, after considering general business conditions, the Corporation’s financial results, including the level of performance fees paid to the Corporation, the Corporation’s solvency position and working capital requirements, and other factors it determines to be relevant at the time. The Corporation’s dividend policy currently provides that the Board will declare, and the Corporation will pay, quarterly dividends on its Common Shares in the amount of $0.03 per Common Share. In addition, the Board may annually declare a special dividend on each of its Common Shares following receipt of performance fees, if any. The amount and timing of such special dividend, if any, will be determined by the Board in its sole discretion. There is no certainty that any dividends will be declared or paid; however there is not currently any intention to change the Corporation's dividend policy. Any dividend policy established by the Board can be changed at any time and such policy is not binding on the Corporation.

Total dividends paid during the year ended December 31, 2019 were $30.4 million. During the last three financial years, the Corporation has declared and paid cash dividends per Common Share as noted below:

Dividend per Common Share		Record Date	Payment Date
$	0.03	March 10, 2017	March 27, 2017
$	0.03	May 18, 2017	June 2, 2017
$	0.03	August 21, 2017	September 5, 2017
$	0.03	November 17, 2017	December 4, 2017
$	0.03	March 12, 2018	March 27, 2018
$	0.03	May 21, 2018	June 5, 2018
$	0.03	August 20, 2018	September 4, 2018
$	0.03	November 19, 2018	December 4, 2018
$	0.03	March 8, 2019	March 25, 2019
$	0.03	May 21, 2019	June 5, 2019
$	0.03	August 19, 2019	September 3, 2019
$	0.03	November 18, 2019	December 3, 2019

No special dividend was declared in relation to performance fees earned in 2017, 2018 or 2019.

Unless indicated otherwise, all dividends on Common Shares will be designated as “eligible dividends” under the Income Tax Act (Canada).

In November 2016, the Corporation instituted a DRIP for Canadian shareholders. The DRIP provides a convenient and cost-effective method for eligible shareholders in Canada to maximize their investment in the Corporation by reinvesting their cash dividends to acquire additional Common Shares. Under the DRIP, the Corporation has the discretion to issue Common Shares from treasury at a discount of up to 5% in the Average Market Price (as defined in the DRIP). Any applicable discounts on dividend reinvestment common share purchases are announced at the time the Corporation declares a dividend. The DRIP is administered by the Plan Agent, TSX Trust Company.

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CAPITAL STRUCTURE

The authorized share capital of the Corporation consists of an unlimited number of shares designated as common shares, of which 254,398,190 Common Shares are issued and outstanding as of the date hereof.

Common Shares

Each Common Share entitles the holder thereof to receive notice of any meetings of shareholders of the Corporation, and to attend and cast one vote per Common Share at all such meetings. Holders of Common Shares are entitled to receive on a pro-rata basis (i) such dividends, if any, as and when declared by the Board at its discretion from funds legally available therefore; and (ii) upon the liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation after payment of debts and other liabilities (in each case subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares ranking senior in priority to, or on a pro rata basis with, the holders of Common Shares with respect to dividends or liquidation). The Common Shares do not carry any pre-emptive, subscription, redemption or conversion rights, nor do they contain any sinking or purchase fund provisions. See also “Dividends”.

Restriction on Share Ownership

The Corporation may not, without regulatory approval, permit an investor, alone or together with its associates and affiliates, to own voting securities carrying 10% or more of the votes carried by all voting securities in SAM, SCP or the Corporation, 10% or more of the outstanding participating securities of SAM, SCP or the Corporation, or an interest of 10% or more in the total equity of the Corporation.

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MARKET FOR SECURITIES

Trading Price and Volume

The Common Shares are listed and posted for trading on the TSX under the stock symbol “SII”. Information concerning the trading prices and aggregate volume of the Common Shares on the TSX during each month of fiscal 2019 is set out below:

Month	High ($)		Low ($)		Aggregate Volume
January		2.62		2.42		7,505,105
February		2.74		2.36		11,407,023
March		3.18		2.5		27,601,695
April		3.14		2.93		7,016,700
May		3.14		2.95		8,677,094
June		3.54		3.01		17,308,714
July		3.93		3.35		16,556,003
August		3.99		3.62		16,048,386
September		3.88		3.08		10,373,117
October		3.29		3.01		10,571,371
November		3.05		2.62		9,697,228
December		3.08		2.84		6,290,875

Prior Sales

The Corporation granted no stock options under the Option Plan during the most recently completed financial year.

The Corporation has granted the following restricted share units ("RSUs") under the EIP since January 1, 2019:

Date of Grant	Number of RSUs
March 5, 2019		230,157
April 30, 2019		26,562
May 13, 2019		100,000
May 15, 2019		119,687
August 13, 2019		223,143

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The Corporation has granted the following deferred share units (“DSUs”) under its Deferred Share Unit Plan since January 1, 2019:

Date of Grant	Number of DSUs		Issue Price ($)
March 25, 2019		8,046		3.13
June 5, 2019		4,636		3.08
September 3, 2019		3,877		3.72
December 3, 2019		5,082		2.86
November 25, 2019		75,000		2.79
January 15, 2020		3,621		3.08
Total DSUs Granted:		100,262

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ESCROWED SECURITIES

There were no securities of the Corporation held, to the knowledge of the Corporation, in escrow or that were subject to a contractual restriction on transfer during the Corporation’s most recently completed financial year.

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DIRECTORS AND EXECUTIVE OFFICERS

The Board consists of six directors. All directors were elected or appointed to serve until the next annual meeting of shareholders of the Corporation, subject to earlier resignation or removal. The following table sets forth the name; province or state and country of residence; position(s) held with the Corporation; principal occupation; period of directorship with the Corporation; and shareholdings of each of the directors and executive officers of the Corporation.

Name, Province/State and Country of Residence	Position(s) held with the Corporation	Principal Occupation	Director Since	Number of Voting Securities Owned or Controlled or Directed(1)	Percentage of Issued and Outstanding Voting Securities
Ronald Dewhurst(2)(3) Victoria, Australia	Chairman of the Board	Corporate Director	2017	—	—%
Sharon Ranson(2)(3) Ontario, Canada	Director	President of The Ranson Group Inc. (executive coaching and consulting services firm)	2014	250,000	0.10%
Rosemary Zigrossi(2)(3) Ontario, Canada	Director	President, Odaamis Inc. (consulting services firm)	2014	35,000	0.01%
Graham Birch, Dorset, England	Director	Corporate Director	2019	—	—%
Arthur Richards Rule IV (4) California, United States	Director	President and CEO of Sprott USA	2011	26,870,382	10.56%
Peter Grosskopf(5) Ontario, Canada	CEO and Director	CEO of the Corporation and CEO of Sprott Resource Lending	2010	6,148,625	2.42%
Whitney George(6) Connecticut, United States	President	President of the Corporation, Chairman of Sprott. U.S. and CIO of SAM	N/A	11,207,240	4.41%
Kevin Hibbert(7) Ontario, Canada	Chief Financial Officer and Senior Managing Director	Chief Financial Officer and Co-Head, Enterprise Shared Services	N/A	908,189	0.36%
Arthur Einav(8) Ontario, Canada	General Counsel,  Corporate Secretary and Senior Managing Director	General Counsel, Co-Head, Enterprise Shared Services	N/A	1,000,000	0.39%
John Ciampaglia(9) Ontario, Canada	Senior Managing Director	CEO of SAM	N/A	880,282	0.35%
Edward Coyne (10) Connecticut, United States	Senior Managing Director	Head of Global Sales, Sprott Inc.	N/A	40,000	0.02%

Notes:

(1) The information as to the number of Common Shares beneficially owned, directly or indirectly, or over which control or direction is exercised, by the directors and executive officers, not being within the knowledge of the Corporation, has been obtained from the System for Electronic Disclosure by Insiders.

(2) Member of the Audit and Risk Management Committee.

(3) Member of the Corporate Governance and Compensation Committee.

(4) 273,963 of the 26,870,382 Common Shares owned or controlled or directed by Mr. Rule were granted under the EIP and vested prior to December 31, 2019.

(5) 1,277,425 of the 6,148,625 Common Shares of Mr. Grosskopf's Common Shares were granted under the EPSP. 320,166 of the 1,277,425 Common Shares granted under the EPSP have not yet vested.

(6) 731,011 of the 11,207,240 Common Shares owned or controlled or directed by Mr. George were granted under the EIP and vested prior to December 31, 2019.

(7) All of Mr. Hibbert's 908,189 Common Shares were granted under the EPSP. 425,000 of 908,189 Common Shares granted under the EPSP have not yet vested.

(8) All of Mr. Einav's 1,000,000 Common Shares were granted under the EPSP. 425,000 of 1,000,000 Common Shares granted under the EPSP have not yet vested.

(9) All of Mr. Ciampaglia's 880,282 Common Shares were granted under the EPSP. 425,000 of 880,282 Common Shares granted under the EPSP have not yet vested.

(10) All of Mr. Coyne's 40,000 Common Shares were granted under the were granted under the EIP and vested prior to December 31, 2019.

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Each of the foregoing individuals have been engaged in the principal occupation set forth opposite his or her name during the past five years or in a similar capacity with a predecessor organization except for: (i) Whitney George, who prior to January 2016 served as Senior Portfolio Manager of Sprott U.S. and, prior to March 2015, served as Managing Director and Portfolio Manager of Royce & Associates LLC (asset manager); (ii) Kevin Hibbert, who, from January 2014 to December 4, 2015 served as the Vice-President, Finance of the Corporation and prior thereto, served as the Director, Finance of the Royal Bank of Canada; (iii) John Ciampaglia, who, from April 2010 to September 2014 served as Chief Operating Officer of SAM and from September 2014 to March 2018 served as Executive Vice-President, Corporate Development of the Corporation; and (iv) Ed Coyne, who, prior to January 2016, served as Principal and Investment Specialist at Royce & Associates LLC.

The directors and executive officers of the Corporation, as a group directly or indirectly, beneficially own, or control or direct 47,339,718 Common Shares, being 18.61% of the total issued and outstanding Common Shares.

Corporate Cease Trade Orders, Bankruptcies or Penalties or Sanctions

No director, officer or executive officer of the Corporation is, as of the date of this AIF, or was within ten years before the date of this AIF, a director, CEO or chief financial officer of any company (including the Corporation), that:

(a) was the subject of a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, (an “order”) that was issued while the director or executive officer was acting in the capacity as director, CEO or chief financial officer; or

(b) was subject to an order that was issued after the director or executive officer ceased to be a director, CEO or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, CEO or chief financial officer.

No director or executive officer of the Corporation, or a shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation:

(a) is, as of the date of this AIF, or has been within the ten years before the date of this AIF, a director or executive officer of any company (including the Corporation) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, or

(b) has, within ten years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or become subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

No director or executive officer of the Corporation, or a shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation has been subject to:

(a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

All of the above disclosure also applies to any personal holding companies of any of the persons referred to above.

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LEGAL PROCEEDINGS AND REGULATORY ACTIONS

In June 2013, the Corporation and certain subsidiaries were named as defendants in a legal proceeding filed with the Ontario Superior Court of Justice relating to the Flatiron Market Neutral Limited Partnership ("Flatiron Fund") by Performance Diversified Fund, as plaintiff. The proceeding is in respect of a claim relating to an investment by the plaintiff in the Flatiron Fund. The plaintiff was a limited partner in the Flatiron Fund from 2006 until February 2013. The Corporation indirectly acquired the shares of the manager of the Flatiron Fund in August 2012. The orderly liquidation of the Flatiron Fund was announced in November 2012 and completed in February 2013.

Performance Diversified Fund claims damages in the amount of $60 million from the Corporation and certain subsidiaries and $5 million in other damages from the Corporation, certain subsidiaries and other defendants not related to the Corporation.

The Corporation denies any liability in connection with this claim and will vigorously defend the claim.

The Corporation has incurred nominal expenses in relation to this claim as at December 31, 2019 and expects most legal costs will be recoverable under its insurance policies and other contractual arrangements.

Management of the Corporation is not aware of any other material litigation or regulatory action that the Corporation may be a party to.

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INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Other than as described elsewhere herein, to the knowledge of the Corporation, no (i) director or executive officer of the Corporation, (ii) person or company who beneficially owns, or controls or directs, directly or indirectly, more than 10% of any class or series of outstanding voting securities of the Corporation; or (iii) associate or affiliate of any of the persons or companies referred to in (i) or (ii), has any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year that has materially affected or is reasonably expected to materially affect the Corporation.

The Corporation’s directors and officers are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosure by directors and officers of conflicts of interest and the fact that the Corporation will rely upon such laws in respect of any director’s or officer’s conflicts of interest or in respect of breaches of duty by any of its directors or officers. All such conflicts must be disclosed by such directors or officers in accordance with the Act, and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.

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TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Shares is TSX Trust Company at its principal office located at 100 Adelaide Street West, Suite 301, Toronto, Ontario, Canada M5H 4H1.

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MATERIAL CONTRACTS

Except for contracts entered into in the ordinary course of business, the only contracts entered into during the 12-month period ended December 31, 2019 which are material or entered into before the 12-month period ended December 31, 2019, but are still in effect, and which are required to be filed with the Canadian securities regulatory authorities in accordance with Section 12.2 of National Instrument 51-102 - Continuous Disclosure Obligations is the following:

1. Asset Purchase Agreement

See "General Development of the Business" for further details.

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AUDIT AND RISK MANAGEMENT COMMITTEE INFORMATION

The Board has established an audit and risk management committee (the “Audit Committee”) comprised of Sharon Ranson (Chair), Ron Dewhurst and Rosemary Zigrossi. All members of the Audit Committee are independent and non-executive directors of the Corporation. All members of the Audit Committee meet the independence and financial literacy requirements of National Instrument 52-110 Audit Committees. Ms. Ranson was an Adjunct Professor for the Master of Finance program at the Smith School of Business at Queen's University. Prior to founding her current business in 2002, Ms. Ranson spent over 20 years in the Financial Services industry in various executive positions. Ms. Ranson is a Fellow Chartered Accountant and has a Bachelor of Commerce and a Masters of Business Administration. Mr. Dewhurst is currently Chairman of the Corporation He was previously CEO of Australian Investment Bank ANZ McCaughan Ltd, Head of Americas for J.P. Morgan Asset Management. Mr. Dewhurst has held a number of board roles, including Australian United Investment Company, IOOF Holdings Inc. and Orchard Petroleum Ltd. Prior to establishing Odaamis Inc. in 2014, Ms. Zigrossi was a Director at Promontory Financial Group (a financial services consulting firm) from 2011 to 2014, and prior to that held various positions at the Ontario Teachers’ Pension Plan including Vice President, Asset Mix and Risk; Vice President, Venture Capital; and Controller. In addition, Ms. Zigrossi was an Assistant Vice President at J.P. Morgan (Canada). Ms. Zigrossi has a Bachelor of Commerce and is a Chartered Accountant and CFA charter holder.

The Board has adopted a written mandate for the Audit Committee, which sets out the Audit Committee’s responsibility in overseeing enterprise risk management, the accounting and financial reporting processes of the Corporation, audits of the financial statements of the Corporation, and the appointment, compensation, and oversight of the work of any registered external auditor employed by the Corporation for the purpose of preparing or issuing an audit report or related work. This mandate is reviewed and assessed at least annually or otherwise, as deemed appropriate, by the Board with the assistance of the Corporate Governance and Compensation Committee and the Audit Committee. A copy of this mandate is attached hereto as Appendix “A”.

At no time since January 1, 2017 has a recommendation of the Audit Committee to nominate or compensate an external auditor not been adopted by the Board.

Pre-Approval Policies and Procedures

The Audit Committee is responsible for the oversight of the work of the external auditor. As part of this responsibility, the Audit Committee is required to pre-approve the audit and non-audit services performed by the external auditor in order to assure that they do not impair the external auditor's independence from the Corporation. Accordingly, on May 12, 2016, the Audit Committee adopted an Audit and Non-Audit Pre-Approval Policy (the "Pre-Approval Policy"), which sets forth the procedures and the conditions pursuant to which services proposed to be performed by the external auditor may be pre-approved.

Unless a type of service has received the pre-approval of the Audit Committee for the fiscal year pursuant to the Pre-Approval Policy, it requires specific pre-approval by the Audit Committee if it is to be provided by the external auditor. Any proposed services exceeding the pre-approved cost levels or budgeted amounts for the fiscal year as specified in the Pre-Approval Policy, will also require specific pre-approval by the Audit Committee.

The Audit Committee considers whether such services raise any issue regarding the independence of the external auditor. For this purpose, the Audit Committee also takes into account whether the external auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Corporation's business, people, culture, accounting, systems, risk profile and other factors and whether the service might enhance the Corporation's ability to manage or control risk or improve audit quality. All such factors are considered as a whole, and no one factor is necessarily determinative.

The Audit Committee is also mindful of the relationship between fees for audit and non-audit services in deciding whether to pre-approve any such services and may determine, for each fiscal year, the appropriate ratio between the total amount of fees for audit services, and audit-related services and the total amount of fees for tax services and for certain permissible non-audit services classified as all other services.

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The Pre-Approval Policy describes the audit, audit-related, tax and all other services that have been granted the pre-approval of the Audit Committee. The term of such pre-approval is 12 months from the date of pre-approval, unless the Audit Committee considers a different period and states otherwise. The Audit Committee annually reviews and pre-approves the services that may be provided by the external auditor without obtaining specific pre-approval from the Audit Committee. The Audit Committee can add or subtract to the list of pre-approved services from time to time, based on subsequent determinations.

The Pre-Approval Policy also outlines a list of prohibited non-audit services which may not be provided by the Corporation's external auditor.

On August 9, 2018, the Audit Committee amended the Pre-Approval Policy to provide the CFO with the authority to review and approve services to be provided by an external audit firm that is not the Corporation's external auditor. On the same date, the Audit Committee also granted pre-approval for all audit, audit-related, tax and all other services to be provided to the Corporation by the external auditor as specified in the Pre-Approval Policy to an aggregate annual (fiscal year) maximum of $600,000 (other than specifically pre-approved audit services).

External Auditor Fees

KPMG LLP was appointed as the Corporation's auditors effective January 1, 2016.

For the fiscal years ended December 31, 2019 and December 31, 2018, the fees received and accrued by KPMG LLP are summarized below for each category:

Service(1)	Fees Incurred 2019		Fees Incurred 2018
Audit and Audit-Related Fees(2)	$	880,075	$	544,132
Tax Fees(3)	$	167,323	$	145,100
All Other Fees		—		—
Total Fees Paid	$	1,047,398	$	689,232

Notes:

(1) Fees do not include any fees related to services provided with respect to the funds managed by SAM. Fees for services related to the funds include: Audit and Audit-Related Fees - $970,491 (2018 - $922,160), Tax Fees - $106,541 (2018 - $24,450).

(2) Audit-related services include quarterly reviews, year-end audit fees and other audit and assurance related engagements.

(3) Tax services include tax return review, tax planning, GST work, tax research and other tax services.

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INTERESTS OF EXPERTS

KPMG LLP, the auditors of the Corporation, who have prepared an independent auditors’ report dated February 27, 2020 with respect to the consolidated financial statements of the Corporation for its fiscal year ended December 31, 2019, have advised that they are independent of the Corporation within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario.

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ADDITIONAL INFORMATION

Additional information relating to the Corporation may be found on SEDAR at www.sedar.com.

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Corporation’s securities and securities authorized for issuance under equity compensation plans, if applicable, is contained in the Corporation’s information circular for its most recent annual meeting of security holders involving the election of directors.

Additional financial information is provided in the Corporation’s financial statements and management’s discussion and analysis for its most recently completed financial year.

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APPENDIX A

SPROTT INC.

AUDIT AND RISK MANAGEMENT COMMITTEE MANDATE

General

The board of directors (the “Board”) of Sprott Inc. (the “Corporation”) has delegated the responsibilities, authorities and duties described below to the audit and risk management committee (the “Committee”). For the purpose of these terms of reference, the term “Corporation” shall include the Corporation and its subsidiaries.

The Committee shall be directly responsible for overseeing the accounting and financial reporting processes of the Corporation and audits of the financial statements of the Corporation, and the Committee shall be directly responsible for the appointment, compensation, and oversight of the work of any registered external auditor employed by the Corporation (including resolution of disagreements between management of the Corporation and the external auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. In so doing, the Committee will comply with all applicable Canadian securities laws, rules and guidelines, any applicable stock exchange requirements or guidelines and any other applicable regulatory rules.

Members

1. The Committee will be comprised of a minimum of three directors. Each Committee member shall satisfy the independence, financial literacy and experience requirements of applicable Canadian securities laws, rules and guidelines, any applicable stock exchange requirements or guidelines and any other applicable regulatory rules. In particular, each member shall be “independent” and “financially literate” within the meaning of Multilateral Instrument 52-110 Audit Committees (except as otherwise set forth in the limited exemptions contained therein). Determinations as to whether a particular director satisfies the requirements for membership on the Committee shall be made by the Board.

2. Members of the Committee shall be appointed annually by the Board at the first meeting of the Board after the annual general meeting of shareholders. Each member shall serve until such member’s successor is appointed, unless that member resigns or is removed by the Board or otherwise ceases to be a director of the Corporation. The Board shall fill any vacancy if the membership of the Committee is less than three directors.

3. The Chair of the Committee will be designated by the Board, on the recommendation of the Corporate Governance and Compensation Committee, or, if it does not do so, the members of the Committee may elect a Chair by vote of a majority of the full Committee membership. The Chair of the Committee shall, among other things, have the following duties and responsibilities:

(a) overseeing the structure, effectiveness of the Committee, membership and activities delegated to the Committee;

(b) chairing meetings of the Committee and encouraging free and open discussion at such meetings, including encouraging members to ask questions and express viewpoints during meetings;

(c) scheduling and setting the agenda for meetings of the Committee with input from other members of the Committee, the Board and management as appropriate;

(d) facilitating the timely, accurate and proper flow of information to and from the Committee, including reporting periodically to the Board;

(e) arranging sufficient time during meetings of the Committee to discuss agenda items;

(f) taking reasonable steps to ensure the duties of the Committee are understood by members; and

(g) carrying out such other duties as may reasonably be requested by the Board.

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Meetings

4. The Committee will meet at least quarterly and at such times and at such locations as the Chair of the Committee shall determine, provided that meetings shall be scheduled so as to permit the timely review of the Corporation’s quarterly and annual financial statements and related management discussion and analysis, if applicable. Notice of every meeting shall be given to the external auditor, who shall, at the expense of the Corporation, be entitled to attend and to be heard thereat. The external auditor or any member of the Committee may also request a meeting of the Committee. The Committee shall have an in-camera session without non-independent directors and management as a regular feature of each regularly scheduled meeting. The external auditor and management employees of the Corporation shall, when required by the Committee, attend any meeting of the Committee. Any director of the Corporation may request the Chair of the Committee to call a meeting of the Committee and may attend at such meeting or inform the Committee of a specific matter of concern to such director, and may participate in such meeting to the extent permitted by the Chair of the Committee.

5. Meetings of the Committee shall be validly constituted if a majority of the members of the Committee is present in person or by telephone conference. A resolution in writing signed by all the members of the Committee entitled to vote on that resolution at a meeting of the Committee is as valid as if it had been passed at a meeting of the Committee.

6. The Committee shall submit the minutes of all meetings to the Board, and when requested to, shall discuss the matters discussed at each Committee meeting with the Board.

Committee Charter and Performance

7. The Committee shall have a written charter that sets out its mandate and responsibilities and the Committee shall review and assess the adequacy of such charter and the effectiveness of the Committee at least annually or otherwise, as it deems appropriate, and propose recommended changes to the Corporate Governance and Compensation Committee who will do same and recommend changes to the Board for its approval. Unless and until replaced or amended, this mandate constitutes that charter.

Committee Authority and Responsibilities

8. General

The overall duties of the Committee shall be to:

(i) assist the Board in the discharge of its duties relating to the Corporation’s accounting policies and practices, reporting practices and internal controls;

(ii) establish and maintain a direct line of communication with the Corporation’s external auditor and assess their performance;

(iii) oversee the work of the external auditor engaged to prepare or issue an auditor’s report or to prepare other audit, review or attest services for the Corporation, including resolution of disagreements between management and the external auditor regarding financial reporting;

(iv) ensure that management has designed, implemented and is maintaining an effective system of internal controls and disclosure controls and procedures;

(v) monitor the credibility and objectivity of the Corporation’s financial reports;

(vi) report regularly to the Board on the fulfillment of the Committee’s duties, including any issues that arise with respect to the quality or integrity of the Corporation’s financial statements, the Corporation’s compliance with legal or regulatory requirements, the performance and independence of the external auditor or the internal audit function;

(vii) assist, with the assistance of the Corporation’s legal counsel, the Board in the discharge of its duties relating to the Corporation’s compliance with legal and regulatory requirements; and

(viii) assist the Board in the discharge of its duties relating to risk assessment and risk management.

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9. External Auditor

The external auditor will report directly to the Committee and the Committee should have a clear understanding with the external auditor that such auditor must maintain an open and transparent relationship with the Committee and that ultimate accountability of the auditor is to the shareholders of the Corporation. The duties of the Committee as they relate to the external auditor shall be to:

(i) review management’s recommendations for the appointment of the external auditor, and in particular their qualifications and independence, and recommend to the Board a firm of external auditors to be engaged and the compensation of such external auditor;

(ii) review the performance of the external auditor, including the fee, scope and timing of the audit, and make recommendations to the Board regarding the appointment or termination of the external auditor;

(iii) review, where there is to be a change of external auditor, all issues related to the change, including the information to be included in the notice of change of auditor called for under National Instrument 51-102 Continuous Disclosure Obligations or any successor legislation (“NI 51-102”), and the planned steps for an orderly transition;

(iv) review all reportable events, including disagreements, unresolved issues and consultations, as defined in NI 51-102, on a routine basis, whether or not there is to be a change of external auditor;

(v) ensure the rotation of partners on the audit engagement team of the external auditor in accordance with applicable law, standards or rules;

(vi) review and pre-approve non-audit services to be provided to the Corporation by the external auditor;

(vii) review and approve the engagement letters of the external auditor, both for audit and permissible non-audit services, including the fees to be paid for such services;

(viii) review the nature of and fees for any non-audit services performed for the Corporation by the external auditor and consider whether the nature and extent of such services could detract from the external auditor’s independence in carrying out the audit function; and

(ix) meet with the external auditor, as the Committee may deem appropriate, to consider any matter which the Committee or external auditor believes should be brought to the attention of the Board or shareholders of the Corporation.

10. Audits and Financial Reporting

The duties of the Committee as they relate to audits and financial reporting shall be to:

(i) review the audit plan with the external auditor and management;

(ii) review with the external auditor and management all critical accounting policies and practices of the Corporation (including any proposed changes in accounting policies), the presentation of the impact of significant risks and uncertainties, all material alternative accounting treatments that the external auditor has discussed with management, other material written communications between the external auditor and management (such as any management letter or schedule of unadjusted differences), and key estimates and judgments of management that may in any such case be material to financial reporting;

(iii) review the contents of the audit report;

(iv) question the external auditor and management regarding significant financial reporting issues discussed during the fiscal period and the method of resolution;

(v) review the scope and quality of the audit work performed;

(vi) review the adequacy of the Corporation’s financial and auditing personnel;

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(vii) review the co-operation received by the external auditor from the Corporation’s personnel during the audit, any problems encountered by the external auditor and any restrictions on the external auditor’s work;

(viii) review the evaluation of internal controls by the persons performing the internal audit function and the external auditor, together with management’s response to the recommendations, including subsequent follow-up of any identified weaknesses. Particular emphasis will be given to the adequacy of internal controls to prevent or detect any payments, transactions or procedures that might be deemed illegal or otherwise improper;

(ix) review the appointments of the Chief Financial Officer, persons performing the internal audit function and any key financial executives involved in the financial reporting process;

(x) review with management and the external auditor the Corporation’s interim unaudited financial statements and the annual audited financial statements in conjunction with the report of the external auditor thereon, and obtain an explanation from management of all significant variances between comparative reporting periods before recommending approval by the Board and the release thereof to the public; and

(xi) review the terms of reference for an internal auditor or internal audit function.

11. Accounting and Disclosure Policies

The duties of the Committee as they relate to accounting and disclosure policies and practices shall be to:

(i) review the effect of regulatory and accounting initiatives and changes to accounting principles of the Canadian Institute of Chartered Accountants or any successor thereto, which would have a significant impact on the Corporation’s financial reporting as reported to the Committee by management and the external auditor;

(ii) review the appropriateness of the accounting policies used in the preparation of the Corporation’s financial statements and consider recommendations for any material change to such policies;

(iii) review the status of material contingent liabilities as reported to the Committee by management;

(iv) review the status of income tax returns and potentially significant tax problems as reported to the Committee by management;

(v) review any errors or omissions in the current or prior years’ financial statements;

(vi) review and recommend approval by the Board before their release all public disclosure documents containing audited or unaudited financial results, including all press releases containing financial results, offering documents, annual reports, annual information forms and management’s discussion and analysis containing such results; and

(vii) satisfy itself that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements other than the public disclosure referred to in clause (vi), above, and periodically assess the adequacy of these procedures.

12. Risk Management

The duties of the Committee as they relate to risk management shall be to:

(i) review the design and effectiveness of the Corporation’s risk management systems and policies (including with respect to corporate reporting and disclosure, accounting and auditing controls and procedures, securities compliance and other matters pertaining to fraud against the Corporation and its shareholders) and, if considered appropriate, recommend such systems or policies to the Board for approval;

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(ii) review and consider with management the Corporation’s risk capacity, risk taking philosophy and approach to determining an appropriate balance between risk and reward, including remuneration policies in respect of performance objectives;

(iii) review and evaluate the Corporation’s significant financial risk exposures, including currency, interest rate, credit, and market risks, and the steps management has taken or has proposed to take to monitor and manage such risk exposures (through hedges, swaps, other financial instruments, and otherwise), in compliance with applicable policies;

(iv) review and discuss with management the Corporation’s significant non-financial risk exposures, including strategic, reputational, operational, regulatory, and business risks, and the steps management has taken or proposes to take to monitor and control such risk exposures in compliance with applicable policies;

(v) review and confirm with management that material non-financial information about the Corporation and its subsidiaries that is required to be disclosed under applicable law or stock exchange rules is disclosed;

(vi) review with management the quality and competence of management appointed to administer risk management functions;

(vii) review with management the Corporation’s compliance programs;

(viii) review the Corporation’s insurance coverage and deductible levels;

(ix) review, with legal counsel where required, such litigation, claims, tax assessments and other tax-related matters, transactions, material inquiries from regulators and governmental agencies or other contingencies which may have a material impact on financial results, the Corporation’s reputation or which may otherwise adversely affect the financial well-being of the Corporation;

(x) review and evaluate the Corporation’s susceptibility to fraud and corruption and management’s processes for identifying and managing the risks of fraud and corruption;

(xi) review complaints or concerns submitted to the Chair of the Committee with respect questionable treatment or alleged violations of financial reporting and other risk related matters in accordance with the Corporation’s Whistleblower Policy;

(xii) review and approve the statements to be included in the annual report, annual information form and any other disclosure documents concerning risk management; and

(xiii) consider other matters of a risk management nature as directed by the Board.

13. Other

The other duties of the Committee shall include:

(i) reviewing any inquiries, investigations or audits of a financial nature by governmental, regulatory or taxing authorities;

(ii) reviewing annual operating and capital budgets;

(iii) reviewing and reporting to the Board on difficulties and problems with regulatory agencies which are likely to have a significant financial impact;

(iv) establishing procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters; and the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters;

(v) reviewing and approving the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the Corporation;

(vi) inquiring of management and the external auditor as to any activities that may be or may appear to be illegal or unethical; and

(vii) at the request of the Board, investigating and reporting on such other matters as it considers necessary or appropriate in the circumstances.

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Authority to engage independent counsel and outside advisors

14. The Committee has the authority to engage independent counsel and other advisors it determines necessary to carry out its duties, to set and pay the compensation for any advisors employed by the Committee and to communicate directly with the internal and external auditors.

15. The Corporation shall provide appropriate funding, as determined by the Committee, in its capacity as a committee of the Board, for payment (a) of compensation to the external auditors employed by the issuer for the purposes of rendering or issuing an audit report and to any advisors engaged by the committee, and (b) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

March 6, 2018

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EX-99.22

Exhibit 99.22

Table of Contents

Letter to Shareholders	2
Management's Discussion and Analysis	3
Management's Responsibility for Financial Reporting	28
Independent Auditors' Report	29
Consolidated Financial Statements	33
Notes to the Consolidated Financial Statements	37

Dear Shareholders,

Last year Sprott continued to build its global platform while gold entered a new bull market. Gold prices convincingly broke out of their multi-year range in 2019, spurred by coordinated easing by all of the global central banks. In particular, the US Federal Reserve stumbled into a major policy reversal in July by cutting interest rates and ending its quantitative tightening program. Further, during the fourth quarter of 2019, the Fed began intervening in the overnight repo markets to offer additional liquidity into the financial system. Gold responded to these developments by gaining 18% to close the year at US$1,520 per ounce.

Stronger precious metals prices and increased investor interest contributed to Sprott’s Assets Under Management (“AUM”) increasing by 14% in 2019 to $12.1 billion. In January 2020, Sprott completed the previously announced acquisition of the Tocqueville gold strategies in a transaction that added a further $2.3 billion in assets to our managed equities segment at time of deal closure.

In our exchange listed products segment, our physical trusts returned to positive flows in the fourth quarter of 2019 and the momentum has continued into the start of 2020.

In 2019, we built on the success of our first private resource lending LPs by securing new commitments to our lending strategies from leading global institutions. We have also expanded our capabilities in this area with a new royalty and streaming strategy. Total committed capital in this segment is now more than US$1.3 billion.

With the addition of Tocqueville portfolio managers John Hathaway and Douglas Groh, Sprott believes it now has the world’s leading gold investment team in terms of sector experience, depth and technical expertise. By continuing to invest while our competitors retreat from the sector, we have built a global platform to offer the full spectrum of precious metal investment strategies.

Looking ahead, 2020 is likely to be a pivotal year for Sprott. Detailed analysis shows us that the Federal Reserve and other global central banks are now required to inject increasing amounts of liquidity into the financial system. We believe the markets will come to the realization that the Minsky Moment of government debt levels has already occurred. The Federal Reserve is employing variations of Modern Monetary Theory in order to provide short-term liquidity to the Treasury markets. To throw gasoline on the fire, populist political agendas, financed by significant fiscal deficits, are also likely here to stay. We believe this gold bull market will be different. Gold is no longer a “fringe” asset, is no longer being driven by short-term dislocations, and is being steadily accumulated by long-term investors as a mandatory portfolio insurance asset.

This is our time to shine. Sprott is uniquely positioned to benefit from these trends, and is committed to building our funds and delivering exceptional investment performance to our clients and shareholders.

Thank you for your continued support. We look forward to reporting to you on our progress in the months ahead.

Peter Grosskopf

Chief Executive Officer

P.S. At the time of publication, front page news and markets have become focused on the fallout from the Coronavirus. We believe that its impact to both the global economy and the financial markets will be substantial, and this may become the pin that pricks the bubble of confidence in central bank policies and fiat currencies. If so, gold could move to new highs as a protection asset. It will be an interesting year.

2

Management's Discussion and Analysis

Year ended December 31, 2019

3

FORWARD LOOKING STATEMENTS

Certain statements in this Management's Discussion & Analysis ("MD&A"), and in particular the "Business Highlights and Growth Initiatives" section and "Outlook" subsection, contain forward-looking information (collectively referred to herein as the "Forward-Looking Statements") within the meaning of applicable 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) expectations regarding an increasingly constructive gold and silver pricing environment; (ii) expectations regarding deployment of capital called into our lending LPs; (iii) anticipation of flat year-over-year performance in the Brokerage segment; (iv) anticipation of higher year-over-year operating costs (primarily relating to higher SG&A on increased U.S. operating activities) and lower EBITDA contribution from non-reportable segments; (v) the impact to the Managed Equities segment of the Tocqueville gold strategies asset management business; (vi) the performance of the co-investments in the lending LPs; (vii) gold accumulation and new highs as insurance and protection assets; and (viii) the declaration, payment and designation of dividends.

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; and (iv) those assumptions disclosed herein under the heading "Significant Accounting Judgments, Estimates and Changes in Accounting Policies". 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 favourable 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 lending business; (xxvii) risks relating to the Company’s merchant bank and advisory business; (xxviii) those risks described under the heading "Risk Factors" in the Company’s annual information form dated February 27, 2020; and (xxix) those risks described under the headings "Managing Risk: Financial" and "Managing Risk: Non-Financial" 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. As a result of the foregoing, readers should not place undue reliance on the forward-looking statements contained in this MD&A concerning the completion of the acquisition or the timing thereof. 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 Canadian securities laws.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This MD&A of financial condition and results of operations, dated February 27, 2020, presents an analysis of the consolidated financial condition of the Company and its subsidiaries as at December 31, 2019, compared with December 31, 2018, and the consolidated results of operations for the three and twelve months ended December 31, 2019, compared with the three and twelve months ended December 31, 2018. The Board of Directors approved this MD&A on February 27, 2020. All note references in this MD&A are to the notes to the Company's December 31, 2019 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 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. The Canadian dollar is the Company's functional and reporting currency for purposes of preparing the annual financial statements. Accordingly, all dollar references in this MD&A are in Canadian dollars, unless otherwise specified. The use of the term "prior period" refers to the three and twelve months ended December 31, 2018.

While the Company’s functional currency is the Canadian dollar, its presentation currency will switch to US dollars effective January 1, 2020. Going forward, we believe the US dollar will better reflect the Company’s consolidated financial position and results of operations given the significance of its subsidiaries that have the US market as their primary economic environment. The proportion of the Company’s subsidiaries that have the US market as their primary economic environment has further increased in 2020 with the January 17, 2020 close of the Tocqueville Asset Management gold strategies acquisition.

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KEY PERFORMANCE INDICATORS (NON-IFRS 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 are discussed below:

Assets Under Management

Assets Under Management ("AUM") refers to the total net assets managed by the Company through its various investment product offerings, managed accounts and managed companies.

Net Inflows

Net Inflows (consisting of net sales, capital calls and fee earning capital commitments) result in changes to AUM and are described individually below:

Net Sales

Fund sales (net of redemptions), including 'at-the-market' transactions and secondary offerings of our physical trusts and new 'creations' of ETF units, are a key performance indicator as new assets being managed will lead to higher management fees and can potentially lead to increased carried interest and performance fee generation (as applicable) given that AUM is also the basis upon which carried interest and performance fees are calculated.

Capital calls and commitments

Capital calls into our lending LPs are a key source of AUM creation, and ultimately, earnings for the Company. Once capital is called into our lending LPs, it is included within the AUM of the Company as it will now earn a management fee (NOTE: it is possible for some forms of committed capital to earn a commitment fee despite being uncalled, in which case, it will also be included in AUM at that time). Conversely, once loans in our lending LPs are repaid, capital may be returned to investors in the form of a distribution, thereby reducing our AUM ("capital distributions").

Net Fees

Management fees (net of trailer and sub-advisor fees) and carried interest and performance fees (net of carried interest and performance fee payouts) 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, arise primarily from the transaction based service offerings of our brokerage segment.

Compensation

Compensation excludes commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance and new hire accruals which are non-recurring.

Investable Capital

Investable capital includes: 1) cash, net of syndicate cash holdings; 2) proprietary investments, net of any obligations for securities sold short; and 3) balance sheet loans.

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EBITDA, Adjusted EBITDA and Adjusted base EBITDA

EBITDA in its most basic form is defined as earnings before interest expense, income taxes, depreciation and amortization. EBITDA 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.

Neither EBITDA, adjusted EBITDA or adjusted base EBITDA have 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 and Adjusted base EBITDA measures are determined:

	3 months ended						12 months ended
(in thousands $)	Dec. 31, 2019			Dec. 31, 2018			Dec. 31, 2019			Dec. 31, 2018
Net income (loss) for the periods		1,909			9,831			13,532			31,379
Adjustments:
Interest expense		354			312			1,373			419
Provision (recovery) for income taxes		1,251			3,383			3,619			1,278
Depreciation and amortization		1,655			598			5,033			2,199
EBITDA		5,169			14,124			23,557			35,275
Other adjustments:
(Gains) losses on net investments (1)		1,879			(3,912	)		1,401			5,782
(Gains) losses on foreign exchange		478			(2,026	)		1,960			(2,310	)
Non-cash stock-based compensation		854			1,738			5,120			5,199
Net proceeds from sale transaction		—			—			—			(4,200	)
Unamortized placement fees (2)		—			(279	)		—			(1,093	)
Other expenses(3)		2,525			447			7,509			2,746
Adjusted EBITDA		10,905			10,092			39,547			41,399
Other adjustments:
Carried interest and performance fees		(2,391	)		—			(2,391	)		(1,802	)
Carried interest and performance fee related expenses		1,310			—			1,310			915
Adjusted base EBITDA		9,824			10,092			38,466			40,512

⁽¹⁾ This adjustment removes the income effects of certain gains or losses on proprietary and long-term investments to ensure the reporting objectives of our EBITDA metric as described above are met.

⁽²⁾ The prior period comparative figures contained a placement fee amortization adjustment to ensure the 2018 results were comparable to 2017 in light of the 2018 adoption of IFRS 15.

⁽³⁾ See Other expenses in Note 7 of the annual financial statements. In addition to the items outlined in Note 7, Other expenses also includes severance and new hire accruals of $0.2 million for the 3 months ended (3 months ended December 31, 2018 - $Nil) and $1.4 million for the 12 months ended (12 months ended December 31, 2018 - $0.5 million).

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BUSINESS OVERVIEW

Our reportable operating segments are as follows:

Exchange Listed Products

• The Company's closed-end physical trusts and exchange traded funds ("ETFs").

Lending

• The Company's lending activities primarily occur through limited partnership vehicles ("lending LPs").

Managed Equities

• The Company's alternative investment strategies (open-end, closed-end, etc.) managed in-house and on a sub-advised basis. Prior to Q1 2019, the Company's fixed-term LP vehicles formed part of the "global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, the global segment no longer satisfied the qualitative tests of IFRS 8, Operating Segments ("IFRS 8") as the geographic location of the U.S. businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, the global segment has been deconstructed and its fixed-term LP assets and earnings reallocated to the managed equities segment given that it is now at the managed equities level that the allocation of resources and assessment of product and service performance occurs by management.

Brokerage

• Formerly "Merchant Banking & Advisory Services", this segment has been renamed to reflect the inclusion of our U.S. broker-dealer alongside our Canada based broker-dealer as the Company's "brokerage segment". Prior to Q1 2019 , the Company's U.S. broker-dealer formed part of the "global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, the global segment no longer satisfied the qualitative tests of IFRS 8 as the geographic location of the U.S. businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, the global segment has been deconstructed and its U.S. broker-dealer assets and earnings reallocated to the brokerage segment given that it is now at the brokerage level (independent of geography) that the allocation of resources and assessment of product and service performance occurs by management.

Corporate

• Provides the Company's various operating segments with capital, balance sheet management and other shared services.

All Other Segments

• Contains all non-reportable segments as per IFRS 8. See Note 14 of the annual financial statements for further details.

For a detailed account of the underlying principal subsidiaries within our reportable business segments, refer to the Company's Annual Information Form and Note 2 of the annual financial statements.

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BUSINESS HIGHLIGHTS AND GROWTH INITIATIVES

Investment Performance

Market value appreciation was $174 million during the quarter and $957 million on a full year basis as the Company benefited from stronger precious metals prices throughout the year.

Product and Business Line Expansion

• Subsequent to year-end, on January 17, 2020, the Company successfully closed on the acquisition of Tocqueville Asset Management's gold strategies. Based on AUM valuations as at January 17, 2020, this transaction will add approximately $2.3 billion (US$1.8 billion) to the Company's total AUM. The transaction cost is US$15 million (US$12.5 million in cash and Sprott Inc. common shares valued at US$2.5 million). Contingent consideration valued up to an additional US$35 million in cash and Sprott Inc. shares is payable subject to the achievement of certain financial performance conditions over two years following the closing of the transaction.

• AUM in our lending LPs stood at $1 billion (US$784 million) as of December 31 2019. The $521 million (US$419 million) increase in the year was primarily due to additional new AUM arising from fee earning committed capital in a new lending LP and new capital calls into existing lending LPs.

• On January 11, 2019, the Company launched a new Korean co-managed private equity fund with KB Securities (KB Solar fund), raising $75 million in commitment fee earning AUM in the process.

Other Matters

While the Company’s functional currency is the Canadian dollar, its presentation currency will switch to US dollars effective January 1, 2020. Going forward, we believe the US dollar will better reflect the Company’s consolidated financial position and results of operations given the significance of its subsidiaries that have the US market as their primary economic environment. The proportion of the Company’s subsidiaries that have the US market as their primary economic environment has further increased in 2020 with the January 17, 2020 close of the Tocqueville Asset Management gold strategies acquisition.

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OUTLOOK

Exchange Listed Products

• We expect this segment to benefit from an increasingly constructive gold and silver pricing environment in 2020 as more than 98% of this segment’s AUM is directly or indirectly impacted by gold and silver price changes, net of redemptions.

Lending

• Interest income from balance sheet loans (included in finance income) will no longer be earned in 2020 as we have successfully transitioned to co-investments in our lending fund strategies instead. Effective 2020, this segment’s revenues will be generated primarily from two sources: management fees and co-investment income (included in finance income).

• Our lending strategies had a total of approximately $1 billion in AUM at the end of 2019, earning a blended net management fee rate of approximately 1%. We expect capital calls (net of capital distributions) in 2020 to be in the range of US$100 million to US$200 million, based on our lending team's current view of the loan market and their expectations of possible repayments.

• At the end of 2019, approximately $40 million of co-investments accounted for 4% of total segment AUM. These co-investments accounted for approximately 57% of finance income earned in this segment in 2019. NOTE: co-investment income is included in the finance income line given that it is largely interest income earned from lending LPs we are invested in alongside our clients.

Managed Equities

• The purchase of Tocqueville Asset Management’s gold fund strategies (which closed on January 17, 2020) will increase AUM in this segment by approximately $2.3 billion.

Brokerage

• We anticipate flat year-over-year performance in this segment.

Corporate & Other Non-reportable Segments

• We anticipate higher year-over-year operating costs (primarily relating to higher SG&A on increased U.S. operating activities) and lower EBITDA contribution from non-reportable segments. (see “Elimination and all other segments” column of the segment table in Note 14 of the annual financial statements).

9

SUMMARY FINANCIAL INFORMATION

(In thousands $)	Q4 2019			Q3 2019			Q2 2019			Q1 2019			Q4 2018			Q3 2018			Q2 2018			Q1 2018
SUMMARY INCOME STATEMENT
Management fees		14,106			13,964			13,329			13,558			13,182			13,722			14,559			14,056
Carried interest and performance fees		2,391			—			—			—			—			—			685			1,117
less: Trailer and sub-advisor fees		1,275			65			89			—			38			45			49			47
less: Carried interest and performance fee payouts		114			—			—			—			—			—			356			559
Net Fees		15,108			13,899			13,240			13,558			13,144			13,677			14,839			14,567
Commissions		8,712			7,995			4,406			4,409			6,414			4,573			7,516			8,857
less: Commission expense		3,508			3,505			1,814			1,844			2,704			2,447			2,701			3,667
Net Commissions		5,204			4,490			2,592			2,565			3,710			2,126			4,815			5,190
Finance income (1)		3,276			3,381			4,595			3,918			4,244			4,824			3,293			3,066
Gains (losses) on net investments		(1,652	)		791			(546	)		6			6,919			(4,916	)		(3,122	)		(1,823	)
Other income (loss)		161			604			(559	)		(644	)		2,453			(275	)		3,683			6,242
Total Net Revenues		22,097			23,165			19,322			19,403			30,470			15,436			23,508			27,242
Compensation (2)		9,731			9,098			7,317			8,387			11,163			8,167			10,634			9,485
Compensation - severance and new hire accruals		204			222			855			146			38			359			—			149
Placement and referral fees		572			150			336			78			368			223			148			204
Selling, general and administrative		3,942			4,191			4,354			4,069			4,171			3,404			4,905			4,586
Interest expense		354			393			302			324			312			26			15			66
Amortization and impairment charges (3)		1,655			1,180			1,097			1,101			598			457			456			688
Other expenses		2,479			263			3,399			637			606			790			802			1,179
Total Expenses		18,937			15,497			17,660			14,742			17,256			13,426			16,960			16,357
Net Income (Loss)		1,909			5,723			2,116			3,784			9,831			1,975			5,916			13,657
Net Income (Loss) per share		0.01			0.02			0.01			0.02			0.04			0.01			0.02			0.06
Adjusted base EBITDA		9,824			10,049			9,409			9,184			10,092			9,707			10,686			10,027
Adjusted base EBITDA per share		0.04			0.04			0.04			0.04			0.04			0.04			0.04			0.04
SUMMARY BALANCE SHEET
Total Assets		424,344			431,178			445,776			444,325			428,215			401,366			403,985			407,177
Total Liabilities		69,622			68,596			79,019			72,172			55,094			36,486			36,372			42,417
Cash		71,495			89,431			60,593			48,193			47,252			41,452			37,974			52,097
less: syndicate cash holdings		(569	)		(154	)		(10,119	)		(12,218	)		(10,421	)		(967	)		(796	)		(932	)
Net cash		70,926			89,277			50,474			35,975			36,831			40,485			37,178			51,165
Proprietary and long-term investments		120,147			110,699			122,607			134,681			129,271			115,744			120,853			96,352
less: obligations related to securities sold short		—			—			—			—			(255	)		—			(2,927	)		(8,543	)
Net investments		120,147			110,699			122,607			134,681			129,016			115,744			117,926			87,809
Loans receivable		—			2,871			32,011			32,360			36,021			36,532			40,208			50,467
Investable Capital		191,073			202,847			205,092			203,016			201,868			192,761			195,312			189,441
Total Enterprise AUM		12,082,468			11,326,546			10,670,982			10,569,449			10,578,426			10,066,112			11,126,042			11,591,213

⁽¹⁾ Finance income includes: (1) interest income from on-balance sheet loans and brokerage client accounts; (2) co-investment income from lending LP units held as part of our long-term investments portfolio; and (3) ancillary income earned directly or indirectly from lending activities.

⁽²⁾ See 'Compensation' in the key performance indicators (non-IFRS financial measures) section of this MD&A.

⁽³⁾ Starting Q1 2019, in order to comply with the new IFRS 16 Leases accounting standard ("IFRS 16"), certain lease assets have now been capitalized and depreciated over their expected lease terms. See Note 2, Changes in Accounting Policies of the annual financial statements.

10

SUMMARY MANAGEMENT FEE BREAKDOWN

Below is a detailed list of management fee rates on our fund products as at December 31, 2019 (in millions $):

FUND	AUM		BLENDED NET MANAGEMENT FEE RATE			CARRIED INTEREST AND PERFORMANCE FEE CRITERIA
Exchange Listed Products
Sprott Physical Gold and Silver Trust		3,843		0.40	%	N/A (1)
Sprott Physical Gold Trust		3,197		0.35	%	N/A (1)
Sprott Physical Silver Trust		1,399		0.45	%	N/A (1)
Sprott Gold Miner's ETF		251		0.35	%	N/A (1)
Sprott Physical Platinum & Palladium Trust		153		0.50	%	N/A (1)
Sprott Jr. Gold Miner's ETF		79		0.35	%	N/A (1)
Total		8,922		0.39	%
Lending
Sprott private resource lending LPs		1,019		1.00	%	15-70% of net profits over preferred return
Managed Equities: In-house
Sprott U.S. Value Strategies		306		1.00	%	N/A
Fixed Term Limited Partnerships		242		1.70	%	15-30% over preferred return
Separately Managed Accounts (2)		59		1.00	%	N/A
Sprott Hathaway Special Situations Fund (3)		49		0.75	%	20% of net profits over preferred return
Total		656		1.24	%
Managed Equities: Sub-advised
Bullion Funds (3)		332		0.51	%	5% excess over applicable benchmark indices
Corporate Class Funds (3)		162		0.75	%	5% excess over applicable benchmark indices
Flow-through LPs (3)		93		0.70	%	10% of all net profits in excess of the HWM
Total		587		0.61	%
Other
Managed Companies (4)		622		0.50	%	20% of net profits over preferred return
Separately Managed Accounts (5)		276		0.61	%	20% of net profits over preferred return
Total		898		0.53	%
Total AUM		12,082		0.51	%

⁽¹⁾ Exchange listed products do not generate performance fees, however the management fees they generate are closely correlated to precious metals prices.

⁽²⁾ Institutional managed accounts.

⁽³⁾ Management fee rate represents the net amount received by the Company.

⁽⁴⁾ Includes Sprott Resource Holdings Inc. and Sprott Korea Corp.

⁽⁵⁾ Includes our private equity strategy in Sprott Asia and high net worth discretionary managed accounts in the U.S.

11

RESULTS OF OPERATIONS

AUM SUMMARY

AUM was $12.1 billion as at December 31, 2019, up $0.8 billion (7%) from September 30, 2019 and up $1.5 billion (14%) from December 31, 2018. On a three and twelve months ended basis we benefited from strong precious metals price appreciation in our exchange listed products and managed equities segments. We also benefited from capital calls and new commitment fee earning assets being added to our lending LPs throughout the year, which more than offset capital distributions.

3 months results

(In millions $)	AUM Sep. 30, 2019		Net      Inflows (1)			Market Value Changes			Other (2)			AUM Dec. 31, 2019
Exchange Listed Products
- Physical Trusts		8,376		71			145			—			8,592
- ETFs		314		(7	)		23			—			330
		8,690		64			168			—			8,922
Lending		586		474			(38	)		(3	)		1,019	(3	)
Managed Equities
- In-house		592		35			29			—			656
- Sub-advised		535		11			41			—			587
		1,127		46			70			—			1,243
Other		924		—			(26	)		—			898
Total		11,327		584			174			(3	)		12,082

12 months results

(In millions $)	AUM Dec. 31, 2018		Net      Inflows (1)			Market Value Changes			Other (2)			AUM Dec. 31, 2019
Exchange Listed Products
- Physical Trusts		7,927		(177	)		842			—			8,592
- ETFs		237		11			82			—			330
		8,164		(166	)		924			—			8,922
Lending		498		858			(55	)		(282	)		1,019	(3)
Managed Equities
- In-house		538		66			52			—			656
- Sub-advised		505		3			79			—			587
		1,043		69			131			—			1,243
Other		873		68			(43	)		—			898
Total		10,578		829			957			(282	)		12,082

⁽¹⁾ See 'Net Inflows' in the key performance indicators (non-IFRS financial measures) section of this MD&A.

⁽²⁾ Includes new AUM from fund acquisitions and lost AUM from fund divestitures and capital distributions of our lending LPs.

⁽³⁾ $1.7 billion (US$1.3 billion) of committed capital remains uncalled, of which $697 million (US$536 million) earns a commitment fee (AUM), and $980 million (US$754 million) does not (future AUM).

12

KEY REVENUE LINES

Net Fees in the quarter were $15.1 million, up $2 million (15%) from the prior period and were $55.8 million on a full year basis, down $0.4 million (1%).	Finance Income in the quarter was $3.3 million, down $1 million (23%) from the prior period and was $15.2 million on a full year basis, down $0.3 million (2%).
Net fees increased in the quarter due to higher average AUM in our exchange listed products and managed equities segments given strong precious metals price appreciation and improved mining equities stock performance. We also benefited from higher fees in our lending segment as we continue to grow AUM in this area. Additionally, our managed equities segment generated higher net performance fees from the prior period.	Finance income primarily includes interest income from legacy loans, co-investment income from LP units and other ancillary income earned directly or indirectly from lending activities. The decrease in finance income in the quarter and on a full year basis was primarily due to legacy loan repayments. The resultant lower finance income was partially offset by increased co-investment income earned in our lending LPs.
	Net Commissions in the quarter were $5.2 million, up $1.5 million from the prior period and were $14.9 million on a full year basis, down $1 million. The increase in the quarter was due to improved equity origination activity in our brokerage segment. The decrease on a full year basis was due to lower equity origination activity in the first half of the year that over shadowed the increase in origination activity in the second half of the year.
Net fees decreased on a full year basis despite strong precious metals price appreciation in the second half of the year as redemptions of our exchange listed products throughout last year and the first half of this year, led to lower average AUM on a full year basis from this segment. In addition, we experienced lower average AUM in the fixed-term LPs of our managed equities segment. These declines more than offset increased fee generation in our lending segment and higher performance fees generated in our managed equities segment.

13

KEY EXPENSE LINES Compensation, excluding commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance and new hire accruals which are non-recurring, was $9.7 million, down $1.4 million (13%) from the prior period and was $34.5 million on a full year basis, down $4.9 million (12%). The decrease in the quarter and on a full year basis was primarily due to lower LTIP amortization.	ADJUSTED BASED EBITDA Adjusted base EBITDA in the quarter was $9.8 million, down $0.3 million (3%) from the prior period and was $38.5 million on a full year basis, down $2 million (5%). On an aggregate basis, our reportable segments had improved quarterly performance, however, their results were more than offset by lower earnings from our non-reportable segments.
	Our full year results were primarily impacted by lower fee income in our exchange listed products segment due to last year's redemption experience that continued through to the first half of this year and lower AUM valuations in our managed equities segment. We also encountered legacy loans being repaid in full by the end of the third quarter in our lending segment, resulting in lower full year finance income.
SG&A was $3.9 million in the quarter, down $0.2 million (5%) from the prior period and was $16.6 million on a full year basis, down $0.5 million (3%).
The decrease was largely due to the adoption of IFRS 16 and our ongoing cost containment program.

14

ADDITIONAL REVENUES AND EXPENSES	BALANCE SHEET
Net investments losses were mainly due to market value depreciation of certain equity holdings and long-term investments.	Investable Capital was $191 million, down $11 million from December 31, 2018.
Other income was lower in the quarter and on a full year basis.The decrease was primarily due to FX translation losses in the current periods (USD-to-CAD) compared to FX translation gains in the prior periods, net sales proceeds received on last year's sale transaction in the first quarter of 2018 and income earned on the early settlement of a loan last year. Placement and referral fees were higher in the quarter and on a full year basis. They mainly include referral fees paid in our brokerage segment. Interest expense was higher in the quarter and on a full year basis due to interest accruals on leases from the adoption of IFRS 16 and the draw down of our loan facility in the first quarter of this year (see Note 15 of the annual financial statements). Amortization of intangibles did not change in the quarter and was lower on a full year basis due to finite life fund management contracts related to fixed term LPs in our managed equities segment being fully amortized by the end of the first quarter of the prior period. Amortization of property and equipment was higher in the quarter and on a full year basis mainly due to increased depreciation expense related to leasehold improvements and leases that were capitalized on the adoption of IFRS 16. Other expenses were higher in the quarter and on a full year basis due to higher non-recurring professional fees and transaction costs.	Total Assets were $424 million, down $4 million (1%) from December 31, 2018. The slight decrease was primarily due to a combination of loan repayments, investment exits and FX losses on goodwill valuation. Total Liabilities were $70 million, up $15 million (26%) from December 31, 2018. The increase was primarily due to the draw down of our loan facility to help fund anticipated investment activities of the Company over the next 12-18 months. The increase was also due to the recording of a lease liability on adoption of IFRS 16. These increases were partially offset by the payment of prior year's accrued liabilities. Total Shareholder's Equity was $355 million, down $18 million (5%) from December 31, 2018.

15

REPORTABLE OPERATING SEGMENTS

Exchange Listed Products

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2019			Dec. 31, 2018		Dec. 31, 2019			Dec. 31, 2018
SUMMARY INCOME STATEMENT
Management fees		8,678			7,511		32,477			32,652
Other income (loss)		(395	)		719		(811	)		827
Total Revenues		8,283			8,230		31,666			33,479
Compensation		1,481			1,047		5,052			4,473
Selling, general and administrative		1,240			802		4,025			3,295
Interest expense		265			—		1,093			—
Amortization and impairment charges		315			316		1,263			1,259
Other expenses		—			—		—			30
Total Expenses		3,301			2,165		11,433			9,057
Net Income before income taxes		4,982			6,065		20,233			24,422
Adjusted base EBITDA		6,039			5,675		23,863			24,924
Total AUM		8,922,030			8,164,136		8,922,030			8,164,136

3 and 12 months ended

Adjusted base EBITDA in the quarter was $6 million, up $0.4 million (6%) from the prior period and was $23.9 million on a full year basis, down $1.1 million (4%).

Our three months ended results were positively impacted by higher average AUM given strong precious metals price appreciation this quarter which more than offset higher compensation and SG&A. However on a full year basis, the strong pricing environment was more than offset by the redemption experience we encountered last year which continued through to the first half of this year. Additionally we also incurred higher compensation and SG&A in this segment.

Non-EBITDA highlights:

• Other losses was due to FX translation movements (USD-to-CAD).

• Interest expense relates to the draw down of our loan facility in the first quarter of this year (see Note 15 of the annual financial statements).

16

Lending

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2019			Dec. 31, 2018		Dec. 31, 2019			Dec. 31, 2018
SUMMARY INCOME STATEMENT
Management fees		1,833			1,420		7,492			4,929
Carried interest and performance fees		—			—		—			685
less: Carried interest and performance fee payouts		—			—		—			356
Net Fees		1,833			1,420		7,492			5,258
Finance income (1)		2,985			3,619		13,229			13,884
Gains (losses) on net investments		(134	)		3,515		(1,542	)		1,914
Other income (loss)		(219	)		1,666		(1,069	)		6,290
Total Net Revenues		4,465			10,220		18,110			27,346
Compensation		1,658			1,291		6,643			5,173
Placement and referral fees		20			49		58			157
Selling, general and administrative		293			595		1,032			1,522
Interest expense		39			—		80			—
Amortization and impairment charges		36			37		143			78
Other expenses		1,509			—		1,509			30
Total Expenses		3,555			1,972		9,465			6,960
Net Income before income taxes		910			8,248		8,645			20,386
Adjusted base EBITDA		3,247			3,300		14,236			15,437
Total AUM (2)		1,019,030			498,231		1,019,030			498,231

⁽¹⁾ Includes: (1) interest income from on-balance sheet loans; and (2) co-investment income from lending LP units held as part of our long-term investments portfolio.

⁽²⁾ $1.7 billion (US$1.3 billion) of committed capital remains uncalled, of which $697 million (US$536 million) earns a commitment fee (AUM), and $980 million (US$754 million) does not (future AUM).

3 and 12 months ended

Adjusted base EBITDA in the quarter was $3.2 million, down $0.1 million (2%) from the prior period and was $14.2 million on a full year basis, down $1.2 million (8%).

Our three months ended and full year results were primarily impacted by legacy loans repaid in full by the end of the third quarter, which led to lower interest income over the periods. This more than offset increased management fees and co-investment income as we continue to grow AUM in this segment.

Non-EBITDA highlights:

• Net investment losses were due to equity kicker valuations.

• Other losses was due to FX translation movements (USD-to-CAD).

• Other expenses related primarily to non-recurring professional fees.

17

Managed Equities*

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2019		Dec. 31, 2018			Dec. 31, 2019		Dec. 31, 2018
SUMMARY INCOME STATEMENT
Management fees		2,641		2,573			10,356		11,867
Carried interest and performance fees		2,391		—			2,391		1,061
less: Trailer and sub-advisor fees		1,317		80			1,599		358
less: Carried interest and performance fee payouts		114		—			114		559
Net Fees		3,601		2,493			11,034		12,011
Gains (losses) on net investments		1,553		(164	)		4,721		(395	)
Other income (loss)		454		179			1,239		65
Total Net Revenues		5,608		2,508			16,994		11,681
Compensation		1,378		1,462			6,052		6,104
Selling, general and administrative		809		596			2,485		2,081
Amortization and impairment charges		67		73			280		540
Other expenses		1		140			339		500
Total Expenses		2,255		2,271			9,156		9,225
Net Income before income taxes		3,353		237			7,838		2,456
Adjusted base EBITDA		1,043		1,094			4,201		4,571
Total AUM		1,243,100		1,043,294			1,243,100		1,043,294

*See "Managed Equities" in the business overview section on page 7 of this MD&A.

3 and 12 months ended

Adjusted base EBITDA in the quarter was $1 million, down $0.1 million (5%) from the prior period, and was $4.2 million on a full year basis, down $0.4 million (8%).

Our three months ended results were primarily impacted by higher SG&A which more than offset lower compensation and higher management fees. On a full year basis, the impact of lower average AUM on fixed-term LPs was more pronounced.

Non-EBITDA highlights:

• Net investments gains were due to market value appreciation of certain holdings.

18

Brokerage*

	3 months ended						12 months ended
(In thousands $)	Dec. 31, 2019			Dec. 31, 2018			Dec. 31, 2019			Dec. 31, 2018
SUMMARY INCOME STATEMENT
Commissions		8,266			5,766			24,487			26,120
less: Commission expense		3,498			2,823			10,632			11,964
Net Commissions		4,768			2,943			13,855			14,156
Management fees		473			445			1,723			1,746
Finance income		291			625			1,941			1,543
Gains (losses) on net investments		218			(829	)		(149	)		(1,701	)
Other income (loss)		(1	)		(167	)		121			4,474
Total Net Revenues		5,749			3,017			17,491			20,218
Compensation (1)		2,234			2,501			9,157			10,342
Placement and referral fees		468			300			893			666
Selling, general and administrative		1,102			1,625			5,705			6,238
Interest expense		17			—			77			—
Amortization and impairment charges		179			25			651			76
Other expenses		2			—			9			344
Total Expenses		4,002			4,451			16,492			17,666
Net Income (Loss) before income taxes		1,747			(1,434	)		999			2,552
Adjusted base EBITDA		2,319			547			4,413			4,033

*See "Brokerage" in the business overview section on page 7 of this MD&A.

⁽¹⁾ Compensation is presented excluding commission expense, which is reported net of commission revenue.

3 and 12 months ended

Adjusted base EBITDA in the quarter was $2.3 million, up $1.8 million from the prior period, and was $4.4 million on a full year basis, up $0.4 million.

Our three and twelve months ended results were positively impacted by a combination of lower compensation and SG&A expense and higher net commissions on improved equity origination in the second half of the year. However, the weak equity origination environment encountered in the first half of the year weighed down our full year results.

Non-EBITDA highlights:

• Net investment gains in the quarter and losses on a full year basis were the result of equity kicker valuations.

• Other income in the prior period was primarily related to net sales proceeds received on last year's sale transaction in the first quarter of 2018. See Note 7 of the annual financial statements.

19

Corporate

This segment is primarily a cost centre that provides capital, balance sheet management and shared services to the Company's subsidiaries.

	3 months ended						12 months ended
(In thousands $)	Dec. 31, 2019			Dec. 31, 2018			Dec. 31, 2019			Dec. 31, 2018
SUMMARY INCOME STATEMENT
Gains (losses) on net investments		(2,786	)		5,348			(3,531	)		2,334
Other income (loss)		422			(149	)		795			138
Total Revenues		(2,364	)		5,199			(2,736	)		2,472
Compensation		2,580			4,022			7,651			10,308
Selling, general and administrative		483			328			2,553			2,630
Interest expense		33			12			123			93
Amortization and impairment charges		1,049			59			2,660			142
Other expenses		119			159			861			1,355
Total Expenses		4,264			4,580			13,848			14,528
Net Income (Loss) before income taxes		(6,628	)		619			(16,584	)		(12,056	)
Adjusted base EBITDA		(2,699	)		(1,020	)		(9,674	)		(8,982	)

3 and 12 months ended

• Net investments losses were due to market value depreciation of certain equity holdings and long-term investments.

• Compensation decreased due to lower LTIP amortization and lower incentive accruals.

• SG&A increased in the quarter due to lower than normal operating expenses this time last year. The decrease on a full year basis was primarily due to the adoption of IFRS 16 which was partially offset by lower than normal operating expenses in the second half of last year.

• Higher amortization was due to increased depreciation expense related to leasehold improvements and leases that were capitalized on the adoption of IFRS 16.

20

Dividends

The following dividends were declared by the Company during the year ended December 31, 2019:

Record date	Payment Date	Cash dividend per share ($)		Total dividend amount (in thousands $)
March 08, 2019 - Regular Dividend Q4 - 2018	March 25, 2019		0.03		7,602
May 21, 2019 - Regular Dividend Q1 - 2019	June 5, 2019		0.03		7,605
August 19, 2019 - Regular Dividend Q2 - 2019	September 3, 2019		0.03		7,614
November 18, 2019 - Regular Dividend Q3 - 2019	December 3, 2019		0.03		7,614
Dividends (1)					30,435

⁽¹⁾ Subsequent to year-end, on February 27, 2020, a regular dividend of $0.03 per common share was declared for the quarter ended December 31, 2019. This dividend is payable on March 24, 2020 to shareholders of record at the close of business on March 9, 2020.

Capital Stock

Including the 9 million unvested common shares currently held in the EPSP Trust (December 31, 2018 - 9.9 million), total capital stock issued and outstanding was 253.1 million (December 31, 2018 - 253 million).

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 were $0.01 and $0.06 for the quarter and twelve months ended respectively, compared to $0.04 and $0.13 in the respective prior periods. Diluted earnings per share were $0.01 and $0.05 for the quarter and twelve months ended respectively, compared to $0.04 and $0.12 in the respective prior periods. 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 3.3 million stock options are outstanding pursuant to our stock option plan, of which 2.6 million are exercisable.

21

Liquidity and Capital Resources 

As at December 31, 2019, the Company had $20 million (December 31, 2018 - $Nil) outstanding on its credit facility, $5 million of which is due within 12 months and $15 million is due after 12 months (December 31, 2018 - $Nil and $Nil respectively).

The Company has a 5 year, $90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a $25 million term loan and a $65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. In the first quarter, the Company drew $25 million on the term loan portion of the credit facility to avoid its expiry and to partially fund anticipated growth in the business over the next 12-18 months. As at December 31, 2019, the Company was in compliance with all covenants, terms and conditions under the credit facility. Key terms under the credit facility are noted below:

Structure

◦ 5-year, $65 million revolver with "bullet maturity" December 31, 2022

◦ 5-year, $25 million term loan with 5% of principal amortizing quarterly, with the remaining balance maturing on December 31, 2022

Interest Rate

◦ Prime rate + 0 bps or;

◦ Banker Acceptance Rate + 170 bps

Covenant Terms

◦ Minimum AUM: $8.2 billion

◦ Debt to EBITDA less than 2.5:1

◦ EBITDA to interest expense more than 2.5:1

Commitments

Besides the Company's long-term lease agreements, there may be commitments to make co-investments in lending LPs arising from our lending segment or commitments to make investments in the net investments portfolio of the Company. As at December 31, 2019, the Company had $8.6 million in co-investment commitments from the lending segment (December 31, 2018 - $38.7 million).

22

Significant Accounting Judgments, Estimates and Changes in Accounting Policies

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 annual 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. The use of unobservable inputs can involve significant judgment and materially affect the reported fair value of financial instruments.

Share-based payments

The Company measures the cost of share-based payments to employees by reference to the fair value of the equity instruments at the date on which they are granted. Estimating fair value for share-based payments requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including (in the case of options grants) the expected life of the option, expected volatility, and expected dividend yields, and in the case of performance-based equity grants, the probability of a subsidiary or executive attaining certain performance targets, the future stock price of the Company and the future employment of a senior employee.

Deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent it is probable that sufficient taxable profit will be generated in order to utilize the losses. In addition, taxable income is subject to estimation as a portion of performance fee and carried interest revenue is an allocation of partnership income. Such allocations involve a certain degree of estimation and income tax estimates could change as a result of: (i) changes in tax laws and regulations, both domestic and foreign; (ii) an amendment to the calculation of partnership income allocation; or (iii) a change in foreign affiliate rules. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized based on the likely timing and the level of future taxable profits together with future tax planning strategies.

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 annual 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. Values associated with goodwill and intangibles involve estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates 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.

23

Change in accounting policies

On January 1, 2019, the Company adopted IFRS 16 and IFRIC 23 Uncertainty over Income Tax Treatments ("IFRIC 23"). As a result, the Company changed its accounting policies. As permitted by the transition provision of IFRS 16, the Company elected not to restate comparative period results. Accordingly, all comparative period information is presented in accordance with previous accounting policies. For a summary of the impact of the adoption of IFRS 16, see Note 2 of the annual financial statements. The adoption of IFRIC 23 did not have a material impact on the Company's annual financial statements.

Managing Risk: Financial

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 interests 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 instrument assets. The Company’s earnings, particularly through its lending 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

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 Canadian dollars. The Company's primary foreign currency is the United States Dollar ("USD"). 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 legacy loan book and co-investments in lending LPs and its net investments portfolio.

Loans receivable

The Company incurs credit risk primarily in the on-balance sheet loans of its lending segment and through co-investments made in the lending LPs of the lending segment. In addition to the relative default probability of borrowers (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with), credit risk is also dependent on loss given default, which can increase credit risk if the values of the underlying assets securing the Company's loans and co-investments decline to levels approaching or below the loan amounts. A decrease in commodity prices may delay the development of the underlying security or business plans of the borrower and could adversely affect the value of the Company's security against a loan. Additionally, the value of the Company's underlying security in a loan can be negatively affected if the actual amount or quality of the commodity proves to be less than originally estimated, or the ability to extract the commodity proves to be more difficult or more costly than originally estimated. 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 managed.

24

Collectability of loans

Besides the above noted measures we take to manage credit risk, the Company will report on credit risk in the notes to the annual financial statements and records expected credit loss provisions to ensure that on-balance sheet loans are recorded at their estimated recoverable amount (i.e. net of impairment risk we believe to exist as at the balance sheet date and in accordance with IFRS). Actual losses incurred in the on-balance sheet loan portfolio could differ materially from our provisions. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed.

Net 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 accounts receivable relate to management fees, carried interest and performance fees receivable from the funds, managed accounts and managed companies 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 $90 million committed line of credit with a major Canadian schedule I chartered bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months.

The Company's exposure to liquidity risk as it relates to our co-investments in lending LPs arises from fluctuations in cash flows from making capital calls and receiving capital distributions. The Company manages its loan 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 and employee bonuses 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 (e.g. dividend payments) 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 and through its broader treasury risk management program. To meet any liquidity shortfalls, actions taken by the Company could include: syndicating a portion of its loans; slowing its lending activities; cutting its dividend; drawing on the line of credit; liquidating net investments; and/or issuing common shares.

Concentration risk

A significant portion of the Company's AUM as well as its net investments and loans are focused on the natural resource sector, and in particular, precious metals related investments and transactions. In addition, from time-to-time, certain net investment and loan positions 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.

25

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.

Consistent with National Instrument 52-109, the Company's CEO and CFO evaluate quarterly the DC&P and ICFR. As at December 31, 2019, the Company's CEO and CFO concluded that the Company's DC&P and ICFR were properly designed and were operating effectively. In addition, there were no material changes to ICFR during the quarter.

Managing Risk: Non-financial

Managing Risk: Non-financial

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.

Independent Review Committee

National Instrument 81-107 - Independent Review Committee for Investment Funds (“NI 81-107”) requires all publicly offered investment funds 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 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 mutual 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, IIROC, FINRA and the U.S. Securities and Exchange Commission ("SEC").

Additional information relating to the Company, including the Company's Annual Information Form is available on SEDAR at www.sedar.com

26

Consolidated Financial Statements

Year ended December 31, 2019

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 year ended December 31, 2019. The consolidated financial statements were prepared by management in accordance with International Financial Reporting Standards. 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 significant accounting policies 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 (the "Board of Directors") of the Company appoints the Company's audit and risk committee (the "Audit & Risk 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.

Peter Grosskopf	Kevin Hibbert, FCPA, FCA
Chief Executive Officer	Chief Financial Officer and Senior Managing Director
February 27, 2020

28

 

 

Independent Auditors' Report

To the Shareholders of Sprott Inc.

Opinion

We have audited the consolidated financial statements of Sprott Inc. (the "Company"), which comprise:

• the consolidated balance sheets as at December 31, 2019 and 2018;

• the consolidated statements of operations and comprehensive income for the years then ended;

• the consolidated statements of changes in shareholders’ equity for the years then ended;

• the consolidated statements of cash flows for the years then ended;

• and notes to the consolidated financial statements, including a summary of significant accounting policies.

(hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the "Auditors’ Responsibilities for the Audit of the Financial Statements" section of our auditors’ report.

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

 

Other Information

Management is responsible for the other information. Other information comprises:

• the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions.

• the information, other than the financial statements and the auditors’ report thereon, included in a document likely to be entitled "Annual Report 2019".

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We obtained the information, other than the financial statements and the auditors’ report thereon, included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions and the "Annual Report 2019" as at the date of this auditors’ report.

If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditors’ report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company‘s financial reporting process.

 

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control;

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

• conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern;

 

• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represents the underlying transactions and events in a manner that achieves fair presentation;

• communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit;

• provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards; and

• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

 

Chartered Professional Accountants, Licensed Public Accountants

The engagement partner on the audit resulting in this auditors' report is James Loewen.

February 27, 2020

Toronto, Canada

CONSOLIDATED BALANCE SHEETS

As at		Dec. 31			Dec. 31
(In thousands of Canadian dollars)		2019			2018
Assets
Current
Cash and cash equivalents			71,495			47,252
Fees receivable			11,338			8,635
Loans receivable	(Note 6)		—			15,275
Proprietary investments	(Notes 3 and 10)		22,847			26,711
Other assets	(Note 7)		16,951			10,774
Income taxes recoverable			1,879			2,379
Total current assets			124,510			111,026
Loans receivable	(Note 6)		—			20,746
Long-term investments	(Note 3)		97,300			102,560
Other assets	(Note 7)		1,780			1,214
Property and equipment, net	(Note 4)		21,195			12,334
Intangible assets	(Note 5)		148,975			148,324
Goodwill	(Note 5)		25,006			26,115
Deferred income taxes	(Note 9)		5,578			5,896
			299,834			317,189
Total assets			424,344			428,215
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities			30,843			41,641
Compensation payable			9,027			9,466
Obligations related to securities sold short	(Notes 3 and 10)		—			255
Loan facility	(Note 15)		5,000			—
Income taxes payable			1,054			607
Total current liabilities			45,924			51,969
Other accrued liabilities			5,546			—
Loan facility	(Note 15)		15,000			—
Deferred income taxes	(Note 9)		3,152			3,125
Total liabilities			69,622			55,094
Shareholders' equity
Capital stock	(Note 8)		413,114			412,938
Contributed surplus	(Note 8)		43,672			43,383
Deficit			(134,104	)		(117,201	)
Accumulated other comprehensive income			32,040			34,001
Total shareholders' equity			354,722			373,121
Total liabilities and shareholders' equity			424,344			428,215
Commitments and provisions	(Notes 16 and 17)
The accompanying notes form part of the consolidated financial statements

"Ron Dewhurst"	"Sharon Ranson, FCPA, FCA"
Director	Director

33

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

		For the years ended
		Dec. 31			Dec. 31
(In thousands of Canadian dollars, except for per share amounts)		2019			2018
Revenues
Management fees			54,957			55,519
Carried interest and performance fees			2,391			1,802
Commissions			25,522			27,360
Finance income			15,170			15,427
Gain (loss) on net investments	(Note 3)		(1,401	)		(2,942	)
Other income (loss)	(Note 7)		(438	)		12,103
Total revenue			96,201			109,269
Expenses
Compensation			39,596			40,072
Stock-based compensation	(Note 8)		7,149			12,358
Trailer and sub-advisor fees			1,429			179
Placement and referral fees			1,136			943
Selling, general and administrative			16,556			17,066
Interest expense			1,373			419
Amortization of intangibles	(Note 5)		1,167			1,431
Amortization of property and equipment	(Note 4)		3,866			768
Other expenses	(Note 7)		6,778			3,376
Total expenses			79,050			76,612
Income before income taxes for the period			17,151			32,657
Provision (recovery) for income taxes	(Note 9)		3,619			1,278
Net income for the period			13,532			31,379
Basic earnings per share	(Note 8)	$	0.06		$	0.13
Diluted earnings per share	(Note 8)	$	0.05		$	0.12

Net income for the period	13,532		31,379
Other comprehensive income (loss)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation gain (loss) on foreign operations (taxes of $Nil)	(1,961	)	4,328
Total other comprehensive income (loss)	(1,961	)	4,328
Comprehensive income	11,571		35,707
The accompanying notes form part of the consolidated financial statements

34

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(In thousands of Canadian dollars, other than number of shares)		Number of Shares Outstanding			Capital Stock			Contributed Surplus			Deficit			Accumulated Other Comprehensive Income			Total  Equity
At Dec. 31, 2018			243,062,337			412,938			43,383			(117,201	)		34,001			373,121
Shares acquired for equity incentive plan	(Note 8)		(1,826,124	)		(6,479	)		—			—			—			(6,479	)
Shares released on vesting of equity incentive plan	(Note 8)		2,803,998			6,535			(6,535	)		—			—			—
Shares acquired and canceled under normal course issuer bid	(Note 8)		(740,600	)		(2,266	)		—			—			—			(2,266	)
Foreign currency translation loss on foreign operations			—			—			—			—			(1,961	)		(1,961	)
Stock-based compensation	(Note 8)		—			—			7,149			—			—			7,149
Issuance of share capital on conversion of RSUs and other share based considerations	(Note 8)		815,289			2,191			(325	)		—			—			1,866
Dividends declared	(Note 12)		61,519			195			—			(30,435	)		—			(30,240	)
Net income			—			—			—			13,532			—			13,532
Balance, Dec. 31, 2019			244,176,419			413,114			43,672			(134,104	)		32,040			354,722
At Dec. 31, 2017			234,098,634			392,556			39,907			(118,272	)		29,673			343,864
IFRS 9 transition adjustment			—			—			—			(50	)		—			(50	)
Shares acquired for equity incentive plan			(2,402,500	)		(7,161	)		—			—			—			(7,161	)
Shares released on vesting of equity incentive plan			2,836,201			6,446			(6,446	)		—			—			—
Shares released on exercise of stock option plan			558,048			1,217			(1,217	)								—
Foreign currency translation loss on foreign operations			—			—			—			—			4,328			4,328
Issuance of share capital on purchase of management contracts			6,997,387			17,284			—			—			—			17,284
Stock-based compensation			—			—			12,358			—			—			12,358
Issuance of share capital on conversion of RSUs and other share based considerations			635,939			1,581			(1,219	)		—			—			362
Dividends declared			338,628			1,015			—			(30,258	)		—			(29,243	)
Net income			—			—			—			31,379			—			31,379
Balance, Dec. 31, 2018			243,062,337			412,938			43,383			(117,201	)		34,001			373,121
The accompanying notes form part of the consolidated financial statements

35

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the years ended
	Dec. 31			Dec. 31
(In thousands of Canadian dollars)	2019			2018
Operating Activities
Net income for the period		13,532			31,379
Add (deduct) non-cash items:
Loss (gain) on net proprietary investments		1,401			2,942
Stock-based compensation		7,149			12,358
Amortization of property, equipment and intangible assets		5,033			2,199
Current portion of lease liability		(2,133	)		—
Deferred income tax recovery		303			1,022
Current income tax expense		3,316			256
Other items		172			(435	)
Income taxes paid		(2,437	)		(3,852	)
Changes in:
Fees receivable		(2,703	)		5,141
Loans receivable		36,021			12,652
Other assets		(6,743	)		12,621
Accounts payable, accrued liabilities and compensation payable		(11,237	)		14,728
Cash provided by operating activities		41,674			91,011
Investing Activities
Purchase of investments		(45,383	)		(79,267	)
Sale of investments		50,370			37,077
Purchase of property and equipment		(2,952	)		(7,805	)
Purchase of intangible assets		—			(115,719	)
Cash provided by (used in) investing activities		2,035			(165,714	)
Financing Activities
Acquisition of common shares for equity incentive plan		(6,479	)		(7,161	)
Acquisition of common shares under normal course issuer bid		(2,266	)		—
Net advances from loan facility		20,000			—
Dividends paid		(30,240	)		(29,243	)
Cash provided by (used in) financing activities		(18,985	)		(36,404	)
Effect of foreign exchange on cash balances		(481	)		2,239
Net increase (decrease) in cash and cash equivalents during the year		24,243			(108,868	)
Cash and cash equivalents, beginning of the year		47,252			156,120
Cash and cash equivalents, end of the year		71,495			47,252
Cash and cash equivalents:
Cash		66,240			41,999
Short-term deposits		5,255			5,253
		71,495			47,252
Supplementary disclosure of cash flow information
Amount of interest received during the year		5,301			8,689
The accompanying notes form part of the consolidated financial statements

36

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

These annual audited consolidated financial statements for the years ended December 31, 2019 and 2018 ("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 27, 2020 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 financial assets and financial liabilities classified as fair value through profit or loss ("FVTPL") or fair value through other comprehensive income ("FVOCI"), both of which have been measured at fair value. The financial statements are presented in Canadian 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 over the same reporting period as the Company and are based on accounting policies consistent with that of the Company.

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.

The Company currently controls the following principal subsidiaries:

• Sprott Asset Management LP ("SAM");

• Sprott Capital Partners LP ("SCP");

• Sprott Consulting LP ("SC");

• Sprott Asia LP ("Sprott Asia") and Sprott Korea Corporation ("Sprott Korea");

• Sprott U.S. Holdings Inc. ("SUSHI"), parent of: (1) Rule Investments Inc. ("RII"); (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 "Global" in these financial statements;

• Sprott Resource Lending Corp. ("SRLC");

• Sprott Inc. 2011 Employee Profit Sharing Plan Trust (the "Trust")

37

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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.

Proprietary investments

Proprietary investments are investments held with the primary intention of short-term liquidity and capital management.

Long-term investments

Long-term investments are investments held for strategic purposes rather than for short-term liquidity and capital management purposes. Long-term investments classification reflects strategic positions held with the intention of seeding and building the next generation of investment products and services consistent with the long-term strategic objectives of the Company. These investments primarily include co-investments in strategically important investment funds, joint-venture interests or equity stakes in other entities.

Financial Instruments

Classification and measurement of Financial Assets

Financial assets are measured at initial recognition at fair value, and are classified and subsequently measured at FVTPL, amortized cost or 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 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 OCI.

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.

Valuation of Investments

Both Proprietary investments and Long-term investments include public equities, share purchase warrants, fixed income securities, mutual fund and alternative investment strategies, co-investments in funds and private holdings. 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 which 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 in the private companies determined 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 gains (loss) on net investments on the consolidated statements of operations and comprehensive income.

38

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 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 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.

At each reporting date, management assesses the probability of default and the loss given default using economic and market trends, quoted credit rating of the borrower, market value of the asset, and appraisals, if any, of the security underlying the loan. The impairment is then classified into three stages:

• Stage 1 - For Loans where credit risk has not increased significantly, an impairment is recognized equal to the credit losses expected to result from defaults occurring over the following twelve months.

• Stage 2 - For Loans where credit risk has increased significantly, an impairment is recognized equal to the credit losses expected to result from defaults occurring over the life of the loan.

• Stage 3 - For Loans which are credit impaired, a loss allowance is recognized equal to the expected credit losses over the expected lifetime of the Loan. Any subsequent recognition of finance income for which an expected credit loss provision exists, is calculated at the discount rate used in determining the provision, which may differ from the contractual rate of interest.

Loans receivable

Loans receivable are financial assets with fixed or determinable payments that are held solely for payments of principal and interest on the principal amount outstanding and are held within a business model whose objective is to hold assets to collect contractual cash flows. Loans receivable are measured at amortized cost.

Fees received for originating loans are considered an integral part of the yield earned on the loan and are recognized in finance income over the term of the loan using the effective interest method. Fees received may include cash payments and/or securities in the borrower.

39

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 in 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 interest income and co-investment income, 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 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 with finite lives are amortized over the useful economic life and assessed for impairment indicators at each reporting date, or more frequently if changes in circumstances indicate that the carrying value may be impaired. 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 may be impaired. 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.

Any loss resulting from 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.

40

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 sheet 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;

• 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.

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.

41

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 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 and diluted earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the period.

The Company applies 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.

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 Global Companies, which uses the U.S. dollar as its functional currency. Accordingly, the assets and liabilities of Global Companies 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 Global 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.

Leases

Changes in accounting policies

The Company adopted IFRS 16 Leases (“IFRS 16”) during the year. As permitted by the transition provisions of IFRS 16, the Company applied a modified retrospective approach. Accordingly, the Company elected not to restate comparative period results and there was no impact to opening retained earnings. Below is a summary of the IFRS 16 impacts.

Lease Commitments

The Company recognizes a right-to-use asset and a lease liability as at the lease commencement date. The right-to-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. Upon transition to IFRS 16, a right-to-use asset and lease liability of $9.8 million were recorded. The right-to-use asset is presented on the property and equipment line of the consolidated balance sheet and the short and long-term portions of the lease liability are presented on the accounts payable and accrued liabilities line and other accrued liabilities line, respectively, of the consolidated balance sheet. The Company used the practical expedient when applying IFRS 16 for short-term leases under 12 months and low-value assets such as IT equipment, with lease payments being expensed as they are occurred.

Prior to the adoption of IFRS 16, the Company classified its lease obligation as operating leases, with the lease payments being presented within the selling, general and administrative line of the consolidated statements of operations. Upon transition to IFRS 16, the right-to-use asset is amortized on a straight-line basis over the term of the lease with the amortization expense being presented on the amortization of property and equipment line of the consolidated statements of operations. The lease liability is subsequently remeasured at amortized cost using the effective interest rate method, with the interest charge on the incremental borrowing rate being presented on the interest expense line of the consolidated statements of operations.

42

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to management. Management is responsible for allocating resources and assessing performance of the operating segments to make strategic decisions.

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. The use of unobservable inputs can involve significant judgment and materially affect the reported fair value of financial instruments.

Expected credit loss

Due to the nature of provisions, a considerable part of their determination is based on estimates and judgments, including assumptions concerning the likelihood of future events occurring. The actual outcome of these uncertain events may be materially different from provisions recorded on the Company's financial statements. With regard to loan impairments, management exercises judgment to determine the expected credit loss, the probability of default and loss given default.

Share-based payments

The Company measures the cost of share-based payments to employees by reference to the fair value of the equity instruments at the date on which they are granted. Estimating fair value for share-based payments requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including (in the case of options grants) the expected life of the option, volatility, and dividend yields, (and in the case of performance-based equity grants), the probability of a subsidiary or executive attaining certain performance targets, the future stock price of the Company and the future employment of senior employees.

Deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent it is probable that sufficient taxable profit will be generated in order to utilize the losses. In addition, taxable income is subject to estimation as a portion of performance fee revenue is an allocation of partnership income. Such allocations involve a certain degree of estimation and income tax estimates could change as a result of: (i) changes in tax laws and regulations, both domestic and foreign; (ii) an amendment to the calculation of partnership income allocation; or (iii) a change in foreign affiliate rules. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized based on the likely timing and the level of future taxable profits together with future tax planning strategies.

43

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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. Values associated with goodwill and intangibles involve estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates 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.

44

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

3 PROPRIETARY INVESTMENTS, OBLIGATIONS RELATED TO SECURITIES SOLD SHORT AND LONG-TERM INVESTMENTS

Proprietary investments and Obligations related to securities sold short

Consist of the following (in thousands $):

	Classification and measurement criteria	Dec. 31, 2019		Dec. 31, 2018
Public equities and share purchase warrants	FVTPL		13,738		19,066
Fixed income securities	FVTPL		5,511		2,796
Private holdings:
- Private investments	FVTPL		2,434		2,830
- Energy contracts	Non-financial instrument		1,164		2,019
Total proprietary investments			22,847		26,711
Obligations related to securities sold short	FVTPL		—		255

Long-term investments

Consists of the following (in thousands $):

	Classification and measurement criteria	Dec. 31, 2019		Dec. 31, 2018
Co-investments in funds	FVTPL		72,602		77,615
Private holdings
- Private investments	FVTPL		24,698		24,945
Total long-term investments			97,300		102,560

Gains and losses on financial assets and liabilities classified at FVTPL are included in the gain (loss) on net investments on the consolidated statements of operations.

45

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

4 PROPERTY AND EQUIPMENT

Consist of the following (in thousands $):

	Artwork		Furniture and fixtures			Computer hardware and software			Right of use assets and Leasehold improvements			Total
Cost
At December 31, 2017		2,996		3,148			2,619			3,939			12,702
Disposal on Sale Transaction		—		(28	)		(54	)		(28	)		(110	)
Additions		6,605		2			946			252			7,805
Net exchange differences		—		44			53			34			131
At December 31, 2018		9,601		3,166			3,564			4,197			20,528
Additions		—		146			—			12,679			12,825
Net exchange differences		—		(12	)		(30	)		(139	)		(181	)
At December 31, 2019		9,601		3,300			3,534			16,737			33,172
Accumulated amortization
At December 31, 2017		—		(3,077	)		(2,564	)		(1,762	)		(7,403	)
Disposal on Sale Transaction		—		28			44			18			90
Charge for the year		—		(27	)		(297	)		(444	)		(768	)
Net exchange differences		—		(44	)		(46	)		(23	)		(113	)
At December 31, 2018		—		(3,120	)		(2,863	)		(2,211	)		(8,194	)
Charge for the year		—		(58	)		(442	)		(3,366	)		(3,866	)
Net exchange differences		—		41			27			15			83
At December 31, 2019		—		(3,137	)		(3,278	)		(5,562	)		(11,977	)
Net book value at:
December 31, 2018		9,601		46			701			1,986			12,334
December 31, 2019		9,601		163			256			11,175			21,195

46

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

5       GOODWILL AND INTANGIBLE ASSETS

Consist of the following (in thousands $):

	Goodwill			Fund management contracts (indefinite life)			Fund management contracts (finite life)			Total
Cost
At December 31, 2017		166,882			—			47,416			214,298
Additions		—			133,303			—			133,303
Net exchange differences		13,482			—			—			13,482
At December 31, 2018		180,364			133,303			47,416			361,083
Additions		—			1,830			—			1,830
Net exchange differences		(7,142	)		(12	)		—			(7,154	)
At December 31, 2019		173,222			135,121			47,416			355,759
Accumulated amortization
At December 31, 2017		(142,859	)		—			(30,964	)		(173,823	)
Amortization charge for the period		—			—			(1,431	)		(1,431	)
Net exchange differences		(11,390	)		—			—			(11,390	)
At December 31, 2018		(154,249	)		—			(32,395	)		(186,644	)
Amortization charge for the period		—			—			(1,167	)		(1,167	)
Net exchange differences		6,033			—			—			6,033
At December 31, 2019		(148,216	)		—			(33,562	)		(181,778	)
Net book value at:
December 31, 2018		26,115			133,303			15,021			174,439
December 31, 2019		25,006			135,121			13,854			173,981

47

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Impairment assessment of goodwill

Previously, the Company reported seven cash generating units ("CGU") for goodwill impairment assessment and testing purposes:

•        Exchange Listed Products

•        Alternative Asset Management

•        Global

•        Lending

•        Consulting

•        Merchant Banking & Advisory

•        Corporate

During the first quarter of 2019, as the Company completed the reorganization of its reportable segments, the assets that were previously aggregated to create the global CGU no longer met the requirements of a CGU as they no longer generated independent cash flows. As a result, these assets were disaggregated from the global CGU, and were reallocated to existing CGUs with similar assets that generate largely independent cash flows (brokerage assets within the brokerage CGU and fixed term LP assets within the managed equities CGU). The Company CGUs are now as follows:

•        Exchange Listed Products

•        Lending

•        Managed Equities

•        Brokerage

•        Corporate

As at December 31, 2019, the Company had allocated $25 million (December 31, 2018 - $26.1 million) of goodwill on a relative value approach basis to the exchange listed products and managed equities CGUs (previously called the alternative asset management CGU).

In the normal course, goodwill is 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. During the impairment testing process, there was no impairment in either the exchange listed products CGU or the managed equities CGU.

Impairment assessment of indefinite life fund management contracts

As at December 31, 2019, the Company had an exchange listed fund management contract within the exchange listed products CGU of $135.1 million related to Central Fund of Canada (December 31, 2018 - $133.3 million). The addition during the year was for integration costs. There was no impairment as at December 31, 2019.

Impairment assessment of finite life fund management contracts

As at December 31, 2019, the Company had exchange listed fund management contracts within the exchange listed products CGU of $13.9 million (December 31, 2018 - $15 million). There was no impairment as at December 31, 2019.

48

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

6       LOANS RECEIVABLE

Components of loans receivable

Loans are reported at their amortized cost using the effective interest method. Loans are reported net of any expected credit loss provisions on the expected credit loss provisions line of the consolidated statements of operations. Total carrying value consists of the following (in thousands $):

	Dec. 31, 2019		Dec. 31, 2018
Loans
Loan principal		—		37,873
Accrued interest		—		14
Deferred revenue		—		(1,816	)
Amortized cost		—		36,071
Expected credit loss provision		—		(50	)
Less: current portion		—		(15,275	)
Total carrying value of non-current loans receivable		—		20,746

Expected credit losses ("ECL")

When a loan is classified as impaired, the original expected timing and amount of future cash flows may be revised to reflect new circumstances. These revised cash flows are discounted using the original effective interest rate to determine the net realizable value of the loan. Finance income is thereafter recognized on this net realizable value using the original effective interest rate. Additional changes to the amount or timing of future cash flows could result in further losses, or the reversal of previous losses, which would also impact the amount of subsequent finance income recognized.

At each reporting date, the Company performs a comprehensive review of each loan measured at amortized cost in its portfolio to determine the requirements for an ECL provision. As at December 31, 2019, the Company had no loans measured at amortized cost.

Finance income on impaired loans and the changes in expected credit loss provisions are as follows (in thousands $):

	For the years ended
	Dec. 31, 2019			Dec. 31, 2018
Interest on impaired loans		—			—
Expected credit loss provisions
Balance, beginning of the year		50			—
Transition adjustment		—			50
Revised balance, beginning of the year		50			50
Expected credit loss provision (recovery)		(50	)		—
Net exchange differences		—			—
Balance, end of period		—			50

49

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Sector distribution of loan principal

Distribution of the Company's outstanding loan principal balances by sector:

	Dec. 31, 2019				Dec. 31, 2018
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Metals and mining		—		—		1		34,931
Energy and other		—		—		2		2,942
Total loan principal		—		—		3		37,873

Geographic distribution of loan principal

Distribution of the Company's outstanding loan principal balances by geographic location of the underlying security:

	Dec. 31, 2019				Dec. 31, 2018
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Canada		—		—		1		1,578
United States of America		—		—		2		36,295
Total loan principal		—		—		3		37,873

50

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

7       OTHER ASSETS, INCOME AND EXPENSES

Other assets

Consist of the following (in thousands $):

	Dec. 31, 2019		Dec. 31, 2018
Fund recoveries and investment receivables		7,772		4,722
Deferred Tocqueville acquisition costs(1)		2,358		—
Prepaid expenses		5,687		5,369
Other (2)		2,914		1,897
Total Other assets		18,731		11,988

^{(1) Includes legal, proxy and investor relations costs.}

^{(2) Other includes miscellaneous third-party receivables.}

Other income (loss)

Consist of the following (in thousands $):

	For the years ended
	Dec. 31, 2019			Dec. 31, 2018
Net proceeds from sale transaction (1)		—			4,200
Other investment income (2)		826			4,417
Foreign exchange gain (losses)		(1,960	)		2,310
Total Other income (loss) (3)		(1,134	)		10,927

^{(1) Gross proceeds of $5.0 million, net of transaction costs of $0.8 million. This relates to the January 29, 2018 closing of the sale of our non-core private wealth client business.}

^{(2) Primarily includes investment fund income, syndication and trailer fee income.}

^{(3) Excludes royalty income of $0.7 million on a twelve month ended basis (December 31, 2018 - $1.2 million), which is presented net of operating, depletion and impairment charges below.}

Other expenses

Consist of the following (in thousands $):

	For the years ended
	Dec. 31, 2019		Dec. 31, 2018
Costs (recoveries) related to energy assets (1)		756		(28	)
Other (2)		5,326		2,228
Total Other expenses		6,082		2,200

^{(1) Includes operating, depletion and impairment charges, net of royalty income of $0.7 million on a twelve month ended basis (December 31, 2018 - $1.2 million).}

^{(2) Includes non-recurring professional fees and transaction costs.}

51

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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.

	Number of shares			Stated value (in thousands $)
At Dec. 31, 2017		234,098,634			392,556
Issuance of share capital under dividend reinvestment program		338,628			1,015
Issuance of share capital on purchase of management contracts		6,997,387			17,284
Released on exercise of stock option plan		558,048			1,217
Issuance of share capital on conversion of RSUs		635,939			1,581
Acquired for equity incentive plan		(2,402,500	)		(7,161	)
Released on vesting of equity incentive plan		2,836,201			6,446
At Dec. 31, 2018		243,062,337			412,938
Issuance of share capital under dividend reinvestment program		61,519			195
Issuance of share capital on conversion of RSUs and other share based considerations		815,289			2,191
Acquired for equity incentive plan		(1,826,124	)		(6,479	)
Acquired and cancelled under normal course issuer bid		(740,600	)		(2,266	)
Released on vesting of equity incentive plan		2,803,998			6,535
At Dec. 31, 2019		244,176,419			413,114

Contributed surplus consists of: stock option expense; earn-out shares expense; equity incentive plans' expense; and additional purchase consideration.

	Stated value (in thousands $)
At Dec. 31, 2017		39,907
Expensing of Stock-based compensation over the vesting period		12,358
Issuance of share capital on conversion of RSUs		(1,219	)
Released on exercise of stock option plan		(1,217	)
Released on vesting of common shares for equity incentive plan		(6,446	)
At Dec. 31, 2018		43,383
Expensing of Stock-based compensation over the vesting period		7,149
Issuance of share capital on conversion of RSUs and other share based considerations		(325	)
Released on vesting of common shares for equity incentive plan		(6,535	)
At Dec. 31, 2019		43,672

52

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Stock option plan

The Company has an option plan (the "Plan") intended to provide incentives to directors, officers, employees and consultants 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 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 for the twelve months ended December 31, 2019 (twelve months ended December 31, 2018 - 750,000). There were no options exercised for the year ended December 31, 2019 (year ended December 31, 2018 - 2,000,000 options).

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.

A summary of the changes in the Plan is as follows:

	Number of options (in thousands)			Weighted average exercise price ($)
Options outstanding, December 31, 2017		6,975			5.14
Options exercisable, December 31, 2017		5,625			5.79
Options issued		750			2.33
Options exercised		(2,000	)		2.33
Options expired		(2,450	)		10.00
Options outstanding, December 31, 2018		3,275			2.57
Options exercisable, December 31, 2018		1,875			2.70
Options outstanding, December 31, 2019		3,275			2.57
Options exercisable, December 31, 2019		2,575			2.60

Options outstanding and exercisable as at December 31, 2019 are as follows:

Exercise price ($)	Number of outstanding options (in thousands)		Weighted average remaining contractual life (years)		Number of options exercisable (in thousands)
6.60		150		0.9		150
2.33		3,000		6.1		2,300
2.73		125		6.4		125
2.33 to 6.60		3,275		5.9		2,575

53

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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; or (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; and (3) from time-to-time, purchases from 2176423 Ontario Ltd., a company controlled by Eric Sprott, pursuant to the terms and conditions of a previously announced share transaction. 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 699,549 RSUs granted during the twelve months ended December 31, 2019 (twelve months ended December 31, 2018 - 2,396,538). The Trust purchased 1.8 million shares in the year ended December 31, 2019 (year ended December 31, 2018 - 2.4 million shares).

	Number of common shares
Common shares held by the Trust, December 31, 2017		10,365,957
Acquired		2,402,500
Released on vesting		(2,836,201	)
Unvested common shares held by the Trust, December 31, 2018		9,932,256
Acquired		1,826,124
Released on vesting		(2,803,998	)
Unvested common shares held by the Trust, December 31, 2019		8,954,382

The table below provides a breakdown of the share-based compensation expense and the corresponding increase to contributed surplus:

	For the years ended
	Dec. 31, 2019		Dec. 31, 2018
Stock option plan		247		424
EPSP / EIP		6,902		11,934
		7,149		12,358

54

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Basic and diluted earnings per share

The following table presents the calculation of basic and diluted earnings (loss) per common share:

	For the years ended
	Dec. 31, 2019		Dec. 31, 2018
Numerator (in thousands $):
Net income (loss) - basic and diluted		13,532		31,379

Denominator (Number of shares in thousands):
Weighted average number of common shares	253,568		251,848
Weighted average number of unvested shares purchased by the Trust	(9,691	)	(11,656	)
Weighted average number of common shares - basic	243,877		240,192
Weighted average number of dilutive stock options	3,125		3,125
Weighted average number of unvested shares purchased by the Trust	9,691		11,656
Weighted average number of common shares - diluted	256,693		254,973

Net income per common share
Basic	$	0.06	$	0.13
Diluted	$	0.05	$	0.12

Capital management

The Company's objectives when managing capital are:

• 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 for 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). SCP is a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), SAM is a registrant of the Ontario Securities Commission ("OSC") and the U.S. Securities and Exchange Commission ("SEC"), SAM US is registered with the 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. As at December 31, 2019 and 2018, all entities were in compliance with their respective capital requirements.

55

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

9       INCOME TAXES

The major components of income tax expense are as follows (in thousands $):

	For the years ended
	Dec. 31, 2019		Dec. 31, 2018
Current income tax expense (recovery)
Based on taxable income of the current period		3,163		393
Other		153		(137	)
		3,316		256
Deferred income tax expense (recovery)
Total deferred income tax expense		303		1,022
Income tax expense reported in the consolidated statements of operations		3,619		1,278

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 $):

	For the years ended
	Dec. 31, 2019			Dec. 31, 2018
Income before income taxes		17,151			32,657
Tax calculated at domestic tax rates applicable to profits in the respective countries		4,545			8,631
Tax effects of:
Non-deductible stock-based compensation		139			153
Non-taxable capital (gains) and losses		(62	)		(559	)
Intangibles		115			(388	)
Adjustments in respect of previous periods		153			(137	)
Other temporary differences not benefited		(11	)		(279	)
Non-capital losses not benefited previously		(1,844	)		(6,680	)
Rate differences and other		584			537
Tax charge		3,619			1,278

The weighted average statutory tax rate was 26.5% (December 31, 2018 - 26.4%). The Company has $7 million of capital tax losses from prior years that will begin to expire in 2020. The benefit of these capital losses has not been recognized.

56

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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, 2019

	Dec. 31, 2018		Recognized in income			Recognized in other comprehensive income			Dec. 31, 2019
Deferred income tax assets
Stock-based compensation		4,300		998			—			5,298
Non-capital losses		5,018		(495	)		(42	)		4,481
Unrealized losses		386		803						1,189
Other		513		(190	)		—			323
Total deferred income tax assets		10,217		1,116			(42	)		11,291
Deferred income tax liabilities
Fund management contracts		7,317		1,873			—			9,190
Proceeds receivable		70		(70	)		—			—
Other		59		(384	)		—			(325	)
Total deferred income tax liabilities		7,446		1,419			—			8,865
Net deferred income tax assets		2,771		(303	)		(42	)		2,426

For the year ended December 31, 2018

	Dec. 31, 2017			Recognized in income			Recognized in other comprehensive income		Dec. 31, 2018
Deferred income tax assets
Other stock-based compensation		2,588			1,712			—		4,300
Non-capital losses		820			4,185			13		5,018
Unrealized losses		481			(95	)		—		386
Other		485			28			—		513
Total deferred income tax assets		4,374			5,830			13		10,217
Deferred income tax liabilities
Fund management contracts		431			6,886			—		7,317
Proceeds receivable		279			(209	)		—		70
Other		(116	)		175			—		59
Total deferred income tax liabilities		594			6,852			—		7,446
Net deferred income tax assets		3,780			(1,022	)		13		2,771

57

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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, 2019 and 2018 (in thousands $).

Proprietary Investments

Dec. 31, 2019	Level 1		Level 2		Level 3		Total
Public equities and share purchase warrants		9,843		3,895		—		13,738
Fixed income securities		—		4,511		1,000		5,511
Private holdings		—		—		2,434		2,434
Total net recurring fair value measurements		9,843		8,406		3,434		21,683

Dec. 31, 2018	Level 1			Level 2		Level 3		Total
Public equities and share purchase warrants		13,680			5,386		—		19,066
Fixed income securities		—			1,796		1,000		2,796
Private holdings		—			—		2,830		2,830
Obligations related to securities sold short		(255	)		—		—		(255	)
Total net recurring fair value measurements		13,425			7,182		3,830		24,437

Long-term investments

Dec. 31, 2019	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		66,686		5,916		72,602
Private holdings		—		—		24,698		24,698
Total net recurring fair value measurements		—		66,686		30,614		97,300

Dec. 31, 2018	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		72,739		4,876		77,615
Private holdings		—		—		24,945		24,945
Total net recurring fair value measurements		—		72,739		29,821		102,560

58

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

The following tables provides a summary of changes in the fair value of Level 3 financial assets (in thousands $):

Proprietary Investments

	Changes in the fair value of Level 3 measurements - Dec. 31 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income			Dec. 31, 2019
Private holdings		2,830		45		(57	)		(384	)		2,434
Fixed income securities		1,000		—		—			—			1,000
		3,830		45		(57	)		(384	)		3,434

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		4,269		2,135		(3,680	)		106		2,830
Fixed income securities		—		1,000		—			—		1,000
		4,269		3,135		(3,680	)		106		3,830

Long-term investments

	Changes in the fair value of Level 3 measurements - Dec. 31, 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Dec. 31, 2019
Private holdings		24,945		3,424		—		(3,671	)		24,698
Co-investments in funds		4,876		1,587		—		(547	)		5,916
		29,821		5,011		—		(4,218	)		30,614

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		8,884		11,678		—		4,383		24,945
Co-investments in funds		3,268		1,467		—		141		4,876
		12,152		13,145		—		4,524		29,821

During the year ended December 31, 2019, the Company transferred public equities of $3.6 million (December 31, 2018 - $0.7 million) from Level 2 to Level 1 within the fair value hierarchy due to the release of trading restrictions by the issuer. For the year ended December 31, 2019, the Company purchased level 3 investments of $5.1 million (December 31, 2018 - $16.3 million). For the year ended December 31, 2019, the Company transferred $0.1 million (December 31, 2018 - $Nil) from Level 3 to Level 1 within the fair value hierarchy.

59

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

The following table presents the valuation techniques used by the Company in measuring fair values:

Type	Valuation Technique
Public equities and share purchase warrants	Fair values are determined using pricing models which incorporate all available market-observable inputs.
Co-investments in funds	Fair values are based on the last available Net Asset Value.
Fixed income securities	Fair values are based on independent market data providers or third-party broker quotes.
Private holdings	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, co-investment in funds and fixed income securities of private companies. The significant unobservable inputs used in these valuation techniques can vary considerably over time, and include grey market financing prices, discount rates and extraction recovery rates of mining projects. 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 $1.2 million (December 31, 2018 - $1.2 million).

Financial instruments not carried at fair value

For fees receivable, other assets, accounts payable and accrued liabilities and compensation payable, the carrying amount represents a reasonable approximation of fair value due to their short term maturity.

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 $):

	For the years ended
	Dec. 31, 2019		Dec. 31, 2018
Fixed salaries and benefits		2,845		3,186
Variable incentive-based compensation		4,494		4,976
Share-based compensation		2,215		4,344
		9,554		12,506

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 123,497 DSUs issued during the year (December 31, 2018 - 123,660).

60

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

12     DIVIDENDS

The following dividends were declared by the Company during the year ended December 31, 2019:

Record date	Payment Date	Cash dividend per share ($)		Total dividend amount (in thousands $)
March 08, 2019 - Regular Dividend Q4 - 2018	March 25, 2019		0.03		7,602
May 21, 2019 - Regular Dividend Q1 - 2019	June 5, 2019		0.03		7,605
August 19, 2019 - Regular Dividend Q2 - 2019	September 3, 2019		0.03		7,614
November 18, 2019 - Regular Dividend Q3 - 2019	December 3, 2019		0.03		7,614
Dividends (1)					30,435

⁽¹⁾ Subsequent to year-end, on February 27, 2020, a regular dividend of $0.03 per common share was declared for the quarter ended December 31, 2019. This dividend is payable on March 24, 2020 to shareholders of record at the close of business on March 9, 2020.

61

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

13     RISK MANAGEMENT ACTIVITIES

The Company's exposure to market, credit, liquidity and concentration risk is 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 proprietary investments and loans receivable. 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 proprietary investments and long-term investments will result in changes in carrying value. If the market values of proprietary investments and long-term 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 $5.9 million for the year (December 31, 2018 - $6.4 million). For more details about the Company's proprietary investments and long-term investments, refer to Note 3.

The Company's revenues are also exposed to price risk since management fees, performance fees and carried interests are 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, SC, RCIC and SAM US.

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 instrument assets. The Company’s earnings, particularly through its co-investment in lending LPs, are exposed to volatility as a result of sudden changes in interest rates.

As at December 31, 2019, the Company had $5.5 million of fixed income securities (December 31, 2018 - $2.8 million).

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 Canadian dollars. The Company's primary foreign currency is the United States dollar ("USD"). The Company may employ certain hedging strategies to mitigate foreign currency risk.

The Global Companies' assets are all denominated in USD with their translation impact being reported as part of other comprehensive income in the financial statements. Excluding the impact of the Global Companies, as at December 31, 2019, approximately $96.3 million (December 31, 2018 - $103.3 million) of total Canadian assets were invested in proprietary investments priced in USD. A total of $38.8 million (December 31, 2018 - $17.3 million) of cash, $7.4 million (December 31, 2018 -$1.3 million) of accounts receivable, $Nil (December 31, 2018 - $34.5 million) of loans receivable and $4.8 million (December 31, 2018 - $2.6 million) of other assets were denominated in USD. As at December 31, 2019, if the exchange rate between USD 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 $7.4 million for the year (December 31, 2018 - $7.9 million) and there would be $Nil impact to other comprehensive income (December 31, 2018 - $Nil).

62

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Credit risk

Credit risk is the risk that a borrower will not honour its commitments and a loss to the Company may result.

Loans receivable

The Company incurs credit risk primarily in the on-balance sheet loans of SRLC and through co-investments made in the lending LPs managed by SRLC. In addition to the relative default probability of SRLC borrowers (both directly via on balance sheet loans and indirectly via borrowers in the lending LPs we co-invest with), credit risk is also dependent on loss given default, which can increase credit risk if the values of the underlying assets securing the Company's loans decline to levels approaching or below the loan amounts. A decrease in commodity prices may delay the development of the underlying security or business plans of the borrower and will adversely affect the value of the Company's security against a loan. Additionally, the value of the Company's underlying security in a loan can be negatively affected if the actual amount or quality of the commodity proves to be less than that originally estimated, or the ability to extract the commodity proves to be more difficult or more costly than originally estimated. 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 Company interests;

• legal reviews that are performed to ensure that all due diligence requirements are met prior to funding.

As at December 31, 2019 had no exposure to credit risk via on-balance sheet loans of SRLC (December 31, 2018 - $36 million). The Company will 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. For precious metal loans, the Company performs the same due diligence procedures as it would for its resource loans and resource debentures.

Collectability of loans

Besides the above noted measures we take to manage credit risk, the Company will report on credit risk in the notes to the annual consolidated financial statements and records expected credit loss provisions to ensure that on-balance sheet loans are recorded at their estimated recoverable amount (i.e. net of impairment risk we believe to exist as at the balance sheet date and in accordance with IFRS). Actual losses incurred in the on-balance sheet loan portfolio could differ materially from our provisions. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed.

Net investments

The Company incurs credit risk when entering into, settling and financing various proprietary transactions. As at December 31, 2019 and 2018, the Company's most significant proprietary investments counterparty was National Bank Correspondent Network Inc. ("NBCN"), the carrying broker of SCP, which also acts as a custodian for most of the Company's proprietary investments. NBCN is registered as an investment dealer subject to regulation by IIROC; as a result, it is required to maintain minimum levels of regulatory capital at all times.

63

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Other

The majority of accounts receivable relate to management, carried interest and performance fees receivable from the Funds, managed accounts and managed companies 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 Global Companies incur credit risk when entering into, settling and financing various proprietary transactions. As at December 31, 2019 and 2018, the Global Companies' 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. 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.

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 $90 million committed line of credit with a major Canadian Schedule I bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months. As at December 31, 2019, the Company had $71.5 million or 17% (December 31, 2018 - $47.3 or 11%) of its total assets in cash and cash equivalents. In addition, approximately $13.7 million or 14% (December 31, 2018 - $19.1 million or 19%) 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 our co-investments in lending LPs arises from fluctuations in cash flows from making capital calls and receiving capital distributions. The Company manages its loan 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, 2019, the Company had $8.6 million in co-investment commitments from the Lending segment (December 31, 2018 - $38.7 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 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: syndicating a portion of its loans; slowing its lending activities; drawing on the line of credit; liquidating proprietary investments and/or issuing common shares.

Concentration risk

The majority of the Company's AUM, as well as its proprietary investments and loans receivables are focused on the natural resource sector, and in particular, precious metals & mining.

64

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

14     SEGMENTED INFORMATION

For management purposes, the Company is organized into business units based on its products, services and geographical location and has five 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;

• Lending (reportable), which provides lending activities through limited partnership vehicles as well as through direct lending activities using the Company's balance sheet;

• Managed Equities (reportable), which provides asset management and sub-advisory services to the Company's branded funds, fixed-term LPs and managed accounts;

• Brokerage (reportable), which includes the activities of our Canadian and U.S broker-dealers;

• Corporate (reportable), which provides capital, balance sheet management and enterprise shared services to the Company's subsidiaries;

• All Other Segments (non-reportable), which do not meet the definition of reportable segments as per IFRS 8.

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 proprietary investments (as if such gains and losses had not occurred), foreign exchange gains and losses, one time non-recurring expenses, non-cash and non-recurring 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, 2019

	Exchange Listed Products		Lending		Managed Equities		Brokerage		Corporate			Elimination and all other segments			Consolidated
Total revenue		31,666		18,110		18,707		28,123		(2,736	)		2,331			96,201
Total expenses		11,433		9,465		10,869		27,124		13,848			6,311			79,050
Pre-tax Income (loss)		20,233		8,645		7,838		999		(16,584	)		(3,980	)		17,151
Adjusted base EBITDA		23,863		14,236		4,201		4,413		(9,674	)		1,427			38,466

For the year ended December 31, 2018

	Exchange Listed Products		Lending		Managed       Equities (1)		Brokerage (1)		Corporate			Elimination and all other segments (1)			Consolidated
Total revenue		33,479		27,702		12,598		32,182		2,472			836			109,269
Total expenses		9.057		7,316		10,142		29,630		14,528			5.939			76,612
Pre-tax Income (loss)		24.422		20,386		2,456		2,552		(12,056	)		(5.103	)		32,657
Adjusted base EBITDA		24,924		15,437		4,571		4,033		(8,982	)		529			40,512

^{(1) Prior year figures have been restated to reflect the changes in operating segments.}

65

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 $):

	For the years ended
	Dec. 31, 2019		Dec. 31, 2018
Canada		82,708		94,719
United States		13,493		14,550
		96,201		109,269

15     LOAN FACILITY

As at December 31, 2019, the Company had $20 million (December 31, 2018 - $Nil) outstanding on its credit facility, $5 million of which is due within 12 months and $15 million is due after 12 months (December 31, 2018 - $Nil and $Nil respectively).

The Company has a 5 year, $90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a $25 million term loan and a $65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. In the first quarter, the Company drew $25 million on the term loan portion of the credit facility to avoid its expiry and to partially fund anticipated growth in the business over the next 12-18 months. As at December 31, 2019, the Company was in compliance with all covenants, terms and conditions under the credit facility. Key terms under the credit facility are noted below:

Structure

◦         5-year, $65 million revolver with "bullet maturity" December 31, 2022

◦         5-year, $25 million term loan with 5% of principal amortizing quarterly with the remaining balance maturing on December 31, 2022

Interest Rate

◦         Prime rate + 0 bps or;

◦         Banker Acceptance Rate + 170 bps

Covenant Terms

◦         Minimum AUM: $8.2 billion

◦         Debt to EBITDA less than 2.5:1

◦         EBITDA to interest expense more than 2.5:1

16     COMMITMENTS AND PROVISIONS

Besides the Company's long-term lease agreement, there may be commitments to make investments in the net investments portfolio of the Company. As at December 31, 2019, the Company had $8.6 million in co-investment commitments from the lending segment (December 31, 2018 - $38.7 million).

66

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

17.    EVENTS AFTER THE REPORTING PERIOD

On January 17, 2020, the Company successfully closed on the acquisition of the Tocqueville Asset Management's gold strategies for proceeds of US$15 million. Contingent consideration valued up to an additional US$35 million is payable subject to the achievement of certain financial performance conditions over two years following the closing of the transaction.

67

Corporate Information

Head Office	Legal Counsel
Sprott Inc.	Stikeman Elliot LLP
Royal Bank Plaza, South Tower 200 Bay Street, Suite 2600	5300 Commerce Court West 199 Bay Street
Toronto, Ontario M5J 2J1, Canada	Toronto, Ontario M5L 1B9
T: 416.943.8099
1.855.943.8099	Auditors
	KPMG LLP
Directors & Officers	Bay Adelaide Centre
Ronald Dewhurst, Chairman	333 Bay Street, Suite 4600
Sharon Ranson, FCPA, FCA, Director	Toronto, Ontario M5H 2S5
Rosemary Zigrossi, Director
Graham Birch, Director	Investor Relations
Peter Grosskopf, Chief Executive Officer and Director	Shareholder requests may be directed to
Rick Rule, Director	Investor Relations by e-mail at ir@sprott.com
Whitney George, President	or via telephone at 416.943.8099
Kevin Hibbert, FCPA, FCA, Chief Financial Officer	or toll free at 1.855.943.8099
Arthur Einav, Corporate Secretary
	Stock Information
Transfer Agent & Registrar	Sprott Inc. common shares are traded on the
TMX Equity Transfer Services	Toronto Stock Exchange under the symbol ‘‘SII’’
200 University Avenue, Suite 300
Toronto, Ontario M5H 4H1	Annual General Meeting
Toll Free: 1.866.393.4891	Friday, May 8, 2020 12:00 pm Stikeman Elliot LLP
www.tmxequitytransferservices.com	5300 Commerce Court West
	199 Bay Street
	Toronto, Ontario M5L 1B9

 

www.sprott.com

EX-99.23

Exhibit 99.23

Management's Discussion and Analysis

Year ended December 31, 2019

     1 

FORWARD LOOKING STATEMENTS

Certain statements in this Management's Discussion & Analysis ("MD&A"), and in particular the "Business Highlights and Growth Initiatives" section and "Outlook" subsection, contain forward-looking information (collectively referred to herein as the "Forward-Looking Statements") within the meaning of applicable 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) expectations regarding an increasingly constructive gold and silver pricing environment; (ii) expectations regarding deployment of capital called into our lending LPs; (iii) anticipation of flat year-over-year performance in the Brokerage segment; (iv) anticipation of higher year-over-year operating costs (primarily relating to higher SG&A on increased U.S. operating activities) and lower EBITDA contribution from non-reportable segments; (v) the impact to the Managed Equities segment of the Tocqueville gold strategies asset management business; (vi) the performance of the co-investments in the lending LPs; (vii) gold accumulation and new highs as insurance and protection assets; and (viii) the declaration, payment and designation of dividends.

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; and (iv) those assumptions disclosed herein under the heading "Significant Accounting Judgments, Estimates and Changes in Accounting Policies". 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 favourable 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 lending business; (xxvii) risks relating to the Company’s merchant bank and advisory business; (xxviii) those risks described under the heading "Risk Factors" in the Company’s annual information form dated February 27, 2020; and (xxix) those risks described under the headings "Managing Risk: Financial" and "Managing Risk: Non-Financial" 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. As a result of the foregoing, readers should not place undue reliance on the forward-looking statements contained in this MD&A concerning the completion of the acquisition or the timing thereof. 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 Canadian securities laws.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This MD&A of financial condition and results of operations, dated February 27, 2020, presents an analysis of the consolidated financial condition of the Company and its subsidiaries as at December 31, 2019, compared with December 31, 2018, and the consolidated results of operations for the three and twelve months ended December 31, 2019, compared with the three and twelve months ended December 31, 2018. The Board of Directors approved this MD&A on February 27, 2020. All note references in this MD&A are to the notes to the Company's December 31, 2019 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 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. The Canadian dollar is the Company's functional and reporting currency for purposes of preparing the annual financial statements. Accordingly, all dollar references in this MD&A are in Canadian dollars, unless otherwise specified. The use of the term "prior period" refers to the three and twelve months ended December 31, 2018.

While the Company’s functional currency is the Canadian dollar, its presentation currency will switch to US dollars effective January 1, 2020. Going forward, we believe the US dollar will better reflect the Company’s consolidated financial position and results of operations given the significance of its subsidiaries that have the US market as their primary economic environment. The proportion of the Company’s subsidiaries that have the US market as their primary economic environment has further increased in 2020 with the January 17, 2020 close of the Tocqueville Asset Management gold strategies acquisition.

     2 

KEY PERFORMANCE INDICATORS (NON-IFRS 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 are discussed below:

Assets Under Management

Assets Under Management ("AUM") refers to the total net assets managed by the Company through its various investment product offerings, managed accounts and managed companies.

Net Inflows

Net Inflows (consisting of net sales, capital calls and fee earning capital commitments) result in changes to AUM and are described individually below:

Net Sales

Fund sales (net of redemptions), including 'at-the-market' transactions and secondary offerings of our physical trusts and new 'creations' of ETF units, are a key performance indicator as new assets being managed will lead to higher management fees and can potentially lead to increased carried interest and performance fee generation (as applicable) given that AUM is also the basis upon which carried interest and performance fees are calculated.

Capital calls and commitments

Capital calls into our lending LPs are a key source of AUM creation, and ultimately, earnings for the Company. Once capital is called into our lending LPs, it is included within the AUM of the Company as it will now earn a management fee (NOTE: it is possible for some forms of committed capital to earn a commitment fee despite being uncalled, in which case, it will also be included in AUM at that time). Conversely, once loans in our lending LPs are repaid, capital may be returned to investors in the form of a distribution, thereby reducing our AUM ("capital distributions").

Net Fees

Management fees (net of trailer and sub-advisor fees) and carried interest and performance fees (net of carried interest and performance fee payouts) 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, arise primarily from the transaction based service offerings of our brokerage segment.

Compensation

Compensation excludes commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance and new hire accruals which are non-recurring.

Investable Capital

Investable capital includes: 1) cash, net of syndicate cash holdings; 2) proprietary investments, net of any obligations for securities sold short; and 3) balance sheet loans.

     3 

EBITDA, Adjusted EBITDA and Adjusted base EBITDA

EBITDA in its most basic form is defined as earnings before interest expense, income taxes, depreciation and amortization. EBITDA 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.

Neither EBITDA, adjusted EBITDA or adjusted base EBITDA have 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 and Adjusted base EBITDA measures are determined:

	3 months ended						12 months ended
(in thousands $)	Dec. 31, 2019			Dec. 31, 2018			Dec. 31, 2019			Dec. 31, 2018
Net income (loss) for the periods		1,909			9,831			13,532			31,379
Adjustments:
Interest expense		354			312			1,373			419
Provision (recovery) for income taxes		1,251			3,383			3,619			1,278
Depreciation and amortization		1,655			598			5,033			2,199
EBITDA		5,169			14,124			23,557			35,275
Other adjustments:
(Gains) losses on net investments (1)		1,879			(3,912	)		1,401			5,782
(Gains) losses on foreign exchange		478			(2,026	)		1,960			(2,310	)
Non-cash stock-based compensation		854			1,738			5,120			5,199
Net proceeds from sale transaction		—			—			—			(4,200	)
Unamortized placement fees (2)		—			(279	)		—			(1,093	)
Other expenses(3)		2,525			447			7,509			2,746
Adjusted EBITDA		10,905			10,092			39,547			41,399
Other adjustments:
Carried interest and performance fees		(2,391	)		—			(2,391	)		(1,802	)
Carried interest and performance fee related expenses		1,310			—			1,310			915
Adjusted base EBITDA		9,824			10,092			38,466			40,512

⁽¹⁾ This adjustment removes the income effects of certain gains or losses on proprietary and long-term investments to ensure the reporting objectives of our EBITDA metric as described above are met.

⁽²⁾ The prior period comparative figures contained a placement fee amortization adjustment to ensure the 2018 results were comparable to 2017 in light of the 2018 adoption of IFRS 15.

⁽³⁾ See Other expenses in Note 7 of the annual financial statements. In addition to the items outlined in Note 7, Other expenses also includes severance and new hire accruals of $0.2 million for the 3 months ended (3 months ended December 31, 2018 - $Nil) and $1.4 million for the 12 months ended (12 months ended December 31, 2018 - $0.5 million).

     4 

BUSINESS OVERVIEW

Our reportable operating segments are as follows:

 

Exchange Listed Products

• The Company's closed-end physical trusts and exchange traded funds ("ETFs").

Lending

• The Company's lending activities primarily occur through limited partnership vehicles ("lending LPs").

Managed Equities

• The Company's alternative investment strategies (open-end, closed-end, etc.) managed in-house and on a sub-advised basis. Prior to Q1 2019, the Company's fixed-term LP vehicles formed part of the "global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, the global segment no longer satisfied the qualitative tests of IFRS 8, Operating Segments ("IFRS 8") as the geographic location of the U.S. businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, the global segment has been deconstructed and its fixed-term LP assets and earnings reallocated to the managed equities segment given that it is now at the managed equities level that the allocation of resources and assessment of product and service performance occurs by management.

Brokerage

• Formerly "Merchant Banking & Advisory Services", this segment has been renamed to reflect the inclusion of our U.S. broker-dealer alongside our Canada based broker-dealer as the Company's "brokerage segment". Prior to Q1 2019 , the Company's U.S. broker-dealer formed part of the "global segment" (which historically housed all of our U.S. business activities). Effective Q1 2019, the global segment no longer satisfied the qualitative tests of IFRS 8 as the geographic location of the U.S. businesses is no longer a relevant consideration by management in the allocation of resources and assessment of product and service performance. Consequently, the global segment has been deconstructed and its U.S. broker-dealer assets and earnings reallocated to the brokerage segment given that it is now at the brokerage level (independent of geography) that the allocation of resources and assessment of product and service performance occurs by management.

Corporate

• Provides the Company's various operating segments with capital, balance sheet management and other shared services.

All Other Segments

• Contains all non-reportable segments as per IFRS 8. See Note 14 of the annual financial statements for further details.

For a detailed account of the underlying principal subsidiaries within our reportable business segments, refer to the Company's Annual Information Form and Note 2 of the annual financial statements.

     5 

BUSINESS HIGHLIGHTS AND GROWTH INITIATIVES

Investment Performance

Market value appreciation was $174 million during the quarter and $957 million on a full year basis as the Company benefited from stronger precious metals prices throughout the year.

Product and Business Line Expansion

• Subsequent to year-end, on January 17, 2020, the Company successfully closed on the acquisition of Tocqueville Asset Management's gold strategies. Based on AUM valuations as at January 17, 2020, this transaction will add approximately $2.3 billion (US$1.8 billion) to the Company's total AUM. The transaction cost is US$15 million (US$12.5 million in cash and Sprott Inc. common shares valued at US$2.5 million). Contingent consideration valued up to an additional US$35 million in cash and Sprott Inc. shares is payable subject to the achievement of certain financial performance conditions over two years following the closing of the transaction.

• AUM in our lending LPs stood at $1 billion (US$784 million) as of December 31 2019. The $521 million (US$419 million) increase in the year was primarily due to additional new AUM arising from fee earning committed capital in a new lending LP and new capital calls into existing lending LPs.

• On January 11, 2019, the Company launched a new Korean co-managed private equity fund with KB Securities (KB Solar fund), raising $75 million in commitment fee earning AUM in the process.

Other Matters

While the Company’s functional currency is the Canadian dollar, its presentation currency will switch to US dollars effective January 1, 2020. Going forward, we believe the US dollar will better reflect the Company’s consolidated financial position and results of operations given the significance of its subsidiaries that have the US market as their primary economic environment. The proportion of the Company’s subsidiaries that have the US market as their primary economic environment has further increased in 2020 with the January 17, 2020 close of the Tocqueville Asset Management gold strategies acquisition.

     6 

OUTLOOK

Exchange Listed Products

• We expect this segment to benefit from an increasingly constructive gold and silver pricing environment in 2020 as more than 98% of this segment’s AUM is directly or indirectly impacted by gold and silver price changes, net of redemptions.

Lending

• Interest income from balance sheet loans (included in finance income) will no longer be earned in 2020 as we have successfully transitioned to co-investments in our lending fund strategies instead. Effective 2020, this segment’s revenues will be generated primarily from two sources: management fees and co-investment income (included in finance income).

• Our lending strategies had a total of approximately $1 billion in AUM at the end of 2019, earning a blended net management fee rate of approximately 1%. We expect capital calls (net of capital distributions) in 2020 to be in the range of US$100 million to US$200 million, based on our lending team's current view of the loan market and their expectations of possible repayments.

• At the end of 2019, approximately $40 million of co-investments accounted for 4% of total segment AUM. These co-investments accounted for approximately 57% of finance income earned in this segment in 2019. NOTE: co-investment income is included in the finance income line given that it is largely interest income earned from lending LPs we are invested in alongside our clients.

Managed Equities

• The purchase of Tocqueville Asset Management’s gold fund strategies (which closed on January 17, 2020) will increase AUM in this segment by approximately $2.3 billion.

Brokerage

• We anticipate flat year-over-year performance in this segment.

Corporate & Other Non-reportable Segments

• We anticipate higher year-over-year operating costs (primarily relating to higher SG&A on increased U.S. operating activities) and lower EBITDA contribution from non-reportable segments. (see “Elimination and all other segments” column of the segment table in Note 14 of the annual financial statements).

     7 

SUMMARY FINANCIAL INFORMATION

(In thousands $)	Q4 2019			Q3 2019			Q2 2019			Q1 2019			Q4 2018			Q3 2018			Q2 2018			Q1 2018
SUMMARY INCOME STATEMENT
Management fees		14,106			13,964			13,329			13,558			13,182			13,722			14,559			14,056
Carried interest and performance fees		2,391			—			—			—			—			—			685			1,117
less: Trailer and sub-advisor fees		1,275			65			89			—			38			45			49			47
less: Carried interest and performance fee payouts		114			—			—			—			—			—			356			559
Net Fees		15,108			13,899			13,240			13,558			13,144			13,677			14,839			14,567
Commissions		8,712			7,995			4,406			4,409			6,414			4,573			7,516			8,857
less: Commission expense		3,508			3,505			1,814			1,844			2,704			2,447			2,701			3,667
Net Commissions		5,204			4,490			2,592			2,565			3,710			2,126			4,815			5,190
Finance income (1)		3,276			3,381			4,595			3,918			4,244			4,824			3,293			3,066
Gains (losses) on net investments		(1,652	)		791			(546	)		6			6,919			(4,916	)		(3,122	)		(1,823	)
Other income (loss)		161			604			(559	)		(644	)		2,453			(275	)		3,683			6,242
Total Net Revenues		22,097			23,165			19,322			19,403			30,470			15,436			23,508			27,242
Compensation (2)		9,731			9,098			7,317			8,387			11,163			8,167			10,634			9,485
Compensation - severance and new hire accruals		204			222			855			146			38			359			—			149
Placement and referral fees		572			150			336			78			368			223			148			204
Selling, general and administrative		3,942			4,191			4,354			4,069			4,171			3,404			4,905			4,586
Interest expense		354			393			302			324			312			26			15			66
Amortization and impairment charges (3)		1,655			1,180			1,097			1,101			598			457			456			688
Other expenses		2,479			263			3,399			637			606			790			802			1,179
Total Expenses		18,937			15,497			17,660			14,742			17,256			13,426			16,960			16,357
Net Income (Loss)		1,909			5,723			2,116			3,784			9,831			1,975			5,916			13,657
Net Income (Loss) per share		0.01			0.02			0.01			0.02			0.04			0.01			0.02			0.06
Adjusted base EBITDA		9,824			10,049			9,409			9,184			10,092			9,707			10,686			10,027
Adjusted base EBITDA per share		0.04			0.04			0.04			0.04			0.04			0.04			0.04			0.04
SUMMARY BALANCE SHEET
Total Assets		424,344			431,178			445,776			444,325			428,215			401,366			403,985			407,177
Total Liabilities		69,622			68,596			79,019			72,172			55,094			36,486			36,372			42,417
Cash		71,495			89,431			60,593			48,193			47,252			41,452			37,974			52,097
less: syndicate cash holdings		(569	)		(154	)		(10,119	)		(12,218	)		(10,421	)		(967	)		(796	)		(932	)
Net cash		70,926			89,277			50,474			35,975			36,831			40,485			37,178			51,165
Proprietary and long-term investments		120,147			110,699			122,607			134,681			129,271			115,744			120,853			96,352
less: obligations related to securities sold short		—			—			—			—			(255	)		—			(2,927	)		(8,543	)
Net investments		120,147			110,699			122,607			134,681			129,016			115,744			117,926			87,809
Loans receivable		—			2,871			32,011			32,360			36,021			36,532			40,208			50,467
Investable Capital		191,073			202,847			205,092			203,016			201,868			192,761			195,312			189,441
Total Enterprise AUM		12,082,468			11,326,546			10,670,982			10,569,449			10,578,426			10,066,112			11,126,042			11,591,213

⁽¹⁾ Finance income includes: (1) interest income from on-balance sheet loans and brokerage client accounts; (2) co-investment income from lending LP units held as part of our long-term investments portfolio; and (3) ancillary income earned directly or indirectly from lending activities.

⁽²⁾ See 'Compensation' in the key performance indicators (non-IFRS financial measures) section of this MD&A.

⁽³⁾ Starting Q1 2019, in order to comply with the new IFRS 16 Leases accounting standard ("IFRS 16"), certain lease assets have now been capitalized and depreciated over their expected lease terms. See Note 2, Changes in Accounting Policies of the annual financial statements.

     8 

SUMMARY MANAGEMENT FEE BREAKDOWN

Below is a detailed list of management fee rates on our fund products as at December 31, 2019 (in millions $):

FUND	AUM		BLENDED NET MANAGEMENT FEE RATE			CARRIED INTEREST AND PERFORMANCE FEE CRITERIA
Exchange Listed Products
Sprott Physical Gold and Silver Trust		3,843		0.40	%	N/A (1)
Sprott Physical Gold Trust		3,197		0.35	%	N/A (1)
Sprott Physical Silver Trust		1,399		0.45	%	N/A (1)
Sprott Gold Miner's ETF		251		0.35	%	N/A (1)
Sprott Physical Platinum & Palladium Trust		153		0.50	%	N/A (1)
Sprott Jr. Gold Miner's ETF		79		0.35	%	N/A (1)
Total		8,922		0.39	%
Lending
Sprott private resource lending LPs		1,019		1.00	%	15-70% of net profits over preferred return
Managed Equities: In-house
Sprott U.S. Value Strategies		306		1.00	%	N/A
Fixed Term Limited Partnerships		242		1.70	%	15-30% over preferred return
Separately Managed Accounts (2)		59		1.00	%	N/A
Sprott Hathaway Special Situations Fund (3)		49		0.75	%	20% of net profits over preferred return
Total		656		1.24	%
Managed Equities: Sub-advised
Bullion Funds (3)		332		0.51	%	5% excess over applicable benchmark indices
Corporate Class Funds (3)		162		0.75	%	5% excess over applicable benchmark indices
Flow-through LPs (3)		93		0.70	%	10% of all net profits in excess of the HWM
Total		587		0.61	%
Other
Managed Companies (4)		622		0.50	%	20% of net profits over preferred return
Separately Managed Accounts (5)		276		0.61	%	20% of net profits over preferred return
Total		898		0.53	%
Total AUM		12,082		0.51	%

⁽¹⁾ Exchange listed products do not generate performance fees, however the management fees they generate are closely correlated to precious metals prices.

⁽²⁾ Institutional managed accounts.

⁽³⁾ Management fee rate represents the net amount received by the Company.

⁽⁴⁾ Includes Sprott Resource Holdings Inc. and Sprott Korea Corp.

⁽⁵⁾ Includes our private equity strategy in Sprott Asia and high net worth discretionary managed accounts in the U.S.

     9 

RESULTS OF OPERATIONS

AUM SUMMARY

AUM was $12.1 billion as at December 31, 2019, up $0.8 billion (7%) from September 30, 2019 and up $1.5 billion (14%) from December 31, 2018. On a three and twelve months ended basis we benefited from strong precious metals price appreciation in our exchange listed products and managed equities segments. We also benefited from capital calls and new commitment fee earning assets being added to our lending LPs throughout the year, which more than offset capital distributions.

3 months results

(In millions $)	AUM Sep. 30, 2019		Net       Inflows (1)			Market Value   Changes			Other (2)			AUM Dec. 31, 2019
Exchange Listed Products
- Physical Trusts		8,376		71			145			—			8,592
- ETFs		314		(7	)		23			—			330
		8,690		64			168			—			8,922
Lending		586		474			(38	)		(3	)		1,019	(3	)
Managed Equities
- In-house		592		35			29			—			656
- Sub-advised		535		11			41			—			587
		1,127		46			70			—			1,243
Other		924		—			(26	)		—			898
Total		11,327		584			174			(3	)		12,082

12 months results

(In millions $)	AUM Dec. 31, 2018		Net Inflows (1)			Market Value Changes			Other (2)			AUM Dec. 31, 2019
Exchange Listed Products
- Physical Trusts		7,927		(177	)		842			—			8,592
- ETFs		237		11			82			—			330
		8,164		(166	)		924			—			8,922
Lending		498		858			(55	)		(282	)		1,019	(3	)
Managed Equities
- In-house		538		66			52			—			656
- Sub-advised		505		3			79			—			587
		1,043		69			131			—			1,243
Other		873		68			(43	)		—			898
Total		10,578		829			957			(282	)		12,082

⁽¹⁾ See 'Net Inflows' in the key performance indicators (non-IFRS financial measures) section of this MD&A.

⁽²⁾ Includes new AUM from fund acquisitions and lost AUM from fund divestitures and capital distributions of our lending LPs.

⁽³⁾ $1.7 billion (US$1.3 billion) of committed capital remains uncalled, of which $697 million (US$536 million) earns a commitment fee (AUM), and $980 million (US$754 million) does not (future AUM).

     10 

KEY REVENUE LINES

Net Fees in the quarter were $15.1 million, up $2 million (15%) from the prior period and were $55.8 million on a full year basis, down $0.4 million (1%).

Net fees increased in the quarter due to higher average AUM in our exchange listed products and managed equities segments given strong precious metals price appreciation and improved mining equities stock performance. We also benefited from higher fees in our lending segment as we continue to grow AUM in this area. Additionally, our managed equities segment generated higher net performance fees from the prior period.

 

Net fees decreased on a full year basis despite strong precious metals price appreciation in the second half of the year as redemptions of our exchange listed products throughout last year and the first half of this year, led to lower average AUM on a full year basis from this segment. In addition, we experienced lower average AUM in the fixed-term LPs of our managed equities segment. These declines more than offset increased fee generation in our lending segment and higher performance fees generated in our managed equities segment.

 

Finance Income in the quarter was $3.3 million, down $1 million (23%) from the prior period and was $15.2 million on a full year basis, down $0.3 million (2%).

Finance income primarily includes interest income from legacy loans, co-investment income from LP units and other ancillary income earned directly or indirectly from lending activities. The decrease in finance income in the quarter and on a full year basis was primarily due to legacy loan repayments. The resultant lower finance income was partially offset by increased co-investment income earned in our lending LPs.

Net Commissions in the quarter were $5.2 million, up $1.5 million from the prior period and were $14.9 million on a full year basis, down $1 million.

The increase in the quarter was due to improved equity origination activity in our brokerage segment. The decrease on a full year basis was due to lower equity origination activity in the first half of the year that over shadowed the increase in origination activity in the second half of the year.

     11 

KEY EXPENSE LINES

Compensation, excluding commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance and new hire accruals which are non-recurring, was $9.7 million, down $1.4 million (13%) from the prior period and was $34.5 million on a full year basis, down $4.9 million (12%). The decrease in the quarter and on a full year basis was primarily due to lower LTIP amortization.

 

 

SG&A was $3.9 million in the quarter, down $0.2 million (5%) from the prior period and was $16.6 million on a full year basis, down $0.5 million (3%).

The decrease was largely due to the adoption of IFRS 16 and our ongoing cost containment program.

ADJUSTED BASED EBITDA

Adjusted base EBITDA in the quarter was $9.8 million, down $0.3 million (3%) from the prior period and was $38.5 million on a full year basis, down $2 million (5%).

On an aggregate basis, our reportable segments had improved quarterly performance, however, their results were more than offset by lower earnings from our non-reportable segments.

Our full year results were primarily impacted by lower fee income in our exchange listed products segment due to last year's redemption experience that continued through to the first half of this year and lower AUM valuations in our managed equities segment. We also encountered legacy loans being repaid in full by the end of the third quarter in our lending segment, resulting in lower full year finance income.

     12 

ADDITIONAL REVENUES AND EXPENSES

Net investments losses were mainly due to market value depreciation of certain equity holdings and long-term investments.

Other income was lower in the quarter and on a full year basis.The decrease was primarily due to FX translation losses in the current periods (USD-to-CAD) compared to FX translation gains in the prior periods, net sales proceeds received on last year's sale transaction in the first quarter of 2018 and income earned on the early settlement of a loan last year.

Placement and referral fees were higher in the quarter and on a full year basis. They mainly include referral fees paid in our brokerage segment.

Interest expense was higher in the quarter and on a full year basis due to interest accruals on leases from the adoption of IFRS 16 and the draw down of our loan facility in the first quarter of this year (see Note 15 of the annual financial statements).

Amortization of intangibles did not change in the quarter and was lower on a full year basis due to finite life fund management contracts related to fixed term LPs in our managed equities segment being fully amortized by the end of the first quarter of the prior period.

Amortization of property and equipment was higher in the quarter and on a full year basis mainly due to increased depreciation expense related to leasehold improvements and leases that were capitalized on the adoption of IFRS 16.

Other expenses were higher in the quarter and on a full year basis due to higher non-recurring professional fees and transaction costs.

BALANCE SHEET

Investable Capital was $191 million, down $11 million from December 31, 2018.

 

Total Assets were $424 million, down $4 million (1%) from December 31, 2018. The slight decrease was primarily due to a combination of loan repayments, investment exits and FX losses on goodwill valuation.

Total Liabilities were $70 million, up $15 million (26%) from December 31, 2018. The increase was primarily due to the draw down of our loan facility to help fund anticipated investment activities of the Company over the next 12-18 months. The increase was also due to the recording of a lease liability on adoption of IFRS 16. These increases were partially offset by the payment of prior year's accrued liabilities.

Total Shareholder's Equity was $355 million, down $18 million (5%) from December 31, 2018.

     13 

REPORTABLE OPERATING SEGMENTS

Exchange Listed Products

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2019			Dec. 31, 2018		Dec. 31, 2019			Dec. 31, 2018
SUMMARY INCOME STATEMENT
Management fees		8,678			7,511		32,477			32,652
Other income (loss)		(395	)		719		(811	)		827
Total Revenues		8,283			8,230		31,666			33,479
Compensation		1,481			1,047		5,052			4,473
Selling, general and administrative		1,240			802		4,025			3,295
Interest expense		265			—		1,093			—
Amortization and impairment charges		315			316		1,263			1,259
Other expenses		—			—		—			30
Total Expenses		3,301			2,165		11,433			9,057
Net Income before income taxes		4,982			6,065		20,233			24,422
Adjusted base EBITDA		6,039			5,675		23,863			24,924
Total AUM		8,922,030			8,164,136		8,922,030			8,164,136

3 and 12 months ended

Adjusted base EBITDA in the quarter was $6 million, up $0.4 million (6%) from the prior period and was $23.9 million on a full year basis, down $1.1 million (4%).

Our three months ended results were positively impacted by higher average AUM given strong precious metals price appreciation this quarter which more than offset higher compensation and SG&A. However on a full year basis, the strong pricing environment was more than offset by the redemption experience we encountered last year which continued through to the first half of this year. Additionally we also incurred higher compensation and SG&A in this segment.

Non-EBITDA highlights:

• Other losses was due to FX translation movements (USD-to-CAD).

• Interest expense relates to the draw down of our loan facility in the first quarter of this year (see Note 15 of the annual financial statements).

     14 

Lending

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2019			Dec. 31, 2018		Dec. 31, 2019			Dec. 31, 2018
SUMMARY INCOME STATEMENT
Management fees		1,833			1,420		7,492			4,929
Carried interest and performance fees		—			—		—			685
less: Carried interest and performance fee payouts		—			—		—			356
Net Fees		1,833			1,420		7,492			5,258
Finance income (1)		2,985			3,619		13,229			13,884
Gains (losses) on net investments		(134	)		3,515		(1,542	)		1,914
Other income (loss)		(219	)		1,666		(1,069	)		6,290
Total Net Revenues		4,465			10,220		18,110			27,346
Compensation		1,658			1,291		6,643			5,173
Placement and referral fees		20			49		58			157
Selling, general and administrative		293			595		1,032			1,522
Interest expense		39			—		80			—
Amortization and impairment charges		36			37		143			78
Other expenses		1,509			—		1,509			30
Total Expenses		3,555			1,972		9,465			6,960
Net Income before income taxes		910			8,248		8,645			20,386
Adjusted base EBITDA		3,247			3,300		14,236			15,437
Total AUM (2)		1,019,030			498,231		1,019,030			498,231

⁽¹⁾ Includes: (1) interest income from on-balance sheet loans; and (2) co-investment income from lending LP units held as part of our long-term investments portfolio.

⁽²⁾ $1.7 billion (US$1.3 billion) of committed capital remains uncalled, of which $697 million (US$536 million) earns a commitment fee (AUM), and $980 million (US$754 million) does not (future AUM).

3 and 12 months ended

Adjusted base EBITDA in the quarter was $3.2 million, down $0.1 million (2%) from the prior period and was $14.2 million on a full year basis, down $1.2 million (8%).

Our three months ended and full year results were primarily impacted by legacy loans repaid in full by the end of the third quarter, which led to lower interest income over the periods. This more than offset increased management fees and co-investment income as we continue to grow AUM in this segment.

Non-EBITDA highlights:

• Net investment losses were due to equity kicker valuations.

• Other losses was due to FX translation movements (USD-to-CAD).

• Other expenses related primarily to non-recurring professional fees.

     15 

Managed Equities*

	3 months ended					12 months ended
(In thousands $)	Dec. 31, 2019		Dec. 31, 2018			Dec. 31, 2019		Dec. 31, 2018
SUMMARY INCOME STATEMENT
Management fees		2,641		2,573			10,356		11,867
Carried interest and performance fees		2,391		—			2,391		1,061
less: Trailer and sub-advisor fees		1,317		80			1,599		358
less: Carried interest and performance fee payouts		114		—			114		559
Net Fees		3,601		2,493			11,034		12,011
Gains (losses) on net investments		1,553		(164	)		4,721		(395	)
Other income (loss)		454		179			1,239		65
Total Net Revenues		5,608		2,508			16,994		11,681
Compensation		1,378		1,462			6,052		6,104
Selling, general and administrative		809		596			2,485		2,081
Amortization and impairment charges		67		73			280		540
Other expenses		1		140			339		500
Total Expenses		2,255		2,271			9,156		9,225
Net Income before income taxes		3,353		237			7,838		2,456
Adjusted base EBITDA		1,043		1,094			4,201		4,571
Total AUM		1,243,100		1,043,294			1,243,100		1,043,294

*See "Managed Equities" in the business overview section on page 7 of this MD&A.

3 and 12 months ended

Adjusted base EBITDA in the quarter was $1 million, down $0.1 million (5%) from the prior period, and was $4.2 million on a full year basis, down $0.4 million (8%).

Our three months ended results were primarily impacted by higher SG&A which more than offset lower compensation and higher management fees. On a full year basis, the impact of lower average AUM on fixed-term LPs was more pronounced.

Non-EBITDA highlights:

• Net investments gains were due to market value appreciation of certain holdings.

     16 

Brokerage*

	3 months ended						12 months ended
(In thousands $)	Dec. 31, 2019			Dec. 31, 2018			Dec. 31, 2019			Dec. 31, 2018
SUMMARY INCOME STATEMENT
Commissions		8,266			5,766			24,487			26,120
less: Commission expense		3,498			2,823			10,632			11,964
Net Commissions		4,768			2,943			13,855			14,156
Management fees		473			445			1,723			1,746
Finance income		291			625			1,941			1,543
Gains (losses) on net investments		218			(829	)		(149	)		(1,701	)
Other income (loss)		(1	)		(167	)		121			4,474
Total Net Revenues		5,749			3,017			17,491			20,218
Compensation (1)		2,234			2,501			9,157			10,342
Placement and referral fees		468			300			893			666
Selling, general and administrative		1,102			1,625			5,705			6,238
Interest expense		17			—			77			—
Amortization and impairment charges		179			25			651			76
Other expenses		2			—			9			344
Total Expenses		4,002			4,451			16,492			17,666
Net Income (Loss) before income taxes		1,747			(1,434	)		999			2,552
Adjusted base EBITDA		2,319			547			4,413			4,033

*See "Brokerage" in the business overview section on page 7 of this MD&A.

⁽¹⁾ Compensation is presented excluding commission expense, which is reported net of commission revenue.

3 and 12 months ended

Adjusted base EBITDA in the quarter was $2.3 million, up $1.8 million from the prior period, and was $4.4 million on a full year basis, up $0.4 million.

Our three and twelve months ended results were positively impacted by a combination of lower compensation and SG&A expense and higher net commissions on improved equity origination in the second half of the year. However, the weak equity origination environment encountered in the first half of the year weighed down our full year results.

Non-EBITDA highlights:

• Net investment gains in the quarter and losses on a full year basis were the result of equity kicker valuations.

• Other income in the prior period was primarily related to net sales proceeds received on last year's sale transaction in the first quarter of 2018. See Note 7 of the annual financial statements.

     17 

Corporate

This segment is primarily a cost centre that provides capital, balance sheet management and shared services to the Company's subsidiaries.

	3 months ended						12 months ended
(In thousands $)	Dec. 31, 2019			Dec. 31, 2018			Dec. 31, 2019			Dec. 31, 2018
SUMMARY INCOME STATEMENT
Gains (losses) on net investments		(2,786	)		5,348			(3,531	)		2,334
Other income (loss)		422			(149	)		795			138
Total Revenues		(2,364	)		5,199			(2,736	)		2,472
Compensation		2,580			4,022			7,651			10,308
Selling, general and administrative		483			328			2,553			2,630
Interest expense		33			12			123			93
Amortization and impairment charges		1,049			59			2,660			142
Other expenses		119			159			861			1,355
Total Expenses		4,264			4,580			13,848			14,528
Net Income (Loss) before income taxes		(6,628	)		619			(16,584	)		(12,056	)
Adjusted base EBITDA		(2,699	)		(1,020	)		(9,674	)		(8,982	)

3 and 12 months ended

• Net investments losses were due to market value depreciation of certain equity holdings and long-term investments.

• Compensation decreased due to lower LTIP amortization and lower incentive accruals.

• SG&A increased in the quarter due to lower than normal operating expenses this time last year. The decrease on a full year basis was primarily due to the adoption of IFRS 16 which was partially offset by lower than normal operating expenses in the second half of last year.

• Higher amortization was due to increased depreciation expense related to leasehold improvements and leases that were capitalized on the adoption of IFRS 16.

     18 

Dividends

The following dividends were declared by the Company during the year ended December 31, 2019:

Record date	Payment Date	Cash dividend per share ($)		Total dividend amount (in thousands $)
March 08, 2019 - Regular Dividend Q4 - 2018	March 25, 2019		0.03		7,602
May 21, 2019 - Regular Dividend Q1 - 2019	June 5, 2019		0.03		7,605
August 19, 2019 - Regular Dividend Q2 - 2019	September 3, 2019		0.03		7,614
November 18, 2019 - Regular Dividend Q3 - 2019	December 3, 2019		0.03		7,614
Dividends (1)					30,435

⁽¹⁾ Subsequent to year-end, on February 27, 2020, a regular dividend of $0.03 per common share was declared for the quarter ended December 31, 2019. This dividend is payable on March 24, 2020 to shareholders of record at the close of business on March 9, 2020.

Capital Stock

Including the 9 million unvested common shares currently held in the EPSP Trust (December 31, 2018 - 9.9 million), total capital stock issued and outstanding was 253.1 million (December 31, 2018 - 253 million).

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 were $0.01 and $0.06 for the quarter and twelve months ended respectively, compared to $0.04 and $0.13 in the respective prior periods. Diluted earnings per share were $0.01 and $0.05 for the quarter and twelve months ended respectively, compared to $0.04 and $0.12 in the respective prior periods. 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 3.3 million stock options are outstanding pursuant to our stock option plan, of which 2.6 million are exercisable.

     19 

Liquidity and Capital Resources

As at December 31, 2019, the Company had $20 million (December 31, 2018 - $Nil) outstanding on its credit facility, $5 million of which is due within 12 months and $15 million is due after 12 months (December 31, 2018 - $Nil and $Nil respectively).

The Company has a 5 year, $90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a $25 million term loan and a $65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. In the first quarter, the Company drew $25 million on the term loan portion of the credit facility to avoid its expiry and to partially fund anticipated growth in the business over the next 12-18 months. As at December 31, 2019, the Company was in compliance with all covenants, terms and conditions under the credit facility. Key terms under the credit facility are noted below:

Structure

◦ 5-year, $65 million revolver with "bullet maturity" December 31, 2022

◦ 5-year, $25 million term loan with 5% of principal amortizing quarterly, with the remaining balance maturing on December 31, 2022

Interest Rate

◦ Prime rate + 0 bps or;

◦ Banker Acceptance Rate + 170 bps

Covenant Terms

◦ Minimum AUM: $8.2 billion

◦ Debt to EBITDA less than 2.5:1

◦ EBITDA to interest expense more than 2.5:1

Commitments

Besides the Company's long-term lease agreements, there may be commitments to make co-investments in lending LPs arising from our lending segment or commitments to make investments in the net investments portfolio of the Company. As at December 31, 2019, the Company had $8.6 million in co-investment commitments from the lending segment (December 31, 2018 - $38.7 million).

     20 

Significant Accounting Judgments, Estimates and Changes in Accounting Policies

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 annual 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. The use of unobservable inputs can involve significant judgment and materially affect the reported fair value of financial instruments.

Share-based payments

The Company measures the cost of share-based payments to employees by reference to the fair value of the equity instruments at the date on which they are granted. Estimating fair value for share-based payments requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including (in the case of options grants) the expected life of the option, expected volatility, and expected dividend yields, and in the case of performance-based equity grants, the probability of a subsidiary or executive attaining certain performance targets, the future stock price of the Company and the future employment of a senior employee.

Deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent it is probable that sufficient taxable profit will be generated in order to utilize the losses. In addition, taxable income is subject to estimation as a portion of performance fee and carried interest revenue is an allocation of partnership income. Such allocations involve a certain degree of estimation and income tax estimates could change as a result of: (i) changes in tax laws and regulations, both domestic and foreign; (ii) an amendment to the calculation of partnership income allocation; or (iii) a change in foreign affiliate rules. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized based on the likely timing and the level of future taxable profits together with future tax planning strategies.

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 annual 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. Values associated with goodwill and intangibles involve estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates 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.

     21 

Change in accounting policies

On January 1, 2019, the Company adopted IFRS 16 and IFRIC 23 Uncertainty over Income Tax Treatments ("IFRIC 23"). As a result, the Company changed its accounting policies. As permitted by the transition provision of IFRS 16, the Company elected not to restate comparative period results. Accordingly, all comparative period information is presented in accordance with previous accounting policies. For a summary of the impact of the adoption of IFRS 16, see Note 2 of the annual financial statements. The adoption of IFRIC 23 did not have a material impact on the Company's annual financial statements.

Managing Risk: Financial

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 interests 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 instrument assets. The Company’s earnings, particularly through its lending 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

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 Canadian dollars. The Company's primary foreign currency is the United States Dollar ("USD"). 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 legacy loan book and co-investments in lending LPs and its net investments portfolio.

Loans receivable

The Company incurs credit risk primarily in the on-balance sheet loans of its lending segment and through co-investments made in the lending LPs of the lending segment. In addition to the relative default probability of borrowers (both directly via on balance sheet loans and indirectly via borrowers of the lending LPs we co-invest with), credit risk is also dependent on loss given default, which can increase credit risk if the values of the underlying assets securing the Company's loans and co-investments decline to levels approaching or below the loan amounts. A decrease in commodity prices may delay the development of the underlying security or business plans of the borrower and could adversely affect the value of the Company's security against a loan. Additionally, the value of the Company's underlying security in a loan can be negatively affected if the actual amount or quality of the commodity proves to be less than originally estimated, or the ability to extract the commodity proves to be more difficult or more costly than originally estimated. 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 managed.

     22 

Collectability of loans

Besides the above noted measures we take to manage credit risk, the Company will report on credit risk in the notes to the annual financial statements and records expected credit loss provisions to ensure that on-balance sheet loans are recorded at their estimated recoverable amount (i.e. net of impairment risk we believe to exist as at the balance sheet date and in accordance with IFRS). Actual losses incurred in the on-balance sheet loan portfolio could differ materially from our provisions. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed.

Net 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 accounts receivable relate to management fees, carried interest and performance fees receivable from the funds, managed accounts and managed companies 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 $90 million committed line of credit with a major Canadian schedule I chartered bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months.

The Company's exposure to liquidity risk as it relates to our co-investments in lending LPs arises from fluctuations in cash flows from making capital calls and receiving capital distributions. The Company manages its loan 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 and employee bonuses 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 (e.g. dividend payments) 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 and through its broader treasury risk management program. To meet any liquidity shortfalls, actions taken by the Company could include: syndicating a portion of its loans; slowing its lending activities; cutting its dividend; drawing on the line of credit; liquidating net investments; and/or issuing common shares.

Concentration risk

A significant portion of the Company's AUM as well as its net investments and loans are focused on the natural resource sector, and in particular, precious metals related investments and transactions. In addition, from time-to-time, certain net investment and loan positions 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.

     23 

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.

Consistent with National Instrument 52-109, the Company's CEO and CFO evaluate quarterly the DC&P and ICFR. As at December 31, 2019, the Company's CEO and CFO concluded that the Company's DC&P and ICFR were properly designed and were operating effectively. In addition, there were no material changes to ICFR during the quarter.

Managing Risk: Non-financial

Managing Risk: Non-financial

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.

Independent Review Committee

National Instrument 81-107 - Independent Review Committee for Investment Funds (“NI 81-107”) requires all publicly offered investment funds 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 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 mutual 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, IIROC, FINRA and the U.S. Securities and Exchange Commission ("SEC").

Additional information relating to the Company, including the Company's Annual Information Form is available on SEDAR at www.sedar.com

     24 

EX-99.24

Exhibit 99.24

Consolidated Financial Statements

Year ended December 31, 2019 

 

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 year ended December 31, 2019. The consolidated financial statements were prepared by management in accordance with International Financial Reporting Standards. 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 significant accounting policies 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 (the "Board of Directors") of the Company appoints the Company's audit and risk committee (the "Audit & Risk 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.

Peter Grosskopf	Kevin Hibbert, FCPA, FCA
Chief Executive Officer	Chief Financial Officer and Senior Managing Director
February 27, 2020

     2 

KPMG LLP	Telephone (416) 777-8500
Chartered Professional Accountants	Fax (416) 777-8818
Bay Adelaide Centre	www.kpmg.ca
Suite 4600
333 Bay Street
Toronto, ON M5H 2S5

Independent Auditors' Report

To the Shareholders of Sprott Inc.

Opinion

We have audited the consolidated financial statements of Sprott Inc. (the "Company"), which comprise:

• the consolidated balance sheets as at December 31, 2019 and 2018;

• the consolidated statements of operations and comprehensive income for the years then ended;

• the consolidated statements of changes in shareholders’ equity for the years then ended;

• the consolidated statements of cash flows for the years then ended;

• and notes to the consolidated financial statements, including a summary of significant accounting policies.

(hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the "Auditors’ Responsibilities for the Audit of the Financial Statements" section of our auditors’ report.

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG

network of independent member firms affiliated with KPMG International Cooperative

("KPMG International"), a Swiss entity.

KPMG Canada provides services to KPMG LLP.

Page2

Other Information

Management is responsible for the other information. Other information comprises:

• the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions.

• the information, other than the financial statements and the auditors’ report thereon, included in a document likely to be entitled "Annual Report 2019".

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We obtained the information, other than the financial statements and the auditors’ report thereon, included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions and the "Annual Report 2019" as at the date of this auditors’ report.

If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditors’ report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company‘s financial reporting process.

Page3

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control;

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

• conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern;

Page4

• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represents the underlying transactions and events in a manner that achieves fair presentation;

• communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit;

• provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards; and

• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

 

Chartered Professional Accountants, Licensed Public Accountants

The engagement partner on the audit resulting in this auditors' report is James Loewen.

February 27, 2020

Toronto, Canada

CONSOLIDATED BALANCE SHEETS

As at		Dec. 31			Dec. 31
(In thousands of Canadian dollars)		2019			2018
Assets
Current
Cash and cash equivalents			71,495			47,252
Fees receivable			11,338			8,635
Loans receivable	(Note 6)		—			15,275
Proprietary investments	(Notes 3 and 10)		22,847			26,711
Other assets	(Note 7)		16,951			10,774
Income taxes recoverable			1,879			2,379
Total current assets			124,510			111,026
Loans receivable	(Note 6)		—			20,746
Long-term investments	(Note 3)		97,300			102,560
Other assets	(Note 7)		1,780			1,214
Property and equipment, net	(Note 4)		21,195			12,334
Intangible assets	(Note 5)		148,975			148,324
Goodwill	(Note 5)		25,006			26,115
Deferred income taxes	(Note 9)		5,578			5,896
			299,834			317,189
Total assets			424,344			428,215
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities			30,843			41,641
Compensation payable			9,027			9,466
Obligations related to securities sold short	(Notes 3 and 10)		—			255
Loan facility	(Note 15)		5,000			—
Income taxes payable			1,054			607
Total current liabilities			45,924			51,969
Other accrued liabilities			5,546			—
Loan facility	(Note 15)		15,000			—
Deferred income taxes	(Note 9)		3,152			3,125
Total liabilities			69,622			55,094
Shareholders' equity
Capital stock	(Note 8)		413,114			412,938
Contributed surplus	(Note 8)		43,672			43,383
Deficit			(134,104	)		(117,201	)
Accumulated other comprehensive income			32,040			34,001
Total shareholders' equity			354,722			373,121
Total liabilities and shareholders' equity			424,344			428,215
Commitments and provisions	(Notes 16 and 17)

The accompanying notes form part of the consolidated financial statements

"Ron Dewhurst"	"Sharon Ranson, FCPA, FCA"
Director	Director

     7 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

		For the years ended
		Dec. 31			Dec. 31
(In thousands of Canadian dollars, except for per share amounts)		2019			2018
Revenues
Management fees			54,957			55,519
Carried interest and performance fees			2,391			1,802
Commissions			25,522			27,360
Finance income			15,170			15,427
Gain (loss) on net investments	(Note 3)		(1,401	)		(2,942	)
Other income (loss)	(Note 7)		(438	)		12,103
Total revenue			96,201			109,269
Expenses
Compensation			39,596			40,072
Stock-based compensation	(Note 8)		7,149			12,358
Trailer and sub-advisor fees			1,429			179
Placement and referral fees			1,136			943
Selling, general and administrative			16,556			17,066
Interest expense			1,373			419
Amortization of intangibles	(Note 5)		1,167			1,431
Amortization of property and equipment	(Note 4)		3,866			768
Other expenses	(Note 7)		6,778			3,376
Total expenses			79,050			76,612
Income before income taxes for the period			17,151			32,657
Provision (recovery) for income taxes	(Note 9)		3,619			1,278
Net income for the period			13,532			31,379
Basic earnings per share	(Note 8)	$	0.06		$	0.13
Diluted earnings per share	(Note 8)	$	0.05		$	0.12
Net income for the period			13,532			31,379
Other comprehensive income (loss)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation gain (loss) on foreign operations (taxes of $Nil)			(1,961	)		4,328
Total other comprehensive income (loss)			(1,961	)		4,328
Comprehensive income			11,571			35,707

The accompanying notes form part of the consolidated financial statements

     8 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(In thousands of Canadian dollars, other than number of shares)		Number of Shares Outstanding			Capital Stock			Contributed Surplus			Deficit			Accumulated Other Comprehensive Income			Total  Equity
At Dec. 31, 2018			243,062,337			412,938			43,383			(117,201	)		34,001			373,121
Shares acquired for equity incentive plan	(Note 8)		(1,826,124	)		(6,479	)		—			—			—			(6,479	)
Shares released on vesting of equity incentive plan	(Note 8)		2,803,998			6,535			(6,535	)		—			—			—
Shares acquired and canceled under normal course issuer bid	(Note 8)		(740,600	)		(2,266	)		—			—			—			(2,266	)
Foreign currency translation loss on foreign operations			—			—			—			—			(1,961	)		(1,961	)
Stock-based compensation	(Note 8)		—			—			7,149			—			—			7,149
Issuance of share capital on conversion of RSUs and other share based considerations	(Note 8)		815,289			2,191			(325	)		—			—			1,866
Dividends declared	(Note 12)		61,519			195			—			(30,435	)		—			(30,240	)
Net income			—			—			—			13,532			—			13,532
Balance, Dec. 31, 2019			244,176,419			413,114			43,672			(134,104	)		32,040			354,722
At Dec. 31, 2017			234,098,634			392,556			39,907			(118,272	)		29,673			343,864
IFRS 9 transition adjustment			—			—			—			(50	)		—			(50	)
Shares acquired for equity incentive plan			(2,402,500	)		(7,161	)		—			—			—			(7,161	)
Shares released on vesting of equity incentive plan			2,836,201			6,446			(6,446	)		—			—			—
Shares released on exercise of stock option plan			558,048			1,217			(1,217	)								—
Foreign currency translation loss on foreign operations			—			—			—			—			4,328			4,328
Issuance of share capital on purchase of management contracts			6,997,387			17,284			—			—			—			17,284
Stock-based compensation			—			—			12,358			—			—			12,358
Issuance of share capital on conversion of RSUs and other share based considerations			635,939			1,581			(1,219	)		—			—			362
Dividends declared			338,628			1,015			—			(30,258	)		—			(29,243	)
Net income			—			—			—			31,379			—			31,379
Balance, Dec. 31, 2018			243,062,337			412,938			43,383			(117,201	)		34,001			373,121

The accompanying notes form part of the consolidated financial statements

     9 

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the years ended
	Dec. 31			Dec. 31
(In thousands of Canadian dollars)	2019			2018
Operating Activities
Net income for the period		13,532			31,379
Add (deduct) non-cash items:
Loss (gain) on net proprietary investments		1,401			2,942
Stock-based compensation		7,149			12,358
Amortization of property, equipment and intangible assets		5,033			2,199
Current portion of lease liability		(2,133	)		—
Deferred income tax recovery		303			1,022
Current income tax expense		3,316			256
Other items		172			(435	)
Income taxes paid		(2,437	)		(3,852	)
Changes in:
Fees receivable		(2,703	)		5,141
Loans receivable		36,021			12,652
Other assets		(6,743	)		12,621
Accounts payable, accrued liabilities and compensation payable		(11,237	)		14,728
Cash provided by operating activities		41,674			91,011
Investing Activities
Purchase of investments		(45,383	)		(79,267	)
Sale of investments		50,370			37,077
Purchase of property and equipment		(2,952	)		(7,805	)
Purchase of intangible assets		—			(115,719	)
Cash provided by (used in) investing activities		2,035			(165,714	)
Financing Activities
Acquisition of common shares for equity incentive plan		(6,479	)		(7,161	)
Acquisition of common shares under normal course issuer bid		(2,266	)		—
Net advances from loan facility		20,000			—
Dividends paid		(30,240	)		(29,243	)
Cash provided by (used in) financing activities		(18,985	)		(36,404	)
Effect of foreign exchange on cash balances		(481	)		2,239
Net increase (decrease) in cash and cash equivalents during the year		24,243			(108,868	)
Cash and cash equivalents, beginning of the year		47,252			156,120
Cash and cash equivalents, end of the year		71,495			47,252
Cash and cash equivalents:
Cash		66,240			41,999
Short-term deposits		5,255			5,253
		71,495			47,252
Supplementary disclosure of cash flow information
Amount of interest received during the year		5,301			8,689

The accompanying notes form part of the consolidated financial statements

     10 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

These annual audited consolidated financial statements for the years ended December 31, 2019 and 2018 ("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 27, 2020 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 financial assets and financial liabilities classified as fair value through profit or loss ("FVTPL") or fair value through other comprehensive income ("FVOCI"), both of which have been measured at fair value. The financial statements are presented in Canadian 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 over the same reporting period as the Company and are based on accounting policies consistent with that of the Company.

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.

The Company currently controls the following principal subsidiaries:

• Sprott Asset Management LP ("SAM");

• Sprott Capital Partners LP ("SCP");

• Sprott Consulting LP ("SC");

• Sprott Asia LP ("Sprott Asia") and Sprott Korea Corporation ("Sprott Korea");

• Sprott U.S. Holdings Inc. ("SUSHI"), parent of: (1) Rule Investments Inc. ("RII"); (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 "Global" in these financial statements;

• Sprott Resource Lending Corp. ("SRLC");

• Sprott Inc. 2011 Employee Profit Sharing Plan Trust (the "Trust")

     11 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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.

Proprietary investments

Proprietary investments are investments held with the primary intention of short-term liquidity and capital management.

Long-term investments

Long-term investments are investments held for strategic purposes rather than for short-term liquidity and capital management purposes. Long-term investments classification reflects strategic positions held with the intention of seeding and building the next generation of investment products and services consistent with the long-term strategic objectives of the Company. These investments primarily include co-investments in strategically important investment funds, joint-venture interests or equity stakes in other entities.

Financial Instruments

Classification and measurement of Financial Assets

Financial assets are measured at initial recognition at fair value, and are classified and subsequently measured at FVTPL, amortized cost or 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 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 OCI.

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.

Valuation of Investments

Both Proprietary investments and Long-term investments include public equities, share purchase warrants, fixed income securities, mutual fund and alternative investment strategies, co-investments in funds and private holdings. 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 which 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 in the private companies determined 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 gains (loss) on net investments on the consolidated statements of operations and comprehensive income.

     12 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 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 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.

At each reporting date, management assesses the probability of default and the loss given default using economic and market trends, quoted credit rating of the borrower, market value of the asset, and appraisals, if any, of the security underlying the loan. The impairment is then classified into three stages:

• Stage 1 - For Loans where credit risk has not increased significantly, an impairment is recognized equal to the credit losses expected to result from defaults occurring over the following twelve months.

• Stage 2 - For Loans where credit risk has increased significantly, an impairment is recognized equal to the credit losses expected to result from defaults occurring over the life of the loan.

• Stage 3 - For Loans which are credit impaired, a loss allowance is recognized equal to the expected credit losses over the expected lifetime of the Loan. Any subsequent recognition of finance income for which an expected credit loss provision exists, is calculated at the discount rate used in determining the provision, which may differ from the contractual rate of interest.

Loans receivable

Loans receivable are financial assets with fixed or determinable payments that are held solely for payments of principal and interest on the principal amount outstanding and are held within a business model whose objective is to hold assets to collect contractual cash flows. Loans receivable are measured at amortized cost.

Fees received for originating loans are considered an integral part of the yield earned on the loan and are recognized in finance income over the term of the loan using the effective interest method. Fees received may include cash payments and/or securities in the borrower.

     13 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 in 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 interest income and co-investment income, 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 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 with finite lives are amortized over the useful economic life and assessed for impairment indicators at each reporting date, or more frequently if changes in circumstances indicate that the carrying value may be impaired. 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 may be impaired. 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.

Any loss resulting from 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.

     14 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 sheet 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;

• 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.

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.

     15 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 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 and diluted earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the period.

The Company applies 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.

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 Global Companies, which uses the U.S. dollar as its functional currency. Accordingly, the assets and liabilities of Global Companies 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 Global 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.

Leases

Changes in accounting policies

The Company adopted IFRS 16 Leases (“IFRS 16”) during the year. As permitted by the transition provisions of IFRS 16, the Company applied a modified retrospective approach. Accordingly, the Company elected not to restate comparative period results and there was no impact to opening retained earnings. Below is a summary of the IFRS 16 impacts.

Lease Commitments

The Company recognizes a right-to-use asset and a lease liability as at the lease commencement date. The right-to-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. Upon transition to IFRS 16, a right-to-use asset and lease liability of $9.8 million were recorded. The right-to-use asset is presented on the property and equipment line of the consolidated balance sheet and the short and long-term portions of the lease liability are presented on the accounts payable and accrued liabilities line and other accrued liabilities line, respectively, of the consolidated balance sheet. The Company used the practical expedient when applying IFRS 16 for short-term leases under 12 months and low-value assets such as IT equipment, with lease payments being expensed as they are occurred.

     16 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Prior to the adoption of IFRS 16, the Company classified its lease obligation as operating leases, with the lease payments being presented within the selling, general and administrative line of the consolidated statements of operations. Upon transition to IFRS 16, the right-to-use asset is amortized on a straight-line basis over the term of the lease with the amortization expense being presented on the amortization of property and equipment line of the consolidated statements of operations. The lease liability is subsequently remeasured at amortized cost using the effective interest rate method, with the interest charge on the incremental borrowing rate being presented on the interest expense line of the consolidated statements of operations.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to management. Management is responsible for allocating resources and assessing performance of the operating segments to make strategic decisions.

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. The use of unobservable inputs can involve significant judgment and materially affect the reported fair value of financial instruments.

Expected credit loss

Due to the nature of provisions, a considerable part of their determination is based on estimates and judgments, including assumptions concerning the likelihood of future events occurring. The actual outcome of these uncertain events may be materially different from provisions recorded on the Company's financial statements. With regard to loan impairments, management exercises judgment to determine the expected credit loss, the probability of default and loss given default.

Share-based payments

The Company measures the cost of share-based payments to employees by reference to the fair value of the equity instruments at the date on which they are granted. Estimating fair value for share-based payments requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including (in the case of options grants) the expected life of the option, volatility, and dividend yields, (and in the case of performance-based equity grants), the probability of a subsidiary or executive attaining certain performance targets, the future stock price of the Company and the future employment of senior employees.

Deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent it is probable that sufficient taxable profit will be generated in order to utilize the losses. In addition, taxable income is subject to estimation as a portion of performance fee revenue is an allocation of partnership income. Such allocations involve a certain degree of estimation and income tax estimates could change as a result of: (i) changes in tax laws and regulations, both domestic and foreign; (ii) an amendment to the calculation of partnership income allocation; or (iii) a change in foreign affiliate rules. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized based on the likely timing and the level of future taxable profits together with future tax planning strategies.

     17 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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. Values associated with goodwill and intangibles involve estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates 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.

     18 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

3 PROPRIETARY INVESTMENTS, OBLIGATIONS RELATED TO SECURITIES SOLD SHORT AND LONG-TERM INVESTMENTS

Proprietary investments and Obligations related to securities sold short

Consist of the following (in thousands $):

	Classification and measurement criteria	Dec. 31, 2019		Dec. 31, 2018
Public equities and share purchase warrants	FVTPL		13,738		19,066
Fixed income securities	FVTPL		5,511		2,796
Private holdings:
- Private investments	FVTPL		2,434		2,830
- Energy contracts	Non-financial instrument		1,164		2,019
Total proprietary investments			22,847		26,711
Obligations related to securities sold short	FVTPL		—		255

Long-term investments

Consists of the following (in thousands $):

	Classification and measurement criteria	Dec. 31, 2019		Dec. 31, 2018
Co-investments in funds	FVTPL		72,602		77,615
Private holdings
- Private investments	FVTPL		24,698		24,945
Total long-term investments			97,300		102,560

Gains and losses on financial assets and liabilities classified at FVTPL are included in the gain (loss) on net investments on the consolidated statements of operations.

     19 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

4 PROPERTY AND EQUIPMENT

Consist of the following (in thousands $):

	Artwork		Furniture and fixtures			Computer hardware and software			Right of use assets and Leasehold improvements			Total
Cost
At December 31, 2017		2,996		3,148			2,619			3,939			12,702
Disposal on Sale Transaction		—		(28	)		(54	)		(28	)		(110	)
Additions		6,605		2			946			252			7,805
Net exchange differences		—		44			53			34			131
At December 31, 2018		9,601		3,166			3,564			4,197			20,528
Additions		—		146			—			12,679			12,825
Net exchange differences		—		(12	)		(30	)		(139	)		(181	)
At December 31, 2019		9,601		3,300			3,534			16,737			33,172
Accumulated amortization
At December 31, 2017		—		(3,077	)		(2,564	)		(1,762	)		(7,403	)
Disposal on Sale Transaction		—		28			44			18			90
Charge for the year		—		(27	)		(297	)		(444	)		(768	)
Net exchange differences		—		(44	)		(46	)		(23	)		(113	)
At December 31, 2018		—		(3,120	)		(2,863	)		(2,211	)		(8,194	)
Charge for the year		—		(58	)		(442	)		(3,366	)		(3,866	)
Net exchange differences		—		41			27			15			83
At December 31, 2019		—		(3,137	)		(3,278	)		(5,562	)		(11,977	)
Net book value at:
December 31, 2018		9,601		46			701			1,986			12,334
December 31, 2019		9,601		163			256			11,175			21,195

     20 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

5 GOODWILL AND INTANGIBLE ASSETS

Consist of the following (in thousands $):

	Goodwill			Fund management contracts (indefinite life)			Fund management contracts (finite life)			Total
Cost
At December 31, 2017		166,882			—			47,416			214,298
Additions		—			133,303			—			133,303
Net exchange differences		13,482			—			—			13,482
At December 31, 2018		180,364			133,303			47,416			361,083
Additions		—			1,830			—			1,830
Net exchange differences		(7,142	)		(12	)		—			(7,154	)
At December 31, 2019		173,222			135,121			47,416			355,759
Accumulated amortization
At December 31, 2017		(142,859	)		—			(30,964	)		(173,823	)
Amortization charge for the period		—			—			(1,431	)		(1,431	)
Net exchange differences		(11,390	)		—			—			(11,390	)
At December 31, 2018		(154,249	)		—			(32,395	)		(186,644	)
Amortization charge for the period		—			—			(1,167	)		(1,167	)
Net exchange differences		6,033			—			—			6,033
At December 31, 2019		(148,216	)		—			(33,562	)		(181,778	)
Net book value at:
December 31, 2018		26,115			133,303			15,021			174,439
December 31, 2019		25,006			135,121			13,854			173,981

     21 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Impairment assessment of goodwill

Previously, the Company reported seven cash generating units ("CGU") for goodwill impairment assessment and testing purposes:

• Exchange Listed Products

• Alternative Asset Management

• Global

• Lending

• Consulting

• Merchant Banking & Advisory

• Corporate

During the first quarter of 2019, as the Company completed the reorganization of its reportable segments, the assets that were previously aggregated to create the global CGU no longer met the requirements of a CGU as they no longer generated independent cash flows. As a result, these assets were disaggregated from the global CGU, and were reallocated to existing CGUs with similar assets that generate largely independent cash flows (brokerage assets within the brokerage CGU and fixed term LP assets within the managed equities CGU). The Company CGUs are now as follows:

• Exchange Listed Products

• Lending

• Managed Equities

• Brokerage

• Corporate

As at December 31, 2019, the Company had allocated $25 million (December 31, 2018 - $26.1 million) of goodwill on a relative value approach basis to the exchange listed products and managed equities CGUs (previously called the alternative asset management CGU).

In the normal course, goodwill is 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. During the impairment testing process, there was no impairment in either the exchange listed products CGU or the managed equities CGU.

Impairment assessment of indefinite life fund management contracts

As at December 31, 2019, the Company had an exchange listed fund management contract within the exchange listed products CGU of $135.1 million related to Central Fund of Canada (December 31, 2018 - $133.3 million). The addition during the year was for integration costs. There was no impairment as at December 31, 2019.

Impairment assessment of finite life fund management contracts

As at December 31, 2019, the Company had exchange listed fund management contracts within the exchange listed products CGU of $13.9 million (December 31, 2018 - $15 million). There was no impairment as at December 31, 2019.

     22 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

6 LOANS RECEIVABLE

Components of loans receivable

Loans are reported at their amortized cost using the effective interest method. Loans are reported net of any expected credit loss provisions on the expected credit loss provisions line of the consolidated statements of operations. Total carrying value consists of the following (in thousands $):

	Dec. 31, 2019		Dec. 31, 2018
Loans
Loan principal		—		37,873
Accrued interest		—		14
Deferred revenue		—		(1,816	)
Amortized cost		—		36,071
Expected credit loss provision		—		(50	)
Less: current portion		—		(15,275	)
Total carrying value of non-current loans receivable		—		20,746

Expected credit losses ("ECL")

When a loan is classified as impaired, the original expected timing and amount of future cash flows may be revised to reflect new circumstances. These revised cash flows are discounted using the original effective interest rate to determine the net realizable value of the loan. Finance income is thereafter recognized on this net realizable value using the original effective interest rate. Additional changes to the amount or timing of future cash flows could result in further losses, or the reversal of previous losses, which would also impact the amount of subsequent finance income recognized.

At each reporting date, the Company performs a comprehensive review of each loan measured at amortized cost in its portfolio to determine the requirements for an ECL provision. As at December 31, 2019, the Company had no loans measured at amortized cost.

Finance income on impaired loans and the changes in expected credit loss provisions are as follows (in thousands $):

	For the years ended
	Dec. 31, 2019			Dec. 31, 2018
Interest on impaired loans		—			—
Expected credit loss provisions
Balance, beginning of the year		50			—
Transition adjustment		—			50
Revised balance, beginning of the year		50			50
Expected credit loss provision (recovery)		(50	)		—
Net exchange differences		—			—
Balance, end of period		—			50

     23 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Sector distribution of loan principal

Distribution of the Company's outstanding loan principal balances by sector:

	Dec. 31, 2019				Dec. 31, 2018
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Metals and mining		—		—		1		34,931
Energy and other		—		—		2		2,942
Total loan principal		—		—		3		37,873

Geographic distribution of loan principal

Distribution of the Company's outstanding loan principal balances by geographic location of the underlying security:

	Dec. 31, 2019				Dec. 31, 2018
	Number of Loans		(in thousands $)		Number of Loans		(in thousands $)
Loans
Canada		—		—		1		1,578
United States of America		—		—		2		36,295
Total loan principal		—		—		3		37,873

     24 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

7 OTHER ASSETS, INCOME AND EXPENSES

Other assets

Consist of the following (in thousands $):

	Dec. 31, 2019		Dec. 31, 2018
Fund recoveries and investment receivables		7,772		4,722
Deferred Tocqueville acquisition costs(1)		2,358		—
Prepaid expenses		5,687		5,369
Other (2)		2,914		1,897
Total Other assets		18,731		11,988

^{(1) Includes legal, proxy and investor relations costs.}

^{(2) Other includes miscellaneous third-party receivables.}

Other income (loss)

Consist of the following (in thousands $):

	For the years ended
	Dec. 31, 2019			Dec. 31, 2018
Net proceeds from sale transaction (1)		—			4,200
Other investment income (2)		826			4,417
Foreign exchange gain (losses)		(1,960	)		2,310
Total Other income (loss) (3)		(1,134	)		10,927

^{(1) Gross proceeds of $5.0 million, net of transaction costs of $0.8 million. This relates to the January 29, 2018 closing of the sale of our non-core private wealth client business.}

^{(2) Primarily includes investment fund income, syndication and trailer fee income.}

^{(3) Excludes royalty income of $0.7 million on a twelve month ended basis (December 31, 2018 - $1.2 million), which is presented net of operating, depletion and impairment charges below.}

Other expenses

Consist of the following (in thousands $):

	For the years ended
	Dec. 31, 2019		Dec. 31, 2018
Costs (recoveries) related to energy assets (1)		756		(28	)
Other (2)		5,326		2,228
Total Other expenses		6,082		2,200

^{(1) Includes operating, depletion and impairment charges, net of royalty income of $0.7 million on a twelve month ended basis (December 31, 2018 - $1.2 million).}

^{(2) Includes non-recurring professional fees and transaction costs.}

     25 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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.

	Number of shares			Stated value  (in thousands $)
At Dec. 31, 2017		234,098,634			392,556
Issuance of share capital under dividend reinvestment program		338,628			1,015
Issuance of share capital on purchase of management contracts		6,997,387			17,284
Released on exercise of stock option plan		558,048			1,217
Issuance of share capital on conversion of RSUs		635,939			1,581
Acquired for equity incentive plan		(2,402,500	)		(7,161	)
Released on vesting of equity incentive plan		2,836,201			6,446
At Dec. 31, 2018		243,062,337			412,938
Issuance of share capital under dividend reinvestment program		61,519			195
Issuance of share capital on conversion of RSUs and other share based considerations		815,289			2,191
Acquired for equity incentive plan		(1,826,124	)		(6,479	)
Acquired and cancelled under normal course issuer bid		(740,600	)		(2,266	)
Released on vesting of equity incentive plan		2,803,998			6,535
At Dec. 31, 2019		244,176,419			413,114

Contributed surplus consists of: stock option expense; earn-out shares expense; equity incentive plans' expense; and additional purchase consideration.

	Stated value (in thousands $)
At Dec. 31, 2017		39,907
Expensing of Stock-based compensation over the vesting period		12,358
Issuance of share capital on conversion of RSUs		(1,219	)
Released on exercise of stock option plan		(1,217	)
Released on vesting of common shares for equity incentive plan		(6,446	)
At Dec. 31, 2018		43,383
Expensing of Stock-based compensation over the vesting period		7,149
Issuance of share capital on conversion of RSUs and other share based considerations		(325	)
Released on vesting of common shares for equity incentive plan		(6,535	)
At Dec. 31, 2019		43,672

     26 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Stock option plan

The Company has an option plan (the "Plan") intended to provide incentives to directors, officers, employees and consultants 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 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 for the twelve months ended December 31, 2019 (twelve months ended December 31, 2018 - 750,000). There were no options exercised for the year ended December 31, 2019 (year ended December 31, 2018 - 2,000,000 options).

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.

A summary of the changes in the Plan is as follows:

	Number of options (in thousands)			Weighted average exercise price ($)
Options outstanding, December 31, 2017		6,975			5.14
Options exercisable, December 31, 2017		5,625			5.79
Options issued		750			2.33
Options exercised		(2,000	)		2.33
Options expired		(2,450	)		10.00
Options outstanding, December 31, 2018		3,275			2.57
Options exercisable, December 31, 2018		1,875			2.70
Options outstanding, December 31, 2019		3,275			2.57
Options exercisable, December 31, 2019		2,575			2.60

Options outstanding and exercisable as at December 31, 2019 are as follows:

Exercise price ($)		Number of outstanding options (in thousands)		Weighted average remaining contractual life (years)		Number of options exercisable (in thousands)
	6.60		150		0.9		150
	2.33		3,000		6.1		2,300
	2.73		125		6.4		125
	2.33 to 6.60		3,275		5.9		2,575

     27 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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; or (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; and (3) from time-to-time, purchases from 2176423 Ontario Ltd., a company controlled by Eric Sprott, pursuant to the terms and conditions of a previously announced share transaction. 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 699,549 RSUs granted during the twelve months ended December 31, 2019 (twelve months ended December 31, 2018 - 2,396,538). The Trust purchased 1.8 million shares in the year ended December 31, 2019 (year ended December 31, 2018 - 2.4 million shares).

	Number of common shares
Common shares held by the Trust, December 31, 2017		10,365,957
Acquired		2,402,500
Released on vesting		(2,836,201	)
Unvested common shares held by the Trust, December 31, 2018		9,932,256
Acquired		1,826,124
Released on vesting		(2,803,998	)
Unvested common shares held by the Trust, December 31, 2019		8,954,382

The table below provides a breakdown of the share-based compensation expense and the corresponding increase to contributed surplus:

	For the years ended
	Dec. 31, 2019		Dec. 31, 2018
Stock option plan		247		424
EPSP / EIP		6,902		11,934
		7,149		12,358

     28 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Basic and diluted earnings per share

The following table presents the calculation of basic and diluted earnings (loss) per common share:

	For the years ended
	Dec. 31, 2019			Dec. 31, 2018
Numerator (in thousands $):
Net income (loss) - basic and diluted		13,532			31,379
Denominator (Number of shares in thousands):
Weighted average number of common shares		253,568			251,848
Weighted average number of unvested shares purchased by the Trust		(9,691	)		(11,656	)
Weighted average number of common shares - basic		243,877			240,192
Weighted average number of dilutive stock options		3,125			3,125
Weighted average number of unvested shares purchased by the Trust		9,691			11,656
Weighted average number of common shares - diluted		256,693			254,973
Net income per common share
Basic	$	0.06		$	0.13
Diluted	$	0.05		$	0.12

Capital management

The Company's objectives when managing capital are:

• 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 for 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). SCP is a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), SAM is a registrant of the Ontario Securities Commission ("OSC") and the U.S. Securities and Exchange Commission ("SEC"), SAM US is registered with the 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. As at December 31, 2019 and 2018, all entities were in compliance with their respective capital requirements.

     29 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

9 INCOME TAXES

The major components of income tax expense are as follows (in thousands $):

	For the years ended
	Dec. 31, 2019		Dec. 31, 2018
Current income tax expense (recovery)
Based on taxable income of the current period		3,163		393
Other		153		(137	)
		3,316		256
Deferred income tax expense (recovery)
Total deferred income tax expense		303		1,022
Income tax expense reported in the consolidated statements of operations		3,619		1,278

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 $):

	For the years ended
	Dec. 31, 2019			Dec. 31, 2018
Income before income taxes		17,151			32,657
Tax calculated at domestic tax rates applicable to profits in the respective countries		4,545			8,631
Tax effects of:
Non-deductible stock-based compensation		139			153
Non-taxable capital (gains) and losses		(62	)		(559	)
Intangibles		115			(388	)
Adjustments in respect of previous periods		153			(137	)
Other temporary differences not benefited		(11	)		(279	)
Non-capital losses not benefited previously		(1,844	)		(6,680	)
Rate differences and other		584			537
Tax charge		3,619			1,278

The weighted average statutory tax rate was 26.5% (December 31, 2018 - 26.4%). The Company has $7 million of capital tax losses from prior years that will begin to expire in 2020. The benefit of these capital losses has not been recognized.

     30 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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, 2019

	Dec. 31, 2018		Recognized in income			Recognized in other comprehensive income			Dec. 31, 2019
Deferred income tax assets
Stock-based compensation		4,300		998			—			5,298
Non-capital losses		5,018		(495	)		(42	)		4,481
Unrealized losses		386		803						1,189
Other		513		(190	)		—			323
Total deferred income tax assets		10,217		1,116			(42	)		11,291
Deferred income tax liabilities
Fund management contracts		7,317		1,873			—			9,190
Proceeds receivable		70		(70	)		—			—
Other		59		(384	)		—			(325	)
Total deferred income tax liabilities		7,446		1,419			—			8,865
Net deferred income tax assets		2,771		(303	)		(42	)		2,426

For the year ended December 31, 2018

	Dec. 31, 2017			Recognized in income			Recognized in other comprehensive income		Dec. 31, 2018
Deferred income tax assets
Other stock-based compensation		2,588			1,712			—		4,300
Non-capital losses		820			4,185			13		5,018
Unrealized losses		481			(95	)		—		386
Other		485			28			—		513
Total deferred income tax assets		4,374			5,830			13		10,217
Deferred income tax liabilities
Fund management contracts		431			6,886			—		7,317
Proceeds receivable		279			(209	)		—		70
Other		(116	)		175			—		59
Total deferred income tax liabilities		594			6,852			—		7,446
Net deferred income tax assets		3,780			(1,022	)		13		2,771

     31 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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, 2019 and 2018 (in thousands $).

Proprietary Investments

Dec. 31, 2019	Level 1		Level 2		Level 3		Total
Public equities and share purchase warrants		9,843		3,895		—		13,738
Fixed income securities		—		4,511		1,000		5,511
Private holdings		—		—		2,434		2,434
Total net recurring fair value measurements		9,843		8,406		3,434		21,683

Dec. 31, 2018	Level 1			Level 2		Level 3		Total
Public equities and share purchase warrants		13,680			5,386		—		19,066
Fixed income securities		—			1,796		1,000		2,796
Private holdings		—			—		2,830		2,830
Obligations related to securities sold short		(255	)		—		—		(255	)
Total net recurring fair value measurements		13,425			7,182		3,830		24,437

Long-term investments

Dec. 31, 2019	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		66,686		5,916		72,602
Private holdings		—		—		24,698		24,698
Total net recurring fair value measurements		—		66,686		30,614		97,300

Dec. 31, 2018	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		72,739		4,876		77,615
Private holdings		—		—		24,945		24,945
Total net recurring fair value measurements		—		72,739		29,821		102,560

     32 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

The following tables provides a summary of changes in the fair value of Level 3 financial assets (in thousands $):

Proprietary Investments

	Changes in the fair value of Level 3 measurements - Dec. 31 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income			Dec. 31, 2019
Private holdings		2,830		45		(57	)		(384	)		2,434
Fixed income securities		1,000		—		—			—			1,000
		3,830		45		(57	)		(384	)		3,434

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		4,269		2,135		(3,680	)		106		2,830
Fixed income securities		—		1,000		—			—		1,000
		4,269		3,135		(3,680	)		106		3,830

Long-term investments

	Changes in the fair value of Level 3 measurements - Dec. 31, 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Dec. 31, 2019
Private holdings		24,945		3,424		—		(3,671	)		24,698
Co-investments in funds		4,876		1,587		—		(547	)		5,916
		29,821		5,011		—		(4,218	)		30,614

	Changes in the fair value of Level 3 measurements - Dec. 31, 2018
	Dec. 31, 2017		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income		Dec. 31, 2018
Private holdings		8,884		11,678		—		4,383		24,945
Co-investments in funds		3,268		1,467		—		141		4,876
		12,152		13,145		—		4,524		29,821

During the year ended December 31, 2019, the Company transferred public equities of $3.6 million (December 31, 2018 - $0.7 million) from Level 2 to Level 1 within the fair value hierarchy due to the release of trading restrictions by the issuer. For the year ended December 31, 2019, the Company purchased level 3 investments of $5.1 million (December 31, 2018 - $16.3 million). For the year ended December 31, 2019, the Company transferred $0.1 million (December 31, 2018 - $Nil) from Level 3 to Level 1 within the fair value hierarchy.

     33 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

The following table presents the valuation techniques used by the Company in measuring fair values:

Type	Valuation Technique
Public equities and share purchase warrants	Fair values are determined using pricing models which incorporate all available market-observable inputs.
Co-investments in funds	Fair values are based on the last available Net Asset Value.
Fixed income securities	Fair values are based on independent market data providers or third-party broker quotes.
Private holdings	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, co-investment in funds and fixed income securities of private companies. The significant unobservable inputs used in these valuation techniques can vary considerably over time, and include grey market financing prices, discount rates and extraction recovery rates of mining projects. 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 $1.2 million (December 31, 2018 - $1.2 million).

Financial instruments not carried at fair value

For fees receivable, other assets, accounts payable and accrued liabilities and compensation payable, the carrying amount represents a reasonable approximation of fair value due to their short term maturity.

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 $):

	For the years ended
	Dec. 31, 2019		Dec. 31, 2018
Fixed salaries and benefits		2,845		3,186
Variable incentive-based compensation		4,494		4,976
Share-based compensation		2,215		4,344
		9,554		12,506

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 123,497 DSUs issued during the year (December 31, 2018 - 123,660).

     34 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

12 DIVIDENDS

The following dividends were declared by the Company during the year ended December 31, 2019:

Record date	Payment Date	Cash dividend per share ($)		Total dividend amount (in thousands $)
March 08, 2019 - Regular Dividend Q4 - 2018	March 25, 2019		0.03		7,602
May 21, 2019 - Regular Dividend Q1 - 2019	June 5, 2019		0.03		7,605
August 19, 2019 - Regular Dividend Q2 - 2019	September 3, 2019		0.03		7,614
November 18, 2019 - Regular Dividend Q3 - 2019	December 3, 2019		0.03		7,614
Dividends (1)					30,435

⁽¹⁾ Subsequent to year-end, on February 27, 2020, a regular dividend of $0.03 per common share was declared for the quarter ended December 31, 2019. This dividend is payable on March 24, 2020 to shareholders of record at the close of business on March 9, 2020.

     35 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

13 RISK MANAGEMENT ACTIVITIES

The Company's exposure to market, credit, liquidity and concentration risk is 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 proprietary investments and loans receivable. 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 proprietary investments and long-term investments will result in changes in carrying value. If the market values of proprietary investments and long-term 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 $5.9 million for the year (December 31, 2018 - $6.4 million). For more details about the Company's proprietary investments and long-term investments, refer to Note 3.

The Company's revenues are also exposed to price risk since management fees, performance fees and carried interests are 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, SC, RCIC and SAM US.

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 instrument assets. The Company’s earnings, particularly through its co-investment in lending LPs, are exposed to volatility as a result of sudden changes in interest rates.

As at December 31, 2019, the Company had $5.5 million of fixed income securities (December 31, 2018 - $2.8 million).

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 Canadian dollars. The Company's primary foreign currency is the United States dollar ("USD"). The Company may employ certain hedging strategies to mitigate foreign currency risk.

The Global Companies' assets are all denominated in USD with their translation impact being reported as part of other comprehensive income in the financial statements. Excluding the impact of the Global Companies, as at December 31, 2019, approximately $96.3 million (December 31, 2018 - $103.3 million) of total Canadian assets were invested in proprietary investments priced in USD. A total of $38.8 million (December 31, 2018 - $17.3 million) of cash, $7.4 million (December 31, 2018 -$1.3 million) of accounts receivable, $Nil (December 31, 2018 - $34.5 million) of loans receivable and $4.8 million (December 31, 2018 - $2.6 million) of other assets were denominated in USD. As at December 31, 2019, if the exchange rate between USD 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 $7.4 million for the year (December 31, 2018 - $7.9 million) and there would be $Nil impact to other comprehensive income (December 31, 2018 - $Nil).

     36 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Credit risk

Credit risk is the risk that a borrower will not honour its commitments and a loss to the Company may result.

Loans receivable

The Company incurs credit risk primarily in the on-balance sheet loans of SRLC and through co-investments made in the lending LPs managed by SRLC. In addition to the relative default probability of SRLC borrowers (both directly via on balance sheet loans and indirectly via borrowers in the lending LPs we co-invest with), credit risk is also dependent on loss given default, which can increase credit risk if the values of the underlying assets securing the Company's loans decline to levels approaching or below the loan amounts. A decrease in commodity prices may delay the development of the underlying security or business plans of the borrower and will adversely affect the value of the Company's security against a loan. Additionally, the value of the Company's underlying security in a loan can be negatively affected if the actual amount or quality of the commodity proves to be less than that originally estimated, or the ability to extract the commodity proves to be more difficult or more costly than originally estimated. 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 Company interests;

• legal reviews that are performed to ensure that all due diligence requirements are met prior to funding.

As at December 31, 2019 had no exposure to credit risk via on-balance sheet loans of SRLC (December 31, 2018 - $36 million). The Company will 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. For precious metal loans, the Company performs the same due diligence procedures as it would for its resource loans and resource debentures.

Collectability of loans

Besides the above noted measures we take to manage credit risk, the Company will report on credit risk in the notes to the annual consolidated financial statements and records expected credit loss provisions to ensure that on-balance sheet loans are recorded at their estimated recoverable amount (i.e. net of impairment risk we believe to exist as at the balance sheet date and in accordance with IFRS). Actual losses incurred in the on-balance sheet loan portfolio could differ materially from our provisions. Management takes into account a number of factors and is committed to several processes to ensure that this risk is appropriately managed.

Net investments

The Company incurs credit risk when entering into, settling and financing various proprietary transactions. As at December 31, 2019 and 2018, the Company's most significant proprietary investments counterparty was National Bank Correspondent Network Inc. ("NBCN"), the carrying broker of SCP, which also acts as a custodian for most of the Company's proprietary investments. NBCN is registered as an investment dealer subject to regulation by IIROC; as a result, it is required to maintain minimum levels of regulatory capital at all times.

     37 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Other

The majority of accounts receivable relate to management, carried interest and performance fees receivable from the Funds, managed accounts and managed companies 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 Global Companies incur credit risk when entering into, settling and financing various proprietary transactions. As at December 31, 2019 and 2018, the Global Companies' 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. 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.

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 $90 million committed line of credit with a major Canadian Schedule I bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months. As at December 31, 2019, the Company had $71.5 million or 17% (December 31, 2018 - $47.3 or 11%) of its total assets in cash and cash equivalents. In addition, approximately $13.7 million or 14% (December 31, 2018 - $19.1 million or 19%) 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 our co-investments in lending LPs arises from fluctuations in cash flows from making capital calls and receiving capital distributions. The Company manages its loan 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, 2019, the Company had $8.6 million in co-investment commitments from the Lending segment (December 31, 2018 - $38.7 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 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: syndicating a portion of its loans; slowing its lending activities; drawing on the line of credit; liquidating proprietary investments and/or issuing common shares.

Concentration risk

The majority of the Company's AUM, as well as its proprietary investments and loans receivables are focused on the natural resource sector, and in particular, precious metals & mining.

     38 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

14 SEGMENTED INFORMATION

For management purposes, the Company is organized into business units based on its products, services and geographical location and has five 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;

• Lending (reportable), which provides lending activities through limited partnership vehicles as well as through direct lending activities using the Company's balance sheet;

• Managed Equities (reportable), which provides asset management and sub-advisory services to the Company's branded funds, fixed-term LPs and managed accounts;

• Brokerage (reportable), which includes the activities of our Canadian and U.S broker-dealers;

• Corporate (reportable), which provides capital, balance sheet management and enterprise shared services to the Company's subsidiaries;

• All Other Segments (non-reportable), which do not meet the definition of reportable segments as per IFRS 8.

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 proprietary investments (as if such gains and losses had not occurred), foreign exchange gains and losses, one time non-recurring expenses, non-cash and non-recurring 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, 2019

	Exchange Listed Products		Lending		Managed Equities		Brokerage		Corporate			Elimination and all other segments			Consolidated
Total revenue		31,666		18,110		18,707		28,123		(2,736	)		2,331			96,201
Total expenses		11,433		9,465		10,869		27,124		13,848			6,311			79,050
Pre-tax Income (loss)		20,233		8,645		7,838		999		(16,584	)		(3,980	)		17,151
Adjusted base EBITDA		23,863		14,236		4,201		4,413		(9,674	)		1,427			38,466

For the year ended December 31, 2018

	Exchange Listed Products		Lending		Managed Equities (1)		Brokerage (1)		Corporate			Elimination and all other segments (1)			Consolidated
Total revenue		33,479		27,702		12,598		32,182		2,472			836			109,269
Total expenses		9.057		7,316		10,142		29,630		14,528			5.939			76,612
Pre-tax Income (loss)		24.422		20,386		2,456		2,552		(12,056	)		(5.103	)		32,657
Adjusted base EBITDA		24,924		15,437		4,571		4,033		(8,982	)		529			40,512

^{(1) Prior year figures have been restated to reflect the changes in operating segments.}

     39 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

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 $):

	For the years ended
	Dec. 31, 2019		Dec. 31, 2018
Canada		82,708		94,719
United States		13,493		14,550
		96,201		109,269

15 LOAN FACILITY

As at December 31, 2019, the Company had $20 million (December 31, 2018 - $Nil) outstanding on its credit facility, $5 million of which is due within 12 months and $15 million is due after 12 months (December 31, 2018 - $Nil and $Nil respectively).

The Company has a 5 year, $90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a $25 million term loan and a $65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. In the first quarter, the Company drew $25 million on the term loan portion of the credit facility to avoid its expiry and to partially fund anticipated growth in the business over the next 12-18 months. As at December 31, 2019, the Company was in compliance with all covenants, terms and conditions under the credit facility. Key terms under the credit facility are noted below:

Structure

◦ 5-year, $65 million revolver with "bullet maturity" December 31, 2022

◦ 5-year, $25 million term loan with 5% of principal amortizing quarterly with the remaining balance maturing on December 31, 2022

Interest Rate

◦ Prime rate + 0 bps or;

◦ Banker Acceptance Rate + 170 bps

Covenant Terms

◦ Minimum AUM: $8.2 billion

◦ Debt to EBITDA less than 2.5:1

◦ EBITDA to interest expense more than 2.5:1

16 COMMITMENTS AND PROVISIONS

Besides the Company's long-term lease agreement, there may be commitments to make investments in the net investments portfolio of the Company. As at December 31, 2019, the Company had $8.6 million in co-investment commitments from the lending segment (December 31, 2018 - $38.7 million).

     40 

SPROTT INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

17. EVENTS AFTER THE REPORTING PERIOD

On January 17, 2020, the Company successfully closed on the acquisition of the Tocqueville Asset Management's gold strategies for proceeds of US$15 million. Contingent consideration valued up to an additional US$35 million is payable subject to the achievement of certain financial performance conditions over two years following the closing of the transaction.

     41 

EX-99.25

Exhibit 99.25

FORM 13-502F1 CLASS 1 AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE MANAGEMENT CERTIFICATION I, Kevin Hibbert , an officer of the reporting issuer noted below have examined this Form 13-502F1 (the Form) being submitted hereunder to the Ontario Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate. (s)Kevin Hibbert February 28, 2020 Name: Date: Title: Reporting Issuer Name: Sprott Inc. End date of previous financial year: December 31, 2019 Type of Reporting Issuer: Class 1 reporting issuer Class 3B reporting issuer Highest Trading Marketplace: TSX (refer to the definition of “highest trading marketplace” under OSC Rule 13-502 Fees) Market value of listed or quoted equity securities: (in Canadian Dollars - refer to section 7.1 of OSC Rule 13-502 Fees) Equity Symbol 1st Specified Trading Period (dd/mm/yy) SII to (refer to the definition of “specified trading period” under OSC 01/01/19 31/03/19 Rule 13-502 Fees) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted $3.03 on the highest trading marketplace (i) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period 253,485,943 (ii) $768,062,407.29 Market value of class or series (i) x (ii) (A) 2nd Specified Trading Period (dd/mm/yy) to (refer to the definition of “specified trading period” under OSC 01/04/2019 30/06/19 Rule 13-502 Fees)

FORM 13-502F1 CLASS 1 AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE MANAGEMENT CERTIFICATION I, Kevin Hibbert , an officer of the reporting issuer noted below have examined this Form 13-502F1 (the Form) being submitted hereunder to the Ontario Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate. (s)Kevin Hibbert February 28, 2020 Name: Date: Title: Reporting Issuer Name: Sprott Inc. End date of previous financial year: December 31, 2019 Type of Reporting Issuer: Class 1 reporting issuer Class 3B reporting issuer Highest Trading Marketplace: TSX (refer to the definition of “highest trading marketplace” under OSC Rule 13-502 Fees) Market value of listed or quoted equity securities: (in Canadian Dollars - refer to section 7.1 of OSC Rule 13-502 Fees) Equity Symbol 1st Specified Trading Period (dd/mm/yy) SII to (refer to the definition of “specified trading period” under OSC 01/01/19 31/03/19 Rule 13-502 Fees) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted $3.03 on the highest trading marketplace (i) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period 253,485,943 (ii) $768,062,407.29 Market value of class or series (i) x (ii) (A) 2nd Specified Trading Period (dd/mm/yy) to (refer to the definition of “specified trading period” under OSC 01/04/2019 30/06/19 Rule 13-502 Fees)

Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted $3.37 on the highest trading marketplace (iii) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period 253,501,512 (iv) (iii) x (iv) $854,300,095.44 Market value of class or series (B) 3rd Specified Trading Period (dd/mm/yy) (refer to the definition of “specified trading period” under OSC Rule 13-502 Fees) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period Market value of class or series 4th Specified Trading Period (dd/mm/yy) 01/07/19 to 30/09/19 $ 3.12 (v) 253,804,511 (vi) (v) x (vi) $791,870,074.32 (C) (refer to the definition of “specified trading period” under OSC 01/10/19 to 31/12/19 Rule 13-502 Fees) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace 2.98 (vii) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period 253,130,798 (viii) (vii) x (viii) $754,329,778.04 Market value of class or series (D) 5th Specified Trading Period (dd/mm/yy) to (if applicable - refer to the definition of “specified trading period” under OSC Rule 13-502 Fees) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted $ (ix) on the highest trading marketplace Number of securities in the class or series of such (x)

EX-99.26

Exhibit 99.26

Note: [01 Mar 2017] – The following is a consolidation of 13-501F1. It incorporates amendments to this document that came into effect on March 1, 2017. This consolidation is provided for your convenience and should not be relied on as authoritative. FORM 13-501F1 CLASS 1 REPORTING ISSUERS AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE MANAGEMENT CERTIFICATION Kevin Hibbert I, , an officer of the reporting issuer noted below have examined this Form 13-501F1 (the Form) being submitted hereunder to the Alberta Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate. Kevin Hibbert February 28, 2020 Name: Kevin Hibbert Date: Title: Chief Financial Officer Reporting Issuer Name: Sprott Inc. End date of previous financial year: December 31, 2019 Type of Reporting Issuer: [ ] Class 1 reporting [ ] Class 3B reporting issuer issuer Highest Trading Marketplace: TSX Market value of listed or quoted equity securities: Equity Symbol 1st Specified Trading Period (dd/mm/yy) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace SII 01/01/19 31/03/19 to 3.03 $ (i) 

 Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period (i) x (ii) Market value of class or series 253,485,943 (ii) 768,062,407.29 $ (A) 2nd Specified Trading Period (dd/mm/yy) 01/04/19 30/06/19 to Closing price of the security in the class or series on the last trading day of the specified trading period in which 3.37 such security was listed or quoted on the highest trading $ marketplace (iii) Number of securities in the class or series of such 253,501,512 security outstanding at the end of the last trading day of the specified trading period (iv) 854,300,095.44 (iii) x (iv) $ Market value of class or series (B) 3rd Specified Trading Period (dd/mm/yy) 01/07/19 30/09/19 to Closing price of the security in the class or series on the last trading day of the specified trading period in which 3.12 such security was listed or quoted on the highest trading $ marketplace (v) Number of securities in the class or series of such 253,804,511 security outstanding at the end of the last trading day of the specified trading period (vi) 791,870,074.32 (v) x (vi) $ Market value of class or series (C)

4th Specified Trading Period (dd/mm/yy) Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period 01/10/2019 31/12/19 to 2.98 $ (vii) 253,130,798 (viii) 754,329,778.04 (vii) x (viii) $ Market value of class or series (D) 5th Specified Trading Period (dd/mm/yy) to Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading $ marketplace (ix) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period (x) (ix) x (x) $ Market value of class or series (E) Average Market Value of Class or Series (Calculate the simple average of the market value of the class or 792,140,588.77 series of security for each applicable specified trading $ period (i.e. A through E above)) (1) (Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary, if applicable) that was listed or quoted on a marketplace at the end of the previous financial year) 

Fair value of outstanding debt securities: (Provide details of how value was determined) $ (2) Capitalization for the previous financial year 792,140,588.77 (1) + (2) $ Participation Fee 19,000.00 $ Late Fee, if applicable $ Total Fee Payable 19,000.00 $ (Participation Fee plus Late Fee)

EX-99.27

Exhibit 99.27

FORM 52 – 109F1

CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

I, Peter Grosskopf, Chief Executive Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the AIF, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Sprott Inc. (the “issuer”) for the financial year ended December

31, 2019;

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings;

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings;

4. Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the financial year end:

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer and I have:

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s

ICFR at the financial year end and the issuer has disclosed in its annual MD&A:

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) N/A

7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on October 1, 2019 and ended on December 31, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

8. Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

Date: February 28, 2020

“Peter Grosskopf”

Name: Peter Grosskopf

Title: Chief Executive Officer

- 2 -

EX-99.28

Exhibit 99.28

FORM 52 – 109F1

CERTIFICATION OF ANNUAL FILINGS FULL CERTIFICATE

I, Kevin Hibbert, Chief Financial Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the AIF, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Sprott Inc. (the “issuer”) for the financial year ended December 31, 2019;

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings;

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings;

4. Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the financial year end:

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer and I have:

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A:

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) N/A

7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on October 1, 2019 and ended on December 31, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

8. Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

Date: February 28, 2020

“Kevin Hibbert”

Name: Kevin Hibbert

Title:Chief Financial Officer

- 2  -

EX-99.29

Exhibit 99.29

Management's Discussion and Analysis

Three months ended March 31, 2020

1

FORWARD LOOKING STATEMENTS

Certain statements in this Management's Discussion & Analysis ("MD&A"), and in particular the "Business Highlights and Growth Initiatives" section and "Outlook" subsection, contain forward-looking information (collectively referred to herein as the "Forward-Looking Statements") within the meaning of applicable 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) outperform general markets and is firmly on an upward trajectory, (ii) gold’s role in investor portfolios will continue to gain broader acceptance, (iii) gold equities will reach new highs over the mid-term; (iv) expectations regarding an increasingly constructive gold and silver pricing environment; (v) expectations regarding deployment of capital called into our lending LPs; (vi) anticipation of flat year-over-year performance in the Brokerage segment; (vii) anticipation of higher year-over-year operating costs (primarily relating to higher SG&A and compensation expense on increased U.S. operating activities) and lower EBITDA contribution from non-reportable segments; (viii) the impact to the Managed Equities segment of the Tocqueville gold strategies asset management business; (ix) the performance of the co-investments in the lending LPs; (x) gold accumulation and new highs as insurance and protection assets; and (xi) the declaration, payment and designation of dividends.

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; and (iv) those assumptions disclosed herein under the heading "Significant Accounting Judgments, Estimates and Changes in Accounting Policies". 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 favourable 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 lending business; (xxvii) risks relating to the Company’s merchant bank and advisory business; (xxviii) those risks described under the heading "Risk Factors" in the Company’s annual information form dated February 27, 2020; and (xxix) those risks described under the headings "Managing Risk: Financial" and "Managing Risk: Non-Financial" 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. As a result of the foregoing, readers should not place undue reliance on the forward-looking statements contained in this MD&A concerning the completion of the acquisition or the timing thereof. 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 Canadian securities laws.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This MD&A of financial condition and results of operations, dated May 7, 2020, presents an analysis of the consolidated financial condition of the Company and its subsidiaries as at March 31, 2020, compared with December 31, 2019, and the consolidated results of operations for the three months ended March 31, 2020, compared with the three months ended March 31, 2019. The Board of Directors approved this MD&A on May 7, 2020. All note references in this MD&A are to the notes to the Company's March 31, 2020 unaudited interim condensed consolidated financial statements ("interim financial statements"), unless otherwise noted. The Company was incorporated under the Business Corporations Act (Ontario) on February 13, 2008.

PRESENTATION OF FINANCIAL INFORMATION

The 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 interim financial statements. While the Company’s functional currency is the Canadian dollar, its presentation currency has switched to US dollars effective January 1, 2020, with the prior period figures restated accordingly. We believe the US dollar better reflects the Company’s consolidated financial position and results of operations given the significance of our revenues denominated in US dollars that further increased in 2020 with the January 17, 2020 close of the Tocqueville Asset Management gold strategies acquisition. Accordingly, all dollar references in this MD&A are in US dollars, unless otherwise specified. The use of the term "prior period" refers to the three months ended March 31, 2019.

2

KEY PERFORMANCE INDICATORS (NON-IFRS 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 are discussed below:

Assets Under Management

Assets Under Management ("AUM") refers to the total net assets managed by the Company through its various investment product offerings, managed accounts and managed companies.

Net Inflows

Net Inflows (consisting of net sales, capital calls and fee earning capital commitments) result in changes to AUM and are described individually below:

Net Sales

Fund sales (net of redemptions), including 'at-the-market' transactions and secondary offerings of our physical trusts and new 'creations' of ETF units, are a key performance indicator as new assets being managed will lead to higher management fees and can potentially lead to increased carried interest and performance fee generation (as applicable) given that AUM is also the basis upon which carried interest and performance fees are calculated.

Capital calls and commitments

Capital calls into our lending LPs are a key source of AUM creation, and ultimately, earnings for the Company. Once capital is called into our lending LPs, it is included within the AUM of the Company as it will now earn a management fee (NOTE: it is possible for some forms of committed capital to earn a commitment fee despite being uncalled, in which case, it will also be included in AUM at that time). Conversely, once loans in our lending LPs are repaid, capital may be returned to investors in the form of a distribution, thereby reducing our AUM ("capital distributions").

Net Fees

Management fees (net of trailer and sub-advisor fees) and carried interest and performance fees (net of carried interest and performance fee payouts) 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, arise primarily from the transaction based service offerings of our brokerage segment.

Compensation

Compensation excludes commissions, carried interest and performance fee payouts, which are presented net of their related revenues in this MD&A, and severance and new hire accruals which are non-recurring.

3

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 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.

Neither EBITDA, adjusted EBITDA or adjusted base EBITDA have 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 and Adjusted base EBITDA measures are determined:

	3 months ended
(in thousands $)	Mar. 31, 2020			Mar. 31, 2019
Net income for the periods		1,062			2,847
Adjustments:
Interest expense		236			244
Provision (recovery) for income taxes		1,865			659
Depreciation and amortization		988			829
EBITDA		4,151			4,579
Other adjustments:
(Gains) losses on investments (1)		4,352			(55	)
Non-cash stock-based compensation		98			1,247
Other expenses (2)		(414	)		1,147
Adjusted EBITDA		8,187			6,918
Other adjustments:
Carried interest and performance fees		—			—
Carried interest and performance fee related expenses		—			—
Adjusted base EBITDA		8,187			6,918
Operating margin (3)		43	%		39	%

⁽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⁾ See Other expenses in Note 6 of the interim financial statements. In addition to the items outlined in Note 6, Other expenses also includes severance and new hire accruals of $0.7 million for the 3 months ended (3 months ended March 31, 2019 - $0.1 million).

⁽³⁾ Calculated as adjusted base EBITDA inclusive of depreciation and amortization, and excluding income related to legacy balance sheet loans. This figure is then divided by revenues, net of direct costs as applicable.

4

BUSINESS OVERVIEW

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 (open-end, closed-end) managed in-house and on a sub-advised basis.

Lending

• The Company's lending activities primarily occur through limited partnership vehicles ("lending LPs").

Brokerage

• The Company's regulated broker-dealer activities (primarily equity origination, corporate advisory, sales and trading activities), in the U.S. and Canada.

Corporate

• Provides the Company's various 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"). See Note 12 of the interim financial statements for further details.

5

For a detailed account of the underlying principal subsidiaries within our reportable business segments, refer to the Company's Annual Information Form and Note 2 of the annual financial statements.

6

BUSINESS HIGHLIGHTS AND GROWTH INITIATIVES

Investment Performance

Market value depreciation was $885 million during the quarter. The Company was impacted by lower silver prices in our exchange listed products and weak equity market valuations in our managed equities fund products that occurred during the last two weeks of March. Subsequent to quarter end, the Company recovered these unrealized losses as silver and global equity markets rebounded from their March lows.

Product and Business Line Expansion

On January 17, 2020, the Company successfully closed on the acquisition of Tocqueville Asset Management's gold strategies ("the Acquisition"). Based on AUM valuations as at January 17, 2020, the Acquisition added approximately $1.7 billion to the Company's total AUM. The Acquisition cost was $15 million ($12.5 million in cash and Sprott Inc. common shares valued at $2.5 million). Contingent consideration valued up to an additional $35 million in cash and Sprott Inc. shares is payable subject to the achievement of certain financial performance conditions over the two years following the closing of the Acquisition.

Other Matters

While the Company’s functional currency is the Canadian dollar, its presentation currency has switched to US dollars effective January 1, 2020, with the prior period figures restated accordingly. We believe the US dollar better reflects the Company’s consolidated financial position and results of operations given the significance of our revenues denominated in US dollars that further increased in 2020 with the January 17, 2020 close of the Acquisition.

7

OUTLOOK

Exchange Listed Products

We expect this segment to benefit from an increasingly constructive gold and silver pricing environment in 2020 as more than 98% of this segment’s AUM is directly or indirectly impacted by gold and silver price changes, net of redemptions.

Managed Equities

The Acquisition contributed approximately $1.7 billion of AUM to this segment as at quarter-end. We anticipate the Acquisition AUM to be immediately accretive to operating margins, net of anticipated near-term redemptions.

Lending

• Effective 2020, this segment’s revenues will be generated primarily from two sources: management fees and co-investment income (included in finance income).

• Our lending strategies had approximately $839 million in AUM at the end of first quarter, earning a blended net management fee rate of approximately 94bps. We expect capital calls (net of capital distributions) in 2020 to be in the range of $100 million to $200 million, based on our lending team's current view of the loan market and their expectations of possible repayments.

Brokerage

We anticipate flat year-over-year performance in this segment.

Corporate & Other Non-reportable Segments

We anticipate higher year-over-year operating costs (primarily relating to higher SG&A and compensation expense on increased U.S. operating activities) and lower EBITDA contribution from non-reportable segments. (see “Elimination and all other segments” column of the segment table in Note 12 of the interim financial statements).

COVID-19

The changing economic and market climate as a result of COVID-19 has led to the Company implementing its business continuity plan. Our portfolio managers, brokerage professionals, enterprise shared services teams and key outsource service providers are fully operational. While the exact impacts of COVID-19 over the short and long-term are undeterminable at the date of this report, management believes the effects of COVID-19 we have witnessed thus far, and in particular, world government responses thereto via fiscal and monetary policy, will continue to be highly constructive to precious metals markets.

8

SUMMARY FINANCIAL INFORMATION

(In thousands $)	Q1 2020			Q4 2019			Q3 2019			Q2 2019			Q1 2019			Q4 2018			Q3 2018			Q2 2018
SUMMARY INCOME STATEMENT
Management fees		15,125			10,685			10,577			9,962			10,195			9,979			10,498			11,279
Carried interest and performance fees		—			1,811			—			—			—			—			—			531
less: Trailer and sub-advisor fees		154			966			50			67			—			29			34			38
less: Carried interest and performance fee payouts		—			86			—			—			—			—			—			276
Net Fees		14,971			11,444			10,527			9,895			10,195			9,950			10,464			11,496
Commissions		5,179			6,599			6,056			3,293			3,315			4,855			3,499			5,823
less: Commission expense		1,870			2,658			2,654			1,356			1,386			2,047			1,872			2,092
Net Commissions		3,309			3,941			3,402			1,937			1,929			2,808			1,627			3,731
Finance income (1)		914			2,481			2,561			3,435			2,946			3,213			3,691			2,551
Gains (losses) on investments		(4,352	)		(1,252	)		600			(408	)		5			5,238			(3,761	)		(2,419	)
Other income (loss)		113			623			91			(194	)		77			173			209			2,389
Total Net Revenues		14,955			17,237			17,181			14,665			15,152			21,382			12,230			17,748
Compensation (2)		7,588			7,371			6,891			5,468			6,306			8,450			6,248			8,238
Compensation - severance and new hire accruals		667			154			169			639			109			29			275			—
Placement and referral fees		86			434			114			251			58			279			171			115
Selling, general and administrative		3,544			2,986			3,175			3,256			3,062			3,157			2,604			3,800
Interest expense		236			269			297			226			244			236			20			12
Amortization and impairment charges		988			1,254			893			819			829			453			350			353
Other expenses		(1,081	)		2,376			(167	)		2,764			1,038			(1,225	)		1,024			157
Total Expenses		12,028			14,844			11,372			13,423			11,646			11,379			10,692			12,675
Net Income		1,062			1,445			4,336			1,581			2,847			7,442			1,511			4,583
Net Income per share		0.01			0.01			0.02			0.01			0.01			0.03			0.01			0.02
Adjusted base EBITDA		8,187			7,441			7,612			7,032			6,918			7,639			7,426			8,279
Adjusted base EBITDA per share		0.03			0.03			0.03			0.03			0.03			0.03			0.03			0.03
Operating margin		43	%		38	%		36	%		39	%		39	%		38	%		36	%		39	%
SUMMARY BALANCE SHEET
Total Assets		318,318			324,943			325,442			338,530			332,504			313,895			310,055			314,214
Total Liabilities		65,945			53,313			51,774			68,008			54,009			40,386			28,185			28,290
Total AUM		10,734,831			9,252,515			8,548,982			8,103,723			7,909,488			7,756,582			7,776,062			8,653,684
Average AUM		11,007,781			8,932,651			8,608,001			7,898,334			7,887,089			7,599,173			7,964,464			8,715,059

⁽¹⁾ Finance income includes: (1) interest income from on-balance sheet loans and brokerage client accounts; (2) co-investment income from lending LP units; and (3) ancillary income earned directly or indirectly from lending activities.

⁽²⁾ See 'Compensation' in the key performance indicators (non-IFRS financial measures) section of this MD&A.

9

SUMMARY MANAGEMENT FEE BREAKDOWN

Below is a detailed list of management fee rates on our fund products as at March 31, 2020 (in millions $):

FUND	AUM		BLENDED NET MANAGEMENT FEE RATE			CARRIED INTEREST & PERFORMANCE FEE CRITERIA
Exchange Listed Products
Sprott Physical Gold Trust		2,954		0.35	%	N/A (1)
Sprott Physical Gold and Silver Trust		2,809		0.40	%	N/A (1)
Sprott Physical Silver Trust		914		0.45	%	N/A (1)
Sprott Gold Miner's ETF		146		0.35	%	N/A (1)
Sprott Physical Platinum & Palladium Trust		121		0.50	%	N/A (1)
Sprott Jr. Gold Miner's ETF		41		0.35	%	N/A (1)
Total		6,985		0.39	%
Managed Equities: Precious Metals Strategies
Sprott Gold Equity Fund		781		0.75	%	N/A
Institutional Accounts		603		0.31	%	0-20% of all net profits in excess of the HWM
Fixed Term Limited Partnerships		195		1.70	%	15-30% over preferred return
Bullion Funds (2)		155		0.33	%	N/A
Corporate Class Funds (2)		86		0.75	%	5% excess over applicable benchmark indices
Gold and Precious Minerals Fund (2)		71		1.00	%	5% excess over applicable benchmark indices
Sprott Hathaway Special Situations Fund		28		1.50	%	20% of net profits over preferred return
Total		1,919		0.69	%
Managed Equities: Other
Sprott U.S. Value Strategies		166		1.00	%	N/A
Flow-through LPs (2)		34		0.70	%	10% of all net profits in excess of the HWM
Legacy Managed Accounts (3)		9		1.00	%	N/A
Total		209		0.95	%
Lending
Sprott private resource lending LPs		839		0.94	%	15-70% of net profits over preferred return
Other
Managed Companies (4)		586		0.50	%	20% of net profits over preferred return
Separately Managed Accounts (5)		197		0.61	%	20% of net profits over preferred return
Total		783		0.53	%
Total AUM		10,735		0.51	%

⁽¹⁾ Exchange listed products do not generate performance fees, however the management fees they generate are closely correlated to precious metals prices.

⁽²⁾ Management fee rate represents the net amount received by the Company.

⁽³⁾ Institutional managed accounts.

⁽⁴⁾ Includes Sprott Korea Corp.

⁽⁵⁾ Includes our private equity strategy in Sprott Asia and high net worth discretionary managed accounts in the U.S.

10

RESULTS OF OPERATIONS

AUM SUMMARY

AUM was $10.7 billion as at March 31, 2020, up $1.5 billion (16%) from December 31, 2019. On a three months ended basis, we benefited from the Acquisition, which added $1.7 billion to our precious metals strategies. We also benefited from strong inflows to our physical trusts and private equity strategies in Asia (see "Other" in the table below). Additionally, we benefited from new capital calls and commitment fee earning assets being added to our lending platform. These increases were partially offset by market value depreciation from lower silver prices and weak equity market valuations that occurred during the last two weeks of March. Subsequent to quarter end, the Company recovered these unrealized losses as silver and global equity markets rebounded from their March lows.

3 months results

(In millions $)	AUM Dec 31, 2019		Net Inflows (1)			Market Value Changes			Other (2)			AUM Mar. 31, 2020
Exchange Listed Products
- Physical Trusts		6,579		474			(255	)		—			6,798
- ETFs		252		(9	)		(56	)		—			187
		6,831		465			(311	)		—			6,985
Managed Equities
- Precious Metals Strategies		601		(30	)		(393	)		1,741			1,919
- Other		350		(4	)		(137	)		—			209
		951		(34	)		(530	)		1,741			2,128
Lending		783		63			(6	)		(1	)		839	(3)
Other		688		133			(38	)		—			783
Total		9,253		627			(885	)		1,740			10,735

⁽¹⁾ See 'Net Inflows' in the key performance indicators (non-IFRS financial measures) section of this MD&A. 

⁽²⁾ Includes new AUM from fund acquisitions and lost AUM from fund divestitures and capital distributions of our lending LPs. 

⁽³⁾ $1.3 billion of committed capital remains uncalled, of which $506 million earns a commitment fee (AUM), and $748 million does not (future AUM).

 

11

  KEY REVENUE LINES   Management fees in the quarter were $15.1 million, up $4.9 million (48%) from the prior period. Net fees were $15 million, up $4.8 million (47%) from the prior period. Net fees increased in the quarter due to the Acquisition in our managed equities segment and strong net inflows in our exchange listed products segment. We also benefited from higher fees in our lending segment as we continue to grow AUM in this area.       Finance Income in the quarter was $0.9 million, down $2 million (69%) from the prior period. Finance income primarily includes interest income from legacy loans, interest income from our co-investments in LP units and other ancillary income earned directly or indirectly from lending activities. Lower finance income in the quarter was primarily due to the repayment of legacy balance sheet loans and higher capital distribution levels in our lending LPs in 2019.   Commission revenues in the quarter were $5.2 million, up $1.9 million (56%) from the prior period. Net Commissions in the quarter were $3.3 million, up $1.4 million (72%) from the prior period. The increase in the quarter was due to improved equity origination, sales and trading activities in our brokerage segment.   KEY EXPENSE LINES   Compensation was $7.6 million, up $1.3 million (20%) from the prior period. The increase in the quarter was primarily due to higher salaries from new hires related to the Acquisition and higher AIP on increased revenues across the Company. These increases were partially offset by lower LTIP amortization.       SG&A was $3.5 million in the quarter, up $0.5 million (16%) from the prior period. The increase was largely from the expansion of our managed equities segment related to the Acquisition.   EARNINGS   Net income in the quarter was $1.1 million, down $1.8 million (63%). Adjusted base EBITDA in the quarter was $8.2 million, up $1.3 million (18%) from the prior period.   Net income was negatively impacted by unrealized losses on our investments. Adjusted base EBITDA benefited from the Acquisition in our managed equities segment and increased fees from strong net flows in our exchange listed products segment. We also benefited from increased commission revenues in our brokerage segment. These increases were partially offset by lower finance income in our lending segment given the repayment of legacy balance sheet loans and higher capital distribution levels in our lending LPs in 2019.

12

ADDITIONAL REVENUES AND EXPENSES Investments losses were mainly due to unrealized market value depreciation of certain equity holdings, co-investments and digital gold strategies. Other income, placement and referral fees were nominal for the quarter and interest expense was largely flat year-over-year. Amortization of intangibles was flat for the quarter and amortization of property and equipment was higher in the quarter mainly due to increased depreciation expense related to a new lease attributable to the Acquisition. Other expenses were lower in the quarter primarily due to FX translation gains in the current period.

BALANCE SHEET Total Assets were $318 million, down $7 million (2%) from December 31, 2019. The decrease was primarily due to a decline in the value of certain investments. Total Liabilities were $66 million, up $13 million (24%) from December 31, 2019. The increase was primarily due to an accrual of contingent consideration related to the Acquisition. Total Shareholder's Equity was $252 million, down $19 million (7%) from December 31, 2019.

13

REPORTABLE OPERATING SEGMENTS

Exchange Listed Products

	3 months ended
(In thousands $)	Mar. 31, 2020			Mar. 31, 2019
SUMMARY INCOME STATEMENT
Management fees		6,872			5,752
Other income (loss)		5			—
Total Revenues		6,877			5,752
Compensation		1,004			790
Selling, general and administrative		607			677
Interest expense		116			206
Amortization and impairment charges		233			239
Other expenses		(1,026	)		268
Total Expenses		934			2,180
Income before income taxes		5,943			3,572
Adjusted base EBITDA		5,282			4,285
Operating margin		75	%		74	%
Total AUM		6,985,240			5,799,618
Average AUM		7,069,230			5,932,553

3 months ended

Income before income taxes in the quarter was $5.9 million, up $2.4 million (66%) from the prior period. Adjusted base EBITDA in the quarter was $5.3 million, up $1 million (23%) from the prior period. Our three months ended results were positively impacted by higher average AUM given strong inflows this quarter which more than offset higher compensation.

14

Managed Equities

	3 months ended
(In thousands $)	Mar. 31, 2020			Mar. 31, 2019
SUMMARY INCOME STATEMENT
Management fees		4,181			1,819
less: Trailer and sub-advisor fees		186			31
Net Fees		3,995			1,788
Gains (losses) on investments		(2,700	)		454
Other income (loss)		71			107
Total Net Revenues		1,366			2,349
Compensation		1,464			1,642
Selling, general and administrative		647			428
Interest expense		82			—
Amortization and impairment charges		50			55
Other expenses		(1,147	)		(52	)
Total Expenses		1,096			2,073
Income before income taxes		270			276
Adjusted base EBITDA		2,053			688
Operating margin		49	%		33	%
Total AUM		2,128,134			836,048
Average AUM		2,416,764			807,073

3 months ended

Income before income taxes was $0.3 million, largely flat for the quarter. Higher management fees related to the Acquisition were largely offset by unrealized market value losses on our co-investments that occurred primarily during the last two weeks of March. Subsequent to quarter end, the Company recovered these unrealized losses as global equity markets rebounded from their March lows. Adjusted base EBITDA in the quarter was $2.1 million, up $1.4 million from the prior period. Adjusted base EBITDA was higher in the quarter as a result of increased management fees from the Acquisition, partially offset by higher SG&A.

15

Lending

	3 months ended
(In thousands $)	Mar. 31, 2020			Mar. 31, 2019
SUMMARY INCOME STATEMENT
Management fees		2,900			1,614
Finance income (1)		800			2,489
Gains (losses) on investments		1,437			(1,076	)
Other income (loss)		38			8
Total Revenues		5,175			3,035
Compensation		1,570			1,022
Placement and referral fees		8			6
Selling, general and administrative		194			89
Interest expense		3			—
Amortization and impairment charges		26			27
Other expenses		(2,324	)		490
Total Expenses		(523	)		1,634
Income before income taxes		5,698			1,401
Adjusted base EBITDA		2,038			3,042
Operating margin		61	%		63	%
Total AUM (2)		839,478			547,210
Average AUM		807,882			425,784

⁽¹⁾ Includes: (1) co-investment income from lending LP units held as part of our co-investment portfolio; and (2) interest income from on-balance sheet loans in the prior period.

⁽²⁾ $1.3 billion of committed capital remains uncalled, of which $506 million earns a commitment fee (AUM), and $748 million does not (future AUM).

3 months ended

Income before income taxes was $5.7 million, up $4.3 million from the prior period. Adjusted base EBITDA in the quarter was $2 million, down $1 million (33%) from the prior period. Higher income before income taxes was primarily due to unrealized market value appreciation of co-investments and FX translation gains in the current period. However, Adjusted base EBITDA was primarily impacted by lower finance income on higher capital distribution levels in 2019 and the full repayment of legacy loans in the third quarter of 2019. Lower finance income more than offset increased management fees in the period.

16

Brokerage

	3 months ended
(In thousands $)	Mar. 31, 2020			Mar. 31, 2019
SUMMARY INCOME STATEMENT
Commissions		4,771			3,238
less: Commission expense		1,870			1,401
Net Commissions		2,901			1,837
Management fees		400			280
Finance income		114			457
Gains (losses) on investments		(217	)		223
Other income		28			16
Total Net Revenues		3,226			2,813
Compensation (1)		1,701			1,810
Placement and referral fees		—			44
Selling, general and administrative		1,186			1,119
Interest expense		12			16
Amortization and impairment charges		130			140
Other expenses		37			(33	)
Total Expenses		3,066			3,096
Income (loss) before income taxes		160			(283	)
Adjusted base EBITDA		953			2
Operating margin		26	%		(7	)%

⁽¹⁾ Compensation is presented excluding commission expense, which is reported net of commission revenue.

3 months ended

Income before income taxes was $0.2 million, up $0.4 million from the prior period. Adjusted base EBITDA in the quarter was $1 million, up $1 million from the prior period. Our three months ended results were positively impacted by improved equity origination, sales and trading activities.

17

Corporate

This segment is primarily a cost centre that provides capital, balance sheet management and shared services to the Company's subsidiaries.

	3 months ended
(In thousands $)	Mar. 31, 2020			Mar. 31, 2019
SUMMARY INCOME STATEMENT
Gains (losses) on investments		(2,214	)		(203	)
Other income (loss)		12			13
Total Revenues		(2,202	)		(190	)
Compensation		2,152			667
Selling, general and administrative		575			604
Interest expense		23			22
Amortization and impairment charges		543			363
Other expenses		488			175
Total Expenses		3,781			1,831
Income (loss) before income taxes		(5,983	)		(2,021	)
Adjusted base EBITDA		(2,555	)		(1,272	)

3 months ended

• Net investments losses were due to market value depreciation of certain equity holdings.

• Compensation increased due to the Acquisition, increased executive involvement in our US businesses and higher AIP accruals on higher revenues across the Company.

• SG&A decreased in the quarter due to our ongoing multi-year cost containment program.

• Higher amortization was due to increased depreciation expense due to a new lease.

• Other expenses was primarily due to FX translation movements (CAD-to-USD).

18

Dividends

The following dividends were declared by the Company during the three months ended March 31, 2020:

Record date	Payment Date	Cash dividend per share (CAD $)		Total dividend amount (in thousands $)
March 09, 2020 - Regular Dividend Q4 - 2019	March 24, 2020		0.03		5,387
Dividends (1)					5,387

⁽¹⁾ Subsequent to quarter-end, on May 7, 2020, a regular dividend of CAD$0.03 per common share was declared for the quarter ended March 31, 2020. This dividend is payable on June 3, 2020 to shareholders of record at the close of business on May 19, 2020.

Capital Stock

Including the 10 million unvested common shares currently held in the EPSP Trust (December 31, 2019 - 9 million), total capital stock issued and outstanding was 253.7 million (December 31, 2019 - 253.1 million).

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 and diluted earnings per share were $0.01 for the quarter compared to $0.01 in the prior period. 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 3.3 million stock options are outstanding pursuant to our stock option plan, all of which are exercisable.

19

Liquidity and Capital Resources

As at March 31, 2020, the Company had $18.2 million (December 31, 2019 - $15.3 million) outstanding on its credit facility, $3.5 million of which is due within 12 months and $14.7 million is due after 12 months (December 31, 2019 - $3.8 million and $11.5 million respectively).

The Company has a 5 year, CAD$90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a CAD$25 million term loan and a CAD$65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. In 2019, the Company drew CAD$25 million on the term loan portion of the credit facility to avoid its expiry and to partially fund anticipated growth in the business over the next 12-18 months. As at March 31, 2020, the Company was in compliance with all covenants, terms and conditions under the credit facility. Key terms under the credit facility are noted below:

Structure

• 5-year, CAD$65 million revolver with "bullet maturity" December 31, 2022

• 5-year, CAD $25 million term loan with 5% of principal amortizing quarterly, with the remaining balance maturing on December 31, 2022

Interest Rate

• Prime rate + 0 bps or;

• Banker Acceptance Rate + 170 bps

Covenant Terms

• Minimum AUM: CAD$8.2 billion

• Debt to EBITDA less than 2.5:1

• EBITDA to interest expense more than 2.5:1

Commitments

Besides the Company's long-term lease agreements, there are commitments to make co-investments in lending LPs arising from our lending segment or commitments to make investments in the net investments portfolio of the Company. As at March 31, 2020, the Company had $3.5 million in co-investment commitments from the lending segment (December 31, 2019 - $6.6 million).

20

Significant Accounting Judgments, Estimates and Changes in Accounting Policies

The interim financial statements have been prepared in accordance with IFRS standards in effect as at March 31, 2020, specifically, IAS 34 Interim Financial Reporting.

Compliance with IFRS requires the Company to exercise judgment, make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may vary. Except as otherwise noted, significant accounting judgments and estimates are described in Note 2 of the December 31, 2019 annual audited financial statements and have been applied consistently to the interim financial statements as at and for the three months ended March 31, 2020.

Change in presentation currency

Effective January 1, 2020, the Company changed its presentation currency from Canadian to US dollars to better reflect the Company's business activities, given the significance of our revenues denominated in US dollars that further increased in 2020 with the January 17, 2020 close of the Acquisition.

The Company followed the guidance of IAS 21 Effects of Changes in Foreign Exchange Rates ("IAS 21") and have applied the change retroactively. As a result, the Company has restated prior year comparatives, including the January 1 opening balance sheet as required by IFRS 1. The change in presentation currency had the following effect:

• Assets and liabilities have been translated at the exchange rate on the respective reporting dates;

• Equity transactions have been translated at the historical exchange rate at the date of the transaction;

• The statements of operations has been translated at the average exchange rate on the respective reporting dates;

• Exchange differences arising on translation are presented in the Accumulated other comprehensive income line in shareholders' equity on the balance sheet.

Contingent consideration

The Acquisition necessitated the recognition of contingent consideration for the amounts payable in cash and shares under the terms of the purchase agreement. The cash settled portion of the contingent consideration has been measured at the closing date fair value, based on management’s estimate of the level of future revenue obtained from the contracts over the contingent consideration measurement period. The equity settled portion of the contingent consideration has been measured at its grant date fair value in accordance with the requirements of IFRS 2 Share-based Payment. The key judgments utilized in the estimation of the contingent consideration were fund flow assumptions. As at March 31, 2020, there was no change to the estimate of the contingent consideration.

21

Managing Risk: Financial

COVID-19 risk

The changing economic and market climate as a result of COVID-19 has led to the Company implementing its business continuity plan. Our portfolio managers, brokerage professionals, enterprise shared services teams and key outsource service providers are fully operational. While the exact impacts of COVID-19 over the short and long-term are undeterminable at the date of this report, management believes the effects of COVID-19 we have witnessed thus far, and in particular, world government responses thereto via fiscal and monetary policy, will continue to be highly constructive to precious metals markets.

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 interests 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 instrument assets. The Company’s earnings, particularly through its lending 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. dollar and Canadian dollar. 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 accounts receivable relate to management fees, carried interest and performance fees receivable from the funds, managed accounts and managed companies 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.

22

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 CAD$90 million committed line of credit with a major Canadian schedule I chartered bank. As part of its cash management program, the Company primarily invests in short-term debt securities issued by the Government of Canada with maturities of less than three months.

The Company's exposure to liquidity risk as it relates to our co-investments in lending LPs arises from fluctuations in cash flows from making capital calls and receiving capital distributions. The Company manages its loan 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 and employee bonuses 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 (e.g. dividend payments) 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 and through its broader treasury risk management program. To meet any liquidity shortfalls, actions taken by the Company could include: syndicating a portion of its loans; slowing its lending activities; cutting its dividend; drawing on the line of credit; liquidating net investments; and/or issuing common shares.

Concentration risk

A significant portion of the Company's AUM as well as its investments are focused on the natural resource sector, and in particular, precious metals related investments and transactions. In addition, from time-to-time, certain investment 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.

Consistent with National Instrument 52-109, the Company's CEO and CFO evaluate quarterly the DC&P and ICFR. As at March 31, 2020, the Company's CEO and CFO concluded that the Company's DC&P and ICFR were properly designed and were operating effectively. In addition, there were no material changes to ICFR during the quarter, and the implementation of our business continuity plan as a result of COVID-19 has not prevented the normal function of our internal controls.

23

Managing Risk: Non-financial

For details around other risks managed by the Company (e.g. confidentiality of information, conflicts of interest, etc.) refer to the Company's annual report as well as the Annual Information Form available on SEDAR at www.sedar.com.

Additional information relating to the Company, including the Company's Annual Information Form is available on SEDAR at www.sedar.com

24

EX-99.30

Exhibit 99.30

Consolidated Financial Statements

Three months ended March 31, 2020

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As at		Mar. 31			Dec. 31			Jan. 1
(In thousands of US dollars)		2020			2019			2019
Assets					(Note 2)			(Note 2)
Current
Cash and cash equivalents			34,908			54,748			34,637
Fees receivable			11,659			8,682			6,330
Loans receivable			—			—			11,197
Short-term investments	(Notes 3 & 9)		10,281			17,495			19,580
Other assets	(Note 6)		9,561			12,980			7,893
Income taxes recoverable			917			1,439			1,744
Total current assets			67,326			95,344			81,381
Loans receivable			—			—			15,207
Co-investments	(Note 4 & 9)		53,952			55,595			56,894
Other assets	(Note 6 & 9)		18,036			20,276			19,175
Property and equipment, net			16,221			16,230			16,392
Intangible assets	(Note 5)		141,157			114,078			108,726
Goodwill	(Note 5)		19,149			19,149			19,149
Deferred income taxes	(Note 8)		2,477			4,271			4,322
			250,992			229,599			239,865
Total assets			318,318			324,943			321,246
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities			30,460			23,618			32,106
Compensation payable			4,475			6,912			6,939
Obligations related to securities sold short			—			—			187
Loan facility	(Note 13)		3,512			3,829			—
Income taxes payable			1,065			807			445
Total current liabilities			39,512			35,166			39,677
Other accrued liabilities			10,000			4,247			5,769
Loan facility	(Note 13)		14,678			11,486			—
Deferred income taxes	(Note 8)		1,755			2,414			2,291
Total liabilities			65,945			53,313			47,737
Shareholders' equity
Capital stock	(Note 7)		407,544			407,900			407,775
Contributed surplus	(Note 7)		47,280			43,160			42,964
Deficit			(112,547	)		(108,222	)		(95,422	)
Accumulated other comprehensive income			(89,904	)		(71,208	)		(81,808	)
Total shareholders' equity			252,373			271,630			273,509
Total liabilities and shareholders' equity			318,318			324,943			321,246
Commitments and provisions	(Note 14)

The accompanying notes form part of the consolidated financial statements                                

"Ron Dewhurst"	"Sharon Ranson, FCPA, FCA"
Director	Director

2

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

		For the three months ended
		Mar. 31			Mar. 31
(In thousands of US dollars, except for per share amounts)		2020			2019
					(Note 2)
Revenues
Management fees			15,125			10,195
Commissions			5,179			3,315
Finance income			914			2,946
Gain (loss) on investments	(Note 3 & 4)		(4,352			5
Other income	(Note 6)		113			77
Total revenue			16,979			16,538
Expenses
Compensation			9,570			6,102
Stock-based compensation	(Note 7)		555			1,699
Trailer and sub-advisor fees			154			—
Placement and referral fees			86			58
Selling, general and administrative			3,544			3,062
Interest expense			236			244
Amortization of intangibles	(Note 5)		215			220
Amortization of property and equipment			773			609
Other expenses	(Note 6)		(1,081			1,038
Total expenses			14,052			13,032
Income before income taxes for the period			2,927			3,506
Provision for income taxes	(Note 8)		1,865			659
Net income for the period			1,062			2,847
Basic earnings per share	(Note 7)	$	0.01		$	0.01
Diluted earnings per share	(Note 7)	$	0.01		$	0.01
Net income for the period			1,062			2,847
Other comprehensive income (loss)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation gain (loss) on foreign operations (taxes of $Nil)			(18,696	)		5,022
Total other comprehensive income (loss)			(18,696	)		5,022
Comprehensive income (loss)			(17,634	)		7,869

The accompanying notes form part of the consolidated financial statements                        

3

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)

(In thousands of US dollars, other than number of shares)		Number of Shares Outstanding			Capital Stock			Contributed Surplus			Deficit			Accumulated Other Comprehensive Income			Total  Equity
At Dec. 31, 2019			244,176,419			407,900			43,160			(108,222	)		(71,208	)		271,630
Shares acquired for equity incentive plan	(Note 7)		(1,223,044	)		(2,274	)		—			—			—			(2,274	)
Issuance of share capital on purchase of management contracts	(Note 7)		1,047,207			2,500						—			—			2,500
Share-based contingent consideration related to the Acquisition	(Note 7)		—			—			4,879			—			—			4,879
Shares released on vesting of equity incentive plan	(Note 7)		158,342			376			(376	)		—			—			—
Shares acquired and canceled under normal course issuer bid	(Note 7)		(1,023,436	)		(1,940	)		—			—			—			(1,940	)
Foreign currency translation gain (loss) on foreign operations			—			—			—			—			(18,696	)		(18,696	)
Stock-based compensation	(Note 7)		—			—			555			—			—			555
Issuance of share capital on conversion of RSUs and other share based considerations	(Note 7)		479,585			938			(938	)		—			—			—
Dividends declared	(Note 10)		22,715			44			—			(5,387	)		—			(5,343	)
Net income			—			—			—			1,062			—			1,062
Balance, Mar. 31, 2020			243,637,788			407,544			47,280			(112,547	)		(89,904	)		252,373
At Dec. 31, 2018	(Note 2)		243,062,337			407,775			42,964			(95,422	)		(81,808	)		273,509
Shares acquired for equity incentive plan			(130,000	)		(305	)		—			—			—			(305	)
Shares released on vesting of equity incentive plan			968,967			1,718			(1,718	)		—			—			—
Foreign currency translation gain (loss) on foreign operations			—			—			—			—			5,022			5,022
Stock-based compensation			—			—			1,699			—			—			1,699
Issuance of share capital on conversion of RSUs and other share based considerations			476,030			817			588			—			—			1,405
Dividends declared			15,323			36			—			(5,716	)		—			(5,680	)
Net income			—			—			—			2,847			—			2,847
Balance, Mar. 31, 2019	(Note 2)		244,392,657			410,041			43,533			(98,291	)		(76,786	)		278,497
The accompanying notes form part of the consolidated financial statements

4

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the three months ended
	Mar. 31			Mar. 31
(In thousands of US dollars)	2020			2019
Operating Activities				(Note 2)
Net income for the period		1,062			2,847
Add (deduct) non-cash items:
Loss (gain) on net proprietary investments		4,352			(5	)
Stock-based compensation		555			1,699
Amortization of property, equipment and intangible assets		988			829
Deferred income tax recovery		1,104			376
Current income tax expense		761			283
Other items		(475	)		(1,137	)
Income taxes paid		—			(564	)
Changes in:
Fees receivable		(2,977	)		481
Loans receivable		—			2,188
Other assets		5,659			(9,974	)
Accounts payable, accrued liabilities and compensation payable		(4,985	)		(1,302	)
Cash provided by (used in) operating activities		6,044			(4,279	)
Investing Activities
Purchase of investments		(3,809	)		(10,049	)
Sale of investments		2,148			5,506
Purchase of property and equipment		(215	)		(2,130	)
Purchase of management contracts		(12,500	)		—
Cash provided (used in) investing activities		(14,376	)		(6,673	)
Financing Activities
Acquisition of common shares for equity incentive plan		(2,274	)		(305	)
Acquisition of common shares under normal course issuer bid		(1,940	)		—
Net advances from loan facility		4,153			15,315
Dividends paid		(5,343	)		(5,680	)
Cash provided by (used in) financing activities		(5,404	)		9,330
Effect of foreign exchange on cash balances		(6,104	)		3,050
Net increase (decrease) in cash and cash equivalents during the period		(19,840	)		1,428
Cash and cash equivalents, beginning of the year		54,748			34,637
Cash and cash equivalents, end of the period		34,908			36,065
Cash and cash equivalents:
Cash		29,781			32,127
Short-term deposits		5,127			3,938
		34,908			36,065
Supplementary disclosure of cash flow information
Amount of interest received during the period		—			1,194

The accompanying notes form part of the consolidated financial statements                

5

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

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 SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The interim condensed consolidated financial statements have been prepared in accordance with IFRS standards in effect as at March 31, 2020, specifically, IAS 34 Interim Financial Reporting.

Compliance with IFRS requires the Company to exercise judgment and make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may vary. Except as otherwise noted, significant accounting judgments and estimates are described in Note 2 of the as of December 31, 2019 annual audited financial statements and have been applied consistently to the interim financial statements as at and for the three months ended March 31, 2020.

Basis of presentation

These interim financial statements have been prepared on a going concern basis and on a historical cost basis, except for financial assets and financial liabilities classified as fair value through profit or loss ("FVTPL") or fair value through other comprehensive income ("FVOCI"), both of which have been measured at fair value. The financial statements are presented in US dollars and all values are rounded to the nearest thousand ($000), except when indicated otherwise.

Principles of consolidation

These interim 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 over the same reporting period as the Company and are based on accounting policies consistent with that of the Company.

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.

The Company currently controls the following principal subsidiaries:

• Sprott Asset Management LP ("SAM");

• Sprott Capital Partners LP ("SCP");

• Sprott Asia LP ("Sprott Asia") and Sprott Korea Corporation ("Sprott Korea");

• Sprott U.S. Holdings Inc. ("SUSHI"), parent of: (1) Rule Investments Inc. ("RII"); (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 "Global" in these financial statements;

• Sprott Resource Lending Corp. ("SRLC");

• Sprott Inc. 2011 Employee Profit Sharing Plan Trust (the "Trust").

6

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

Changes in accounting policies

Change in presentation currency

Effective January 1, 2020, the Company changed its presentation currency from CAD to USD to better reflect the Company's business activities, given the significance of our revenues denominated in US dollars that further increased in 2020 with the January 17, 2020 close of Tocqueville Asset Management's gold strategies ("the Acquisition").

The Company followed the guidance of IAS 21 Effects of Changes in Foreign Exchange Rates ("IAS 21") and have applied the change retroactively. As a result, the Company has restated prior year comparatives, including the January 1 opening balance sheet as required by IFRS 1. The change in presentation currency had the following effect:

• Assets and liabilities have been translated at the exchange rate on the respective reporting dates;

• Equity transactions have been translated at the historical exchange rate at the date of the transaction;

• The statements of operations has been translated at the average exchange rate on the respective reporting dates;

• Exchange differences arising on translation are presented in the accumulated other comprehensive income line in shareholders' equity on the balance sheet.

The exchange rates used for prior periods were as follows:

	Dec. 31, 2019		Mar. 31, 2019		Jan. 1, 2019
As at reporting date		1.31		1.34		1.36
Average rate for the 3 month ended		1.32		1.33		1.32

Contingent consideration

The Acquisition necessitated the recognition of contingent consideration for the amounts payable in cash and shares under the terms of the purchase agreement. The cash settled portion of the contingent consideration has been measured at the closing date fair value, based on management’s estimate of the level of future revenue obtained from the contracts over the contingent consideration measurement period. The equity settled portion of the contingent consideration has been measured at its grant date fair value in accordance with the requirements of IFRS 2 Share-based Payment. The key judgments utilized in the estimation of the contingent consideration were fund flow assumptions. As at March 31, 2020, there was no change to the estimate of the contingent consideration.

Other accounting policies

All other accounting policies, judgments, and estimates described in the annual audited financial statements have been applied consistently to these consolidated interim financial statements unless otherwise noted.

7

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

3 SHORT-TERM INVESTMENTS

Short-term investments

Primarily consist of equity investments in public and private entities we target through our lending, managed equities and brokerage segments (in thousands $):

	Classification and measurement criteria	March 31, 2020		Dec. 31, 2019
Public equities and share purchase warrants	FVTPL		6,582		10,520
Fixed income securities	FVTPL		1,856		4,220
Private holdings:
- Private investments	FVTPL		1,843		1,864
- Energy contracts	Non-financial instrument		—		891
Total proprietary investments			10,281		17,495

Gains and losses on financial assets and liabilities classified at FVTPL are included in the gain (loss) on investments on the consolidated statements of operations.

4 CO-INVESTMENTS

Co-investments

Consists of the following (in thousands $):

	Classification and measurement criteria	March 31, 2020		Dec. 31, 2019
Co-investments in funds	FVTPL		53,952		55,595
Total co-investments			53,952		55,595

Gains and losses on co-investments in funds are included in the gain (loss) on investments on the consolidated statements of operations.

8

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

5 GOODWILL AND INTANGIBLE ASSETS

Consist of the following (in thousands $):

	Goodwill			Fund management contracts (indefinite life)			Fund management contracts (finite life)			Total
Cost
At December 31, 2018		132,251			97,744			34,768			264,763
Additions		—			1,376			—			1,376
Net exchange differences		—			4,350			1,540			5,890
At December 31, 2019		132,251			103,470			36,308			272,029
Additions		—			36,107			—			36,107
Net exchange differences		—			(8,000	)		(813	)		(8,813	)
At March 31, 2020		132,251			131,577			35,495			299,323
Accumulated amortization
At December 31, 2018		(113,102	)		—			(23,753	)		(136,855	)
Amortization charge for the period		—			—			(879	)		(879	)
Net exchange differences		—			—			(1,068	)		(1,068	)
At December 31, 2019		(113,102	)		—			(25,700	)		(138,802	)
Amortization charge for the period		—			—			(215	)		(215	)
Net exchange differences		—			—			—			—
At March 31, 2020		(113,102	)		—			(25,915	)		(139,017	)
Net book value at:
December 31, 2019		19,149			103,470			10,608			133,227
March 31, 2020		19,149			131,577			9,580			160,306

9

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

Impairment assessment of goodwill

The Company has identified 5 cash generating units ("CGU") as follows:

•        Exchange Listed Products

•        Managed Equities

•        Lending

•        Brokerage

•       Corporate

As at March 31, 2020, the Company had allocated $19.1 million (December 31, 2019 - $19.1 million) of goodwill on a relative value approach basis to the exchange listed products and managed equities CGUs.

In the normal course, goodwill is 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. During the quarter, there were no indicators of impairment in either the exchange listed products CGU or the managed equities CGU.

Impairment assessment of indefinite life fund management contracts

As at March 31, 2020, the Company had indefinite life intangibles related to fund management contracts of $131.6 million (December 31, 2019 - $103.5 million). The addition during the year relates to the Acquisition. The cost of the intangible asset was recorded at the fair value of consideration transferred, including contingent consideration (see Note 2) and the acquisition costs directly attributable to the transfer of the management contracts (see Note 6). There were no indicators of impairment as at March 31, 2020.

Impairment assessment of finite life fund management contracts

As at March 31, 2020, the Company had exchange listed fund management contracts within the exchange listed products CGU of $9.6 million (December 31, 2019 - $11 million). There were no indicators of impairment as at March 31, 2020.

10

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

6 OTHER ASSETS, INCOME AND EXPENSES

Other assets

Consist of the following (in thousands $):

	Mar. 31, 2020		Dec. 31, 2019
Digital gold strategies(1)		16,709		18,913
Fund recoveries and investment receivables		5,915		5,951
Deferred costs related to the Acquisition(2)		—		1,806
Prepaid expenses		2,863		4,355
Other (3)		2,110		2,231
Total Other assets		27,597		33,256

⁽¹⁾ Digital gold strategies are financial instruments classified at FVTPL. Gains and losses are included in the gain (loss) on investments on the consolidated statements of operations. These investments were reclassified from long-term investments to other assets.

⁽²⁾ Includes legal, proxy and investor relations costs.

⁽³⁾ Other includes miscellaneous third-party receivables.

Other income

Consist of the following (in thousands $):

	For the three months ended
	Mar. 31, 2020		Mar. 31, 2019
Investment income (1)		113		77
Total Other income		113		77

⁽¹⁾ Primarily includes investment fund income, syndication and trailer fee income.

Other expenses

Consist of the following (in thousands $):

	For the three months ended
	Mar. 31, 2020			Mar. 31, 2019
Costs related to energy assets		798			8
Foreign exchange losses (gains)		(2,214	)		769
Other (1)		335			261
Total Other expenses		(1,081	)		1,038

⁽¹⁾ Includes non-recurring professional fees and transaction costs.

11

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

7 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.

	Number of shares			Stated value  (in thousands $)
At Dec. 31, 2018		243,062,337			407,775
Issuance of share capital under dividend reinvestment program		61,519			147
Acquired and cancelled under normal course issuer bid		(740,600	)		(1,715	)
Issuance of share capital on conversion of RSUs		815,289			1,654
Acquired for equity incentive plan		(1,826,124	)		(4,906	)
Released on vesting of equity incentive plan		2,803,998			4,945
At Dec. 31, 2019		244,176,419			407,900
Issuance of share capital under dividend reinvestment program		22,715			44
Issuance of share capital on conversion of RSUs and other share based considerations		479,585			938
Issuance of share capital on purchase of management contracts		1,047,207			2,500
Acquired for equity incentive plan		(1,223,044	)		(2,274	)
Acquired and cancelled under normal course issuer bid		(1,023,436	)		(1,940	)
Released on vesting of equity incentive plan		158,342			376
At Mar. 31, 2020		243,637,788			407,544

Contributed surplus consists of: stock option expense; earn-out shares expense; equity incentive plans' expense; and additional purchase consideration.

	Stated value (in thousands $)
At Dec. 31, 2018		42,964
Expensing of Stock-based compensation over the vesting period		5,392
Issuance of share capital on conversion of RSUs		(251	)
Released on vesting of common shares for equity incentive plan		(4,945	)
At Dec. 31, 2019		43,160
Expensing of Stock-based compensation over the vesting period		555
Share-based contingent consideration related to the Acquisition		4,879
Issuance of share capital on conversion of RSUs and other share based considerations		(938	)
Released on vesting of common shares for equity incentive plan		(376	)
At Mar. 31, 2020		47,280

12

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

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 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 or exercised for the three months ended March 31, 2020 (three months ended March 31, 2019 - Nil).

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.

A summary of the changes in the Plan is as follows:

	Number of options (in thousands)		Weighted average exercise price (CAD $)
Options outstanding, December 31, 2018		3,275		2.57
Options exercisable, December 31, 2018		1,875		2.70
Options outstanding, December 31, 2019		3,275		2.57
Options exercisable, December 31, 2019		2,575		2.60
Options outstanding, March 31, 2020		3,275		2.57
Options exercisable, March 31, 2020		3,275		2.57

Options outstanding and exercisable as at March 31, 2020 are as follows:

Exercise price (CAD $)	Number of outstanding options (in thousands)		Weighted average remaining contractual life (years)		Number of options exercisable (in thousands)
6.60		150		0.6		150
2.33		3,000		5.8		3,000
2.73		125		6.1		125
2.33 to 6.60		3,275		5.6		3,275

13

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

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; or (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; and (3) from time-to-time, purchases from 2176423 Ontario Ltd., a company controlled by Eric Sprott, pursuant to the terms and conditions of a previously announced share transaction. 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 652,799 RSUs granted during the three months ended March 31, 2020 (three months ended March 31, 2019 - 256,719). The Trust acquired 1.2 million shares in the three months ended March 31, 2020 (three months ended March 31, 2019 - 0.1 million shares).

	Number of common shares
Common shares held by the Trust, December 31, 2018		9,932,256
Acquired		1,826,124
Released on vesting		(2,803,998	)
Unvested common shares held by the Trust, December 31, 2019		8,954,382
Acquired		1,223,044
Released on vesting		(158,342	)
Unvested common shares held by the Trust, March 31, 2020		10,019,084

The table below provides a breakdown of the share-based compensation expense and the corresponding increase to contributed surplus:

	For the three months ended
	March 31, 2020		March 31, 2019
Stock option plan		10		57
EPSP / EIP		545		1,642
		555		1,699

14

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

Basic and diluted earnings per share

The following table presents the calculation of basic and diluted earnings per common share:

	For the three months ended
	March 31, 2020			March 31, 2019
Numerator (in thousands $):
Net income - basic and diluted		1,062			2,847
Denominator (Number of shares in thousands):
Weighted average number of common shares		254,150			253,417
Weighted average number of unvested shares purchased by the Trust		(8,761	)		(9,238	)
Weighted average number of common shares - basic		245,389			244,179
Weighted average number of dilutive stock options		3,000			3,125
Weighted average number of unvested shares purchased by the Trust		8,761			9,238
Weighted average number of common shares - diluted		257,150			256,542
Net income per common share
Basic	$	0.01		$	0.01
Diluted	$	0.01		$	0.01

Capital management

The Company's objectives when managing capital are:

• 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 for 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). SCP is a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), SAM is a registrant of the Ontario Securities Commission ("OSC") and the U.S. Securities and Exchange Commission ("SEC"), SAM US is registered with the 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. As at March 31, 2020 and 2019, all entities were in compliance with their respective capital requirements.

15

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

8 INCOME TAXES

The major components of income tax expense are as follows (in thousands $):

	For the three months ended
	Mar. 31, 2020		Mar. 31, 2019
Current income tax expense (recovery)
Based on taxable income of the current period		761		283
		761		283
Deferred income tax expense (recovery)
Total deferred income tax expense		1,104		376
Income tax expense reported in the consolidated statements of operations		1,865		659

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 $):

	For the three months ended
	Mar. 31, 2020			Mar. 31, 2019
Income before income taxes		2,927			3,506
Tax calculated at domestic tax rates applicable to profits in the respective countries		787			936
Tax effects of:
Non-deductible stock-based compensation		25			34
Non-taxable capital (gains) and losses		939			(114	)
Intangibles		33			21
Other temporary differences not benefited		(22	)		48
Non-capital losses not benefited previously		—			(358	)
Rate differences and other		103			92
Tax charge		1,865			659

The weighted average statutory tax rate was 26.9% (March 31, 2019 - 26.7%). The Company has $5 million of capital tax losses from prior years that will begin to expire in 2020. The benefit of these capital losses has not been recognized.

16

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

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 three months ended March 31, 2020

	Dec. 31, 2019			Recognized in income			Recognized in other comprehensive income			Mar. 31, 2020
Deferred income tax assets
Stock-based compensation		4,056			11			(315	)		3,752
Non-capital losses		3,432			(1,303	)		(163	)		1,966
Unrealized losses		910			161			(79	)		992
Other		247			149			1			397
Total deferred income tax assets		8,645			(982	)		(556	)		7,107
Deferred income tax liabilities
Fund management contracts		7,037			333			(562	)		6,808
Other		(249	)		(211	)		37			(423	)
Total deferred income tax liabilities		6,788			122			(525	)		6,385
Net deferred income tax assets		1,857			(1,104	)		(31	)		722

For the year ended December 31, 2019

	Dec. 31, 2018		Recognized in income			Recognized in other comprehensive income			Dec. 31, 2019
Deferred income tax assets
Other stock-based compensation		3,152		750			154			4,056
Non-capital losses		3,678		(372	)		126			3,432
Unrealized losses		283		604			23			910
Other		376		(143	)		14			247
Total deferred income tax assets		7,489		839			317			8,645
Deferred income tax liabilities
Fund management contracts		5,364		1,409			264			7,037
Other		94		(339	)		(4	)		(249	)
Total deferred income tax liabilities		5,458		1,070			260			6,788
Net deferred income tax assets		2,031		(231	)		57			1,857

17

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

9 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 March 31, 2020 and December 31, 2019 (in thousands $).

Short-term investments

March 31, 2020	Level 1		Level 2		Level 3		Total
Public equities and share purchase warrants		5,164		1,418		—		6,582
Fixed income securities		—		1,150		706		1,856
Private holdings		—		—		1,843		1,843
Total net recurring fair value measurements		5,164		2,568		2,549		10,281

12/31/2019	Level 1		Level 2		Level 3		Total
Public equities and share purchase warrants		7,537		2,983		—		10,520
Fixed income securities		—		3,454		766		4,220
Private holdings		—		—		1,864		1,864
Total net recurring fair value measurements		7,537		6,437		2,630		16,604

Co-investments

March 31, 2020	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		48,872		5,080		53,952
Total net recurring fair value measurements		—		48,872		5,080		53,952

12/31/2019	Level 1		Level 2		Level 3		Total
Co-investments in funds		—		51,065		4,530		55,595
Total net recurring fair value measurements		—		51,065		4,530		55,595

Other Assets

March 31, 2020	Level 1		Level 2		Level 3		Total
Digital gold strategies		—		—		16,709		16,709
Total net recurring fair value measurements		—		—		16,709		16,709

18

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

12/31/2019	Level 1		Level 2		Level 3		Total
Digital gold strategies		—		—		18,913		18,913
Total net recurring fair value measurements		—		—		18,913		18,913

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 - Mar. 31 2020
	Dec. 31, 2019		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Mar. 31, 2020
Private holdings		1,864		—		—		(21	)		1,843
Fixed income securities		766		—		—		(60	)		706
		2,630		—		—		(81	)		2,549

	Changes in the fair value of Level 3 measurements - Dec. 31, 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements			Net unrealized gains (losses) included in net income			Dec. 31, 2019
Private holdings		2,075		34		(43	)		(202	)		1,864
Fixed income securities		733		—		—			33			766
		2,808		34		(43	)		(169	)		2,630

Co-investments

	Changes in the fair value of Level 3 measurements - Mar. 31, 2020
	Dec. 31, 2019		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Mar. 31, 2020
Co-investments in funds		4,530		800		—		(250	)		5,080
		4,530		800		—		(250	)		5,080

	Changes in the fair value of Level 3 measurements - Dec. 31, 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Dec. 31, 2019
Co-investments in funds		3,574		1,193		—		(237	)		4,530
		3,574		1,193		—		(237	)		4,530

19

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

Other Assets

	Changes in the fair value of Level 3 measurements - Mar. 31, 2020
	Dec. 31, 2019		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Mar. 31, 2020
Digital gold strategies		18,913		—		—		(2,204	)		16,709
		18,913		—		—		(2,204	)		16,709

	Changes in the fair value of Level 3 measurements - Dec. 31, 2019
	Dec. 31, 2018		Purchases and reclassifications		Settlements		Net unrealized gains (losses) included in net income			Dec. 31, 2019
Digital gold strategies		18,285		2,574		0		(1,946	)		18,913
		18,285		2,574		0		(1,946	)		18,913

During the three months ended March 31, 2020, the Company transferred public equities of $0.5 million (December 31, 2019 - $2.5 million) from Level 2 to Level 1 within the fair value hierarchy due to the release of trading restrictions by the issuer. For the three months ended March 31, 2020, the Company purchased level 3 investments of $0.8 million (December 31, 2019 - $3.9 million). For the three months ended March 31, 2020, the Company transferred $Nil million (December 31, 2019 - $0.1 million) from Level 3 to Level 1 within the fair value hierarchy.

The following table presents the valuation techniques used by the Company in measuring fair values:

Type	Valuation Technique
Public equities and share purchase warrants	Fair values are determined using pricing models which incorporate all available market-observable inputs.
Hedge funds and private equity funds	Fair values are based on the last available Net Asset Value.
Fixed income securities	Fair values are based on independent market data providers or third-party broker quotes.
Private holdings (including digital gold strategies)	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, private equity funds and fixed income securities of private companies. The significant unobservable inputs used in these valuation techniques can vary considerably over time, and include grey market financing prices, discount rates and extraction recovery rates of mining projects. 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 $0.9 million (December 31, 2019 - $0.9 million).

Financial instruments not carried at fair value

For fees receivable, other assets, accounts payable and accrued liabilities and compensation payable, the carrying amount represents a reasonable approximation of fair value due to their short term maturity.

20

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

10 DIVIDENDS

The following dividends were declared by the Company during the three months ended March 31, 2020:

Record date	Payment Date	Cash dividend per share (CAD $)		Total dividend amount (in thousands $)
March 09, 2020 - Regular Dividend Q4 - 2019	March 24, 2020		0.03		5,387
Dividends  (1)					5,387

⁽¹⁾ Subsequent to quarter-end, on May 7, 2020, a regular dividend of CAD$0.03 per common share was declared for the quarter ended March 31, 2020. This dividend is payable on June 3, 2020 to shareholders of record at the close of business on May 19, 2020.

11 RISK MANAGEMENT

COVID-19 risk

The changing economic and market climate as a result of COVID-19 has led to the Company implementing its business continuity plan. Our portfolio managers, brokerage professionals, enterprise shared services teams and key outsource service providers are fully operational. While the exact impacts of COVID-19 over the short and long-term are undeterminable at the date of this report, management believes the effects of COVID-19 we have witnessed thus far, and in particular, world government responses thereto via fiscal and monetary policy, will continue to be highly constructive to precious metals markets.

Other risk management activities

All other risk management activities described in the annual audited financial statements are consistent with the consolidated interim financial statements.

21

SPROTT INC. 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

12 SEGMENTED INFORMATION

For management purposes, the Company is organized into business units based on its products, services and geographical location and has five 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 asset management and sub-advisory services to the Company's branded funds, fixed-term LPs and managed accounts;

• Lending (reportable), which provides lending activities through limited partnership vehicles as well as through direct lending activities using the Company's balance sheet;

• Brokerage (reportable), which includes the activities of our Canadian and U.S broker-dealers;

• Corporate (reportable), which provides capital, balance sheet management and enterprise shared services to the Company's subsidiaries;

• All Other Segments (non-reportable), which do not meet the definition of reportable segments as per IFRS 8.

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 proprietary investments (as if such gains and losses had not occurred), foreign exchange gains and losses, one time non-recurring expenses, non-cash and non-recurring 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 three months ended March 31, 2020

	Exchange Listed Products		Managed Equities		Lending			Brokerage		Corporate			Elimination and all other segments			Consolidated
Total revenue		6,877		1,552		5,175			5,096		(2,202	)		481			16,979
Total expenses		934		1,282		(523	)		4,936		3,781			3,642			14,052
Income (loss) before income taxes		5,943		270		5,698			160		(5,983	)		(3,161	)		2,927
Adjusted base EBITDA		5,282		2,053		2,038			953		(2,555	)		416			8,187

For the three months ended March 31, 2019

22

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

	Exchange Listed Products		Managed Equities		Lending		Brokerage			Corporate			Elimination and all other segments		Consolidated
Total revenue		5,752		2,380		3,035		4,214			(190	)		1,347		16,538
Total expenses		2,180		2,104		1,634		4,497			1,831			786		13,032
Income (loss) before income taxes		3,572		276		1,401		(283	)		(2,021	)		561		3,506
Adjusted base EBITDA		4,285		688		3,042		2			(1,272	)		173		6,918

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 $):

	For the three months ended
	Mar. 31, 2020		Mar. 31, 2019
Canada		13,801		13,791
United States		3,178		2,747
		16,979		16,538

13 LOAN FACILITY

As at March 31, 2020, the Company had $18.2 million (December 31, 2019 - $15.3 million) outstanding on its credit facility, $3.5 million of which is due within 12 months and $14.7 million is due after 12 months (December 31, 2019 - $3.8 million and $11.5 million respectively).

The Company has a 5 year, CAD$90 million credit facility with a major Canadian schedule I chartered bank. The facility consists of a CAD$25 million term loan and a CAD$65 million revolving line of credit. Amounts may be borrowed under the facility through prime rate loans or bankers’ acceptances. Amounts may also be borrowed in U.S. dollars through base rate loans. In 2019, the Company drew CAD$25 million on the term loan portion of the credit facility to avoid its expiry and to partially fund anticipated growth in the business over the next 12-18 months. As at March 31, 2020, the Company was in compliance with all covenants, terms and conditions under the credit facility. Key terms under the credit facility are noted below:

Structure

• 5-year, CAD$65 million revolver with "bullet maturity" December 31, 2022

• 5-year, CAD $25 million term loan with 5% of principal amortizing quarterly, with the remaining balance maturing on December 31, 2022

Interest Rate

• Prime rate + 0 bps or;

• Banker Acceptance Rate + 170 bps

Covenant Terms

• Minimum AUM: CAD$8.2 billion

• Debt to EBITDA less than 2.5:1

• EBITDA to interest expense more than 2.5:1

23

SPROTT INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2020 and 2019

14 COMMITMENTS AND PROVISIONS

Besides the Company's long-term lease agreement, there are commitments to make investments in the net investments portfolio of the Company. As at March 31, 2020, the Company had $3.5 million in co-investment commitments from the lending segment (December 31, 2019 - $6.6 million). 

24

EX-99.31

Exhibit 99.31

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Peter Grosskopf, Chief Executive Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Sprott Inc. (the “issuer”) for the interim period ended March 31, 2020.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6.	Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2020 and ended on March 31, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date:	May 8, 2020

/s/ “Peter Grosskopf”

Peter Grosskopf

Chief Executive Officer

EX-99.32

Exhibit 99.32

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Kevin Hibbert, Chief Financial Officer of Sprott Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Sprott Inc. (the “issuer”) for the interim period ended March 31, 2020.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2020 and ended on March 31, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 8, 2020

/s/ “Kevin Hibbert”

Kevin Hibbert

Chief Financial Officer

EX-99.33

Exhibit 99.33

SPROTT INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the “Meeting”) of Sprott Inc. (the “Corporation”) will be held at the offices of Baker & McKenzie LLP, Brookfield Place, Bay/Wellington Tower, 181 Bay Street, Suite 2100, Toronto, Ontario, on Friday, May 10, 2019 at 12:00 p.m. (Toronto time) for the following purposes:

1. to receive the audited consolidated financial statements of the Corporation for the financial year ended December 31, 2018 together with the auditors’ report thereon (the “2018 Financial Statements”);

2. to elect the directors for the ensuing year to hold office until the close of the next annual meeting of shareholders of the Corporation;

3. to re-appoint KPMG LLP as auditors of the Corporation and to authorize the board of directors of the Corporation (the “Board”) to fix their remuneration and terms of engagement; and

4. to transact such other business as may properly come before the Meeting or any adjournment(s) or postponement(s) thereof.

Particulars of the foregoing matters are set forth in the accompanying management information circular (the "Circular"). For the Meeting, the Corporation has elected to use the notice-and-access provisions under National Instrument 51-102 - Continuous Disclosure Obligations and National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer (collectively, the “Notice-and-Access Provisions”) to reduce its mailing costs and volume of paper with respect to the materials distributed for the purpose of the Meeting. The Notice-and-Access Provisions are a set of rules that permit the Corporation to post the Meeting materials, 2018 Financial Statements and accompanying management’s discussion and analysis (“MD&A”) online rather than making a traditional physical delivery of such materials. Shareholders will still receive this Notice of Meeting, together with a form of proxy (the “Proxy Instrument”) or voting instruction form (“VIF”), as the case may be, and a financial statement request form. The Corporation will not use procedures known as “stratification” in relation to the use of the Notice-and-Access Provisions.

Shareholders are directed to read the Circular carefully and in full in evaluating the matters for consideration at the Meeting. Further disclosure on the matters set out above may be found in the Circular in the section entitled “Particulars of Matters to be Acted Upon”. The Circular, 2018 Financial Statements, MD&A and other relevant materials are available on the Corporation’s website at www.sprott.com, for a minimum of one year, and under the Corporation’s directory on the System for Electronic Document Analysis and Retrieval at www.sedar.com. Any shareholder who wishes to receive a paper copy of such documents free of charge should contact the Corporation’s registrar and transfer agent, TSX Trust Company, by mail at 100 Adelaide Street West, Suite 301, Toronto, Ontario, Canada, M5H 4H1, Attention: Proxy Department; by calling toll-free at 1-866-600-5869; or by e-mail at TMXEInvestorServices@tmx.com. In order to be certain of receiving such materials in time to vote before the Meeting, the request should be received by TSX Trust Company by May 1, 2019. A shareholder may also use the toll-free number noted above to obtain additional information about the Notice-and-Access Provisions.

The record date for the determination of shareholders of the Corporation entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof is March 20, 2019 (the “Record Date”). Shareholders of the Corporation whose names have been entered in the register of shareholders of the Corporation at the close of business on the Record Date will be entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof.

If you are a registered shareholder of the Corporation, and are unable to attend the Meeting or any adjournment(s) or postponement(s) thereof in person, please date, sign and return the accompanying Proxy Instrument to TSX Trust Company, by mail or by hand delivery at 100 Adelaide Street West, Suite 301, Toronto, Ontario, Canada, M5H 4H1, or by facsimile at (416) 595-9593, Attention: Proxy Department, at least 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting time.

If you are not a registered shareholder of the Corporation, you must seek instructions on how to complete your VIF from the intermediary whom you hold your common shares through.

Dated at Toronto, Ontario as of March 20, 2019.

BY ORDER OF THE BOARD

(signed) “Jack C. Lee”

Chair of the Board

EX-99.34

Exhibit 99.34

SPROTT INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the “Meeting”) of Sprott Inc. (the “Corporation”) will be held at the offices of Baker & McKenzie LLP, Brookfield Place, Bay/Wellington Tower, 181 Bay Street, Suite 2100, Toronto, Ontario, on Friday, May 10, 2019 at 12:00 p.m. (Toronto time) for the following purposes:

1. to receive the audited consolidated financial statements of the Corporation for the financial year ended December 31, 2018 together with the auditors’ report thereon (the “2018 Financial Statements”);

2. to elect the directors for the ensuing year to hold office until the close of the next annual meeting of shareholders of the Corporation;

3. to re-appoint KPMG LLP as auditors of the Corporation and to authorize the board of directors of the Corporation (the “Board”) to fix their remuneration and terms of engagement; and

4. to transact such other business as may properly come before the Meeting or any adjournment(s) or postponement(s) thereof.

Particulars of the foregoing matters are set forth in the accompanying management information circular (the "Circular"). For the Meeting, the Corporation has elected to use the notice-and-access provisions under National Instrument 51-102 - Continuous Disclosure Obligations and National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer (collectively, the “Notice-and-Access Provisions”) to reduce its mailing costs and volume of paper with respect to the materials distributed for the purpose of the Meeting. The Notice-and-Access Provisions are a set of rules that permit the Corporation to post the Meeting materials, 2018 Financial Statements and accompanying management’s discussion and analysis (“MD&A”) online rather than making a traditional physical delivery of such materials. Shareholders will still receive this Notice of Meeting, together with a form of proxy (the “Proxy Instrument”) or voting instruction form (“VIF”), as the case may be, and a financial statement request form. The Corporation will not use procedures known as “stratification” in relation to the use of the Notice-and-Access Provisions.

Shareholders are directed to read the Circular carefully and in full in evaluating the matters for consideration at the Meeting. Further disclosure on the matters set out above may be found in the Circular in the section entitled “Particulars of Matters to be Acted Upon”. The Circular, 2018 Financial Statements, MD&A and other relevant materials are available on the Corporation’s website at www.sprott.com, for a minimum of one year, and under the Corporation’s directory on the System for Electronic Document Analysis and Retrieval at www.sedar.com. Any shareholder who wishes to receive a paper copy of such documents free of charge should contact the Corporation’s registrar and transfer agent, TSX Trust Company, by mail at 100 Adelaide Street West, Suite 301, Toronto, Ontario, Canada, M5H 4H1, Attention: Proxy Department; by calling toll-free at 1-866-600-5869; or by e-mail at TMXEInvestorServices@tmx.com. In order to be certain of receiving such materials in time to vote before the Meeting, the request should be received by TSX Trust Company by May 1, 2019. A shareholder may also use the toll-free number noted above to obtain additional information about the Notice-and-Access Provisions.

The record date for the determination of shareholders of the Corporation entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof is March 20, 2019 (the “Record Date”). Shareholders of the Corporation whose names have been entered in the register of shareholders of the Corporation at the close of business on the Record Date will be entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof.

If you are a registered shareholder of the Corporation, and are unable to attend the Meeting or any adjournment(s) or postponement(s) thereof in person, please date, sign and return the accompanying Proxy Instrument to TSX Trust Company, by mail or by hand delivery at 100 Adelaide Street West, Suite 301, Toronto, Ontario, Canada, M5H 4H1, or by facsimile at (416) 595-9593, Attention: Proxy Department, at least 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting time.

If you are not a registered shareholder of the Corporation, you must seek instructions on how to complete your VIF from the intermediary whom you hold your common shares through.

Dated at Toronto, Ontario as of March 20, 2019.

BY ORDER OF THE BOARD

(signed) “Jack C. Lee”

Chair of the Board

TABLE OF CONTENTS

PROXY INSTRUCTIONS	1
MANNER IN WHICH PROXIES WILL BE VOTED	2
VOTING BY BENEFICIAL SHAREHOLDERS	3
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF	4
PARTICULARS OF MATTERS TO BE ACTED UPON	4
Financial Statements	4
Election of Directors	4
Appointment of Auditors	9
CORPORATE GOVERNANCE	9
DIRECTOR ATTENDANCE AND COMPENSATION	14
EXECUTIVE COMPENSATION	18
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS	34
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS	39
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS	40
ADDITIONAL INFORMATION	40
BOARD APPROVAL	40
SCHEDULE “A” - MANDATE OF THE BOARD OF DIRECTORS	A-1

SPROTT INC.

MANAGEMENT INFORMATION CIRCULAR

Unless otherwise stated, the information in this management information circular (the “Circular”) is as of March 20, 2019.

PROXY INSTRUCTIONS

This Circular is furnished in connection with the solicitation of proxies by the management of Sprott Inc. (the “Corporation”) for use at the annual meeting of shareholders of the Corporation (the “Meeting”) to be held at the offices of Baker & McKenzie LLP, Brookfield Place, Bay/Wellington Tower, 181 Bay Street, Suite 2100, Toronto, Ontario, on Friday, May 10, 2019 at 12:00 p.m. (Toronto time) and at any adjournment(s) or postponement(s) thereof, for the purposes set out in the foregoing Notice of Meeting (the “Notice”).

It is expected that the solicitation of proxies will be primarily by mail, subject to the use of the Notice-and-Access Provisions (as defined below). Proxies may also be solicited personally by officers and directors of the Corporation (but not for additional compensation). The costs of solicitation will be borne by the Corporation. None of the directors of the Corporation have informed management in writing that he or she intends to oppose any action intended to be taken by management at the Meeting.

Notice-and-Access

The Corporation has elected to use the notice-and-access provisions (the “Notice-and-Access Provisions”) provided for under National Instrument 51-102 - Continuous Disclosure Obligations (“NI 51-102”) and National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”) for the delivery of the Meeting materials to its shareholders.

The Notice-and-Access Provisions are rules developed by the Canadian Securities Administrators to reduce the volume of materials that must be physically mailed to shareholders by allowing a reporting issuer to post the relevant meeting materials for a meeting of shareholders online. The Corporation believes this environmentally friendly process will provide shareholders with a convenient way to access the Meeting materials, while allowing the Corporation to lower the costs associated with printing and distributing the Meeting materials. The Meeting materials have been posted on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com under the Corporation’s profile and on the Corporation’s website at www.sprott.com.

Although the Corporation has elected to use the Notice-and-Access Provisions, both registered shareholders and non-registered shareholders or beneficial holders (“Non-Registered Holders”) will receive a package that will include either a form of proxy (in the case of registered shareholders) or a voting instruction form (in the case of non-registered shareholders), among other materials (collectively, the “Printed Materials”). Shareholders may receive multiple packages of these Printed Materials if a shareholder holds their Common Shares (as defined below) through more than one Intermediary (as defined below), or if a shareholder is both a registered shareholder and a Non-Registered Holder for different shareholdings.

Should a shareholder receive multiple packages, a shareholder should repeat the steps to vote through a proxy, appoint a proxyholder or attend the Meeting, if desired, separately for each package to ensure that all their Common Shares are voted at the Meeting.

Voting of Shares

Holders of common shares of the Corporation (the “Common Shares”) may vote on all matters to come before the Meeting. The form of proxy forwarded to holders of Common Shares affords the shareholder the opportunity to specify the manner in which the proxy nominees are to vote with respect to any specific item by checking the appropriate space in order to indicate whether the Common Shares registered in the shareholder’s name shall be: (i) voted for or withheld from voting for the directors to be named in this Circular; and (ii) voted for or withheld from voting for the re-appointment of auditors and authorizing the board of directors of the Corporation (the “Board”) to fix their remuneration and terms of engagement.

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The proxy must be signed by the holder of Common Shares or the shareholder’s attorney duly authorized in writing or, if the shareholder is a corporation, by an officer or attorney thereof duly authorized. Persons signing as executors, administrators, trustees or in any other representative capacity should so indicate and give their full title as such.

The persons named in the enclosed form of proxy are officers of the Corporation and represent management. Each shareholder has the right to appoint a person other than the persons named in the form of proxy, who need not be a shareholder, to attend and act for him, her or it and on his, her or its behalf at the Meeting. A shareholder wishing to appoint some other person as a representative at the Meeting may do so either by crossing out the nominees of management and inserting such person’s name in the blank space provided in the form of proxy or by completing another proper form of proxy and, in either case, delivering the completed form of proxy to the Corporation’s registrar and transfer agent, TSX Trust Company, Attention: Proxy Department, at 100 Adelaide Street West, Suite 301, Toronto, Ontario, Canada, M5H 4H1 or by faxing the completed form to (416) 595-9593 at least 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting time.

Revocation of Proxies

A proxy given by a shareholder for use at the Meeting may be revoked at any time prior to its use. In addition to revocation in any other manner permitted by law, a proxy may be revoked by an instrument in writing executed by the shareholder or by the shareholder’s attorney who is authorized by a document that is signed in writing or by electronic signature or, if the shareholder is a corporation, by an officer or attorney thereof duly authorized in writing, and deposited either at the registered office of the Corporation at any time up to and including the last business day preceding the day of the Meeting, or any adjournment(s) or postponement(s) thereof, at which the proxy is to be used, or with the chair of the Meeting on the day of the Meeting, or any adjournment(s) or postponement(s) thereof. The registered office of the Corporation is located at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, Canada, M5J 2J1.

Non-Registered Holders should contact their Intermediary through which they hold their Common Shares and obtain instructions regarding the procedure for revocation of any voting or proxyholder instructions that he, she or it has previously provided to their Intermediary. Revocations must be deposited either at the registered office of the Corporation at any time up to and including the last business day preceding the day of the Meeting, or any adjournment(s) or postponement(s) thereof, at which the proxy is to be used, or with the chair of the Meeting on the day of the Meeting, or any adjournment(s) or postponement(s) thereof. The registered office of the Corporation is located at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, Canada, M5J 2J1.

MANNER IN WHICH PROXIES WILL BE VOTED

The management representatives designated in the form of proxy will vote or withhold from voting the Common Shares in respect of which they are appointed by proxy on any ballot that may be called for in accordance with the instructions of the shareholder as indicated on the proxy and, if the shareholder specifies a choice with respect to any matter to be acted upon, the Common Shares will be voted accordingly.

In the absence of such direction, such Common Shares will be voted by the management representatives in favour of the passing of the matters set out in the Notice. The form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the Notice, and with respect to other matters which may properly come before the Meeting or any adjournment(s) or postponement(s) thereof. As at the date hereof, management of the Corporation knows of no such amendments, variations or other matters. However, if any other matters should properly come before the Meeting, the proxy will be voted on such matters in accordance with the best judgment of the proxy nominee.

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VOTING BY BENEFICIAL SHAREHOLDERS

The information in this section is of significant importance to shareholders who do not hold their Common Shares in their own name. Only registered shareholders or duly appointed proxyholders are permitted to vote at the Meeting. More particularly, a person is not a registered shareholder in respect of Common Shares which are held on behalf of that person but which are registered either: (a) in the name of an intermediary (an “Intermediary”) that the Non-Registered Holder deals with in respect of the Common Shares (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans); or (b) in the name of a clearing agency (such as CDS Clearing and Depositary Services Inc.) of which the Intermediary is a participant.

Non-Registered Holders who have not objected to their Intermediary disclosing certain ownership information about themselves to the Corporation are referred to as non-objecting beneficial owners (“NOBOs”). Those Non-Registered Holders who have objected to their Intermediary disclosing ownership information about themselves to the Corporation are referred to as objecting beneficial owners (“OBOs”).

The Corporation is not sending the Printed Materials directly to NOBOs in connection with the Meeting but rather has delivered copies of the Printed Materials to the Intermediaries for distribution to NOBOs. With respect to OBOs, in accordance with applicable securities law requirements, the Corporation has delivered copies of the Printed Materials to the clearing agencies and Intermediaries for distribution to OBOs. The Corporation intends to pay for Intermediaries to deliver the Printed Materials and Form 54-101F7 - Request for Voting Instructions made by Intermediary to Non-Registered Holders.

Request for Voting Instructions Made by Intermediary to OBOs.

Intermediaries are required to forward the Printed Materials to Non-Registered Holders unless a Non-Registered Holder has waived the right to receive them. Very often, Intermediaries will use service companies to forward the Printed Materials to the Non-Registered Holders. Generally, Non-Registered Holders who have not waived the right to receive Printed Materials will either:

(a) be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature), which is restricted as to the number of Common Shares beneficially owned by the Non-Registered Holder but which is otherwise not completed and must be deposited with the Corporation’s registrar and transfer agent. Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Non-Registered Holder when submitting the proxy. In this case, the Non-Registered Holder who wishes to submit a proxy should otherwise properly complete the form of proxy and deliver it to TSX Trust Company, Attention: Proxy Department, at 100 Adelaide Street West, Suite 301, M5H 4H1; or

(b) more typically, be given a voting instruction form which is not signed by the Intermediary, and which, when properly completed and signed by the Non-Registered Holder and returned to the Intermediary or its service company, will constitute voting instructions which the Intermediary must follow.

In either case, the purpose of this procedure is to permit Non-Registered Holders to direct the voting of the Common Shares which they beneficially own. Should a Non-Registered Holder who receives one of the above forms wish to vote at the Meeting in person, the Non Registered Holder should strike out the names of the management proxyholders and insert the Non-Registered Holder’s name in the blank space provided. In either case, Non-Registered Holders should carefully follow the instructions of their Intermediary, including those regarding when and where the form of proxy or voting instruction form is to be delivered.

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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

The authorized share capital of the Corporation consists of an unlimited number of Common Shares, of which 253,470,620 Common Shares were issued and outstanding as of the Record Date (as defined below).

The close of business on March 20, 2019 has been fixed as the record date (the “Record Date”) for the determination of shareholders entitled to receive notice of the Meeting and any adjournment(s) or postponement(s) thereof.

Each Common Share carries one vote in respect of each matter to be voted upon at the Meeting. Only holders of Common Shares of record at the close of business on the Record Date are entitled to vote at the Meeting or any adjournment(s) or postponement(s) thereof. The Corporation will prepare, or cause to be prepared, a list of shareholders (“Shareholders List”) entitled to receive notice of the Meeting not later than 10 days after the Record Date. At the Meeting, the holders of Common Shares shown on the Shareholders List will be entitled to one vote per Common Share shown opposite their names on the Shareholders List.

Two persons present and each holding or representing by proxy at least one issued share of the Corporation shall be a quorum of any meeting of shareholders for the choice of a chair of the meeting and for the adjournment of the meeting to a fixed time and place but may not transact any other business; for all other purposes a quorum for any meeting shall be persons present not being less than two in number and holding or representing by proxy not less than 5% of the total number of the issued and outstanding Common Shares for the time being enjoying voting rights at such meeting.

As of the date hereof, the only persons or companies known by the Corporation to own beneficially, or control or direct, directly or indirectly, more than 10% of the Common Shares are as follows:

Name	Number of Common Shares Beneficially Owned or Controlled or Directed		Percentage of Outstanding Common Shares
Arthur Richards Rule IV (1)		26,370,827		10.40	%

Notes:

(1) Arthur Richards Rule IV, a director of the Corporation, owns 299,167 Common Shares directly, owns or holds 25,964,845 Common Shares indirectly and exercises direction or control over 500 Common Shares on behalf of Ethan Lewis, 500 Common Shares on behalf of Nicholas Lewis, 340 Common Shares on behalf of Katherine Lewis, 15,000 Common Shares on behalf of the Lewis Family Trust, 60,000 Common Shares on behalf of the Young Marital Trust, 30,030 Common Shares on behalf of Bonnie Rule, and 445 Common Shares on behalf of Corinne Coury. The information provided above is based on information obtained from Mr. Rule's public filing made on the System for Electronic Disclosure by Insiders (SEDI) at www.sedi.ca.

PARTICULARS OF MATTERS TO BE ACTED UPON

1. Financial Statements

The audited consolidated financial statements of the Corporation for the financial year ended December 31, 2018, together with the auditors' report thereon and the annual management’s discussion and analysis, will be presented to the shareholders at the Meeting for their consideration.

2. Election of Directors

The Articles of the Corporation provide that the Board shall consist of a minimum of one and a maximum of ten directors. The Board has the authority to fix the number of directors within these limits. The Board has set the number of directors at five. Each nominee for election as a director is currently a director of the Corporation. The term of each of the Corporation’s present directors expires at the Meeting and each director elected at the Meeting will hold office until the next annual general meeting of shareholders of the Corporation or until his or her successor is duly elected or appointed, unless he or she resigns, is removed or becomes disqualified in accordance with the Corporation’s by-laws or governing legislation.

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The Corporation's by-laws provide for advance notice of nominations of directors in circumstances where nominations of persons for election to the Board are made by shareholders other than pursuant to: (a) a requisition to call a meeting of shareholders made pursuant to the provisions of the Business Corporations Act (Ontario) (the “Act”); or (b) a shareholder proposal made pursuant to the provisions of the Act (collectively, the “Advance Notice Requirement”). Among other things, the Advance Notice Requirement fixes a deadline by which shareholders must submit a notice of director nominations to the Corporation prior to any annual or special meeting of shareholders where directors are to be elected and sets forth the information that a shareholder must include in the notice for it to be valid. In the case of an annual meeting of shareholders, notice to the Corporation must be given not less than 30 days prior to the date of the annual meeting; provided, however, that in the event that the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the 10th day following such public announcement. In the case of a special meeting of shareholders (which is not also an annual meeting), notice to the Corporation must be given not later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting was made. However, if the Corporation relies on the Notice-and-Access Provisions for the delivery of proxy-related materials for an annual general or special meeting and the initial public announcement is not less than 50 days before the date of the meeting, notice must be made not less than 40 days prior to the date of the meeting. The Board may, in its discretion, waive any requirement of the Advance Notice Requirement. The purpose of the Advance Notice Requirement is to treat all shareholders fairly by ensuring that all shareholders, including those participating in a meeting by proxy rather than in person, receive adequate notice of the nominations to be considered at a meeting and sufficient information with respect to all nominees and can thereby exercise their voting rights in an informed manner. In addition, the Advance Notice Requirement should assist in facilitating an orderly and efficient meeting process. A copy of the Corporation's by-laws is available under its profile on SEDAR at www.sedar.com.

The persons named in the enclosed form of proxy intend to vote “for” the election of each of the below-named nominees unless otherwise instructed on a properly executed and validly deposited proxy. Management does not contemplate that any of the nominees named below will be unable to serve as a director but, if that should occur for any reason prior to the Meeting, the persons named in the enclosed form of proxy reserve the right to vote for another nominee in their discretion.

Shareholders can vote or withhold from voting on the election of each director on an individual basis. The Board has adopted a policy which requires voting with respect to the election of directors at any meeting of shareholders to be by individual nominee as opposed to by slate of directors, that is, shareholders will be asked to vote in favour of, or withhold from voting, separately for each nominee.

On March 25, 2014, the Board adopted a majority voting policy (the “Majority Voting Policy”) effective July 1, 2014 and amended on March 1, 2017 and March 6, 2018. Under the Majority Voting Policy, a director nominee who is elected in an uncontested election with a greater number of votes “withheld” than votes “for” will be considered by the Board not to have received the support of the shareholders, even though duly elected as a matter of corporate law. Such a nominee will be expected to provide forthwith his or her resignation to the Chair of the Board for the consideration by the Corporate Governance and Compensation Committee of the Board (the “CGC Committee”). The CGC Committee shall consider the resignation offer and shall recommend to the Board whether or not to accept it. Such director will not participate in any CGC Committee or Board deliberations regarding the resignation offer. Unless extenuating circumstances apply, the CGC Committee shall be expected to accept the resignation. The Board shall act on the CGC Committee’s recommendation within 90 days of the date of the shareholders’ meeting at which the election occurred. The Board shall be expected to accept the resignation except in situations where extenuating circumstances would warrant the applicable director continuing to serve on the Board. Following the Board’s decision on the resignation, the Board will promptly disclose, by way of a press release, its decision (together with an explanation of the process by which the decision was made and, if applicable, the reason(s) for rejecting the tendered resignation). The resignation will be effective when accepted by the Board. The Majority Voting Policy does not apply in circumstances involving contested director elections. A copy of the Majority Voting Policy is available on the Corporation's website at www.sprott.com.

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The following table sets out the name of each person proposed to be nominated for election as a director at the Meeting, all offices of the Corporation now held by such person, his or her principal occupation, the period of time for which he or she has been a director of the Corporation, the number of Common Shares beneficially owned, or controlled or directed, directly or indirectly, by such person and the number of deferred share units (“DSUs”) held by such person as at the date hereof. Biographical information for each nominee is also provided below.

Name,  Municipality and Country of Residence	Position(s) with the Corporation	Principal Occupation	Director Since	Common Shares beneficially owned, or controlled or directed, directly or indirectly(1)	DSUs(2)
Ronald Dewhurst(3) Victoria, Australia	Director	Corporate Director	2017	—	82,234
Peter Grosskopf Ontario, Canada(4)	Chief Executive Officer ("CEO") and Director	CEO of the Corporation and CEO of Sprott Resource Lending Corp. ("SRLC")	2010	5,659,425	—
Sharon Ranson(5) Ontario, Canada	Director	President of The Ranson Group Inc. (executive coaching and consulting services firm)	2014	250,000	258,027
Arthur Richards Rule IV(6) California, United States	Director	President and CEO of Sprott U.S. Holdings Inc. ("Sprott US")	2011	26,370,827	—
Rosemary Zigrossi(3)(5) Ontario, Canada	Director	President, Odaamis Inc. (consulting services firm)	2014	35,000	131,058

Notes:

(1) The information as to the number of Common Shares beneficially owned, directly or indirectly, or over which control or direction is exercised, by the directors, not being within the knowledge of the Corporation, has been obtained from the System for Electronic Disclosure by Insiders.

(2) For further information concerning the Corporation’s DSU Plan (as defined below), see “Director Attendance and Compensation - Deferred Share Unit Plan”.

(3) Member of the CGC Committee.

(4) 777,425 of such Common Shares have been designated for the account of Mr. Grosskopf under the EPSP (as defined below) and, as at the date hereof, 265,971 of such Common Shares designated under the EPSP have not yet vested.

(5) Member of the Audit Committee (as defined below).

(6) 273,963 of such Common Shares have been designated for the account of Mr. Rule under the EIP (as defined below) and, as at the date hereof, all of these Common Shares designated under the EIP have vested.

Except as noted below, each of the foregoing directors and officers has held the same principal occupation for the previous five years.

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Ronald Dewhurst

Ron Dewhurst has spent 40 years spread across the investment banking and asset management industries. He has lived approximately half of his career outside his native Australia working in Hong Kong, the United Kingdom and the United States of America. Ron has held leadership roles as CEO of Australian Investment Bank ANZ McCaughan Ltd., Managing Director of Australian asset manager IOOF Holdings Ltd., Head of Americas for J.P. Morgan Asset Management, and Executive Vice President and Head of Global Investment Managers for Legg Mason Inc. based in the U.S. Over the years Ron has held a number of board roles including Australian United Investment Company, IOOF Holdings Ltd., Orchard Petroleum Ltd., Rhinomed Ltd., One Vue Holdings, The National Gallery of Victoria and The Breast Cancer Network of Australia.

Peter Grosskopf

Peter Grosskopf assumed the role of CEO of the Corporation in September 2010. Mr. Grosskopf has over 30 years of experience in the financial services industry and an extensive background as an advisor and underwriter to companies in a wide variety of sectors. In addition to his role at the Corporation, he also serves as CEO, Managing Director and a director of SRLC, CEO of Sprott Consulting GP Inc. and President and a director of Sprott Consulting LP (“SCLP”). Prior to joining the Corporation, he was President of Cormark Securities Inc. ("Cormark"). Over the course of his career, Mr. Grosskopf has established a track record of successfully building and growing businesses. Prior to joining Cormark, Mr. Grosskopf was one of the co-founders of Newcrest Capital Inc., which was acquired by the TD Bank Financial Group in 2000. Mr. Grosskopf is a CFA^® charterholder, holds the ICD.D designation and earned an Honours Degree in Business Administration and a Masters of Business Administration, both from the Richard Ivey School of Business at the University of Western Ontario.

Sharon Ranson

Sharon Ranson is a corporate director and President of The Ranson Group Inc., a company offering executive coaching and consulting services. Ms Ranson also currently serves as a director of Echelon Financial Holdings (TSX:EFH), Fire and Flower Inc. (TSX-V:FAF.V), Spark Power Corp. (TSX: SPG), Continental Bank of Canada, Borrowell Inc. and the Toronto Investment Board. Her volunteer roles include Chair of the Nominating Committee for the Public Sector Pension Investment Board (PSPIB), the Advisory Board for the Smith School of Business, Queen's University and the Campaign Cabinet for the YMCA of GTA. Prior to founding her current business in 2002, Ms. Ranson spent over 20 years in capital markets where she was a top ranked Financial Services Analyst and a senior Portfolio Manager. Ms. Ranson is an FCPA, FCA and holds the ICD.D designation. She graduated from Queen’s University with a Bachelor of Commerce and holds a MBA from York University.

Arthur Richards Rule IV

Arthur Richards “Rick” Rule IV has over 43 years of experience in natural resource investing. He founded Global Resource Investments, Ltd. (now called Sprott Global Resources Investments, Ltd. (“SGRIL”)), a full service U.S. brokerage firm that specializes in natural resource companies, in 1993, Resource Capital Investment Corp. (“RCIC”), a manager of pooled investment vehicles that invest in natural resource companies, in 1998, and Terra Resource Investment Management (now Sprott Asset Management USA Inc. (“SAM USA”)), a registered investment advisor that provides segregated managed accounts, in 2006. At SGRIL, Mr. Rule leads a team that features professionals trained in resource related disciplines, such as geology and engineering, who work together to evaluate investment opportunities. Mr. Rule is the co-portfolio manager for the RCIC limited partnerships and also advises some of the SAM USA investment platforms. He is a leading American retail broker specializing in mining, energy, water utilities, forest products and agriculture.

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Rosemary Zigrossi

Rosemary Zigrossi is a consultant to small to medium sized companies and serves as a corporate director. Prior to this, Ms. Zigrossi was a Director at Promontory Financial Group Canada (“Promontory”) and involved in advising clients in the asset management and banking industries in the area of risk management, regulatory compliance and governance. Prior to joining Promontory, Ms. Zigrossi was at the Ontario Teachers’ Pension Plan ("OTPP") where she held various roles including Vice President, Asset Mix and Risk; Vice President, Venture Capital and Private Equity; and Controller. Prior to joining OTPP, Ms. Zigrossi was an Assistant Vice President at J.P. Morgan (Canada) and former auditor with KPMG. Ms. Zigrossi currently serves on the board of directors of Russell Investments Corporate Class Inc., is a member of the Investment Committee of Sustainable Development Technology Corporation and a member of the Capital Markets Advisory Committee of the IFRS. She is a former member of the board of the Business Development Bank of Canada, Canadian Venture Capital Association, McMichael Canadian Art Collection and a number of privately held companies and a past governor of Trent University. Ms. Zigrossi is a Chartered Professional Accountant (CPA, CA) and Chartered Financial Analyst (CFA). She holds the ICD.D designation, graduated from the University of Toronto with a Bachelor of Commerce and attended the Harvard Business School’s Program for Management Development.

Corporate Cease Trade Orders or Bankruptcies

To the knowledge of the Corporation, no proposed director is, or within the ten years prior to the date hereof has been, a director, CEO or Chief Financial Officer ("CFO") of any company (including the Corporation) that was subject to (a) a cease trade order; (b) an order similar to a cease trade order; or (c) an order that denied the company access to any exemption under securities legislation, that was in effect for a period of more than thirty consecutive days issued while that person was acting in such capacity or issued thereafter but resulted from an event that occurred while that person was acting in such capacity.

To the knowledge of the Corporation, no proposed director is, or within the ten years prior to the date hereof has been, a director or executive officer of any company (including the Corporation) that, while that person was acting in that capacity or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

Penalties or Sanctions and Personal Bankruptcies

To the knowledge of the Corporation, no proposed director has been subject to (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director.

To the knowledge of the Corporation, no proposed director has, within the ten years prior to the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement, or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his or her assets.

Indemnification

No indemnification under section 136 of the Business Corporations Act (Ontario) was paid or became payable in 2018.

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3.       Appointment of Auditors

KPMG LLP was appointed as the Corporation's auditors effective as of January 1, 2016. Management proposes to re-appoint KPMG LLP, Bay Adelaide Centre, 333 Bay Street, Suite 4600, Toronto, Ontario M5H 2S5, as auditors of the Corporation and to authorize the Board to fix the auditors’ remuneration and terms of engagement.

In the absence of a contrary specification made in the form of proxy, the persons named in the enclosed form of proxy intend to vote “for” the re-appointment of KPMG LLP as auditors of the Corporation and to authorize the Board to fix their remuneration and terms of engagement.

CORPORATE GOVERNANCE

Board of Directors

The Board is currently comprised of six directors, the majority of whom are independent directors. The following are the Corporation’s independent directors: Ronald Dewhurst, Jack C. Lee, Sharon Ranson and Rosemary Zigrossi. The following directors are not independent: Peter Grosskopf (who is CEO of the Corporation; CEO, Managing Director and a director of SRLC, a wholly-owned subsidiary of the Corporation; CEO of Sprott Consulting GP Inc., a wholly-owned subsidiary of the Corporation; and President and a director of SCLP, a wholly-owned subsidiary of the Corporation); and Arthur Richards Rule IV (who is President and CEO of Sprott US, a wholly-owned subsidiary of the Corporation, co-Portfolio Manager of the RCIC limited partnerships and advisor on some of SAM USA's investment platforms).

As noted above, the Chair of the Board is Jack C. Lee, an independent director who has served on the Board since March 10, 2008. The Chair of the Board is responsible for overseeing the performance by the Board of its duties, communicating periodically with committee chairs regarding the activities of their respective committees, and ensuring the Board functions in a cohesive manner and providing the leadership essential to achieve this. As Mr. Lee will not stand for re-election at the Meeting, it is anticipated that Mr. Dewhurst will be appointed Chair of the Board if he is elected as a director.

The independent directors do not hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. Rather, a portion of each meeting is set aside for meetings of the independent directors, if requested. During the course of a Board meeting, if a matter is more effectively dealt with without the presence of members of management, the independent directors will request that members of management leave the meeting, and the independent directors then meet in camera. The independent directors communicate with each other on an informal basis throughout the year. At each of its meetings, the Audit and Risk Management Committee (the "Audit Committee") members (who are all independent directors) meet without members of management in attendance.

The Board discharges its responsibility for overseeing the management of the Corporation’s business by delegating to the Corporation’s senior officers the responsibility for day-to-day management of the Corporation. The Board discharges its responsibilities both directly and through its two standing committees: the Audit Committee and the CGC Committee. In addition to these regular committees, the Board may appoint ad hoc committees periodically to address certain issues of a more short-term nature.

Certain of the directors are also directors (or equivalent) of other reporting issuers as set forth below:

Name	Reporting Issuer
Jack C. Lee	Alaris Royalty Corp.
Sharon Ranson	Echelon Financial Holdings Inc.; Fire and Flower Inc.; and  Spark Power Corp.
Arthur Richards Rule IV	Sprott Resource Holdings Inc.

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Board Mandate

The Board has adopted a written mandate that acknowledges its responsibility for the stewardship of the business and affairs of the Corporation. The Board reviews and assesses the adequacy of the Board mandate at least annually or otherwise, as it deems appropriate, and makes any necessary changes. A copy of this mandate is attached to this Circular as Schedule “A”.

Position Descriptions

The Board is responsible for: (i) developing position descriptions for the Chair of the Board, the lead director, if applicable, the chair of each Board committee and, together with the CEO of the Corporation, the CEO of the Corporation (which includes delineating management’s responsibilities); (ii) developing and approving the corporate goals and objectives that the CEO of the Corporation is responsible for meeting; and (iii) developing a description of the expectations and responsibilities of the Corporation’s directors, including basic duties and responsibilities with respect to attendance at Board meetings and advance review of meeting materials.

The Board has developed written position descriptions for the Chair, the lead director and the chair of each Board committee. In addition, the Board has developed a written position description for the CEO which delineates the role and responsibilities of such officer. The CEO is specifically charged with the responsibility of managing the strategic and operational agenda of the Corporation and for the execution of the directives and policies of the Board.

Orientation and Continuing Education

The Board is responsible for: (i) ensuring that all new directors receive a comprehensive orientation, that they fully understand the role of the Board and its committees, as well as the contribution individual directors are expected to make (including the commitment of time and resources that the Corporation expects from its directors) and that they understand the nature and operation of the Corporation's business; and (ii) providing continuing education opportunities for all directors, so that individuals may maintain or enhance their skills and abilities as directors, as well as to ensure that their knowledge and understanding of the Corporation's business remains current. Each member of the Board is provided with copies of all of the mandates of the Board (and its committees) as well as all governance-related policies of the Corporation. In order to provide members of the Board with a more comprehensive understanding of the operations of the group, each senior portfolio manager and other senior executives are provided with an opportunity to present to the Board at a regularly scheduled meeting. Board members are also encouraged to contact the CEO, the CFO or the General Counsel of the Corporation should they have any specific questions or concerns.

The Board does not have a formal continuing education program for its directors. All directors are encouraged to attend, enroll or participate in courses and/or seminars dealing with financial literacy, corporate governance and related matters. Each current member of the Board is an experienced director who is aware of his or her responsibility to maintain the skill and knowledge necessary to meet his or her obligations as a director. Directors have the resources to engage outside consultants to review matters on which they feel they require independent advice.

Ethical Business Conduct

The Board has approved policies and procedures (collectively, the “Policies”) designed to ensure that the Corporation operates with the highest ethical and moral standards “best practices”, including the Code of Business Conduct and Ethics (the "Code") which is available on SEDAR at www.sedar.com and the Corporation's website at www.sprott.com. The Board is ultimately responsible for the implementation and administration of the Code and has designated the General Counsel and Corporate Secretary as well as the CFO of the Corporation for the day-to-day implementation and administration of the Code. The Policies include (i) a whistleblower policy, to ensure that the Corporation, its subsidiaries, directors, officers and employees comply with all applicable legal and regulatory requirements relating to corporate reporting and disclosure, accounting and auditing controls and procedures, securities compliance and other matters pertaining to fraud against the Corporation and its shareholders; and (ii) an insider trading policy, to ensure that the Corporation, its subsidiaries, directors, officers and employees comply with, or do not violate, insider trading obligations or restrictions under applicable securities laws. The directors of the Corporation encourage and promote an overall culture of ethical business conduct by promoting compliance with applicable laws, rules and regulations, providing guidance to employees, directors and officers to help them recognize and deal with ethical issues, promoting a culture of open communication, honesty and accountability and ensuring awareness of disciplinary action for violations of ethical conduct. Sprott Asset Management LP ("SAM"), Sprott Capital Partners LP (“SCP”), SAM USA and SGRIL also have written policies and procedures that establish strict rules for professional conduct and management of conflicts of interest. Where a director or executive officer of the Corporation has a material interest in a transaction or agreement under consideration by the Corporation, such director or executive officer must declare his or her interest and, in the case of a director, recuse himself or herself from deliberations and voting on the matter in compliance with the Act.

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Nomination of Directors

In connection with the nomination or appointment of individuals as directors, the Board is responsible for: (i) considering what competencies and skills the Board, as a whole, should possess; (ii) assessing what competencies and skills each existing director possesses; and (iii) considering the appropriate size of the Board, with a view to facilitating effective decision making, all with regard to their Diversity. “Diversity” refers to any characteristic that can be used to differentiate groups and people from one another. Diversity includes, but is not limited to, characteristics such as gender, geographical representation, education, religion, ethnicity, race, nationality, culture, language, aboriginal or indigenous status and other ethnic distinctions, sexual orientation, political affiliation, family and marital status, age, disability, and industry experience and expertise. See also “Corporate Governance - Diversity on the Board and in Executive Officer Positions” below. The Board will also consider the advice and input of the CGC Committee.

The CGC Committee is responsible for establishing and recommending to the Board qualification criteria for the selection of new directors to serve on the Board and for implementing a procedure to reasonably identify, with as much advance notice as practicable, impending vacancies on the Board, so as to allow sufficient time for recruitment and introduction of proposed nominees to existing members of the Board. The CGC Committee works with the Chair of the Board to identify and recommend individuals qualified to become Board members, consistent with the Corporation's Diversity Policy and criteria approved by the Board. See "Corporate Governance - Diversity on the Board and in Executive Officer Positions" below for further details regarding the Corporation's Diversity Policy. See “Corporate Governance - Corporate Governance and Compensation Committee” below for further details regarding the CGC Committee, including its members and responsibilities.

Board Evaluation

The Board is responsible for ensuring that the Board, its committees and each individual director are regularly assessed regarding his, her or its effectiveness and contribution. These assessments consider, in the case of the Board or a committee thereof, its mandate or charter and in the case of an individual director, any applicable position description, as well as the competencies and skills each individual director is expected to bring to the Board. The Chair of the CGC Committee canvasses the directors individually for both self-assessment and assessment of the Board as a whole. Such findings are aggregated and reported to the CGC Committee and the Board, along with any recommendations which may arise.

Audit and Risk Management Committee

The Board has established an Audit Committee that is currently comprised of Sharon Ranson (Chair), Jack C. Lee and Rosemary Zigrossi. All members of the Audit Committee are independent and non-executive directors of the Corporation and meet the independence and financial literacy requirements of National Instrument 52-110 - Audit Committees (“NI 52-110”). See “Particulars of Matters to be Acted Upon - Election of Directors” for a biographical description of each member of the Audit Committee. It is anticipated that Ms Ranson will be re-appointed Chair of the Audit Committee if she is elected a director and Mr. Dewhurst and Ms Zigrossi will be appointed members of the Audit Committee if they are elected as directors.

For further information regarding the Audit Committee, see the section entitled "Audit and Risk Management Committee Information" in the Corporation’s Annual Information Form for the financial year ended December 31, 2018 (the "AIF") as well as Appendix "A" to the AIF (collectively, the "AIF Audit Committee Disclosure"). The AIF Audit Committee Disclosure is incorporated by reference into, and forms an integral part of, this Circular. The AIF is available on SEDAR at www.sedar.com. The Corporation will, upon request at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, Canada M5J 2J1, Attention Chief Financial Officer, promptly provide a copy of the AIF free of charge to any securityholder of the Corporation.

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Corporate Governance and Compensation Committee

The Board has established a CGC Committee comprised of Ronald Dewhurst (Chair), Jack C. Lee and Rosemary Zigrossi, all of whom are independent directors within the meaning of Section 1.4 of NI 52-110. The CGC Committee previously operated as two separate committees: the Human Resource and Compensation Committee (the "HRC Committee") and the Corporate Governance and Nominating Committee (the "CGN Committee"). On March 6, 2018, the Board resolved to combine these two committees and form the CGC Committee. It is anticipated that Mr. Dewhurst will be re-appointed Chair of the CGC Committee if he is elected a director and Ms Ranson and Ms Zigrossi will be appointed members of the CGC Committee if they are elected as directors. All members of the CGC Committee have direct experience that is relevant in their responsibilities in executive compensation.

The overall purpose of the CGC Committee is to assist the Board (i) in maintaining high standards of corporate governance by developing, recommending and monitoring effective guidelines and procedures applicable to the Corporation; (ii) by establishing the process for identifying, recruiting, appointing and/or providing ongoing development for directors of the Corporation; and (iii) in fulfilling its oversight responsibilities in relation to human resources and compensation by developing, monitoring and assessing the Corporation’s approach to the development and succession of key executives and the compensation of its directors, senior management and employees.

Corporate governance responsibilities include reviewing the mandates of the Board and its committees; periodically reviewing and evaluating the performance of all directors, committees and the Board as a whole; recommending new candidates for Board membership, making recommendations to the Board regarding the size and composition of the Board and qualification criteria for the selection of new Board members and ensuring that appropriate orientation and education programs are available for new Board members; reviewing annually the membership and chairs of all committees of the Board; and reviewing annually and recommending retainers and fees paid to Board members. Human resources and compensation responsibilities include recommending to the Board candidates for CEO, President and all other senior management positions and approving the terms of their appointment and termination or retirement; reviewing succession planning programs for the CEO, President and all other senior management and specific career planning for potential successors; reviewing, in consultation with the Chair of the Board, and recommending to the Board for approval, the remuneration of the Corporation’s CEO and other senior executive officers; reviewing and recommending to the Board for approval, on an annual basis, the corporate goals and objectives for the CEO and evaluating the CEO's performance against such goals and objectives; reviewing and, if advisable, approving compensation for any newly hired individual whose total annual compensation (including salary, bonus and any other incentive compensation) exceeds $1 million; and determining (or delegating the authority to determine) and recommending to the Board for approval awards of Options under the 2016 Amended and Restated Stock Option Plan (the "Option Plan") as well as awards under the Corporation's 2011 Employee Profit Sharing Plan (the "EPSP") and the Corporation's 2011 Equity Inventive Plan for U.S. Service Providers (the "EIP"), respectively. See also “Executive Compensation - Compensation Discussion and Analysis - Executive Compensation Governance Compensation Process”.

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Director Term Limits and Other Mechanisms of Board Renewal

Three of the six current directors were elected or appointed within the past one to four years. The Corporation has not adopted term limits for members of the Board, but facilitates Board renewal by reviewing and evaluating the performance and independence of directors and committees annually and seeks to foster a balance between new perspectives and the experience of seasoned Board members. The Corporation believes a policy imposing a term limit or an arbitrary retirement age would discount the value of experience and unnecessarily deprive the Corporation of the contribution by directors who have developed a deep knowledge of the Corporation over time.

Diversity on the Board and in Executive Officer Positions

The Board has adopted a written diversity policy (the "Diversity Policy"), which recognizes the Corporation's commitment to a merit based system for the composition of its Board and senior management, within a diverse and inclusive culture that solicits multiple perspectives and views, free of conscious or unconscious bias and discrimination.

The Corporation recognizes and embraces the benefits of having diversity on the Board and in senior management. Diversity is important to ensure that members of the Board and senior management possess the necessary range of perspectives, experience and expertise required to achieve the Corporation’s objectives and deliver for its stakeholders. The Corporation believes that diversity mitigates the risk of group think, ensures that the Corporation has the opportunity to benefit from all available talent and enhances, among other things, its organizational strength, problem-solving ability and opportunity for innovation.

In the Diversity Policy, “diversity” refers to any characteristic that can be used to differentiate groups and people from one another. It includes, but is not limited to, characteristics such as gender, geographical representation, education, religion, ethnicity, race, nationality, culture, language, aboriginal or indigenous status and other ethnic distinctions, sexual orientation, political affiliation, family and marital status, age, disability, and industry experience and expertise.

It is an objective of the Diversity Policy that diversity be considered in determining the optimal composition of the Board. In reviewing Board composition and identifying suitable candidates for Board appointment or nomination for election to the Board, candidates will be selected based on merit and against objective criteria. Accordingly the Corporation does not have a formal target regarding women on the Board, but due regard will be given within the appointment or nomination process to the benefits of diversity in order to enable the Board to discharge its duties and responsibilities effectively.

The Corporation recognizes that gender diversity is a significant aspect of diversity and acknowledges the important role that women with the appropriate competencies and skills can play in contributing to diversity of perspective in the boardroom. Although the Corporation does not have a formal target regarding women on the Board, the selection process for new Board nominees involves ensuring at least one female candidate is included on the short-list identifying potential Board nominees. If, at the end of the selection process, no female candidates are selected, the Board must be satisfied that there are objective reasons to support this determination.

Upon adoption of the Corporation's diversity policy and currently, the Board includes two female members, representing approximately 33% of the Board.

It is also an objective of the Corporation's diversity policy that diversity be considered in connection with succession planning and the appointment of members of the Corporation's senior management. The Corporation recognizes that gender diversity is a significant aspect of diversity and acknowledges the important role that women with the appropriate competencies and skills can play in contributing to diversity of perspective in senior management positions. The Corporation does not have a formal target regarding women in executive positions because the Board does not believe that targets necessarily result in the identification or selection of the best candidates. However, in order to promote the specific objective of gender diversity in senior management, the Corporation (i) continues to implement policies which address impediments to gender diversity in the workplace and review their availability and utilisation; (ii) proactively identifies high-potential women for leadership training programs and encourages them to apply for more senior roles; (iii) has developed flexible scheduling programs and other family friendly policies for mid-career women to assist with recruitment and retention; (iv) regularly reviews the proportion (in percentage terms) of persons at all levels of the Corporation who are women; (v) monitors effectiveness of, and continues to expand on, existing initiatives designed to identify, support and develop talented women with senior management potential; and (vi) continues to identify new ways to entrench diversity as a cultural priority across the Corporation.

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Female representation in senior management at the Corporation includes the CFO of SAM and SCP, the Chief Compliance Officer ("CCO") of SCP, the Managing Director, Marketing and the Director of Human Resources, representing approximately 20% of senior management. Other senior positions are occupied by members of visible minorities.

DIRECTOR ATTENDANCE AND COMPENSATION

The Board meets regularly to review the activities and financial results of the Corporation and as necessary to review and consider significant impending actions of the Corporation. The Board met formally 5 times during 2018 and twice since the end of 2018. The attendance record of each director for all Board and committee meetings held since January 1, 2018 is as follows:

Name of Director	Board Meetings    (Attended/Held)(1)	Audit Committee Meetings (Attended/Held)(2)	CGC Committee Meetings (Attended/Held)(3)
Ronald Dewhurst(4)	7/7	—	8/8
Peter Grosskopf	7/7	—	—
Jack C. Lee(5)	7/7	5/5	6/6
Sharon Ranson	7/7	5/5	1/1
James T. Roddy(6)	1/1	1/1	—
Arthur Richards Rule IV	7/7	—	—
Rosemary Zigrossi	7/7	5/5	7/7

Notes:

(1) Includes Board meetings held on January 29, 2019 and February 27, 2019.

(2) Includes an Audit Committee meeting held on February 27, 2019.

(3) The CGC Committee previously operated as two separate committees: the HRC Committee and the CGN Committee. On March 6, 2018, the Board resolved to combine these two committees and form the CGC Committee. The above chart includes HRC Committee and CGN Committee meetings held on March 1, 2018 and CGC Committee meetings held on January 29, 2019 and February 27, 2019.

(4) Mr. Dewhurst was appointed as the Chair of the CGC Committee effective March 6, 2018.

(5) Mr. Lee, in his capacity as Chair of the Board, also sat as an ex officio member of the Audit Committee, CGN Committee and HRC Committee between May 10, 2017 and March 6, 2018. On March 6, 2018, Mr. Lee was appointed as a member of the Audit Committee and the CGC Committee. The above numbers do not include his attendance at each meeting at which he served as an ex officio member.

(6) Mr. Roddy resigned as a director of the Corporation on March 6, 2018.

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Director Compensation Table

The following table shows all compensation (before taxes and other statutory withholdings) provided to the directors of the Corporation (other than the directors who were also Named Executive Officers ("NEOs") and for whom information is shown in the tables for NEOs below) for the year ended December 31, 2018.

Name(1)	Fees Earned ($)(2)	Share- based awards ($)	Option- based awards ($)	Non-equity incentive plan compensation ($)	All other compensation ($)	Pension value ($)	Total ($)
Jack C. Lee	200,000	—	—	—	—	—	200,000
Sharon Ranson	151,490	—	—	—	—	—	151,490
Ronald Dewhurst	142,740	—	—	—	—	—	142,740
Rosemary Zigrossi	110,000	—	—	—	—	—	110,000
James T. Roddy(3)	29,792	—	—	—	—	—	29,792

Notes:

(1) Peter Grosskopf, CEO of the Corporation and CEO of SRLC, and Arthur Richards Rule IV, President and CEO of Sprott US, are also directors of the Corporation. Messrs. Grosskopf’s and Rule’s compensation in respect of the Corporation is fully disclosed in the Summary Compensation Table below dealing with the compensation of NEOs. Messrs. Grosskopf and Rule did not receive any additional compensation from the Corporation for their services as directors of the Corporation.

(2) As noted below, each eligible director shall have the right, but not the obligation, to elect once each calendar year to receive all or 50% of such director's annual retainer for the immediately succeeding year in the form of DSUs. Ms. Ranson elected to receive DSUs in respect of $75,745 of her $151,490 in director fees earned for the year ended December 31, 2018. Mr. Lee elected to receive all of his directors fees earned for the year ended December 31, 2018 in the form of DSUs. Mr. Roddy, Mr. Dewhurst and Ms. Zigrossi each elected to receive all of their director fees earned for the year ended December 31, 2018 in cash. A portion of the director fees earned in DSUs during the year ended December 31, 2018 were granted on January 15, 2019.

(3) Mr. Roddy resigned as a director of the Corporation on March 6, 2018.

Each independent member of the Board is paid such remuneration for his or her services as the Board may, from time to time, determine. In addition, the Chair of the CGC Committee is authorized to approve the grant of 75,000 DSUs to each new non-executive director of the Corporation upon his or her election or appointment to the Board.

In 2017, the HRC Committee undertook a review of independent director compensation to ensure such fees remained competitive in order to attract and retain quality directors. Effective following the Corporation's annual shareholders meeting on May 12, 2017, meeting attendance fees were eliminated and the Board revised the compensation payable to independent directors of the Corporation for serving as directors of the Corporation as follows:

• Annual retainer fee for each independent director: $110,000 (the Chair is entitled to an additional annual retainer fee of $90,000, for a total annual retainer fee of $200,000)

• Annual retainer fee for the Chair of the Audit Committee: $40,000

• Annual retainer fee for the Chair of the HRC Committee: $35,000

• Annual retainer fee for the Chair of the CGN Committee: $15,000

• Reimbursement for out-of-pocket expenses for attending Board or committee meetings

As a result of the combination of the HRC Committee and CGN Committee into the new CGC Committee on March 6, 2018, the annual retainer fees for the chairs of the HRC Committee and CGN Committee were eliminated and the Board approved a new annual retainer fee of $40,000 for the Chair of the CGC Committee.

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Deferred Share Unit Plan

In May 2012, the Corporation established the deferred share unit plan (the “DSU Plan”) for the independent directors of the Corporation. The purpose of the DSU Plan is to advance the interests of the Corporation by: (i) providing additional incentives to eligible directors, as determined by the Board, by aligning their interests with those of the Corporation’s shareholders; and (ii) promoting the success of the Corporation’s business.

The Board designates the number of DSUs granted. The issue price for each DSU is the Market Price of the Common Shares calculated as of the date of the award. “Market Price” for the purpose of the DSU Plan means the volume-weighted average price of the Common Shares on the TSX for the five trading days immediately preceding the relevant date. In the event that the Common Shares are not then listed and posted for trading on any exchange, the Market Price in respect thereof is the fair market value of the Common Shares as determined by the reasonable application by the Board of a reasonable valuation method.

Each eligible director shall have the right, but not the obligation, to elect once each calendar year to receive all or 50% of such director’s annual retainer for the immediately succeeding year in the form of DSUs. If an eligible director does not make an election for all or part of a year, all of such director’s annual retainer for the year is paid in cash.

A participant’s account is credited with dividend equivalents in the form of additional DSUs on each dividend payment date in respect of which ordinary course cash dividends are paid on the Common Shares.

All DSUs awarded pursuant to the DSU Plan are settled in cash. Participants are entitled to payment when he or she ceases to be an eligible director of the Corporation.

The Corporation’s annual “burn rate” for shares granted under the DSU Plan, calculated as described in Section 613(p) of the TSX Company Manual with respect to the number of issued and outstanding shares (total number of Options issued in a fiscal year, divided by the weighted average number of outstanding Common Shares for that year) was 0.04% in fiscal 2016, 0.09% in fiscal 2017 and 0.05% in fiscal 2018.

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Outstanding Option-Based and Share-Based Awards

The following table sets forth information concerning all option-based and share-based awards for each director (other than the directors who were also NEOs and for whom the identical information is shown on the comparable table for NEOs set out below) outstanding at December 31, 2018, including awards granted before the financial year ended December 31, 2018. During the financial year ended December 31, 2018, the directors earned 92,635 DSUs in director fees and were granted no option-based awards. The directors also earned 30,300 DSUs in dividend income during the financial year ended December 31, 2018 from prior DSU grants.

	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date	Value of unexercised in-the- money options ($)	Number of shares or units of shares that have not vested (#)	Market or payout value of share- based awards that have not vested ($)(1)	Market or payout value of vested share-based awards not paid or distributed ($)(2)
Jack C. Lee	50,000	6.60	November 9, 2020	—	—	—	945,339(3)
Sharon Ranson	—	—	—	—	—	—	663,129(4)
Ronald Dewhurst	—	—	—	—	25,000	64,250	147,091
Rosemary Zigrossi	—	—	—	—	—	—	336,819
James T. Roddy (5)	50,000	6.60	November 9, 2020	—	—	—	—

Notes:

(1) Based on the December 31, 2018 TSX closing price of $2.57 per Common Share.

(2) Valued as at December 31, 2018. Although DSUs vest immediately upon being awarded, they cannot be paid out until 30 days following the date on which an independent director ceases to be independent of the Corporation, as determined in accordance with Section 1.4 of NI 52-110.

(3) Includes $50,000 of DSUs earned in director fees in the year ended December 31, 2018 but not granted until January 15, 2019.

(4) Includes $18,750 of DSUs earned in director fees in the year ended December 31, 2018 but not granted until January 15, 2019.

(5) Mr. Roddy resigned as a director of the Corporation on March 6, 2018. On the same date, the Board approved the expiry of his Options remaining at the original expiry dates thereof. Mr. Roddy was paid out all of his 94,457 DSUs earned from previous years in the amount of $313,897 on March 6, 2018.

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Incentive Plan Awards - Value Vested or Earned during the Year

The following table provides information regarding the value on pay-out or vesting of incentive plan awards for each of the Corporation’s directors (other than the directors who were also NEOs and for whom the identical information is shown on the comparable table for NEOs set out below) for the financial year ended December 31, 2018.

Name	Option-based awards - value vested during the year ($)	Share-based awards - value vested during the year ($)	Non-equity incentive plan compensation - value earned during the year ($)
Jack C. Lee	—	237,905(1)	—
Sharon Ranson	—	103,997(2)	—
Rosemary Zigrossi	—	15,341(3)	—
Ronald Dewhurst	—	74,125(4)	—
James T. Roddy (5)	—	—	—

Notes:

(1) Includes $200,000 of DSUs in director fees and $37,905 of DSUs earned in dividend income during the year ended December 31, 2018 from prior DSU grants. $50,000 of the $200,000 of DSUs were earned in director fees in the year ended December 31, 2018 but were not granted until January 15, 2019.

(2) Includes $75,745 of DSUs in director fees and $28,252 of DSUs earned in dividend income during the year ended December 31, 2018 from prior DSU grants. $18,750 of the $75,745 of DSUs were earned in director fees in the year ended December 31, 2018 but were not granted until January 15, 2019.

(3) Includes $15,341 of DSUs earned in dividend income during the year ended December 31, 2018 from prior DSU grants.

(4) Includes $64,500 of DSUs in special grants and $9,625 of DSUs earned in dividend income during the year ended December 31, 2018 from prior DSU grants.

(5) Mr. Roddy resigned as a director on March 6, 2018.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Named Executive Officers (NEOs)

The following is an overview of our executive compensation policy and programs, and focuses on the following executives who appear in the compensation tables:

• Peter Grosskopf (CEO)

• Kevin Hibbert (Senior Managing Director ("SMD"), CFO and Co-Head of the Enterprise Shared Services Group)

• Arthur Richards Rule IV (SMD of the Corporation and President of Sprott U.S.)

• Tim Sorensen (Managing Director of the Corporation and CEO of SCP)

• John Ciampaglia (SMD of the Corporation and CEO of SAM)

• Arthur Einav (SMD, General Counsel and Co-head of Enterprise Shared Services Group)

Objectives of the Corporation’s Compensation Programs

Sprott has a number of diverse business activities, with distinct talent pools from which we hire. In order to ensure our compensation programs can attract, retain and motivate the best professionals in the marketplace, our compensation programs are tailored to the individual business units we operate; we have deliberately not adopted a “one size fits all” approach to compensation across our various divisions.

For each of our business units, we approach compensation as follows:

• As the Corporation has grown, we have developed a core team of professionals who provide services to some or all of the operating entities within the Sprott group of companies. These “shared services” employees are rewarded by reference to the overall success of the Corporation, with a focus on their individual contributions and the external competitive environment.

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• SAM’s strategy has been to selectively hire “best in class” portfolio managers and analysts supported by sales, trading, operations, finance and compliance personnel. We seek to align the interests of our key personnel, including the CEO of SAM, with those of the investors in the investment funds that SAM manages and, in turn, the shareholders of the Corporation. SAM's portfolio managers earn variable compensation as part of Pool 1.

• SCP is engaged in two lines of business: (1) a merchant banking and investment banking business; and (2) investment management and administrative services to high net worth individuals and institutions. Employees of SCP engaged in merchant and investment banking are compensated primarily via a percentage of the commissions and advisory fees generated from corporate finance and advisory mandates completed. Employees of SCP engaged in investment management and administrative services are primarily compensated via a percentage of the commissions on the sale and purchase of securities on behalf of their clients. Additional variable compensation may be earned based on overall results of SCP.

• At SGRIL and SAM USA, investment advisors are compensated primarily via a percentage of the commissions generated from the sale and purchase of securities on behalf of their clients, a fee based on the client assets they manage and a percentage of the commissions and advisory fees generated from corporate finance and advisory mandates completed. They may earn additional variable compensation based on overall corporate results.

• At RCIC, variable compensation for senior investment employees is largely related to the earnings and performance of the funds that they manage, thereby closely aligning investment management’s interests with those of the investors in the investment funds that RCIC manages and, in turn, the shareholders of the Corporation.

Within our core competencies, we compete for a broad range of talent across the investment management, private equity and investment banking industries. As a result, we continuously review our compensation practices to ensure we provide competitive compensation for all employees, including the NEOs. Given competition to attract and retain high performing executives and professionals in the financial services industry is intense, the amount of total compensation paid to our executives must be considered in light of competitive compensation levels. When hiring new employees, compensation packages are structured so as to attract and retain such personnel. Compensation is tailored to the particular circumstances. While there are no directly comparable publicly listed companies in Canada, in 2015, with the assistance of Hugessen Consulting Inc. (“Hugessen”), a Canadian-based compensation consulting firm, we identified a “reference group” of companies against which to “benchmark” executive compensation at the Corporation. The reference group was selected based on criteria including geography, exchange-listing, asset management industry and market capitalization. Seven issuers were identified by Hugessen as public comparators: AGF Management Limited (TSX:AGF.B), Dundee Corporation (TSX:DC.A), Gluskin Sheff + Associates, Inc. (TSX:GS), Fiera Capital Corporation (TSX:FSZ), Tricon Capital Group Inc. (TSX:TCN), Guardian Capital Group Ltd. (TSX:GCG) and Senvest Capital Inc. (TSX:SEC), which group we believe remains the most relevant to us and provides some benchmark information to the CGC Committee.

We aim to pay competitive salaries but, in most cases, place a significant emphasis on variable compensation in order to align executive compensation with the financial performance of the Corporation and with long-term shareholder returns. In 2011, we implemented a deferred compensation element through the introduction of the EPSP (currently for Canadian employees) and the EIP (currently for U.S. employees). See “Securities Authorized for Issuance Under Equity Compensation Plans”.

On April 10, 2017, as a result of a strategic repositioning, SAM and SCP entered into an asset purchase agreement (the "Purchase Agreement") to sell the Corporation's Canadian diversified asset management contracts and certain of the client accounts of its Canadian private wealth business to a management group led by John Wilson, the then CEO of SAM, and James Fox, the then President of SAM, for an aggregate purchase price of approximately $46 million (the "Sale Transaction"). The Corporation undertook the Sale Transaction in order to realign resources to focus on its core competencies in precious metals, natural resources and real assets and therefore capitalize on global market opportunities in those areas. In line with this strategic repositioning, we reduced headcount by 40% to 124 employees upon the closing of the Sale Transaction and solidified our industry-leading precious metals and private resource investment teams. Senior management has also been re-positioned to better reflect the refreshed strategy of the Corporation.

With the re-alignment of the Corporation’s business strategies, a new compensation program was designed to address two key objectives: (i) the transition of share ownership from the founder, Eric Sprott, to the next generation of management and leaders tasked with driving the Corporation forward; and (ii) to better align executive and key employee interest with those of our shareholders on a more meaningful basis. As part of the implementation process new employment agreements were entered into with certain senior executives and key employees (collectively, the "Current LTIP Participants").

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Elements of Compensation

The key elements of the compensation arrangements of our executive officers, investment professionals and other key employees are set out below.

The Corporation’s compensation structure has, in the past, followed the tradition of a competitive base salary and greater participation in the profits of the Corporation primarily through cash bonuses as well as participation in the Option Plan, EPSP or EIP. There were a few exceptions to that model for certain key hires. In those exceptional circumstances and in order to attract them to the Corporation, compensation levels were guaranteed for a specified period (not to exceed two years). Those compensation structures were reviewed at the end of the specified periods and converted to the general corporate policy of competitive base pay and variable pay dependent upon long-term financial and personal performance.

Base Salary and Benefits

The base salary is the fixed portion of each NEO’s total compensation. It is designed to provide income certainty. In determining the base level of compensation for the Corporation’s executives, weight is placed on the following factors: the particular responsibilities related to the position, salaries or fees paid by companies of similar size in the industry, level of experience of the executive and overall performance, and the time which the executive is required to devote to the Corporation in fulfilling his or her responsibilities.

In addition to the base salary, we provide all employees with a benefits program that includes medical, dental, life insurance and other benefits. We believe that providing this type of program is a necessary part of our overall compensation structure to attract and retain employees in the competitive environment for professional talent. We do not provide any other perquisites to our NEOs, nor do we have any pension or other post-retirement plans.

Cash Bonus and Other Variable Compensation

As part of the overall re-alignment of the Corporation’s business in 2017, the Current LTIP Participants, with the exception of Mr. Grosskopf, agreed to receive cash bonus compensation only for extraordinary personal performance or Corporation results in exchange for a one-time Equity Grant (as defined below) under the EPSP or EIP, as applicable. In lieu of the one-time Equity Grant, Mr. Grosskopf’s existing performance-based options were also amended to align their vesting provisions with those of the Equity Grants. See “Elements of Compensation - Equity Incentives” below.

In order to further align the Corporation's business with the interest of our shareholders, we removed the discretionary bonus compensation program for all other employees. All employees, including the Current LTIP participants are now in one of three pools:

• Pool 1 employees are capital allocators and their support staff. These employees are now paid a quarterly cash incentive based on a pre-set percentage of the net revenues they generate within their segment. This incentive pool is reduced by any base salary earned during the applicable period for such incentive pool and the value of Common Shares received under the Current LTIP program that vested during the applicable period for such incentive pool. This incentive pool was designed to motivate Pool 1 employees to allocate capital in the most optimal way that maximizes shareholder benefits while mitigating operating risks.

• Pool 2 employees include the CEO and enterprise shared service executives. These employees are now paid from a cash incentive pool derived from a portion of the income generated above an annual EBIT margin target, subject to a minimum payout floor. This incentive pool was designed to strike an appropriate balance between motivating these employees with variable compensation incentives and ensuring their independence and objectivity while carrying out their monitoring and oversight mandates over company business operations 

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• Pool 3 employees are all other employees. As part of the transition to non-discretionary cash incentive payouts, these employees now receive an average cash bonus of 10% of their base salary. Individual bonus payments are calculated based on an overall assessment by senior management of the individual's performance and absolute and/or relative contribution. In all cases, each employee is considered separately, taking into account personal performance, relative ranking among peers (both internally and with reference to external information, where available and appropriate) and base salary. These incentives are designed to motivate employees to achieve personal business objectives, to be accountable for their relative contribution to the Corporation’s performance, as well as to attract and retain quality personnel.

Equity Incentives

We intend to continue to structure our compensation programs to attract, retain and motivate executives and investment professionals of the highest level of quality and effectiveness. We are focused on rewarding the types of performance that increase long-term shareholder value, including growing our assets under management, retaining investors in the Sprott funds, developing new investor relationships, improving operational efficiency and managing risks. In order to improve our ability to retain talent and to further align the interest of employees and those of our shareholders, as noted above, the Corporation established the Option Plan, to attract, retain and motivate our employees while aligning their interests with that of our shareholders. Grants of Options pursuant to the Option Plan are approved by the Board upon the recommendation of the CGC Committee. See “Securities Authorized for Issuance Under Equity Compensation Plans - Equity Compensation Plan Information as at December 31, 2018 - Option Plan”. In 2011, we introduced the EPSP and EIP whereby a portion of the bonus allocated to certain employees are paid by way of Common Shares or other forms of equity compensation such as restricted share units ("RSUs"). The Common Shares are either purchased in the open market or issued from treasury in the case of the EIP and are available to the relevant employees over a specified vesting period. When considering grants pursuant to the EPSP and the EIP, an appropriate portion of the bonus is allocated to equity compensation to incentivize and to better align the interests of the employees with those of the shareholders.

Pre-2017 LTIP

Beginning in late 2014 and throughout 2015, the HRC Committee undertook a detailed review of the organization’s compensation programs. As a result of this exercise, in 2016 the HRC Committee with the assistance of Hugessen, negotiated with each of Messrs Grosskopf, Wilson (the then CEO of SAM), Fox (the then President of SAM) and Hibbert new employment agreements and compensation packages which aligned each of their interests more closely with those of the Corporation’s shareholders. The revised compensation packages included long-term and performance-based vesting schedules through the year 2020 (the "Pre-2017 LTIP").

Current LTIP

Since the strategy of the Corporation was refocused and a new executive committee was selected to execute and manage the strategy in 2017, the Corporation's long term incentive plan was also restructured to incent and align the management and employee base with the new strategy and its expected future results. The employees who left the Corporation as a result of the Sale Transaction, including Messrs. Wilson and Fox, forfeited their unvested entitlements under the Pre-2017 LTIP, which consisted primarily of Common Shares held within the EPSP. The Company has restructured the new long term incentive plan with the objective of further cementing management and key employee alignment with shareholders by setting more stringent and performance-based goals than the predecessor program (the "Current LTIP"). In particular, rather than “static” performance conditions set at the time of the grant or time-based only vesting, more dynamic performance conditions were implemented whereby the thresholds included not only a time-based component, but also a performance-based threshold that is subject to ongoing annual review and determination on an annual basis. Moreover, the performance thresholds are not cumulative. Instead, a particular tranche of equity only vests and is earned if that year’s overall corporate performance threshold and/or individual performance goals are met. Otherwise, the employee will forfeit the relevant portion of his or her grant.

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Plan Feature	Pre-2017 LTIP	Current LTIP
Vesting	Three to four years	Five years
Performance Condition	"Static" performance conditions (targets set at inception)	"Dynamic" performance conditions (targets set annually)
	Cumulative (could be earned at any point in the three to four years)	Non-cumulative (corporate and individual targets set annually)
Annual Incentive Plan Impact	No impact	Reduced
Forfeiture Risk	Low (limited forfeiture triggers)	High (multiple forfeiture triggers)

Pursuant to the Current LTIP, the Current LTIP Participants agreed to receive cash bonus compensation only for extraordinary personal performance or Corporation results in exchange for a one-time grant of Common Shares through the EPSP (for Canadian participants) and RSUs through the EIP (for U.S. participants) (the "Equity Grant"). Henceforth, the Current LTIP Participants will only be awarded cash incentives in the event of “extraordinary performance” that is meaningful to the Corporation as assessed by the CEO in partnership with the CGC Committee. The Equity Grant has a vesting period of five years, with 15% of the Equity Grant vesting on August 31, 2017 and 21.25% for each year thereafter through to December 31, 2021. Vesting of each annual tranche is conditional upon the achievement by the Corporation of a performance threshold as determined by the Board for the relevant fiscal year (the “Performance Threshold”) and achievement by the employee of certain performance milestones for the relevant fiscal year (the “Performance Milestones”) as established by the Board with respect to the CEO and by the CEO with respect to the other Current LTIP Participants. The Performance Threshold for 2017 was determined by the Board to have been achieved; the Performance Threshold for fiscal 2018 was set at a 35% earnings before interest and taxes (EBIT) margin and was determined by the Board to have been achieved; and the Performance Threshold for fiscal 2019 is set at a 35% EBIT margin. Dividends on granted Common Shares or RSUs, as applicable, will accrue to the employees commencing on the grant date. In the case of Mr. Grosskopf, in lieu of an Equity Grant, his existing performance-based stock options were amended so that vesting of such options is similarly subject to a Performance Threshold and Performance Milestones. See "Employment Agreements, Termination and Change of Control Benefits". Participation in this program was conditional upon the execution and delivery of a new employment agreement between the relevant Sprott entity and each executive or key employee participating in the program. See "Executive Compensation - Employment Agreements, Termination and Change of Control Benefits".

We believe these incentive arrangements will better motivate executives to achieve long-term sustainable business results, align their interests with those of the shareholders, attract and retain executives and make our executives partners and owners of the Corporation over time. For further details concerning the compensation paid to the NEOs, see the “Summary Compensation Table”.

Executive Compensation Governance

CGC Committee

The CGC Committee periodically reviews and approves our compensation policies and practices. For further information concerning the CGC Committee, see “Corporate Governance - Corporate Governance and Compensation Committee”.

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Scorecards

In 2018, the CGC Committee, together with the CEO of the Corporation, developed a new set of individualized scorecards for all senior executives. Each scorecard sets out (i) an individualized set of quantitative and/or qualitative annual target Performance Milestones which must be achieved for the applicable tranche of the Equity Grant to vest in that year; and (ii) an individualized set of quantitative annual target milestones which must be achieved in order for a cash award to be made for "extraordinary performance". For qualitative metrics, the CGC Committee set appropriate methods of evaluation to determine whether a specific metric had been met. The CGC Committee believes that the use of scorecards enhances transparency and better aligns executive compensation with the Corporation’s fiscal year performance. The CGC Committee, together with the CEO of the Corporation, reviews and revises the scorecards on an annual basis.

In making compensation recommendations for our other investment professionals and senior employees, in addition to the objective criteria referenced herein, the CGC Committee relies on the CEO and other executive officers of the Corporation to make recommendations based on their judgment of the performance and contribution of the relevant individual. The first step involves an analysis of the Corporation's performance against budget and on a year-over-year basis. From there, consideration is given to individual employee performance. A detailed formal bonus proposal is presented by management to the CGC Committee (on both a segment-by-segment and employee-by-employee basis). The CGC Committee reviews and discusses such recommendations with the CEO and, if determined to be appropriate, recommends approval by the Board. The CGC Committee performs an annual reassessment of the programs each year in connection with year-end compensation decisions. See “Corporate Governance - Corporate Governance and Compensation Committee”.

Compensation Risk Management

The CGC Committee recognizes that certain elements of compensation could promote unintended inappropriate risk-taking behaviors, but the Corporation seeks to ensure that the Corporation’s executive compensation package is comprised of a mix of cash and equity compensation, with a significant weighting placed on long-term incentives (through the Current LTIP), see "Elements of Compensation - Equity Incentives". Base salaries and personal benefits are sufficiently competitive and not subject to performance risk. Subject to limited exceptions, to receive short-term or long-term incentives, the executive officer must be employed by the Corporation at the time of payout. Therefore, through the time horizons and metrics reflected in the compensation elements, the Corporation is of the view that executive performance is now more closely aligned with the interests of the Corporation and its shareholders.

The CGC Committee believes that executive compensation risk management is reinforced by ongoing Board oversight of, among other things, the Corporation’s financial results, regulatory disclosure, strategic plans, fraud and error reporting, the Audit Committee’s regular meetings with the external auditors (including without the presence of management), the Corporation’s internal controls, management information systems and financial control systems. In addition, the Corporation reviews significant risks associated with its operations, the most significant of which are disclosed in the Corporation’s annual management’s discussion and analysis for each fiscal year. The Corporation does not believe that its compensation policies and practices are reasonably likely to have a material adverse effect on the Corporation.

Other Compensation Policies

Share Ownership Policy

As a condition of employment, the CEO, CFO, General Counsel and Corporate Secretary and Senior Managing Director, Private Resource Investments of the Corporation and the CEO of SAM are subject to an Executive Share Ownership Policy (the "Executive Ownership Policy") and are (and/or their spouses are) required to beneficially own and hold that number of Common Shares (including certain allocations thereto under the EPSP) having a minimum aggregate market value that is equal to three times their then applicable annual base salary by the date which is three years after the date of their respective employment agreement. In addition, the other employees participating in the Current LTIP are subject to an Employee Share Ownership Policy (the "Employee Ownership Policy") and are (and/or their spouses are) required to beneficially own and hold that number of Common Shares (including certain allocations thereto under the EPSP) having a minimum aggregate market value that is equal to 0.5, 0.75, one or two times the employee's then applicable base salary (or deemed base salary) by the later of January 23, 2021 or the date which is three years after the date of their respective employment agreement.

We believe these standards are meaningfully higher than share ownership requirements at other companies. We believe significant long-term share ownership best aligns executives and shareholders. Market value shall be determined on December 31 of each year based on the greater of the market value thereof on that date and the weighted average purchase price of the Common Shares.

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Recoupment Policy

The Corporation adopted an incentive compensation recoupment policy (the “Recoupment Policy”) on March 10, 2016, as amended on March 27, 2018, that allows the recoupment of any performance-base incentive compensation, including, without limitation, cash bonuses and awards granted to employees under our annual incentive plan (the “AIP”), the Option Plan, the EPSP and the EIP (collectively, the “Incentive Compensation”) under certain circumstances. In the event of a restatement of our financial results (as a result of which any Incentive Compensation to have been paid is a lower amount had it been calculated based on such restatement) (a “Restatement”) or of fraud or intentional misconduct by one or more of the employees, the Board, on the recommendation of the CGC Committee, may, based upon the facts and circumstances surrounding such event, direct that we recover all or a portion of any Incentive Compensation paid, or cancel all, or part of, the equity-based Incentive Compensation granted, to an employee. The Board may also seek to recover any gains realized with respect to equity-based Incentive Compensation, regardless of when issued or if required to be issued at a future date. In addition, the Board, on the recommendation of the CGC Committee, may, in the event of fraud or intentional misconduct by the employee, take other disciplinary action that it deems necessary, including, without limitation: (1) adjusting any future compensation of the employee, (2) terminating of the employee’s employment, (3) pursuing any and all remedies available in law and/or equity in any country, and (4) pursuing such other action as may fit the circumstances of the particular case. As of the date hereof, this policy applies to all employees of the Corporation and its subsidiaries, related and affiliated corporations, limited partnerships and other business entities.

Hedging

The Corporation adopted an anti-hedging policy (the "Anti-Hedging Policy") effective May 12, 2016. The objectives of the Anti-Hedging Policy are to: (a) prohibit directors, officers or employees of the Corporation or its subsidiaries from directly or indirectly engaging in hedging or monetization transactions, through transactions in the Corporation’s securities or through the use of financial instruments designed for such purpose; and (b) prohibit directors, officers or employees of the Corporation or its subsidiaries from engaging in short-term or speculative transactions in the Corporation’s securities that could create heightened legal risk and/or the appearance of improper or inappropriate conduct by such individuals.

Pursuant to the Anti-Hedging Policy, directors, officers or employees of the Corporation may not engage in any hedging or monetization transactions with respect to the Corporation’s securities, including, but not limited to, through the use of financial instruments such as exchange funds, prepaid variable forwards, equity swaps, puts, calls, collars, forwards and other derivative instruments, or through the establishment of a short position in the Corporation’s securities. Further, directors, officers or employees of the Corporation may not engage in short-term trading, short sales and publicly-traded options.

Any director or officer of the Corporation or any of its subsidiaries may seek an exemption from the Anti-Hedging Policy from the Chair of the CGC Committee. Other persons to whom the Anti-Hedging Policy applies may seek an exemption from the CCO or such other person designated by the CGC Committee. Any such request must be submitted prior to the contemplated transaction and the person seeking an exception should be advised that any purchase or sale of securities will be subject to the prohibition on “insider trading” as set forth under the Corporation’s insider trading policy. An exemption will only be granted in exceptional circumstances.

The Anti-Hedging Policy applies to all of the directors, officers or employees of the Corporation or its subsidiaries and includes, to the extent practicable, any other person (or their associates) in a special relationship (within the meaning of applicable securities laws) with the Corporation.

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Performance Graph

The following graph compares the cumulative shareholder return per $100 invested in Common Shares to the cumulative total return of the S&P/ TSX Composite Index from January 1, 2013 to December 31, 2018. The calculations include reinvested dividends and exclude brokerage fees and taxes.

There are many factors that may influence the Corporation’s stock price, such as future earnings expectations, views on specific sectors and personnel changes, all of which are not directly related to historical financial performance. Historically, there has been some relationship between corporate performance and the compensation of our NEOs but not necessarily between compensation and shareholder returns over any given period of time. The significant equity-based component of our NEOs' compensation packages implemented in 2017 and the elimination of the discretionary bonus compensation program and implementation of the three incentive pools in 2018 are designed to more closely correlate compensation and shareholder returns. See “Compensation Discussion and Analysis - Elements of Compensation - Cash Bonus and other Variable Compensation” and “Compensation Discussion and Analysis - Elements of Compensation - Equity Incentives”.

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Summary Compensation Table

The following table provides a summary of compensation information for the three most recently completed financial years for the Corporation’s CEO, CFO and four other NEOs.

					Non-Equity Incentive Plan Compensation ($)
Name and Principal Occupation	Year	Salary ($)	Share-based Awards ($)(1)	Option- based Awards ($)(2)	Annual Incentive Plans(3)	Long- Term Incentive Plans	Pension Value ($)	All other Compensation ($)	Total Compensation ($)
Peter Grosskopf, CEO; CEO of SRLC(4)	2018	500,000	—	175,000	2,307,000	—	—	—	2,982,000
	2017	500,000	969,000	177,500	720,000	—	—	—	2,366,500
	2016	500,000	557,000	1,296,135	1,343,000	—	—	—	3,696,135
Kevin Hibbert, CFO, SMD and Co-head of the Enterprise Shared Services Group(5)	2018	350,000	—	—	475,000	—	—	—	825,000
	2017	350,000	2,200,000	—	255,000	—	—	—	2,805,000
	2016	325,000	198,200	344,800	232,800	—	—	—	1,100,800
Arthur Richards Rule IV, President and CEO of Sprott US(6)	2018	466,452	573,995	—	—	—	—	573,643	1,614,090
	2017	467,496	401,547	—	—	—	—	782,470	1,651,513
	2016	616,032	186,667	—	287,670	—	—	421,418	1,511,787
Tim Sorensen, MD of the Corporation, and CEO of SCP(7)	2018	—	57,200	—	—	—	—	791,000	848,200
	2017	—	497,999	—	138,000	—	—	1,785,463	2,421,462
	2016	—	—	—	—	—	—	—	—
John Ciampaglia, SMD of the Corporation and CEO of SAM(8)	2018	350,000	—	—	475,000	—	—	—	825,000
	2017	350,000	2,200,000	—	255,000	—	—	—	2,805,000
	2016	350,000	32,250	—	182,750	—	—	—	565,000
Arthur Einav, SMD, General Counsel, and Co-head of Enterprise Shared Services Group (9)	2018	350,000	—	—	475,000	—	—	—	825,000
	2017	350,000	2,200,000	—	255,000	—	—	—	2,805,000
	2016	300,000	251,667	—	341,000	—	—	10,000	902,667

Notes:

(1) In 2017, as part of the Current LTIP, one million Common Shares were granted under the EPSP for each of Messrs. Hibbert, Einav and Ciampaglia at an adjusted cost base of $2.20 per Common Share. See “Compensation Discussion and Analysis - Elements of Compensation - Equity Incentives”.

(2) This balance reflects the grant date fair value using a Black-Scholes option pricing model for the time-based Options and Performance Based Options (as defined below). As a condition of participating in the Current LTIP, in 2017, Mr. Hibbert forfeited 500,000 Options received in 2016 for notional consideration of $75,000.

(3) Represents the cash bonus earned during the year.

(4) Mr. Grosskopf was granted $969,000 and $557,000 in value of Common Shares under the EPSP for 2017 and 2016, respectively. These Common Shares vest equally over three years commencing on January 1, 2019 and 2018, respectively. In 2016, Mr. Grosskopff was awarded 2,250,000 time-based options and 1,000,000 Performance Based options. Of the 1,000,000 Performance Based options, 250,000 Performance Based Options expired without vesting in 2016 as the performance criteria were not met. In 2017, the performance criteria were met and 250,000 Performance-Based options vested on March 30, 2018. In 2018, the performance criteria were met and 250,000 Performance-Based options will vest on March 30, 2019. The remaining 250,000 Performance-Based options have not yet met the performance criteria and have not vested. Bonus allocations to Mr. Grosskopf reflect his contribution to the overall profitability of the Corporation and the competitive environment within the financial services sector and, effective for 2018, are calculated as part of the Pool 2 incentive pool.

(5) Mr. Hibbert was granted $198,200 in value in Common Shares under the EPSP for 2016. These Common Shares vest equally over three years commencing on January 1, 2017 . Bonus allocations to Mr. Hibbert reflect his contribution to the overall profitability of the Corporation and the competitive environment within the financial services sector and, effective for 2018, are calculated as part of the Pool 2 incentive pool.

(6) Mr. Rule was granted $573,995, $401,547 and $186,667 in value of Common Shares under the EIP for 2018, 2017 and 2016, respectively. The Common shares granted in 2018 and 2017 vested immediately and the Common Shares granted in 2016 vest equally over three years commending January 16, 2017. Mr. Rule is paid in U.S. Dollars. 2018 values expressed above are converted from U.S. dollars at the Bank of Canada average exchange rate for the year ended December 31, 2018 of Cdn 1.2957 per U.S. $1.00. 2017 values expressed above are in Canadian dollars are converted from U.S. dollars at the Bank of Canada average exchange rate for the year ended December 31, 2017 of Cdn 1.2986 per U.S. $1.00. 2016 values expressed above are in Canadian dollars are converted from U.S. dollars at the Bank of Canada average exchange rate for the year ended December 31, 2017 of Cdn 1.3248 per U.S. $1.00. In 2018, Mr. Rule received $573,643 in commissions from placement and advisory services in SGRIL ($782,470 in 2017 and 421,418 in 2016).

(7) Mr. Sorensen was granted $57,200 in value of Common Shares under the EPSP for 2018. These common shares vest equally over 4 years commencing on December 31, 2018. In 2018, Mr. Sorensen received $791,000 in commissions from placement and advisory services provided by SCP ($1,785,463 in 2017 and $Nil in 2016).

(8) Mr. Ciampaglia was granted $32,250 in value in Common Shares under the EPSP for 2016. These Common Shares vest equally over three years commencing on January 1, 2017 . Bonus allocations to Mr. Ciampaglia reflect his contribution to the overall profitability of the Corporation and the competitive environment within the financial services sector and, effective for 2018, are calculated as part of the Pool 1 incentive pool.

(9) Mr. Einav was granted $251,667 in value in Common Shares under the EPSP for 2016. These Common Shares vest equally over three years commencing on January 1, 2017 . Bonus allocations to Mr. Einav reflect his contribution to the overall profitability of the Corporation and the competitive environment within the financial services sector and, effective for 2018, are calculated as part of the Pool 2 incentive pool.

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Outstanding Option-Based and Share-Based Awards

The following table sets forth information concerning all option-based and share-based awards for each NEO outstanding at December 31, 2018, including awards granted before the financial year ended December 31, 2018.

	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date	Value of unexercised in-the- money options ($)(1)	Number of shares or units of shares that have not vested (#)	Market or payout value of share- based awards that have not vested ($)(2)	Market or payout value of vested share-based awards not paid out or distributed ($)(2)
Peter Grosskopf(3)	3,000,000	2.33	January 27, 2026	720,000	265,971	683,545	1,314,437
Kevin Hibbert(4)	—	—	—	—	645,756	1,659,593	674,453
Arthur Richards Rule IV(5)	—	—	—	—	24,401	62,711	—
Tim Sorensen(6)	—	—	—	—	160,056	411,344	220,318
John Ciampaglia(7)	—	—	—	—	642,074	1,650,130	740,695
Arthur Einav(8)	—	—	—	—	637,500	1,638,375	1,026,905

Notes:

(1) This balance is based on the difference between the market value of the securities underlying the instrument at December 31, 2018 ($2.57) and the exercise price of the Option ($2.33) for time based Options and Performance Based Options.

(2) Based on the December 31, 2018 TSX closing price of $2.57 per Common Share.

(3) See Notes 4 to the Summary Compensation Table above for details of Mr. Grosskopf’s option-based and share-based awards.

(4) See Notes 5 to the Summary Compensation Table above for details of Mr. Hibbert’s option-based and share-based awards.

(5) See Notes 6 to the Summary Compensation Table above for details of Mr. Rule's share-based awards.

(6) See Notes 7 to the Summary Compensation Table above for details of Mr. Sorensen’s share-based awards.

(7) See Notes 8 to the Summary Compensation Table above for details of Mr. Ciampaglia's share-based awards.

(8) See Notes 9 to the Summary Compensation Table above for details of Mr. Einav's share-based awards.

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Incentive Plan Awards - Value Vested or Earned during the Year

The following table provides information regarding the value on payout or vesting of incentive plan awards for the NEOs for the fiscal year ended December 31, 2018.

Name	Option-based awards - Value vested during the year ($)(1)	Share-based awards - Value vested during the year ($)(2)	Non-equity incentive plan compensation - Value earned during the year ($)
Peter Grosskopf(3)	303,000	537,513	2,307,000
Kevin Hibbert(4)	—	674,453	475,000
Arthur Richards Rule IV(5)	—	433,867	—
Tim Sorensen(6)	—	141,466	—
John Ciampaglia(7)	—	584,361	475,000
Arthur Einav(8)	—	641,405	475,000

Notes:

(1) This balance is based on the difference between the market value of the securities underlying the instrument at the vesting dates ($2.57 and $3.11) and the exercise price of the Option ($2.33) for Time-Based Options and Performance-Based Options.

(2) Based on the December 31, 2018 TSX closing price of $2.57 per Common Share.

(3) See Notes 4 to the Summary Compensation Table above for details of Mr. Grosskopf’s option-based and share-based awards.

(4) See Notes 5 to the Summary Compensation Table above for details of Mr. Hibbert’s option-based and share-based awards.

(5) See Notes 6 to the Summary Compensation Table above for details of Mr. Rule's share-based awards.

(6) See Notes 7 to the Summary Compensation Table above for details of Mr. Sorensen’s share-based awards.

(7) See Notes 8 to the Summary Compensation Table above for details of Mr. Ciampaglia's share-based awards

(8) See Notes 9 to the Summary Compensation Table above for details of Mr. Einav's share-based awards.

Pension Plan Benefits

The Corporation does not have any pension plans that provide for payments of benefits at, following or in connection with, retirement or provide for retirement or deferred compensation plans for the NEOs or directors.

Employment Agreements, Termination and Change of Control Benefits

Other than as described herein, the Corporation does not have any contract, agreement, plan or arrangement that provides for payments to a NEO at, following or in connection with a termination (whether voluntary, involuntary or constructive), resignation, retirement, a change in control of the Corporation or a change in an NEO’s responsibilities (each, a “Triggering Event”). Potential payments to each NEO shown below assumes the Triggering Event took place on December 31, 2018. “Sprott Group” means the Corporation and any of its subsidiaries, related and affiliated corporations, limited partnerships and other business entities.

Peter Grosskopf

The services of Mr. Grosskopf as the CEO of the Corporation are provided under an employment agreement dated October 25, 2017 (the “Grosskopf Employment Agreement”) .. Mr. Grosskopf’s employment under the terms of the Grosskopf Employment Agreement began on December 22, 2017. Under the Grosskopf Employment Agreement, Mr. Grosskopf is entitled to receive an annual base salary of $500,000. In addition, Mr. Grosskopf is eligible to participate in the AIP pursuant to which he may receive an AIP award (an “AIP Award”) of between $500,000 and $2,500,000 subject to the achievement of annual performance objectives (with an AIP Award equal to $1,500,000 should the applicable annual target performance metrics be achieved), pro rated for any partial calendar year of employment, as determined by the Board or the CGC Committee in its sole discretion. A percentage of the AIP Award will be translated into Common Shares under the EPSP, which will be awarded and vest in accordance with the EPSP. For each year of Mr. Grosskopf's employment under the Grosskopf Employment Agreement, the percentage of the AIP Award which will be translated into Common Shares, which percentage shall be no less than 35%, will be determined by the Board or the CGC Committee in its sole discretion. In its sole discretion, the Board or CGC Committee may award other compensation for extraordinary personal performance or Corporation results. Unless otherwise required by applicable law, such other compensation will not form part of normal or expected compensation or salary for any purposes, including calculating resignation, termination or similar payments. Any awards, whether in cash or shares, are subject to the Recoupment Policy in effect from time to time. See “- Compensation Discussion and Analysis - Elements of Compensation - Equity Incentives”.

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Under the Grosskopf Employment Agreement, the second tranche, being one quarter of the performance based Options to acquire up to 1,000,000 Common Shares (the "Performance Based Options") previously granted to Mr. Grosskopf, are deemed vested. The Board or the CGC Committee shall determine if Performance Conditions, now comprising a Performance Threshold and Performance Milestones (as such terms are defined in Mr. Grosskopf’s Amended and Restated Stock Option Award Agreement), have been met. See “Compensation Discussion and Analysis - Elements of Compensation - Equity Incentives”. Any Options, whether vested or unvested, will be subject to the Recoupment Policy.

Mr. Grosskopf may participate in the Sprott Private Resource Lending Fund (the "Lending Fund") Carried Interest Plan (the "Carry Plan"). The purpose of the Carry Plan is to, among other things, advance the best interests of the Sprott Group by providing an additional incentive to work towards and promote the financial success of the Lending Fund and the Sprott Group. Each allocation under the Carry Plan is an entitlement to be paid an amount as a bonus, subject to the provisions of, and calculated as set out in, the Carry Plan. If Mr. Grosskopf is employed by the Corporation at the time he becomes eligible to receive an allocation under the Carry Plan then any allocation he becomes eligible to receive for a fiscal year will be decreased by any other compensation he receives in that fiscal year. If he is not employed by the Corporation at the time he is eligible to receive an allocation under the Carry Plan, he will be eligible to receive the entirety of his allocation, in accordance with and subject to the vesting and other terms of the Carry Plan. Mr. Grosskopf’s allocation under the Carry Plan is established by the CGC Committee.

The Grosskopf Employment Agreement contains provisions relating to: (i) non-disclosure or use of the Sprott Group’s and their clients’ confidential information during and after employment, other than for the purposes of the Sprott Group; (ii) non-solicitation of the Sprott Group’s clients and employees during, and 12 months after, employment; and (iii) non-competition during, and six months after, employment.

The Sprott Group may terminate Mr. Grosskopf’s employment at any time for cause without notice or payment of any compensation in lieu or continuation of employee benefits, either by way of anticipated earnings or damages of any kind. The Sprott Group may terminate Mr. Grosskopf’s employment at any time without cause by providing 24 months of notice (or pay in lieu of all or any part of the notice calculated using base salary only) and all of Mr. Grosskopf's rights and entitlements under the EPSP, the Option Plan and the Carry Plan (collectively, the "Plans"), including the vesting of any unvested RSUs, will be governed by the terms of the applicable plan. In addition, in the event of a termination without cause, the Sprott Group will continue to make its employer contributions to maintain employee benefits for the minimum period prescribed by the Employment Standards Act, 2000, as it may be amended from time to time (the “ESA”) and, subject to any limitations or exclusions set by the Corporation's insurers, for the period commensurate with the balance of notice period provided under the Grosskopf Employment Agreement.

If Mr. Grosskopf's employment with the Corporation is terminated without cause, or if he ceases to be an employee of the Corporation as a result of his death or permanent disability, he will be entitled to require the Corporation to purchase his or his estate’s, as the case may be, limited partnership interest in the Fund (the "Interest") by delivering notice to the Corporation within 180 days of the termination without cause of his employment with the Corporation, his death or the determination of his permanent disability, as the case may be. If Mr. Grosskopf is terminated for just cause, the Corporation will have the right, but not the obligation to purchase the Interest from Mr. Grosskopf by delivering notice to him within 180 days following the date of such termination.

Mr. Grosskopf may terminate his employment with the Sprott Group at any time by providing at least six months’ prior written notice (which notice may be waived) and he will be entitled only to any outstanding base salary and accrued unpaid vacation pay due to the effective date of his resignation. If the Sprott Group waives notice and accepts his resignation at an earlier effective date, he will be paid only to the end of six months following the provision of such notice and his entitlement under the Plans will similarly continue until the end of said six months. Mr. Grosskopf may also terminate his employment with the Sprott Group for “Good Reason”, as such term is described in the Grosskopf Employment Agreement (which includes, among other things, acts constituting constructive dismissal at common law), upon, or within six months of, a Change of Control (as such term is defined in the Grosskopf Employment Agreement), upon which the Sprott Group will, following Mr. Grosskopf’s delivery of written notice of resignation, pay and provide to him the pay in lieu of notice of termination, any EPSP shares and benefits as though he had been terminated without cause. If Mr. Grosskopf resigns, he will have the right to require the Corporation to purchase the Interest by delivering notice to the Corporation within 180 days following the date of such resignation. Any sale of the Interest by Mr. Grosskopf or his estate will be subject to the terms and conditions of the limited partnership agreement governing the business and affairs of the Fund.

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If Mr. Grosskopf's employment had been terminated without cause on December 31, 2018, the estimated termination payment would have been approximately $2,183,545, which can be broken down as follows: $1,500,000 attributable to severance, 683,545 attributable to the EPSP Shares that will vest on December 31, 2019 and December 31, 2020 and none attributable to the Carry Plan. All payments are subject to applicable statutory deductions.

Kevin Hibbert

The services of Mr. Hibbert are provided under an employment agreement dated October 24, 2017 (the “Hibbert Employment Agreement”). Mr. Hibbert’s employment under the terms of the Hibbert Employment Agreement began on December 22, 2017. Under the Hibbert Employment Agreement, Mr. Hibbert is entitled to receive an annual base salary of $350,000 for his position as Chief Financial Officer, Senior Managing Director and Co-Head of the Enterprise Shared Services Group. In addition, under the Current LTIP, Mr. Hibbert received a one-time grant of 1,000,000 Common Shares (the "EPSP Shares") in accordance with and subject to the terms of the EPSP and an agreement for participation in the EPSP (the "EPSP Letter"). The EPSP Shares shall only vest if specific Performance Conditions, comprising both a Performance Threshold and Performance Milestones are met. For the fiscal year ended December 31, 2017, 15% of the EPSP Shares vested as of August 31, 2017. Subject to meeting the Performance Conditions, the remaining EPSP Shares shall vest as follow: 21.25% on December 31, 2018, 21.25% on December 31, 2019, 21.25% on December 31, 2020 and the balance on December 31, 2021. At his sole discretion, the CEO may award other cash compensation to Mr. Hibbert for extraordinary personal performance or Corporation results. Such additional compensation may be awarded on an annual basis or from time to time as determined by the Board or the CGC Committee. Unless otherwise required by applicable law, such other compensation will not form part of normal or expected compensation or salary for any purposes, including calculating resignation, termination or similar payments. As a condition of his eligibility to participate in the one-time grant of EPSP Shares, Mr. Hibbert agreed to the repurchase by the Corporation of all of his outstanding stock options previously granted under the Option Plan for a notional consideration of $75,000 (the "Option Repurchase"). The Option Repurchase occurred concurrently with the execution of the Hibbert Employment Agreement.

The Hibbert Employment Agreement contains provisions relating to: (i) non-disclosure or use of the Sprott Group’s and their clients’ confidential information during and after employment, other than for the purposes of the Sprott Group; (ii) non-solicitation of the Sprott Group’s clients and employees during, and 12 months after, employment; and (iii) non-competition during, and six months after, employment.

The Sprott Group may terminate Mr. Hibbert’s employment at any time for cause without notice or payment of any compensation in lieu or continuation of employee benefits, either by way of anticipated earnings or damages of any kind and all of Mr. Hibbert’s actual or contingent entitlements under the EPSP and the EPSP Letter shall be forfeited without any further act or formality as set out in the EPSP. The Sprott Group may terminate Mr. Hibbert’s employment at any time without cause by providing 12 months of notice (or pay in lieu of all or any part of the notice calculated using base salary only) and Mr. Hibbert shall be entitled to, subject to the Board’s unfettered discretion to deem vested any unvested EPSP Shares: (i) in the event of a termination without cause in the first three quarters of the calendar year, all vested EPSP Shares at the end of Mr. Hibbert’s notice period; or (ii) in the event of a termination without cause in the fourth quarter of the calendar year, all vested EPSP Shares at the end of Mr. Hibbert’s notice period, plus three months. In addition, in the event of termination without cause, the Corporation will continue to make its employer contributions to maintain employee benefits provided in the Hibbert Employment Agreement for the minimum period prescribed by the ESA and, subject to any limitations or exclusions set by the Corporation's insurers, for the period commensurate with the balance of notice period provided under the Hibbert Employment Agreement.

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Mr. Hibbert may terminate his employment with the Sprott Group at any time by providing at least three months’ prior written notice (which notice may be waived) and he will be entitled only to any outstanding base salary and accrued unpaid vacation pay due to the effective date of his resignation. If the Sprott Group waives notice and accepts his resignation at an earlier effective date, he will be paid only to the end of three months following the provision of such notice. In the event of Mr. Hibbert’s resignation, he will be entitled to, subject to the Board’s unfettered discretion to deem vested any unvested EPSP Shares, all EPSP Shares vested as of the date that is the earlier of: (i) the effective date of Mr. Hibbert’s resignation; and (ii) the end of the three month minimum notice period. Mr. Hibbert may also terminate his employment with the Sprott Group for “Good Reason”, as such term is described in the Hibbert Employment Agreement (which includes, among other things, acts constituting constructive dismissal at common law), upon, or within six months of a Change of Control (as such term is defined in the Hibbert Employment Agreement), upon which the Sprott Group will, following Mr. Hibbert’s delivery of written notice of resignation, pay and provide to him the pay in lieu of notice of termination and benefits as though he had been terminated without cause. On the occurrence of a Change of Control, all of the EPSP Shares which have not vested prior to the Change of Control shall vest on the date of the Change of Control, provided that Mr. Hibbert terminates his employment for Good Reason in accordance with the terms of the Hibbert Employment Agreement.

In the case of Mr. Hibbert’s retirement as an employee of the Corporation, Mr. Hibbert will be entitled to all EPSP Shares vested as of the date which is 90 days after the effective date of his retirement. On the date which is one year after Mr. Hibbert’s death, all EPSP Shares vested as of such date shall be available for distribution to Mr. Hibbert’s beneficiary. If the Corporation ceases to be a Participating Entity (as defined in the EPSP), Mr. Hibbert will be entitled to all EPSP Shares vested as of the date which is three months after such date. In each case, Mr. Hibbert’s entitlement under the EPSP and the EPSP Letter is subject to the sole and unfettered discretion of the Board to deem vested any unvested EPSP Shares.

If Mr. Hibbert's employment had been terminated without cause on December 31, 2018, the estimated termination payment would have been approximately $896,125, which can be broken down as follows: $350,000 attributable to severance and $546,125 attributable to the EPSP Shares that will vest on December 31, 2019 (with the value determined for the purposes of this disclosure based on the December 31, 2018 closing price of the Common Shares on the TSX). All payments are subject to applicable statutory deductions.

Arthur Richards Rule

Mr. Rule has entered into a written employment agreement with Sprott US, a wholly-owned subsidiary of the Corporation, for an initial term of three years (the “Employment Term”) renewable automatically thereafter for additional one-year terms. Either party may terminate such agreement upon notice provided not more than 180 days nor less than 90 days before the last day of the Employment Term or any extension thereof. Pursuant to such employment agreement, Mr. Rule was entitled to receive an annual salary of US$360,000 and effective, January 1, 2019, an annual salary of US$50,000, as compensation for his services as CEO and President of Sprott US. Additionally, he is entitled to receive a discretionary cash bonus. Mr. Rule is also eligible to receive certain commission payments in accordance with the general practice with respect to commission payments of SGRIL and SAM USA, each an indirect wholly-owned subsidiary of the Corporation. In the event that Mr. Rule is terminated without cause or he resigns for good reason, he will be entitled to receive (i) salary until the end of the Employment Term, (ii) a bonus payable out of SGRIL’s and SAM USA’s bonus plan in respect of the calendar year in which Mr. Rule is terminated, prorated to the portion of such year that Mr. Rule was employed by Sprott US, and (iii) continued payment of his bonus payable under the bonus plan of RCIC, an indirect wholly-owned subsidiary of the Corporation. Subject to certain conditions, in the event of Mr. Rule’s termination without cause or he resigns for good reason, Sprott US will cause RCIC to enter into a contract with Mr. Rule pursuant to which Mr. Rule will continue to manage the then existing RCIC funds as an independent contractor through the end of the term for such RCIC Funds. Mr. Rule’s employment agreement also provides for, among other things, non-compete and non-solicit covenants in favour of Sprott US. If Mr. Rule’s employment had been terminated without cause on December 31, 2018, the estimated termination payment would have been approximately US$360,000 with respect to the salary based component of such payment, and his bonus based component would have been determined and pro-rated as set forth above.

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Tim Sorensen

The services of Mr. Sorensen are provided under an employment agreement dated January 23, 2018 (the “Sorensen Employment Agreement”) which supersedes his previous employment agreement. Mr. Sorensen’s employment under the terms of the Sorensen Employment Agreement began on April 1, 2018. Under the Sorensen Employment Agreement, Mr. Sorensen is entitled to receive a monthly draw (the “Monthly Draw”) of $15,000, less deductions. In addition, Mr. Sorensen is eligible to receive a payment (the “Sorensen Revenue Share Payment”) equal to a percentage of the revenue Mr. Sorensen directly or indirectly generates for the merchant banking division of SCP less the aggregate Monthly Draw paid to Mr. Sorensen and certain other charges and expenses incurred in relation to such revenue. In addition to the Sorensen Revenue Share Payment, Mr. Sorensen is also eligible to receive a payment (the “Sorensen Profit Share Payment”) out of SCP's merchant banking division profit share payment pool, as calculated in accordance with the Sorensen Agreement, during each calendar year. All or a percentage of the Sorensen Profit Share Payment will be payable in EPSP Shares, which will be awarded and vest in accordance with and subject to the terms of the EPSP. The percentage of the Sorensen Profit Share Payment which will be translated into EPSP Shares, if any, will be determined by SCP in its sole discretion.

In addition, under the Current LTIP, Mr. Sorensen received a one-time grant of 204,545 EPSP Shares in accordance with and subject to the terms of the EPSP and an EPSP Letter. The EPSP Shares shall only vest if a specific Performance Threshold is met. For the fiscal year ended December 31, 2017, 15% of the EPSP Shares vested as of August 31, 2017. Subject to meeting the Performance Threshold, the remaining EPSP Shares shall vest as follow: 21.25% on December 31, 2018, 21.25% on December 31, 2019, 21.25% on December 31, 2020 and the balance on December 31, 2021.

The Sorensen Employment Agreement contains provisions relating to: (i) non-disclosure or use of the Sprott Group’s and their clients’ confidential information during and after employment, other than for the purposes of the Sprott Group; (ii) non-solicitation of the Sprott Group’s clients and employees during, and three months after, employment; and (iii) non-competition during, and three months after, employment.

If the SCP were to terminate Mr. Sorensen without cause, SCP may, in its discretion, provide Termination Pay in lieu of all or any part of any notice of termination owed, which is calculated as (i) the minimum period of advance notice to which he is entitled on termination of employment under the ESA; (ii) the minimum amount of severance pay, if any, to which he is entitled on termination of employment under the ESA; and (iii) four weeks of advance notice for every year of service, prorated for partial years, with the total combined entitlements under (i), (ii) and (iii) capped at 52 weeks. "Termination Pay" is equal to the greater of: (i) ¼ of the Monthly Draw; or (ii) the weekly average Sorensen Revenue Share Payments received in the two years immediately preceding his termination. In addition, in the event of termination without cause, SCP will continue to make its employer contributions to maintain employee benefits provided in the Sorensen Employment Agreement for the minimum period prescribed by the ESA.

Additionally, in the event of termination without cause, the Sorensen EPSP Shares will be governed by the EPSP and the Sorensen EPSP Letter.

In the event of a change of control (as such term is defined in the Sorensen Employment Agreement), Mr. Sorensen will be entitled to compensation as if he were terminated without cause.

If Mr. Sorensen’s employment had been terminated without cause on December 31, 2018, the estimated termination payment would have been approximately $359,444 which can be broken down as follows:$247,737 attributable to the Sorensen Revenue Share Payments received in the last two years and $111,707 attributable to the EPSP Shares that will vest on December 31, 2019 (with the value determined for the purposes of this disclosure based on the December 31, 2018 closing price of the Common Shares on the TSX). All payments are subject to applicable statutory deductions.

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John Ciampaglia and Arthur Einav

The services of Messrs. Ciampaglia and Einav are provided under individual employment agreements, each with terms and conditions identical to the terms and conditions of the Hibbert Employment Agreement as set forth above. However, as Messrs. Ciampaglia and Einav did not participate in the Pre-2017 LTIP, the Option Repurchase was not applicable to them. If Messrs. Ciampaglia's or Einav's employment had been terminated without cause on December 31, 2018, the estimated termination payment would have been approximately $896,125 each, which can be broken down as follows: $350,000 attributable to severance and $546,125 attributable to the EPSP Shares that will vest on December 31, 2019 (with the value determined for the purposes of this disclosure based on the December 31, 2018 closing price of the Common Shares on the TSX). All payments are subject to applicable statutory deductions.

Directors’ & Officers’ Liability Insurance

The Corporation has purchased directors’ & officers’ liability insurance coverage (“D&O Insurance”) for directors and officers of the Corporation. The total annual premium payable by the Corporation for the D&O Insurance for the year ended December 31, 2018 was $125,352, and no amount of such premium was paid by the directors or officers of the Corporation. The D&O Insurance coverage has an annual aggregate limit of $25,000,000. There is a $100,000 deductible for any Canadian claims made, and $150,000 deductible for any U.S claims made, but no deductible is assessed against any director or officer. D&O Insurance is designed to protect Board members and officers for their legal liabilities including, but not limited to, securities claims, claims for statutory liabilities and employment claims.

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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Equity Compensation Plan Information as at December 31, 2018

Plan Category	Number of Securities to be issued upon the exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)(1)
Equity compensation plans approved by security holders	3,275,000	$2.57	12,092,203
Equity compensation plans not approved by security holders	—	—	—
Total	3,275,000	$2.57	12,092,203

Note:

(1)       After accounting for the 9,932,256 Common Shares under the EPSP that have not yet vested and nil Common Shares under the EIP.

The Corporation has the following three equity based compensation plans: (a) the Option Plan; (b) the EPSP; and (c) the EIP. As of December 31, 2018 there were 3,275,000 Options outstanding under the Option Plan and no Common Shares issued under the EIP, representing approximately 1.3% and nil, respectively, of the issued and outstanding Common Shares. No Common Shares have been granted from treasury under the EPSP. However, as at December 31, 2018, 2,402,500 Common Shares have been purchased in the open market by the trustee for the EPSP (the "Trustee") under the EPSP, representing approximately 0.9% of the issued and outstanding Common Shares.

The aggregate number of Common Shares from treasury that may be granted under the Option Plan, the EPSP and the EIP and all other securities based compensation arrangements shall not exceed 10% of the issued and outstanding Common Shares as at the date of such grant. As a result, if the Corporation issues additional Common Shares in the future, the number of Common Shares issuable under such securities based compensation arrangements will increase accordingly. Furthermore, the number of Common Shares that are (i) issuable from treasury, at any time, and (ii) issued from treasury, within any one year period, to insiders (as defined in the applicable rules of the TSX) of the Corporation under the Option Plan, the EPSP and the EIP and all other security based compensation arrangements, may not exceed 10% of the issued and outstanding Common Shares.

Option Plan

The Option Plan is intended to aid in attracting, retaining and motivating our officers, employees and directors.

Options may be granted to a director, officer, employee or service provider of the Corporation or any related entity (being a person that controls or is controlled by the Corporation or that is controlled by the same person that controls the Corporation). However, no Options are to be granted to any optionee that is a non-employee director if such grant could result, at any time, in: (i) the aggregate number of Common Shares issuable to non-employee directors under the Option Plan, or any other security-based compensation arrangement of the Corporation, exceeding 1% of the issued and outstanding Common Shares; or (ii) an annual grant of Options per non-employee director exceeding a grant value of $100,000, determined using a generally accepted valuation model.

The exercise price for any Option issued under the Option Plan may not be less than the market price of the Common Shares at the time of issue. Options issued under the Option Plan may be exercised during a period determined under the Option Plan, which may not exceed ten years. Unless otherwise determined by the Board, Options will vest at a rate of one-third per annum commencing 12 months after the date of grant.

In addition to the restrictions on maximum issuances set forth above for all security based compensation arrangements, the number of Common Shares which may be issued pursuant to Options granted pursuant to the Option Plan to any one person may not exceed 5% of the then aggregate issued and outstanding Common Shares.

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The following insider participation limits shall apply under the Option Plan:(a) the number of Common Shares issuable to insiders, at any time, pursuant to the Option Plan and other share compensation arrangements shall not exceed 10% of the issued and outstanding Common Shares; and (b) the number of Common Shares issued to insiders, within a one-year period, pursuant to the Option Plan and other share compensation arrangements shall not exceed 10% of the issued and outstanding Common Shares.

Options may be transferred to certain permitted assigns which include a spouse, a trustee acting on behalf of the optionholder or spouse, or a holding entity. If the optionholder resigns, is terminated for cause or fails to be re-elected as a director, the Options terminate immediately. If the optionholder dies or ceases to be eligible under the Option Plan for any other reason, Options that are entitled to be exercised may generally be exercised (subject to certain extensions at the discretion of the Board or a committee thereof) until the earlier of (i) one year or three months, respectively, of the applicable date, or (ii) the expiry date of the Option. The Option Plan also provides for the cashless exercise of Options which allows for the optionholder to receive, without cash payment (other than taxes), a number of Common Shares based on a specified formula tied to the market price of the Common Shares as at the last trading day immediately prior to the cashless exercise. In the event that the expiry of an Option occurs during a blackout period imposed by management or the Board in accordance with the Corporation’s insider trading policy, the expiry date of such Option shall be deemed to be amended to that date which is ten business days following the end of such blackout period.

In the event of a Change of Control (as defined below) with respect to the Corporation or a Sprott Group entity (which, under the Option Plan and for the purposes of this summary, means the Corporation and any subsidiary or related or affiliated business entities of the Corporation and includes any successor corporations or entities thereto), notwithstanding anything in the Option Plan to the contrary:

• if the employment of an optionee is terminated by the Corporation or a Sprott Group entity, respectively, without cause or if the optionee resigns in circumstances constituting constructive dismissal by the Corporation or a Sprott Group entity, respectively, in each case, within six months (or such other period as determined by the Board in its sole discretion) following a Change of Control with respect to the Corporation or the Sprott Group entity, respectively (such date being the “Termination Date”), all or any of the optionee’s Options will vest immediately prior to the Termination Date (or such later period as determined by the Board in its sole discretion), subject to any performance conditions which shall be dealt with at the discretion of the Board. All vested Options may be exercised until 90 days (or such other period as may be determined by the Board in its sole discretion) following the Termination Date (but until the normal expiry date of the Option rights of such optionee, if earlier). Upon the expiration of such period, all unexercised Option rights of that optionee shall immediately become terminated and shall lapse notwithstanding the original term of the Option granted to such optionee under the Option Plan; and

• any surviving, successor or acquiring entity will assume any outstanding Options or will substitute similar awards for the outstanding Options. If the surviving, successor or acquiring entity is a “private issuer” or does not have any securities listed on an established securities exchange, does not assume the outstanding Options or substitute similar awards for the outstanding Options, or if the Board otherwise determines in its sole discretion and subject to the rules of the TSX, the Corporation will give written notice to all optionees advising that the Option Plan will be terminated effective immediately prior to the Change of Control and all Options will be deemed to be vested Options, and may provide for the exercise of Options and tender of Common Shares in connection with the Change of Control and may otherwise provide for the cash out or termination of Options that are not exercised within a specified period of time.

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A “Change of Control” for the purposes of the Option Plan means: (a) the acquisition by any person or persons acting jointly or in concert (as determined by the Securities Act (Ontario)), whether directly or indirectly, of beneficial ownership of voting securities of the Corporation that, together with all other voting securities of the Corporation held by such persons, constitute in the aggregate more than 50% of all of the then outstanding voting securities of the Corporation; (b) an amalgamation, arrangement, consolidation, share exchange, take-over bid or other form of business combination of the Corporation with another person that results in the holders of voting securities of that other person holding, in the aggregate, more than 50% of all outstanding voting securities of the person resulting from the business combination; (c) the sale, lease, exchange or other disposition of all or substantially all of the property of the Sprott Group to another person, other than (i) in the ordinary course of business of the Sprott Group, or (ii) to the Sprott Group; (d) a resolution is adopted to wind-up, dissolve or liquidate the Corporation; or (e) as a result of, or in connection, with: (i) a contested election of directors of the Corporation, or (ii) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Sprott Group and another Person, the nominees named in the most recent management information circular of the Corporation for election to the Board shall not constitute a majority of the Board, provided however that a transaction or a series of related transactions will not constitute a Change of Control if such transaction(s) result(s) in the Corporation or Sprott Group entity, or any successor to the Corporation’s or Sprott Group entity's respective business, being controlled, directly or indirectly, by the same person or persons who controlled the Corporation or the Sprott Group entity, respectively, directly or indirectly, immediately before such transaction(s).

The Board may make the following amendments to the Option Plan, without obtaining shareholder approval: (i) amendments to the terms and conditions of the Option Plan necessary to ensure that the Option Plan complies with the applicable regulatory requirements, including the rules of the TSX, in place from time to time; (ii) amendments to the provisions of the Option Plan respecting administration of the Option Plan and eligibility for participation under the Option Plan; (iii) amendments to the provisions of the Option Plan respecting the terms and conditions on which Options may be granted pursuant to the Option Plan, including the provisions relating to the term of the Option and the vesting schedule; and (iv) amendments to the Option Plan that are of a “housekeeping” nature.

However, the Board may not, without the approval of the Corporation’s shareholders, make amendments with respect to the following: (i) an increase to the Option Plan maximum or the number of securities issuable under the Option Plan; (ii) amendment provisions granting additional powers to the Board to amend the Option Plan or entitlements; (iii) an amendment to the exercise price of Options (if such shareholder approval is required by the TSX); (iv) reduction in the exercise price of Options or cancellation and reissue of Options or other entitlements; (v) extension to the term of Options (other than as a result of an Blackout Period Extension (as such term is defined in the Option Plan)); (vi) amendments that may permit the introduction or re-introduction of non-employee directors on a discretionary basis or amendments that increase limits previously imposed on non-employee director participation; (vii) any amendment which would permit Options granted under the Option Plan to be transferable or assignable other than to a related Permitted Assign (as such term is defined in the Option Plan) and for normal estate settlement purposes; (viii) changes to insider participation limits; and (ix) amendments to the Option Plan amendment provisions.

As a general matter, if any Option granted under the Option Plan shall expire, terminate for any reason in accordance with the terms of the Option Plan or be exercised, Common Shares subject thereto shall again be available for the purpose of the Option Plan.

The Corporation's annual "burn rate" for Options granted under the Option Plan, calculated as described in Section 613(p) of the TSX Company Manual with respect to the number of issued and outstanding shares (total number of Options issued in a fiscal year, divided by the weighted average number of outstanding Common Shares for that year) was 3% for fiscal 2016, 0.3% for fiscal 2017 and nil for fiscal 2018.

EPSP

Membership and Administration

Participation in the EPSP is limited to eligible non-U.S. resident employees of, or "employees" within the meaning of the Income Tax Act (Canada) ("ITA") who provide services to, the Corporation and any affiliated entity that has adopted the EPSP. The Corporation and such affiliated entities are collectively referred to as the “Participating Entities”.

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The selection of Members and the specific terms of any benefits granted to a Member, including the number of Common Shares, vesting schedule, and timing of distributions (after discharge of debt owing in respect of Common Shares) in cash or Common Shares will be determined by the CGC Committee or the general partner or other controlling person of a Participating Entity, as applicable, and as set forth in the applicable employment or other contract entitling the Member to benefits under the EPSP (the “Member’s Contract”).

While Common Shares from treasury may be granted under the EPSP subject to the restrictions set forth above, Common Shares may also be purchased on the open market by the Trustee on behalf of the Members. Management of the Corporation is responsible for administering the EPSP. The Trustee is an independent trustee appointed by the Board pursuant to a trust agreement entered into by the Corporation and the Trustee, which created the trust in respect of the EPSP.

In each fiscal year, or within 120 days thereafter, each Participating Entity realizing profits in such fiscal year shall pay to the Trustee (to be held in trust) for such fiscal year out of profits a contribution in an amount determined by the Board or general partner or other controlling person of the Participating Entity.

Subject to the terms of a Member’s Contract and the ITA, distributions of cash or in specie, may be made from a Member’s “allocated account” to such Member at any time upon the written direction of the Corporation provided that the Trustee shall distribute only the net amount available for distribution to the Member and only upon the discharge of any debt owing by the EPSP in respect of the Common Shares at the time of distribution. Such debt may be discharged by a Participating Entity (including the Corporation) or the Member in accordance with the relevant provisions of the Member’s Contract. Any applicable taxes or interest shall be the sole responsibility of the Members.

Termination of Employment

No later than three months of the earliest of the (i) termination of employment or service, including retirement, resignation or dismissal without cause and (ii) termination of the EPSP, an amount equal to the net value of the assets (after applicable expenses and any unpaid debt owing on any Common Shares in the Member’s vested account) that have been allocated to the Member’s vested account shall be distributed by the Trustee to the Member, subject to any debt obligations assumed by the Member under the Member’s Contract. Within three months of the death of a Member, subject to compliance with applicable laws, the Trustee shall distribute to such Member’s beneficiary the net value (after applicable expenses) of the amount in the Member’s vested account. Upon the occurrence of the foregoing events, the Board may, in its sole discretion, deem vested and designate to a Member’s vested account, such number of Common Shares that would otherwise have vested up to a specified period had death or termination of employment of the Member not occurred.

In the event that a Member’s employment with a Participating Entity is terminated for cause, all Common Shares and amounts contained in or allocated to such Member’s vested account and such Member’s allocated account shall be forfeited and the amounts thereof shall be reallocated to the other Members of the EPSP at the end of the taxation year of the Trust as the Corporation shall direct.

Transferability

The Member may not assign, convert, charge, surrender or alienate the rights or benefits granted under the EPSP. Amounts vested in a Member under the EPSP shall not be available for the claims of his or her creditors.

Amendments or Termination

The Corporation currently intends to continue the EPSP in effect indefinitely but the Corporation reserves the right to amend, modify or discontinue the EPSP, in whole or in part, at any time, provided, however, that any such amendment or modification which may affect the rights, duties and responsibilities of the Trustee shall not become effective until the Corporation has received the written consent of the Trustee.

The Board may make the following amendments to the EPSP, without obtaining shareholder approval: (i) amendments to the terms and conditions of the EPSP necessary to ensure that the EPSP complies with the applicable regulatory requirements, including the rules of the TSX and Canada Revenue Agency, in place from time to time; (ii) amendments to the provisions of the EPSP respecting administration of the EPSP and eligibility for participation under the EPSP; (iii) amendments to the provisions of the EPSP respecting the terms and conditions on which allocations may be made to a Member’s allocated account pursuant to the EPSP, including the provisions relating to the vesting schedule (subject to a minimum three-month vesting period for Common Shares issued from treasury); and (iv) amendments to the EPSP that are of a “housekeeping” nature.

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The Board may not, without the approval of the Corporation’s shareholders, make amendments with respect to the following: (i) an increase to the EPSP maximum or the number of securities issuable under the EPSP; (ii) amendment provisions granting additional powers to the Corporation or the Board to amend the EPSP; and (iii) an increase in entitlements held by insiders of the Corporation, including extension of the termination or expiry dates thereof or changes to insider participation limits.

If the EPSP is terminated, each Participating Entity shall not recover any amounts paid into the EPSP up to the date of such termination and all such amounts must and shall be used for the sole benefit of the Members and/or their beneficiaries, according to the balance in their Member’s account as determined by a special valuation of the assets of the EPSP as of the date of the termination of the EPSP.

The Corporation's annual "burn rate" for shares granted under the EPSP plan, calculated as described in Section 613(p) of the TSX Company Manual with respect to the number of issued and outstanding shares (total number of Options issued in a fiscal year, divided by the weighted average number of outstanding Common Shares for that year) was nil in fiscal 2016, 2017 and 2018.

EIP

Participants and Administration

Eligible participants in the EIP are those directors, officers, employees and consultants of the Corporation and its subsidiaries and affiliates residing in the United States or who are otherwise U.S. taxpayers who are selected for participation by the plan administrator.

The EIP provides for the award of restricted stock, RSUs, related dividend equivalents and unrestricted stock. Shares issued pursuant to the EIP may be authorized but unissued Common Shares or treasury shares or Common Shares obtained on the market by the Corporation.

The EIP is administered by the CGC Committee. The specific terms of any award granted under the EIP is determined by the plan administrator, subject to the terms of the EIP, including the number of Common Shares, vesting conditions and schedule, timing of distributions, and such other terms and conditions as the administrator may determine, and as may be set forth in the applicable award agreement.

Restricted stock is subject to forfeiture prior to the vesting of the award. A restricted stock unit is notional stock that entitles the grantee to receive a Common Share following the vesting of the RSU. The CGC Committee may determine to make grants under the EIP of restricted stock and RSUs containing such terms as the CGC Committee may determine, subject to applicable law. The CGC Committee will determine the period over which restricted stock and RSUs granted to EIP participants will vest, subject to a minimum vesting period of three months for Common Shares issued from treasury, and the timing of distributions. In connection with RSUs, the CGC Committee, in its discretion, may grant dividend equivalent rights under the EIP, subject to such terms and conditions, including the timing of distribution, as determined by the CGC Committee and subject to the provisions of the EIP and applicable law. The CGC Committee may base its determination upon the achievement of specified performance goals. The CGC Committee, in its discretion, may grant Common Shares free of restrictions under the EIP in respect of past services or other valid consideration. Such Common Shares shall be purchased on the market, and in no event shall treasury shares be issued to make such grants.

The Corporation's annual "burn rate" for shares granted under the EIP calculated as described in Section 613(p) of the TSX Company Manual with respect to the number of issued and outstanding shares (total number of restricted stock, RSUs, related dividend equivalents and unrestricted stock issued in a fiscal year, divided by the weighted average number of outstanding Common Shares for that year) was 0.1% for fiscal 2016, nil for fiscal 2017 and 0.94% for fiscal 2018.

Termination of Employment or Service

Unless otherwise provided in the applicable award agreement, upon a termination of employment or service other than for death or disability, unvested restricted stock and RSUs granted under the EIP will be forfeited, provided that the administrator may waive or modify such provisions. Unless otherwise provided in the applicable award agreement, upon a termination of employment or service due to death or disability, unvested restricted stock and RSUs granted under the EIP will vest.

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Transferability

Shares of restricted stock or RSUs granted under the EIP may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of prior to the lapsing of all restrictions thereon, other than by will, by the laws of descent and distribution, or through gift or domestic relations orders to a "family member" of the grantee as permitted by Rule 701 of the United States Securities Act of 1933, as amended, or may be otherwise specifically provided in the applicable award agreement in accordance with applicable law. Following any such transfer, any transferred restricted stock or RSUs will continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.

Adjustments, Termination and Amendment

Subject to any required approvals of the stock exchange(s) on which the Common Shares are listed, the plan administrator may, in its discretion, provide for adjustment of the terms and conditions of outstanding awards and awards issuable under the EIP, in recognition of unusual or nonrecurring events (including any stock split, reverse stock split, reorganization, merger, consolidation, split-up, combination, or other similar corporate transaction or event) affecting the Corporation or any of its affiliates. The Board, in its discretion, may terminate, suspend or discontinue the EIP at any time with respect to any award that has not yet been granted. Unless the EIP is terminated earlier, no award may be granted under the EIP following the tenth anniversary of the date of the EIP’s adoption by the Board or approval by the Corporation's security holders, whichever is earlier. The Board also has the right to alter or amend the EIP or any part of the EIP, and the CGC Committee may modify outstanding awards granted under the EIP, from time to time, in each case subject to shareholder approval in certain circumstances as provided in the EIP. However, other than adjustments to outstanding awards upon the occurrence of certain unusual or nonrecurring events, generally no change in any outstanding grant may be made that would materially impair the rights or materially increase the obligations of the participant without the consent of the participant.

The Board may make the following amendments to the EIP, without obtaining shareholder approval: (i) amendments to the terms and conditions of the EIP necessary to ensure that the EIP complies with the applicable regulatory requirements, including the rules of the TSX, U.S. federal and state securities laws, Canada Revenue Agency, and the Internal Revenue Code of 1986, as amended, in place from time to time; (ii) amendments to the provisions of the EIP respecting administration of the EIP and eligibility for participation under the EIP; (iii) amendments to the provisions of the EIP respecting the terms and conditions on which awards may be granted pursuant to the EIP, including the provisions relating to the vesting schedule (subject to a minimum three-month vesting period for Common Shares issued from treasury); and (iv) amendments to the EIP that are of a “housekeeping” nature.

The Board and the plan administrator may not, without the approval of the Corporation’s shareholders, make amendments with respect to the following: (i) an increase to the EIP maximum or the number of securities issuable under the EIP; (ii) amendment provisions granting additional powers to the Board or plan administrator to amend the EIP or entitlements thereunder; and (iii) an increase in entitlements held by insiders of the Corporation, including extension of the termination or expiry dates thereof or changes to insider participation limits.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

Other than as disclosed herein,

(a) there is no indebtedness outstanding of any executive officers, directors, employees or former executive officers, directors or employees of the Corporation or any of its subsidiaries or to another entity which is the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or any of its subsidiaries, entered into in connection with a purchase of securities or otherwise; and

(b) no individual who is, or at any time during the most recently completed financial year of the Corporation was, a director or executive officer of the Corporation, no proposed nominee for election as a director of the Corporation and no associate of any such person:

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(i) is or at any time since the beginning of the most recently completed financial year of the Corporation has been, indebted to the Corporation or any of its subsidiaries; or

(ii) whose indebtedness to another entity is, or at any time since the beginning of the most recently completed financial year of the Corporation has been, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or any of its subsidiaries,

whether in relation to a securities purchase program or other program.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

To the knowledge of the Corporation, no “informed person”, proposed director, or any associate or affiliate of any of these persons, has any material interest, direct or indirect, in any transaction since January 1, 2018 or in any proposed transaction that has materially affected or would materially affect the Corporation or any of its subsidiaries. An “informed person” means, among others, (i) a director or executive officer of the Corporation or of a subsidiary of the Corporation, (ii) any person or company who beneficially owns, or controls or directs, directly or indirectly, voting securities of the Corporation or a combination of both carrying more than 10% of the voting rights attached to all outstanding voting securities of the Corporation other than voting securities held by the person or company as underwriter in the course of a distribution.

ADDITIONAL INFORMATION

Financial information about the Corporation is provided in its financial statements for the fiscal year ended December 31, 2018 and related management’s discussion and analysis. You may obtain a copy of such documents by contacting Sprott Investor Relations at (416) 203-2310 or toll-free at 1 (877) 403-2310 or ir@sprott.com.

All of these above mentioned documents, as well as additional information relating to the Corporation, are also available by visiting the Corporation’s website at www.sprott.com or SEDAR’s website at www.sedar.com.

BOARD APPROVAL

The contents and the distribution of this Circular have been approved by the Board, and this Circular has been sent (or made available) to each director of the Corporation, each shareholder entitled to notice of the Meeting and the auditors of the Corporation.

Dated at Toronto, Ontario as of March 20, 2019.

BY ORDER OF THE BOARD

(signed) “Jack C. Lee”

Jack C. Lee

Chair of the Board

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SCHEDULE “A”

SPROTT INC.

MANDATE OF THE BOARD OF DIRECTORS

Introduction

The term “Corporation” herein shall refer to Sprott Inc. and the term “Board” shall refer to the board of directors of the Corporation. The Board is elected by the shareholders and is responsible for the stewardship of the business and affairs of the Corporation. The Board seeks to discharge such responsibility by reviewing, discussing and approving the Corporation’s strategic planning and organizational structure and supervising management to ensure that the foregoing enhance and preserve the underlying value of the Corporation.

Although directors may be elected by the shareholders to bring special expertise or a point of view to Board deliberations, they are not chosen to represent a particular constituency. The best interests of the Corporation must be paramount at all times.

Chair and Composition and Quorum

1. The Board will be comprised of a minimum of one member and a maximum of ten members, the majority of which shall be, in the determination of the Board, “independent” for the purposes of National Instrument 58-101 Disclosure of Corporate Governance Practices. Each Board member shall satisfy the independence and experience requirements, if any, imposed by applicable securities laws, rules or guidelines, any applicable stock exchange requirements or guidelines and any other applicable regulatory rules.

2. The chair of the Board will be elected by vote of a majority of the full Board membership, on the recommendation of the Corporate Governance and Compensation Committee. The chair of the Board with the assistance of the lead director (who shall be an independent director), if any, will chair Board meetings and shall be responsible for overseeing the performance by the Board of its duties, for setting the agenda of each Board meeting (in consultation with the Chief Executive Officer (the “CEO”)), for communicating periodically with committee chairs regarding the activities of their respective committees, for assessing the effectiveness of the Board as a whole as well as individual Board members and for ensuring the Board works as a cohesive team and providing the leadership essential to achieve this.

Meetings

3. Meetings will be scheduled to facilitate the Board carrying out its responsibilities. Additional meetings will be held as deemed necessary by the Chair of the Board. The time at which and place where the meetings of the Board shall be held and the calling of the meetings and procedure in all things at such meetings shall be determined by the Board in accordance with the Corporation’s articles, by-laws and applicable laws. The independent directors of the Board shall hold regularly scheduled meetings at which non-independent directors and management are not in attendance. Any director of the Corporation may request the Chair of the Board to call a meeting of the Board.

4. Meetings of the Board shall be validly constituted if a majority of the members of the Board is present in person or by tele- or video- conference. A resolution in writing signed by all the members of the Board entitled to vote on that resolution at a meeting of the Board is as valid as if it had been passed at a meeting of the Board duly called and held.

Board Charter and Performance

5. The Board shall have a written charter that sets out its mandate and responsibilities and the Board shall review and assess the adequacy of such charter and the effectiveness of the Board at least annually or otherwise, as it deems appropriate, and make any necessary changes. Unless and until replaced or amended, this mandate constitutes that charter. The Board will ensure that this mandate or a summary that has been approved by the Board is disclosed in accordance with all applicable securities laws or regulatory requirements in the Corporation’s annual management information circular or such other annual filing as may be permitted or required by applicable securities regulatory authorities.

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Duties of Directors

6. The Board discharges its responsibility for overseeing the management of the Corporation’s business by delegating to the Corporation’s senior officers the responsibility for day-to-day management of the Corporation. The Board discharges its responsibilities both directly and through its committees, the Audit and Risk Management Committee and the Corporate Governance and Compensation Committee. In addition to these regular committees, the Board may appoint ad hoc committees periodically to address certain issues of a more short-term nature. In addition to the Board’s primary roles of overseeing corporate performance and providing quality, depth and continuity of management to meet the Corporation’s strategic objectives, principal duties include the following:

Appointment of Management

(i) The Board has the responsibility for approving the appointment of the CEO and all other senior management, monitoring their performance and, where deemed necessary, approving their compensation, following a review of the recommendations of the Corporate Governance and Compensation Committee. To the extent feasible, the Board shall satisfy itself as to the integrity of the CEO and other executive officers and that the CEO and other executive officers create a culture of integrity throughout the Corporation. The Board may provide advice and counsel in the execution of the CEO’s duties as appropriate.

(ii) The Board from time to time delegates to senior management the authority to enter into certain types of transactions, including financial transactions, subject to specified limits. Investments and other expenditures above the specified limits and material transactions outside the ordinary course of business are reviewed by and subject to the prior approval of the Board.

(iii) The Board oversees that succession planning programs are in place, including programs to appoint, train, develop and monitor management.

Board Organization

(iv) The Board will respond to recommendations received from the Corporate Governance and Compensation Committee, but retains the responsibility for managing its own affairs by giving its approval for its composition and size, the selection of the Chair of the Board, candidates nominated for election to the Board, committee and committee chair appointments, committee charters and director compensation.

(v) The Board may delegate to Board committees matters it is responsible for, including the approval of compensation of the Board and management, the conduct of performance evaluations and oversight of internal controls systems, but the Board retains its oversight function and ultimate responsibility for these matters and all other delegated responsibilities.

Strategic Planning

(vi) The Board has oversight responsibility to participate directly, and through its committees, in reviewing, questioning and approving the mission of the business and its objectives and goals and the strategy by which it proposes to reach those goals.

(vii) The Board is responsible for adopting a strategic planning process and approving and reviewing, on at least an annual basis, the business, financial and strategic plans by which it is proposed that the Corporation may reach those goals, and such strategic plans will take into account, among other things, the opportunities and risks of the business.

(viii) The Board has the responsibility to provide input to management on emerging trends and issues and on strategic plans, objectives and goals that management develops.

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Monitoring of Financial Performance and Other Financial Reporting Matters

(ix) The Board is responsible for:

(a) adopting processes for monitoring the Corporation’s progress toward its strategic and operational goals, and to revise and alter its direction to management in light of changing circumstances affecting the Corporation; and

(b) taking action when the Corporation’s performance falls short of its goals or when other special circumstances warrant.

(x) The Board shall be responsible for approving the audited financial statements, interim financial statements and the notes and Management’s Discussion and Analysis accompanying such financial statements.

(xi) The Board is responsible for reviewing and approving material transactions outside the ordinary course of business and those matters which the Board is required to approve under the Corporation’s governing statute, including the payment of dividends, issuance, purchase and redemptions of securities, acquisitions and dispositions of material capital assets and material capital expenditures.

Risk Management

(xii) The Board has responsibility for the identification of the principal risks of the Corporation’s business and ensuring the implementation of appropriate systems to effectively monitor and manage such risks with a view to the long-term viability of the Corporation and achieving a proper balance between the risks incurred and the potential return to the Corporation’s shareholders.

(xiii) The Board is responsible for the Corporation’s internal control and management information systems.

Policies and Procedures

(xiv) The Board is responsible for:

(a) developing the Corporation’s approach to corporate governance, including developing a set of corporate governance principles and guidelines for the Corporation and approving and monitoring compliance with all significant policies and procedures related to corporate governance; and

(b) approving policies and procedures designed to ensure that the Corporation operates at all times within applicable laws and regulations and to the highest ethical and moral standards and, in particular, adopting a written code of business conduct and ethics which is applicable to directors, officers and employees of the Corporation and which constitutes written standards that are reasonably designed to promote integrity and to deter wrongdoing.

(xv) The Board enforces its policy respecting confidential treatment of the Corporation’s proprietary information and Board deliberations.

(xvi) The Board is responsible for adopting and monitoring compliance with the Corporation’s Code of Business Conduct and Ethics.

Communications and Reporting

(xvii) The Board is responsible for approving and revising from time to time as circumstances warrant a Disclosure Policy to address communications with shareholders, employees, financial analysts, the media and such other outside parties as may be appropriate.

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(xviii) The Board is responsible for:

(a) overseeing the accurate reporting of the financial performance of the Corporation to shareholders, other security holders and regulators on a timely, regular and non-selective basis;

(b) overseeing that the financial results are reported fairly and in accordance with international financial reporting standards and related legal disclosure requirements;

(c) taking steps to enhance the timely, non-selective disclosure of any other developments that have a significant and material impact on the Corporation;

(d) reporting annually to shareholders on its stewardship for the preceding year; and

(e) overseeing the Corporation’s implementation of systems which accommodate feedback from stakeholders.

Position Descriptions

(xix) The Board is responsible for:

(a) developing position descriptions for the Chair of the Board, the lead director, if applicable, the chair of each Board committee and, together with the CEO, the CEO (which will include delineating management’s responsibilities). The CEO shall be expected to, among other things:

(i) foster a corporate culture that promotes ethical practices, encourages individual integrity and fulfills social responsibility;

(ii) develop and recommend to the Board a long-term strategy and vision for the Corporation that is intended to lead to creation of shareholder value;

(iii) develop and recommend to the Board annual plans and budgets that support the Corporation’s long-term strategy; and

(iv) seek to consistently strive to achieve the Corporation’s financial and operating goals and objectives;

(b) developing and approving the corporate goals and objectives that the CEO is responsible for meeting; and

(c) developing a description of the expectations and responsibilities of directors, including basic duties and responsibilities with respect to attendance at Board meetings and advance review of meeting materials.

Orientation and Continuing Education

(xx) The Board is responsible for:

(a) ensuring that all new directors receive a comprehensive orientation, that they fully understand the role of the Board and its committees, as well as the contribution individual directors are expected to make (including the commitment of time and resources that the Corporation expects from its directors) and that they understand the nature and operation of the Corporation’s business; and

(b) providing continuing education opportunities for all directors, so that individuals may maintain or enhance their skills and abilities as directors, as well as to ensure that their knowledge and understanding of the Corporation’s business remains current.

Nomination of Directors

(xxi) In connection with the nomination or appointment of individuals as directors, the Board is responsible for:

(a) considering what competencies and skills the Board, as a whole, should possess;

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(b) assessing what competencies and skills each existing director possesses; and

(c) considering the appropriate size of the Board, with a view to facilitating effective decision making;

with regard to their Diversity. “Diversity” refers to any characteristic that can be used to differentiate groups and people from one another. It includes, but is not limited to, characteristics such as gender, geographical representation, education, religion, ethnicity, race, nationality, culture, language, aboriginal or indigenous status and other ethnic distinctions, sexual orientation, political affiliation, family and marital status, age, disability, and industry experience and expertise.

In carrying out each of these responsibilities, the Board will consider the advice and input of the Corporate Governance and Compensation Committee.

(xxii) Director nominees shall be selected by a majority of the independent directors.

Board Evaluation

(xxiii) The Board is responsible for ensuring that the Board, its committees and each individual director are regularly assessed regarding his, her or its effectiveness and contribution. An assessment will consider, in the case of the Board or a Board committee, its mandate or charter and in the case of an individual director, any applicable position description, as well as the competencies and skills each individual director is expected to bring to the Board.

Authority to engage outside advisors

7. The Board has the authority to engage outside advisors as it determines necessary to carry out its duties, including, but not limited to identifying and reviewing candidates to serve as directors or officers.

8. The Corporation shall provide appropriate funding, as determined by the Board, for payment (a) of compensation to any advisors engaged by the Board, and (b) of ordinary administrative expenses of the Board that are necessary or appropriate in carrying out its duties.

November 8, 2018

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EX-99.35

Exhibit 99.35

Sprott Inc. (the “Corporation”) FORM OF PROXY (“PROXY”) Annual General Meeting Friday, May 10, 2019 at 12:00 p.m. (Toronto time) Offices of Baker & McKenzie LLP, Brookfield Place, Bay/Wellington Tower, 181 Bay Street, Suite 2100, Toronto, ON (the “Meeting”) RECORD DATE: March 20, 2019 CONTROL NUMBER: SEQUENCE #: FILING DEADLINE FOR PROXY: Wednesday, May 8, 2019 at 12:00 p.m. (Toronto time) VOTING METHOD INTERNET Go to www.voteproxyonline.com and enter the 12 digit control number above FACSIMILE 416-595-9593 MAIL or HAND DELIVERY TSX Trust Company 301 – 100 Adelaide Street West Toronto, Ontario, M5H 4H1 The undersigned hereby appoints Peter Grosskopf, Chief Executive Officer of the Corporation, whom failing Kevin Hibbert, Chief Financial Officer of the Corporation (the “Management Nominees”), or instead of any of them, the following Appointee Please print appointee name as proxyholder on behalf of the undersigned with the power of substitution to attend, act and vote for and on behalf of the undersigned in respect of all matters that may properly come before the Meeting and at any adjournment(s) or postponement(s) thereof, to the same extent and with the same power as if the undersigned were personally present at the said Meeting or such adjournment(s) or postponement(s) thereof in accordance with voting instructions, if any, provided below. - SEE VOTING GUIDELINES ON REVERSE - RESOLUTIONS – MANAGEMENT VOTING RECOMMENDATIONS ARE INDICATED BY HIGHLIGHTED TEXT ABOVE THE BOXES 1. Election of Directors FOR WITHHOLD a) Ronald Dewhurst b) Peter Grosskopf c) Sharon Ranson d) Arthur Richards Rule IV e) Rosemary Zigrossi 2. Appointment of Auditors FOR WITHHOLD Appointment of KPMG LLP as auditors of the Corporation and to authorize the board of directors of the Corporation to fix their remuneration and terms of engagement. This proxy revokes and supersedes all earlier dated proxies and MUST BE SIGNED PLEASE PRINT NAME Signature of registered owner(s) Date (MM/DD/YYYY) 

Proxy Voting – Guidelines and Conditions THIS PROXY IS SOLICITED BY MANAGEMENT OF THE CORPORATION. THIS PROXY SHOULD BE READ IN CONJUNCTION WITH THE MEETING MATERIALS PRIOR TO VOTING. If you appoint the Management Nominees to vote your securities, they will vote in accordance with your instructions or, if no instructions are given, in accordance with the Management Voting Recommendations highlighted for each Resolution on the reverse. If you appoint someone else to vote your securities, they will also vote in accordance with your instructions or, if no instructions are given, as they in their discretion choose. This proxy confers discretionary authority on the person named to vote in his or her discretion with respect to amendments or variations to the matters identified in the Notice of the Meeting accompanying the proxy or such other matters which may properly come before the Meeting or any adjournment or postponement thereof. Each security holder has the right to appoint a person other than the Management Nominees specified herein to represent them at the Meeting or any adjournment or postponement thereof. Such right may be exercised by inserting in the space labeled “Please print appointee name”, the name of the person to be appointed, who need not be a security holder of the Corporation. To be valid, this proxy must be signed. Please date the proxy. If the proxy is not dated, it is deemed to bear the date of its mailing to the security holders of the Corporation. To be valid, this proxy must be filed using one of the Voting Methods and must be received by TSX Trust Company before the Filing Deadline for Proxies, noted on the reverse or in the case of any adjournment or postponement of the Meeting not less than 48 hours (Saturdays, Sundays and holidays excepted) before the time of the adjourned or postponed meeting. Late proxies may be accepted or rejected by the Chairman of the Meeting in his discretion, and the Chairman is under no obligation to accept or reject any particular late proxy. If the security holder is a corporation, the proxy must be executed by an officer or attorney thereof duly authorized, and the security holder may be required to provide documentation evidencing the signatory’s power to sign the proxy. Guidelines for proper execution of the proxy are available at www.stac.ca. Please refer to the Proxy Protocol. Investor inSite TSX Trust Company offers at no cost to security holders, the convenience of secure 24-hour access to all data relating to their account including summary of holdings, transaction history, and links to valuable security holder forms and Frequently Asked Questions. To register, please visit www.tsxtrust.com/investorinsite Click on, “Register Online Now” and complete the registration form. Call us toll free at 1-866-600-5869 with any questions.Notice-and-Access The Canadian securities regulators have adopted rules which permit the use of notice-and-access for proxy solicitation instead of the traditional physical delivery of material. This new process provides the option to post meeting related materials including management information circulars as well as annual financial statements and management’s discussion and analysis, on a website in addition to SEDAR. Under notice-and-access, meeting related materials will be available for viewing for up to 1 year from the date of posting and a paper copy of the material can be requested at any time during this period. Disclosure regarding each matter or group of matters to be voted on is in the Information Circular in the Section with the same title as each Resolution on the reverse. You should review the Information Circular before voting. Sprott Inc. has elected to utilize notice-and-access and provide you with the following information: Meeting materials are available electronically at www.sedar.com and also at http://sprott.com/investor-relations/2019-agm/. If you wish to receive a paper copy of the Meeting materials or have questions about notice-and-access, please call 1-866-600-5869 or email TMXEInvestorServices@tmx.com. In order to receive a paper copy in time to vote before the meeting, your request should be received by May 1, 2019. Request for Financial Statements In accordance with securities regulations, security holders may elect to receive Annual Financial Statements, Interim Financial Statements and MD&As. Instead of receiving the financial statements by mail, you may choose to view these documents on SEDAR at www.sedar.com. I am currently a security holder of the Corporation and as such request the following: Annual Financial Statements with MD&A Interim Financial Statements with MD&A If you are casting your vote online and wish to receive financial statements, please complete the online request for financial statements following your voting instructions. If the cut-off time has passed, please fax this side to 416-595-9593 Check this box if you wish to receive the selected financial statements electronically and print your email address below E-mail (optional) By providing my email address, I hereby acknowledge and consent to all provisions outlined in the following: https://www.voteproxyonline.com/equity/fsred.pdf Sprott Inc. 2019 

EX-99.36

Exhibit 99.36

SPROTT INC.

REPORT OF VOTING RESULTS

Pursuant to Section 11.3 of National Instrument 51-102 – Continuous Disclosure Obligations, the following briefly describes the matters voted upon and the outcome of the votes at the annual meeting (the “Meeting”) of the shareholders of Sprott Inc. (the “Corporation”) held on May 10, 2019.

1. Election of Directors

By a vote by way of a show of hands, the individuals identified in the management information circular of the Corporation dated March 20, 2019 (the “Circular”) and set forth below, were elected as directors of the Corporation.

Nominee	Votes For		%		Votes Withheld		%
Ronald Dewhurst		137,523,800		98.915		1,508,390		1.085
Peter Grosskopf		137,564,934		98.945		1,467,256		1.055
Sharon Ranson		137,477,200		98.882		1,554,990		1.118
Arthur Richards Rule IV		138,229,873		99.423		802,317		0.577
Rosemary Zigrossi		137,533,957		98.922		1,498,233		1.078

2. Appointment of Auditors

By a vote by way of a show of hands, the resolution appointing KPMG LLP as auditors of the Corporation and authorizing the board of directors of the Corporation to fix the auditors’ remuneration and terms of engagement was passed.

Votes For	%		Votes Withheld		%
180,545,048		99.317		1,240,777		0.683

DATED this 10th day of May, 2019.

SPROTT INC.

Per:	“Arthur Einav”
	Arthur Einav
	Corporate Secretary

EX-99.37

Exhibit 99.37

SPROTT INC.

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the annual and special meeting of shareholders (the “Meeting”) of Sprott Inc. (the “Corporation”) will be held at 12:00 p.m. (Toronto time) on Friday, May 8, 2020 for the following purposes:

1. to receive the audited consolidated financial statements of the Corporation for the financial year ended December 31, 2019 together with the auditors’ report thereon (the “2019 Financial Statements”);

2. to elect the directors for the ensuing year to hold office until the close of the next annual meeting of shareholders of the Corporation;

3. to re-appoint KPMG LLP as auditors of the Corporation and to authorize the board of directors of the Corporation (the “Board”) to fix their remuneration and terms of engagement;

4. to consider and, if deemed advisable, pass a special resolution approving an amendment to the articles of the Corporation for the future consolidation of the Corporation’s issued and outstanding common shares (“Common Shares”) on the basis of one (1) post consolidation Common Share for up to ten (10) pre-consolidation Common Shares (the “Common Share Consolidation”), if, and at such time following the date of the Meeting, as may be determined by the Board in its sole discretion, as more particularly described in the management information circular dated March 18, 2020 (the “Circular”);

5. to consider and, if thought advisable, pass, with or without amendment, an ordinary resolution to approve, confirm and ratify the 2020 Amended and Restated Stock Option Plan of the Corporation;

6. to consider and, if thought advisable, pass, with or without amendment, an ordinary resolution to approve, confirm and ratify the 2020 Amended and Restated Employee Profit Sharing Plan for non-U.S. employees of the Corporation and its affiliated entities;

7. to consider and, if thought advisable, pass, with or without amendment, an ordinary resolution to approve, confirm and ratify the 2020 Amended and Restated Equity Incentive Plan for U.S. service providers of the Corporation and its affiliated entities; and

8. to transact such other business as may properly come before the Meeting or any adjournment(s) or postponement(s) thereof.

This year, out of an abundance of caution, to proactively deal with the unprecedented public health impact of COVID-19 and to mitigate risks to the health and safety of our community, shareholders, employees and other stakeholders, we will hold the Meeting in a virtual only format, which will be conducted via live audio webcast online at www.virtualshareholdermeeting.com/SII2020. At this website, shareholders will be able to hear the Meeting live, submit questions and vote their shares while the Meeting is being held. We hope that hosting a virtual meeting helps enable greater participation by our shareholders by allowing shareholders that might not otherwise be able to travel to a physical meeting to attend online and minimizes the health risk that may be associated with large gatherings.

Registered shareholders and duly appointed proxyholders will be able to attend, submit questions and vote at the Meeting online at www.virtualshareholdermeeting.com/SII2020. Non-registered (beneficial) shareholders who have not duly appointed themselves as proxyholder will be able to attend the Meeting, but will not be able to vote at the Meeting. Please refer to the voting instructions provided in the “Voting of Shares” section of the Circular.

Particulars of the foregoing matters are set forth in the Circular. For the Meeting, the Corporation has elected to use the notice-and-access provisions under National Instrument 51-102 - Continuous Disclosure Obligations and National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer (collectively, the “Notice-and-Access Provisions”) to reduce its mailing costs and volume of paper with respect to the materials distributed for the purpose of the Meeting. The Notice-and-Access Provisions are a set of rules that permit the Corporation to post the Meeting materials, 2019 Financial Statements and accompanying management’s discussion and analysis (“MD&A”) online rather than making a traditional physical delivery of such materials. Shareholders will still receive a form of proxy or voting instruction form, as the case may be, and a financial statement request form. The Corporation will not use procedures known as “stratification” in relation to the use of the Notice-and-Access Provisions.

Shareholders are directed to read the Circular carefully and in full in evaluating the matters for consideration at the Meeting. Further disclosure on the matters set out above may be found in the Circular in the section entitled “Particulars of Matters to be Acted Upon”. The Circular, 2019 Financial Statements, MD&A and other relevant materials are available on the Corporation’s website at https://www.sprott.com/investor-relations/2019-agm, for a minimum of one year, and under the Corporation’s directory on the System for Electronic Document Analysis and Retrieval at www.sedar.com. Any shareholder who wishes to receive a paper copy of such documents free of charge should contact the Corporation’s registrar and transfer agent, TSX Trust Company, by mail at 100 Adelaide Street West, Suite 301, Toronto, Ontario, Canada, M5H 4H1, Attention: Proxy Department; by calling toll-free at 1-866-600-5869; or by e-mail at TMXEInvestorServices@tmx.com. In order to be certain of receiving such materials in time to vote before the Meeting, the request should be received by TSX Trust Company by April 29, 2020. A shareholder may also use the toll-free number noted above to obtain additional information about the Notice-and-Access Provisions.

The record date for the determination of shareholders of the Corporation entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof is March 18, 2020 (the “Record Date”). Shareholders of the Corporation whose names have been entered in the register of shareholders of the Corporation at the close of business on the Record Date will be entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof.

If you are a shareholder and you are not able to attend the Meeting online, please carefully follow the instructions on the form of proxy or voting instruction form. Your form of proxy should be sent in sufficient time so as to arrive not less than 48 hours before the time set for the holding of the Meeting or any adjournment or postponement thereof (excluding Saturdays, Sundays and holidays in the Province of Ontario). Shareholders that hold their Common Shares with a financial intermediary will receive a voting instruction form in order to instruct their intermediary how to vote on their behalf. Only shareholders of record as at the close of business on the Record Date will be entitled to notice of the Meeting or any adjournment thereof. The Circular includes important information about the Meeting and the voting process. Please read it carefully and remember to vote.

Questions

If you have any questions about the information contained in this Circular or need assistance in completing your form of proxy or voting instruction form, please contact your professional advisors or you may contact Glen Williams, Managing Director, Investor Relations at 416-943-4394  or email ir@sprott.com.

Dated at Toronto, Ontario as of March 18, 2020.

BY ORDER OF THE BOARD

(signed) “Ron Dewhurst”

Ron Dewhurst

Chair of the Board

EX-99.38

Exhibit 99.38 

 

SPROTT INC.

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the annual and special meeting of shareholders (the “Meeting”) of Sprott Inc. (the “Corporation”) will be held at 12:00 p.m. (Toronto time) on Friday, May 8, 2020 for the following purposes:

1. to receive the audited consolidated financial statements of the Corporation for the financial year ended December 31, 2019 together with the auditors’ report thereon (the “2019 Financial Statements”);

2. to elect the directors for the ensuing year to hold office until the close of the next annual meeting of shareholders of the Corporation;

3. to re-appoint KPMG LLP as auditors of the Corporation and to authorize the board of directors of the Corporation (the “Board”) to fix their remuneration and terms of engagement;

4. to consider and, if deemed advisable, pass a special resolution approving an amendment to the articles of the Corporation for the future consolidation of the Corporation’s issued and outstanding common shares (“Common Shares”) on the basis of one (1) post consolidation Common Share for up to ten (10) pre-consolidation Common Shares (the “Common Share Consolidation”), if, and at such time following the date of the Meeting, as may be determined by the Board in its sole discretion, as more particularly described in the management information circular dated March 18, 2020 (the “Circular”);

5. to consider and, if thought advisable, pass, with or without amendment, an ordinary resolution to approve, confirm and ratify the 2020 Amended and Restated Stock Option Plan of the Corporation;

6. to consider and, if thought advisable, pass, with or without amendment, an ordinary resolution to approve, confirm and ratify the 2020 Amended and Restated Employee Profit Sharing Plan for non-U.S. employees of the Corporation and its affiliated entities;

7. to consider and, if thought advisable, pass, with or without amendment, an ordinary resolution to approve, confirm and ratify the 2020 Amended and Restated Equity Incentive Plan for U.S. service providers of the Corporation and its affiliated entities; and

8. to transact such other business as may properly come before the Meeting or any adjournment(s) or postponement(s) thereof.

This year, out of an abundance of caution, to proactively deal with the unprecedented public health impact of COVID-19 and to mitigate risks to the health and safety of our community, shareholders, employees and other stakeholders, we will hold the Meeting in a virtual only format, which will be conducted via live audio webcast online at www.virtualshareholdermeeting.com/SII2020. At this website, shareholders will be able to hear the Meeting live, submit questions and vote their shares while the Meeting is being held. We hope that hosting a virtual meeting helps enable greater participation by our shareholders by allowing shareholders that might not otherwise be able to travel to a physical meeting to attend online and minimizes the health risk that may be associated with large gatherings.

Registered shareholders and duly appointed proxyholders will be able to attend, submit questions and vote at the Meeting online at www.virtualshareholdermeeting.com/SII2020. Non-registered (beneficial) shareholders who have not duly appointed themselves as proxyholder will be able to attend the Meeting, but will not be able to vote at the Meeting. Please refer to the voting instructions provided in the “Voting of Shares” section of the Circular.

Particulars of the foregoing matters are set forth in the Circular. For the Meeting, the Corporation has elected to use the notice-and-access provisions under National Instrument 51-102 - Continuous Disclosure Obligations and National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer (collectively, the “Notice-and-Access Provisions”) to reduce its mailing costs and volume of paper with respect to the materials distributed for the purpose of the Meeting. The Notice-and-Access Provisions are a set of rules that permit the Corporation to post the Meeting materials, 2019 Financial Statements and accompanying management’s discussion and analysis (“MD&A”) online rather than making a traditional physical delivery of such materials. Shareholders will still receive a form of proxy or voting instruction form, as the case may be, and a financial statement request form. The Corporation will not use procedures known as “stratification” in relation to the use of the Notice-and-Access Provisions.

Shareholders are directed to read the Circular carefully and in full in evaluating the matters for consideration at the Meeting. Further disclosure on the matters set out above may be found in the Circular in the section entitled “Particulars of Matters to be Acted Upon”. The Circular, 2019 Financial Statements, MD&A and other relevant materials are available on the Corporation’s website at https://www.sprott.com/investor-relations/2019-agm, for a minimum of one year, and under the Corporation’s directory on the System for Electronic Document Analysis and Retrieval at www.sedar.com. Any shareholder who wishes to receive a paper copy of such documents free of charge should contact the Corporation’s registrar and transfer agent, TSX Trust Company, by mail at 100 Adelaide Street West, Suite 301, Toronto, Ontario, Canada, M5H 4H1, Attention: Proxy Department; by calling toll-free at 1-866-600-5869; or by e-mail at TMXEInvestorServices@tmx.com. In order to be certain of receiving such materials in time to vote before the Meeting, the request should be received by TSX Trust Company by April 29, 2020. A shareholder may also use the toll-free number noted above to obtain additional information about the Notice-and-Access Provisions.

The record date for the determination of shareholders of the Corporation entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof is March 18, 2020 (the “Record Date”). Shareholders of the Corporation whose names have been entered in the register of shareholders of the Corporation at the close of business on the Record Date will be entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof.

If you are a shareholder and you are not able to attend the Meeting online, please carefully follow the instructions on the form of proxy or voting instruction form. Your form of proxy should be sent in sufficient time so as to arrive not less than 48 hours before the time set for the holding of the Meeting or any adjournment or postponement thereof (excluding Saturdays, Sundays and holidays in the Province of Ontario). Shareholders that hold their Common Shares with a financial intermediary will receive a voting instruction form in order to instruct their intermediary how to vote on their behalf. Only shareholders of record as at the close of business on the Record Date will be entitled to notice of the Meeting or any adjournment thereof. The Circular includes important information about the Meeting and the voting process. Please read it carefully and remember to vote.

Questions

If you have any questions about the information contained in this Circular or need assistance in completing your form of proxy or voting instruction form, please contact your professional advisors or you may contact Glen Williams, Managing Director, Investor Relations at 416-943-4394  or email ir@sprott.com.

Dated at Toronto, Ontario as of March 18, 2020.

BY ORDER OF THE BOARD

(signed) “Ron Dewhurst”

Ron Dewhurst

Chair of the Board

TABLE OF CONTENTS
PROXY INSTRUCTIONS	2
MANNER IN WHICH PROXIES WILL BE VOTED	5
VOTING BY BENEFICIAL SHAREHOLDERS	5
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF	6
PARTICULARS OF MATTERS TO BE ACTED UPON	7
Financial Statements	7
Election of Directors	7
Appointment of Auditors	11
Approval of the Common Share Consolidation	11
Approval of the 2020 Amended and Restated Stock Option Plan	15
Approval of the 2020 Amended and Restated Employee Profit Sharing Plan	16
Approval of the 2020 Amended and Restated Equity Incentive Plan for U.S. Service Providers	17
CORPORATE GOVERNANCE	18
DIRECTOR ATTENDANCE AND COMPENSATION	24
EXECUTIVE COMPENSATION	28
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS	43
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS	49
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS	50
ADDITIONAL INFORMATION	50
BOARD APPROVAL	50
SCHEDULE A - MANDATE OF THE BOARD OF DIRECTORS	A - 1
SCHEDULE B - 2020 AMENDED AND RESTATED STOCK OPTION PLAN	B - 1
SCHEDULE C - 2020 AMENDED AND RESTATED EMPLOYEE PROFIT SHARING PLAN	C - 1
SCHEDULE D - 2020 AMENDED AND RESTATED EQUITY INCENTIVE PLAN FOR U.S. SERVICE PROVIDERS	D - 1

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SPROTT INC.

MANAGEMENT INFORMATION CIRCULAR

Unless otherwise stated, the information in this management information circular (the “Circular”) is as of March 18, 2020.

PROXY INSTRUCTIONS

This Circular is furnished in connection with the solicitation of proxies by the management of Sprott Inc. (the “Corporation”) for use at the annual meeting of shareholders of the Corporation (the “Meeting”) to be held on Friday, May 8, 2020 at 12:00 p.m. (Toronto time) and at any adjournment(s) or postponement(s) thereof, for the purposes set out in the foregoing Notice of Meeting (the “Notice”).

Virtual Only Format

This year, out of an abundance of caution, to proactively deal with the unprecedented public health impact of COVID-19 and to mitigate risks to the health and safety of our community, shareholders, employees and other stakeholders, we will hold the Meeting in a virtual only format, which will be conducted via live audio webcast. Shareholders will have an equal opportunity to participate at the Meeting online regardless of their geographic location. Shareholders will not be able to physically attend the Meeting.

Registered shareholders and duly appointed proxyholders will be able to attend, submit questions and vote at the Meeting online at www.virtualshareholdermeeting.com/SII2020. Non-registered (beneficial) shareholders who have not duly appointed themselves as proxyholder will be able to attend the Meeting, but will not be able to vote at the Meeting.

It is expected that the solicitation of proxies will be primarily by mail, subject to the use of the Notice-and-Access Provisions (as defined below). Proxies may also be solicited personally by officers and directors of the Corporation (but not for additional compensation). The costs of solicitation will be borne by the Corporation. None of the directors of the Corporation have informed management in writing that he or she intends to oppose any action intended to be taken by management at the Meeting.

Notice-and-Access

The Corporation has elected to use the notice-and-access provisions (the “Notice-and-Access Provisions”) provided for under National Instrument 51-102 - Continuous Disclosure Obligations (“NI 51-102”) and National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”) for the delivery of the Meeting materials to its shareholders.

The Notice-and-Access Provisions are rules developed by the Canadian Securities Administrators to reduce the volume of materials that must be physically mailed to shareholders by allowing a reporting issuer to post the relevant meeting materials for a meeting of shareholders online. The Corporation believes this environmentally friendly process will provide shareholders with a convenient way to access the Meeting materials, while allowing the Corporation to lower the costs associated with printing and distributing the Meeting materials. The Meeting materials have been posted on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com under the Corporation’s profile and on the Corporation’s website at https://www.sprott.com/investor-relations/2019-agm.

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Although the Corporation has elected to use the Notice-and-Access Provisions, both registered shareholders and non-registered shareholders or beneficial holders (“Non-Registered Holders”) will receive a package that will include either a form of proxy (in the case of registered shareholders) or a voting instruction form (in the case of non-registered shareholders), among other materials (collectively, the “Printed Materials”). Shareholders may receive multiple packages of these Printed Materials if a shareholder holds their common shares of the Corporation (the “Common Shares”) through more than one Intermediary (as defined below), or if a shareholder is both a registered shareholder and a Non-Registered Holder for different shareholdings.

Should a shareholder receive multiple packages, a shareholder should repeat the steps to vote through a proxy, appoint a proxyholder or attend the Meeting, if desired, separately for each package to ensure that all their Common Shares are voted at the Meeting.

Voting of Shares

Before the Meeting, shareholders of record as of the close of business on March 18, 2020 may vote by completing the form of proxy (registered shareholders) or voting instruction form (non-registered shareholders). Voting by proxy or voting instruction form can be completed via the Internet, or by mail in accordance with the instructions provided in the form of proxy and/or voting instruction form. Non-registered shareholders should carefully follow all instructions provided by their intermediaries to ensure that their shares are voted at the Meeting.

To be valid, proxies must be submitted to Broadridge Investor Communications Corporation so that it arrives no later than 5:00 p.m. (Toronto time) on March 16, 2020 or, if the Meeting is adjourned or postponed, proxies must be deposited by not less than 48 hours (excluding Saturdays, Sundays and holidays in the Province of Ontario) before the time set for any reconvened meeting at which the proxy or instructions are to be used.

Holders of the Common Shares may vote on all matters to come before them at the Meeting online or you can appoint someone to attend the Meeting online and vote your Common Shares for you (called voting by proxy). Holders of Common Shares or duly appointed proxyholders can access the Meeting online by visiting www.virtualshareholdermeeting.com/SII2020. To participate in the Meeting, you will require the control number included on your form of proxy or on the instructions that accompany your proxy materials. Holders of Common Shares or duly appointed proxyholders may vote electronically during the Meeting. However, even if you plan to attend the Meeting online, the Corporation recommends that you vote your Common Shares in advance, so that your vote will be counted if you later decide not to attend the Meeting. Voting by proxy can be completed electronically, or by returning the proxy card or voting instruction form. If you are attending the Meeting online, it is important that you are connected to the internet at all times during the Meeting in order to vote when balloting commences. You should ensure you have a strong, preferably high-speed, internet connection wherever you intend to participate in the Meeting. The Meeting will begin promptly at 12:00 p.m. (Toronto time) on May 8, 2020, unless otherwise adjourned or postponed. Online check-in will begin thirty minutes prior to the Meeting. You should allow ample time for the online check-in procedures. For any technical difficulties experienced during the check-in process or during the Meeting, please call 1-800-586-1548 (within Canada and the U.S.) or 303-562-9288 (International). Please log-on to the virtual meeting in advance to ensure that your vote will be counted.

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The form of proxy or voting instruction form forwarded to holders of Common Shares affords the shareholder the opportunity to specify the manner in which the proxy nominees are to vote with respect to any specific item by checking the appropriate space in order to indicate whether the Common Shares registered in the shareholder’s name shall be:

(i) voted FOR or WITHHELD from voting for the directors named in this Circular;

(ii) voted FOR or WITHHELD from voting for the re-appointment of auditors and authorizing the board of directors of the Corporation (the “Board”) to fix their remuneration and terms of engagement;

(iii) voted FOR or AGAINST the approval of the Common Share Consolidation Resolution (as defined below);

(iv) voted FOR or AGAINST the approval of the 2020 Amended and Restated Stock Option Plan of the Corporation (the “Option Plan”);

(v) voted FOR or AGAINST the approval of the 2020 Amended and Restated Employee Profit Sharing Plan of the Corporation (the “EPSP”); and

(vi) voted FOR or AGAINST the approval of the 2020 Amended and Restated Equity Incentive Plan for U.S. Service Providers of the Corporation (the “EIP”).

The proxy must be signed by the holder of Common Shares or the shareholder’s attorney duly authorized in writing or, if the shareholder is a corporation, by an officer or attorney thereof duly authorized. Persons signing as executors, administrators, trustees or in any other representative capacity should so indicate and give their full title as such.

Appointing a Proxyholder

The persons named in the form of proxy are officers of the Corporation and represent management. Each shareholder has the right to appoint a person other than the persons named in the form of proxy, who need not be a shareholder, to attend and act for him, her or it and on his, her or its behalf at the Meeting online.

The following applies to shareholders who wish to appoint a person (a "third party proxyholder") other than the management nominees identified in the form of proxy or voting instruction form as proxyholder. This information also applies to Non-Registered Holders who wish to appoint themselves as proxyholders to be able to vote at the Meeting. Failure to register as the proxyholder will result in the proxyholder attending the Meeting as a guest and not being able to vote on the matters before the Meeting.

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Shareholders who wish to appoint themselves or a third party proxyholder to attend and participate at the Meeting as their proxyholder and vote their shares MUST submit their form of proxy or voting instruction form, as applicable, appointing that person as proxyholder by following the instructions provided by their financial intermediary.

If you are using the form of proxy or voting instruction form to designate a third party proxyholder or in the case of Non-Registered Holders, to appoint the non-registered shareholder as proxyholder, print the name of the designee or appointee in the space provided herein and provide a unique appointee identification number. This identification number can be alpha or numeric and must be 8 characters long. This number must be provided to the appointee to register at the Meeting online along with the exact registration name provided for the appointee. The appointee will require this information to access the Meeting.

Shareholders may choose to direct how their appointees shall vote on matters that may come before the Meeting or any adjournment or postponement thereof. Unless shareholders instruct otherwise, a third party proxyholder will have full authority to attend, vote, and otherwise act in respect of all matters that may come before the Meeting or any adjournment or postponement thereof, even if these matters are not set out in the form of proxy or the Circular.

Revocation of Proxies

A proxy given by a shareholder for use at the Meeting may be revoked at any time prior to its use. In addition to revocation in any other manner permitted by law, a proxy may be revoked by an instrument in writing executed by the shareholder or by the shareholder’s attorney who is authorized by a document that is signed in writing or by electronic signature or, if the shareholder is a corporation, by an officer or attorney thereof duly authorized in writing, and deposited either at the registered office of the Corporation at any time up to and including the last business day preceding the day of the Meeting, or any adjournment(s) or postponement(s) thereof, at which the proxy is to be used, or with the chair of the Meeting on the day of the Meeting, or any adjournment(s) or postponement(s) thereof. The registered office of the Corporation is located at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, Canada, M5J 2J1.

Non-Registered Holders should contact their Intermediary through which they hold their Common Shares and obtain instructions regarding the procedure for revocation of any voting or proxyholder instructions that he, she or it has previously provided to their Intermediary. Revocations must be deposited either at the registered office of the Corporation at any time up to and including the last business day preceding the day of the Meeting, or any adjournment(s) or postponement(s) thereof, at which the proxy is to be used, or with the chair of the Meeting on the day of the Meeting, or any adjournment(s) or postponement(s) thereof. The registered office of the Corporation is located at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, Canada, M5J 2J1.

MANNER IN WHICH PROXIES WILL BE VOTED

The management representatives designated in the form of proxy will vote or withhold from voting the Common Shares in respect of which they are appointed by proxy on any ballot that may be called for in accordance with the instructions of the shareholder as indicated on the proxy and, if the shareholder specifies a choice with respect to any matter to be acted upon, the Common Shares will be voted accordingly.

In the absence of such direction, such Common Shares will be voted by the management representatives in favour of the passing of the matters set out in the Notice. The form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the Notice, and with respect to other matters which may properly come before the Meeting or any adjournment(s) or postponement(s) thereof. As at the date hereof, management of the Corporation knows of no such amendments, variations or other matters. However, if any other matters should properly come before the Meeting, the proxy will be voted on such matters in accordance with the best judgment of the proxy nominee.

VOTING BY BENEFICIAL SHAREHOLDERS

The information in this section is of significant importance to shareholders who do not hold their Common Shares in their own name. Only registered shareholders or duly appointed proxyholders are permitted to vote at the Meeting. More particularly, a person is not a registered shareholder in respect of Common Shares which are held on behalf of that person but which are registered either: (a) in the name of an intermediary (an “Intermediary”) that the Non-Registered Holder deals with in respect of the Common Shares (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans); or (b) in the name of a clearing agency (such as CDS Clearing and Depositary Services Inc.) of which the Intermediary is a participant.

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Non-Registered Holders who have not objected to their Intermediary disclosing certain ownership information about themselves to the Corporation are referred to as non-objecting beneficial owners (“NOBOs”). Those Non-Registered Holders who have objected to their Intermediary disclosing ownership information about themselves to the Corporation are referred to as objecting beneficial owners (“OBOs”).

The Corporation is not sending the Printed Materials directly to NOBOs in connection with the Meeting but rather has delivered copies of the Printed Materials to the Intermediaries for distribution to NOBOs. With respect to OBOs, in accordance with applicable securities law requirements, the Corporation has delivered copies of the Printed Materials to the clearing agencies and Intermediaries for distribution to OBOs. The Corporation intends to pay for Intermediaries to deliver the Printed Materials and Form 54-101F7 - Request for Voting Instructions made by Intermediary to Non-Registered Holders.

In many cases, Common Shares which are beneficially owned by a non-registered shareholder are registered in the name of a financial intermediary. Non-Registered Holders are able to vote at the Meeting by following the steps to appoint themselves as a proxyholder for the shares they hold in non-registered form. Non-Registered Holders that do not appoint themselves or someone else may also attend the Meeting online.

Registered and Non-Registered Holders should carefully follow the instructions on the form of proxy and voting instruction form, including those regarding when and where the form of proxy or voting instruction form is to be delivered.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

The authorized share capital of the Corporation consists of an unlimited number of Common Shares, of which 253,887,654 Common Shares were issued and outstanding as of the Record Date (as defined below).

The close of business on March 18, 2020 has been fixed as the record date (the “Record Date”) for the determination of shareholders entitled to receive notice of the Meeting and any adjournment(s) or postponement(s) thereof.

Each Common Share carries one vote in respect of each matter to be voted upon at the Meeting. Only holders of Common Shares of record at the close of business on the Record Date are entitled to vote at the Meeting or any adjournment(s) or postponement(s) thereof. The Corporation will prepare, or cause to be prepared, a list of shareholders (“Shareholders List”) entitled to receive notice of the Meeting not later than 10 days after the Record Date. At the Meeting, the holders of Common Shares shown on the Shareholders List will be entitled to one vote per Common Share shown opposite their names on the Shareholders List.

Two persons present and each holding or representing by proxy at least one issued share of the Corporation shall be a quorum of any meeting of shareholders for the choice of a chair of the Meeting and for the adjournment of the Meeting to a fixed time and place but may not transact any other business; for all other purposes a quorum for any Meeting shall be persons present not being less than two in number and holding or representing by proxy not less than 5% of the total number of the issued and outstanding Common Shares for the time being enjoying voting rights at such Meeting.

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As of the date hereof, the only persons or companies known by the Corporation to own beneficially, or control or direct, directly or indirectly, more than 10% of the Common Shares are as follows:

Name	Number of Common Shares Beneficially Owned or Controlled or Directed		Percentage of Outstanding Common Shares
Arthur Richards Rule IV (1)		26,870,382		10.58	%

Notes:

(1) Arthur Richards Rule IV, a director of the Corporation, owns 299,167 Common Shares directly, owns or holds 26,464,845 Common Shares indirectly and exercises direction or control over 500 Common Shares on behalf of Ethan Lewis, 500 Common Shares on behalf of Nicholas Lewis, 340 Common Shares on behalf of Katherine Lewis, 15,000 Common Shares on behalf of the Lewis Family Trust, 60,000 Common Shares on behalf of the Young Marital Trust, and 30,030 Common Shares on behalf of Bonnie Rule. The information provided above is based on information obtained from Mr. Rule’s public filing made on the System for Electronic Disclosure by Insiders (SEDI) at www.sedi.ca.

PARTICULARS OF MATTERS TO BE ACTED UPON

1. Financial Statements

The audited consolidated financial statements of the Corporation for the financial year ended December 31, 2019, together with the auditors’ report thereon and the annual management’s discussion and analysis, will be presented to the shareholders at the Meeting for their consideration.

2. Election of Directors

The Articles of the Corporation provide that the Board shall consist of a minimum of one and a maximum of ten directors. The Board has the authority to fix the number of directors within these limits. The Board has set the number of directors at six. Each nominee for election as a director is currently a director of the Corporation. The term of each of the Corporation’s present directors expires at the Meeting and each director elected at the Meeting will hold office until the next annual general meeting of shareholders of the Corporation or until his or her successor is duly elected or appointed, unless he or she resigns, is removed or becomes disqualified in accordance with the Corporation’s by-laws or governing legislation.

The persons named in the form of proxy intend to vote “for” the election of each of the below-named nominees unless otherwise instructed on a properly executed and validly deposited proxy. Management does not contemplate that any of the nominees named below will be unable to serve as a director but, if that should occur for any reason prior to the Meeting, the persons named in the form of proxy reserve the right to vote for another nominee in their discretion.

Shareholders can vote or withhold from voting on the election of each director on an individual basis. The Board has adopted a policy which requires voting with respect to the election of directors at any meeting of shareholders to be by individual nominee as opposed to by slate of directors, that is, shareholders will be asked to vote in favour of, or withhold from voting, separately for each nominee. See “Corporate Governance – Director Majority Voting Policy” below for information about the Director Majority Voting Policy.

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Nominees

The following table sets out the name of each person proposed to be nominated for election as a director at the Meeting, all offices of the Corporation now held by such person, his or her principal occupation, the period of time for which he or she has been a director of the Corporation, the number of Common Shares beneficially owned, or controlled or directed, directly or indirectly, by such person and the number of deferred share units (“DSUs”) held by such person as at the date hereof. Biographical information for each nominee is also provided below.

Name, Municipality and Country of Residence	Position(s) with the Corporation	Principal Occupation	Director Since		Common Shares beneficially owned, or controlled or directed, directly or indirectly(1)		DSUs(2)
Ronald Dewhurst(3) Victoria, Australia	Chairman	Corporate Director		2017		—		85,396
Peter Grosskopf Ontario, Canada(4)	Chief Executive Officer (“CEO”) and Director	CEO of the Corporation		2010		6,148,625		—
Sharon Ranson(5) Ontario, Canada	Director	President of The Ranson Group Inc. (executive coaching and consulting services firm)		2014		250,000		267,943
Graham Birch Dorset, England	Director	Corporate Director		2019		—		78,621
Arthur Richards Rule IV(6) California, United States	Director	President and CEO of Sprott U.S. Holdings Inc. (“Sprott US”)		2011		26,870,382		—
Rosemary Zigrossi(3)(5) Ontario, Canada	Director	President, Odaamis Inc. (consulting services firm)		2014		35,000		136,095

Notes:

(1) The information as to the number of Common Shares beneficially owned, directly or indirectly, or over which control or direction is exercised, by the directors, not being within the knowledge of the Corporation, has been obtained from the System for Electronic Disclosure by Insiders.

(2) For further information concerning the Corporation’s DSU Plan (as defined below), see “Director Attendance and Compensation - Deferred Share Unit Plan”.

(3) Member of the Corporate Governance and Compensation Committee.

(4) 1,277,425 of such Common Shares have been designated for the account of Mr. Grosskopf under the EPSP (as defined below) and, as at the date hereof, 320,166 of such Common Shares designated under the EPSP have not yet vested.

(5) Member of the Audit Committee (as defined below).

(6) 273,963 of such Common Shares have been designated for the account of Mr. Rule under the EIP (as defined below) and, as at the date hereof, all of these Common Shares designated under the EIP have vested.

Except as noted below, each of the foregoing directors and officers has held the same principal occupation for the previous five years.

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Ronald Dewhurst

Ron Dewhurst has spent 40 years spread across the investment banking and asset management industries. He has lived approximately half of his career outside his native Australia working in Hong Kong, the United Kingdom and the United States of America. Mr. Dewhurst has held leadership roles as CEO of Australian Investment Bank ANZ McCaughan Ltd., Managing Director of Australian asset manager IOOF Holdings Ltd., Head of Americas for J.P. Morgan Asset Management, and Executive Vice President and Head of Global Investment Managers for Legg Mason Inc. based in the U.S. Over the years, Ron has held a number of board roles including Australian United Investment Company, IOOF Holdings Ltd., Orchard Petroleum Ltd., Rhinomed Ltd., One Vue Holdings, The National Gallery of Victoria and The Breast Cancer Network of Australia.

Peter Grosskopf

Peter Grosskopf has more than 30 years of experience in the financial services industry. At Sprott, he is responsible for strategy and managing the firm’s private resource investment businesses. His career includes a long tenure in investment banking, where he managed many strategic and underwriting transactions for companies in a variety of sectors. Prior to joining Sprott, Mr. Grosskopf was President of Cormark Securities Inc. He has a track record of building and growing successful businesses including Newcrest Capital Inc. (as one of its co-founders) which was acquired by the TD Bank Financial Group in 2000. Mr. Grosskopf is a CFA® charterholder and earned an Honours Degree in Business Administration and a Masters of Business Administration from the Richard Ivey School of Business at the University of Western Ontario.

Sharon Ranson

Sharon Ranson is a corporate director and President of The Ranson Group Inc., a company offering executive coaching and consulting services. Ms. Ranson also currently serves as a director of Dorel Industries (TSX:DII.B) Fire and Flower Inc. (TSX:FAF), Spark Power Corp. (TSX: SPG) and the Toronto Investment Board. Prior to founding her current business in 2002, Ms. Ranson spent over 20 years in capital markets where she was a top ranked Financial Services Analyst and a senior Portfolio Manager. Ms. Ranson is an FCPA, FCA and holds the ICD.D designation. She graduated from Queen’s University with a Bachelor of Commerce and holds an MBA from York University.

Graham Birch

Dr. Graham Birch has spent over 35 years in the mining equity industries, including roles at Panmure Gordon, Kleinwort Benson Securities, Ord Minnett and Mercury Asset Management. Dr. Birch was the Managing Director and Head of the Natural Resources Investment Team at BlackRock in London until 2010. In addition, he has been a non-executive director at ETF Securities, and is currently a non-executive director of Hochschild Mining (LON:HOC). Dr. Birch has a PhD in Mining Geology from the Royal School of Mines, Imperial College London.

Arthur Richards Rule IV

Arthur Richards “Rick” Rule IV has over 44 years of experience in natural resource investing. He founded Global Resource Investments, Ltd. (now called Sprott Global Resources Investments, Ltd. (“SGRIL”)), a full service U.S. brokerage firm that specializes in natural resource companies, in 1993, Resource Capital Investment Corp. (“RCIC”), a manager of pooled investment vehicles that invest in natural resource companies, in 1998, and Terra Resource Investment Management (now Sprott Asset Management USA Inc. (“SAM USA”)), a registered investment advisor that provides segregated managed accounts, in 2006. At SGRIL, Mr. Rule leads a team that features professionals trained in resource related disciplines, such as geology and engineering, who work together to evaluate investment opportunities. Mr. Rule is the co-portfolio manager for the RCIC limited partnerships and also advises some of the SAM USA investment platforms. He is a leading American retail broker specializing in mining, energy, water utilities, forest products and agriculture.

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Rosemary Zigrossi

Rosemary Zigrossi is a consultant to small to medium sized companies and serves as a corporate director. Prior to this, Ms. Zigrossi was a Director at Promontory Financial Group Canada (“Promontory”) and involved in advising clients in the asset management and banking industries in the area of risk management, regulatory compliance and governance. Prior to joining Promontory, Ms. Zigrossi was at the Ontario Teachers’ Pension Plan (“OTPP”) where she held various roles including Vice President, Asset Mix and Risk; Vice President, Venture Capital and Private Equity; and Controller. Prior to joining OTPP, Ms. Zigrossi was an Assistant Vice President at J.P. Morgan (Canada) and former auditor with KPMG. Ms. Zigrossi currently serves on the board of directors of Russell Investments Corporate Class Inc., and a member of the Capital Markets Advisory Committee of the IFRS. She is a former member of the board of the Business Development Bank of Canada, Canadian Venture Capital Association, McMichael Canadian Art Collection, a number of privately held companies and a publicly traded company. She is a past governor of Trent University and member of the Investment Committee of Sustainable Development Technology Corporation. Ms. Zigrossi is a Chartered Professional Accountant (CPA, CA) and Chartered Financial Analyst (CFA). She holds the ICD.D designation, graduated from the University of Toronto with a Bachelor of Commerce and attended the Harvard Business School’s Program for Management Development.

Corporate Cease Trade Orders or Bankruptcies

To the knowledge of the Corporation, no proposed director is, or within the ten years prior to the date hereof has been, a director, CEO or Chief Financial Officer (“CFO”) of any company (including the Corporation) that was subject to (a) a cease trade order; (b) an order similar to a cease trade order; or (c) an order that denied the company access to any exemption under securities legislation, that was in effect for a period of more than thirty consecutive days issued while that person was acting in such capacity or issued thereafter but resulted from an event that occurred while that person was acting in such capacity.

To the knowledge of the Corporation, no proposed director is, or within the ten years prior to the date hereof has been, a director or executive officer of any company (including the Corporation) that, while that person was acting in that capacity or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

Penalties or Sanctions and Personal Bankruptcies

To the knowledge of the Corporation, no proposed director has been subject to (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director.

To the knowledge of the Corporation, no proposed director has, within the ten years prior to the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement, or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his or her assets.

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Indemnification

No indemnification under section 136 of the Business Corporations Act (Ontario) (the “Act”) was paid or became payable in 2019.

3. Appointment of Auditors

KPMG LLP was appointed as the Corporation’s auditors effective as of January 1, 2016. Management proposes to re-appoint KPMG LLP, Bay Adelaide Centre, 333 Bay Street, Suite 4600, Toronto, Ontario M5H 2S5, as auditors of the Corporation and to authorize the Board to fix the auditors’ remuneration and terms of engagement.

In the absence of a contrary specification made in the form of proxy, the persons named in the form of proxy intend to vote “for” the re-appointment of KPMG LLP as auditors of the Corporation and to authorize the Board to fix their remuneration and terms of engagement.

4. Approval of the Common Share Consolidation

Basis for Consolidation

The Board is of the opinion that, in the future, it may be in the best interests of the Corporation to have the authority to implement the Common Share Consolidation.

The Corporation regularly reviews whether seeking a listing on additional stock exchanges may be to the benefit of the Corporation. Having considered various stock exchanges, the Corporation has determined to commence the listing application process on the New York Stock Exchange (“NYSE”). The proposed Common Share Consolidation is designed to facilitate the Corporation’s potential listing on the NYSE.

Listing on a U.S. exchange has enabled some Toronto Stock Exchange (“TSX”) listed companies to expand their investor base, increase the liquidity of their equity securities and reduce their cost of capital. The Corporation anticipates that it may realize a number of benefits from an additional listing in the United States, including:

(i) access to a larger domestic and global financial market;

(ii) expanded exposure to additional investors;

(iii) greater coverage by industry and financial analysts; and

(iv) the ability to disclose the Corporation’s financial performance, business achievements and other important information to a larger audience.

The Corporation intends to file a listing application with the NYSE. Listing will be subject to the approval of the NYSE in accordance with its listing requirements, and there is no assurance that the NYSE will approve the listing application.

Shareholders are not being asked to approve the listing of the Common Shares on the NYSE. At the Meeting, shareholders will be asked to consider and approve, with or without modification, a special resolution authorizing the Common Share Consolidation. Although approval for the Common Share Consolidation is being sought at the Meeting and, if approved, the Board anticipates implementing the Common Share Consolidation promptly thereafter, such a Common Share Consolidation would ultimately become effective at a date in the future to be determined by the Board when the Board considers it to be in the best interests of the Corporation to implement such a Common Share Consolidation, including, but not limited to, proceeding in connection with a listing on the NYSE. The special resolution will also authorize the Board to elect not to proceed with, and abandon, the Common Share Consolidation at any time if it determines, in its sole discretion to do so. The Common Share Consolidation is subject to approval by the shareholders and acceptance by the TSX.

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Risks Associated with the Common Share Consolidation

There is no assurance whatsoever that the Corporation will be successful at achieving a listing on the NYSE even if the proposed Common Share Consolidation is implemented. Nor is there any assurance that the market price of the consolidated Common Shares will increase as a result of the Common Share Consolidation. The marketability and trading liquidity of the consolidated shares of the Corporation may not improve. The Common Share Consolidation may result in some shareholders owning “odd lots” of less than 100 or 1,000 Common Shares which may be more difficult for such shareholders to sell or which may require greater transaction costs per Common Share to sell.

Principal Effects of the Common Share Consolidation

The Common Share Consolidation will not have a dilutive effect on the Corporation’s shareholders since each shareholder will hold the same percentage of Common Shares outstanding immediately following the Common Share Consolidation as such shareholder held immediately prior to the Common Share Consolidation. The Common Share Consolidation will not affect the relative voting and other rights that accompany the Common Shares.

If the Board decides to proceed with the Common Share Consolidation at the time they deem appropriate, the principal effects of the Common Share Consolidation include the following:

(a) the fair market value of each Common Share may increase and will, in part, form the basis upon which further Common Shares or other securities of the Corporation will be issued (recognizing that the Board may elect to consolidate on the basis of a lesser ratio that it deems appropriate);

(b) based on the number of issued and outstanding Common Shares as at March 18, 2020, the current number of issued and outstanding Common Shares, being 253,887,654, would be reduced as follows:

Ratio	Number of Post-Consolidation Common Shares
2 for 1		126,943,827
3 for 1		84,629,218
4 for 1		63,471,913
5 for 1		50,777,530
6 for 1		42,314,609
7 for 1		36,269,664
8 for 1		31,735,956
9 for 1		28,209,739
10 for 1		25,388,765

(c) the exercise prices and the number of Common Shares issuable upon the exercise or deemed exercise of any stock options or other convertible or exchangeable securities of the Corporation will be automatically adjusted based on the consolidation ratio selected by the Board; and

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(d) as the Corporation currently has an unlimited number of Common Shares authorized for issuance, the Common Share Consolidation will not have any effect on the number of Common Shares of the Corporation available for issuance.

Effect on Fractional Shareholders

No fractional shares will be issued, and no cash consideration will be paid, if, as a result of the Common Share Consolidation, a shareholder would otherwise become entitled to a fractional Common Share. After the Common Share Consolidation, the then current shareholders of the Corporation will have no further interest in the Corporation with respect to their fractional Common Shares. This is not, however, the purpose for which the Corporation is effecting the Common Share Consolidation.

Effect on Share Certificates

If the Common Share Consolidation is approved by the shareholders and implemented by the Board, registered shareholders will be required to exchange their Common Share certificates representing pre-consolidation Common Shares for new Common Share certificates representing the post-consolidation Common Shares. Following the determination of the consolidation ratio by the Board and as soon as possible following the effective date of the Common Share Consolidation, registered shareholders will be sent a letter of transmittal by the Corporation’s transfer agent, TSX Trust Company (the “Transfer Agent”). The letter of transmittal that contains instructions on how to surrender Common Share certificate(s) representing pre-consolidation Common Shares to the Transfer Agent. The Transfer Agent will forward to each registered shareholder who has sent the required documents a new Common Share certificate representing the number of post-consolidation Common Shares to which the shareholder is entitled. Until surrendered, each Common Share certificate representing pre-consolidation Common Shares will be deemed for all purposes to represent the number of whole post-consolidation Common Shares to which the holder is entitled as a result of the Common Share Consolidation. Shareholders should not destroy any Common Share certificate(s) and should not submit any Common Share certificate(s) until requested to do so. The method of delivery of certificates representing Common Shares and the letter of transmittal and all other required documents will be at the option and risk of the person surrendering them. It is recommended that such documents be delivered by hand to the Transfer Agent, at the address noted in the letter of transmittal, and a receipt obtained therefore, or, if mailed, that registered mail, with return receipt requested, be used and that proper insurance be obtained.

No new Common Share certificates will be issued to a shareholder until such shareholder has surrendered the corresponding “old” Common Share certificates, together with a properly completed and executed letter of transmittal, to the transfer agent. Consequently, following the Common Share Consolidation, shareholders will need to surrender their old Common Share certificates before they will be able to sell or transfer their Common Shares. If an old Common Share certificate has any restrictive legends on the back thereof, the new Common Share certificate will be issued with the same restrictive legends, if any, that are on the back of the old Common Share certificate.

If the Common Share Consolidation is implemented by the Board, Intermediaries will be instructed to effect the Common Share Consolidation for Non-Registered Holders. However, such Intermediaries may have different procedures than registered shareholders for processing the Common Share Consolidation. If you hold your Common Shares with such an Intermediary and if you have any questions in this regard, the Corporation encourages you to contact your Intermediary.

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Procedure for Implementing the Share Consolidation

If the special resolution is approved by the shareholders and the Board decides to implement the Common Share Consolidation, the Corporation will file Articles of Amendment pursuant to the Act to amend the articles of the Corporation. The Common Share Consolidation will become effective on the date shown in the Certificate of Amendment issued pursuant to the Act.

In order to complete the Common Share Consolidation, regulatory approval from the TSX will be required and temporary suspension of trading of the Common Shares may take place. If the Common Share Consolidation is approved, no further action on the part of the shareholders will be required in order for the Board to implement the Common Share Consolidation.

Dissent Rights

Under the Act, shareholders do not have dissent and appraisal rights with respect to the proposed Common Share Consolidation.

Special Resolution

Pursuant to the Act, a share consolidation requires approval of the shareholders by way of a special resolution, being a resolution passed by not less than two-thirds of the votes cast by holders of Common Shares present or represented by proxy at the Meeting. The text of the special resolution to be voted on at the Meeting by the shareholders is set forth below (the “Common Share Consolidation Resolution”):

“RESOLVED, AS A SPECIAL RESOLUTION, THAT:

1. the articles of the Corporation be amended to change the number of issued and outstanding Common Shares of the Corporation by consolidating the issued and outstanding Common Shares of the Corporation on the basis of one (1) post-consolidation Common Share for up to ten (10) pre-consolidation Common Shares of the Corporation or for such other lesser whole or fractional number of existing Common Shares that the directors, in their sole discretion, determine to be appropriate (the “Common Share Consolidation”), and in the event that the Common Share Consolidation would otherwise result in a holder of Common Shares holding a fraction of a Common Share, such holder shall not receive any whole new Common Shares or any cash consideration for each such fraction, such amendment to become effective at a date in the future to be determined by the board of directors of the Corporation (the “Board”).

2. any director or officer of the Corporation be and is hereby authorized, for and on behalf of the Corporation, to execute and deliver or cause to be delivered Articles of Amendment to the Director under the Business Corporations Act (Ontario) at such time as the Board determines to implement the Common Share Consolidation.

3. notwithstanding that this special resolution has been duly passed by the holders of the Common Shares of the Corporation, the directors of the Corporation are hereby authorized in their sole discretion to revoke this special resolution in whole or in part at any time prior to its being given effect without further notice to, or approval of, the holders of the Common Shares of the Corporation.

4. any one director or officer of the Corporation be and the same is hereby authorized, for and on behalf of the Corporation to execute or cause to be executed, and to deliver or cause to be delivered all such documents and filings, and to do or cause to be done all such acts and things, as in the opinion of such director or officer may be necessary or desirable in order to carry out the terms of this resolution, such determination to be conclusively evidenced by the execution and delivery of such documents or the doing of any such act or thing.”

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The Board recommends a vote “for” the Common Share Consolidation Resolution. Unless the shareholder who has given such proxy has directed that the shares be voted “against” the Common Share Consolidation Resolution, the persons named by management of the Corporation in the form of proxy intend to cast the votes to which the Common Shares represented by such proxy are entitled “for” the Common Share Consolidation Resolution.

5. Approval of the 2020 Amended and Restated Stock Option Plan

A summary of the material terms and conditions of the Option Plan are described under the heading “Securities Authorized for Issuance Under Equity Compensation Plans – Option Plan”. Pursuant to the Option Plan, when options to acquire Common Shares (each an “Option”) have been granted, Common Shares reserved for issuance under an outstanding Option are referred to as allocated Options.

The Option Plan is a “rolling plan” that provides that the maximum number of Common Shares from treasury that may be granted under the Option Plan and all other securities based compensation arrangements (including the EPSP and the EIP) shall not exceed 10% of the issued and outstanding Common Shares at the time of an Option grant. As a result, should the Corporation issue additional Common Shares in the future, the number of Common Shares issuable under the Option Plan will increase accordingly. In accordance with the policies of the Toronto Stock Exchange (the “TSX”), every three years after institution, all unallocated options, rights or other entitlements with respect to treasury issuances under a security based compensation arrangement which does not have a fixed maximum aggregate of securities issuable must be approved by: (i) the Board; and (ii) a majority of an issuer’s security holders.

On March 23, 2020, the Board approved the Option Plan which included the following amendments to the 2017 amended and restated stock option plan: (i) adding language that provides that the Corporation shall abide by the regulatory requirements of an additional stock exchange in the event that the Corporation lists its Common Shares on another stock exchange; and (ii) providing for a ten year term limit for stock options granted under the Option Plan.

The amendments described above are intended as a summary only and are qualified in their entirety by reference to the Option Plan which is attached as Schedule B hereto.

At the Meeting, shareholders will be asked to consider and, if deemed advisable, to approve, with or without variation, a resolution (the “Option Plan Resolution”) to approve, confirm and ratify the Option Plan.

The text of the Option Plan Resolution is as follows:

“RESOLVED AS AN ORDINARY RESOLUTION THAT:

1. The Option Plan, attached as Schedule B to this Circular, which plan was approved by the Board on March 23, 2020, is hereby approved, confirmed and ratified in replacement of the 2017 amended and restated stock option plan.

2. The Corporation shall have the ability to continue granting options under the Option Plan until May 8, 2023, which is three years from the date of the meeting at which approval of the shareholders of the Corporation is being sought.

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3. Any director or officer of the Corporation is hereby authorized and directed, for and on behalf of the Corporation, to do all things and execute and deliver all such agreements, documents and instruments necessary or desirable in connection with the foregoing.”

Unless otherwise specified, the persons named in the form of proxy intend to vote “for” the Option Plan Resolution. Approval of the foregoing resolution will require the affirmative vote of a majority of the votes cast by holders of Common Shares present or represented by proxy at the Meeting.

6. Approval of the 2020 Amended and Restated Employee Profit Sharing Plan

The EPSP is described under the heading “Securities Authorized for Issuance Under Equity Compensation Plans - EPSP”.

Similar to the Option Plan, the EPSP is a “rolling plan” that provides that the maximum number of Common Shares from treasury that may be granted under the EPSP and all other securities based compensation arrangements (including the Option Plan and the EIP) shall not exceed 10% of the issued and outstanding Common Shares at the time of an EPSP grant. As a result, should the Corporation issue additional Common Shares in the future, the number of Common Shares issuable under the EPSP will increase accordingly. In addition to the foregoing, Common Shares may be purchased on the open market by the independent trustee(s) under the EPSP (the “Trustee”) on behalf of the EPSP members (the “Members”). The Trustee may also purchase Common Shares from Eric S. Sprott (who is not entitled to be a Member under the EPSP) at a price equal to the market price for such shares and in compliance with applicable securities laws and the rules of the TSX. If Common Shares have been distributed under the EPSP or the Member’s entitlement to benefits expires, terminates or is canceled for any reason in accordance with the terms of the EPSP, the Common Shares subject thereto shall again be available for the purpose of the EPSP. Since the EPSP does not have a fixed maximum aggregate of securities issuable, all unallocated options, rights or other entitlements with respect to treasury issuances thereunder must be approved by: (i) the Board; and (ii) a majority of its security holders, every three years after institution.

On March 23, 2020, the Board approved the EPSP which amended the 2011 Employee Profit Sharing Plan by providing for a ten year term limit for Common Shares issued pursuant to the EPSP. A complete copy of the EPSP is attached as Schedule C hereto.

At the Meeting, shareholders will be asked to consider and, if deemed advisable, to approve, with or without variation, a resolution (the “EPSP Resolution”) to approve, confirm and ratify the EPSP Resolution.

The text of the EPSP Resolution is as follows:

“RESOLVED AS AN ORDINARY RESOLUTION THAT:

1. The 2020 amended and restated Employee Profit Sharing Plan (the “EPSP”) , attached as Schedule C to this Circular, which plan was approved by the Board on March 23, 2020, is hereby approved, confirmed and ratified in replacement of the 2011 Employee Profit Sharing Plan.

2. The Corporation shall have the ability to continue granting benefits under the EPSP until May 8, 2023, which is three years from the date of the meeting at which approval of the shareholders of the Corporation is being sought.

3. Any director or officer of the Corporation is hereby authorized and directed, for and on behalf of the Corporation, to do all things and execute and deliver all such agreements, documents and instruments necessary or desirable in connection with the foregoing.”

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Unless otherwise specified, the persons named in the form of proxy intend to vote “for” the EPSP Resolution. Approval of the foregoing resolution will require the affirmative vote of a majority of the votes cast by holders of Common Shares present or represented by proxy at the Meeting.

7. Approval of the 2020 Amended and Restated Equity Incentive Plan for U.S. Service Providers

The EIP is described under the heading “Securities Authorized for Issuance Under Equity Compensation Plans - EIP”.

Similar to the Option Plan and the EPSP, the aggregate number of Common Shares from treasury that may be granted under the EIP and under all other securities based compensation arrangements (including the Option Plan and the EPSP) shall not exceed 10% of the issued and outstanding Common Shares as at the date of such grant. As a result, if the Corporation issues additional Common Shares in the future, the number of Common Shares issuable under the Corporation’s securities based compensation arrangements will increase accordingly. Common Shares may also be purchased on the open market for distribution under the EIP. If Common Shares have been distributed under the EIP or the grantee’s entitlement to benefits shall expire, terminate or be canceled for any reason in accordance with the terms of the EIP, the Common Shares subject thereto shall again be available for the purpose of the EIP.

Since the EIP does not have a fixed maximum aggregate of securities issuable, all unallocated options, rights or other entitlements with respect to treasury issuances thereunder must be approved by: (i) the Board; and (ii) a majority of its security holders, every three years after institution.

On March 23, 2020, the Board approved the EIP which amended the 2011 Equity Incentive Plan for U.S. Service Providers by adding language that provides that the Corporation shall abide by the regulatory requirements of an additional stock exchange in the event the Corporation lists its Common Shares on another stock exchange. A complete copy of the EIP is attached as Schedule D hereto.

At the Meeting, shareholders will be asked to consider and, if deemed advisable, to approve, with or without variation, a resolution (the “EIP Resolution”) to approve, confirm and ratify the EIP Resolution.

The text of the EIP Resolution is as follows:

“RESOLVED AS AN ORDINARY RESOLUTION THAT:

1. The 2020 Equity Incentive Plan for U.S. Service Providers (the “EIP”), attached as Schedule D to this Circular, which plan was approved by the Board on March 23, 2020, is hereby approved, confirmed and ratified in replacement of the 2011 Equity Incentive Plan for U.S. Service Providers.

2. The Corporation shall have the ability to continue granting awards under the EIP until May 8, 2023, which is three years from the date of the meeting at which approval of the shareholders of the Corporation is being sought.

3. Any director or officer of the Corporation is hereby authorized and directed, for and on behalf of the Corporation, to do all things and execute and deliver all such agreements, documents and instruments necessary or desirable in connection with the foregoing.”

Unless otherwise specified, the persons named in the form of proxy intend to vote “for” the EIP Resolution. Approval of the foregoing resolution will require the affirmative vote of a majority of the votes cast by holders of Common Shares present or represented by proxy at the Meeting.

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CORPORATE GOVERNANCE

Board of Directors

The Board is currently comprised of six directors, the majority of whom are independent directors. The following are the Corporation’s independent directors: Ronald Dewhurst, Sharon Ranson, Graham Birch and Rosemary Zigrossi. The following directors are not independent: Peter Grosskopf (who is CEO of the Corporation, CEO of Sprott Capital Partners LP and is a Managing Partner at SRLC); and Arthur Richards Rule IV (who is President and CEO of Sprott US, a wholly-owned subsidiary of the Corporation, Co-Portfolio Manager of the RCIC limited partnerships and advisor on some of SAM USA’s investment platforms).

As noted above, the Chair of the Board is Ronald Dewhurst, an independent director who has served on the Board since January 9, 2017. The Chair of the Board is responsible for overseeing the performance by the Board of its duties, communicating periodically with committee chairs regarding the activities of their respective committees, and ensuring the Board functions in a cohesive manner and providing the leadership essential to achieve this.

The independent directors do not hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. Rather, a portion of each meeting is set aside for meetings of the independent directors, if requested. During the course of a Board meeting, if a matter is more effectively dealt with without the presence of members of management, the independent directors will request that members of management leave the meeting, and the independent directors then meet in camera. The independent directors communicate with each other on an informal basis throughout the year. At each of its meetings, the Audit and Risk Management Committee (the “Audit Committee”) members (who are all independent directors) meet without members of management in attendance.

The Board discharges its responsibility for overseeing the management of the Corporation’s business by delegating to the Corporation’s senior officers the responsibility for day-to-day management of the Corporation. The Board discharges its responsibilities both directly and through its two standing committees: the Audit Committee and the Corporate Governance and Compensation Committee (the “CGC Committee”). In addition to these regular committees, the Board may appoint ad hoc committees periodically to address certain issues of a more short-term nature.

Certain of the directors are also directors (or equivalent) of other reporting issuers as set forth below:

Name	Reporting Issuer
Peter Grosskopf	Kirkland Lake Gold Ltd. and Alaris Royalty Corp.
Sharon Ranson	Dorel Industries Inc.; Fire and Flower Inc. and Spark Power Corp.
Graham Birch	Hochschild Mining
Arthur Richards Rule IV	Sprott Resource Holdings Inc.

Board Mandate

The Board has adopted a written mandate that acknowledges its responsibility for the stewardship of the business and affairs of the Corporation. The Board reviews and assesses the adequacy of the Board mandate at least annually or otherwise, as it deems appropriate, and makes any necessary changes. A copy of this mandate is attached to this Circular as Schedule A.

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Position Descriptions

The Board is responsible for: (i) developing position descriptions for the Chair of the Board, the lead director, if applicable, the chair of each Board committee and, together with the CEO of the Corporation, the CEO of the Corporation (which includes delineating management’s responsibilities); (ii) developing and approving the corporate goals and objectives that the CEO of the Corporation is responsible for meeting; and (iii) developing a description of the expectations and responsibilities of the Corporation’s directors, including basic duties and responsibilities with respect to attendance at Board meetings and advance review of meeting materials.

The Board has developed written position descriptions for the Chair, the lead director and the chair of each Board committee. In addition, the Board has developed a written position description for the CEO which delineates the role and responsibilities of such officer. The CEO is specifically charged with the responsibility of managing the strategic and operational agenda of the Corporation and for the execution of the directives and policies of the Board.

Orientation and Continuing Education

The Board is responsible for: (i) ensuring that all new directors receive a comprehensive orientation, that they fully understand the role of the Board and its committees, as well as the contribution individual directors are expected to make (including the commitment of time and resources that the Corporation expects from its directors) and that they understand the nature and operation of the Corporation’s business; and (ii) providing continuing education opportunities for all directors, so that individuals may maintain or enhance their skills and abilities as directors, as well as to ensure that their knowledge and understanding of the Corporation’s business remains current. Each member of the Board is provided with copies of all of the mandates of the Board (and its committees) as well as all governance-related policies of the Corporation. In order to provide members of the Board with a more comprehensive understanding of the operations of the group, each senior portfolio manager and other senior executives are provided with an opportunity to present to the Board at a regularly scheduled meeting. Board members are also encouraged to contact the CEO, the CFO or the General Counsel of the Corporation should they have any specific questions or concerns.

The Board does not have a formal continuing education program for its directors. All directors are encouraged to attend, enroll or participate in courses and/or seminars dealing with financial literacy, corporate governance and related matters. Each current member of the Board is an experienced director who is aware of his or her responsibility to maintain the skill and knowledge necessary to meet his or her obligations as a director. Directors have the resources to engage outside consultants to review matters on which they feel they require independent advice.

Ethical Business Conduct

The Board has approved policies and procedures (collectively, the “Policies”) designed to ensure that the Corporation operates with the highest ethical and moral standards “best practices”, including the Code of Business Conduct and Ethics (the “Code”) which is available on SEDAR at www.sedar.com and on the Corporation’s website at www.sprott.com/investor-relations/corporate-governance/. The Board is ultimately responsible for the implementation and administration of the Code and has designated the General Counsel and Corporate Secretary as well as the CFO of the Corporation for the day-to-day implementation and administration of the Code. The Policies include (i) a whistleblower policy, to ensure that the Corporation, its subsidiaries, directors, officers and employees comply with all applicable legal and regulatory requirements relating to corporate reporting and disclosure, accounting and auditing controls and procedures, securities compliance and other matters pertaining to fraud against the Corporation and its shareholders; and (ii) an insider trading policy, to ensure that the Corporation, its subsidiaries, directors, officers and employees comply with, or do not violate, insider trading obligations or restrictions under applicable securities laws. The directors of the Corporation encourage and promote an overall culture of ethical business conduct by promoting compliance with applicable laws, rules and regulations, providing guidance to employees, directors and officers to help them recognize and deal with ethical issues, promoting a culture of open communication, honesty and accountability and ensuring awareness of disciplinary action for violations of ethical conduct. Sprott Asset Management LP (“SAM”), Sprott Capital Partners LP (“SCP”), SAM USA and SGRIL also have written policies and procedures that establish strict rules for professional conduct and management of conflicts of interest. Where a director or executive officer of the Corporation has a material interest in a transaction or agreement under consideration by the Corporation, such director or executive officer must declare his or her interest and, in the case of a director, recuse himself or herself from deliberations and voting on the matter in compliance with the Act.

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Nomination of Directors

In connection with the nomination or appointment of individuals as directors, the Board is responsible for: (i) considering what competencies and skills the Board, as a whole, should possess; (ii) assessing what competencies and skills each existing director possesses; and (iii) considering the appropriate size of the Board, with a view to facilitating effective decision making, all with regard to their Diversity. “Diversity” refers to any characteristic that can be used to differentiate groups and people from one another. Diversity includes, but is not limited to, characteristics such as gender, geographical representation, education, religion, ethnicity, race, nationality, culture, language, aboriginal or indigenous status and other ethnic distinctions, sexual orientation, political affiliation, family and marital status, age, disability, and industry experience and expertise. See also “Corporate Governance - Diversity on the Board and in Executive Officer Positions” below. The Board will also consider the advice and input of the CGC Committee.

The CGC Committee is responsible for establishing and recommending to the Board qualification criteria for the selection of new directors to serve on the Board and for implementing a procedure to reasonably identify, with as much advance notice as practicable, impending vacancies on the Board, so as to allow sufficient time for recruitment and introduction of proposed nominees to existing members of the Board. The CGC Committee works with the Chair of the Board to identify and recommend individuals qualified to become Board members, consistent with the Corporation’s Diversity Policy and criteria approved by the Board. See “Corporate Governance - Diversity on the Board and in Executive Officer Positions” below for further details regarding the Corporation’s Diversity Policy. See “Corporate Governance - Corporate Governance and Compensation Committee” below for further details regarding the CGC Committee, including its members and responsibilities.

Advance Notice Requirement

The Corporation’s by-laws provide for advance notice of nominations of directors in circumstances where nominations of persons for election to the Board are made by shareholders other than pursuant to: (a) a requisition to call a meeting of shareholders made pursuant to the provisions of the Act; or (b) a shareholder proposal made pursuant to the provisions of the Act (collectively, the “Advance Notice Requirement”).

Among other things, the Advance Notice Requirement fixes a deadline by which shareholders must submit a notice of director nominations to the Corporation prior to any annual or special meeting of shareholders where directors are to be elected and sets forth the information that a shareholder must include in the notice for it to be valid. In the case of an annual meeting of shareholders, notice to the Corporation must be given not less than 30 days prior to the date of the annual meeting. In the event that the annual meeting is to be held on a date that is less than 50 days after the date that is the earlier of: (i) the date that a notice of meeting is filed; and (ii) the date that the first public announcement of the date of the annual meeting was made (the notice date), notice may be given not later than the close of business on the 10th day following the notice date. In the case of a special meeting of shareholders (which is not also an annual meeting), notice to the Corporation pursuant to the Advance Notice Requirement must be given not later than the close of business on the 15th day following the notice date. However, if the Corporation relies on the Notice-and-Access Provisions for the delivery of proxy-related materials for an annual general or special meeting and the initial public announcement is not less than 50 days before the date of the meeting, notice must be made not less than 40 days prior to the date of the meeting. The Board may, in its discretion, waive any requirement of the Advance Notice Requirement. A copy of the Corporation’s by-laws is available under its profile on SEDAR at www.sedar.com and on the Corporation’s website at www.sprott.com/investor-relations/corporate-governance/.

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Director Majority Voting Policy

On March 25, 2014, the Board adopted a majority voting policy (the “Majority Voting Policy”) effective July 1, 2014 and amended on March 1, 2017 and March 6, 2018. A nominee who does not receive the support of at least a majority of the votes cast at the meeting in his or her favour must immediately tender his or her resignation to the Chair of the Board for the consideration by the CGC Committee of the Board. The CGC Committee shall consider the resignation offer and shall recommend to the Board whether or not to accept it. Unless extenuating circumstances apply, the CGC Committee shall be expected to accept the resignation. The Board shall act on the CGC Committee’s recommendation within 90 days of the date of the shareholders’ meeting at which the election occurred. The Board shall be expected to accept the resignation except in situations where extenuating circumstances would warrant the applicable director continuing to serve on the Board. Following the Board’s decision on the resignation, the Board will promptly disclose, by way of a press release, its decision (together with an explanation of the process by which the decision was made and, if applicable, the reason(s) for rejecting the tendered resignation). The Majority Voting Policy does not apply in circumstances involving contested director elections. A copy of the Majority Voting Policy is available on the Corporation’s website at www.sprott.com/investor-relations/corporate-governance/.

Board Evaluation

The Board is responsible for ensuring that the Board, its committees and each individual director are regularly assessed regarding his, her or its effectiveness and contribution. These assessments consider, in the case of the Board or a committee thereof, its mandate or charter and in the case of an individual director, any applicable position description, as well as the competencies and skills each individual director is expected to bring to the Board. The Chair of the CGC Committee canvasses the directors individually for both self-assessment and assessment of the Board as a whole. Such findings are aggregated and reported to the CGC Committee and the Board, along with any recommendations which may arise.

Audit and Risk Management Committee

The Board has established an Audit Committee that is currently comprised of Sharon Ranson (Chair), Rosemary Zigrossi and Graham Birch. All members of the Audit Committee are independent and non-executive directors of the Corporation and meet the independence and financial literacy requirements of National Instrument 52-110 - Audit Committees (“NI 52-110”). See “Particulars of Matters to be Acted Upon - Election of Directors” for a biographical description of each member of the Audit Committee. It is anticipated that Ms. Ranson will be re-appointed Chair of the Audit Committee if she is elected a director and Ms. Zigrossi and Mr. Birch will be appointed members of the Audit Committee if they are elected as directors.

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For further information regarding the Audit Committee, see the section entitled “Audit and Risk Management Committee Information” in the Corporation’s Annual Information Form for the financial year ended December 31, 2019 (the “AIF”) as well as Appendix A to the AIF (collectively, the “AIF Audit Committee Disclosure”). The AIF Audit Committee Disclosure is incorporated by reference into, and forms an integral part of, this Circular. The AIF is available on SEDAR at www.sedar.com. The Corporation will, upon request at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, Canada M5J 2J1, Attention Chief Financial Officer, promptly provide a copy of the AIF free of charge to any securityholder of the Corporation.

Corporate Governance and Compensation Committee

The Board has established a CGC Committee comprised of Ronald Dewhurst (Chair), Sharon Ranson and Rosemary Zigrossi, all of whom are independent directors within the meaning of Section 1.4 of NI 52-110. The CGC Committee previously operated as two separate committees: the Human Resource and Compensation Committee and the Corporate Governance and Nominating Committee. On March 6, 2018, the Board resolved to combine these two committees and form the CGC Committee. It is anticipated that Mr. Dewhurst will be re-appointed Chair of the CGC Committee if he is elected a director and Ms. Ranson and Ms. Zigrossi will be appointed members of the CGC Committee if they are elected as directors. All members of the CGC Committee have direct experience that is relevant in their responsibilities in executive compensation.

The overall purpose of the CGC Committee is to assist the Board (i) in maintaining high standards of corporate governance by developing, recommending and monitoring effective guidelines and procedures applicable to the Corporation; (ii) by establishing the process for identifying, recruiting, appointing and/or providing ongoing development for directors of the Corporation; and (iii) in fulfilling its oversight responsibilities in relation to human resources and compensation by developing, monitoring and assessing the Corporation’s approach to the development and succession of key executives and the compensation of its directors, senior management and employees.

Corporate governance responsibilities include reviewing the mandates of the Board and its committees; periodically reviewing and evaluating the performance of all directors, committees and the Board as a whole; recommending new candidates for Board membership, making recommendations to the Board regarding the size and composition of the Board and qualification criteria for the selection of new Board members and ensuring that appropriate orientation and education programs are available for new Board members; reviewing annually the membership and chairs of all committees of the Board; and reviewing annually and recommending retainers and fees paid to Board members. Human resources and compensation responsibilities include recommending to the Board candidates for CEO, President and all other senior management positions and approving the terms of their appointment and termination or retirement; reviewing succession planning programs for the CEO, President and all other senior management and specific career planning for potential successors; reviewing, in consultation with the Chair of the Board, and recommending to the Board for approval, the remuneration of the Corporation’s CEO and other senior executive officers; reviewing and recommending to the Board for approval, on an annual basis, the corporate goals and objectives for the CEO and evaluating the CEO’s performance against such goals and objectives; reviewing and, if advisable, approving compensation for any newly hired individual whose total annual compensation (including salary, bonus and any other incentive compensation) exceeds $1 million; and determining (or delegating the authority to determine) and recommending to the Board for approval awards of Options under the Option Plan as well as awards under the EPSP and EIP, respectively. See also “Executive Compensation - Compensation Discussion and Analysis - Executive Compensation Governance Compensation Process”.

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Director Term Limits and Other Mechanisms of Board Renewal

Two of the six current directors were elected or appointed within the past one to four years. The Corporation has not adopted term limits for members of the Board, but facilitates Board renewal by reviewing and evaluating the performance and independence of directors and committees annually and seeks to foster a balance between new perspectives and the experience of seasoned Board members. The Corporation believes a policy imposing a term limit or an arbitrary retirement age would discount the value of experience and unnecessarily deprive the Corporation of the contribution by directors who have developed a deep knowledge of the Corporation over time.

Diversity on the Board and in Executive Officer Positions

The Board has adopted a written diversity policy (the “Diversity Policy”), which recognizes the Corporation’s commitment to a merit-based system for the composition of its Board and senior management, within a diverse and inclusive culture that solicits multiple perspectives and views, free of conscious or unconscious bias and discrimination.

The Corporation recognizes and embraces the benefits of having diversity on the Board and in senior management. Diversity is important to ensure that members of the Board and senior management possess the necessary range of perspectives, experience and expertise required to achieve the Corporation’s objectives and deliver for its stakeholders. The Corporation believes that diversity mitigates the risk of group think, ensures that the Corporation has the opportunity to benefit from all available talent and enhances, among other things, its organizational strength, problem-solving ability and opportunity for innovation.

It is an objective of the Diversity Policy that diversity be considered in determining the optimal composition of the Board. In reviewing Board composition and identifying suitable candidates for Board appointment or nomination for election to the Board, candidates will be selected based on merit and against objective criteria. Accordingly, the Corporation does not have a formal target regarding women on the Board, but due regard will be given within the appointment or nomination process to the benefits of diversity in order to enable the Board to discharge its duties and responsibilities effectively.

The Corporation recognizes that gender diversity is a significant aspect of diversity and acknowledges the important role that women with the appropriate competencies and skills can play in contributing to diversity of perspective in the boardroom. Although the Corporation does not have a formal target regarding women on the Board, the selection process for new Board nominees involves ensuring at least one female candidate is included on the short-list identifying potential Board nominees. If, at the end of the selection process, no female candidates are selected, the Board must be satisfied that there are objective reasons to support this determination.

Upon adoption of the Corporation’s diversity policy and currently, the Board includes two female members, representing approximately 33% of the Board.

It is also an objective of the Corporation’s diversity policy that diversity be considered in connection with succession planning and the appointment of members of the Corporation’s senior management. The Corporation recognizes that gender diversity is a significant aspect of diversity and acknowledges the important role that women with the appropriate competencies and skills can play in contributing to diversity of perspective in senior management positions. The Corporation does not have a formal target regarding women in executive positions because the Board does not believe that targets necessarily result in the identification or selection of the best candidates. However, in order to promote the specific objective of gender diversity in senior management, the Corporation: (i) continues to implement policies which address impediments to gender diversity in the workplace and review their availability and utilization; (ii) proactively identifies high-potential women for leadership training programs and encourages them to apply for more senior roles; (iii) has developed flexible scheduling programs and other family friendly policies for mid-career women to assist with recruitment and retention; (iv) regularly reviews the proportion (in percentage terms) of persons at all levels of the Corporation who are women; (v) monitors effectiveness of, and continues to expand on, existing initiatives designed to identify, support and develop talented women with senior management potential; and (vi) continues to identify new ways to entrench diversity as a cultural priority across the Corporation.

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Female representation in senior management at the Corporation includes the CFO of SAM, SRLC and SCP and the Managing Director, Marketing, representing approximately 11% of senior management. Other senior positions are occupied by members of visible minorities.

DIRECTOR ATTENDANCE AND COMPENSATION

The Board meets regularly to review the activities and financial results of the Corporation and as necessary to review and consider significant impending actions of the Corporation. The Board met formally six times during 2019 and once since the end of 2019. The attendance record of each director for all Board and committee meetings held since January 1, 2019 is as follows:

Name of Director	Board Meetings    (Attended/Held)(1)	Audit Committee Meetings (Attended/Held)(2)	CGC Committee Meetings (Attended/Held) (3)
Ronald Dewhurst(4)	7/7	3/3	6/6
Peter Grosskopf	7/7	—	—
Sharon Ranson(5)	7/7	5/5	3/3
Arthur Richards Rule IV	7/7	—	—
Rosemary Zigrossi	7/7	5/5	6/6
Jack C. Lee(6)	3/3	2/2	3/3
Graham Birch (7)	1/1	—	—

Notes:

(1) Includes Board meetings held on February 27, 2020

(2) Includes an Audit Committee meeting held on February 27, 2020

(3) Includes a CGC Committee meeting held on February 27, 2020

(4) Mr. Dewhurst joined the Audit and Risk Management Committee effective May 10, 2019

(5) Ms. Ranson joined the CGC Committee effective May 10, 2019

(6) Mr. Lee did not stand for re-election and accordingly ceased to be a director for the Corporation on May 10, 2019

(7) Dr. Birch was appointed to the Board on November 25, 2019

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Director Compensation Table

The following table shows all compensation (before taxes and other statutory withholdings) provided to the directors of the Corporation (other than the directors who were also Named Executive Officers (“NEOs”) and for whom information is shown in the tables for NEOs below) for the year ended December 31, 2019.

Name(1)	Fees Earned ($)(2)		Share-based awards ($)		Option-based awards ($)		Non-equity incentive plan compensation ($)		All other compensation ($)		Pension value ($)		Total ($)
Jack C. Lee(3)		71,978		—		—		—		—		—		71,978
Sharon Ranson		150,000		—		—		—		—		—		150,000
Ronald Dewhurst		210,934		—		—		—		—		—		210,934
Rosemary Zigrossi		110,000		—		—		—		—		—		110,000
Graham Birch(4)		11,151		209,250		—		—		—		—		220,401

Notes:

(1) Peter Grosskopf, CEO of the Corporation and CEO of SRLC, and Arthur Richards Rule IV, President and CEO of Sprott US, are also directors of the Corporation. Mr. Grosskopf’s compensation in respect of the Corporation is fully disclosed in the Summary Compensation Table below dealing with the compensation of NEOs. Mr. Grosskopf and Mr. Rule did not receive any additional compensation from the Corporation for their services as directors of the Corporation.

(2) As noted below, each eligible director shall have the right, but not the obligation, to elect once each calendar year to receive all or 50% of such director’s annual retainer for the immediately succeeding year in the form of DSUs. Mr. Birch elected to receive all of his directors fees earned for the year ended December 31, 2019 in the form of DSUs. Mr. Lee, Mr. Dewhurst, Ms. Ranson and Ms. Zigrossi each elected to receive all of their director fees earned for the year ended December 31, 2019 in cash. A portion of the director fees earned in DSUs during the year ended December 31, 2019 were granted on January 15, 2020.

(3) Mr. Lee did not stand for re-election and accordingly ceased to be a director for the Corporation on May 10, 2019

(4) Dr. Birch was appointed to the Board on November 25, 2019

Fees and Retainers

Each independent member of the Board is paid such remuneration for his or her services as the Board may, from time to time determine. In addition, the Chair of the CGC Committee is authorized to approve the grant of 75,000 DSUs to each new non-executive director of the Corporation upon his or her election or appointment to the Board.

Effective following the Corporation’s annual shareholders meeting on May 12, 2017, meeting attendance fees were eliminated and the Board revised the compensation payable to independent directors of the Corporation for serving as directors of the Corporation as follows:

Annual Retainer	Fees Earned
Board Members
Board Chair	$	200,000
Independent Director	$	110,000
Additional Retainer for Committee Positions
Chair of the Audit Committee	$	40,000
Chair of the CGC Committee	$	40,000
Expenses
Reimbursement for out-of-pocket expenses for attending Board or committee meetings in person

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Deferred Share Unit Plan

In May 2012, the Corporation established the deferred share unit plan (the “DSU Plan”) for the independent directors of the Corporation. The purpose of the DSU Plan is to advance the interests of the Corporation by: (i) providing additional incentives to eligible directors, as determined by the Board, by aligning their interests with those of the Corporation’s shareholders; and (ii) promoting the success of the Corporation’s business.

The Board designates the number of DSUs granted. The issue price for each DSU is the Market Price of the Common Shares calculated as of the date of the award. “Market Price” for the purpose of the DSU Plan means the volume-weighted average price of the Common Shares on the TSX for the five trading days immediately preceding the relevant date. In the event that the Common Shares are not then listed and posted for trading on any exchange, the Market Price in respect thereof is the fair market value of the Common Shares as determined by the reasonable application by the Board of a reasonable valuation method.

Each eligible director shall have the right, but not the obligation, to elect once each calendar year to receive all or 50% of such director’s annual retainer for the immediately succeeding year in the form of DSUs. If an eligible director does not make an election for all or part of a year, all of such director’s annual retainer for the year is paid in cash.

A participant’s account is credited with dividend equivalents in the form of additional DSUs on each dividend payment date in respect of which ordinary course cash dividends are paid on the Common Shares.

All DSUs awarded pursuant to the DSU Plan are settled in cash. Participants are entitled to payment when he or she ceases to be an eligible director of the Corporation.

The Corporation’s annual “burn rate” for shares granted under the DSU Plan, calculated as described in Section 613(p) of the TSX Company Manual with respect to the number of issued and outstanding shares (total number of Options issued in a fiscal year, divided by the weighted average number of outstanding Common Shares for that year) was 0.09% in fiscal 2017, 0.05% in fiscal 2018 and 0.04% in fiscal 2019.

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Outstanding Option-Based and Share-Based Awards

The following table sets forth information concerning all option-based and share-based awards for each director (other than the directors who were also NEOs and for whom the identical information is shown on the comparable table for NEOs set out below) outstanding at December 31, 2019, including awards granted before the financial year ended December 31, 2019. During the financial year ended December 31, 2019, the directors earned 3,621 DSUs in director fees and were granted no option-based awards. The directors were also granted 75,000 DSUs and earned 21,641 DSUs in dividend income during the financial year ended December 31, 2019 from prior DSU grants.

	Option-based Awards									Share-based Awards
Name		Number of securities underlying unexercised options (#)		Option exercise price ($)		Option expiration date		Value of unexercised in-the- money options ($)		Number of shares or units of shares that have not vested (#)		Market or payout value  of share- based awards that have not vested ($)(1)		Market or payout value of vested share-based awards not paid or distributed ($)(2)
Ronald Dewhurst			—		—		—		—		—		—		254,480
Sharon Ranson			—		—		—		—		—		—		798,470
Graham Birch(3)			—		—		—		—		75,000		223,500		10,791
Rosemary Zigrossi			—		—		—		—		—		—		405,563
Jack C. Lee(4)			50,000		6.60		November 9, 2020		—		—		—		—

Notes:

(1) Based on the December 31, 2019 TSX closing price of $2.98 per Common Share.

(2) Valued as at December 31, 2019. Although DSUs vest immediately upon being awarded, they cannot be paid out until 30 days following the date on which an independent director ceases to be independent of the Corporation, as determined in accordance with Section 1.4 of NI 52-110.

(3) Includes $11,151 of DSUs earned in director fees in the year ended December 31, 2019 but not granted until January 15, 2020.

(4) Mr. Lee did not stand for re-election. Mr. Lee was paid out all of his 371,362 DSUs earned from previous years in the amount of $1,114,086 on May 15, 2019.

Incentive Plan Awards - Value Vested or Earned during the Year

The following table provides information regarding the value on pay-out or vesting of incentive plan awards for each of the Corporation’s directors (other than the directors who were also NEOs and for whom the identical information is shown on the comparable table for NEOs set out below) for the financial year ended December 31, 2019.

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Name	Option-based awards - value vested during the year ($)	Share-based awards - value vested during the year ($)	Non-equity incentive plan compensation - value earned during the year ($)
Ronald Dewhurst	—	74,517 (1)	—
Sharon Ranson	—	31,412 (2)	—
Graham Birch	—	11,151 (3)	—
Rosemary Zigrossi	—	15,955 (4)	—
Jack C. Lee	—	11,036 (5)	—

Notes:

(1) Includes $64,500 of DSUs in special grants and $10,017 of DSUs earned in dividend income during the year ended December 31, 2019 from prior DSU grants.

(2) Includes $31,412 of DSUs earned in dividend income during the year ended December 31, 2019 from prior DSU grants.

(3) Includes $11,151 of DSUs in director fees during the year ended December 31, 2019 from prior DSU grants. All DSUs were earned in director fees in the year ended December 31, 2019 but were not granted until January 15, 2020.

(4) Includes $15,955 of DSUs earned in dividend income during the year ended December 31, 2019 from prior DSU grants.

(5) Includes $11,036 of DSUs earned in dividend income during the year ended December 31, 2019 from prior DSU grants. Mr. Lee did not stand for re-election and resigned from the Board on May 10, 2019.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Named Executive Officers

The following is an overview of our executive compensation policy and programs, and focuses on the following five named executive officers, or NEOs, of the Corporation and its subsidiaries for the year ended December 31, 2019:

Executive	Position
Peter Grosskopf	Chief Executive Officer of the Corporation and Managing Director of Sprott Resource Lending
Kevin Hibbert	Senior Managing Director and Chief Financial Officer of the Corporation and Co-Head of the Enterprise Shared Services Group
Tim Sorensen(1)	Managing Director of the Corporation and Chief Executive Officer of Sprott Capital Partners LP
John Ciampaglia	Senior Managing Director of the Corporation and Chief Executive Officer of Sprott Asset Management
Edward Coyne	Senior Managing Director and Head of Global Sales of the Corporation

Notes:

(1) Mr. Sorensen stepped down effective January 2020.

Objectives of the Corporation’s Compensation Programs

Sprott has a number of diverse business activities, with distinct talent pools from which we hire. In order to ensure our compensation programs can attract, retain and motivate the best professionals in the marketplace, our compensation programs are tailored to the individual business units we operate; we have deliberately not adopted a “one size fits all” approach to compensation across our various divisions.

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For each of our business units, we approach compensation as follows:

• As the Corporation has grown, we have developed a core team of professionals who provide services to some or all of the operating entities within the Sprott group of companies. These “shared services” employees are rewarded by reference to the overall success of the Corporation, with a focus on their individual contributions and the external competitive environment.

• SAM’s strategy has been to selectively hire “best in class” portfolio managers and analysts supported by sales, trading, operations, finance and compliance personnel. We seek to align the interests of our key personnel, including the CEO of SAM, with those of the investors in the investment funds that SAM manages and, in turn, the shareholders of the Corporation. SAM’s portfolio managers earn variable compensation as part of Pool 1.

• SCP is engaged in two lines of business: (1) a merchant banking and investment banking business; and (2) investment management and administrative services to high net worth individuals and institutions. Employees of SCP engaged in merchant and investment banking are compensated primarily via a percentage of the commissions and advisory fees generated from corporate finance and advisory mandates completed. Employees of SCP engaged in investment management and administrative services are primarily compensated via a percentage of the commissions on the sale and purchase of securities on behalf of their clients. Additional variable compensation may be earned based on overall results of SCP.

• At SGRIL and SAM USA, investment advisors are compensated primarily via a percentage of the commissions generated from the sale and purchase of securities on behalf of their clients, a fee based on the client assets they manage and a percentage of the commissions and advisory fees generated from corporate finance and advisory mandates completed. They may earn additional variable compensation based on overall corporate results.

• At RCIC, variable compensation for senior investment employees is largely related to the earnings and performance of the funds that they manage, thereby closely aligning investment management’s interests with those of the investors in the investment funds that RCIC manages and, in turn, the shareholders of the Corporation.

Within our core competencies, we compete for a broad range of talent across the investment management, private equity and investment banking industries. As a result, we continuously review our compensation practices to ensure we provide competitive compensation for all employees, including the NEOs. Given competition to attract and retain high performing executives and professionals in the financial services industry is intense, the amount of total compensation paid to our executives must be considered in light of competitive compensation levels. When hiring new employees, compensation packages are structured so as to attract and retain such personnel. Compensation is tailored to the particular circumstances. While there are no directly comparable publicly listed companies in Canada, in 2015, with the assistance of Hugessen Consulting Inc. (“Hugessen”), a Canadian-based compensation consulting firm, we identified a “reference group” of companies against which to “benchmark” executive compensation at the Corporation. The reference group was selected based on criteria including geography, exchange-listing, asset management industry and market capitalization. Seven issuers were identified by Hugessen as public comparators: AGF Management Limited (TSX:AGF.B), Dundee Corporation (TSX:DC.A), Gluskin Sheff + Associates, Inc. (TSX:GS), Fiera Capital Corporation (TSX:FSZ), Tricon Capital Group Inc. (TSX:TCN), Guardian Capital Group Ltd. (TSX:GCG) and Senvest Capital Inc. (TSX:SEC), which group we believe remains the most relevant to us and provides some benchmark information to the CGC Committee.

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We aim to pay competitive salaries but, in most cases, place a significant emphasis on variable compensation in order to align executive compensation with the financial performance of the Corporation and with long-term shareholder returns. In 2011, we implemented a deferred compensation element through the introduction of the EPSP (currently for Canadian employees) and the EIP (currently for U.S. employees). See “Securities Authorized for Issuance Under Equity Compensation Plans”.

In 2017, a new compensation program was designed to address two key objectives: (i) the transition of share ownership from the founder, Eric Sprott, to the next generation of management and leaders tasked with driving the Corporation forward; and (ii) to better align executive and key employee interest with those of our shareholders on a more meaningful basis. As part of the implementation process, new employment agreements were entered into with certain senior executives and key employees (collectively, the “LTIP Participants”).

Elements of Compensation

The key elements of the compensation arrangements of our executive officers, investment professionals and other key employees are set out below.

The Corporation’s compensation structure has, in the past, followed the tradition of a competitive base salary and greater participation in the profits of the Corporation primarily through cash bonuses as well as participation in the Option Plan, EPSP or EIP. There were a few exceptions to that model for certain key hires. In those exceptional circumstances and in order to attract them to the Corporation, compensation levels were guaranteed for a specified period (not to exceed two years). Those compensation structures were reviewed at the end of the specified periods and converted to the general corporate policy of competitive base pay and variable pay dependent upon long-term financial and personal performance.

Base Salary and Benefits

The base salary is the fixed portion of each NEO’s total compensation. It is designed to provide income certainty. In determining the base level of compensation for the Corporation’s executives, weight is placed on the following factors: the particular responsibilities related to the position, salaries or fees paid by companies of similar size in the industry, level of experience of the executive and overall performance, and the time which the executive is required to devote to the Corporation in fulfilling his or her responsibilities.

In addition to the base salary, we provide all employees with a benefits program that includes medical, dental, life insurance and other benefits. We believe that providing this type of program is a necessary part of our overall compensation structure to attract and retain employees in the competitive environment for professional talent. We do not provide any other perquisites to our NEOs, nor do we have any pension or other post-retirement plans.

Cash Bonus and Other Variable Compensation

As part of the overall re-alignment of the Corporation’s business in 2017, the LTIP Participants, with the exception of Mr. Grosskopf, agreed to receive cash bonus compensation only for extraordinary personal performance or Corporation results in exchange for a one-time Equity Grant (as defined below) under the EPSP or EIP, as applicable. In lieu of the one-time Equity Grant, Mr. Grosskopf’s existing performance-based options were also amended to align their vesting provisions with those of the Equity Grants. See “Elements of Compensation - Equity Incentives” below. In 2019, the Board determined that Mr. Grosskopf’s compensation should be further aligned with the LTIP Participants and therefore removed a portion of his cash bonus compensation in consideration for a grant of 500,000 shares, with the same vesting provisions as those of the Equity Grants.

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In order to further align the Corporation’s business with the interest of our shareholders, we removed the discretionary bonus compensation program for all other employees. All employees, including the LTIP participants are now in one of three pools:

• Pool 1 employees are capital allocators and their support staff. These employees are now paid a quarterly cash incentive based on a pre-set percentage of the net revenues or EBIT they generate within their segment. This incentive pool is reduced by any base salary earned during the applicable period for such incentive pool and the value of Common Shares received under the LTIP program that vested during the applicable period for such incentive pool. This incentive pool was designed to motivate Pool 1 employees to allocate capital in the most optimal way that maximizes shareholder benefits while mitigating operating risks.

• Pool 2 employees include the CEO and enterprise shared service executives. These employees are now paid from a cash incentive pool derived from a portion of the income generated above an annual EBIT margin target, subject to a minimum payout floor. This incentive pool was designed to strike an appropriate balance between motivating these employees with variable compensation incentives and ensuring their independence and objectivity while carrying out their monitoring and oversight mandates over company business operations. 

• Pool 3 employees are all other employees. As part of the transition to non-discretionary cash incentive payouts, these employees now receive an average cash bonus of 10% of their base salary. Individual bonus payments are calculated based on an overall assessment by senior management of the individual’s performance and absolute and/or relative contribution. In all cases, each employee is considered separately, taking into account personal performance, relative ranking among peers (both internally and with reference to external information, where available and appropriate) and base salary. These incentives are designed to motivate employees to achieve personal business objectives, to be accountable for their relative contribution to the Corporation’s performance, as well as to attract and retain quality personnel.

Equity Incentives

We intend to continue to structure our compensation programs to attract, retain and motivate executives and investment professionals of the highest level of quality and effectiveness. We are focused on rewarding the types of performance that increase long-term shareholder value, including growing our assets under management, retaining investors in the Sprott funds, developing new investor relationships, improving operational efficiency and managing risks. In order to improve our ability to retain talent and to further align the interest of employees and those of our shareholders, as noted above, the Corporation established the Option Plan, to attract, retain and motivate our employees while aligning their interests with that of our shareholders. Grants of Options pursuant to the Option Plan are approved by the Board upon the recommendation of the CGC Committee. See “Securities Authorized for Issuance Under Equity Compensation Plans - Equity Compensation Plan Information as at December 31, 2019 - Option Plan”. In 2011, we introduced the EPSP and EIP whereby a portion of the bonus allocated to certain employees are paid by way of Common Shares or other forms of equity compensation such as restricted share units (“RSUs”). The Common Shares are either purchased in the open market or issued from treasury in the case of the EIP and are available to the relevant employees over a specified vesting period. When considering grants pursuant to the EPSP and the EIP, an appropriate portion of the bonus is allocated to equity compensation to incentivize and to better align the interests of the employees with those of the shareholders.

Long-Term Incentive Program

The long-term incentive program (the “LTIP”) provides the key employees with an opportunity to receive variable compensation contingent on the Corporation’s long-term performance.

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The objective of the LTIP is align the interests of NEOs, executives and senior leaders with the interests of the Corporation’s shareholders, motivate leaders to deliver shareholder value over various time horizons, mitigate potential compensation risk by virtue of the longer time horizon and allow us to attract, motivate and retain key talent. The following is a summary of certain key features of the LTIP:

Long-Term Incentive Program Key Features
Vesting	Five years
Performance Condition	“Dynamic” performance conditions (targets set annually) Non-cumulative corporate and individual targets set annually
Forfeiture Risk	High (multiple forfeiture triggers)

Pursuant to the LTIP, the LTIP Participants agreed to receive cash bonus compensation only for extraordinary personal performance or Corporation results in exchange for a one-time grant of Common Shares through the EPSP (for Canadian participants) and RSUs through the EIP (for U.S. participants) (the “Equity Grant”). The LTIP Participants are only awarded cash incentives in the event of “extraordinary performance” that is meaningful to the Corporation as assessed by the CEO in partnership with the CGC Committee. The Equity Grant has a vesting period of five years, with 15% of the Equity Grant vesting on August 31, 2017 and 21.25% for each year thereafter through to December 31, 2021. Vesting of each annual tranche is conditional upon the achievement by the Corporation of a performance threshold as determined by the Board for the relevant fiscal year (the “Performance Threshold”) and achievement by the employee of certain performance milestones for the relevant fiscal year (the “Performance Milestones”) as established by the Board with respect to the CEO and by the CEO with respect to the other LTIP Participants. The Performance Thresholds for each of 2017, 2018 and 2019 were determined by the Board to have been achieved. The Performance Threshold for fiscal 2020 was set at 35% earnings before interest and taxes (EBIT) margin. Dividends on granted Common Shares or RSUs, as applicable, will accrue to the employees commencing on the grant date. In the case of Mr. Grosskopf, in lieu of an Equity Grant at the commencement of this program, his existing performance-based stock options were amended so that vesting of such options is similarly subject to a Performance Threshold and Performance Milestones. See “Employment Agreements, Termination and Change of Control Benefits”. Participation in this program was conditional upon the execution and delivery of a new employment agreement between the relevant Sprott entity and each executive or key employee participating in the program. See “Executive Compensation - Employment Agreements, Termination and Change of Control Benefits”.

We believe these incentive arrangements will better motivate executives to achieve long-term sustainable business results, align their interests with those of the shareholders, attract and retain executives and make our executives partners and owners of the Corporation over time. For further details concerning the compensation paid to the NEOs, see the “Summary Compensation Table”.

Executive Compensation Governance

CGC Committee

The CGC Committee periodically reviews and approves our compensation policies and practices. For further information concerning the CGC Committee, see “Corporate Governance - Corporate Governance and Compensation Committee”.

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Scorecards

In 2018, the CGC Committee, together with the CEO of the Corporation, developed a new set of individualized scorecards for all senior executives. Each scorecard sets out: (i) an individualized set of quantitative and/or qualitative annual target Performance Milestones which must be achieved for the applicable tranche of the Equity Grant to vest in that year; and (ii) an individualized set of quantitative annual target milestones which must be achieved in order for a cash award to be made for “extraordinary performance”. For qualitative metrics, the CGC Committee set appropriate methods of evaluation to determine whether a specific metric had been met. The CGC Committee believes that the use of scorecards enhances transparency and better aligns executive compensation with the Corporation’s fiscal year performance. The CGC Committee reviews and revises the scorecards of the CEO and President on an annual basis and the CEO of the Corporation reviews and revises the other senior executive scorecards on an annual basis.

In making compensation recommendations for the President, the CGC Committee relies on the CEO to make recommendations based on his or her judgment of the performance and contribution of the President. The first step involves an analysis of the Corporation’s performance against budget and on a year-over-year basis. From there, consideration is given to the President’s performance. A detailed formal bonus proposal is presented by the CEO to the CGC Committee. The CGC Committee reviews and discusses such recommendations with the CEO and, if determined to be appropriate, recommends approval by the Board. In making compensation recommendations for our senior employees, the CGC Committee relies on the CEO to determine if any changes are required to the individualized scorecards and performs an annual assessment of any changes in (i) the qualitative annual target Performance Milestones which must be achieved for the applicable tranche of the Equity Grant to vest in that year and (ii) the quantitative annual target milestones which must be achieved in order for a cash award to be made for “extraordinary performance” each year in connection with year-end compensation decisions. See “Corporate Governance - Corporate Governance and Compensation Committee”.

Compensation Risk Management

The CGC Committee recognizes that certain elements of compensation could promote unintended inappropriate risk-taking behaviors, but the Corporation seeks to ensure that the Corporation’s executive compensation package is comprised of a mix of cash and equity compensation, with a significant weighting placed on long-term incentives (through the LTIP), see “Elements of Compensation - Equity Incentives”. Base salaries and personal benefits are sufficiently competitive and not subject to performance risk. Subject to limited exceptions, to receive short-term or long-term incentives, the executive officer must be employed by the Corporation at the time of payout. Therefore, through the time horizons and metrics reflected in the compensation elements, the Corporation is of the view that executive performance is now more closely aligned with the interests of the Corporation and its shareholders.

The CGC Committee believes that executive compensation risk management is reinforced by ongoing Board oversight of, among other things, the Corporation’s financial results, regulatory disclosure, strategic plans, fraud and error reporting, the Audit Committee’s regular meetings with the external auditors (including without the presence of management), the Corporation’s internal controls, management information systems and financial control systems. In addition, the Corporation reviews significant risks associated with its operations, the most significant of which are disclosed in the Corporation’s annual management’s discussion and analysis for each fiscal year. The Corporation does not believe that its compensation policies and practices are reasonably likely to have a material adverse effect on the Corporation.

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Other Compensation Policies

Share Ownership Policy

As a condition of employment, the CEO, CFO, General Counsel and Corporate Secretary and the CEO of SAM are subject to an Executive Share Ownership Policy (the “Executive Ownership Policy”) and are (and/or their spouses are) required to beneficially own and hold that number of Common Shares (including certain allocations thereto under the EPSP) having a minimum aggregate market value that is equal to three times their then applicable annual base salary by the date which is three years after the date of their respective employment agreement. In addition, the other employees participating in the LTIP are subject to an Employee Share Ownership Policy (the “Employee Ownership Policy”) and are (and/or their spouses are) required to beneficially own and hold that number of Common Shares (including certain allocations thereto under the EPSP) having a minimum aggregate market value that is equal to 0.5, 0.75, one or two times the employee’s then applicable base salary (or deemed base salary) by the later of January 23, 2021 or the date which is three years after the date of their respective employment agreement.

We believe these standards are meaningfully higher than share ownership requirements at other companies. We believe significant long-term share ownership best aligns executives and shareholders. Market value shall be determined on December 31 of each year based on the greater of the market value thereof on that date and the weighted average purchase price of the Common Shares.

Recoupment Policy

The Corporation adopted an incentive compensation recoupment policy (the “Recoupment Policy”) on March 10, 2016, as amended on March 27, 2018, that allows the recoupment of any performance-based incentive compensation, including, without limitation, cash bonuses and awards granted to employees under our annual incentive plan, the Option Plan, the EPSP and the EIP (collectively, the “Incentive Compensation”) under certain circumstances. In the event of a restatement of our financial results (as a result of which any Incentive Compensation to have been paid is a lower amount had it been calculated based on such restatement) or of fraud or intentional misconduct by one or more of the employees, the Board, on the recommendation of the CGC Committee, may, based upon the facts and circumstances surrounding such event, direct that we recover all or a portion of any Incentive Compensation paid, or cancel all, or part of, the equity-based Incentive Compensation granted, to an employee. The Board may also seek to recover any gains realized with respect to equity-based Incentive Compensation, regardless of when issued or if required to be issued at a future date. In addition, the Board, on the recommendation of the CGC Committee, may, in the event of fraud or intentional misconduct by the employee, take other disciplinary action that it deems necessary, including, without limitation: (1) adjusting any future compensation of the employee; (2) terminating of the employee’s employment, (3) pursuing any and all remedies available in law and/or equity in any country; and (4) pursuing such other action as may fit the circumstances of the particular case. As of the date hereof, this policy applies to all employees of the Corporation and its subsidiaries, related and affiliated corporations, limited partnerships and other business entities.

Anti-Hedging Policy

The Corporation adopted an anti-hedging policy (the “Anti-Hedging Policy”) effective May 12, 2016. The objectives of the Anti-Hedging Policy are to: (a) prohibit directors, officers or employees of the Corporation or its subsidiaries from directly or indirectly engaging in hedging or monetization transactions, through transactions in the Corporation’s securities or through the use of financial instruments designed for such purpose; and (b) prohibit directors, officers or employees of the Corporation or its subsidiaries from engaging in short-term or speculative transactions in the Corporation’s securities that could create heightened legal risk and/or the appearance of improper or inappropriate conduct by such individuals.

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Pursuant to the Anti-Hedging Policy, directors, officers or employees of the Corporation may not engage in any hedging or monetization transactions with respect to the Corporation’s securities, including, but not limited to, through the use of financial instruments such as exchange funds, prepaid variable forwards, equity swaps, puts, calls, collars, forwards and other derivative instruments, or through the establishment of a short position in the Corporation’s securities. Further, directors, officers or employees of the Corporation may not engage in short-term trading, short sales and publicly-traded options.

Any director or officer of the Corporation or any of its subsidiaries may seek an exemption from the Anti-Hedging Policy from the Chair of the CGC Committee. Other persons to whom the Anti-Hedging Policy applies may seek an exemption from the CCO or such other person designated by the CGC Committee. Any such request must be submitted prior to the contemplated transaction and the person seeking an exception should be advised that any purchase or sale of securities will be subject to the prohibition on “insider trading” as set forth under the Corporation’s insider trading policy. An exemption will only be granted in exceptional circumstances.

The Anti-Hedging Policy applies to all of the directors, officers or employees of the Corporation or its subsidiaries and includes, to the extent practicable, any other person (or their associates) in a special relationship (within the meaning of applicable securities laws) with the Corporation

Performance Graph

The following graph compares the cumulative shareholder return per $100 invested in Common Shares to the cumulative total return of the S&P/ TSX Composite Index from January 1, 2015 to December 31, 2019. The calculations include reinvested dividends and exclude brokerage fees and taxes.

 

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There are many factors that may influence the Corporation’s stock price, such as future earnings expectations, views on specific sectors and personnel changes, all of which are not directly related to historical financial performance. Historically, there has been some relationship between corporate performance and the compensation of our NEOs, but not necessarily between compensation and shareholder returns over any given period of time. The significant equity-based component of our NEOs’ compensation packages implemented in 2017 and the elimination of the discretionary bonus compensation program and implementation of the three incentive pools in 2018 are designed to more closely correlate compensation and shareholder returns. See “Compensation Discussion and Analysis - Elements of Compensation - Cash Bonus and other Variable Compensation” and “Compensation Discussion and Analysis - Elements of Compensation - Equity Incentives”.

Summary Compensation Table

The following table provides a summary of compensation information for the three most recently completed financial years for the Corporation’s CEO, CFO and four other NEOs.

Name and Principal Occupation	Year	Salary ($)	Share-based Awards ($)	Option-based Awards ($)(1)	Non-Equity Incentive Plan Compensation ($)		Pension Value ($)	All other Compensation ($)	Total Compensation ($)
					Annual Incentive Plans(2)	Long-Term Incentive Plans
Peter Grosskopf, CEO; CEO of SRLC(3)	2019	500,000	1,100,000	175,000	1,497,000	—	—	—	3,272,000
	2018	500,000	—	175,000	2,307,000	—	—	—	2,982,000
	2017	500,000	969,000	177,500	720,000	—	—	—	2,366,500
Kevin Hibbert, CFO, SMD and Co-head of the Enterprise Shared Services Group(4)(5)	2019	350,000	—	—	404,000	—	—	—	754,000
	2018	350,000	—	—	475,000	—	—	—	825,000
	2017	350,000	2,200,000	—	255,000	—	—	—	2,805,000
Tim Sorensen, MD of the Corporation, and CEO of SCP(6)	2019	—	—	—	—	—	—	1,348,000	1,348,000
	2018	—	57,200	—	—	—	—	791,000	848,200
	2017	—	497,999	—	138,000	—	—	1,785,463	2,421,462
Edward Coyne, SMD of the Corporation and head of global sales(7)	2019	390,000	303,000	—	491,270	—	—	—	1,184,270
	2018	390,000	—	—	340,110	—	—	—	730,110
	2017	390,000	—	—	390,000	—	—	—	780,000
John Ciampaglia, SMD of the Corporation and CEO of SAM(4)(8)	2019	350,000	—	—	702,000	—	—	—	1,052,000
	2018	350,000	—	—	475,000	—	—	—	825,000
	2017	350,000	2,200,000	—	255,000	—	—	—	2,805,000

Notes:

(1) This balance reflects the grant date fair value using a Black-Scholes option pricing model for the time-based Options and Performance Based Options (as defined below). As a condition of participating in the LTIP, in 2017, Mr. Hibbert forfeited 500,000 Options received in 2016 for notional consideration of $75,000.

(2) Represents the cash bonus earned during the year.

(3) Mr. Grosskopf was granted $1,100,000 and $969,000 in value of Common Shares under the EPSP for 2019 and 2017, respectively. The Common Shares granted in 2019 have the same vesting criteria as those granted under the LTIP, with 36.25% vested immediately, and the remaining 63.75% vesting equally starting December 31, 2019. The Common Shares granted in 2017 vest equally over three years commencing on January 1, 2018. In 2016, Mr. Grosskopff was awarded 2,250,000 time-based options and 1,000,000 Performance Based options. Of the 1,000,000 Performance Based options, 250,000 Performance Based Options expired without vesting in 2016 as the performance criteria were not met. In 2017, the performance criteria were met and 250,000 Performance-Based options vested on March 30, 2018. In 2018, the performance criteria were met and 250,000 Performance-Based options vested on March 30, 2019. In 2019, the performance criteria were met and the remaining 250,000 Performance-Based options will vest on March 30, 2020. Bonus allocations to Mr. Grosskopf reflect his contribution to the overall profitability of the Corporation and the competitive environment within the financial services sector and, effective for 2018, are calculated as part of the Pool 2 incentive pool.

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(4) In 2017, as part of the LTIP, one million Common Shares were granted under the EPSP for each of Messrs. Hibbert, and Ciampaglia at an adjusted cost base of $2.20 per Common Share. See “Compensation Discussion and Analysis - Elements of Compensation - Equity Incentives”.

(5) Bonus allocations to Mr. Hibbert reflect his contribution to the overall profitability of the Corporation and the competitive environment within the financial services sector and, effective for 2018, are calculated as part of the Pool 2 incentive pool.

(6) Mr. Sorensen was granted $57,200 in value of Common Shares under the EPSP for 2018. These common shares vest equally over 4 years commencing on December 31, 2018. Mr. Sorensen also received $497,999 shares as part of the LTIP. In 2019, Mr. Sorensen received $1,348,000 in commissions from placement and advisory services provided by SCP ($791,000 in 2018 and $1,785,463 in 2017).

(7) Mr. Coyne was granted $303,000 in value of Common Shares under the EIP for 2019, 40% of which vested in the current year. The remaining 60% vest equally over the next 2 years. Bonus allocations to Mr. Coyne reflect his contribution to the overall profitability of the Corporation and the competitive environment within the financial services sector, and are calculated as part of the Pool 1 incentive pool.

(8) Bonus allocations to Mr. Ciampaglia reflect his contribution to the overall profitability of the Corporation and the competitive environment within the financial services sector and, effective for 2018, are calculated as part of the Pool 1 incentive pool.

Outstanding Option-Based and Share-Based Awards

The following table sets forth information concerning all option-based and share-based awards for each NEO outstanding at December 31, 2019, including awards granted before the financial year ended December 31, 2019.

Name	Option-based Awards				Share-based Awards
	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date	Value of unexercised in-the-money options ($)(1)	Number of shares or units of shares that have not vested (#)	Market or payout value of share-based awards that have not vested ($)(2)	Market or payout value of vested share-based awards not paid out or distributed ($)(2)
Peter Grosskopf(3)	3,000,000	2.33	January 27, 2026	1,950,000	320,166	954,095	2,852,632
Kevin Hibbert(4)	—	—	—	—	425,000	1,266,500	1,439,903
Tim Sorensen(5)	—	—	—	—	105,011	312,933	419,501
Edward Coyne(6)	—	—	—	—	40,000	119,200	—
John Ciampaglia(7)	—	—	—	—	425,000	1,266,500	1,356,740

Notes:

(1) This balance is based on the difference between the market value of the securities underlying the instrument at December 31, 2019 ($2.98) and the exercise price of the Option ($2.33) for time based Options and Performance Based Options.

(2) Based on the December 31, 2019 TSX closing price of $2.98 per Common Share.

(3) See Note 4 to the Summary Compensation Table above for details of Mr. Grosskopf’s option-based and share-based awards.

(4) See Note 5 to the Summary Compensation Table above for details of Mr. Hibbert’s option-based and share-based awards.

(5) See Note 6 to the Summary Compensation Table above for details of Mr. Sorensen’s share-based awards.

(6) See Note 7 to the Summary Compensation Table above for details of Mr. Coyne’s share-based awards.

(7) See Note 8 to the Summary Compensation Table above for details of Mr. Ciampaglia’s share-based awards.

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Incentive Plan Awards - Value Vested or Earned during the Year

The following table provides information regarding the value on payout or vesting of incentive plan awards for the NEOs for the fiscal year ended December 31, 2019.

Name	Option-based awards - Value vested during the year ($)(1)		Share-based awards - Value vested during the year ($)(2)		Non-equity incentive plan compensation - Value earned during the year ($)
Peter Grosskopf(3)		467,500		1,328,499		1,497,000
Kevin Hibbert(4)		—		657,853		404,000
Tim Sorensen(5)		—		164,035		—
Edward Coyne(6)		—		178,800		491,270
John Ciampaglia(7)		—		646,881		702,000

Notes:

(1) This balance is based on the difference between the market value of the securities underlying the instrument at the vesting dates ($2.57 and $3.03) and the exercise price of the Option ($2.33) for Time-Based Options and Performance-Based Options.

(2) Based on the December 31, 2019 TSX closing price of $2.98 per Common Share.

(3) See Note 4 to the Summary Compensation Table above for details of Mr. Grosskopf’s option-based and share-based awards.

(4) See Note 5 to the Summary Compensation Table above for details of Mr. Hibbert’s option-based and share-based awards.

(5) See Note 6 to the Summary Compensation Table above for details of Mr. Sorensen’s share-based awards.

(6) See Note 7 to the Summary Compensation Table above for details of Mr. Coyne’s share-based awards.

(7) See Note 8 to the Summary Compensation Table above for details of Mr. Ciampaglia’s share-based awards

Pension Plan Benefits

The Corporation does not have any pension plans that provide for payments of benefits at, following or in connection with, retirement or provide for retirement or deferred compensation plans for the NEOs or directors.

Employment Agreements, Termination and Change of Control Benefits

Other than as described herein, the Corporation does not have any contract, agreement, plan or arrangement that provides for payments to a NEO at, following or in connection with a termination (whether voluntary, involuntary or constructive), resignation, retirement, a change in control of the Corporation or a change in an NEO’s responsibilities (each, a “Triggering Event”). Potential payments to each NEO shown below assumes the Triggering Event took place on December 31, 2019. “Sprott Group” means the Corporation and any of its subsidiaries, related and affiliated corporations, limited partnerships and other business entities.

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Peter Grosskopf – Chief Executive Officer and Managing Director of Sprott Resource Lending

The services of Mr. Grosskopf are provided under an employment agreement dated October 25, 2017, as amended and effective December 22, 2017.

Key Provisions
Compensation	•     $500,000 annual base salary; •     one-time grant of 500,000 Common Shares (the “EPSP Shares”), vesting based on meeting certain performance milestones (as of December 31, 2019, 57.5% of the EPSP Shares have vested, and subject to meeting the Performance Conditions, the remaining EPSP Shares shall vest as follow: 21.25% on December 31, 2020 and the balance on December 31, 2021); •     participation in the Sprott Private Resource Lending Fund Carried Interest Plan (the “Carry Plan”), each allocation under the Carry Plan is an entitlement to be paid an amount as a bonus, subject to the provisions of, and calculated as set out in, the Carry Plan; and •     at their sole discretion, the Board or the CGC Committee may award variable cash compensation to Mr. Grosskopf for extraordinary personal performance or Corporation results based on quantitative annual target milestones.
Severance Period	•     24 months
Restrictive Covenants	•     6-month non-competition provision. •     12-month non-solicitation provision.
Termination without cause, death, or permanent disability	•     Mr. Grosskopf or his estate can require the Corporation to purchase his limited partnership interest in the Fund (the “Interest”); and •     Mr. Grosskopf shall be entitled to, subject to the Board’s discretion, to deem vested any unvested EPSP Shares all vested EPSP Shares as of the next vesting date.
Termination with cause	•     Corporation will have right, but not obligation, to purchase the Interest.
If Mr. Grosskopf’s employment had been terminated without cause on December 31, 2019	Mr. Grosskopf would be entitled to a termination payment of approximately $1,637,470 broken down as follows: •     $1,000,000 attributable to severance; and •     $637,470 attributable to the EPSP Shares that will vest on December 31, 2020
Mr. Grosskopf may terminate his employment with the Sprott Group at any time by providing at least six months’ prior written notice (which notice may be waived) and he will be entitled only to any outstanding base salary and accrued unpaid vacation pay due to the effective date of his resignation.

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Kevin Hibbert – Senior Managing Director and Chief Financial Officer & Co-Head of the Enterprise

Shared Services Group

The services of Mr. Hibbert are provided under an employment agreement dated October 24, 2017 and effective December 22, 2017.

Key Provisions
Compensation	•     $350,000 annual base salary; •     one-time grant of 1,000,000 Common Shares (the “EPSP Shares”), vesting based on meeting certain performance milestones (as of December 31, 2019, 57.5% of the EPSP Shares have vested, and subject to meeting the Performance Conditions, the remaining EPSP Shares shall vest as follow: 21.25% on December 31, 2020 and the balance on December 31, 2021); and •     variable cash compensation for extraordinary personal performance or Corporation results based on quantitative annual target milestones
Severance Period	•     12 months
Restrictive Covenants	•     6-month non-competition provision. •     12-month non-solicitation provision.
Termination without cause, death, or permanent disability	•     Mr. Hibbert shall be entitled to, subject to the Board’s discretion, to deem vested any unvested EPSP Shares: (i) in the event of a termination in the first three quarters of the calendar year, all vested EPSP Shares at the end of his notice period; or (ii) in the event of a termination in the fourth quarter of the calendar year, all vested EPSP Shares at the end of his notice period, plus three months.
Change of Control	•     all of the EPSP Shares which have not vested prior to the Change of Control shall vest on the date of the Change of Control, provided that Mr. Hibbert terminates his employment for good reason in accordance with the terms of his employment agreement.
If Mr. Hibbert’s employment had been terminated without cause on December 31, 2019	Mr. Hibbert would be entitled to a termination payment of approximately $983,250 broken down as follows: •     $350,000 attributable to severance; and •     $633,250 attributable to the EPSP Shares that will vest on December 31, 2020.
Mr. Hibbert may terminate his employment with the Sprott Group at any time by providing at least three months’ prior written notice (which notice may be waived) and he will be entitled only to any outstanding base salary and accrued unpaid vacation pay due to the effective date of his resignation

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John Ciampaglia – Senior Managing Director and CEO of SAM

The services of Mr. Ciampaglia are provided under a form of executive employment agreement similar to Mr. Hibbert’s employment agreement.

Key Provisions
Compensation	•     $350,000 annual base salary; •     one-time grant of 1,000,000 Common Shares (the “EPSP Shares”), vesting based on meeting certain performance milestones (as of December 31, 2019, 57.5% of the EPSP Shares have vested, and subject to meeting the Performance Conditions, the remaining EPSP Shares shall vest as follow: 21.25% on December 31, 2020 and the balance on December 31, 2021); and •     variable cash compensation for extraordinary personal performance or Corporation results based on quantitative annual target milestones.
Severance Period	•     12 months.
Restrictive Covenants	•     6-month non-competition provision. •     12-month non-solicitation provision.
Termination without cause, death, or permanent disability	•     Mr. Ciampaglia shall be entitled to, subject to the Board’s discretion to, deem vested any unvested EPSP Shares: (i) in the event of a termination in the first three quarters of the calendar year, all vested EPSP Shares at the end of his notice period; or (ii) in the event of a termination in the fourth quarter of the calendar year, all vested EPSP Shares at the end of his notice period, plus three months.
Change of Control	•     all of the EPSP Shares which have not vested prior to the Change of Control shall vest on the date of the Change of Control, provided that Mr. Ciampaglia terminates his employment for good reason in accordance with the terms of his employment agreement.
If Mr. Ciampaglia’s employment had been terminated without cause on December 31, 2019	Mr. Ciampaglia would be entitled to a termination payment of approximately $983,250 broken down as follows: •     $350,000 attributable to severance; and •     $633,250 attributable to the EPSP Shares that will vest on December 31, 2020.
Mr. Ciampaglia may terminate his employment with the Sprott Group at any time by providing at least three months’ prior written notice (which notice may be waived) and he will be entitled only to any outstanding base salary and accrued unpaid vacation pay due to the effective date of his resignation

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Edward Coyne - Senior Managing Director and Head of Global Sales

The services of Mr. Coyne are provided under an employment agreement dated December 23, 2015.

Key Provisions
Compensation	•     US$300,000 annual base salary; •     one-time grant of 100,000 RSUs Common Shares (the “EPSP Shares”), vesting based on meeting certain performance milestones (as of December 31, 2019, 40% of the RSUs have vested, and subject to meeting the Performance Conditions, the remaining RSUs shall vest as follow: 20% on December 31, 2020, 20% on December 31, 2021 and the balance on December 31, 2022.); and •     variable cash compensation to Mr. Coyne for extraordinary personal performance or Corporation results based on quantitative annual target milestones.
Restrictive Covenants	•     60 days non-competition provision. •     12-month non-solicitation provision.
Mr. Coyne is not entitled to termination pay in the event the Corporation were to terminate the Coyne Employment Agreement.

Tim Sorensen – Former Managing Director and CEO of SCP

In January 2020, Mr. Sorensen stepped down as Managing Director of the Corporation and CEO of SCP.

Key Provisions
Termination without Cause or Resignation for Good Reason	Mr. Sorensen was entitled to a minimum lump sum payment equal to: •     $61,702 and $164,037 attributable to EPSP Shares that immediately vested as a result of his departure.

Directors’ & Officers’ Liability Insurance

The Corporation has purchased directors’ & officers’ liability insurance coverage (“D&O Insurance”) for directors and officers of the Corporation. The total annual premium payable by the Corporation for the D&O Insurance for the year ended December 31, 2019 was $136,172, and no amount of such premium was paid by the directors or officers of the Corporation. The D&O Insurance coverage has an annual aggregate limit of $25,000,000. There is a $100,000 deductible for any Canadian claims made, and $150,000 deductible for any U.S claims made, but no deductible is assessed against any director or officer. D&O Insurance is designed to protect Board members and officers for their legal liabilities including, but not limited to, securities claims, claims for statutory liabilities and employment claims.

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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Equity Compensation Plan Information as at December 31, 2019

Plan Category	Number of Securities to be issued upon the exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)(1)
Equity compensation plans approved by security holders	3,275,000	$2.57	13,083,698
Equity compensation plans not approved by security holders	—	—	—
Total	3,275,000	$2.57	13,083,698

Note:

(1) After accounting for the 8,954,382 Common Shares under the EPSP that have not yet vested and nil Common Shares under the EIP.

The Corporation has the following three equity based compensation plans: (a) the Option Plan; (b) the EPSP; and (c) the EIP. As of December 31, 2019, there were 3,275,000 Options outstanding under the Option Plan providing for the purchase of 3,275,000 Common Shares, which represents 1.3% of the issued and outstanding Common Shares and no Common Shares issued under the EIP, representing nil issued and outstanding Common Shares. No Common Shares have been granted from treasury under the EPSP. However, as at December 31, 2019, 2,402,500 Common Shares have been purchased in the open market by the trustee for the EPSP (the “Trustee”) under the EPSP, representing approximately 0.9% of the issued and outstanding Common Shares. The maximum number of Common Shares available for issuance under the Option Plan, EPSP and EIP was 25,313,080, representing 10% of the issued and outstanding Common Shares as of December 31, 2019.

The aggregate number of Common Shares from treasury that may be granted under the Option Plan, the EPSP and the EIP and all other securities based compensation arrangements shall not exceed 10% of the issued and outstanding Common Shares as at the date of such grant, representing 25,388,765 Common Shares as of the date of hereof. As a result, if the Corporation issues additional Common Shares in the future, the number of Common Shares issuable under such securities based compensation arrangements will increase accordingly. Furthermore, the number of Common Shares that are (i) issuable from treasury, at any time; and (ii) issued from treasury, within any one year period, to insiders (as defined in the applicable rules of the TSX) of the Corporation under the Option Plan, the EPSP and the EIP and all other security based compensation arrangements, may not exceed 10% of the issued and outstanding Common Shares.

Option Plan

The Option Plan is intended to aid in attracting, retaining and motivating our officers, employees and directors.

Options may be granted to a director, officer, employee or service provider of the Corporation or any related entity (being a person that controls or is controlled by the Corporation or that is controlled by the same person that controls the Corporation). However, no Options are to be granted to any optionee that is a non-employee director if such grant could result, at any time, in: (i) the aggregate number of Common Shares issuable to non-employee directors under the Option Plan, or any other security-based compensation arrangement of the Corporation, exceeding 1% of the issued and outstanding Common Shares; or (ii) an annual grant of Options per non-employee director exceeding a grant value of $100,000, determined using a generally accepted valuation model.

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The exercise price for any Option issued under the Option Plan may not be less than the market price of the Common Shares at the time of issue. Options issued under the Option Plan may be exercised during a period determined under the Option Plan, which may not exceed ten years. Unless otherwise determined by the Board, Options will vest at a rate of one-third per annum commencing 12 months after the date of grant.

In addition to the restrictions on maximum issuances set forth above for all security based compensation arrangements, the number of Common Shares which may be issued pursuant to Options granted pursuant to the Option Plan to any one person may not exceed 5% of the then aggregate issued and outstanding Common Shares. The Option Plan also provides for a ten year term limit for Options pursuant to the Option Plan.

The following insider participation limits shall apply under the Option Plan: (a) the number of Common Shares issuable to insiders, at any time, pursuant to the Option Plan and other share compensation arrangements shall not exceed 10% of the issued and outstanding Common Shares; and (b) the number of Common Shares issued to insiders, within a one-year period, pursuant to the Option Plan and other share compensation arrangements shall not exceed 10% of the issued and outstanding Common Shares.

Options may be transferred to certain permitted assigns which include a spouse, a trustee acting on behalf of the optionholder or spouse, or a holding entity. If the optionholder resigns, is terminated for cause, or fails to be re-elected as a director, the Options terminate immediately. If the optionholder dies or ceases to be eligible under the Option Plan for any other reason, Options that are entitled to be exercised may generally be exercised (subject to certain extensions at the discretion of the Board or a committee thereof) until the earlier of: (i) one year or three months, respectively, of the applicable date, or (ii) the expiry date of the Option. The Option Plan also provides for the cashless exercise of Options which allows for the optionholder to receive, without cash payment (other than taxes), a number of Common Shares based on a specified formula tied to the market price of the Common Shares as at the last trading day immediately prior to the cashless exercise. In the event that the expiry of an Option occurs during a blackout period imposed by management or the Board in accordance with the Corporation’s insider trading policy, the expiry date of such Option shall be deemed to be amended to that date which is ten business days following the end of such blackout period.

In the event of a Change of Control (as defined below) with respect to the Corporation or a Sprott Group entity (which, under the Option Plan and for the purposes of this summary, means the Corporation and any subsidiary or related or affiliated business entities of the Corporation and includes any successor corporations or entities thereto), notwithstanding anything in the Option Plan to the contrary:

• if the employment of an optionee is terminated by the Corporation or a Sprott Group entity, respectively, without cause or if the optionee resigns in circumstances constituting constructive dismissal by the Corporation or a Sprott Group entity, respectively, in each case, within six months (or such other period as determined by the Board in its sole discretion) following a Change of Control with respect to the Corporation or the Sprott Group entity, respectively (such date being the “Termination Date”), all or any of the optionee’s Options will vest immediately prior to the Termination Date (or such later period as determined by the Board in its sole discretion), subject to any performance conditions which shall be dealt with at the discretion of the Board. All vested Options may be exercised until 90 days (or such other period as may be determined by the Board in its sole discretion) following the Termination Date (but until the normal expiry date of the Option rights of such optionee, if earlier). Upon the expiration of such period, all unexercised Option rights of that optionee shall immediately become terminated and shall lapse notwithstanding the original term of the Option granted to such optionee under the Option Plan; and

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• any surviving, successor or acquiring entity will assume any outstanding Options or will substitute similar awards for the outstanding Options. If the surviving, successor or acquiring entity is a “private issuer” or does not have any securities listed on an established securities exchange, does not assume the outstanding Options or substitute similar awards for the outstanding Options, or if the Board otherwise determines in its sole discretion and subject to the rules of the TSX, the Corporation will give written notice to all optionees advising that the Option Plan will be terminated effective immediately prior to the Change of Control and all Options will be deemed to be vested Options, and may provide for the exercise of Options and tender of Common Shares in connection with the Change of Control and may otherwise provide for the cash out or termination of Options that are not exercised within a specified period of time.

A “Change of Control” for the purposes of the Option Plan means: (a) the acquisition by any person or persons acting jointly or in concert (as determined by the Securities Act (Ontario)), whether directly or indirectly, of beneficial ownership of voting securities of the Corporation that, together with all other voting securities of the Corporation held by such persons, constitute in the aggregate more than 50% of all of the then outstanding voting securities of the Corporation; (b) an amalgamation, arrangement, consolidation, share exchange, take-over bid or other form of business combination of the Corporation with another person that results in the holders of voting securities of that other person holding, in the aggregate, more than 50% of all outstanding voting securities of the person resulting from the business combination; (c) the sale, lease, exchange or other disposition of all or substantially all of the property of the Sprott Group to another person, other than (i) in the ordinary course of business of the Sprott Group, or (ii) to the Sprott Group; (d) a resolution is adopted to wind-up, dissolve or liquidate the Corporation; or (e) as a result of, or in connection, with: (i) a contested election of directors of the Corporation, or (ii) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Sprott Group and another Person, the nominees named in the most recent management information circular of the Corporation for election to the Board shall not constitute a majority of the Board, provided however that a transaction or a series of related transactions will not constitute a Change of Control if such transaction(s) result(s) in the Corporation or Sprott Group entity, or any successor to the Corporation’s or Sprott Group entity’s respective business, being controlled, directly or indirectly, by the same person or persons who controlled the Corporation or the Sprott Group entity, respectively, directly or indirectly, immediately before such transaction(s).

The Board may make the following amendments to the Option Plan, without obtaining shareholder approval: (i) amendments to the terms and conditions of the Option Plan necessary to ensure that the Option Plan complies with the applicable regulatory requirements, including the rules of the TSX, in place from time to time; (ii) amendments to the provisions of the Option Plan respecting administration of the Option Plan and eligibility for participation under the Option Plan; (iii) amendments to the provisions of the Option Plan respecting the terms and conditions on which Options may be granted pursuant to the Option Plan, including the provisions relating to the term of the Option and the vesting schedule; and (iv) amendments to the Option Plan that are of a “housekeeping” nature.

However, the Board may not, without the approval of the Corporation’s shareholders, make amendments with respect to the following: (i) an increase to the Option Plan maximum or the number of securities issuable under the Option Plan; (ii) amendment provisions granting additional powers to the Board to amend the Option Plan or entitlements; (iii) an amendment to the exercise price of Options (if such shareholder approval is required by the TSX); (iv) reduction in the exercise price of Options or cancellation and reissue of Options or other entitlements; (v) extension to the term of Options (other than as a result of an Blackout Period Extension (as such term is defined in the Option Plan)); (vi) amendments that may permit the introduction or re-introduction of non-employee directors on a discretionary basis or amendments that increase limits previously imposed on non-employee director participation; (vii) any amendment which would permit Options granted under the Option Plan to be transferable or assignable other than to a related Permitted Assign (as such term is defined in the Option Plan) and for normal estate settlement purposes; (viii) changes to insider participation limits; and (ix) amendments to the Option Plan amendment provisions.

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As a general matter, if any Option granted under the Option Plan shall expire, terminate for any reason in accordance with the terms of the Option Plan or be exercised, Common Shares subject thereto shall again be available for the purpose of the Option Plan.

The Corporation’s annual “burn rate” for Options granted under the Option Plan, calculated as described in Section 613(p) of the TSX Company Manual with respect to the number of issued and outstanding shares (total number of Options issued in a fiscal year, divided by the weighted average number of outstanding Common Shares for that year) was 0.3% for fiscal 2017, nil% for fiscal 2018 and nil for fiscal 2019.

EPSP

Membership and Administration

Participation in the EPSP is limited to eligible non-U.S. resident employees of, or “employees” within the meaning of the Income Tax Act (Canada) (“ITA”) who provide services to, the Corporation and any affiliated entity that has adopted the EPSP. The Corporation and such affiliated entities are collectively referred to as the “Participating Entities”.

The selection of Members and the specific terms of any benefits granted to a Member, including the number of Common Shares, vesting schedule, and timing of distributions (after discharge of debt owing in respect of Common Shares) in cash or Common Shares will be determined by the CGC Committee or the general partner or other controlling person of a Participating Entity, as applicable, and as set forth in the applicable employment or other contract entitling the Member to benefits under the EPSP (the “Member’s Contract”). The EPSP provides for a ten year term limit for Common Shares issued pursuant to the EPSP.

While Common Shares from treasury may be granted under the EPSP subject to the restrictions set forth above, Common Shares may also be purchased on the open market by the Trustee on behalf of the Members. Management of the Corporation is responsible for administering the EPSP. The Trustee is an independent trustee appointed by the Board pursuant to a trust agreement entered into by the Corporation and the Trustee, which created the trust in respect of the EPSP.

In each fiscal year, or within 120 days thereafter, each Participating Entity realizing profits in such fiscal year shall pay to the Trustee (to be held in trust) for such fiscal year out of profits a contribution in an amount determined by the Board or general partner or other controlling person of the Participating Entity.

Subject to the terms of a Member’s Contract and the ITA, distributions of cash or in specie, may be made from a Member’s “allocated account” to such Member at any time upon the written direction of the Corporation provided that the Trustee shall distribute only the net amount available for distribution to the Member and only upon the discharge of any debt owing by the EPSP in respect of the Common Shares at the time of distribution. Such debt may be discharged by a Participating Entity (including the Corporation) or the Member in accordance with the relevant provisions of the Member’s Contract. Any applicable taxes or interest shall be the sole responsibility of the Members.

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Termination of Employment

No later than three months of the earliest of the: (i) termination of employment or service, including retirement, resignation or dismissal without cause; and (ii) termination of the EPSP, an amount equal to the net value of the assets (after applicable expenses and any unpaid debt owing on any Common Shares in the Member’s vested account) that have been allocated to the Member’s vested account shall be distributed by the Trustee to the Member, subject to any debt obligations assumed by the Member under the Member’s Contract. Within three months of the death of a Member, subject to compliance with applicable laws, the Trustee shall distribute to such Member’s beneficiary the net value (after applicable expenses) of the amount in the Member’s vested account. Upon the occurrence of the foregoing events, the Board may, in its sole discretion, deem vested and designate to a Member’s vested account, such number of Common Shares that would otherwise have vested up to a specified period had death or termination of employment of the Member not occurred.

In the event that a Member’s employment with a Participating Entity is terminated for cause, all Common Shares and amounts contained in or allocated to such Member’s vested account and such Member’s allocated account shall be forfeited and the amounts thereof shall be reallocated to the other Members of the EPSP at the end of the taxation year of the Trust as the Corporation shall direct.

Transferability

The Member may not assign, convert, charge, surrender or alienate the rights or benefits granted under the EPSP. Amounts vested in a Member under the EPSP shall not be available for the claims of his or her creditors.

Amendments or Termination

The Corporation currently intends to continue the EPSP in effect indefinitely but the Corporation reserves the right to amend, modify or discontinue the EPSP, in whole or in part, at any time, provided, however, that any such amendment or modification which may affect the rights, duties and responsibilities of the Trustee shall not become effective until the Corporation has received the written consent of the Trustee.

The Board may make the following amendments to the EPSP, without obtaining shareholder approval: (i) amendments to the terms and conditions of the EPSP necessary to ensure that the EPSP complies with the applicable regulatory requirements, including the rules of the TSX and Canada Revenue Agency, in place from time to time; (ii) amendments to the provisions of the EPSP respecting administration of the EPSP and eligibility for participation under the EPSP; (iii) amendments to the provisions of the EPSP respecting the terms and conditions on which allocations may be made to a Member’s allocated account pursuant to the EPSP, including the provisions relating to the vesting schedule (subject to a minimum three-month vesting period for Common Shares issued from treasury); and (iv) amendments to the EPSP that are of a “housekeeping” nature.

The Board may not, without the approval of the Corporation’s shareholders, make amendments with respect to the following: (i) an increase to the EPSP maximum or the number of securities issuable under the EPSP; (ii) amendment provisions granting additional powers to the Corporation or the Board to amend the EPSP; and (iii) an increase in entitlements held by insiders of the Corporation, including extension of the termination or expiry dates thereof or changes to insider participation limits.

If the EPSP is terminated, each Participating Entity shall not recover any amounts paid into the EPSP up to the date of such termination and all such amounts must and shall be used for the sole benefit of the Members and/or their beneficiaries, according to the balance in their Member’s account as determined by a special valuation of the assets of the EPSP as of the date of the termination of the EPSP.

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The Corporation’s annual “burn rate” for shares granted under the EPSP, calculated as described in Section 613(p) of the TSX Company Manual with respect to the number of issued and outstanding shares (total number of Options issued in a fiscal year, divided by the weighted average number of outstanding Common Shares for that year) was nil in fiscal 2017, 2018 and 2019.

EIP

Participants and Administration

Eligible participants in the EIP are those directors, officers, employees and consultants of the Corporation and its subsidiaries and affiliates residing in the United States or who are otherwise U.S. taxpayers who are selected for participation by the plan administrator.

The EIP provides for the award of restricted stock, RSUs, related dividend equivalents and unrestricted stock. Shares issued pursuant to the EIP may be authorized but unissued Common Shares or treasury shares or Common Shares obtained on the market by the Corporation.

The EIP is administered by the CGC Committee. The specific terms of any award granted under the EIP is determined by the plan administrator, subject to the terms of the EIP, including the number of Common Shares, vesting conditions and schedule, timing of distributions, and such other terms and conditions as the administrator may determine, and as may be set forth in the applicable award agreement.

Restricted stock is subject to forfeiture prior to the vesting of the award. A restricted stock unit is notional stock that entitles the grantee to receive a Common Share following the vesting of the RSU. The CGC Committee may determine to make grants under the EIP of restricted stock and RSUs containing such terms as the CGC Committee may determine, subject to applicable law. The CGC Committee will determine the period over which restricted stock and RSUs granted to EIP participants will vest, subject to a minimum vesting period of three months for Common Shares issued from treasury, and the timing of distributions. In connection with RSUs, the CGC Committee, in its discretion, may grant dividend equivalent rights under the EIP, subject to such terms and conditions, including the timing of distribution, as determined by the CGC Committee and subject to the provisions of the EIP and applicable law. The CGC Committee may base its determination upon the achievement of specified performance goals. The CGC Committee, in its discretion, may grant Common Shares free of restrictions under the EIP in respect of past services or other valid consideration. Such Common Shares shall be purchased on the market, and in no event shall treasury shares be issued to make such grants.

The Corporation’s annual “burn rate” for shares granted under the EIP, calculated as described in Section 613(p) of the TSX Company Manual with respect to the number of issued and outstanding shares (total number of restricted stock, RSUs, related dividend equivalents and unrestricted stock issued in a fiscal year, divided by the weighted average number of outstanding Common Shares for that year) was nil% for fiscal 2017, 0.94% for fiscal 2018 and 0.28% for 2019.

Termination of Employment or Service

Unless otherwise provided in the applicable award agreement, upon a termination of employment or service other than for death or disability, unvested restricted stock and RSUs granted under the EIP will be forfeited, provided that the administrator may waive or modify such provisions. Unless otherwise provided in the applicable award agreement, upon a termination of employment or service due to death or disability, unvested restricted stock and RSUs granted under the EIP will vest.

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Transferability

Shares of restricted stock or RSUs granted under the EIP may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of prior to the lapsing of all restrictions thereon, other than by will, by the laws of descent and distribution, or through gift or domestic relations orders to a “family member” of the grantee as permitted by Rule 701 of the United States Securities Act of 1933, as amended, or may be otherwise specifically provided in the applicable award agreement in accordance with applicable law. Following any such transfer, any transferred restricted stock or RSUs will continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.

Adjustments, Termination and Amendment

Subject to any required approvals of the stock exchange(s) on which the Common Shares are listed, the plan administrator may, in its discretion, provide for adjustment of the terms and conditions of outstanding awards and awards issuable under the EIP, in recognition of unusual or nonrecurring events (including any stock split, reverse stock split, reorganization, merger, consolidation, split-up, combination, or other similar corporate transaction or event) affecting the Corporation or any of its affiliates. The Board, in its discretion, may terminate, suspend or discontinue the EIP at any time with respect to any award that has not yet been granted. Unless the EIP is terminated earlier, no award may be granted under the EIP following the tenth anniversary of the date of the EIP’s adoption by the Board or approval by the Corporation’s security holders, whichever is earlier. The Board also has the right to alter or amend the EIP or any part of the EIP, and the CGC Committee may modify outstanding awards granted under the EIP, from time to time, in each case subject to shareholder approval in certain circumstances as provided in the EIP. However, other than adjustments to outstanding awards upon the occurrence of certain unusual or nonrecurring events, generally no change in any outstanding grant may be made that would materially impair the rights or materially increase the obligations of the participant without the consent of the participant.

The Board may make the following amendments to the EIP, without obtaining shareholder approval: (i) amendments to the terms and conditions of the EIP necessary to ensure that the EIP complies with the applicable regulatory requirements, including the rules of the TSX, U.S. federal and state securities laws, Canada Revenue Agency, and the Internal Revenue Code of 1986, as amended, in place from time to time; (ii) amendments to the provisions of the EIP respecting administration of the EIP and eligibility for participation under the EIP; (iii) amendments to the provisions of the EIP respecting the terms and conditions on which awards may be granted pursuant to the EIP, including the provisions relating to the vesting schedule (subject to a minimum three-month vesting period for Common Shares issued from treasury); and (iv) amendments to the EIP that are of a “housekeeping” nature.

The Board and the plan administrator may not, without the approval of the Corporation’s shareholders, make amendments with respect to the following: (i) an increase to the EIP maximum or the number of securities issuable under the EIP; (ii) amendment provisions granting additional powers to the Board or plan administrator to amend the EIP or entitlements thereunder; and (iii) an increase in entitlements held by insiders of the Corporation, including extension of the termination or expiry dates thereof or changes to insider participation limits.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

Other than as disclosed herein,

(a) there is no indebtedness outstanding of any executive officers, directors, employees or former executive officers, directors or employees of the Corporation or any of its subsidiaries or to another entity which is the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or any of its subsidiaries, entered into in connection with a purchase of securities or otherwise; and

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(b) no individual who is, or at any time during the most recently completed financial year of the Corporation was, a director or executive officer of the Corporation, no proposed nominee for election as a director of the Corporation and no associate of any such person:

(i) is or at any time since the beginning of the most recently completed financial year of the Corporation has been, indebted to the Corporation or any of its subsidiaries; or

(ii) whose indebtedness to another entity is, or at any time since the beginning of the most recently completed financial year of the Corporation has been, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or any of its subsidiaries,

whether in relation to a securities purchase program or other program.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

To the knowledge of the Corporation, no “informed person”, proposed director, or any associate or affiliate of any of these persons, has any material interest, direct or indirect, in any transaction since January 1, 2019 or in any proposed transaction that has materially affected or would materially affect the Corporation or any of its subsidiaries. An “informed person” means, among others, (i) a director or executive officer of the Corporation or of a subsidiary of the Corporation, (ii) any person or company who beneficially owns, or controls or directs, directly or indirectly, voting securities of the Corporation or a combination of both carrying more than 10% of the voting rights attached to all outstanding voting securities of the Corporation other than voting securities held by the person or company as underwriter in the course of a distribution.

ADDITIONAL INFORMATION

Financial information about the Corporation is provided in its financial statements for the fiscal year ended December 31, 2019 and related management’s discussion and analysis. You may obtain a copy of such documents by contacting Sprott Investor Relations at (416) 203-2310 or toll-free at 1 (877) 403-2310 or ir@sprott.com.

All of these above-mentioned documents, as well as additional information relating to the Corporation, are also available by visiting the Corporation’s website at www.sprott.com or SEDAR’s website at www.sedar.com.

BOARD APPROVAL

The contents and the distribution of this Circular have been approved by the Board, and this Circular has been sent (or made available) to each director of the Corporation, each shareholder entitled to notice of the Meeting and the auditors of the Corporation.

Dated at Toronto, Ontario as of March 18, 2020.

BY ORDER OF THE BOARD

(signed) “Ron Dewhurst”

Ron Dewhurst

Chair of the Board

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SCHEDULE “A”

SPROTT INC.

MANDATE OF THE BOARD OF DIRECTORS

Introduction

The term “Corporation” herein shall refer to Sprott Inc. and the term “Board” shall refer to the board of directors of the Corporation. The Board is elected by the shareholders and is responsible for the stewardship of the business and affairs of the Corporation. The Board seeks to discharge such responsibility by reviewing, discussing and approving the Corporation’s strategic planning and organizational structure and supervising management to ensure that the foregoing enhance and preserve the underlying value of the Corporation.

Although directors may be elected by the shareholders to bring special expertise or a point of view to Board deliberations, they are not chosen to represent a particular constituency. The best interests of the Corporation must be paramount at all times.

Chair and Composition and Quorum

1. The Board will be comprised of a minimum of one member and a maximum of ten members, the majority of which shall be, in the determination of the Board, “independent” for the purposes of National Instrument 58-101 Disclosure of Corporate Governance Practices. Each Board member shall satisfy the independence and experience requirements, if any, imposed by applicable securities laws, rules or guidelines, any applicable stock exchange requirements or guidelines and any other applicable regulatory rules.

2. The chair of the Board will be elected by vote of a majority of the full Board membership, on the recommendation of the Corporate Governance and Compensation Committee. The chair of the Board with the assistance of the lead director (who shall be an independent director), if any, will chair Board meetings and shall be responsible for overseeing the performance by the Board of its duties, for setting the agenda of each Board meeting (in consultation with the Chief Executive Officer (the “CEO”)), for communicating periodically with committee chairs regarding the activities of their respective committees, for assessing the effectiveness of the Board as a whole as well as individual Board members and for ensuring the Board works as a cohesive team and providing the leadership essential to achieve this.

Meetings

3. Meetings will be scheduled to facilitate the Board carrying out its responsibilities. Additional meetings will be held as deemed necessary by the Chair of the Board. The time at which and place where the meetings of the Board shall be held and the calling of the meetings and procedure in all things at such meetings shall be determined by the Board in accordance with the Corporation’s articles, by-laws and applicable laws. The independent directors of the Board shall hold regularly scheduled meetings at which non-independent directors and management are not in attendance. Any director of the Corporation may request the Chair of the Board to call a meeting of the Board.

4. Meetings of the Board shall be validly constituted if a majority of the members of the Board is present in person or by tele- or video- conference. A resolution in writing signed by all the members of the Board entitled to vote on that resolution at a meeting of the Board is as valid as if it had been passed at a meeting of the Board duly called and held.

A-1

Board Charter and Performance

5. The Board shall have a written charter that sets out its mandate and responsibilities and the Board shall review and assess the adequacy of such charter and the effectiveness of the Board at least annually or otherwise, as it deems appropriate, and make any necessary changes. Unless and until replaced or amended, this mandate constitutes that charter. The Board will ensure that this mandate or a summary that has been approved by the Board is disclosed in accordance with all applicable securities laws or regulatory requirements in the Corporation’s annual management information circular or such other annual filing as may be permitted or required by applicable securities regulatory authorities.

Duties of Directors

6. The Board discharges its responsibility for overseeing the management of the Corporation’s business by delegating to the Corporation’s senior officers the responsibility for day-to-day management of the Corporation. The Board discharges its responsibilities both directly and through its committees, the Audit and Risk Management Committee and the Corporate Governance and Compensation Committee. In addition to these regular committees, the Board may appoint ad hoc committees periodically to address certain issues of a more short-term nature. In addition to the Board’s primary roles of overseeing corporate performance and providing quality, depth and continuity of management to meet the Corporation’s strategic objectives, principal duties include the following:

Appointment of Management

(i) The Board has the responsibility for approving the appointment of the CEO and all other senior management, monitoring their performance and, where deemed necessary, approving their compensation, following a review of the recommendations of the Corporate Governance and Compensation Committee. To the extent feasible, the Board shall satisfy itself as to the integrity of the CEO and other executive officers and that the CEO and other executive officers create a culture of integrity throughout the Corporation. The Board may provide advice and counsel in the execution of the CEO’s duties as appropriate.

(ii) The Board from time to time delegates to senior management the authority to enter into certain types of transactions, including financial transactions, subject to specified limits. Investments and other expenditures above the specified limits and material transactions outside the ordinary course of business are reviewed by and subject to the prior approval of the Board.

(iii) The Board oversees that succession planning programs are in place, including programs to appoint, train, develop and monitor management.

Board Organization

(iv) The Board will respond to recommendations received from the Corporate Governance and Compensation Committee, but retains the responsibility for managing its own affairs by giving its approval for its composition and size, the selection of the Chair of the Board, candidates nominated for election to the Board, committee and committee chair appointments, committee charters and director compensation.

(v) The Board may delegate to Board committees matters it is responsible for, including the approval of compensation of the Board and management, the conduct of performance evaluations and oversight of internal controls systems, but the Board retains its oversight function and ultimate responsibility for these matters and all other delegated responsibilities.

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Strategic Planning

(vi) The Board has oversight responsibility to participate directly, and through its committees, in reviewing, questioning and approving the mission of the business and its objectives and goals and the strategy by which it proposes to reach those goals.

(vii) The Board is responsible for adopting a strategic planning process and approving and reviewing, on at least an annual basis, the business, financial and strategic plans by which it is proposed that the Corporation may reach those goals, and such strategic plans will take into account, among other things, the opportunities and risks of the business.

(viii) The Board has the responsibility to provide input to management on emerging trends and issues and on strategic plans, objectives and goals that management develops.

Monitoring of Financial Performance and Other Financial Reporting Matters

(ix) The Board is responsible for:

(a) adopting processes for monitoring the Corporation’s progress toward its strategic and operational goals, and to revise and alter its direction to management in light of changing circumstances affecting the Corporation; and

(b) taking action when the Corporation’s performance falls short of its goals or when other special circumstances warrant.

(x) The Board shall be responsible for approving the audited financial statements, interim financial statements and the notes and Management’s Discussion and Analysis accompanying such financial statements.

(xi) The Board is responsible for reviewing and approving material transactions outside the ordinary course of business and those matters which the Board is required to approve under the Corporation’s governing statute, including the payment of dividends, issuance, purchase and redemptions of securities, acquisitions and dispositions of material capital assets and material capital expenditures.

Risk Management

(xii) The Board has responsibility for the identification of the principal risks of the Corporation’s business and ensuring the implementation of appropriate systems to effectively monitor and manage such risks with a view to the long-term viability of the Corporation and achieving a proper balance between the risks incurred and the potential return to the Corporation’s shareholders.

(xiii) The Board is responsible for the Corporation’s internal control and management information systems.

Policies and Procedures

(xiv) The Board is responsible for:

(a) developing the Corporation’s approach to corporate governance, including developing a set of corporate governance principles and guidelines for the Corporation and approving and monitoring compliance with all significant policies and procedures related to corporate governance; and

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(b) approving policies and procedures designed to ensure that the Corporation operates at all times within applicable laws and regulations and to the highest ethical and moral standards and, in particular, adopting a written code of business conduct and ethics which is applicable to directors, officers and employees of the Corporation and which constitutes written standards that are reasonably designed to promote integrity and to deter wrongdoing.

(xv) The Board enforces its policy respecting confidential treatment of the Corporation’s proprietary information and Board deliberations.

(xvi) The Board is responsible for adopting and monitoring compliance with the Corporation’s Code of Business Conduct and Ethics.

Communications and Reporting

(xvii) The Board is responsible for approving and revising from time to time as circumstances warrant a Disclosure Policy to address communications with shareholders, employees, financial analysts, the media and such other outside parties as may be appropriate.

(xviii) The Board is responsible for:

(a) overseeing the accurate reporting of the financial performance of the Corporation to shareholders, other security holders and regulators on a timely, regular and non-selective basis;

(b) overseeing that the financial results are reported fairly and in accordance with international financial reporting standards and related legal disclosure requirements;

(c) taking steps to enhance the timely, non-selective disclosure of any other developments that have a significant and material impact on the Corporation;

(d) reporting annually to shareholders on its stewardship for the preceding year; and

(e) overseeing the Corporation’s implementation of systems which accommodate feedback from stakeholders.

Position Descriptions

(xix) The Board is responsible for:

(a) developing position descriptions for the Chair of the Board, the lead director, if applicable, the chair of each Board committee and, together with the CEO, the CEO (which will include delineating management’s responsibilities). The CEO shall be expected to, among other things:

(i) foster a corporate culture that promotes ethical practices, encourages individual integrity and fulfills social responsibility;

(ii) develop and recommend to the Board a long-term strategy and vision for the Corporation that is intended to lead to creation of shareholder value;

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(iii) develop and recommend to the Board annual plans and budgets that support the Corporation’s long-term strategy; and

(iv) seek to consistently strive to achieve the Corporation’s financial and operating goals and objectives;

(b) developing and approving the corporate goals and objectives that the CEO is responsible for meeting; and

(c) developing a description of the expectations and responsibilities of directors, including basic duties and responsibilities with respect to attendance at Board meetings and advance review of meeting materials.

Orientation and Continuing Education

(xx) The Board is responsible for:

(a) ensuring that all new directors receive a comprehensive orientation, that they fully understand the role of the Board and its committees, as well as the contribution individual directors are expected to make (including the commitment of time and resources that the Corporation expects from its directors) and that they understand the nature and operation of the Corporation’s business; and

(b) providing continuing education opportunities for all directors, so that individuals may maintain or enhance their skills and abilities as directors, as well as to ensure that their knowledge and understanding of the Corporation’s business remains current.

Nomination of Directors

(xxi) In connection with the nomination or appointment of individuals as directors, the Board is responsible for:

(a) considering what competencies and skills the Board, as a whole, should possess;

(b) assessing what competencies and skills each existing director possesses; and

(c) considering the appropriate size of the Board, with a view to facilitating effective decision making;

with regard to their Diversity. “Diversity” refers to any characteristic that can be used to differentiate groups and people from one another. It includes, but is not limited to, characteristics such as gender, geographical representation, education, religion, ethnicity, race, nationality, culture, language, aboriginal or indigenous status and other ethnic distinctions, sexual orientation, political affiliation, family and marital status, age, disability, and industry experience and expertise.

In carrying out each of these responsibilities, the Board will consider the advice and input of the Corporate Governance and Compensation Committee.

(xxii) Director nominees shall be selected by a majority of the independent directors.

Board Evaluation

(xxiii) The Board is responsible for ensuring that the Board, its committees and each individual director are regularly assessed regarding his, her or its effectiveness and contribution. An assessment will consider, in the case of the Board or a Board committee, its mandate or charter and in the case of an individual director, any applicable position description, as well as the competencies and skills each individual director is expected to bring to the Board.

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Authority to engage outside advisors

7. The Board has the authority to engage outside advisors as it determines necessary to carry out its duties, including, but not limited to identifying and reviewing candidates to serve as directors or officers.

8. The Corporation shall provide appropriate funding, as determined by the Board, for payment (a) of compensation to any advisors engaged by the Board, and (b) of ordinary administrative expenses of the Board that are necessary or appropriate in carrying out its duties.

November 8, 2018

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SCHEDULE “B”

SPROTT INC.

2020 AMENDED AND RESTATED STOCK OPTION PLAN

1.                   PURPOSE OF THE PLAN

1.1                 The purpose of the Plan is to attract, retain and motivate persons of training, experience and leadership as key service providers to the Corporation and its Subsidiaries, including their directors, officers and employees, and to advance the interests of the Corporation by providing such persons with the opportunity, through share options, to acquire an increased proprietary interest in the Corporation.

2.                   DEFINED TERMS

Where used herein, the following terms shall have the following meanings, respectively:

2.1               “Board” means the Board of Directors of the Corporation;

2.2               “Change of Control” means

(a) the acquisition by any Person or Persons acting jointly or in concert (as determined by the Securities Act (Ontario)), whether directly or indirectly, of beneficial ownership of voting securities of the Corporation that, together with all other voting securities of the Corporation held by such Persons, constitute in the aggregate more than 50% of all of the then outstanding voting securities of the Corporation;

(b) an amalgamation, arrangement, consolidation, share exchange, take-over bid or other form of business combination of the Corporation with another Person that results in the holders of voting securities of that other Person holding, in the aggregate, more than 50% of all outstanding voting securities of the Person resulting from the business combination;

(c) the sale, lease, exchange or other disposition of all or substantially all of the property of the Corporation or any Corporate Group entity to another Person, other than (i) in the ordinary course of business of the Corporation or any Corporate Group entity, or (ii) to the Corporation or any Corporate Group entity;

(d) a resolution is adopted to wind-up, dissolve or liquidate the Corporation; or

(e) as a result of, or in connection, with: (i) a contested election of directors of the Corporation, or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving Corporation or any Corporate Group entity and another Person, the nominees named in the most recent management information circular of the Corporation for election to the Board shall not constitute a majority of the Board.

Notwithstanding the foregoing, a transaction or a series of related transactions will not constitute a Change of Control if such transaction(s) result(s) in the Corporation or Corporate Group entity, or any successor to the Corporation’s or Corporate Group entity’s respective business, being controlled, directly or indirectly, by the same Person or Persons who controlled the Corporation or the Corporate Group entity, respectively, directly or indirectly, immediately before such transaction(s).

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2.3               “Committee” means the compensation committee of the Board (being currently the Human Resources and Compensation Committee);

2.4               “Corporation” means Sprott Inc. and includes any successor corporation thereto;

2.5               “Corporate Group” means any of the Corporation’s subsidiaries, related and affiliated corporations, limited partnerships and other business entities and includes any successor corporations or entities thereto;

2.6               “Eligible Person” means:

(i) a director, officer, employee or Service Provider of the Corporation or any Related Entity, but excluding Eric Sprott (an “Eligible Individual”); or

(ii) a permitted assign (a “Permitted Assign”) as such term is defined in NI 45-106 in respect of the Eligible Individual, and includes (a) spouse of the Eligible Individual, (a) a trustee, custodian or administrator acting on behalf of, or for the benefit of, the Eligible Individual or his or her spouse, (b) a holding entity (as such term is defined in NI 45-106) of the Eligible Individual or his or her spouse, or (c) an RRSP, RRIF or TFSA of the Eligible Individual or his or her spouse, and , in the case of Eligible Individuals who are resident outside of Canada or are otherwise subject to the applicable laws outside of Canada, those Persons who are permitted assigns pursuant to such laws;

2.7               “Insider” has the meaning set forth in the applicable rules of the TSX or other exchange on which the Shares are listed;

2.8               “Market Price” at any date in respect of the Shares means the closing sale price of such Shares on the TSX on the trading day immediately preceding such date. In the event that such Shares did not trade on such trading day, the Market Price shall be the average of the bid and ask prices in respect of such Shares at the close of trading on such trading day. If no quotation is made for the applicable day, the Market Price on such day shall be determined in the manner set forth in the preceding sentence for the next preceding trading day. Notwithstanding the foregoing, if there is no reported closing price or high bid/low asked price that satisfies the preceding sentences, the Market Price on any day shall be determined by such methods and procedures as shall be established from time to time by the Committee;

2.9               “NI 45-106” means National Instrument 45-106: Prospectus Exemptions;

2.10             “Option” means an option to purchase Shares granted to an Eligible Individual under the Plan;

2.11             “Option Price” means the price per Share at which Shares may be purchased under an Option, as the same may be adjusted from time to time in accordance with Article 9 hereof;

2.12             “Optionee” means an Eligible Individual to whom an Option has been granted (or Permitted Assign, if applicable) and who continues to hold such Option;

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2.13            “Person” means an individual, partnership, limited partnership, corporation, limited liability company, trust, joint venture, unincorporated association, or other entity or association;

2.14             “Plan” means this Stock Option Plan, as the same may be further amended or varied from time to time;

2.15             “Related Entity” means the Corporation, a Person that controls or is controlled by the Corporation or that is controlled by the same Person that controls the Corporation;

2.16             “RRIF” means a registered retirement income fund as defined in the Income Tax Act (Canada);

2.17             “RRSP” means a registered retirement savings plan as defined in the Income Tax Act (Canada);

2.18             “Service Provider” means a consultant as such term is defined in NI 45-106 and includes a service provider as such term is defined in clause 613(b) of the TSX Company Manual;

2.19             “Shares” means the common shares of the Corporation or, in the event of an adjustment contemplated by Article 9 hereof, such other shares or securities to which an Optionee may be entitled upon the exercise of an Option as a result of such adjustment;

2.20             “Subsidiaries” has the meaning set forth in NI 45-106;

2.21             “TFSA” means a tax-free savings account as described in the Income Tax Act (Canada); and

2.22             “TSX” means the Toronto Stock Exchange.

3.                   ADMINISTRATION OF THE PLAN

3.1                 The Plan shall be administered by the Committee under the supervision of the Board.

3.2                 The Committee shall recommend to the Board, and the Board shall have the power, where consistent with the general purpose and intent of the Plan and subject to the specific provisions of the Plan and the rules of the TSX or, to the extent applicable, such other exchange in which the Shares are listed:

(a) to establish policies and to adopt rules and regulations for carrying out the purposes, provisions and administration of the Plan;

(b) to interpret and construe the Plan and to determine all questions arising out of the Plan or any Option, and any such interpretation, construction or determination made by the Committee shall be final, binding and conclusive for all purposes;

(c) to determine the number of Shares covered by each Option;

(d) to determine the Option Price of each Option;

(e) to determine the time or times when Options will be granted and exercisable;

(f) to determine if the Shares which are issuable on the exercise of an Option will be subject to any restrictions upon the exercise of such Option; and

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(g) to prescribe the form of the instruments relating to the grant, exercise and other terms of Options.

3.3                 Except as provided in this Section 3.3 and subject to Section 5.7, no member of the Committee shall, during the currency of his or her membership on the Committee, be entitled to participate in the Plan. A member of the Committee may be entitled to participate in the Plan only if an Option is granted, and the terms and provisions thereof determined, by the Board without such member of the Committee participating in any way whatsoever in the granting of an Option to, or the determinations made with respect to, such member of the Committee or to such Option; and the Board shall, with respect to such member of the Committee, be vested with all power and authority otherwise granted to the Committee pursuant to the Plan and the term “Committee” as used herein shall mean the Board for such purposes.

The Committee may, in its discretion, require as conditions to the grant or exercise of any Option that the Optionee shall have:

(a) represented, warranted and agreed in form and substance satisfactory to the Corporation that he or she is acquiring and will acquire such Option and the Shares to be issued upon the exercise thereof or, as the case may be, is acquiring such Shares, for his or her own account, for investment and not with a view to or in connection with any distribution, that he or she has had access to such information as is necessary to enable him or her to evaluate the merits and risks of such investment and that he or she is able to bear the economic risk of holding such Shares for an indefinite period;

(b) agreed to restrictions on transfer in form and substance satisfactory to the Corporation and to an endorsement on any option agreement on certificate representing the Shares making appropriate reference to such restrictions; and

(c) agreed to indemnify the Corporation in connection with the foregoing.

Any Option granted under the Plan shall be subject to the requirement that, if at any time counsel to the Corporation shall determine that the listing, registration or qualification of the Shares subject to such Option upon any securities exchange or under any law or regulation of any jurisdiction, or the consent or approval of any securities exchange or any governmental or regulatory body, is necessary as a condition of, or in connection with, the grant or exercise of such Option or the issuance or purchase of Shares thereunder, such Option may not be accepted or exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Committee. Nothing herein shall be deemed to require the Corporation to apply for or to obtain such listing, registration, qualification, consent or approval.

4.                   SHARES SUBJECT TO THE PLAN

4.1                 Subject to adjustment as provided in Article 9 hereof, the Shares to be offered under the Plan shall consist of the Corporation’s authorized but unissued Shares. The aggregate number of Shares issuable upon the exercise of all Options granted under the Plan and under all other share compensation arrangements shall not exceed 10% of the issued and outstanding Shares as at the date of grant of each Option under the Plan. If any Option granted hereunder shall expire, terminate for any reason in accordance with the terms of the Plan or be exercised, Shares subject thereto shall again be available for the purpose of this Plan.

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5.                   ELIGIBILITY; GRANT; and TERMS OF OPTIONS

5.1                 Options may be granted to any Eligible Individuals in accordance with Section 5.2 hereof.

5.2                 Options may be granted by the Corporation pursuant to the recommendations of the Committee from time to time provided and to the extent that such decisions are approved by the Board.

5.3                 Subject as herein and otherwise specifically provided in this Article 5, the number of Shares subject to each Option, the Option Price of each Option, the expiration date of each Option, the extent to which each Option is exercisable from time to time during the term of the Option and other terms and conditions relating to each such Option shall be determined by the Committee and recommended to the Board.

5.4                 In the event that no specific determination is made by the Committee with respect to any of the following matters, each Option shall, subject to any other specific provisions of the Plan, contain the following terms and conditions:

(a) the term during which an Option shall be exercisable shall be 10 years from the date the Option is granted to the Optionee; and

(b) one-third of the Shares covered by the Option shall vest on each of the first, second and third anniversaries of the date of the grant of the Option. Any or all Shares that have vested may be purchased during the term of the Option.

5.5                 Subject to any adjustments pursuant to the provisions of Article 9 hereof, the Option Price of any Option shall be in no circumstances lower than the Market Price on the date of which the grant of the Option is approved by the Board. Notwithstanding the foregoing, in the event that the Shares are not listed on any stock exchange on the date on which the grant of an Option is approved by the Board, the Option Price for such Option shall be determined by the Board. If, as and when any Shares have been duly purchased and paid for under the terms of an Option, such Shares shall be conclusively deemed allotted and issued as fully paid non-assessable Shares at the price paid therefor.

5.6                No Options shall be granted to any Optionee if the total number of Shares issuable to such Optionee under this Plan, together with any Shares issuable to such Optionee under options for services or any other share compensation arrangement, would exceed 5% of the issued and outstanding Shares at the date of grant.

5.7                No Options shall be granted to any Optionee that is a non-employee director if such grant could result, at any time, in (i) the aggregate number of Shares issuable to non-employee directors under the Plan, or any other security based compensation arrangement of the Corporation, exceeding 1% of the issued and outstanding Shares; or (ii) an annual grant of Options per non-employee director exceeding a grant value of $100,000, determined using a generally accepted valuation model..

5.8                An Option is personal to the Optionee and non-assignable (whether by operation of law or otherwise), except as provided for herein. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of an Option contrary to the provisions of the Plan, or upon the levy of any attachment or similar process upon an Option, the Option shall, at the election of the Corporation, cease and terminate and be of no further force or effect whatsoever.

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5.9                 The following Insider participation limits shall apply:

(a) The number of Shares issuable to Insiders, at any time, pursuant to the Plan and other share compensation arrangements shall not exceed 10% of the issued and outstanding Shares; and

(b) The number of Shares issued to Insiders, within a one-year period, pursuant to the Plan and other share compensation arrangements shall not exceed 10% of the issued and outstanding Shares.

6.                   TERMINATION OF EMPLOYMENT AND DEATH

6.1                 Subject to Sections 6.2 and 6.3 hereof and to any express resolution passed by the Board with respect to an Option, an Option and all rights to purchase Shares pursuant thereto shall expire and terminate immediately upon the Optionee who holds such Option ceasing to be an Eligible Person.

6.2                 If, before the expiry of an Option in accordance with the terms thereof, an Optionee shall cease to be an Eligible Person (an “Event of Termination”) for any reason other than his or her resignation or the termination for “cause” of his or her employment with the Corporation or any Related Entity, or his or her resignation or failure to be re-elected as a director of the Corporation or any Related Entity, then the Optionee may:

(a) exercise the Option to the extent that he or she was entitled to do so at the time of such Event of Termination, at any time up to and including, but not after, a date that is three (3) months (or such other period as may be determined by the Board in its sole discretion) following the date of such Event of Termination, or prior to the close of business on the expiration date of the Option, whichever is earlier; and

(b) with the prior written consent of the Board or the Committee, which consent may be withheld in the Board’s sole discretion, exercise a further Option at any time up to and including, but not after, a date that is three (3) months (or such other period as may be determined by the Board in its sole discretion) following the date of such Event of Termination, or prior to the close of business on the expiration date of the Option, whichever is earlier, to purchase all or any of the Shares as the Board or the Committee may designate but not exceeding the number of Shares the Optionee would have otherwise been entitled to purchase pursuant to the Option had the Optionee’s status as an Eligible Person been maintained for the term of the Option.

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6.3                 Subject to Section 6.2, if an Optionee dies before the expiry of an Option in accordance with the terms thereof, the Optionee’s legal representative(s) may, subject to the terms of the Option and the Plan:

(a) exercise the Option to the extent that the Optionee was entitled to do so at the date of his or her death at any time up to and including, but not after, a date one year following the date of death of the Optionee, or prior to the close of business on the expiration date of the Option, whichever is earlier; and

(b) with the prior written consent of the Board or the Committee, which consent may be withheld in the Board’s sole discretion, exercise a further Option at any time up to and including, but not after, a date one year following the date of death of the Optionee, or prior to the close of business on the expiration date of the Option, whichever is earlier, to purchase all or any of the Shares as the Board or the Committee may designate but not exceeding the number of Shares the Optionee would have otherwise been entitled to purchase had the Optionee survived.

6.4                 For greater certainty, Options shall not be affected by any change of employment of the Optionee or by the Optionee ceasing to be a director of the Corporation provided that the Optionee continues to be an Eligible Person.

6.5                 For the purposes of this Article 6, a determination by the Corporation that an Optionee was discharged for “cause” shall be binding on the Optionee; provided, however, that such determination shall not be conclusive of the Optionee’s potential entitlement to damages for the loss of the right to exercise an Option in the event that a court of competent jurisdiction ultimately determines that the discharge was without “cause”.

6.6                 For the purposes of this Article 6 or Article 8, the date of Event of Termination or Termination Date in the case of termination of employment with the Corporation or any Related Entity shall be the last day upon which the employee provide services to the Corporation or Related Entity, as the case may be, at its premises and not the last day upon which the Corporation or Related Entity pays wages or salaries in lieu of notice of termination, statutory, contractual or otherwise.

6.7                 If the Optionee is a Permitted Assign, the references to the Optionee in this Article 6 shall be deemed to refer to the Eligible Individual associated with the Permitted Assign.

7.                   EXERCISE OF OPTIONS

7.1                 Subject to the provisions of the Plan, an Option may be exercised from time to time by delivery to the Corporation at its registered office of a written notice of exercise addressed to the Secretary of the Corporation specifying the number of Shares with respect to which the Option is being exercised and, subject to Section 7.4 hereof, accompanied by payment in full, by cash or cheque, of the aggregate Option Price of the Shares then being purchased. Certificates for such Shares shall be issued and delivered to the Optionee within a reasonable time following the receipt of such notice and payment.

7.2                 Notwithstanding any of the provisions contained in the Plan or in any Option, the Corporation’s obligation to issue Shares to an Optionee pursuant to the exercise of any Option shall be subject to:

(a) completion of such registration or other qualification of such Shares or obtaining approval of such governmental or regulatory authority as the Corporation shall determine to be necessary or advisable in connection with the authorization, issuance or sale thereof;

(b) the administration of such Shares to listing on any stock exchange on which the Shares may then be listed;

(c) the receipt from the Optionee of such representations, warranties, agreements and undertakings, as the Corporation determines to be necessary or advisable in order to safeguard against the violation of the securities laws of any jurisdiction; and

(d) the satisfaction of any conditions on exercise prescribed pursuant to Section 3.4 hereof.

In this connection the Corporation shall, to the extent necessary, take all commercially reasonable steps to obtain such approvals, registrations, and qualifications as may be necessary for the issuance of such Shares in compliance with applicable securities laws and for the listing of such Shares on any stock exchange on which the Shares are then listed.

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7.3                 Options shall be evidenced by a share option agreement, instrument or certificate in such form not inconsistent with this Plan as the Committee may from time to time determine as provided for under Subsection 3.2(g), provided that the substance of Article 5 be included therein.

7.4                 Any Optionee may elect to effect a cashless exercise of any or all of such Optionee’s right under an Option. In connection with any such cashless exercise, the Optionee shall be entitled to receive, without any cash payment (other than the taxes required to be paid in connection with the exercise which must be paid by the Optionee to the Corporation in cash at the time of exercise), such number of whole Shares (rounded down to the nearest whole number) obtained pursuant to the following formula:

	x	=	[a (b – c)]
			b
where
	x	=	the number of whole Shares to be issued
	a	=	the number of Shares under Option
	b	=	the Market Price of the Shares on the date of the cashless exercise
	c	=	the Option Price of the Option

In connection with any such cashless exercise, the full number of Shares issuable (item (a) in the formula) shall be considered to have been issued for the purposes of the reduction in the number of Shares which may be issued under the Plan.

7.5                In the event that the expiry of an Option occurs during a blackout period imposed by management or the Board in accordance with the Corporation’s insider trading policy, the expiry date of such Option shall be deemed to be amended to that date which is ten business days following the end of such blackout period (the “Blackout Period Extension”).

7.6                 If the Corporation is required under the Income Tax Act (Canada) or any other applicable law to remit to any governmental authority an amount on account of tax on the value of any taxable benefit associated with the exercise or disposition of Options by an Optionee, then the Optionee shall, concurrently with the exercise or disposition:

(a) pay to the Corporation, in addition to the exercise price for the Options, if applicable, sufficient cash as is determined by the Corporation to be the amount necessary to fund the required tax remittance;

(b) authorize the Corporation, on behalf of the Optionee, to sell in the market on such terms and at such time or times as the Corporation determines such portion of the Shares being issued upon exercise of the Options as is required to realize cash proceeds in the amount necessary to fund the required tax remittance; or

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(c) make other arrangements acceptable to the Corporation to fund the required tax remittance.

8.                   CHANGE OF CONTROL

8.1                 In the event of a Change of Control, notwithstanding anything in the Plan to the contrary, if the employment of an Optionee is terminated by the Corporation or a Corporate Group entity without cause or if the Optionee resigns in circumstances constituting constructive dismissal by the Corporation or the Corporate Group entity, respectively, in each case, within six months (or such other period as determined by the Board in its sole discretion) following a Change of Control with respect to the Corporation or the Corporate Group entity, respectively (such date being the “Termination Date”), all or any of the Optionee’s Options will vest immediately prior to the Termination Date (or such later period as determined by the Board in its sole discretion), subject to any performance conditions which shall be dealt with at the discretion of the Board. All vested Options may be exercised until 90 days (or such other period as may be determined by the Board of Directors in its sole discretion) following the Termination Date (but until the normal expiry date of the Option rights of such Optionee, if earlier). Upon the expiration of such period, all unexercised Option rights of that Optionee shall immediately become terminated and shall lapse notwithstanding the original term of the Option granted to such Optionee under the Plan.

8.2                 In the event of a Change of Control, notwithstanding anything in the Plan to the contrary, any surviving, successor or acquiring entity will assume any outstanding Options or will substitute similar awards for the outstanding Options. If the surviving, successor or acquiring entity is a “private issuer” (as such term is defined in “NI 45-106”) or does not have any securities listed on an established securities exchange, does not assume the outstanding Options or substitute similar awards for the outstanding Options, or if the Board otherwise determines in its sole discretion and subject to the applicable rules of the TSX or other exchange on which the Shares are listed, the Corporation will give written notice to all Optionees advising that the Plan will be terminated effective immediately prior to the Change of Control and all Options will be deemed to be vested Options, and may provide for the exercise of Options and tender of Shares in connection with the Change of Control and may otherwise provide for the cash out or termination of Options that are not exercised within a specified period of time.

9.                   CERTAIN ADJUSTMENTS

9.1                 Subject to the provisions of Article 10, in the event of any subdivision or redivision of the Shares into a greater number of Shares at any time after the grant of an Option to any Optionee and prior to the expiration of the term of such Option, the Corporation shall deliver to such Optionee at the time of any subsequent exercise of his or her Option in accordance with the terms hereof, in lieu of the number of Shares to which he or she was theretofore entitled upon such exercise, but for the same aggregate consideration payable therefor, such number of Shares as such Optionee would have held as a result of such subdivision or redivision if, on the record date thereof, the Optionee had been the registered holder of the number of Shares to which he or she was theretofore entitled upon such exercise.

9.2                 Subject to the provisions of Article 10, in the event of any consolidation of the Shares into a lesser number of Shares at any time after the grant of an Option to any Optionee and prior to the expiration of the term of such Option, the Corporation shall deliver to such Optionee at the time of any subsequent exercise of his or her Option in accordance with the terms hereof, in lieu of the number of Shares to which he or she was theretofore entitled upon such exercise, but for the same aggregate consideration payable therefor, such number of Shares as such Optionee would have held as a result of such consolidation if, on the record date thereof, the Optionee had been the registered holder of the number of Shares to which he or she was theretofore entitled upon such exercise.

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9.3      Subject to the provisions of Article 8 and 10, if at any time after the grant of any Option to an Optionee and prior to the expiration of the term of such Option, (i) the Shares shall be reclassified, reorganized or otherwise changed, otherwise than as specified in Sections 9.1 and 9.2, (ii) the Corporation shall consolidate, merge or amalgamate with or into another corporation (the corporation resulting or continuing from such consolidation, merger or amalgamation being herein called the “Successor Corporation”), or (iii) the Corporation shall pay a stock dividend (other than any dividends in the ordinary course), the Optionee shall be entitled to receive upon the subsequent exercise of his or her Option in accordance with the terms hereof and shall accept in lieu of the number of Shares to which he or she was theretofore entitled upon such exercise but for the same aggregate consideration payable therefor, the aggregate number of shares of the appropriate class and/or other securities of the Corporation or the Successor Corporation (as the case may be) that the Optionee would have been entitled to receive as a result of such reclassification, reorganization or other change or as a result of such consolidation, merger, amalgamation or stock dividend, if on the record date of such reclassification, reorganization, other change, consolidation, merger, amalgamation or dividend payment, as the case may be, he or she had been the registered holder of the number of Shares to which he or she was theretofore entitled upon such exercise.

10.      AMENDMENT OR DISCONTINUANCE OF THE PLAN

10.1    Subject to applicable regulatory requirements, including the rules of the TSX or other exchange on which the Shares are listed, and except as provided herein, the Board may, in its sole and absolute discretion and without shareholder approval, amend, suspend, terminate or discontinue the Plan and may amend the terms and conditions of Options granted pursuant to the Plan. Provided, however, that if the Board wishes to increase the maximum percentage in Section 4.1 hereof or extend the term of the Option (other than as a result of a Blackout Period Extension) or reduce the Option Price of Options granted under the Plan, shareholder approval will be required.

10.2    Without limiting the generality of the foregoing, the Board may make the following amendments to the Plan, without obtaining shareholder approval:

(a) amendments to the terms and conditions of the Plan necessary to ensure that the Plan complies with the applicable regulatory requirements, including the rules of the TSX or other exchange on which the Shares are listed, in place from time to time;

(b) amendments to the provisions of the Plan respecting administration of the Plan and eligibility for participation under the Plan;

(c) amendments to the provisions of the Plan respecting the terms and conditions on which Options may be granted pursuant to the Plan, including the provisions relating to the term of the Option and the vesting schedule; and

(d) amendments to the Plan that are of a “housekeeping” nature.

10.3    Without limiting the generality of the foregoing, the Board may not, without the approval of the Corporation’s shareholders, make amendments with respect to the following:

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(a) an increase to the Plan maximum or the number of securities issuable under the Plan;

(b) amendment provisions granting additional powers to the Board to amend the Plan or entitlements thereunder;

(c) an amendment to the Option Price of an Option (if such shareholder approval is required by the stock exchange on which the Shares are listed);

(d) reduction in the Option Price of an Option or cancellation and reissue of Options or other entitlements;

(e) extension to the term of Options (other than as a result of a Blackout Period Extension);

(f) amendments that may permit the introduction or re-introduction of non-employee directors on a discretionary basis or amendments that increase limits previously imposed on non-employee director participation;

(g) any amendment which would permit Options granted under the Plan to be transferable or assignable other than as set forth in Section 11.3 hereof and for normal estate settlement purposes;

(h) changes to Insider participation limits; and

(i) amendments to the Plan amendment provisions.

11.      MISCELLANEOUS PROVISIONS

11.1    An Optionee shall not have any rights as a shareholder of the Corporation with respect to any of the Shares covered by such Option until the date of issuance of Shares upon the exercise of such Option, in full or in part, and then only with respect to the issued Shares. Without in any way limiting the generality of the foregoing, no adjustment shall be made for dividends or other rights for which the record date is prior to the date the Options are exercised.

11.2    Nothing in the Plan or any Option shall confer upon an Optionee any right to continue or be re-elected as a director of the Corporation or any right to continue in the employ of the Corporation or any Related Entity, or affect in any way the right of the Corporation or any Related Entity to terminate his or her employment at any time; nor shall anything in the Plan or any Option be deemed or construed to constitute an agreement, or an expression of intent, on the part of the Corporation or any Related Entity to extend the employment of any Optionee beyond the time which he or she would be normally be retired pursuant to the provisions of any present or future retirement plan of the Corporation or any Related Entity or any present or future retirement policy of the Corporation or any Related Entity, or beyond the time at which he or she would otherwise be retired pursuant to the provisions of any contract of employment with the Corporation or any Related Entity.

11.3    Notwithstanding Section 5.9 hereof, Options may be transferred or assigned between an Eligible Individual and the related Permitted Assign provided the assignor delivers notice to the Corporation prior to the assignment substantially in the form of Schedule B attached hereto.

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11.4    The Plan and all matters to which reference is made herein shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

12.      SHAREHOLDER AND REGULATORY APPROVAL

12.1    If applicable, the Plan shall be subject to ratification by the shareholders of the Corporation to be effected by a resolution passed at a meeting of the shareholders of the Corporation, and to acceptance by the TSX and any other relevant regulatory authority or exchange on which the Shares are listed. Any Options granted prior to such ratification and acceptance shall be conditional upon such ratification and acceptance being given and no such Options may be exercised unless and until such ratification and acceptance are given.

13.      TERM OF PLAN

13.1    No Option shall be granted pursuant to the Plan on or after the tenth anniversary of May 18, 2020 but Options theretofore granted may extend beyond that date.

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NOTICE OF TRANSFER

To transfer an Option, complete and return this form along with an original option agreement

The undersigned Optionee under the Sprott Inc. 2017 Amended and Restated Stock Option Plan (as the same may be supplemented and amended from time to time) (the “Plan”) hereby irrevocably elects to transfer the Option evidenced by the attached Option Agreement to the following person(s), each of whom the Optionee hereby certifies is a permitted transferee in accordance with section 10.3 of the Plan (each an “Eligible Transferee”):

Direction as to Registration:
	Name of Registered Holder
	Address of Registered Holder

The undersigned Optionee hereby directs such Option(s) to be registered in the names of such Eligible Transferee(s). Unless they are otherwise defined herein, any defined terms used herein shall have the meaning ascribed to such terms in the Plan.

Dated:	, 20
		)
		)
		)
		)
Witness to the Signature of:		)	Name of Optionee
		)
		)

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		FORM OF OPTION AGREEMENT
Optionee:
		Name
		Address
Grant:
		Maximum Number of Shares issuable upon exercise
		of the Option
Option Price: $			per Share
Date of Grant:				, 20
Expiry Date:				,20
Vesting Schedule:

Instalment	Date of Vesting (Milestone)	Number of Shares Vested	Cumulative Number of  Shares Vested
1
2
3

This Option Agreement is made under and is subject in all respects to the Sprott Inc. 2017 Amended and Restated Stock Option Plan (as the same may be supplemented and amended from time to time) (the “Plan”), and the Plan is deemed to be incorporated in and to be part of this Option Agreement. The Optionee is deemed to have notice of and to be bound by all of the terms and provisions of the Plan (as supplemented and amended), as if the Plan were set forth in full herein (including the restrictions on transfer of the Options and Shares issuable upon exercise thereof). In the event of any inconsistency between the terms of this Option Agreement and the Plan, the terms of this Option Agreement shall prevail to the extent that it is not inconsistent with the requirements of the TSX. The Plan contains certain provisions relating to termination and transfer. All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Plan.

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This Option Agreement evidences that the Optionee named above is entitled, subject to and in accordance with the Plan, to purchase up to but not more than the maximum number of Shares set out above at the Option Price set out above upon delivery of an exercise form as annexed hereto as Exhibit 1 duly completed and accompanied by certified cheque or bank draft for the aggregate Option Price.

This Option Agreement is not effective until countersigned on behalf of Sprott Inc. and accepted by the Optionee.

Dated:	, 20
		SPROTT INC.
		By:
			Name:
			Title:
			(Authorized Signatory)
Accepted:	, 20

Signature of Optionee

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Exhibit 1

NOTICE OF EXERCISE

To exercise the Option, complete and return this form:

The undersigned Optionee or his or her legal representative(s) permitted under the 2017 Amended and Restated Stock Option Plan (as the same may be supplemented and amended from time to time) (the “Plan”) hereby irrevocably elects to exercise the Option for the number of Shares as set forth below:

(a) Number of Options to be Exercised:

(b) Option Price per Share:

(c)	Aggregate Purchase Price
	[ (a) multiplied by (b) ]:

and hereby tenders a certified cheque or bank draft for such aggregate Option Price, and directs such Shares to be issued and registered as directed below, all subject to and in accordance with the Plan. Unless they are otherwise defined herein, any defined terms used herein shall have the meaning ascribed to such terms in the Plan.

Dated:	, 20
		)
		)
		)
		)	Name of Optionee
		)
		)
Witness to the Signature of:		)
		)	Signature of Optionee
		)
Direction as to Registration:
Name of Registered Holder
Address of Registered Holder

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SCHEDULE “C”
SPROTT INC.2020 AMENDED AND RESTATED EMPLOYEE PROFIT SHARING PLAN

ARTICLE 1
ESTABLISHMENT OF PLAN

There is hereby established a 2020 Amended and Restated Employee Profit Sharing Plan for the purpose of creating a Trust Fund to be held by the Trustee in trust for the benefit of the Members and to be administered, managed, operated, invested, dealt with and disposed of pursuant to and in accordance with the provisions of the Plan and the Trust Agreement.

It is intended that the Plan shall qualify as a “Employee Profit Sharing Plan” as defined in subsection 144(1) of the Income Tax Act (Canada) (the “ITA”) and the Plan shall be governed by section 144(1) of the ITA.

The said Trust Fund shall consist in the aggregate of:

(i) all Contributions;

(ii) all Trust Property;

(iii) all proceeds of the sale or other disposal of any Trust Property; and

(iv) all income and gains derived from the Trust Property and moneys forming part of the Trust Fund;

less the aggregate of:

(v) all amounts which may from time to time be paid to, or with respect to, Members or Beneficiaries;

(vi) all losses sustained by the Trustee with respect to the Trust Fund; and

(vii) all Expenses incurred by the Trustee and the Plan.

ARTICLE 2
DEFINITIONS

The following terms, wherever used in this document or in the Trust Agreement shall, for the purposes thereof, unless the context otherwise requires, have the meaning set forth below:

(a) "Affiliated Entity" means: (i) any corporation which is a direct or indirect subsidiary of the Corporation or any corporation designated by the Corporation to be an Affiliated Entity; (ii) any limited partnership if more than 50% of the voting shares of the General Partner of such limited partnership are directly or indirectly held or controlled by the Corporation or any other limited partnership that is designated by the Corporation to be an Affiliated Entity; and (iii) any trust or other entity that is directly or indirectly controlled by the Corporation and that is designated by the Corporation to be an Affiliated Entity.

(b) "Beneficiary" means the beneficiary referred to in Paragraph (b) of Article 12.

(c) "Contract" means the written employment or other contract entitling the Member to benefits under the Plan and entered into between the Member and the Participating Entity (including the Corporation), as amended from time to time. Each Member shall have his or her own Contract which, inter alia, specify the terms and conditions, if any, upon which a Member is entitled to any benefits under the Plan.

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(d) "Contribution" means an amount, whether money or rights or things expressed in terms of the amount of money or the value in terms of money of the right or thing, contributed to the Trust Fund and calculated in accordance with the provisions of Article 4.

(e) "Corporation" means Sprott Inc. and/or its successors.

(f) "Employee" means an individual who is an employee of a Participating Entity or an individual who is an “employee” within the meaning of the ITA.

(g) "Expenses" means all costs of every nature and kind associated with the creation, maintenance, administration, operation and termination of the Plan and the Trust, including carrying costs and expenses, Trustee fees and disbursements, administration fees, outlays, commissions, salaries, payments on account of interest and principal on borrowed funds.

(h) "Fiscal Year" means the financial year of the Participating Entity as determined by its Board of Directors, General Partner or other person having authority from time to time.

(i) “General Partner” with respect to a limited partnership means the general partner thereof;

(j) "Member" means any Employee who meets the criteria for membership in the Plan as set out in Article 3 but excluding Eric S. Sprott.

(k) "Member's Account" means the account established for a Member pursuant to the provisions of the Plan as set out in Article 5.

(l) "Participating Entity" means the Corporation and any Affiliated Entity which has adopted the Plan. In relation to a Member, "Participating Entity" means that Participating Entity by which the Member is employed or to which the Member provides services.

(m) "Plan" means the 2020 Amended and Restated Employee Profit Sharing Plan set forth in this document and includes any amendments which are from time to time made hereto and the Trust Agreement therefor as amended from time to time.

(n) "Profits" means the net income after taxes of the Corporation and of an Affiliated Entity, as determined by the Corporation's and Affiliated Entity's auditors, respectively, according to generally accepted accounting practices.

(o) “Shares” means the common shares of the Corporation or, in the event of an adjustment contemplated by Article 8 hereof, such other shares or securities to which a Member may be entitled upon the distribution out of the Member’s Allocated Account as a result of such adjustment.

(p) "Taxation Year" means the taxation year of the Trust being the calendar year or such part of it that the Trust was in existence.

(q) "Trust" means the trust created pursuant to the Trust Agreement.

(r) "Trust Agreement" means the trust agreement entered into by the Corporation and the Trustee as the same may be amended or replaced from time to time.

(s) "Trust Fund" means the trust fund established pursuant to the Plan and the Trust Agreement as more particularly described in Article 1, including the balance of all Member's Accounts.

(t) "Trust Property" means all property in which the Trust Fund may from time to time be invested.

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(u) "Trustee" means the person or persons appointed by the Corporation from time to time to act as trustee or trustees under the Plan.

The masculine pronoun wherever used herein shall include the feminine pronoun where applicable, and the singular shall include the plural and vice versa, as the context shall require.

All monetary reference in the Plan are to be construed as being expressed in terms of the lawful currency of Canada.

ARTICLE 3
MEMBERSHIP

The Members shall be those of the Employees of one or more Participating Entities who have been designated as Members by the compensation committee of the Board of Directors of the Corporation or the General Partner or other controlling person of a Participating Entity on the recommendation of the president of the Corporation or of another Participating Entity in accordance with the terms of Employee's written employment or other applicable contract. The Corporation shall from time to time provide the Trustee with written notice of:

(a) the identity of a Member immediately after an Employee of one or more Participating Entities has been designated as a Member; and

(b) notification of a Member ceasing to be a Member, immediately upon the happening thereof.

ARTICLE 4
CONTRIBUTIONS

In each Fiscal Year, or within one hundred and twenty (120) days thereafter, each Participating Entity realizing Profits in such Fiscal Year shall pay to the Trustee for such Fiscal Year out of Profits a Contribution in an amount determined by the Board of Directors, General Partner or other controlling person of the Participating Entity, to be not less than $100.00 per Member who is an Employee of such Participating Entity.

The Contributions to the Plan will be made "out of profits" pursuant to subsection 144(10) of the ITA and the Corporation and each Participating Entity shall elect in prescribed manner to have the Plan treated as an employee sharing plan in accordance with subsection 144(10) of the ITA. For greater certainty, any loans advanced by the Corporation or any Participating Entity to the Trust shall not be considered to be Contributions so long as such loans are outstanding.

ARTICLE 5
MEMBERS' ACCOUNTS

Member's Account:

(a) The Trustee, in the name of the Trust, shall from time to time purchase Shares in the capital stock of the Corporation in such amounts, at such times and in accordance with the written directions of the Corporation. Such Shares may be purchased in the open market, from a third party or from the treasury of the Corporation. The price at which such Shares may be issued from treasury shall equal the closing sale price of such Shares on the Toronto Stock Exchange on the trading day immediately preceding such date. In the event that such Shares did not trade on such trading day, the price shall be the average of the bid and ask prices in respect of such Shares at the close of trading on such trading day. If no quotation is made for the applicable day, the price on such day shall be determined in the manner set forth in the preceding sentence for the next preceding trading day. Notwithstanding the foregoing, if there is no reported closing price or high bid/low asked price that satisfies the preceding sentences, the price on any day shall be determined by such methods and procedures as shall be established from time to time by the compensation committee of the Board of Directors of the Corporation. The Corporation shall provide such direction in accordance with the requirements of the Member's Contract. At the time of purchase the Shares so purchased shall be designated for the account of the particular Member (the "Member's Account") in accordance with the Corporation's written direction. The Member’s Account shall also record the amount of any debt incurred by the Trust in connection with the purchase of such Shares. The Member shall have no interest in nor entitlement to the Shares in the Member's Account until such time as the Shares have been distributed to him or disposed of by the Plan in accordance with the terms of the Member's Contract and the Plan. For the purpose of the ITA, no amount shall be allocated to a Member under the Plan in respect of any vested Shares, except as set out in the relevant Member’s Contract and the terms of the Plan that govern each Member’s Allocated Account (as set out below).

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Member's Vested Account:

(b) All or a part of the Shares in a Member's Account shall vest in the Member from time to time in accordance with the Member's Contract, subject to a minimum vesting period of three months for Shares issued from treasury in accordance with paragraph (a) of Article 5. For greater certainty, in accordance with the Member's Contract, as the preconditions specified in the Member's Contract are satisfied a specified number of Shares shall vest in the Member for the purposes of the Plan. The entitlement of a Member to the vested Shares may be subject to any debt incurred and owing by the Trust in connection with the purchase of the Shares. At such time as Shares vest in the Member, the Trustee shall, upon written direction from the Corporation, designate the Shares which have so vested to a sub-account for the Member created for such purpose. The sub-account so created shall be referred to as the "Member's Vested Account". At such time as all of the preconditions specified in the Member's Contract are satisfied, all of the Shares in the Member's Account shall have been designated to the Member's Vested Account. The Member’s Vested Account shall also record the amount of any debt incurred by the Trust in connection with the purchase of such Shares. The terms and conditions governing a Member’s ability to acquire Shares in his or her Vested Account shall be governed by the relevant Member’s Contract and the terms of the Plan.

Member's Allocated Account:

(c) From time to time the Trustee shall, upon written direction from the Corporation, allocate the Contributions, profits, capital gains and capital losses incurred, realized, received or accrued by the Shares in a Member's Vested Account to an account to be known as the "Member's Allocated Account". The Corporation shall make such determination in accordance with the Member's Contract and the Plan which in conjunction shall specify at what time and upon the happening of what contingency the profits, capital gains and capital losses incurred, realized, received or accrued by the Shares in a Member's Vested Account shall be allocated to the Member's Allocated Account. Such allocation shall be as further described in paragraph (d) of Article 5.

(d) The Member's Allocated Account shall be a complete record of:

(i) all Contributions allocated to the Member in accordance with paragraph (c);

(ii) any dividends or other profits from the Shares in the Member's Vested Account (computed without reference to capital gains and losses) and any capital gains and capital losses derived from the Shares in the Member's Vested Account to the extent that such profits, net value, capital gains or capital losses have been allocated to the Member in accordance with the preceding paragraphs.

(iii) all amounts or property distributed to the Member or to his or her Beneficiary;

(iv) all Expenses of the Trust Fund allocated to the Member at the direction of the Corporation which have not been deducted for the purpose of determining the profits from the Shares in the Member's Vested Account allocated pursuant to subparagraph (ii) above; and

(v) any amount allocated to the Member of the total amount another Employee is entitled to deduct under subsection 144(9) of the ITA.

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Such Member's Allocated Account shall be maintained for the Member until full distribution is made to the Member or Beneficiary in accordance with the provisions of the Plan.

(e) Allocation of Contributions: Immediately upon receipt thereof, and in no case later than the end of the Taxation Year, the Trustee, acting upon the written direction of the Corporation (such direction to specify the amount to be so allocated to each Member's Allocated Account), shall allocate the Contributions (net of Expenses incurred during the year) received during the Taxation Year to a Member's Allocated Account or Members' Allocated Accounts.

(f) Allocation of Profits from the Trust Property, Capital Gains and Capital Losses: Subject to the provisions of Article 7 and the provisions of a Member's Contract, upon written direction of the Corporation, the following items shall be allocated to a Member's Allocated Account:

(i) all net profits (after Expenses of the Trust and not including capital gains) from the Shares in the Member's Vested Account on a yearly basis;

(ii) capital gains net of any capital losses derived from dispositions of Shares in the Member's Vested Account; and

(iii) such other property or amounts out of the Trust Fund as the Trustee shall determine are payable to the Member in accordance with the Member's Contract and the Plan shall be allocated to the Member during the Taxation Year in which a distribution is to be made to a Member in accordance with Article 7 and with paragraphs (b) and (c) of Article 6 of the Plan, to the extent that they have not been allocated in Taxation Years preceding that Taxation Year.

In the event that a Member's employment or service with the Participating Entity is terminated for cause, the Corporation shall advise the Trustee in writing and thereupon all Shares and amounts contained in or allocated to such Member's Vested Account and such Member's Allocated Account shall be forfeited and the amounts thereof shall be reallocated to the Members of the Plan at the end of the Taxation Year in accordance with the Corporation's written direction. Such reallocated amounts shall be divided in such Shares and proportions between the participating Members of the Plan as the Corporation shall direct.

(g) Valuation of Members' Accounts: Each Member's Allocated Account shall be valued as of the last business day of each fiscal year, and as of any other date on which such Member's Allocated Account or any portion thereof must be valued for the purpose of the Plan, to reflect the Member's allocated share of earnings (consisting of all profits, capital gains and capital losses from the Shares in the Member's Vested Account), Contributions, distributions and Expenses of the Trust Fund not deducted in determining the profits from the Trust Property.

(h) Payment of Income Tax: The Corporation shall provide the Trustee with an estimate of the amount of income tax which will be payable by each Member with respect to the allocations made in favour of each Member and the Trustee shall remit the amount of income tax so estimated to Canada Revenue Agency on behalf of each such Member. The Trustee shall provide the Corporation with a report with respect to amounts remitted by it to Canada Revenue Agency pursuant to this section.

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ARTICLE 6
VESTING AND DISTRIBUTION

(a) Vesting: All amounts designated by the Trustee to a Member's Vested Account in a particular Taxation Year shall vest in such Member in the manner provided for in such Member's Contract. As set out in Article 5 above, vesting in and of itself does not constitute an allocation to a Member in respect of the relevant Shares.

In the event of death or termination of employment or service, other than resignation or termination for cause, the Board of Directors of the Corporation in its sole discretion, may deem vested and designate to a Member’s Vested Account, as soon as practicable and in any event prior to the distribution as set forth in paragraphs (b) and (c) of this Article 6, such number of Shares as would otherwise have been vested up to:

(i) one year thereafter, in the event of death, and

(ii) three months thereafter, in the event of termination of employment or service, other than resignation or termination for cause,

(or such longer period as determined by the Board of Directors of the Corporation) had death or termination of employment or service not occurred.

(b) Distribution: An amount equal to the net value (after Expenses of the Trust and any unpaid debt owing by the Trust on any Shares in the Member's Vested Account) of the assets which have been allocated to the Member's Vested Account shall be transferred by the Trustee to the Member's Allocated Account and distributed by the Trustee to a Member no later than three months after the earliest of the date of the happening of the following events:

(iii) the termination of employment or service including retirement, resignation, and dismissal without cause of the Member; and

(iv) the termination of the Plan.

The Trustee shall be entitled to rely on the Corporation's determination of the net value of the assets to be transferred to the Member in accordance with this Article 6. In the event that the Member’s Contract provides that any unpaid debt owing by the Trust is to be assumed by the Member or paid by the Member, then the amount of any such debt may be reflected in the calculation of the relevant Member’s Allocated Account.

(c) Distribution upon death: Subject to compliance with applicable laws and regulations, when a Member dies there shall be allocated to his or her Member's Allocated Account and distributed to his or her Beneficiary within three months after the date of death the net value (after Expenses of the Trust) of the amount in the Member's Vested Account.

ARTICLE 7
DISTRIBUTIONS AND WITHDRAWALS

Subject to the terms of a Member’s Contract, distributions of cash or in specie, as provided below, may be made from a Member's Allocated Account to such Member at any time upon the written direction of the Corporation.

Any distribution to a Member from a Member's Allocated Account shall be in cash or in specie, provided that the Trustee shall distribute to a Member out of the Member's Allocated Account only the net amount available for distribution to the Member. For greater certainty, any Shares which have been allocated to a Member's Allocated Account in accordance with the Member's Contract may be distributed to the Member in specie only upon the discharge of any debt owing by the Trust in respect of the Shares at the time of distribution. Such debt may be discharged by a Participating Entity or the Member in accordance with the relevant provisions of the Member’s Contract.

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In the event that property other than the money is received by a Member from the Plan, then the income tax consequences to the Plan and the Member shall be governed by subsection 144(7.1) of the ITA.

ARTICLE 8
CERTAIN ADJUSTMENTS

(a) Subject to the provisions of Article 10, if at any time after the grant of any benefits under the Plan to any Member and prior to the termination of such Member’s entitlement thereto, there occurs any subdivision or redivision of the Shares into a greater number of Shares or any consolidation of Shares into a lesser number of Shares, the Corporation shall deliver to such Member at the time of any subsequent distribution out of the Member’s Allocated Account in accordance with the terms hereof, in lieu of the number of Shares to which he or she was theretofore entitled upon such distribution, such number of Shares as such Member would have held as a result of such subdivision, redivision or consolidation, as the case may be, if, on the record date thereof, the Member had been the registered holder of the number of Shares to which he or she was theretofore entitled upon such distribution.

(b) Subject to the provisions of Article 10, if at any time after the grant of any benefits under the Plan to any Member and prior to the termination of such Member’s entitlement thereto, (i) the Shares shall be reclassified, reorganized or otherwise changed, otherwise than as specified in Sections 8(a), (ii) the Corporation shall consolidate, merge or amalgamate with or into another corporation (the corporation resulting or continuing from such consolidation, merger or amalgamation being herein called the “Successor Corporation”) or (iii) the Corporation shall pay a stock dividend (other than any dividends in the ordinary course), the Member shall be entitled to receive upon the subsequent distribution out of the Member’s Allocated Account in accordance with the terms hereof and shall accept in lieu of the number of Shares to which he or she was theretofore entitled upon such distribution, the aggregate number of shares of the appropriate class and/or other securities of the Corporation or the Successor Corporation (as the case may be) that the Member would have been entitled to receive as a result of such reclassification, reorganization or other change or as a result of such consolidation, merger, amalgamation or stock dividend, if on the record date of such reclassification, reorganization, other change, consolidation, merger, amalgamation or dividend payment, as the case may be, he or she had been the registered holder of the number of Shares to which he or she was theretofore entitled upon such distribution.

ARTICLE 9
ADMINISTRATION OF THE PLAN

The management of the Corporation is responsible for the administration of the Plan; it will administer the Plan in all its details which, without being limited thereto, include:

(a) the establishment and application of rules and regulations necessary and proper for an efficient administration of the Plan;

(b) the interpretation of the Plan;

(c) the determination by the Corporation of the Contributions or amounts on which Contributions are based; and

(d) furnishing information in writing to the Members regarding their rights under the Plan. all of which shall be final and binding on the Trustee, the Members and shall not be subject to review in any manner by any of them or any other person claiming under the Plan.

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The Corporation shall only be accountable for reasonable diligence in the exercise of their powers and the performance of their duties and shall only be liable for their own fraud, willful misconduct or negligence.

The aggregate number of Shares from treasury that may be granted (whether vested or unvested) under the Plan and under all other securities based compensation arrangements (including employee stock purchase plans, stock option plans or other Share compensation arrangements of the Corporation) shall not exceed 10% of the issued and outstanding Shares as at the date of such grant. If Shares have been distributed under the Plan or the Member’s entitlement to benefits shall expire, terminate or be cancelled for any reason in accordance with the terms of the Plan, the Shares subject thereto shall again be available for the purpose of the Plan.

Notwithstanding anything else contained herein, the number of Shares of the Corporation which are (i) issuable from treasury, at any time, and (ii) issued from treasury within any one-year period, pursuant to the terms of the Plan, a Member’s Contract and under any other security based compensation arrangement to insiders (as defined in the applicable rules of the Toronto Stock Exchange) of the Corporation, shall not exceed 10% of the Corporation’s total issued and outstanding Shares.

From time to time, the Plan may borrow monies from a third party or a Participating Employer (including the Corporation) and use such borrowed funds to acquire Shares of the Corporation or other property. For greater certainty, any funds borrowed by the Plan or other indebtedness incurred by the Plan shall not be considered to be amounts contributed to the Plan by a Participating Employer (including the Corporation) and any Shares or other property acquired with any such borrowed funds or indebtedness shall not be required to be designated or allocated to any particular Member’s Account, although such a designation or allocation may be made at a subsequent time pursuant to the terms of a particular Member’s Contract.

Notwithstanding anything to the contrary herein any taxes or interest that are assessed against Members and that relate in any way to their participation in the Plan shall be the sole responsibility of the Members, including any amounts that arise as a direct or indirect result of the Plan failing at any time to qualify as an “Employee Profit Sharing Plan” as defined in subsection 144(1) of the ITA.

The Corporation and the Trustee shall be entitled to rely upon tables, valuations, certificates, reports and opinions made or given by an actuary or by any accountant or legal counsel being in the Corporation's employ or under contract for such purpose with the Corporation.

The Trustee shall be entitled and required to rely upon the written directions and determinations provided or made by the Corporation in respect of the terms of a Member's Contract or the entitlement of a Member to any Shares or other assets of the Trust Fund. The Trustee is fully protected in such reliance.

ARTICLE 10
AMENDMENT OR TERMINATION OF THE PLAN

It is the intention of the Corporation to continue the Plan in effect indefinitely (subject to the term below) but the Corporation necessarily reserves the right to amend, modify or discontinue the Plan, in whole or in part, at any time, provided, however, that any such amendment or modification which may affect the rights, duties and responsibilities of the Trustee shall not become effective until the Corporation has received the written consent of the Trustee thereto.

No amendment or modification to the Plan shall adversely affect the rights of the Members up to the date of such amendment or modification.

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Without limiting the generality of the foregoing, the Board of Directors of the Corporation may make the following amendments to the Plan, without obtaining shareholder approval:

(a) amendments to the terms and conditions of the Plan necessary to ensure that the Plan complies with the applicable regulatory requirements, including the rules of the Toronto Stock Exchange and Canada Revenue Agency, in place from time to time;

(b) amendments to the provisions of the Plan respecting administration of the Plan and eligibility for participation under the Plan;

(c) amendments to the provisions of the Plan respecting the terms and conditions on which allocations may be made to a Member’s Allocated Account pursuant to the Plan, including the provisions relating to the vesting schedule (subject to the minimum vesting period set out in paragraph (b) of Article 5); and

(d) amendments to the Plan that are of a “housekeeping” nature.

Without limiting the generality of the foregoing, the Board of Directors may not, without the approval of the Corporation’s shareholders, make amendments with respect to the following:

(a) an increase to the Plan maximum or the number of securities issuable under the Plan;

(b) amendment provisions granting additional powers to the Corporation or the Board of Directors to amend the Plan; and

(c) an increase in entitlements held by insiders of the Corporation, including extension of the termination or expiry dates thereof or changes to insider participation limits.

If the Plan is terminated, each Participating Entity shall not recover any amounts paid into the Trust Fund up to the date of such termination and all of the Trust Fund must and shall be used for the sole benefit of the Members and/or their Beneficiaries, according to the balance in their Member's Account as determined by a special valuation of the Trust Fund as of the date of the termination of the Plan. Notwithstanding the foregoing, if on a termination of the Plan there exist Plan assets that have not vested in any Member’ s Vested Account on or before the Plan termination date, then the Trustee, on the direction of the Corporation, shall distribute such assets to a successor “Employee Profit Sharing Plan” as defined in subsection 144(1) of the ITA (a “Successor EPSP”) provided that all of the individuals who participate in the Successor EPSP shall be permanent full time employees of the Corporation or an Affiliated Entity of the Corporation or hold such other position(s) with the Affiliated Entity upon which they have been designated as Members in accordance with Article 3 (other than Eric S. Sprott). For greater certainty, the members who participate in the Successor EPSP may include individuals who are not Members of the Plan immediately before it terminates. The Corporation shall provide the Trustee with the information and direction the Trustee requires in the distribution of Plan assets among the Members or Beneficiaries or to a Successor EPSP at the time of termination of the Plan.

To the extent required by any national exchange on which the Shares are listed, no Shares may be issued from treasury pursuant to the Plan on or after the tenth anniversary of May 18, 2020 provided that for the purpose of clarity, Shares may be credited to a Member’s Allocated Account beyond that date.

ARTICLE 11
ALIENATION

All benefits payable under the Plan shall be personal and the Member cannot anticipate, assign, convert, charge, surrender or alienate them in any way. No part of the Trust Fund shall be transferred to a Member by way of loan or advance. Amounts vested in a Member under the Plan shall not be available for the claims of his or her creditors.

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ARTICLE 12
MISCELLANEOUS

(a) No Deemed Employment or Service Contract: The adoption and maintenance of the Plan shall not be deemed to constitute a contract of employment, service or partnership between a Participating Entity and any of its Employees or to be a consideration for or condition of employment or appointment of any person. No provision of the Plan shall be deemed to give any person the right to continue in the employ or service of a Participating Entity or to interfere with the right of a Participating Entity to discharge, discipline or layoff any of its Employees at any time without regard to the effect which such action might have upon such Employee's participation in the Plan or upon the benefits of such Employees or any Beneficiary.

(b) Beneficiary: Provided there are no legal restrictions preventing it, a Member may in writing name a beneficiary or beneficiaries to receive any amount payable under the Plan in the event of his or her death and, where legally permissible, he may change such beneficiary or beneficiaries. Unless a Member advises the Participating Entity otherwise in writing, such Member's beneficiary shall be the Member's estate.

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SCHEDULE “D”

SPROTT INC.
2020 AMENDED AND RESTATED EQUITY INCENTIVE PLAN FOR U.S. SERVICE PROVIDERS

ARTICLE I
GENERAL

1.1. Purpose

The Sprott Inc. 2020 Amended and Restated Equity Incentive Plan for U.S. Service Providers (the "Plan") is designed to provide certain Key Persons (as defined below) residing in the United States or who are otherwise U.S. taxpayers, whose initiative and efforts are deemed to be important to the successful conduct of the business of Sprott Inc. (the "Company"), with incentives to (a) enter into and remain in the service of the Company or its Affiliates (as defined below), (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company.

1.2. Administration

(a)         Administration. The Plan shall be administered by the Compensation Committee of the Company's Board of Directors (the "Board") or such other committee of the Board as may be designated by the Board to administer the Plan (the "Administrator"); provided that (i) in the event the Company is subject to Section 16 of the U.S. Securities Exchange Act of 1934, as amended (the "1934 Act"), the Administrator shall be composed of two or more directors, each of whom is a "Non-Employee Director" (a "Non-Employee Director") under Rule 16b-3 (as promulgated and interpreted by the Securities and Exchange Commission (the "SEC") under the 1934 Act, or any successor rule or regulation thereto as in effect from time to time ("Rule 16b-3")), and (ii) the Administrator shall be composed solely of two or more directors who are "independent directors" under the rules of any stock exchange on which the Company's Common Stock (as defined below) is traded; provided further, however, that, (A) the requirement in the preceding clause (i) shall apply only when required to exempt an Award intended to qualify for an exemption under the applicable provisions referenced therein, (B) the requirement in the preceding clause (ii) shall apply only when required pursuant to the applicable rules of the applicable stock exchange and (C) if at any time the Administrator is not so composed as required by the preceding provisions of this sentence, that fact will not invalidate any grant made, or action taken, by the Administrator hereunder that otherwise satisfies the terms of the Plan. Subject to the terms of the Plan, applicable law and the applicable rules and regulations of any stock exchange on which the Common Stock is listed for trading, and in addition to other express powers and authorizations conferred on the Administrator by the Plan, the Administrator shall have the full power and authority to: (1) designate the Persons (as defined below) to receive Awards (as defined below) under the Plan; (2) determine the types of Awards granted to a participant under the Plan; (3) determine the number of shares to be covered by, or with respect to which payments, rights or other matters are to be calculated with respect to, Awards; (4) determine the terms and conditions of any Awards; (5) determine whether, and to what extent, and under what circumstances, Awards may be settled in cash, shares, other securities, other Awards or other property, or cancelled, forfeited or suspended, and the methods by which Awards may be settled, cancelled, forfeited or suspended; (6) determine whether, to what extent, and under what circumstances cash, shares, other securities, other Awards, other property and other amounts payable with respect to an Award shall be deferred, either automatically or at the election of the holder thereof or the Administrator; (7) construe, interpret and implement the Plan and any Award Agreement (as defined below); (8) prescribe, amend, rescind or waive rules and regulations relating to the Plan, including rules governing its operation, and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (9) correct any defect, supply any omission and reconcile any inconsistency in the Plan or any Award Agreement; and (10) make any other determination and take any other action that the Administrator deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Administrator, may be made at any time and shall be final, conclusive and binding upon all Persons.

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(b)         General Right of Delegation. Except to the extent prohibited by applicable law, the applicable rules of a stock exchange or any charter, by-laws or other agreement governing the Administrator, the Administrator may delegate all or any part of its responsibilities to any Person or Persons selected by it; provided, however, that in no event shall an officer of the Company be delegated the authority to grant Awards to, or amend Awards held by, the following individuals: (i) individuals who are subject to Section 16 of the 1934 Act, or (ii) officers of the Company (or directors of the Company) to whom authority to grant or amend Awards has been delegated hereunder; provided, further, that any delegation of administrative authority shall only be permitted to the extent it is permissible under applicable securities laws (including, without limitation, Rule 16b-3, to the extent applicable) and the rules of any applicable stock exchange. Any delegation hereunder shall be subject to the restrictions and limits that the Administrator specifies at the time of such delegation, and the Administrator may at any time rescind the authority so delegated or appoint a new delegate. At all times, the delegate appointed under this Section 1.2(b) shall serve in such capacity at the pleasure of the Administrator.

(c)         Indemnification. No member of the Board, the Administrator or any employee of the Company or an Affiliate (each such Person, a "Covered Person") shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award hereunder. Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability or expense (including attorneys' fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement and (ii) any and all amounts paid by such Covered Person, with the Company's approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person; provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company's choice. The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person's bad faith, fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company's articles of incorporation or bylaws (in each case, as amended and/or restated). The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company's articles of incorporation or bylaws (in each case, as amended and/or restated), as a matter of law, or otherwise, or any other power that the Company may have to indemnify such Persons or hold them harmless.

(d)         Delegation of Authority to Senior Officers. The Administrator may, in accordance with and subject to the terms of Section 1.2(b) and applicable law, delegate, on such terms and conditions as it determines, to one or more senior officers of the Company the authority to make grants of Awards to Key Persons who are employees of the Company and its Subsidiaries (as defined below) or consultants of the Company and its Subsidiaries.

(e)         Awards to Non-Employee Directors. Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards to Key Persons who are Non-Employee Directors or administer the Plan with respect to such Awards. In any such case, the Board shall have all the authority and responsibility granted to the Administrator herein with respect to such Awards.

1.3. Persons Eligible for Awards

The Persons eligible to receive Awards under the Plan are those directors, officers, employees and consultants of the Company and its Subsidiaries and Affiliates residing in the United States or who are otherwise U.S. taxpayers (collectively, "Key Persons") as the Administrator shall select; provided that in no event shall Eric Sprott be deemed to be a Key Person eligible to receive Awards under the Plan.

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1.4. Types of Awards

Awards may be made under the Plan in the form of (a) restricted stock, (b) restricted stock units and (c) unrestricted stock, all as more fully set forth in the Plan. The term "Award" means any of the foregoing that are granted under the Plan.

1.5. Shares Available for Awards; Adjustments for Changes in Capitalization

(a)          Maximum Number. The aggregate number of common shares of the Company ("Common Stock") from treasury that may be granted (whether vested or unvested) under the Plan and under all other securities based compensation arrangements (including employee stock purchase plans, stock option plans or other share compensation arrangements of the Company) shall not exceed 10% of the issued and outstanding shares of Common Stock as at the date of such grant. If shares that have been distributed under the Plan or the grantee's entitlement to benefits shall expire, terminate or be cancelled for any reason in accordance with the terms of the Plan, the shares subject thereto shall again be available for the purpose of the Plan. Notwithstanding anything else contained herein, the number of shares of Common Stock which are (i) issuable from treasury, at any time, and (ii) issued from treasury within any one-year period, pursuant to the terms of the Plan, an Award Agreement and under any other security based compensation arrangement to insiders (as defined in the applicable rules of the Toronto Stock Exchange ("TSX")) of the Company, shall not exceed 10% of the Company's total issued and outstanding shares of Common Stock.

(b)         Sources of Shares; Certain Requirements/Limitations for Share Issuances. Except to the extent otherwise provided in Section 2.4 of the Plan, shares issued pursuant to the Plan may be authorized but unissued Common Stock or treasury shares or shares of Common Stock obtained on the market by the Company. Any shares of Common Stock issued under the Plan from treasury shall provide for a minimum vesting period of three months. The Administrator may direct that any stock certificate evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares.

(c)          Adjustments. (i) Subject to any required approvals of the stock exchange(s) on which the Common Stock is listed, the Administrator is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including any stock split, reverse stock split, reorganization, merger, consolidation, split-up, combination, repurchase or exchange of Company shares or other securities of the Company, issuance of warrants or other rights to purchase Company shares or other securities of the Company, or other similar corporate transaction or event) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles or law, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, including providing for (A) adjustment to the number of shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards or to which outstanding Awards relate and (B) a substitution or assumption of Awards, accelerating the vesting of, or lapse of restrictions on, Awards, or, if deemed appropriate or desirable, providing for a cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award.

(i)                 In the event of (A) a dissolution or liquidation of the Company, (B) a sale of all or substantially all the Company's assets or (C) a merger, reorganization or consolidation involving the Company or one of its Subsidiaries (as defined below), the Administrator shall have the power to:

(1)                provide that outstanding restricted stock units (including any related dividend equivalent right) shall either continue in effect, be assumed or an equivalent award shall be substituted therefor by the successor corporation or a parent corporation or subsidiary corporation; or

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(2)              cancel, effective immediately prior to the occurrence of such event, restricted stock units (including each dividend equivalent right related thereto) outstanding immediately prior to such event and, in full consideration of such cancellation, pay to the holder of such Award a cash payment in an amount equal to the Fair Market Value (as of a date specified by the Administrator) of the shares subject to such Award.

1.6. Definitions of Certain Terms

(a)          "Affiliate" shall mean (i) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Administrator.

(b)          Unless otherwise set forth in the applicable Award Agreement, in connection with a termination of employment or consultancy/service relationship or a dismissal from Board membership, for purposes of the Plan, the term "for Cause" shall be defined as follows:

(i)               if there is an employment, severance, consulting, service, change in control or other agreement governing the relationship between the grantee, on the one hand, and the Company or an Affiliate, on the other hand, that contains a definition of "cause" (or similar phrase), for purposes of the Plan, the term "for Cause" shall mean those acts or omissions that would constitute "cause" under such agreement; or

(ii)              if the preceding clause (i) is not applicable to the grantee, for purposes of the Plan, the term "for Cause" shall mean any of the following:

(A)          any failure by the grantee substantially to perform the grantee's employment or consulting/service or Board membership duties;

(B)          any excessive unauthorized absenteeism by the grantee;

(C)          any refusal by the grantee to obey the lawful orders of the Board or any other Person to whom the grantee reports;

(D)          any act or omission by the grantee that is or may be injurious to the Company or any Affiliate, whether monetarily, reputationally or otherwise;

(E)           any act by the grantee that is inconsistent with the best interests of the Company or any Affiliate;

(F)           the grantee's gross negligence that is injurious to the Company or any Affiliate, whether monetarily, reputationally or otherwise;

(G)          the grantee's material violation of any of the policies of the Company or an Affiliate, as applicable, including, without limitation, those policies relating to discrimination or sexual harassment;

(H)          the grantee's material breach of his or her employment or service contract with the Company or any Affiliate;

(I)            the grantee's unauthorized (1) removal from the premises of the Company or an Affiliate of any document (in any medium or form) relating to the Company or an Affiliate or the customers or clients of the Company or an Affiliate or (2) disclosure to any Person of any of the Company's, or any Affiliate's, confidential or proprietary information;

(J)            the grantee's being convicted of, or entering a plea of guilty or nolo contendere to, any crime that constitutes a felony or involves moral turpitude;

(K)          the grantee's engaging in a reportable violation of banking or securities industry laws, rules or regulations that constitutes a serious offense or that could or does result in a significant fine;

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(L)           the grantee's engaging in any act or omission resulting in a statutory disqualification, bar or suspension of the grantee, the Company or any of its Affiliates; and

(M)          the grantee's commission of any act involving dishonesty or fraud.

Any rights the Company or its Affiliates may have under the Plan in respect of the events giving rise to a termination or dismissal "for Cause" shall be in addition to any other rights the Company or its Affiliates may have under any other agreement with a grantee or at law or in equity. Any determination of whether a grantee's employment, consultancy/service relationship or Board membership is (or is deemed to have been) terminated "for Cause" shall be made by the Administrator. If, subsequent to a grantee's voluntary termination of employment or consultancy/service relationship or voluntarily resignation from the Board or involuntary termination of employment or consultancy/service relationship without Cause or removal from the Board other than "for Cause", it is discovered that the grantee's employment or consultancy/service relationship or Board membership could have been terminated "for Cause", the Administrator may deem such grantee's employment or consultancy/service relationship or Board membership to have been terminated "for Cause" upon such discovery and determination by the Administrator.

(c)           "Code" shall mean the Internal Revenue Code of 1986, as amended.

(d)           Unless otherwise set forth in the applicable Award Agreement, "Disability" shall mean the grantee's being unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or the grantee's, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the grantee's employer. The existence of a Disability shall be determined by the Administrator.

(e)           The "Fair Market Value" of a share of Common Stock on any day shall be the closing price on the TSX, or such other primary stock exchange upon which such shares are then listed, or, if no such price is reported for such day, the average of the high bid and low asked price of Common Stock as reported for such day. If no quotation is made for the applicable day, the Fair Market Value of a share of Common Stock on such day shall be determined in the manner set forth in the preceding sentence for the next preceding trading day. Notwithstanding the foregoing, if there is no reported closing price or high bid/low asked price that satisfies the preceding sentences, the Fair Market Value of a share of Common Stock on any day shall be determined by such methods and procedures as shall be established from time to time by the Administrator. The "Fair Market Value" of any property other than Common Stock shall be the fair market value of such property determined by such methods and procedures as shall be established from time to time by the Administrator.

(f)           "Person" shall mean any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, governmental body or other entity of any kind.

(g)           "Subsidiary" shall mean any entity in which the Company, directly or indirectly, has a 50% or more equity interest.

ARTICLE II
AWARDS UNDER THE PLAN

2.1. Agreements Evidencing Awards

Each Award granted under the Plan shall be evidenced by a written certificate ("Award Agreement"), which shall contain such provisions as the Administrator may deem necessary or desirable and which may, but need not, require execution or acknowledgment by a grantee. The Award shall be subject to all of the terms and provisions of the Plan, applicable law and the applicable Award Agreement.

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2.2. Grant of Restricted Stock

(a)            Restricted Stock Grants. The Administrator may grant restricted shares of Common Stock to such Key Persons, in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions as the Administrator shall determine, subject to the provisions of the Plan and applicable law. A grantee of a restricted stock Award shall have no rights with respect to such Award unless such grantee accepts the Award within such period as the Administrator shall specify by accepting delivery of a restricted stock Award Agreement in such form as the Administrator shall determine.

(b)            Issuance of Stock Certificate. Promptly after a grantee accepts a restricted stock Award in accordance with Section 2.2(a), subject to Sections 3.2, 3.4 and 3.13, the Company or its designated exchange agent (the "Exchange Agent") shall issue to the grantee a stock certificate or stock certificates for the shares of Common Stock covered by the Award or shall establish an account evidencing ownership of the stock in uncertificated form. Upon the issuance of such stock certificates, or establishment of such account, the grantee shall have the rights of a stockholder with respect to the restricted stock, subject to: (i) the nontransferability restrictions and forfeiture provisions described in the Plan (including paragraphs (d) and (e) of this Section 2.2); (ii) in the Administrator's sole discretion, a requirement, as set forth in the Award Agreement, that any dividends paid on such shares shall be held in escrow and, unless otherwise determined by the Administrator, shall remain forfeitable until all restrictions on such shares have lapsed; and (iii) any other restrictions and conditions contained in the applicable Award Agreement.

(c)            Custody of Stock Certificate. Unless the Administrator shall otherwise determine, any stock certificates issued evidencing shares of restricted stock shall remain in the possession of the Company until such shares are free of any restrictions specified in the applicable Award Agreement. The Administrator may direct that such stock certificates bear a legend setting forth the applicable restrictions on transferability.

(d)            Nontransferability. Shares of restricted stock granted under the Plan may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of prior to the lapsing of all restrictions thereon, except by will, by the laws of descent and distribution, or through gift or domestic relations orders to a "family member" of the grantee as permitted by Rule 701 of the Securities Act of 1933, as amended (the "1933 Act"), or as may be otherwise specifically provided in the applicable Award Agreement in accordance with applicable law. Following any such transfer, any transferred restricted stock shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer. The Administrator at the time of grant shall specify the date or dates (which may depend upon or be related to the attainment of performance goals and other conditions) on which the nontransferability of the restricted stock shall lapse.

(e)            Consequence of Termination of Employment/Service. Unless otherwise set forth in the applicable Award Agreement, (i) a grantee's termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates for any reason other than death or Disability shall cause the immediate forfeiture of all shares of restricted stock that have not yet vested as of the date of such termination of employment or consultancy/service relationship and (ii) if a grantee incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates as the result of his or her death or Disability, all shares of restricted stock that have not yet vested as of the date of such termination shall immediately vest as of such date. Unless otherwise determined by the Administrator, all dividends paid on shares forfeited under this Section 2.2(e) that have not theretofore been directly remitted to the grantee shall also be forfeited, whether by termination of any escrow arrangement under which such dividends are held or otherwise. For greater certainty, shares of restricted stock shall not be affected by any change of employment of the grantee or by the grantee ceasing to be an officer, director or consultant of the Company or any of its Subsidiaries or Affiliates so long as the grantee continues to be a director, officer, employee or consultant of the Company or any of its Subsidiaries or Affiliates. The Administrator may, in writing, waive or modify the application of the foregoing provisions of this Section 2.2(e).

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2.3. Grant of Restricted Stock Units

(a)           Restricted Stock Unit Grants. The Administrator may grant restricted stock units to such Key Persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, subject to the provisions of the Plan and applicable law. A restricted stock unit granted under the Plan shall confer upon the grantee a right to receive from the Company, conditioned upon the occurrence of such vesting event as shall be determined by the Administrator and specified in the Award Agreement, a number of shares of Common Stock equal to the number of such grantee's restricted stock units that vest upon the occurrence of such vesting event. Payment upon vesting of a restricted stock unit shall be in shares of Common Stock, and such payments shall be made to the grantee at such time as provided in the Award Agreement, which the Administrator shall intend to be within the period required by Section 409A such that it qualifies as a "short-term deferral" pursuant to Section 409A and the Treasury Regulations issued thereunder, unless the Administrator shall otherwise provide for deferral of the Award intended to comply with Section 409A.

(b)           Dividend Equivalents. The Administrator may include in any Award Agreement with respect to a restricted stock unit a dividend equivalent right entitling the grantee to receive amounts equal to the ordinary dividends that would be paid, during the time such Award is outstanding and unvested, and/or, if payment of the vested Award is deferred, during the time of such deferral following such vesting event, on the shares of Common Stock underlying such Award if such shares were then outstanding. In the event such a provision is included in a Award Agreement, the Administrator shall determine whether such payments shall be (i) paid to the holder of the Award, as specified in the Award Agreement, either (A) at the same time as the underlying dividends are paid, regardless of the fact that the restricted stock unit has not theretofore vested, (B) at the time at which the Award's vesting event occurs, conditioned upon the occurrence of the vesting event, (C) once the Award has vested, at the same time as the underlying dividends are paid, regardless of the fact that payment of the vested restricted stock unit has been deferred, and/or (D) at the time at which the corresponding vested restricted stock units are paid, (ii) made in cash, shares of Common Stock or other property and (iii) subject to such other vesting and forfeiture provisions and other terms and conditions as the Administrator shall deem appropriate and as shall be set forth in the Award Agreement, subject to the provisions of the Plan and applicable law.

(c)           Consequence of Termination of Employment/Service. Unless otherwise set forth in the applicable Award Agreement, (i) a grantee's termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates for any reason other than death or Disability shall cause the immediate forfeiture of all restricted stock units that have not yet vested as of the date of such termination of employment or consultancy/service relationship and (ii) if a grantee incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates as the result of his or her death or Disability, all restricted stock units that have not yet vested as of the date of such termination shall immediately vest as of such date. Unless otherwise determined by the Administrator, any dividend equivalent rights on any restricted stock units forfeited under this Section 2.3(c) that have not theretofore been directly remitted to the grantee shall also be forfeited, whether by termination of any escrow arrangement under which such dividends are held or otherwise. For greater certainty, restricted stock units shall not be affected by any change of employment of the grantee or by the grantee ceasing to be an officer, director or consultant of the Company or any of its Subsidiaries or Affiliates so long as the grantee continues to be a director, officer, employee or consultant of the Company or any of its Subsidiaries or Affiliates. The Administrator may, in writing, waive or modify the application of the foregoing provisions of this Section 2.3(c).

(d)           No Stockholder Rights. No grantee of a restricted stock unit shall have any of the rights of a stockholder of the Company with respect to such Award unless and until a stock certificate is issued with respect to such vested Award, which issuance shall be subject to Sections 3.2, 3.4 and 3.13. Except as otherwise provided in Section 1.5(c), no adjustment to any restricted stock unit shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate, if any, is issued.

(e)           Nontransferability. Restricted stock units granted under the Plan may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of prior to the lapsing of all restrictions thereon, except by will, by the laws of descent and distribution, or through gift or domestic relations orders to a "family member" of the grantee as permitted by Rule 701 of the 1933 Act, or as may be otherwise specifically provided in the applicable Award Agreement in accordance with applicable law. Following any such transfer, any transferred restricted stock units shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.

2.4. Grant of Unrestricted Stock

The Administrator may grant (or sell at a purchase price at least equal to any par value) shares of Common Stock free of restrictions under the Plan to such Key Persons and in such amounts and subject to such forfeiture provisions as the Administrator shall determine, subject to the provisions of the Plan and applicable law. Shares may be thus granted or sold in respect of past services or other valid consideration. Grants of Common Stock under this Section 2.4 shall be made using shares of Common Stock obtained on the market by the Company, and in no event shall treasury shares be used to make grants under this Section 2.4.

ARTICLE III
Miscellaneous

3.1. Amendment of the Plan; Modification of Awards

(a)           Subject to applicable regulatory requirements and except as provided herein, the Board may, in its sole and absolute discretion and without shareholder approval, amend, suspend, terminate or discontinue the Plan and the Board and/or the Administrator may amend the terms and conditions of Awards granted pursuant to the Plan; provided, however, that if the Board wishes to increase the maximum percentage in Section 1.5(a) hereof, shareholder approval will be required; provided further, however, that if the Plan at the time does not comply with all conditions of Rule 701 of the Securities Act of 1933, as amended, the maximum percentage in Section 1.5(a) hereof may not be increased above 30% of the then outstanding securities of the Company (counting convertible preferred or convertible senior common shares of stock on an as if converted basis) unless approval of the shareholders holding at least two-thirds of the outstanding securities entitled to vote is obtained; and provided further, however, that no such action shall materially impair any rights or materially increase any obligations under any Award theretofore made under the Plan without the consent of the grantee (or, upon the grantee's death, the Person having the rights to the Award). For purposes of this Section 3.1, any action of the Board or the Administrator that in any way alters or affects the tax treatment of any Award shall not be considered to materially impair any rights of any grantee.

(b)          Without limiting the generality of the foregoing, the Board may make the following amendments to the Plan, without obtaining shareholder approval:

(i)              amendments to the terms and conditions of the Plan necessary to ensure that the Plan complies with the applicable regulatory requirements, including the rules of the TSX or other exchange on which the Common Stock is listed, U.S. federal and state securities laws, the Canada Revenue Agency and the Code, in place from time to time;

(ii)             amendments to the provisions of the Plan respecting administration of the Plan and eligibility for participation under the Plan;

(iii)            amendments to the provisions of the Plan respecting the terms and conditions on which Awards may be granted pursuant to the Plan, including the provisions relating to any vesting schedule (subject to the minimum vesting period set out in Section 1.5(b)); and

(iv)            amendments to the Plan that are of a "housekeeping" nature.

D - 7 

(c)          Without limiting the generality of the foregoing, the Board and the Administrator may not, without the approval of the Company's shareholders, make amendments with respect to the following:

(i)               an increase to the Plan maximum or the number of securities issuable under the Plan (subject to the approval requirements set forth in Section 3.1(a) above);

(ii)              amendment provisions granting additional powers to the Board and/or the Administrator to amend the Plan or entitlements thereunder; and

(iii)             an increase in entitlements held by insiders of the Company, including extension of the termination or expiry dates thereof or changes to insider participation limits.

3.2. Consent Requirement

(a)           No Plan Action Without Required Consent. If the Administrator shall at any time determine that any Consent (as defined below) is necessary or desirable as a condition of, or in connection with, the granting of any Award under the Plan, the issuance or purchase of shares or other rights thereunder, or the taking of any other action thereunder (each such action being hereinafter referred to as a "Plan Action"), then such Plan Action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Administrator.

(b)           Consent Defined. The term "Consent" as used herein with respect to any Plan Action means (i) any and all listings, registrations, exemptions or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the grantee with respect to the disposition of shares, or with respect to any other matter, which the Administrator shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made and (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies or any other Person.

3.3. Nonassignability

Except as provided in Sections 2.2(d) or 2.3(e), (a) no Award or right granted to any Person under the Plan or under any Award Agreement shall be assignable or transferable, other than by will, by the laws of descent and distribution, or through a gift or domestic relations orders to a "family member" of the grantee as permitted by Rule 701 of the 1933 Act, or as may be otherwise specifically provided in the applicable Award Agreement in accordance with applicable law and (b) all rights granted under the Plan or any Award Agreement shall be exercisable during the life of the grantee only by the grantee or the grantee's legal representative or the grantee's permissible successors or assigns. All terms and conditions of the Plan and the applicable Award Agreements will be binding upon any permitted successors or assigns.

3.4. Taxes

(a)           Withholding. A grantee or other Award holder under the Plan shall be required to pay, in cash, to the Company, and the Company and its Affiliates shall have the right and are hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to such grantee or other Award holder, the amount of any applicable withholding taxes in respect of an Award, its grant, its vesting, or any payment or transfer under an Award or under the Plan, and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for payment of such taxes. Whenever shares of Common Stock are to be delivered pursuant to an Award under the Plan, with the approval of the Administrator, which the Administrator shall have sole discretion whether or not to give, the grantee may satisfy the foregoing condition by electing to have the Company withhold from delivery shares having a value equal to the amount of minimum tax required to be withheld. Such shares shall be valued at their Fair Market Value as of the date on which the amount of tax to be withheld is determined. Fractional share amounts shall be settled in cash. Such a withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an Award as may be approved by the Administrator in its sole discretion.

D - 8 

(b)           Liability for Taxes. Grantees and holders of Awards are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with Awards (including, without limitation, any taxes arising under Sections 409A and 457A of the Code) and the Company shall not have any obligation to indemnify or otherwise hold any such Person harmless from any or all of such taxes. The Administrator shall have the discretion to organize any deferral program, to require deferral election forms, and to grant or, notwithstanding anything to the contrary in the Plan or any Award Agreement, to unilaterally modify any Award in a manner that (i) conforms with the requirements of Sections 409A and 457A of the Code (to the extent applicable), (ii) voids any participant election to the extent it would violate Sections 409A or 457A of the Code (to the extent applicable) and (iii) for any distribution event or election that could be expected to violate Section 409A of the Code, make the distribution only upon the earliest of the first to occur of a "permissible distribution event" within the meaning of Section 409A of the Code or a distribution event that the participant elects in accordance with Section 409A of the Code. The Administrator shall have the sole discretion to interpret the requirements of the Code, including, without limitation, Sections 409A and 457A, for purposes of the Plan and all Awards.

3.5. Information Requirements

If the Plan at any time does not comply with all conditions of Rule 701 of the 1933 Act, then the Company shall provide security holders under the Plan financial statements of the Company at least annually.

3.6. Operation and Conduct of Business

Nothing in the Plan or any Award Agreement shall be construed as limiting or preventing the Company or any Affiliate from taking any action with respect to the operation and conduct of their business that they deem appropriate or in their best interests, including any or all adjustments, recapitalizations, reorganizations, exchanges or other changes in the capital structure of the Company or any Affiliate, any merger or consolidation of the Company or any Affiliate, any issuance of Company shares or other securities or subscription rights, any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or other securities or rights thereof, any dissolution or liquidation of the Company or any Affiliate, any sale or transfer of all or any part of the assets or business of the Company or any Affiliate, or any other corporate act or proceeding, whether of a similar character or otherwise.

3.7. No Rights to Awards

No Key Person or other Person shall have any claim to be granted any Award under the Plan.

3.8. Right of Discharge Reserved

Nothing in the Plan or in any Award Agreement shall confer upon any grantee the right to continue his or her employment with the Company or any Affiliate, his or her consultancy/service relationship with the Company or any Affiliate, or his or her position as a director of the Company or any Affiliate, or affect any right that the Company or any Affiliate may have to terminate such employment or consultancy/service relationship or service as a director.

3.9. Non-Uniform Determinations

The Administrator's determinations and the treatment of Key Persons and grantees and their beneficiaries under the Plan need not be uniform and may be made and determined by the Administrator selectively among Persons who receive, or who are eligible to receive, Awards under the Plan (whether or not such Persons are similarly situated). Without limiting the generality of the foregoing, the Administrator shall be entitled, among other things, to make non-uniform and selective determinations, and to enter into non-uniform and selective Award Agreements, as to (a) the Persons to receive Awards under the Plan, (b) the types of Awards granted under the Plan, (c) the number of shares to be covered by, or with respect to which payments, rights or other matters are to be calculated with respect to, Awards and (d) the terms and conditions of Awards.

D - 9 

3.10. Other Payments or Awards

Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company from making any award or payment to any Person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.

3.11. Headings

Any section, subsection, paragraph or other subdivision headings contained herein are for the purpose of convenience only and are not intended to expand, limit or otherwise define the contents of such subdivisions.

3.12. Effective Date and Term of Plan

(a)            Adoption; Stockholder Approval. The Plan was adopted by the Board on March 23, 2020 and by a majority of the outstanding securities of the Company entitled to vote on May 18, 2020. The Board may, but need not, make the granting of any Awards under the Plan subject to the approval of the Company's stockholders.

(b)           Termination of Plan. The Board may terminate the Plan at any time. All Awards made under the Plan prior to its termination shall remain in effect until such Awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Award Agreements. No Awards may be granted under the Plan following the tenth anniversary of the date on which the Plan was adopted by the Board or approved by the Company's security holders, whichever is earlier.

3.13. Restriction on Issuance of Stock Pursuant to Awards

The Company shall not permit any shares of Common Stock to be issued pursuant to Awards granted under the Plan unless such shares of Common Stock are fully paid and non-assessable under applicable law. Notwithstanding anything to the contrary in the Plan or any Award Agreement, at the time of vesting of any Award, at the time of payment of shares of Common Stock in exchange for, or in cancellation of, any Award, or at the time of grant of any unrestricted shares under the Plan, the Company and the Administrator may, if either shall deem it necessary or advisable for any reason, require the holder of an Award to represent in writing to the Company that it is the Award holder's then-intention to acquire the shares with respect to which the Award is granted for investment and not with a view to the distribution thereof; and no shares shall be issued or transferred in connection with any Award unless and until all legal requirements applicable to the issuance or transfer of such shares have been complied with to the satisfaction of the Company and the Administrator. The Company and the Administrator shall have the right to condition any issuance of shares to any Award holder hereunder on such Person's undertaking in writing to comply with such restrictions on the subsequent transfer of such shares as the Company or the Administrator shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof, and all share certificates delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Company or the Administrator may deem advisable under the Plan, the applicable Award Agreement or the rules, regulations and other requirements of the SEC, any stock exchange upon which such shares are listed, and any applicable securities or other laws, and certificates representing such shares may contain a legend to reflect any such restrictions. The Administrator may refuse to issue or transfer any shares or other consideration under an Award if it determines that the issuance or transfer of such shares or other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the 1934 Act. Without limiting the generality of the foregoing, no Award granted under the Plan shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Administrator has determined that any such offer, if made, would be in compliance with all applicable requirements of any applicable securities laws.

D - 10 

3.14. Requirement of Notification of Election Under Section 83(b) of the Code

If an Award recipient, in connection with the acquisition of Company shares under the Plan, makes an election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Section 83(b) of the Code), the grantee shall notify the Administrator of such election within ten days of filing notice of the election with the U.S. Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code. No Award recipient may make an election under Section 83(b) of the Code without first seeking and obtaining the written permission of the Administrator, which the Administrator may provide in its discretion.

3.15. Severability

If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Administrator, such provision shall be construed or deemed amended to conform to the applicable laws or, if it cannot be construed or deemed amended without, in the determination of the Administrator, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

3.16. Sections 409A and 457A

To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Sections 409A and 457A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder. Notwithstanding any provision of the Plan or any applicable Award Agreement to the contrary, in the event that the Administrator determines that any Award may be subject to Section 409A or 457A of the Code, the Administrator may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (i) exempt the Plan and Award from Sections 409A and 457A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Sections 409A and 457A of the Code and related Department of Treasury guidance and thereby avoid the application of penalty taxes under Sections 409A and 457A of the Code.

3.17. Forfeiture; Clawback

The Administrator may, in its sole discretion, specify in the applicable Award Agreement that any realized value with respect to any Award shall be subject to forfeiture or clawback, in the event of (a) a grantee's breach of any non-competition, non-solicitation, confidentiality or other restrictive covenants with respect to the Company or any Affiliate, (b) a grantee's breach of any employment or consulting agreement with the Company or any Affiliate, (c) a grantee's termination for Cause or (d) a financial restatement that reduces the amount of compensation under the Plan previously awarded to a grantee that would have been earned had results been properly reported.

3.18. No Trust or Fund Created

Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and an Award recipient or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or its Affiliate.

3.19. No Fractional Shares

No fractional shares shall be issued or delivered pursuant to the Plan or any Award, and the Administrator shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional shares or whether such fractional shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.

3.20. Governing Law

The Plan will be construed and administered in accordance with the laws of the State of New York, without giving effect to principles of conflict of laws.

D - 11 

EX-99.39

Exhibit 99.39

 

Royal Bank Plaza, South Tower 200 Bay Street, Suite 2600 Toronto ON, M5J 2J1 FORM OF PROXY ANNUAL AND SPECIAL MEETING SPROTT INC. (THE “CORPORATION”) WHEN: FRIDAY, MAY 8, 2020 AT 12:00 PM TORONTO TIME WHERE: WWW.VIRTUALSHAREHOLDERMEETING.COM/SII2020 STEP 1 REVIEW YOUR VOTING OPTIONS ONLINE: VOTE AT PROXYVOTE.COM USING YOUR COMPUTER OR MOBILE DATA DEVICE. YOUR CONTROL NUMBER IS LOCATED BELOW. SCAN TO VIEW MATERIAL AND VOTE NOW BY TELEPHONE: YOU MAY ENTER YOUR VOTING INSTRUCTIONS BY TELEPHONE AT: ENGLISH: 1-800-474-7493 OR FRENCH: 1-800-474-7501 BY MAIL: THIS PROXY FORM MAY BE RETURNED BY MAIL IN THE ENVELOPE PROVIDED. REMINDER: PLEASE REVIEW THE MANAGEMENT INFORMATION CIRCULAR DATED MARCH 18, 2020 (THE “CIRCULAR”) BEFORE VOTING. G-13122017 IF YOU VOTE BY MAIL WE NEED TO RECEIVE YOUR VOTING INSTRUCTIONS AT LEAST ONE BUSINESS DAY BEFORE THE PROXY DEPOSIT DATE. CONTROL NO.: PROXY DEPOSIT DATE: WEDNESDAY, MAY 6 AT 12:00 PM (TORONTO TIME) INSTRUCTIONS: This proxy, solicited by Management, for the annual and special meeting (the “Meeting”) of the holders (“Shareholders”) of common shares of Sprott Inc. You have the right to appoint a different person or corporation (with appropriate documentation) of your choice, who need not be a Shareholder, to attend and act on your behalf at the Meeting. If you wish to appoint a person other than the persons whose names are printed herein, please insert the name of your chosen proxyholder (exact name) and create and provide a unique APPOINTEE IDENTIFICATION NUMBER for your appointee to access the live audio webcast Meeting in the space provided (see reverse).The common shares represented by this form of proxy may be voted at the discretion of the proxyholder with respect to amendments or variations to the matters identified in the notice of Meeting and with respect to other matters that may properly be brought before the Meeting. You MUST provide your appointee the EXACT NAME and EIGHT CHARACTER APPOINTEE IDENTIFICATION NUMBER you created to access the Meeting. Appointees can only be validated at the live audio webcast meeting using the EXACT NAME and EIGHT CHARACTER APPOINTEE IDENTIFICATION NUMBER you created. IF YOU DO NOT CREATE AN EIGHT CHARACTER APPOINTEE IDENTIFICATION NUMBER, YOUR APPOINTEE WILL NOT BE ABLE TO ACCESS THE LIVE AUDIO WEBCAST MEETING. This instrument of proxy will not be valid and not be acted upon or voted unless it is completed as outlined herein and delivered to the attention of Proxy Tabulation, P.O. Box 3700, STN Industrial Park, Markham, ON, L3R 9Z9, Canada, by 12:00 p.m. (Toronto time), on Wednesday, May 6, 2020. If the common shares are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered should sign this form of proxy. If you are voting on behalf of a Corporation or another individual, documentation evidencing your power to sign this form of proxy with signing capacity stated may be required. In order to expedite your vote, you may use a touch-tone telephone or the Internet. To vote by telephone, call toll free 1-800-474-7493 (English) or 1-800-474-7501 (French). You will be prompted to provide your control number located above. The telephone or Internet voting service is not available on the day of the meeting and the telephone system cannot be used if you designate another person to attend on your behalf. To vote via the Internet, go to www.proxyvote.com and follow the instructions. IF YOU VOTE BY TELEPHONE OR THE INTERNET, DO NOT MAIL BACK THIS INSTRUMENT OF PROXY. The form of proxy should be signed in the exact manner as the name appears on the form of proxy. If the form of proxy is not dated, it will be deemed to bear the date on which it was mailed to the Shareholder. Proxy will be voted as directed. If no voting preferences are indicated on the reverse, this form of proxy will be voted as recommended by the board of directors. PLEASE SEE OVER 

 

FORM OF PROXY SPROTT INC. (THE “CORPORATION”) MEETING TYPE: ANNUAL AND SPECIAL MEETING MEETING DATE: FRIDAY, MAY 8, 2020 AT 12:00 PM TORONTO TIME RECORD DATE: WEDNESDAY, MARCH 18, 2020 PROXY DEPOSIT DATE: WEDNESDAY, MAY 6 AT 12:00 PM (TORONTO TIME) CUID: ACCOUNT NO: CUSIP: CONTROL NO.: STEP 2 APPOINT A PROXY (OPTIONAL) APPOINTEE(S): PETER GROSSKOPF, CHIEF EXECUTIVE OFFICER OF THE CORPORATION, WHOM FAILING KEVIN HIBBERT, CHIEF FINANCIAL OFFICER OF THE CORPORATION Change Appointee If you wish to designate another person to attend, vote and act on your behalf at the Meeting, or any adjournment or postponement thereof, other than the person(s) specified above, print the name of the other person attending the Meeting in the space provided herein (exact name) and provide a unique APPOINTEE IDENTIFICATION NUMBER USING ALL BOXES for your appointee to access the Meeting. You may choose to direct how your appointee shall vote on matters that may come before the Meeting or any adjournment or postponement thereof. Unless you instruct otherwise your appointee will have full authority to attend, vote, and otherwise act in respect of all matters that may come before the Meeting or any adjournment or postponement thereof, even if these matters are not set out in the proxy form or the Circular for the Meeting. You MUST create and provide your appointee the EXACT NAME and an EIGHT (8) CHARACTER APPOINTEE IDENTIFICATION NUMBER you created to access the Meeting. Appointees can only be validated at the live audio webcast Meeting using the EXACT NAME and EIGHT (8) CHARACTER APPOINTEE IDENTIFICATION NUMBER you enter below. CREATE AN EIGHT (8) CHARACTER IDENTIFICATION NUMBER PLEASE PRINT APPOINTEE NAME INSIDE THE BOX FOR YOUR APPOINTEE E-R6 MAXIMUM 22 CHARACTERS - PLEASE PRINT CLEARLY MUST BE EIGHT CHARACTERS IN LENGTH - PLEASE PRINT CLEARLY STEP 3 COMPLETE YOUR VOTING DIRECTIONS 01 ELECTION OF DIRECTORS: VOTING RECOMMENDATION: FOR ALL THE NOMINEES PROPOSED AS DIRECTORS (FILL IN ONLY ONE BOX “ “ PER NOMINEE IN BLACK OR BLUE INK) FOR WITHHOLD 01 RONALD DEWHURST 02 GRAHAM BIRCH 03 PETER GROSSKOPF 04 SHARON RANSON 05 ARTHUR RICHARDS RULE IV 06 ROSEMARY ZIGROSSI ITEM(S): VOTING RECOMMENDATIONS ARE INDICATED BY HIGHLIGHTED TEXT OVER THE BOXES (FILL IN ONLY ONE BOX “ ” PER ITEM IN BLACK OR BLUE INK) 02 APPOINTMENT OF AUDITORS RE-APPOINTMENT OF KPMG LLP, CHARTED ACCOUNTANTS AS AUDITORS OF FOR WITHHOLD THE CORPORATION, AND TO AUTHORIZE THE BOARD OF DIRECTORS OF THE CORPORATION TO FIX THEIR REMUNERATION AND TERMS OF ENGAGEMENT. 03 APPROVAL OF THE COMMON SHARE CONSOLIDATION TO CONSIDER AND, IF DEEMED ADVISABLE, PASS A SPECIAL RESOLUTION FOR AGAINST APPROVING AN AMENDMENT TO THE ARTICLES OF THE CORPORATION FOR THE FUTURE CONSOLIDATION OF THE CORPORATION’S ISSUED AND OUTSTANDING COMMON SHARES ON THE BASIS OF ONE (1) POST CONSOLIDATION COMMON SHARE FOR UP TO TEN (10) PRE-CONSOLIDATION COMMON SHARES, IF, AND AT SUCH TIME FOLLOWING THE DATE OF THE MEETING, AS MAY BE DETERMINED BY THE BOARD IN ITS SOLE DISCRETION. 04 APPROVAL OF THE 2020 AMENDED AND RESTATED STOCK OPTION PLAN TO CONSIDER AND, IF THOUGHT ADVISABLE, TO PASS, WITH OR WITHOUT FOR AGAINST AMENDMENT, AN ORDINARY RESOLUTION TO APPROVE, CONFIRM AND RATIFY THE 2020 AMENDED AND RESTATED STOCK OPTION PLAN OF THE CORPORATION. 05 APPROVAL OF THE 2020 AMENDED AND RESTATED EMPLOYEE PROFIT SHARING PLAN FOR AGAINST TO CONSIDER AND, IF THOUGHT ADVISABLE, TO PASS, WITH OR WITHOUT AMENDMENT, AN ORDINARY RESOLUTION TO APPROVE, CONFIRM AND RATIFY THE 2020 AMENDED AND RESTATED EMPLOYEE PROFIT SHARING PLAN FOR NON-U.S. EMPLOYEES OF THE CORPORATION AND ITS AFFILIATED ENTITIES. 06 APPROVAL OF THE 2020 AMENDED AND RESTATED EQUITY INCENTIVE PLAN FOR U.S. SERVICE PROVIDERS FORAGAINST TO CONSIDER AND, IF THOUGHT ADVISABLE, TO PASS, WITH OR WITHOUT AMENDMENT, AN ORDINARY RESOLUTION TO APPROVE, CONFIRM AND RATIFY THE 2020 AMENDED AND RESTATED EQUITY INCENTIVE PLAN FOR U.S. SERVICE PROVIDERS OF THE CORPORATION AND ITS AFFILIATED ENTITIES. STEP 4 THIS DOCUMENT MUST BE SIGNED AND DATED SIGNATURE(S) *INVALID IF NOT SIGNED* M M D D YY 

EX-99.40

Exhibit 99.40

SPROTT INC.

Report of Voting Results

Submitted Pursuant to

Section 11.3 of National Instrument 51-102 – Continuous Disclosure Obligations

May 8, 2020

The following briefly describes the matters voted upon and the outcome of the votes at the annual and special meeting (the “Meeting”) of shareholders (“Shareholders”) of Sprott Inc. (the “Company”) held on May 8, 2020.

At the Meeting, Shareholders voted by ballot on the following matters:

1.       Election of Directors

The election of each of the following proposed director nominees with the results of voting set forth opposite the name of each nominee:

Nominee	Votes For	%	Votes Withheld	%
Ronald Dewhurst	127,781,470	99.15%	1,089,004	0.85%
Graham Birch	128,106,903	99.41%	763,571	0.59%
Peter Grosskopf	127,609,289	99.02%	1,261,185	0.98%
Sharon Ranson	127,728,812	99.11%	1,141,662	0.89%
Arthur Richards Rule IV	127,868,564	99.22%	1,001,910	0.78%
Rosemary Zigrossi	127,490,007	98.93%	1,380,467	1.07%

2.       Appointment of Auditors

A resolution re-appointing KPMG LLP as auditors of the Company was passed. The results of the vote were:

Votes For	%	Votes Withheld	%
168,307,456	99.33%	1,142,502	0.67%

3.       Approval of the Common Share Consolidation

A special resolution authorizing the future consolidation of the Company’s issued and outstanding common shares on the basis of one (1) post-consolidation common share for up to ten (10) pre-consolidation common shares at such time as the Company’s board of directors so determines was passed. The results of the vote were:

Votes For	%	Votes Against	%
163,659,988	96.58%	5,789,970	3.42%

4.       Approval of the 2020 Amended and Restated Stock Option Plan

A resolution approving the 2020 Amended and Restated Stock Option Plan, and related matters, as more particularly described in the Management Information Circular dated March 18, 2020 (the “Circular”) of the Company was passed. The results of the vote were:

Votes For	%	Votes Against	%
110,576,330	85.74%	18,383,433	14.26%

2

5.       Approval of the 2020 Amended and Restated Employee Profit Sharing Plan

A resolution approving the 2020 Amended and Restated Employee Profit Sharing Plan for non-U.S. employees, and related matters, as more particularly described in the Circular of the Company was passed. The results of the vote were:

Votes For	%	Votes Against	%
100,327,639	77.80%	28,632,124	22.20%

6. Approval of the 2020 Amended and Restated Equity Incentive Plan for U.S. Service Providers

A resolution approving the 2020 Amended and Restated Equity Incentive Plan for U.S. Service Providers of the Company and its affiliates, and related matters, as more particularly described in the Circular of the Company was passed. The results of the vote were:

Votes For	%	Votes Against	%
104,141,785	80.76%	24,817,978	19.24%

DATED this 8^th day of May, 2020.

SPROTT INC.

Per:	/s/ “Arthur Einav”
	Arthur Einav
	Corporate Secretary

EX-99.41

Exhibit 99.41

ASSET PURCHASE AGREEMENT

by and among

TOCQUEVILLE ASSET MANAGEMENT LP,

SPROTT ASSET MANAGEMENT LP

and

SPROTT INC.

dated as of August 6, 2019

TABLE OF CONTENTS

Page

Article I
PURCHASE AND SALE
Section 1.1	Purchase and Sale of the Purchased Assets	1
Section 1.2	Excluded Assets	2
Section 1.3	Assumed Liabilities	2
Section 1.4	Retained Liabilities	2
Section 1.5	Closing	2
Section 1.6	Closing Deliverables	2
Section 1.7	Sale Consideration	3
Section 1.8	Contingent Payments	3
Section 1.9	Withholding	7
Article II
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 2.1	Organization and Formation	8
Section 2.2	Authority	8
Section 2.3	No Violation	9
Section 2.4	Consents and Approvals	9
Section 2.5	Ownership of Purchased Assets	10
Section 2.6	Absence of Changes	10
Section 2.7	Material Contracts	10
Section 2.8	Compliance With Law; Permits	10
Section 2.9	Regulatory Documents; Investment Adviser Matters	11
Section 2.10	Base Revenue Run-Rate Schedule; Clients.	12
Section 2.11	Public Funds	13
Section 2.12	Separate Account Clients	15
Section 2.13	Proceedings	16
Section 2.14	Seller Benefit Plans; Employee Matters	16
Section 2.15	Intellectual Property	17
Section 2.16	Taxes	18
Section 2.17	Records	19
Section 2.18	Certain Securities Law Matters	19
Section 2.19	Investment Intention	20
Section 2.20	Brokers and Finders	20
Section 2.21	No Other Representations and Warranties	20

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Article III
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 3.1	Organization	21
Section 3.2	Authority	21
Section 3.3	No Violations	21
Section 3.4	Consents and Approvals	22
Section 3.5	Proceedings	22
Section 3.6	Sufficiency of Funds	22
Section 3.7	Solvency	22
Section 3.8	Brokers and Finders	22
Section 3.9	No Other Representations and Warranties	22
Article IV
REPRESENTATIONS AND WARRANTIES OF BUYER PARENT
Section 4.1	Organization	23
Section 4.2	Authority	23
Section 4.3	No Violations	24
Section 4.4	Consents and Approvals	24
Section 4.5	Capitalization	24
Section 4.6	Canadian Securities Laws Matters	24
Section 4.7	No Other Representations and Warranties	25
Article V
COVENANTS
Section 5.1	Pre-Closing Conduct of Business by Seller	26
Section 5.2	Client Consents	28
Section 5.3	Pre-Closing Access; Post-Closing Access	30
Section 5.4	Confidentiality; Announcements	31
Section 5.5	Regulatory Matters	32
Section 5.6	Expenses	33
Section 5.7	Third-Party Consents	33
Section 5.8	Additional Financial Information	34
Section 5.9	Revenue Run-Rate Schedules	34
Section 5.10	Efforts of Parties to Close	34
Section 5.11	Sprott Shares	35
Section 5.12	Further Assurances	35
Section 5.13	No Solicitation	35
Section 5.14	Employee Benefits	35
Section 5.15	Certain Notifications	37
Section 5.16	Non-Compete	37
Section 5.17	Delivery of Closing Revenue Run-Rate Schedule	38
Section 5.18	Section 15(f)	38
Section 5.19	Wrong Pockets	39
Section 5.20	Name Change	40
Section 5.21	Transfer Restrictions	40

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Article VI
CONDITIONS TO THE CONSUMMATION OF THE Transactions
Section 6.1	Mutual Conditions	40
Section 6.2	Conditions to the Obligation of Buyer and Buyer Parent	41
Section 6.3	Conditions to the Obligation of Seller	42
Section 6.4	Frustration of Closing Conditions, etc.	42
Article VII
TERMINATION
Section 7.1	Termination	43
Section 7.2	Survival After Termination	43
Article VIII
INDEMNIFICATION
Section 8.1	Survival of Representations, Warranties, Covenants and Other Agreements	44
Section 8.2	Indemnification	44
Section 8.3	Indemnification Procedure	45
Section 8.4	Limitation of Liability	47
Section 8.5	Effect on Final Purchase Price	48
Section 8.6	Calculation of Losses	48
Section 8.7	No Duplication	48
Section 8.8	Exclusive Remedy	48
Section 8.9	Assignment of Claims	49
Article IX
MISCELLANEOUS
Section 9.1	Amendments; Waiver	49
Section 9.2	Entire Agreement, etc.	49
Section 9.3	Interpretation	49
Section 9.4	Disclosure Schedules	51
Section 9.5	Severability	51
Section 9.6	Notices	51
Section 9.7	No Assignment; Binding Effect; Persons Benefiting	52
Section 9.8	Specific Performance	53
Section 9.9	Counterparts	53
Section 9.10	Tax Matters	54
Section 9.11	Governing Law	54
Section 9.12	Consent to Jurisdiction; Waiver of Jury Trial	55
Section 9.13	No Recourse	55

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Annexes
Annex A	Definitions
Exhibits
Exhibit A	Form of Assignment and Assumption Agreement
Exhibit B-1	Purchased Assets
Exhibit B-2	Excluded Assets
Exhibit B-3	Assumed Liabilities
Exhibit B-4	Retained Liabilities
Exhibit C	Consents and Approvals
Exhibit D	Transfer Restrictions
Exhibit E	Assumed Contracts
Exhibit F	Seller Knowledge Persons
Exhibit G	Buyer Knowledge Persons
Exhibit H	Sample “Net Fee Revenue” Calculation

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT, dated as of August 6, 2019 (this “Agreement”), is by and among Tocqueville Asset Management LP, a limited partnership formed under the laws of the State of Delaware (“Seller”), Sprott Asset Management LP, a limited partnership formed under the laws of the Province of Ontario (“Buyer”) and Sprott Inc., a corporation existing under the laws of the Province of Ontario (“Buyer Parent”). For all purposes of this Agreement, capitalized terms shall have the meanings set forth in Annex A.

W I T N E S S E T H:

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the Purchased Assets (as defined herein) upon the terms and subject to the conditions set forth herein;

WHEREAS, concurrently with the execution of this Agreement, and as an inducement to the willingness of Buyer and Buyer Parent to enter into this Agreement, each of the Key Employees has executed and delivered an employment agreement (each, an “Employment Agreement” and, collectively, the “Employment Agreements”) with the Employer, each of which will become effective by its terms upon the Closing;

WHEREAS, Seller desires to transfer to John Hathaway all or a portion of the Closing Share Consideration and the Final Year 1 Share Portion (any such transfer, a “Key Employee Transfer”); and

WHEREAS, the parties contemplate that, upon the terms and subject to the conditions set forth herein, at the Closing, the parties and/or certain Affiliates thereof shall enter into a bill of sale and assignment and assumption agreement, substantially in the form attached hereto as Exhibit A (the “Assignment and Assumption Agreement”);

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and other agreements herein set forth, intending to be legally bound, the parties hereto agree as follows:

Article I

PURCHASE AND SALE

Section 1.1Purchase and Sale of the Purchased Assets.

(a)Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyer will purchase from Seller, and Seller shall sell, assign, transfer, convey and deliver to Buyer, free and clear of all Encumbrances (other than Permitted Encumbrances), all of its rights, title and interest in the assets set forth on Exhibit B-1 (the “Purchased Assets”) in consideration for payment by Buyer of an aggregate amount equal to the Sale Consideration and the assumption by Buyer of the Assumed Liabilities.

(b)Subject to Section 5.7, to the extent that Seller’s rights under any Purchased Asset (including any Assumed Contract but excluding the Advisory Contract with the Gold Fund) may not be assigned to Buyer without the consent of another Person (whether because such an unconsented assignment would (i) constitute a breach or contravention of such Person’s rights or (ii) be deemed ineffective) and such consent has not been obtained as of the Closing, then this Agreement shall not constitute an agreement to assign the same until such consent is obtained.

Section 1.2Excluded Assets. Notwithstanding anything contained in this Agreement (including Section 1.1) to the contrary, Seller is not selling, transferring, conveying or delivering (or causing to be sold, transferred, conveyed or delivered), and Buyer is not purchasing, any assets or properties of Seller or any of its Affiliates or any other Person, in each case other than the Purchased Assets (all such assets and properties other than the Purchased Assets being referred to herein as the “Excluded Assets”). Without limiting the generality of the foregoing, the Excluded Assets include the assets and properties set forth on Exhibit B-2.

Section 1.3Assumed Liabilities. Upon the terms and subject to the conditions set forth in this Agreement, Buyer shall assume and shall agree to pay, perform and discharge, effective as of the Closing, and from and after the Closing, Buyer shall pay, perform and discharge when due, only those Liabilities specifically set forth on Exhibit B-3 (the “Assumed Liabilities”).

Section 1.4Retained Liabilities. Notwithstanding anything contained in this Agreement to the contrary, Seller shall retain and be solely liable for, and Buyer shall not assume or become responsible for, any Liabilities of Seller or any of its Affiliates other than the Assumed Liabilities (all such Liabilities other than the Assumed Liabilities, the “Retained Liabilities”). Without limiting the generality of the foregoing, the Retained Liabilities include the Liabilities set forth on Exhibit B-4.

Section 1.5Closing. The consummation of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities (the “Closing”) shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York, at 10:00 a.m., New York City time, on the latest to occur of (a) January 3, 2020, (b) the fifth Business Day following the date on which all of the conditions set forth in Article VI (other than conditions that relate to actions to be taken at the Closing, but subject to the satisfaction or waiver thereof at the Closing) have been satisfied or waived by the parties entitled to the benefits thereto, and (c) the date of the closing of the Gold Fund Reorganization or the Business Day immediately prior to such date of the closing of the Gold Fund Reorganization, or such other date, time and place as Buyer and Seller shall mutually agree in writing (the date on which the Closing takes place being referred to herein as the “Closing Date”).

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Section 1.6Closing Deliverables. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing:

(a)Buyer and Buyer Parent shall deliver (or cause to be delivered):

(i)to Seller, by Wire Transfer, an amount equal to the Closing Cash Consideration;

(ii)to Seller, evidence of the issuance by Buyer Parent of the Closing Share Consideration to Seller as the beneficial holder;

(iii)to Seller, the certificate required to be provided by Buyer pursuant to Section 6.3(c); and

(iv)to the applicable counterparties thereto, each Ancillary Agreement (other than the Employment Agreements) to which Buyer or any of its Affiliates is a party, duly executed by Buyer or such Affiliate (as applicable); provided that this Section 1.6(a)(iv) shall not obligate Buyer to deliver (or cause to be delivered) at the Closing any Ancillary Agreement that it or any of its Affiliates executes and delivers simultaneously with the execution and delivery of this Agreement.

(b)Seller shall deliver (or cause to be delivered):

(i)to Buyer, the certificate required to be provided by Seller pursuant to Section 6.2(c); and

(ii)to the applicable counterparties thereto, each Ancillary Agreement (other than the Employment Agreements) to which it or any other Seller Party is a party, duly executed by such Seller Party; provided that this Section 1.6(b)(ii) shall not obligate Seller to deliver (or cause to be delivered) at the Closing any Ancillary Agreement that it or any of its Affiliates executes and delivers simultaneously with the execution and delivery of this Agreement; and

(iii)to Buyer, a non-foreign affidavit dated as of the Closing Date, sworn under penalty of perjury and in the form and substance required under Treasury Regulations issued pursuant to Section 1445 of the Code, stating that Seller is not a “foreign person” as defined in Section 1445 of the Code.

Section 1.7Sale Consideration. The aggregate consideration to be paid by Buyer to Seller in respect of the purchase and sale of the Purchased Assets (the “Sale Consideration”) shall consist of:

(a)an amount in cash equal to $10,000,000 (the “Closing Cash Consideration”) by Wire Transfer; plus

(b)the Closing Share Consideration; plus

(c)any cash and Sprott Shares paid or delivered by Buyer and/or Buyer Parent to Seller pursuant to Section 1.8 (if applicable).

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Section 1.8Contingent Payments.

(a)Contingent Payments. As further consideration for the purchase and sale of the Purchased Assets by Buyer, if applicable, Buyer and Buyer Parent shall make the following additional payments in the form of cash and Sprott Shares (as applicable), in each case subject to the terms and conditions of this Section 1.8:

(i)following the Year 1 Calculation Date, the Year 1 Cash Portion and the Year 1 Share Portion; and

(ii)following the Year 2 Calculation Date, the Year 2 Contingent Payment Amount.

(b)Contingent Payment Statements; Payment of Estimated Contingent Payment Amounts. As soon as reasonably practicable following each Contingent Payment Calculation Date, and in no event later than 60 days thereafter, Buyer shall prepare and deliver to Seller a schedule (each such schedule, a “Contingent Payment Statement”) setting forth in reasonable detail (i) the calculation of Net Fee Revenues as of the applicable Contingent Payment Calculation Date, (ii) the calculation of the applicable Contingent Payment Amount based on the foregoing (each such calculation, an “Estimated Contingent Payment Amount”) and (iii) in the case of the Contingent Payment Statement for the Year 1 Calculation Date, the calculation of the Year 1 Cash Portion (the “Estimated Year 1 Cash Portion”) and the calculation of the Year 1 Share Portion (the “Estimated Year 1 Share Portion”), if any. On the same date on which any Contingent Payment Statement is delivered to Seller, if applicable, Buyer shall (A) in the case of the Contingent Payment Statement for the Year 1 Calculation Date, pay (or cause to be paid) to Seller by Wire Transfer an amount equal to the Estimated Year 1 Cash Portion and (B) in the case of the Contingent Payment Statement for the Year 2 Calculation Date, pay (or cause to be paid) to Buyer by Wire Transfer an amount equal to the Estimated Contingent Payment Amount as set forth in such Contingent Payment Statement.

(c)Disagreement; Payment of Final Contingent Payment Amounts.

(i)Following the delivery of each Contingent Payment Statement, Buyer shall provide Seller with (or shall cause Seller to be provided with) such access to the books and records, working papers and personnel of Buyer and its accountants relating to the preparation of such Contingent Payment Statement as may be reasonably requested by Seller.

(ii)If Seller disagrees with any aspect of any Contingent Payment Statement, Seller may give written notice of such disagreement (a “Notice of Disagreement”) to Buyer no later than 45 days following receipt by Seller of the applicable Contingent Payment Statement. The Notice of Disagreement shall specify, in reasonable detail, the amount of the proposed adjustment for each item or amount in dispute (each, a “Disputed Item”) and the basis of Seller’s disagreement therewith, together with supporting calculations and a calculation of the resulting Contingent Payment Amount and, if applicable, the Year 1 Cash Portion and Year 1 Share Portion, if any. The failure by Seller to deliver a Notice of Disagreement within such 45-day period shall constitute Seller’s acceptance of the applicable Contingent Payment Statement, and the applicable Contingent Payment Statement and the calculations therein shall be deemed final and binding on the parties hereto. If Buyer and Seller agree upon any Contingent Payment Statement (where applicable, as revised pursuant to Section 1.8(c)(iii)), they shall signify such agreement in a writing signed by both parties.

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(iii)If the Notice of Disagreement is timely delivered by Seller as provided herein, Buyer, on the one hand, and Seller, on the other hand, shall, during the 15-day period following receipt by Buyer of the Notice of Disagreement, attempt in good faith to reach agreement on any Disputed Items set forth in the Notice of Disagreement. If Seller and Buyer reach a written agreement with respect to all of the Disputed Items, Seller and Buyer shall mutually revise the applicable Contingent Payment Statement to give effect to such agreement, and the applicable Contingent Payment Statement as so revised shall be final and binding upon the parties hereto. All negotiations pursuant to this Section 1.8(c)(iii) shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules of evidence, and shall not be used for any purpose other than to compromise and settle the Disputed Items.

(iv)If Buyer and Seller fail to reach agreement on one or more of the Disputed Items within 15 days after receipt by Buyer of such Notice of Disagreement, either Buyer or Seller may promptly refer the remaining Disputed Item(s) for determination and resolution to a nationally recognized accounting firm to be mutually agreed by Buyer and Seller; provided that, if Buyer and Seller do not mutually agree upon such Person within five Business Days of the end of such 15-day period, Buyer or Seller may request the American Arbitration Association (or successor thereof) to select a qualified, nationally recognized accounting firm having no material business relationship with any party hereto (or any of its respective Affiliates) that would reasonably be expected to result in a conflict of interest under applicable professional responsibility rules (such accounting firm so agreed or selected, the “Independent Accountant”). Each of Seller and Buyer agree to enter into a customary engagement letter with the Independent Accountant. The Independent Accountant shall act as an expert (and not as an arbitrator) to determine only those unresolved Disputed Items specifically set forth and objected to in the Notice of Disagreement, as submitted to it by Buyer or Seller, and shall be instructed that its determination on such unresolved Disputed Items must be made in accordance with the terms and definitions of this Agreement.

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(v)At the time of submission of the Disputed Items to the Independent Accountant, Buyer and Seller shall each submit a written statement setting forth in such detail as they deem appropriate their respective positions with respect to only the Disputed Items. Buyer and Seller shall also have the opportunity to submit a written response to the other party’s written statement, no later than 10 days following the date of receipt of the other party’s initial written statement. The failure of a party to timely deliver its initial written statement or response to the other party’s initial written statement shall constitute a waiver of such party’s right to submit the same, unless the Independent Accountant determines otherwise. There shall be no ex parte communications between Buyer or Seller (or any of their respective agents or representatives) and the Independent Accountant with respect to the Disputed Items. All written communications to or from the Independent Accountant, on the one hand, and Buyer or Seller (or any of their respective agents or representatives), on the other hand, shall be delivered simultaneously to the other party. Neither Buyer nor Seller may disclose to the Independent Accountant, and the Independent Accountant may not consider for any purpose, any settlement discussions or settlement offer(s) made by or on behalf of either Buyer or Seller unless otherwise agreed by Buyer and Seller. The Independent Accountant shall make its determination of the Disputed Items submitted to it based solely on the submissions of Buyer or Seller to the Independent Accountant in accordance with this Agreement, and not on the basis of independent review. The Independent Accountant shall not conduct any independent review of any matters. The determination of the Independent Accountant with respect to each Disputed Item shall be within the range represented by Buyer’s and Seller’s respective positions, as set forth in the applicable Contingent Payment Statement or the applicable Notice of Disagreement, respectively. Each of Buyer and Seller shall use its commercially reasonable efforts to cause the Independent Accountant to deliver to Buyer and Seller, as promptly as practicable, and in any event no later than 45 days after referral of the Disputed Items to the Independent Accountant, a written decision setting forth its determination with respect to each of the Disputed Items; provided that the failure of the Independent Accountant to deliver its written decision within such time period shall not constitute a defense or objection to the finality or enforcement of such determination. The determination of the Independent Accountant shall be final, conclusive and binding upon the parties hereto and shall not be subject to appeal, such determination may be enforced and judgment thereupon entered in any court of competent jurisdiction, and the items and amounts so determined shall be used to complete the applicable Contingent Payment Statement. The fees and expenses of the Independent Accountant shall be borne by Buyer, on the one hand, and Seller, on the other hand, in inverse proportion as they may prevail on the matters resolved by the Independent Accountant, which allocation shall be calculated on an aggregate basis based on the relative dollar values of the amounts in dispute and shall be determined by the Independent Accountant at the time the Independent Accountant renders its determination on the merits of the matters submitted to it.

(vi)The Year 1 Contingent Payment Amount, the Year 1 Cash Portion and Year 1 Share Portion, if any, set forth in the Contingent Payment Statement for the Year 1 Calculation Date (A) as agreed upon between Buyer and Seller or otherwise accepted by Seller pursuant to Section 1.8(c)(ii) or Section 1.8(c)(iii) or (B) as finally determined by the Independent Accountant pursuant to Section 1.8(c)(v) (as applicable) shall be the “Final Year 1 Contingent Payment Amount”, the “Final Year 1 Cash Portion” and the “Final Year 1 Share Portion”, if any, respectively.

(vii)The Year 2 Contingent Payment Amount set forth in the Contingent Payment Statement for the Year 2 Calculation Date (A) as agreed upon between Buyer and Seller or otherwise accepted by Seller pursuant to Section 1.8(c)(ii) or Section 1.8(c)(iii) or (B) as finally determined by the Independent Accountant pursuant to Section 1.8(c)(v) (as applicable) shall be the “Final Year 2 Contingent Payment Amount”.

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(d)Post-Closing Payments.

(i)With respect to the Year 1 Calculation Date:

(A)if the Final Year 1 Cash Portion is greater than the Estimated Year 1 Cash Portion, then Buyer shall promptly (and in any event no later than five Business Days) following the determination of the Final Year 1 Cash Portion pursuant to Section 1.8(c)(vi) pay (or cause to be paid) by Wire Transfer to Seller an amount in cash equal to the excess of the Final Year 1 Cash Portion over the Estimated Year 1 Cash Portion;

(B)if the Final Year 1 Cash Portion is less than the Estimated Year 1 Cash Portion, then Seller shall promptly (and in any event no later than five Business Days) following the determination of the Final Year 1 Cash Portion pursuant to Section 1.8(c)(vi) pay (or cause to be paid) by Wire Transfer to Buyer an amount in cash equal to the excess of the Estimated Year 1 Cash Portion over the Final Year 1 Cash Portion; and

(C)Buyer Parent shall promptly (and in any event no later than five Business Days) following the determination of the Final Year 1 Share Portion pursuant to Section 1.8(c)(vi) deliver (or cause to be delivered) to Seller, evidence of the issuance of the Final Year 1 Share Portion by Buyer Parent to Seller as the beneficial holder.

(ii)With respect to the Year 2 Calculation Date:

(A)if the Final Year 2 Contingent Payment Amount is greater than the Estimated Contingent Payment Amount for the Year 2 Calculation Date (the “Estimated Year 2 Contingent Payment Amount”), then Buyer shall promptly (and in any event no later than five Business Days) following the determination of the Final Year 2 Contingent Payment Amount pursuant to Section 1.8(c)(vii) pay (or cause to be paid) by Wire Transfer to Seller an amount in cash equal to the excess of the Final Year 2 Contingent Payment Amount over the Estimated Year 2 Contingent Payment Amount; and

(B)if the Final Year 2 Contingent Payment Amount is less than the Estimated Year 2 Contingent Payment Amount, then Seller shall promptly (and in any event no later than five Business Days) following the determination of the Final Year 2 Contingent Payment Amount pursuant to Section 1.8(c)(vii) pay (or cause to be paid) by Wire Transfer to Buyer an amount in cash equal to the excess of the Estimated Year 2 Contingent Payment Amount over the Final Year 2 Contingent Payment Amount.

(e)Notwithstanding anything to the contrary contained herein, any payments under Section 1.8(d) shall be treated as adjustments to the Sale Consideration for any Tax purposes, except as otherwise required by Law.

Section 1.9Withholding. Buyer shall be entitled to deduct and withhold from amounts payable to any Person pursuant to this Agreement or any Ancillary Agreement all amounts that the Buyer reasonably determines may be required to be deducted and withheld under any provision of applicable Tax Law. All such withheld amounts shall be treated as having been paid to the Person in respect of which such deduction and withholding was made.

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Article II

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in a correspondingly labeled section of the written disclosure schedule delivered by Seller on or prior to the date of this Agreement (the “Seller Disclosure Schedule”) (it being agreed that any matter disclosed in any section or subsection of the Seller Disclosure Schedule shall be deemed disclosed in any other section or subsection of the Seller Disclosure Schedule to the extent that such information is reasonably apparent on its face to be applicable to such other section or subsection notwithstanding the omission of any cross-reference to such other section or subsection), Seller hereby represents and warrants to Buyer as follows:

Section 2.1Organization and Formation. Seller (a) is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, (b) has the requisite power and authority necessary to carry on the Business as it is now being conducted and to own, lease and operate all of its material properties and assets used in connection with the Business, and (c) is duly licensed or qualified to do business and, with respect to jurisdictions that recognize the concept of “good standing,” in good standing in each jurisdiction in which the nature of the Business as conducted by it or the character or location of the properties and assets owned, leased or operated by it in connection with the Business makes such qualification or licensing necessary under Law, except, in the case of clause (c) above, where the failure to be so licensed, qualified and in good standing would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect. No Person, other than Seller, operates any part of the Business, and no Person, other than Seller, owns, leases, or operates any properties and assets used in connection with the operation by Seller of the Business.

Section 2.2Authority. Each Seller Party has all requisite power and authority to execute and deliver this Agreement and/or each Ancillary Agreement to which it is (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by each Seller Party of this Agreement and/or each Ancillary Agreement to which it is (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) a party has been (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be), and the consummation by it of the transactions contemplated hereby and thereby has been (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be), duly and validly authorized and approved by all required actions on the part of Seller Party. This Agreement and each Ancillary Agreement to which any Seller Party is a party has been (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) duly and validly executed and delivered by such Seller Party and (assuming due authorization, execution and delivery by the other parties hereto and thereto) this Agreement and each Ancillary Agreement to which any Seller Party is a party constitutes (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will constitute) legal, valid and binding obligations of such Seller Party, enforceable against such Seller Party in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, rehabilitation, liquidation, fraudulent conveyance, preferential transfer or similar laws now or hereafter in effect affecting creditors’ rights and remedies generally and except as the availability of equitable remedies may be limited by equitable principles of general applicability (regardless of whether enforcement is sought in a proceeding at law or in equity).

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Section 2.3No Violation. Except as set forth in Section 2.4, neither the execution, delivery or performance of this Agreement or any Ancillary Agreement to which any Seller Party is (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) a party, nor the consummation by any Seller Party of the transactions contemplated hereby or thereby, will, with or without the giving of notice, the termination of any grace period or both: (a) violate, conflict with, or result in a breach or default under any material provision of the Organizational Documents of any Seller Party; (b) violate any Law applicable to any Seller Party; (c) result in a violation or breach by any Seller Party of, conflict with or constitute (with or without due notice or lapse of time or both) a breach or default (or give rise to any right of termination, cancellation, payment or acceleration) under any material Contract to which any Seller Party is a party or by which any Seller Party or any of their respective properties or assets are bound; or (d) result in the creation of any Encumbrance (other than Permitted Encumbrances) upon, or the termination or material restriction of any right, title or interest in or to, any of the Purchased Assets, except for, in the case of clauses (b) and (c) of this Section 2.3, any violation, breach, conflict, default or right of termination, cancellation, payment or acceleration that would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

Section 2.4Consents and Approvals. Except (a) as set forth on Exhibit C, (b) for the Client consents contemplated by Section 5.2, (c) for any consent, approval or notice that may be required solely by reason of the participation of Buyer and its Affiliates (as opposed to any other third-party acquirer) in the transactions contemplated hereby, and (d) for those consents, approvals, filings and registrations the failure of which to be obtained or made would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect, no consent, waiver or approval, or filing, notification or registration with, any Governmental Authority or other third party is required of or with respect to any Seller Party in connection with the execution and delivery of this Agreement or any Ancillary Agreement to which any Seller Party is a party or the consummation of the transactions contemplated hereby or thereby, except for such consents, waivers or approvals, filings, notifications or registrations which, in the aggregate, would not have a Seller Material Adverse Effect.

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Section 2.5Ownership of Purchased Assets. Seller has, and upon the Closing will transfer to Buyer, good and marketable title to, or, in the case of Purchased Assets that are subject to a lease, license or other Contract right, valid and subsisting leasehold, license or Contract interests in, each of the Purchased Assets, in each case free and clear of all Encumbrances, except for Permitted Encumbrances or Encumbrances created by Buyer.

Section 2.6Absence of Changes. Since October 31, 2018 through the date hereof, (a) Seller has conducted the Business in the ordinary course in all material respects and (b) Seller has not taken any action that, if proposed to be taken after the date hereof, would require the consent of Buyer under Section 5.1(b). Since October 31, 2018 through the date hereof, there has not been any Seller Material Adverse Effect.

Section 2.7Material Contracts.

(a)Section 2.7(a) of the Seller Disclosure Schedule contains a complete and correct list of all Material Contracts in existence on the date hereof.

(b)Each Material Contract is valid, binding and in full force and effect, and is enforceable in accordance with its terms against (i) Seller and (ii) to the Knowledge of Seller, each party thereto, in each case subject to applicable bankruptcy, insolvency, reorganization, moratorium, rehabilitation, liquidation, fraudulent conveyance, preferential transfer or similar laws now or hereafter in effect affecting creditors’ rights and remedies generally and except as the availability of equitable remedies may be limited by equitable principles of general applicability. As of the date hereof, Seller is not, and, as of the Closing, Seller will not be, in material breach of, or material default under, any Material Contract, nor, to the Knowledge of Seller, is any other party to any Material Contract in material breach of, or material default under any Material Contract.

Section 2.8Compliance With Law; Permits.

(a)(i) Seller (to the extent related to the Business), each Sponsored Public Fund and, to the Knowledge of Seller, each Non-Sponsored Public Fund is currently, and has been since December 31, 2016, in compliance in all material respects with all applicable Laws, and (ii) since December 31, 2016 to the date hereof, none of the Seller Parties or Sponsored Public Funds or, to the Knowledge of Seller, Non-Sponsored Public Funds has received any written notice from any Person or Governmental Authority asserting any material violation by Seller, any other Seller Party, any Sponsored Public Fund or, to the Knowledge of Seller, any Non-Sponsored Public Fund of any applicable Law, which, in the aggregate, would have a Seller Material Adverse Effect.

(b)Seller (to the extent related to the Business), each Sponsored Public Fund and, to the Knowledge of Seller, each Non-Sponsored Public Fund holds, and at all times since December 31, 2016 has held, all material Permits necessary for the conduct of the Business under and pursuant to Law, and Seller, each Sponsored Public Fund and, to the Knowledge of Seller, each Non-Sponsored Public Fund is, and has been since December 31, 2016, in compliance in all material respects with all such Permits. All such Permits are in full force and effect and are not subject to any suspension, cancellation, material modification or revocation or any Proceedings related thereto, and, to the Knowledge of Seller, no such suspension, cancellation, material modification or revocation or Proceeding is threatened as of the date hereof, except in the case where the failure to so hold all such Permits would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

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(c)Since December 31, 2015 until the date hereof, no Governmental Authority has provided notice in writing, or to the Knowledge of Seller, orally of any investigation into the business or operations of Seller (to the extent related to the Business), any Sponsored Public Fund or, to the Knowledge of Seller, any Non-Sponsored Public Fund, other than routine periodic examinations by a Governmental Authority in the ordinary course of business. There is no material deficiency, violation or exception claimed or asserted in writing by any Governmental Authority, since December 31, 2015 through the date hereof, with respect to any examination of Seller (to the extent related to the Business), any Sponsored Public Fund or, to the Knowledge of Seller, any Non-Sponsored Public Fund that has not been resolved. Seller has made available to Buyer complete and correct copies of all (i) material investigation, examination, audit or inspection reports provided by any Governmental Authority in respect of Seller, any Sponsored Public Fund or, to the Knowledge of Seller, any Non-Sponsored Public Fund, (ii) material written responses to any such reports made by Seller, any Sponsored Public Fund or, to the Knowledge of Seller, any Non-Sponsored Public Fund and (iii) other material correspondence with any Governmental Authority relating to any investigation, examination, audit or inspection of Seller, any Sponsored Public Fund or, to the Knowledge of Seller, any Non-Sponsored Public Fund.

(d)Seller or, to the Knowledge of Seller, any of its directors, officers, employees, agents or representatives:

(i)is or has been a Restricted Party;

(ii)is engaged, or since December 31, 2016, has engaged, in any transaction, activity or conduct, directly or indirectly, with or for the benefit of any Restricted Party or with or in a Sanctioned Country, or otherwise in any manner that would reasonably be expected to result in its becoming a Restricted Party; or

(iii)has made any Prohibited Payment.

(e)Seller has in place policies and procedures that are reasonably designed to comply with all applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.

Section 2.9Regulatory Documents; Investment Adviser Matters.

(a)Since December 31, 2016, Seller, each Sponsored Public Fund and, to the Knowledge of Seller, each Non-Sponsored Public Fund has filed on a timely basis (after giving effect to any extensions) all Regulatory Documents that were required to be filed with any Governmental Authority, other than such failures to file that would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

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(b)Seller (i) is, and at all times required by the Investment Advisers Act has been, registered with the SEC as an investment adviser under the Investment Advisers Act and (ii) is, and at all times required by applicable Law has been, registered, licensed or qualified under the Laws of each state and other jurisdiction (other than the Investment Advisers Act) where it is required to be so registered, licensed or qualified, except, in the case of the foregoing clause (ii), where the failure to be so registered, licensed or qualified would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect. Seller has made available to Buyer a complete and correct copy of the Form ADV of Seller as in effect as of the date hereof and, to the Knowledge of Seller, such Form ADV is in compliance with the applicable requirements of the Investment Advisers Act in all material respects.

(c)The Broker-Dealer (i) is, and at all times required by the Exchange Act since has been, duly registered with the SEC as a broker-dealer under the Exchange Act and (ii) is, and at all times required by applicable Law (other than the Exchange Act) has been, duly registered, licensed or qualified as a broker-dealer in each state or any other jurisdiction where the conduct of its business requires such registration, licensing or qualification, except, in the case of the foregoing clause (ii), where the failure to be so registered, licensed or qualified would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect. The Broker-Dealer is a member in good standing with FINRA.

(d)Seller is not registered or required to be registered as a commodity trading adviser, a commodity pool operator, a futures commission merchant, a transfer agent or in any similar capacity with the SEC, the Commodity Futures Trading Commission, the National Futures Association, the securities commission of any state or any other self-regulatory body, except where the failure to be so registered would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

(e)Each employee or individual independent contractor of Seller who is required to be registered, licensed or qualified with any Governmental Authority in any capacity to perform his or her material job functions is so registered, licensed or qualified, except where the failure to be so registered, licensed or qualified would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

(f)Seller has established written compliance and supervisory policies and procedures in compliance with applicable Law in all material respects. Seller and, to the Knowledge of Seller, the employees and individual independent contractors of Seller are in compliance with such policies and procedures, except where the failure to be in compliance would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

(g)Neither Seller nor, to the Knowledge of Seller, any “person associated with an investment adviser” (as defined in the Investment Advisers Act) in respect of Seller is ineligible pursuant to Section 203(e) or 203(f) of the Investment Advisers Act to serve as an investment adviser or as a “person associated with an investment adviser.” Neither Seller nor, to the Knowledge of Seller, any “affiliated person” (as defined in the Investment Company Act) of Seller is ineligible pursuant to Section 9(a) or 9(b) of the Investment Company Act to serve as an investment adviser to a registered investment company.

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Section 2.10Base Revenue Run-Rate Schedule; Clients.

(a)Section 2.10(a) of the Seller Disclosure Schedule (the “Base Revenue Run-Rate Schedule”) sets forth: (i) a complete and correct list, as of the Base Date, of the name of each Client (specifying whether such Client is a Sponsored Public Fund, a Non-Sponsored Public Fund or a Separate Account Client); (ii) the Adjusted Assets Under Management for each Client on the Base Date; (iii) the investment advisory, investment management or subadvisory fee and administrative fee payable to Seller by each Client (or, if different, each account of each such Client) under the applicable Advisory Contract or Administrative Services Contract as of the Base Date; (iv) the distribution and services fees or 12b-1 fees payable to Seller Distributor by each Client under the applicable distribution agreements as of the Base Date; and (v) a calculation of the Revenue Run-Rate for all accounts of all such Clients as of the Base Date (the “Base Revenue Run-Rate”).

(b)Seller is, and at all times has been, in material compliance with the terms of each Advisory Contract with a Client and, in the case of Clients which are Funds, their respective Organizational Documents (including, in each case, the applicable investment guidelines and restrictions thereunder, where applicable) and, to the Knowledge of Seller, no event has occurred or condition exists that constitutes or with notice or passage of time would reasonably be expected to constitute a breach or default by Seller, except, in each case, where such breach or default would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

(c)As of the date hereof, there are no Contracts, arrangements or understandings (including any voluntary undertaking, understanding or agreement) pursuant to which Seller has undertaken or agreed to cap fees, waive payment of any fees or expenses, or reimburse any or all fees payable by or with respect to any Client resulting in an effective fee rate lower than that stated in the applicable Advisory Contract or Administrative Services Contract (or other applicable Contract).

(d)Except as set forth in Section 2.10(d)(i) of the Seller Disclosure Schedule, as of the date hereof, there are no pending notices that were provided to Seller in writing or, to Seller’s Knowledge, orally pursuant to which a Client (or, in the case of any Clients that are collective investment vehicles, underlying investors therein, as applicable) has expressed an intention to (i) terminate or materially reduce its investment relationship with Seller or (ii) cap, waive, offset, reimburse or otherwise adjust the fee schedule with respect to any Advisory Contract in a manner which would reduce the fees and charges payable to Seller in connection with such Client Relationship. Except as set forth in Section 2.10(d)(ii) of the Seller Disclosure Schedule, as of the date hereof, there are no Contracts pursuant to which Seller has agreed to any “most favored nation” or similar commitment to any Client providing that the management or advisory fees, performance fees or other incentive fees payable by such Client may be subject to reduction due to any other Contract between Seller or any of its Affiliates and any other Person.

(e)Seller has made available to Buyer a complete and correct copy of the logs of Seller setting forth all complaints received by Seller from any investor in any Public Fund for the three-year period preceding the date of this Agreement.

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Section 2.11Public Funds

(a)Section 2.11(a) of the Seller Disclosure Schedule sets forth a list of each Client that is registered or required to be registered as an investment company (or comparable Person or other pooled investment vehicle) under applicable Law (each such Client, a “Public Fund”). The Gold Fund is, and all times required under applicable Law has been, a series of the Tocqueville Trust, duly registered with the SEC as an investment company under the Investment Company Act. Each Public Fund other than the Gold Fund is, and at all times required under applicable Law has been, duly registered as an investment company (or comparable company) in accordance with applicable Law. Other than the Gold Fund, no Client is registered or required to be registered with the SEC as an investment company under the Investment Company Act.

(b)The Advisory Contract with the Gold Fund has been duly approved, continued and at all times has been in compliance in all material respects with Section 15 of the Investment Company Act.

(c)Each Sponsored Public Fund and, to the Knowledge of Seller, each Non-Sponsored Public Fund that is a juridical entity is duly organized, validly existing and, with respect to entities in jurisdictions that recognize the concept of “good standing,” in good standing under the laws of the jurisdiction of its organization and has the requisite corporate, trust, company or partnership power and authority to own its properties and to carry on its business as currently conducted, and is qualified to do business in each jurisdiction where it is required to be so qualified under Law, except where any failure to be so duly organized, validly existing, in good standing, licensed or qualified or to have such power would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect. No Sponsored Public Fund or, to the Knowledge of Seller, Non-Sponsored Public Fund is in violation of any provision of its Organizational Documents, except for violations that would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

(d)The shares, units, limited partnership interests or other ownership interests of each Sponsored Public Fund and, to the Knowledge of Seller, each Non-Sponsored Public Fund (i) are duly authorized and validly issued, (ii) have been issued and sold in compliance with Law and (iii) are qualified for public offering and sale in each jurisdiction where offers are made to the extent required under Law, except where any failure to be in compliance or qualified would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect. The registration statement and prospectus (including the statement of additional information incorporated by reference therein) for the Gold Fund did not at the time they were filed, and did not during their period of authorized use, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except for any such statements or omissions that would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

(e)Each Sponsored Public Fund and, to the Knowledge of Seller, each Non-Sponsored Public Fund is, and has been since December 31, 2015, operated in compliance (i) with applicable Law and (ii) with its respective fundamental investment restrictions, as set forth in the applicable prospectus and registration statement for such Fund, except where any failure to be in compliance would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

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(f)Since December 31, 2016 until the date hereof, each Sponsored Public Fund and, to the Knowledge of Seller, each Non-Sponsored Public Fund has maintained fidelity bond and errors and omission insurance coverage of the type and in the amounts sufficient for compliance with applicable Laws and Contracts to which such Fund is a party or by which it is bound.

(g)Seller has made available to Buyer complete and correct copies of the audited financial statements, prepared in accordance with GAAP, of each of the Sponsored Public Funds for the last three fiscal years (or such shorter period as such Public Fund has been in existence) (each hereinafter referred to as a “Public Fund Financial Statement”). Each of the Public Fund Financial Statements presents fairly in all material respects the financial position of the related Public Fund in accordance with GAAP applied on a consistent basis (except as otherwise noted therein) at the respective date of such Public Fund Financial Statement and the results of operations and cash flows for the respective periods indicated.

(h)For all taxable years since its inception, the Gold Fund has elected to be treated as, and has qualified to be classified as, a regulated investment company taxable under Subchapter M of Chapter 1 of the Code. There are no circumstances that would cause the Gold Fund not to qualify for such treatment for its current taxable year, including due to the Gold Fund being a party to any agreement or arrangement that would require the Gold Fund to include in income following the Closing amounts that would cause the Gold Fund to fail the income test described in Section 851(b)(2) of the Code. No challenge to Gold Fund’s status as a regulated investment company taxable under Subchapter M of the Code is pending or threatened.

(i)Each Public Fund has timely filed (or caused to be timely filed) all United States federal income and other material Tax Returns required to be filed by it (taking into account any applicable extensions or waivers) with any taxing authority and has timely paid (or caused to be paid) all Taxes shown on such Tax Returns and all other Taxes imposed on such Public Fund. There is no currently pending or proposed audit or examination of such Tax Returns or Taxes. There are no outstanding waivers or comparable consents given by any Public Fund regarding the application of the statute of limitations with respect to Taxes.

(j)No Public Fund has been the recipient of any exemptive order or no-action letter upon which a Public Fund currently relies for the operation of its business.

(k)No Public Fund is, or has, during any period in the preceding six years when managed by Seller, ever been, a plan, account or arrangement to which the fiduciary responsibility provisions of Title I of ERISA and/or the prohibited transaction provisions of Section 4975 of the Code apply or have, during any period in the preceding six years when managed by Seller, ever applied, and neither Seller nor any of its Affiliates is or has, during any period in the preceding six years when managed by Seller or any of its Affiliates, acted, or has, or has, during any period in the preceding six years when managed by Seller or any of its Affiliates, had, any obligation to act as a fiduciary with respect to any Public Fund pursuant to Title I of ERISA and/or Section 4975 of the Code.

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Section 2.12Separate Account Clients.

(a)No Separate Account Client has provided notice to Seller or any of its Affiliates of its intention to, (i) terminate any of its accounts, (ii) place under review any of its accounts, (iii) initiate a search for a replacement investment adviser or (iv) withdraw a material amount of the assets under management from, or to reduce the fee schedule of, any of its accounts.

(b)Since December 31, 2015, each Separate Account Client account has been managed in all material respects in compliance with the terms of the relevant Advisory Contract and applicable Law.

(c)No Separate Account Client is or has, during any period in the preceding six years when managed by Seller, ever been a plan, account or arrangement to which the fiduciary responsibility provisions of Title I of ERISA and/or the prohibited transaction provisions of Section 4975 of the Code apply or have, during any period in the preceding six years when managed by Seller, ever applied, and neither Seller nor any of its Affiliates is or has, during any period in the preceding six years when managed by Seller or any of its Affiliates, acted, or has, or has, during any period in the preceding six years when managed by Seller or any of its Affiliates, had, any obligation to act as a fiduciary with respect to any Separate Account Client pursuant to Title I of ERISA and/or Section 4975 of the Code.

Section 2.13Proceedings.

(a)Except as set forth in Section 2.13(a) of the Seller Disclosure Schedule, since January 1, 2017 until the date hereof, no legal, administrative, arbitral or other proceeding, suit or action, including any governmental or regulatory investigation or enforcement action (collectively, “Proceedings”) has been pending or, to the Knowledge of Seller, threatened, against Seller, any Sponsored Public Fund or, to the Knowledge of Seller, any Non-Sponsored Public Fund which (i) involves or involved a claim (A) in excess of $100,000, (B) for an unspecified amount which would, if adversely determined, reasonably be expected to exceed $100,000, or (C) seeking injunctive relief or other specific performance of Seller or any of its respective employees or directors or (ii) would, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

(b)There are no injunctions, orders, judgments or decrees currently in effect against Seller, any Sponsored Public Fund or, to the Knowledge of Seller, any Non-Sponsored Public Fund or any of their respective material rights, assets or properties which relate to the Business, the Purchased Assets or the Assumed Liabilities.

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Section 2.14Seller Benefit Plans; Employee Matters.

(a)Section 2.14(a) of the Seller Disclosure Schedule contains a complete and correct list of all Seller Benefit Plans in existence on the date hereof. With respect to each Seller Benefit Plan, Seller has made available to Buyer complete and correct copies of each of the following, to the extent applicable: each Seller Benefit Plan document, including all amendments thereto (or a written summary thereof in the case of an unwritten Seller Benefit Plan). Except as would not result in any material liability to, obligation of or payment from Buyer, each Seller Benefit Plan has been maintained and administered in all material respects in compliance with its terms and with the requirements prescribed by applicable Laws, including ERISA and the Code. Except as would not reasonably be expected to result in any material liability to, obligation of or payment from Buyer, no liability under Title IV or Section 302 of ERISA has been incurred by Seller or any ERISA Affiliate that has not been satisfied in full, and no condition exists that presents a risk to Seller or any ERISA Affiliate of incurring any such liability, other than any liability for premiums due the Pension Benefit Guaranty Corporation (which premiums have been paid when due).

(b)Except as set forth on Section 2.14(b) of the Seller Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will not (either alone or together with any other event) (i) result in any material liability, obligation or payment from Buyer to any Seller Benefit Plan, (ii) entitle any Seller Employee to any compensatory payment or benefit, (ii) accelerate the time of payment of a non-qualified plan, funding or vesting, or increase the amount, of any compensation or benefits with respect to any Seller Employee, or (iii) require the funding of any material compensation or benefits (through a grantor trust or otherwise) with respect to any Seller Employee.

(c)Seller is not a party to a collective bargaining agreement with a labor union or labor organization with respect to Seller Employees. To the Knowledge of Seller, no labor union or labor organization has made a pending demand for recognition or certification with respect to Seller Employees. Since January 1, 2016, there has been no actual or, to the Knowledge of Seller, threatened strikes, organized work stoppages, organized slowdowns, lockouts or other similar labor disruptions or disputes against Seller with respect to Seller Employees.

(d)With respect to Seller Employees, Seller is in compliance with all applicable Laws relating to employment, equal employment opportunity, non-discrimination, immigration, wages, hours, benefits, collective bargaining, workers’ compensation, working conditions, unemployment insurance, employee classification, employment practices and terms and conditions of employment. There are no actions against Seller pending or, to the Knowledge of Seller, threatened, by any Governmental Authority in connection with the employment of any Seller Employees, including, without limitation, any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, wages and hours or any other employment-related matter arising under applicable Law.

(e)Notwithstanding any other provision of this Agreement, the representations and warranties in this Section 2.14 are Seller’s only representations and warranties with respect to employees, individual independent contractors and employee benefits plan matters, and no other representation or warranty shall be deemed to be made by Seller in this Agreement with respect to employees, individual independent contractors or employee benefits plan matters.

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Section 2.15Intellectual Property.

(a)Section 2.15(a)(i) of the Seller Disclosure Schedule sets forth a complete and accurate list of all U.S. and foreign patents and patent applications, Trademark registrations and applications (including Internet domain name registrations) and copyright registrations and applications included in the Transferred Intellectual Property. Except as set forth in Section 2.15(a)(ii) of the Seller Disclosure Schedule, all of the Transferred Intellectual Property is solely owned by Seller free and clear of any Encumbrances (other than Permitted Encumbrances). All Transferred Intellectual Property listed in Section 2.15(a)(i) of the Seller Disclosure Schedule is in effect and subsisting; has not lapsed, expired or been abandoned; and is not the subject of any opposition, interference, cancellation, or other Proceeding (other than routine office actions and examinations) before any Governmental Authority. The Seller takes commercially reasonable measures to protect, maintain and enforce the Transferred Intellectual Property.

(b)To the Knowledge of Seller, (i) the conduct of the Business as currently conducted does not infringe, misappropriate or otherwise violate (“Infringe”) the Intellectual Property rights of any Person and (ii) no Person is Infringing the rights of the Seller in any Transferred Intellectual Property, except (in the case of clauses (i) or (ii) above) for any infringement that would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

(c)Since January 1, 2017 until the date hereof, (i) no claims have been asserted in writing by any Person against Seller alleging that Seller’s use of any Transferred Intellectual Property or the conduct of its business Infringes the rights of such Person, and (ii) no claims have been asserted in writing by Seller alleging that any Person Infringes any Transferred Intellectual Property, except (in the case of clauses (i) or (ii) above) for any Infringement that would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

(d)Since January 1, 2017 until the date hereof, the collection, storage, use and dissemination by Seller of Personal Data is in compliance with its publicly posted privacy policies, except to the extent such failure to comply would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect. Seller uses commercially reasonable measures to protect the Personal Data that it collects and maintains. Since January 1, 2017 until the date hereof, to the Knowledge of Seller, Seller has not experienced an incident of unauthorized access, disclosure, use, destruction or loss of any Personal Data that it collects and stores in the conduct of Seller’s business that required the delivery of notice to affected individuals pursuant to any applicable Law.

Section 2.16Taxes.

(a)There are no Encumbrances for Taxes upon any of the Purchased Assets, other than Permitted Encumbrances.

(b)Seller has filed or caused to be filed with the appropriate Governmental Authority all Tax Returns related to the Purchased Assets required to be filed by it on or prior to the Closing Date. All such Tax Returns were true, correct and complete in all respects, and all amounts in respect of Taxes due to or claimed to be due by any Governmental Authority or other taxing authority have been fully and timely paid.

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(c)Seller has complied with all record keeping and Tax reporting obligations relating to income and employment Taxes due with respect to compensation paid to employees that relates to the Purchased Assets, including withholding of all Taxes required to be withheld.

(d)No Governmental Authority with which Seller does not file a particular Tax Return with respect to the Purchased Assets has claimed that Seller is or may be subject to taxation by that Governmental Authority or required to file such Tax Return.

(e)Seller has not engaged in (or is not treated as engaged in due to prior activities) a trade or business through a “permanent establishment” within the meaning of an applicable income Tax treaty in any jurisdiction other than the United States in connection with the Purchased Assets.

(f)No audit or other Proceeding by any taxing authority has been asserted in writing that could result in the assessment of any unpaid Taxes with respect to the Purchased Assets.

Section 2.17Records.

(a)Other than the Records, there are no books, records, files, papers, documents or other information (in any form or medium) in the possession, custody or control of Seller or any Affiliate of Seller which are necessary to allow Buyer to provide Investment Advisory Services or administrative services to the Clients in a manner consistent with the services provided to the Clients for the 12-month period prior to the date of this Agreement and, in the case of the Gold Fund, with the obligations imposed on an investment adviser to funds registered under the Investment Company Act.

(b)Seller exclusively owns or otherwise has exclusive and legally enforceable rights to use the investment performance record of the Funds and, to the extent related to the Business, the other Clients (the “Performance Record”) and, as of the Closing, Buyer will exclusively own or otherwise have exclusive and legally enforceable rights to use the Performance Record.

(c)The Records contain all documentation reasonably necessary to form the basis for, demonstrate or recreate the calculation of the performance or rate of return of all investments included in the Performance Record (current and historical performance results) as required by applicable Laws (including Rule 204-2(a)(16) under the Investment Advisers Act) and in compliance with the Global Investment Performance Standards.

Section 2.18Certain Securities Law Matters.

(a)Seller is (i) not a person or company located or resident in any jurisdiction within Canada, and (ii) “outside Canada” for the purposes of Ontario Securities Commission Rule 72-503 (“Rule 72-503”).

(b)Each Key Employee is (i) not a person or company located or resident in any jurisdiction within Canada, and (ii) “outside Canada” for the purposes of Rule 72-503.

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Section 2.19Investment Intention.

(a)Subject to any Key Employee Transfer, Seller represents that it is acquiring the Closing Share Consideration and any additional Sprott Shares comprising the Sale Consideration for its own account, for investment purposes only and not with a view to, or for resale in connection with, the distribution or other disposition thereof or with any present intention of distributing or reselling any portion thereof. Seller agrees and acknowledges that (i) all Sprott Shares comprising the Sale Consideration have not been and will not be registered under the Securities Act or any applicable U.S. state securities laws, and (ii) the issuance to Seller of Sprott Shares comprising the Sale Consideration pursuant to this Agreement is exempt from registration under the Securities Act and applicable U.S. state securities laws by virtue of an exemption from registration under the Securities Act and exemptions under applicable U.S. state securities laws. Seller agrees and acknowledges that all Sprott Shares comprising the Sale Consideration are subject to restrictions on resale (including any Key Employee Transfer) and shall be subject to the provisions of Exhibit D.

(b)Each Key Employee that is acquiring Sprott Shares pursuant to a Key Employee Transfer is acquiring such Sprott Shares for his or her own account, for investment purposes only and not with a view to, or for resale in connection with, the distribution or other disposition thereof or with any present intention of distributing or reselling any portion thereof.

(c)Seller is an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and otherwise has such knowledge and experience in financial and business matters that Seller is capable of evaluating the merits and risks of its investment hereunder. Seller is aware that it must bear the economic risk of such investment for an indefinite period of time. Seller can afford to bear such economic risk and can afford to suffer the complete loss of its investment hereunder.

Section 2.20Brokers and Finders. Other than Berkshire Global Advisors, no broker, finder or similar intermediary has acted for or on behalf of, or is entitled to any broker’s, finder’s or similar fee or other commission from, Seller in connection with this Agreement or the transactions contemplated hereby based upon arrangements made by or on behalf of Seller.

Section 2.21No Other Representations and Warranties. Except for the representations and warranties contained in this Article II (including the related portions of the Seller Disclosure Schedule), neither Seller nor any other Person, its directors or senior officers has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Seller, including any representation or warranty as to the accuracy or completeness of any information regarding the Business, the Purchased Assets, or the Assumed Liabilities furnished or made available to Buyer and its Representatives (including any information, documents, or material delivered to Buyer/made available to Buyer in any form in expectation of the transactions contemplated hereby) or as to the future revenue, profitability or success of the Business.

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Article III

REPRESENTATIONS AND WARRANTIES OF BUYER

Except as set forth in a correspondingly labeled section of the written disclosure schedule delivered by Buyer and Buyer Parent to Seller on or prior to the date of this Agreement (the “Buyer Disclosure Schedule”) (it being agreed that any matter disclosed in any section or subsection of the Buyer Disclosure Schedule shall be deemed disclosed in any other section or subsection of the Buyer Disclosure Schedule to the extent that such information is reasonably apparent on its face to be applicable to such other section or subsection notwithstanding the omission of any cross-reference to such other section or subsection), Buyer represents and warrants to Seller as follows:

Section 3.1Organization. Buyer is a limited partnership, duly formed and validly existing and in good standing under the laws of the Province of Ontario. Buyer has the requisite organizational power and authority to carry on its business as it is now being conducted and to own, lease and operate all of its properties and assets except where the failure to have such power or authority would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect.

Section 3.2Authority. Each Buyer Party has all requisite organizational power and authority to execute and deliver this Agreement and each Ancillary Agreement to which it is (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by each Buyer Party of this Agreement and each Ancillary Agreement to which it is (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) a party has been, and the consummation by it of the transactions contemplated hereby and thereby has been, duly and validly authorized and approved by all required actions on the part of Buyer. This Agreement and each Ancillary Agreement to which a Buyer Party is a party has been (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) duly and validly executed and delivered by it and (assuming due authorization, execution and delivery by the other parties hereto and thereto) this Agreement and each Ancillary Agreement to which a Buyer Party is a party constitutes (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will constitute) legal, valid and binding obligations of such Buyer Party, enforceable against such Buyer Party in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, rehabilitation, liquidation, fraudulent conveyance, preferential transfer or similar laws now or hereafter in effect affecting creditors’ rights and remedies generally and except as the availability of equitable remedies may be limited by equitable principles of general applicability.

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Section 3.3No Violations. Except as set forth in Section 3.4, neither the execution, delivery or performance by each of Buyer and any of its Affiliates of this Agreement or any Ancillary Agreement to which it is (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) a party, nor the consummation by Buyer and any of its Affiliates of the transactions contemplated hereby or thereby, will, with or without the giving of notice, the termination of any grace period or both: (a) violate, conflict with, or result in a breach or default under any material provision of the Organizational Documents of Buyer; (b) violate any Law; or (c) result in a violation or breach by Buyer of, conflict with, constitute (with or without due notice or lapse of time or both) a breach or default (or give rise to any right of termination, cancellation, payment or acceleration) under any Contract to which Buyer is a party, or by which Buyer or any of its properties or assets are bound, except for, in the case of clauses (b) and (c) of this Section 3.3, any violation, breach, conflict, default or right of termination, cancellation, payment or acceleration that would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect.

Section 3.4Consents and Approvals. Except (a) as set forth on Exhibit C and (b) for those consents, approvals, filings and registrations the failure of which to be obtained or made would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the ability of Buyer to perform its obligations hereunder or thereunder, none of Buyer and its Affiliates is required to obtain any consent, waiver or approval of, or make any filing, notification or registration with, any Governmental Authority or other third party in connection with the execution and delivery by Buyer of this Agreement or any Ancillary Agreement or the consummation by Buyer of the transactions contemplated hereby or thereby.

Section 3.5Proceedings. No Proceedings are pending or, to the Knowledge of Buyer, threatened against Buyer or any of its Affiliates that would, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect.

Section 3.6Sufficiency of Funds. Buyer will have on the Closing Date sufficient funds to consummate the transactions contemplated hereby, including by making (or causing to be made) the payments to be made (or caused to be made) by Buyer at or after the Closing pursuant to Article I.

Section 3.7Solvency. Buyer is on the date hereof, and will be on the Closing Date, after giving effect to the transactions contemplated by this Agreement to be consummated at the Closing, the payments contemplated by Article I and the payment of all related fees and expenses, and assuming for these purposes the satisfaction of the conditions set forth in Sections 6.1 and 6.2, Solvent. “Solvent” shall mean, with respect to any Person and any date of determination, that (a) the “fair saleable value” of the assets of such Person as of such date exceeds (i) the value of all “liabilities of such Person, including contingent and other liabilities,” as of such date, as such quoted terms are generally determined in accordance with applicable federal laws governing determinations of the insolvency of debtors, and (ii) the amount that is or will be required to pay the probable Liabilities of such Person on its existing debts (including contingent Liabilities) as such debts become absolute and matured and (b) such Person, as of such date, is and will be able to pay its Liabilities, including contingent and other Liabilities, as they mature.

Section 3.8Brokers and Finders. No broker, finder or similar intermediary has acted for or on behalf of, or is entitled to any broker’s, finder’s or similar fee or other commission from, Buyer or any of its Affiliates in connection with this Agreement.

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Section 3.9No Other Representations and Warranties. Except for the representations and warranties contained in this Article III (including the related portions of the Buyer Disclosure Schedule), neither Buyer nor any other Person, its directors or senior officers has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Buyer, including any representation or warranty as to the accuracy or completeness of any information regarding the Buyer’s business furnished or made available to Seller and its Representatives (including any information, documents, or material delivered to Seller/made available to Seller in any form in expectation of the transactions contemplated hereby) or as to the future revenue, profitability or success of Buyer’s business.

Article IV

REPRESENTATIONS AND WARRANTIES OF BUYER PARENT

Except as set forth in a correspondingly labeled section of the Buyer Disclosure Schedule (it being agreed that any matter disclosed in any section or subsection of the Buyer Disclosure Schedule shall be deemed disclosed in any other section or subsection of the Buyer Disclosure Schedule to the extent that such information is reasonably apparent on its face to be applicable to such other section or subsection notwithstanding the omission of any cross-reference to such other section or subsection), Buyer Parent represents and warrants to Seller as follows:

Section 4.1Organization. Buyer Parent is a corporation, duly incorporated and validly existing and in good standing under the laws of the Province of Ontario. Buyer Parent has the requisite organizational power and authority to carry on its business as it is now being conducted and to own, lease and operate all of its properties and assets except where the failure to have such power or authority would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect.

Section 4.2Authority. Buyer Parent has all requisite organizational power and authority to execute and deliver this Agreement and each Ancillary Agreement to which it is (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Buyer Parent of this Agreement and each Ancillary Agreement to which it is (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) a party has been, and the consummation by it of the transactions contemplated hereby and thereby has been, duly and validly authorized and approved by all required actions on the part of Buyer Parent. This Agreement and each Ancillary Agreement to which Buyer Parent is a party has been (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) duly and validly executed and delivered by it and (assuming due authorization, execution and delivery by the other parties hereto and thereto) this Agreement and each Ancillary Agreement to which Buyer Parent is a party constitutes (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will constitute) legal, valid and binding obligations of Buyer Parent (as applicable), enforceable against Buyer Parent (as applicable) in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, rehabilitation, liquidation, fraudulent conveyance, preferential transfer or similar laws now or hereafter in effect affecting creditors’ rights and remedies generally and except as the availability of equitable remedies may be limited by equitable principles of general applicability.

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Section 4.3No Violations. Except as set forth in Section 4.4 below, neither the execution, delivery or performance by Buyer Parent of this Agreement or any Ancillary Agreement to which it is (or, in the case of any Ancillary Agreement to be executed and delivered after the date hereof, will be) a party, nor the consummation by Buyer Parent of the transactions contemplated hereby or thereby, will, with or without the giving of notice, the termination of any grace period or both: (a) violate, conflict with, or result in a breach or default under any material provision of the Organizational Documents of Buyer Parent; (b) violate any Law; or (c) result in a violation or breach by Buyer Parent of, conflict with, constitute (with or without due notice or lapse of time or both) a breach or default (or give rise to any right of termination, cancellation, payment or acceleration) under any Contract to which Buyer Parent is a party, or by which Buyer Parent or any of its properties or assets are bound, except for, in the case of clauses (b) and (c) of this Section 4.3, any violation, breach, conflict, default or right of termination, cancellation, payment or acceleration that would not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect.

Section 4.4Consents and Approvals. Except (a) as set forth on Exhibit C and (b) for those consents, approvals, filings and registrations the failure of which to be obtained or made would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the ability of Buyer Parent to perform its obligations hereunder or thereunder, none of Buyer Parent and its Affiliates is required to obtain any consent, waiver or approval of, or make any filing, notification or registration with, any Governmental Authority or other third party in connection with the execution and delivery by Buyer Parent of this Agreement or any Ancillary Agreement or the consummation by Buyer Parent of the transactions contemplated hereby or thereby.

Section 4.5Capitalization. The authorized capital of Buyer Parent consists of an unlimited number of Sprott Shares. As of the close of business on the date of this Agreement, there were issued and outstanding 253,501,515 Sprott Shares. All outstanding Sprott Shares have been duly authorized and validly issued, are fully paid and non-assessable. No Sprott Shares have been issued in violation of any Law or any pre-emptive or similar rights applicable to them. An aggregate of 5,223,527 Sprott Shares are issuable pursuant to outstanding options, warrants or other rights or securities entitling the holders thereof to acquire Sprott Shares.

Section 4.6Canadian Securities Laws Matters.

(a)Buyer Parent is a “reporting issuer” under Canadian Securities Laws in each of the provinces and territories of Canada. The Sprott Shares are listed and posted for trading on the TSX. Buyer Parent is not in default of Canadian Securities Laws in any material respect.

(b)All Sprott Shares to be issued pursuant to the transactions contemplated herein shall be duly and validly issued by Parent as fully-paid and non-assessable Sprott Shares. Assuming the accuracy of the representations and warranties in Section 2.18 and Section 2.19, the issuance to Seller of the Sprott Shares to be issued pursuant to the transactions contemplated herein is exempt from, or is not subject to, the prospectus requirements of the Securities Act (Ontario), and the first trade of such Sprott Shares by the Seller in Ontario, or on or through any exchange or market in Ontario, will not be deemed to be a distribution by either Section 2.5 or Section 2.6 of National Instrument 45-102 – Resale of Securities.

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(c)Buyer Parent has not taken any action to cease to be a reporting issuer in any province or territory nor has Buyer Parent received notification from any securities commission or securities regulator authority in Canada seeking to revoke the reporting issuer status of Buyer Parent. No delisting, suspension of trading or cease trade or other order or restriction with respect to any securities of Buyer Parent is pending, in effect, has been threatened, or, to the Knowledge of Buyer Parent, is expected to be implemented or undertaken, and, to its Knowledge, Buyer Parent is not subject to any formal or informal review, enquiry, investigation or other proceeding relating to any such order or restriction.

(d)Since January 1, 2018, Buyer Parent has timely filed or furnished all forms, reports, schedules, statements and other documents required to be filed or furnished by Parent with any Governmental Authority under NI 51-102 and all other applicable Canadian Securities Laws (including “documents affecting the rights of security holders” and “material contracts” required to be filed by Part 12 of NI 51-102). The documents comprising the Sprott Filings complied as filed in all material respects with Law and did not, as of the date filed (or, if amended or superseded by a subsequent filing prior to the date of this Agreement, on the date of such filing), contain any Misrepresentation.

(e)Buyer Parent has not filed any confidential material change report (which at the date of this Agreement remains confidential) or any other confidential filings (including redacted filings) filed to or furnished with, as applicable, any securities authority or securities commission in Canada. There are no outstanding or unresolved comments in comment letters from any securities authority or securities commission in Canada with respect to any of the Sprott Filings and, to the Knowledge of Buyer Parent, neither Buyer Parent nor any of the Sprott Filings is the subject of any material ongoing audit, review, comment or investigation by any securities authority or securities commission in Canada or the TSX.

Section 4.7No Other Representations and Warranties. Except for the representations and warranties contained in this Article IV (including the related portions of the Buyer Disclosure Schedule), neither Buyer Parent nor any other Person, its directors or senior officers has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Buyer Parent, including any representation or warranty as to the accuracy or completeness of any information regarding the Buyer Parent’s business furnished or made available to Seller and its Representatives (including any information, documents, or material delivered to Seller/made available to Seller in any form in expectation of the transactions contemplated hereby) or as to the future revenue, profitability or success of Buyer Parent’s business.

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Article V

COVENANTS

Section 5.1Pre-Closing Conduct of Business by Seller.

(a)Except (w) as contemplated by or necessary to effectuate the transactions contemplated by this Agreement or any Ancillary Agreement, (x) as set forth in Section 5.1(a) of the Seller Disclosure Schedule, (y) for any action or inaction required by Law, or (z) with the prior written consent of Buyer (such consent not to be unreasonably withheld, conditioned or delayed), following the date of this Agreement and prior to the Closing, Seller shall (i) conduct the Business in all material respects in the ordinary course of business consistent with past practice and (ii) to the extent consistent therewith, use its commercially reasonable efforts to preserve intact in all material respects its business relationships and goodwill, including its relationships with Clients, Governmental Authorities and its employees (provided that obtaining or failing to obtain consents from any Clients shall not be a breach of this sentence, with such matters governed exclusively by Section 5.2 and Section 6.2(e).

(b)Without limiting the generality of the foregoing, except (w) as contemplated by or necessary to effectuate the transactions contemplated by this Agreement or any Ancillary Agreement, (x) as set forth in Section 5.1(b) of the Seller Disclosure Schedule, (y) for any action or inaction required by Law, or (z) with the prior written consent of Buyer (such consent not to be unreasonably withheld, conditioned or delayed), Seller shall not:

(i)make any change in its organizational documents in any way that could reasonably be expected to cause or result in a Seller Material Adverse Effect;

(ii)sell, transfer, assign, lease or otherwise dispose of or pledge, or voluntarily grant or permit to occur any Encumbrances (other than Permitted Encumbrances) on, any Purchased Assets;

(iii)grant or agree to any fee or expense waivers, caps, rebates, reductions or discounts with respect to fees or expenses payable to Seller (or, following the Closing, to Buyer or its Affiliates) in connection with any Client Relationship (including in pursuance of any Client consent or approval contemplated by Section 5.2);

(iv)settle any Proceeding that results in the imposition of any material restrictions upon (A) any Purchased Assets or (B) any Sponsored Public Fund, other than, in the case of any Sponsored Public Fund, as required by the applicable Public Fund Board;

(v)(A) make any material changes to its policies, procedures or terms with respect to the Business, Clients or Client Relationships (including fees charged for services offered in connection therewith), or (B) alter the general investment or management strategies with respect to any Sponsored Public Fund, other than, in each case, (1) as required by applicable Law or (2) in the case of any Sponsored Public Fund, as required by the applicable Public Fund Board;

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(vi)cause any Sponsored Public Fund to merge, dissolve, liquidate or sell all or substantially all of its assets other than (A) in connection with the Gold Fund Reorganization or (B) as required by the applicable Public Fund Board;

(vii)terminate any Client Relationship or transfer any Client Relationship to an Affiliate of Seller;

(viii)refer any Client for investment management or advisory services relating primarily to investments in precious metals to any third party or to any of Seller’s Affiliates;

(ix)license, grant any exclusive right to, abandon or fail to maintain any Transferred Intellectual Property, or disclose any material Trade Secrets or material confidential information included in the Transferred Intellectual Property (other than in the ordinary course of business consistent with past practice and pursuant to a binding non-disclosure agreement);

(x)terminate or, except in the ordinary course of business, modify any Assumed Contract in any material respect;

(xi)enter into any Contract relating to the Business or the Purchased Assets (A) that would constitute a Material Contract or (B) that would reasonably be expected to adversely affect the Business or the Purchased Assets, except in the case of clause (A), in the ordinary course of business and consistent with Seller’s past practices;

(xii)enter into any Contract with any Fund, or recommend that any Fund enter into any Contract, which, in any case, is not terminable on less than 60-days’ notice without a penalty other than, in any case, (A) in the ordinary course of business and consistent with Seller’s or the applicable Fund’s past practices or (B) in connection with the management of the applicable Fund’s investment portfolio;

(xiii)(A) change the Gold Fund’s election to be taxed as a regulated investment company under Subchapter M of Chapter 1 of the Code, or (B) take any action that would reasonably be expected to cause the Gold Fund to fail to qualify to be taxed as described in the foregoing clause (A);

(xiv)other than as required by the terms of any Seller Benefit Plan as in effect on the date hereof or under applicable Law, (A) increase the compensation or benefits of any Seller Employee, (B) accelerate the vesting or payment of any compensation or benefits of any Seller Employee, (C) enter into or materially amend any Seller Benefit Plan (or any plan, program, agreement or arrangement that would be a Seller Benefit Plan if in effect on the date hereof) for the benefit of any Seller Employee, (D) grant or increase any severance or termination pay to any Seller Employee (or materially amend any existing severance or termination pay arrangement) or (E) fund any payments or benefits that are payable or to be provided under any Seller Benefit Plan for any Seller Employee; or

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(xv)agree or commit to do any of the foregoing or take any action or make any omission that would result in any of the foregoing.

(c)Other than Buyer’s right to consent or withhold consent with respect to the foregoing matters (such consent not to be unreasonably withheld, conditioned or delayed), nothing contained in this Agreement shall give Buyer (or any of its respective Affiliates), directly or indirectly, any right to control or direct the operation of Seller prior to the Closing. Subject to the foregoing sentence and consistent with the terms of this Agreement, prior to the Closing, Seller and its Affiliates shall exercise complete control and supervision of the operation of Seller.

Section 5.2Client Consents.

(a)Gold Fund.

(i)Seller shall use commercially reasonable efforts, as soon as reasonably practicable following the date hereof (including by making appropriate proposals, requests, and recommendations), to obtain the consents and approvals (including by the Gold Fund Board and the shareholders of the Gold Fund) necessary to effect the Gold Fund Reorganization.

(ii)Seller shall use commercially reasonable efforts to cause the Gold Fund Board to call a special meeting of the shareholders of the Gold Fund, to be held as soon as reasonably practicable after the date of this Agreement, for purposes of obtaining the requisite approval of the shareholders of the Gold Fund for the Gold Fund Reorganization. In connection therewith, (A) Buyer shall use (and shall cause its Affiliates to use) commercially reasonable efforts to (x) obtain the required consents and approvals (including by the board of trustees of the Buyer Fund and, if applicable, the shareholders of the Buyer Fund) necessary for the Gold Fund Reorganization and (y) cause the Buyer Fund to prepare and to file with the SEC (to the extent such filing is required) all securities registration statements and prospectuses and proxy solicitation materials necessary to comply in all material respects with the applicable provisions of the Securities Act, Section 14 of the Exchange Act and Section 20 of the Investment Company Act, including a securities registration statement on SEC Form N-14 (or the successor form thereto) containing a joint proxy statement and prospectus (a “Gold Fund Reorganization Proxy Statement/Prospectus”), (B) each of Buyer and Seller shall use commercially reasonable efforts to cause the Gold Fund (1) as promptly as practicable after review by the SEC, to mail such proxy solicitation materials (including, as applicable, a Gold Fund Reorganization Proxy Statement/Prospectus) to the shareholders of the Gold Fund and (2) as soon as practicable following the mailing of such proxy solicitation materials, submit, or cause to be submitted, to the shareholders of the Gold Fund, for a vote at such shareholders meeting, the proposal described in the first sentence of this Section 5.2(a)(ii), and (C) as promptly as reasonably practicable, Seller shall engage a nationally-recognized proxy solicitation firm or proxy services firm reasonably acceptable to Buyer to act as the proxy solicitor in respect of the Gold Fund Reorganization. For the avoidance of doubt, the Advisory Contract of the Gold Fund shall be assigned to Buyer at Closing, including in the event that the Gold Fund Reorganization has not closed as of Closing, which purported assignment will have the effect of terminating such Advisory Contract and permitting the Gold Fund Board to appoint one or more interim adviser(s) pursuant to Rule 15a-4(b)(2) of the Investment Company Act, but (ii) approval of any interim investment advisory agreement pursuant to Rule 15a-4 shall not constitute “consent” for the purposes of this Agreement.

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(iii)Seller agrees that the information provided by it (or on its behalf) in writing specifically for inclusion in the Gold Fund Reorganization Proxy Statement/Prospectus or other proxy materials to be furnished to the shareholders of the Gold Fund (other than information that is or will be provided by or on behalf of Buyer or its Affiliates or any other third party specifically for inclusion in such proxy materials) will not contain, as of the date of such Gold Fund Reorganization Proxy Statement/Prospectus or proxy materials, any untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Buyer agrees that, except as it relates to the information provided by Seller (or on Seller’s behalf) in writing specifically for inclusion in the Gold Fund Reorganization Proxy Statement/Prospectus or proxy materials, the Gold Fund Reorganization Proxy Statement/Prospectus or proxy materials to be furnished to the shareholders of the Gold Fund will not contain, as of the date of such Gold Fund Reorganization Proxy Statement/Prospectus or proxy materials, any untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and will comply in all material respects with the requirements of the Securities Act, the Exchange Act and the Investment Company Act. Each of Seller and Buyer shall have the right to review in advance and to approve (such approval not to be unreasonably withheld) all of the information relating to it and any of its Affiliates proposed to appear in (A) any Gold Fund Reorganization Proxy Statement/Prospectus or proxy materials or any amendment or supplement thereto submitted to the SEC or such other applicable Governmental Authority in connection with the approvals contemplated by this Section 5.2(a), or (B) any other materials sent or made available to the shareholders of the Gold Fund in connection with such approvals.

(iv)The parties hereto agree that the Gold Fund shall be deemed to have consented for all purposes under this Agreement to the transactions contemplated hereby if and only if the Gold Fund Reorganization has been approved by both the Gold Fund Board and shareholders of the Gold Fund in the manner contemplated this Section 5.2(a).

(b)Other Funds. Seller shall use commercially reasonable efforts, as promptly as practicable following the date hereof (including by making appropriate proposals, requests, and recommendations), to obtain any consents and approvals in respect of each Public Fund other than the Gold Fund for the continuation of its Advisory Contract in connection with the transactions contemplated hereby, if and to the extent required by the terms of such Advisory Contract, by the terms of any other applicable Contract, and/or by or pursuant to applicable Law. The parties hereto agree that each Public Fund other than the Gold Fund shall be deemed to have consented for all purposes under this Agreement to the transactions contemplated hereby and the continued management of such Public Fund by Buyer following the Closing, if continued management of such Public Fund by Buyer following the Closing has been approved in accordance with the immediately preceding sentence.

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(c)Separate Account Clients.

(i)As promptly as practicable following the date of this Agreement, Seller shall send a written notice (each, a “Transaction Notice”) informing each Separate Account Client of the transactions contemplated by this Agreement and requesting the written consent of such Separate Account Client to the “assignment” (as defined in the Investment Advisers Act) of the Advisory Contract with such Separate Account Client resulting from the consummation of the transactions contemplated by this Agreement.

(ii)The parties hereto agree that any consent required for the “assignment” (as defined in the Investment Advisers Act) of any Advisory Contract with any Separate Account Client shall be deemed given for all purposes under this Agreement upon receipt of the written consent requested in the applicable Transaction Notice; provided that no consent shall be deemed to have been given for any purpose under this Agreement if at any time prior to the Closing such Separate Account Client notifies Seller in writing or orally that such Separate Account Client has not so consented or has terminated, or intends to terminate, its Advisory Contract (and such notice is not withdrawn in writing).

(d)The parties shall cooperate with one another in connection with the obtaining of Client consents, including the requisite approvals of the Gold Fund Reorganization, as contemplated by this Section 5.2.

Section 5.3Pre-Closing Access; Post-Closing Access.

(a)Subject to the other provisions of this Section 5.3(a), Section 5.4(a) and Law, during the period from the date of this Agreement until the Closing, upon the reasonable request of Buyer, Seller shall provide access to Buyer and its representatives (at Buyer’s sole cost and expense) to the books and records (including the Records), Contracts, offices and employees of Seller and its Affiliates, to the extent reasonably requested by Buyer in furtherance of a purpose reasonably related to the Business, the Purchased Assets, the Assumed Liabilities or the transactions contemplated hereby. Such access shall occur only during normal business hours upon reasonable advance notice by Buyer to Seller, under the supervision of Seller’s personnel and shall be conducted in a manner that does not unreasonably interfere with the operations of Seller. Notwithstanding the obligations contained in this Section 5.3(a), Seller shall not be required to provide access to or to disclose information where such access or disclosure could (i) violate the terms of any confidentiality agreement or other Contract with a third party (provided that Seller shall use its commercially reasonable efforts to obtain the required consent of such third party to such access or disclosure, but in no event shall Seller be obligated to pay any amount of money to any Person to obtain the required consent of such third party to such access or disclosure), (ii) result in the loss of any attorney-client or work-product privilege, or (iii) be reasonably pertinent to a litigation where Seller or any of its Affiliates, on the one hand, and Buyer or any of its Affiliates, on the other hand, are adverse parties. All information provided or accessed under this Section 5.3 shall be subject to the terms of Section 5.4.

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(b)Until the first to occur of the seventh anniversary of the Closing Date or such time as the information and access described below is no longer reasonably required by Seller or Buyer, as applicable, (i) Buyer shall, and shall cause its Affiliates to, retain any books, records and Contracts that constitute Purchased Assets and (ii) Seller shall, and shall cause its Affiliates to, retain any books, records and Contracts relating to the Business that do not constitute Purchased Assets and are not otherwise transferred to Buyer and, upon the reasonable request and advance notice of Seller or Buyer, as applicable, such retaining party shall provide access to such requesting party, its Affiliates and their respective representatives (at the requesting party’s sole cost and expense) to the items described in the foregoing clauses (i) and (ii) (as applicable) to the extent reasonably requested by the requesting party in furtherance of a bona fide business purpose, including litigation, disputes, compliance with Law, and financial reporting; provided that the each of Buyer or its Affiliates and Seller or its Affiliates shall give 30 days’ notice to the other party prior to destroying any of the items described in the foregoing clauses (i) and (ii) (as applicable) to permit such other party, at its expense, to examine, duplicate or repossess such items; provided, further, that the access described in the foregoing sentence shall (x) occur only during the retaining party’s normal business hours upon reasonable advance notice by the requesting party, (y) occur under the supervision of the retaining party’s personnel, and (z) be conducted in a manner that does not unreasonably interfere with the operations of the retaining party; provided, further, no party shall be required to provide access to such party’s Tax Returns (except to the extent related to the Purchased Assets).

Section 5.4Confidentiality; Announcements.

(a)From the date hereof through the Closing, each party hereto agrees that it shall not, except to the extent required by applicable Law or agreements with or rules of any stock exchange or other applicable Governmental Authority, without the other party’s prior written consent, disclose to any person (other than its equity holders, affiliates, directors, officers, employees, agents, investment bankers, attorneys, accountants, consultants, advisors and other representatives who agree to be bound by this Section 5.4(a), and only on a need-to-know basis as necessary to evaluate or consummate the transactions contemplated hereby) the existence or contents or status of this Agreement or such transactions or that any discussions or negotiations are taking place or have taken place concerning such transactions, or any other facts or non-public confidential information provided to the other party in connection with or with respect to such transactions. The parties agree that the confidentiality provisions set forth in this Section 5.4(a) shall terminate upon the Closing.

(b)For the five-year period following the Closing, Seller shall, and shall cause its Controlled Affiliates to, and shall use commercially reasonable efforts to cause its representatives and the representatives of its Controlled Affiliates to, hold in confidence any and all information, whether written or oral, concerning the Business and the Purchased Assets, except to the extent that such information (i) is required to be disclosed by judicial or administrative process or by other requirements of Law or by any Governmental Authority or in the course of inspections, examinations or inquiries by a regulatory or self-regulatory authority that has requested or required the inspection of records; (ii) is required to be disclosed in response to any summons, subpoena or other legal process or formal or informal investigative demand issued to Seller or any of its Affiliates or representatives in the course of any Proceeding to which Seller or any of its Affiliates or representatives is a party (other than a Proceeding under clause (iii) below); or (iii) in order to enforce its rights under this Agreement or any other Ancillary Agreement; provided that, in the case of the foregoing clauses (i) and (ii), the disclosing party shall, to the extent legally permitted and reasonably practicable under the circumstances, notify Buyer of such intended disclosure and reasonably cooperate with Buyer to limit or restrict such disclosure, at the sole cost and expense of Buyer.

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(c)Seller and Buyer shall (and shall cause their respective Affiliates to) consult with each other as to the form, substance and timing of any press release or other public disclosure related to this Agreement or any Ancillary Agreement or the transactions contemplated hereby and thereby, and no such press release or other public disclosure shall be made by any party hereto (or by any of their respective Affiliates) without the prior written consent of Seller and Buyer, which consent shall not be unreasonably withheld or delayed; provided that (i) any party may make such disclosure to the extent required by Law (including rules of any relevant stock exchange on which such party’s or any of its Affiliate’s securities are listed) and (ii) unless prohibited by Law, such party shall provide prompt written notice to the other party of any such required disclosure.

Section 5.5Regulatory Matters.

(a)The parties hereto shall (and shall cause their respective Affiliates to) cooperate with each other and each party shall use its commercially reasonable efforts to, as promptly as practicable after the date hereof, prepare and file (or cause to be prepared and filed) all applications, notices and filings with, and to obtain, as promptly as practicable after the date hereof, all consents, approvals and waivers of, all Governmental Authorities that are necessary to consummate, in a timely manner, the transactions contemplated by this Agreement and the Ancillary Agreements. The parties hereto agree to take all reasonable steps necessary to satisfy any conditions or requirements imposed by any Governmental Authority in connection with the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements. Further, and without limiting the generality of this Section 5.5 and Section 5.10, Buyer shall (and shall cause its Affiliates to) take any and all steps necessary to avoid or eliminate any impediment under any antitrust, competition, or trade regulation law that may be asserted by any Governmental Authority with respect to this Agreement or any Ancillary Agreement, or any transaction contemplated hereby or thereby, so as to make effective as promptly as practicable the transactions contemplated hereby. Without limiting the generality of the foregoing, each of Buyer and Seller shall use its commercially reasonable efforts to obtain the approvals and consents and make, or cause to be made, the filings with, and provide, or cause to be provided, the notices to, any Governmental Authority set forth in Exhibit C. Notwithstanding anything in this Agreement to the contrary, in no event will Buyer (or any of its Affiliates) be obligated to propose or agree to make any divestiture, accept any operational restriction, or take any other action that would be reasonably expected to limit the right of Buyer or its Affiliates to own or operate all or any portion of their respective businesses or assets.

(b)Each of Seller and Buyer (as applicable, the “Reviewing Party”) shall have the right to review in advance, and the other party (the “Filing Party”) shall consult with the Reviewing Party on, any filing or written materials submitted by the Filing Party to any third party or any Governmental Authority in connection with this Agreement and the transactions contemplated hereby. Each of the parties hereto agrees that it will keep the other parties apprised in a timely manner of the status of matters referred to in Section 5.5(a). Each of the parties hereto agrees that none of the information regarding it or any of its Affiliates supplied or to be supplied by it or on its behalf in writing specifically for inclusion in any documents to be filed with any Governmental Authority in connection with this Agreement or the transactions contemplated hereby will, at the respective times such documents are filed with any Governmental Authority, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

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(c)Each party hereto shall promptly, to the extent permitted under applicable Law, advise the other party upon receiving any communication from any Governmental Authority relating to the transactions contemplated by this Agreement or the Ancillary Agreements or otherwise materially affecting its ability to timely consummate the transactions contemplated hereby or thereby.

(d)This Section 5.5 shall not apply to the obtaining of Client consents, which shall be governed exclusively by Section 5.2.

Section 5.6Expenses. Except as otherwise specified in this Agreement, (a) Buyer shall bear the fees, costs and expenses (including legal, accounting, investment banking and other professional advisory fees, costs and expenses) incurred by it or any of its Affiliates in connection with the negotiation, preparation and actions contemplated by this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby and (b) Seller shall bear the fees, costs and expenses (including legal, accounting, investment banking and other professional advisory fees, costs and expenses) incurred by it or any of its Affiliates in connection with the negotiation, preparation and actions contemplated by this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby; provided that Buyer and Seller shall each be responsible for 50% of the fees, costs and expenses (including legal, accounting, investment banking and other professional advisory fees, costs and expenses) relating to (i) obtaining the consents contemplated by Section 5.2 (including the costs and expenses of proxy solicitation, printing and mailing, information statements required to be distributed to the shareholders and legal counsel) (the “Fund Consent Expenses”), (ii) obtaining the consents contemplated by Section 5.5 (the “Governmental Consent Expenses”), and (iii) obtaining the consents contemplated by Section 5.7 (the “Third-Party Consent Expenses”). Each of Buyer and Seller shall promptly reimburse the other party upon request with respect to its share of any Fund Consent Expenses, Governmental Consent Expenses or Third-Party Consent Expenses paid by the other party.

Section 5.7Third-Party Consents.

(a)Seller and Buyer shall cooperate with each other and each of Seller and Buyer shall use its commercially reasonable efforts to obtain any consents and approvals that may be required from third parties in connection with the transactions contemplated by this Agreement and the Ancillary Agreements; provided that the obtaining of any such consent or approval shall not be deemed to be a condition to the obligations of the parties to consummate the transactions contemplated hereby. This Section 5.7 shall not apply to (x) the obtaining of Client consents, which shall be governed exclusively by Section 5.2, or (y) the obtaining of consents, approvals and waivers of Governmental Authorities, which shall be governed exclusively by Section 5.5.

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(b)Notwithstanding anything to the contrary in this Agreement, if any Purchased Asset is not able to be transferred to Buyer, except with the consent, approval or authorization of any third-party, and such consent, approval or authorization has not been obtained on or prior to the Closing, (i) the transfer of such Purchased Asset shall not be effective as of the Closing Date, but rather such Purchased Asset shall be transferred to Buyer only upon such time as such consent, approval or authorization has been obtained, (ii) Seller and Buyer shall, and shall cause their respective Affiliates to, use commercially reasonable efforts to obtain such consent, approval or authorization as promptly thereafter as practicable after the Closing Date, and (iii) to the extent permitted under any relevant underlying Contract and subject to applicable Law, Seller shall use its commercially reasonable efforts to provide Buyer or its Affiliates (as applicable) with the rights and benefits of such Purchased Asset, and Buyer or its Affiliates (as applicable) shall assume all obligations and burdens thereunder.

(c)Seller shall not be required to and, without the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), shall not agree to, amend or modify any Assumed Contract in to order to obtain any consent, approval or authorization required in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.

(d)Upon the reasonable request of Buyer (any such request to be made no later than 30 days following the date hereof), Buyer and Seller shall amend (i) Exhibit E to include any Contract relating to the Business to which Seller is a party (other than any Contract which also relates to any Excluded Business), and (ii) Section 2.14 of the Seller Disclosure Schedule to include any Intellectual Property (other than any Intellectual Property set forth on Exhibit B-2) that is (A) owned by Seller or its Affiliates, (B) necessary for Buyer and its Affiliates to operate the Business after the Closing, and (C) primarily related to the Business during the 365 day period ending on the date hereof.

Section 5.8Additional Financial Information. No later than 45 days after the end of each fiscal quarter the last day of which occurs after the 45th day prior to the date hereof and more than 45 days prior to the Closing, Seller shall provide (or cause to be provided) to Buyer copies of any regularly prepared quarterly statements of revenue of Seller to the extent related to the Business.

Section 5.9Revenue Run-Rate Schedules. No later than the fifth Business Day after the end of each calendar month ending between the date hereof and the Closing (other than the calendar month immediately preceding the month in which the Closing occurs), Seller shall deliver (or cause to be delivered) to Buyer a schedule setting forth in reasonable detail the calculation of the Revenue Run-Rate as of the last Business Day of such month.

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Section 5.10Efforts of Parties to Close. During the period from the date of this Agreement through the Closing, each party hereto shall use its commercially reasonable efforts to fulfill or obtain the fulfillment of the conditions precedent to the consummation of the transactions contemplated by this Agreement and each Ancillary Agreement as promptly as practicable following the date of this Agreement, including the execution and delivery of any documents, certificates, instruments or other papers that are reasonably required for the consummation of such transactions. In furtherance and not in limitation thereof, the parties hereto shall, and shall cause their applicable Affiliates to, negotiate in good faith prior to the Closing to finalize the terms of each of the Ancillary Agreements and the schedules, exhibits, annexes and ancillary agreements thereto. Each party hereto shall, and shall cause its Affiliates to, execute and deliver the Ancillary Agreements to which such Person is a party at or prior to the Closing.

Section 5.11Sprott Shares. Buyer Parent shall use its commercially reasonable efforts to ensure that the Sprott Shares comprising part of the Sale Consideration will: (i) have been duly authorized and, upon issue, will be validly issued as fully paid and non-assessable Sprott Shares; and (ii) will not be issued in violation of the Organizational Documents of Buyer Parent, or any agreement, contract, covenant, undertaking or commitment to which Buyer Parent is bound. Buyer Parent shall only issue the Sprott Shares in compliance with all applicable Securities Laws, including all disclosure requirements under Securities Laws, or in reliance on an exemption from any such Securities Laws, including the filing of Form 72-503F with the Ontario Securities Commission at such time or times as may be required.

Section 5.12Further Assurances. Each party hereto shall (and shall cause its respective Affiliates to), at the request of any other party, at any time and from time to time following the Closing, execute and deliver to the requesting party such further customary instruments and take such other actions as may be reasonably necessary or appropriate in order to confirm or carry out the provisions of this Agreement and the Ancillary Agreements.

Section 5.13No Solicitation. During the period from the date hereof continuing through the Closing, Seller shall not, shall cause its Controlled Affiliates not to, and shall use commercially reasonable efforts to cause the respective directors, officers and employees of Seller and each of its Controlled Affiliates not to, and shall instruct the respective legal, accounting, investment banking and other professional advisors of Seller and each of its Controlled Affiliates not to, solicit, knowingly encourage or engage in discussions or negotiations with any Person (other than Buyer and its Affiliates and their respective advisors and representatives), or enter into any letter of intent, memorandum of understanding or other agreement with any such Person, concerning the acquisition by such Person of any of the Purchased Assets, the Business, or any equity interest in Seller.

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Section 5.14Employee Benefits.

(a)Offers of Employment. Each employee of the Seller set forth on Schedule 5.14(a) is hereinafter referred to as a “Seller Employee.” At least five Business Days prior to the Closing Date, the Employer will make a written offer of employment, on an “at-will” basis, to each of the Seller Employees (other than the Key Employees) to be effective as of the Closing Date with such terms and conditions that are comparable in the aggregate to the terms and conditions of employment for each such Seller Employee as in effect immediately prior to the Closing Date. Buyer shall notify Seller prior to the Employer making any such written offer of employment to any Seller Employee. Section 5.14(a) of the Seller Disclosure Schedule (the “Seller Employees Schedule”) identifies as of the date hereof each Seller Employee’s name, job title or position (including whether full- or part-time), date of hire, job grade, employment status, primary work location, current base salary or wage rate, commission rates, 2018 bonus or variable compensation received, target 2019 bonus or variable compensation, annual vacation entitlement and sick and vacation leave that is accrued but unused.

(b)Transferred Employees. Buyer shall cause the Employer to hire each Seller Employee who accepts the offer of employment from the Employer. Each Seller Employee who accepts the offer of employment from the Employer and whose employment is not terminated due to the failure by such Seller Employee to provide necessary work authorization documentation (including Form I-9 documentation) and commences employment with Buyer, shall be referred to herein as a “Transferred Employee.” Except to the extent prohibited by applicable Law or this Agreement, Seller shall provide Buyer reasonable opportunity to meet and communicate with the Seller Employees concerning employment offers and employment with Buyer in accordance with this Section 5.13, no later than 30 days after the date hereof.

(c)Credit for Service. For purposes of eligibility and vesting under any “employee benefit plan” as defined in Section 3(3) of ERISA (whether or not subject to ERISA) and for purposes of accrual and entitlement to vacation and other paid time off and severance benefits, the plans maintained by the Employer and any of its Affiliates that provide benefits to any Transferred Employees after the Closing Date (the “New Plans”) shall credit each Transferred Employee with his or her years of service with Seller and its Affiliates before the Closing Date, to the same extent as such Transferred Employee was entitled, before the Closing Date, to credit for such service under any corresponding Seller Benefit Plan, except where such credit would result in a duplication of benefits or where such service with Seller and its Affiliates would not otherwise be recognized under the terms of the applicable Seller Benefit Plan. Without limiting the generality of the foregoing: (i) Buyer shall and shall cause the Employer to use commercially reasonable efforts to cause each Transferred Employee to be immediately eligible to participate, without any waiting time, in any and all New Plans to the extent coverage under such New Plan replaces coverage under a corresponding Seller Benefit Plan in which such Transferred Employee participated immediately before such replacement, if such Transferred Employee is eligible to participate in such New Plan after giving effect to the immediately preceding sentence; and (ii) for purposes of each New Plan providing medical, dental, pharmaceutical and/or vision benefits to any Transferred Employee, Buyer shall use commercially reasonable efforts to cause (A) all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be waived for such Transferred Employee and his or her covered dependents, except to the extent such preexisting conditions and actively-at-work requirements had not been satisfied under the analogous Seller Benefit Plan, and (B) any eligible expenses paid by such Transferred Employee and his or her covered dependents under a Seller Benefit Plan during the portion of the plan year prior to the Closing to be taken into account under such New Plan for purposes of satisfying any corresponding deductible, co-insurance, co-payment and maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the plan year in which the Closing Date occurs as if such amounts had been paid in accordance with such New Plan.

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(d)[Reserved]

(e)Seller Obligations. Seller shall be solely responsible, and Buyer (and its Affiliates, including the Employer) shall have no obligation whatsoever for, any compensation or other amounts payable to any current or former employee, officer, director, independent contractor or consultant of Seller, including, without limitation, hourly pay, commissions, bonuses, salary, accrued vacation, fringe, pension or profit sharing benefits or severance pay for any period relating to service with Seller at any time on or prior to the Closing Date, and Seller shall pay all such amounts to all entitled persons no later than 30 days following the Closing Date, unless earlier required by applicable Laws.

(f)Claims. Seller shall remain solely responsible for the satisfaction of all claims for medical, dental, life insurance, health accident or disability benefits brought by or in respect of current or former employees of Seller or the spouses, dependents or beneficiaries thereof, which claims relate to events occurring on or prior to the Closing Date. Seller also shall remain solely responsible for all workers’ compensation claims of any current or former employees of Seller which relate to events occurring on or prior to the Closing Date. Seller shall pay, or cause to be paid, all such amounts to the appropriate persons as and when due.

Section 5.15Certain Notifications. Each party hereto shall promptly notify the other parties in writing of any fact, circumstance, event or action, of which such party has Knowledge, the existence, occurrence or taking of which has resulted or will result in, (a) any representation or warranty made by such party not being true and correct in all material respects or (b) the failure of any of the conditions set forth in Article VI hereunder to be satisfied or becoming incapable of being satisfied.

Section 5.16Non-Compete. For a period starting as of the Closing and expiring three years following the Closing Date, Seller shall not, and shall cause its Controlled Affiliates not to, directly or indirectly, (a) without the prior written consent of Buyer (not to be unreasonably withheld, conditioned or delayed), engage in or have an ownership interest in any Person engaged in, any Competitive Business (as defined below), or (b) encourage or solicit any Transferred Client or Person who is an investor in any Transferred Client to cease or reduce its business with Buyer and its Affiliates, including by withdrawing or reducing any assets under management of such Person in the Public Funds or other Transferred Clients of Buyer or its Affiliates. Notwithstanding the foregoing, nothing contained in the first sentence of this Section 5.16 shall impede, prevent or otherwise restrict Seller or any of its Controlled Affiliates from: (i) holding or beneficially owning (A) equity or other ownership interests representing less than 5% of the outstanding equity securities of any Person engaged, directly or indirectly, in a Competitive Business, or (B) any debt-related securities of any Person engaged, directly or indirectly, in a Competitive Business; (ii) performing any services for Buyer or any of its Affiliates, including in connection with or under the Ancillary Agreements; (iii) engaging in any activities in connection with investments by Seller’s or its Controlled Affiliates’ general investment accounts; or (iv) acquiring and, after such acquisition, owning an interest in another Person (or its successor) that is engaged in a Competitive Business, if (A) such Competitive Business generated less than 15% of such Person’s consolidated net revenues and net profits, determined based on an average of the three most recently completed fiscal years of such Person, and (B) Seller uses commercially reasonable efforts to cause the acquired Person (or its successor) to enter into a definitive agreement to divest itself of the Competitive Business within 12 months after such acquisition is consummated. For the purposes of this Agreement, “Competitive Business” means the business of managing, sponsoring or providing Investment Advisory Services to a registered mutual fund that has an investment strategy substantially similar to the Gold Fund.

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Section 5.17Delivery of Closing Revenue Run-Rate Schedule. Seller shall deliver (or cause to be delivered) to Buyer, not later than the fifth Business Day prior to the Closing Date, a complete and correct schedule setting forth in reasonable detail the calculation of the Closing Revenue Run-Rate. On the Closing Date, Seller shall deliver (or cause to be delivered) to Buyer an updated schedule setting forth in reasonable detail the calculation of the Closing Revenue Run-Rate if necessary to reflect consents that have been obtained, and notices of withdrawal or termination that have been received, from any Clients from and after the date on which such schedule was initially delivered to Buyer through the Closing Date.

Section 5.18Section 15(f).

(a)Buyer and Seller have entered into this Agreement in reliance upon the benefits and protections provided by Section 15(f) of the Investment Company Act. Each of Buyer and Seller (i) shall not take, and shall cause its Affiliates not to take, any action not contemplated by this Agreement that would have the effect, directly or indirectly, of causing the requirements of any of the provisions of Section 15(f) of the Investment Company Act not to be met in respect of this Agreement and the transactions contemplated hereby, and (ii) shall not fail to take any action if the failure to take such action would have the effect, directly or indirectly, of causing the requirements of any of the provisions of Section 15(f) of the Investment Company Act not to be met in respect of this Agreement and the transactions contemplated hereby.

(b)Seller shall use commercially reasonable efforts to assure that, at the Closing, and Buyer shall use commercially reasonable efforts to conduct its business and to cause each of its Affiliates to conduct its business so as to assure that, for the three-year period following the Closing, the composition of the Gold Fund Board (including the board of directors or trustees (as applicable) of the surviving entity of the Gold Fund Reorganization) is in compliance at such times with Section 15(f)(1)(A) of the Investment Company Act.

(c)For a period of two years after the Closing, Buyer shall conduct its business and shall cause each of its Affiliates to conduct its business so as to assure that there shall not be imposed on the Gold Fund (including the surviving entity of the Gold Fund Reorganization) an “unfair burden” (as described in Section 15(f) of the Investment Company Act) as a result of the transactions contemplated by this Agreement and the Ancillary Agreements, or any express or implied terms, conditions or understandings applicable thereto.

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(d)For a period of three years from the Closing, Buyer shall not engage, and shall cause its Affiliates not to engage, in any transaction that would constitute an “assignment” (as defined in the Investment Company Act) to a third party of any investment advisory agreement between (i) Buyer or any of its Affiliates and (ii) the Gold Fund (including the surviving entity of the Gold Fund Reorganization) unless it obtains a covenant in all material respects the same as that contained in this Section 5.18; provided that if Buyer or any of its Affiliates obtains an exemptive order from the SEC as contemplated by Section 15(f)(3) of the Investment Company Act (or if Section 15(f) of the Investment Company Act no longer applies to the transactions contemplated by this Agreement or the Ancillary Agreements, including as a result of any SEC staff interpretation), then this covenant shall be deemed to be modified to the extent necessary to permit Buyer and its Affiliates to act in a manner consistent with such SEC exemptive order or such applicable SEC staff interpretation.

(e)If Section 15(f) of the Investment Company Act no longer applies to the transactions contemplated by this Agreement or the Ancillary Agreements, then the covenants in this Section 5.18 shall be deemed to be modified to the extent necessary to permit Buyer and its Affiliates to act in a manner consistent with such change(s) to the Investment Company Act.

Section 5.19Wrong Pockets.

(a)In the event that, after the Closing, Seller or any of its Affiliates receives any payment related to any Purchased Asset, Seller shall use (and shall cause its Affiliates to use) commercially reasonable efforts to remit any such payment by Wire Transfer within five Business Days (or cause to be so remitted within five Business Days) such funds to Buyer, but in any event such funds shall be remitted to Buyer as soon as possible thereafter.

(b)In the event that, after the Closing, Buyer or any its Affiliates receives any payment related to any Excluded Assets, Buyer shall use (and shall cause its Affiliates to use) commercially reasonable efforts to remit any such payment by Wire Transfer within five Business Days (or cause to be so remitted within five Business Days) such funds to Seller, but in any event such funds shall be remitted to Seller as soon as possible thereafter.

(c)In the event that, after the Closing, Seller or any of its Affiliates pays or discharges an Assumed Liability, Buyer shall (and shall cause its Affiliates to) reimburse Seller or such Affiliate for any amount so paid or discharged promptly (and in any event within five Business Days) following the request from Seller or such Affiliate, accompanied by reasonable documentation for payment.

(d)In the event that, after the Closing, Buyer or any of its Affiliates pays or discharges a Retained Liability, Seller shall (and shall cause its Affiliates to) reimburse Buyer or such Affiliate for any amount so paid or discharged promptly (and in any event within five Business Days) following the request from Buyer or such Affiliate, accompanied by reasonable documentation for payment.

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(e)Subject to Section 5.7, in the event that record or beneficial ownership or possession of any property, right, Contract or other asset constituting a Purchased Asset is held by Seller or its Affiliates on or after the Closing Date, at Buyer’s request, Seller shall, subject to applicable Law and the terms of any relevant Contract, use commercially reasonable efforts to transfer (or cause to be transferred) to Buyer or a designated Affiliate thereof such property, right, Contract or asset for no or nominal value; provided that pending such transfer, subject to applicable Law and the terms of any relevant Contract, Seller shall, or shall cause its Affiliates to, (i) operate or retain such property, right Contract or asset as may reasonably be instructed by Buyer and (ii) provide Buyer all of the rights and benefits and obligations and burdens associated with the ownership and operation thereof.

(f)In the event that record or beneficial ownership or possession of any property, right, Contract or other asset constituting an Excluded Asset is held by Buyer or its Affiliates on or after the Closing Date, at Seller’s request, and subject to applicable Law and the terms of any relevant Contract, Buyer shall use (and shall cause its Affiliates to use) commercially reasonable efforts to transfer (or cause to be transferred) to Seller or a designated Affiliate thereof such property, right, Contract or asset for no or nominal value; provided that pending such transfer, subject to applicable Law and the terms of any relevant Contract, Buyer shall, or shall cause its Affiliates to, (i) operate or retain such property, right Contract or asset as may reasonably be instructed by Seller and (ii) provide Seller all of the rights and benefits and obligations and burdens associated with the ownership and operation thereof.

Section 5.20Name Change. To the extent that are Transferred Clients, (i) Seller shall use commercially reasonable efforts to change the names of to names reasonably acceptable to Buyer, with such name changes to take effect as of the Closing or (in the case of any such name change that is not reasonably practicable to be effected as of the Closing) at the earliest time following the Closing upon which such name change becomes reasonably practicable, and (ii) in the case of any such name change that is not effected as of the Closing, Seller shall cooperate with Buyer as reasonably requested by Buyer to effect such name change at the earliest time following the Closing upon which such name change becomes reasonably practicable and, effective as of the Closing, hereby grants to Buyer a license to use the names in substantially the same manner as such names were used prior to the Closing until such time as such name changes become effective.

Section 5.21Transfer Restrictions. Seller covenants and agrees that any transfer by Seller of Sprott Shares received by Seller pursuant to this Agreement (including any Key Employee Transfer) shall be effected only in accordance with the terms set forth on Exhibit D hereto. Any attempted transfer to a Person in violation of any of the terms set forth in Exhibit D hereto shall be void.

Article VI

CONDITIONS TO THE CONSUMMATION OF THE Transactions

Section 6.1Mutual Conditions. The respective obligation of Seller, Buyer and Buyer Parent to consummate the transactions contemplated hereby shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions:

(a)No Injunction. (i) No order, injunction or decree issued by any Governmental Authority of competent jurisdiction preventing the consummation of the transactions contemplated hereby shall be in effect and (ii) no statute, rule, regulation, order, injunction or decree shall have been enacted by any Governmental Authority of competent jurisdiction that prohibits or makes illegal the consummation of the transactions contemplated hereby; and

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(b)Listing of the Sprott Shares. The conditional approval to the listing of the Sprott Shares issuable as part of the Sale Consideration on the TSX shall have been made, given or obtained and is in force and has not been modified.

Section 6.2Conditions to the Obligation of Buyer and Buyer Parent . The obligation of Buyer and Buyer Parent to consummate the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing, of each of the following conditions, any of which may be waived in writing by Buyer and Buyer Parent:

(a)(i) Each of the Seller Fundamental Representations shall be true and correct in all respects with only de minimis exceptions, and (ii) each other representation and warranty of Seller set forth in Article II of this Agreement shall be true and correct in all respects (determined without regard to any qualifications as to materiality or Seller Material Adverse Effect), except for any failure(s) to be so true and correct that, individually or in the aggregate, has not had and would not reasonably be expected to have a Seller Material Adverse Effect, in the case of each of clauses (i) and (ii) above, on the Closing Date with the same effect as though each such representation and warranty had been made on and as of the Closing Date (except for any representation or warranty made as of a specified date, which shall be so true and correct only as of such specified date);

(b)Seller shall have performed and complied in all material respects with its covenants and agreements required by this Agreement to be performed or complied with by it at or prior to the Closing;

(c)An appropriate senior officer of Seller shall have delivered to Buyer a certificate, dated as of the Closing Date, signed by such officer on behalf of Seller (and not in such officer’s individual capacity) confirming the satisfaction of the conditions contained in paragraphs (a) and (b) of this Section 6.2;

(d)Seller shall have delivered (or caused to be delivered) the certificates, documents and other items to be delivered (or caused to be delivered) by it pursuant to Section 1.6(b);

(e)The Closing Revenue Run-Rate shall not be less than 75% of the Base Revenue Run-Rate;

(f)Unless resulting from death or disability of the Key Employee party thereto, each of the Employment Agreements shall be in full force and effect without repudiation and shall not have been breached by the Key Employee party thereto, and each Key Employee shall be ready and able to commence his full-time employment with Buyer or one of its Affiliates immediately following the Closing; and

(g)From the date hereof through the Closing, no Seller Material Adverse Effect shall have occurred.

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Section 6.3Conditions to the Obligation of Seller. The obligation of Seller to consummate the transactions contemplated hereby shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any of which may be waived in writing by Seller:

(a)(i) Each of the representations and warranties of Buyer and Buyer Parent (as applicable) contained in Section 3.1, Section 3.2, Section 4.1 and Section 4.2 shall be true and correct in all respects with only de minimis exceptions, and (ii) each other representation and warranty of Buyer and Buyer Parent set forth in Article III and Article IV of this Agreement shall be true and correct in all respects (determined without regard to any qualifications or limitations as to materiality or material adverse effect), except for any failure(s) to be so true and correct that, individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on the ability of Buyer or Buyer Parent to consummate the transactions contemplated hereby or to comply with its obligations hereunder in a timely manner, in the case of each of clauses (i) and (ii) above, on the Closing Date with the same effect as though each such representation and warranty had been made on and as of the Closing Date (except for any representation or warranty made as of a specified date, which shall be so true and correct only as of such specified date);

(b)Buyer shall have performed and complied in all material respects with its covenants and agreements required by this Agreement to be performed or complied with by it at or prior to the Closing;

(c)An appropriate senior officer of each of Buyer shall have delivered to Seller a certificate, dated as of the Closing Date, signed by such officer on behalf of Buyer (and not in such officer’s individual capacity) confirming the satisfaction of the conditions contained in paragraphs (a) and (b) of this Section 6.3; and

(d)Buyer and Buyer Parent shall have delivered (or caused to be delivered) the certificates, documents and other items to be delivered (or caused to be delivered) by it pursuant to Section 1.6(a).

Section 6.4Frustration of Closing Conditions, etc. None of the parties hereto may invoke or exercise any right based on the failure of any condition set forth in this Article VI to be satisfied if such failure was caused by such party’s breach of this Agreement. If the Closing occurs, all closing conditions set forth in Section 6.1 and Section 6.2 that have not been fully satisfied as of the Closing shall be deemed to have been waived by Buyer. If the Closing occurs, all closing conditions set forth in Section 6.1 and Section 6.3 that have not been fully satisfied as of the Closing shall be deemed to have been waived by Seller. For the avoidance of doubt, nothing in this Section 6.4 shall relieve any party hereto from Liability for any breach of, or any failure to satisfy, any representation, warranty, covenant or agreement contained herein prior to the Closing Date.

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Article VII

TERMINATION

Section 7.1Termination. This Agreement may be terminated at any time prior to the Closing, as follows:

(a)by mutual written consent of Seller and Buyer;

(b)by Buyer or Seller, by written notice to the other, if any order of any Governmental Authority permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby shall have become final and non-appealable; provided that the right to terminate this Agreement pursuant to this Section 7.1(b) shall not be available to any party hereto whose breach of any provision of this Agreement, directly or indirectly, caused or resulted in the occurrence of such order;

(c)by Seller, by written notice to Buyer, if Buyer or Buyer Parent breaches any representation or warranty, or fails to perform any covenant or other agreement, contained in this Agreement that would result in a failure of a condition set forth in Section 6.1 or Section 6.3 and which breach or failure to perform cannot be cured or has not been cured (to the extent necessary to avoid a failure of such a condition) prior to the earlier of (x) 30 days after receipt by Buyer of written notice of such breach from Seller and (y) five Business Days prior to the Termination Date;

(d)by Buyer, by written notice to Seller, if Seller breaches any representation or warranty, or fails to perform any covenant or other agreement, contained in this Agreement that would result in a failure of a condition set forth in Section 6.1 or Section 6.2 and which breach or failure to perform cannot be cured or has not been cured (to the extent necessary to avoid a failure of such a condition) prior to the earlier of (x) 30 days after receipt by Seller of written notice of such breach from Buyer and (y) five Business Days prior to the Termination Date; or

(e)by Buyer or Seller, by written notice to the other, if the Closing does not occur by the close of business on March 31, 2020 (the “Termination Date”); provided that neither Seller, on the one hand, nor Buyer, on the other hand, may terminate this Agreement pursuant to this clause (e) if Seller (in the case of termination by Seller) or Buyer or Buyer Parent (in the case of termination by Buyer) is in material breach of any of its respective representations or warranties, or has materially failed to perform any of its representative covenants or other agreements, contained in this Agreement on the Termination Date and such breach or failure to perform shall have been the cause of, or shall have resulted in, directly or indirectly, the failure of the Closing to occur by the Termination Date.

Section 7.2Survival After Termination. In the event of the termination of this Agreement pursuant to Section 7.1, this Agreement shall be null and void and have no further force or effect, without any Liability on the part of any party hereto, except for the provisions of Section 5.4(c), Section 5.6, this Section 7.2 and Article IX, which shall survive such termination. Notwithstanding the foregoing, except as otherwise expressly provided herein, the termination of this Agreement shall not relieve any party hereto of Liability for its willful and material breach of this Agreement. For purposes of this Agreement, “willful and material breach” means a material breach of any material representation, warranty or covenant or other agreement in this Agreement that is a consequence of an act or failure to act by or on behalf of the breaching party with actual knowledge that the taking of such act or such failure to act would, or would reasonably be expected to, result in a breach of this Agreement.

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Article VIII

INDEMNIFICATION

Section 8.1Survival of Representations, Warranties, Covenants and Other Agreements. All representations and warranties made in this Agreement shall survive the Closing for a period of 18 months after the Closing Date; provided that the Fundamental Representations shall survive the Closing indefinitely and the representations and warranties set forth in Section 2.16 shall survive the Closing until 60 days following the expiration of the applicable statutory period of limitations (including any extensions thereof). All covenants or agreements contained in this Agreement that, by their terms, are to be fully performed prior to the Closing shall survive the Closing for a period of 18 months after the Closing Date. All covenants or agreements contained in this Agreement that by their terms contemplate performance, in whole or in part, after the Closing shall survive the Closing only until the expiration of the term of the undertaking in such covenant or agreement or, if no such term is specified, for a period of 18 months after the Closing Date.

Section 8.2Indemnification.

(a)Following the Closing, and subject to the other terms of this Article VIII, Seller shall indemnify, defend and hold harmless Buyer and each of its Affiliates and each of their respective officers, directors, employees and agents (each, a “Buyer Indemnified Party”) from and against any and all claims, losses, damages, Liabilities, awards, judgments, costs, Taxes and expenses (including reasonable fees and expenses of attorneys, accountants and consultants) actually incurred by it (collectively, “Losses” and individually, a “Loss”) to the extent arising out of or resulting from:

(i)any failure of any representation or warranty made by Seller in this Agreement to be true and correct as of the date hereof and as of the Closing Date (or, in the case of any representation or warranty expressly made as of an earlier date, as of such date);

(ii)any breach of any covenant or agreement of Seller set forth in this Agreement;

(iii)any Retained Liability; and

(iv)any Taxes required to be paid by Seller under Section 9.10.

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(b)Following the Closing, and subject to the other terms of this Article VIII, Buyer shall indemnify, defend and hold harmless Seller and each of its Affiliates and each of their respective officers, directors, employees and agents (each, a “Seller Indemnified Party”) from and against any and all Losses to the extent arising out of or resulting from:

(i)any failure of any representation or warranty made by Buyer in this Agreement to be true and correct as of the date hereof and as of the Closing Date (or, in the case of any representation or warranty expressly made as of an earlier date, as of such date);

(ii)any breach of any covenant or agreement of Buyer set forth in this Agreement; and

(iii)any Assumed Liability.

(c)Following the Closing, and subject to the other terms of this Article VIII, Buyer Parent shall indemnify, defend and hold harmless the Seller Indemnified Parties from and against any and all Losses to the extent arising out of or resulting from:

(i)any failure of any representation or warranty made by Buyer Parent (as applicable) in this Agreement to be true and correct as of the date hereof and as of the Closing Date (or, in the case of any representation or warranty expressly made as of an earlier date, as of such date); and

(ii)any breach of any covenant or agreement of Buyer Parent set forth in this Agreement.

(d)Notwithstanding any other provision of this Agreement to the contrary, or the purposes of this Article VIII, any inaccuracy in or breach of any representation or warranty, and the amount of any Loss in connection therewith, shall be determined without regard to any materiality, Seller Material Adverse Effect, Buyer Material Adverse Effect or other similar qualification contained in or otherwise applicable to such representation or warranty.

Section 8.3Indemnification Procedure.

(a)Promptly after the Person seeking indemnification pursuant to Section 8.2 (the “Indemnified Party”) has knowledge of any event or circumstance of any claim by a third party that would reasonably be expected to give rise to indemnification under this Article VIII (a “Third-Party Claim”) (but in any event not later than 10 Business Days prior to the time any response to the asserted claim is required), the Indemnified Party shall promptly deliver to the Person from which indemnification is sought (the “Indemnifying Party”) a notice (a “Claim Notice”) setting forth in reasonable detail a description of the matter giving rise to indemnification hereunder, including, if known, a good faith estimate of anticipated Losses; provided, however, that any failure or delay by the Indemnified Party in delivering a Claim Notice to the Indemnifying Party shall not affect the Indemnified Party’s right to indemnification under this Article VIII, except to the extent the Indemnifying Party has been prejudiced by such failure or delay (including to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure and such forfeiture results in prejudice to the Indemnifying Party). The Indemnified Party shall deliver to the Indemnifying Party, promptly after the Indemnified Party’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnified Party relating to such Third-Party Claim and all other information, including the estimated amount (if the calculation of such estimated amount is reasonably practicable) of the Loss that has been or may be sustained by the Indemnified Party with respect to the Third-Party Claim as the Indemnifying Party may reasonably request and the basis of the Indemnified Party’s request for indemnification under this Agreement. A claim for indemnification for any matter not constituting a Third-Party Claim shall be asserted by the Indemnified Party by prompt written notice to the Indemnifying Party. The notice of claim shall describe in reasonable detail the facts known to the Indemnified Party giving rise to such claim, and the amount, or good faith estimate of the amount (to the extent then known), of Losses arising therefrom and the method of computation thereof.

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(b)In case the Indemnifying Party shall object to the indemnification of an Indemnified Party in respect of any claim in any Claim Notice, the Indemnifying Party, as soon as practicable after receipt of such Claim Notice (and in any event not later than 15 Business Days after such receipt), shall deliver to the Indemnified Party a written notice to such effect and the Indemnifying Party and the Indemnified Party, within the 30-day period beginning on the date of receipt by the Indemnified Party of such written objection, shall attempt to agree upon the rights of the respective parties with respect to each of such claims to which the Indemnifying Party shall have so objected, and any agreement reached regarding their respective rights with respect to any of such claims shall be set forth in a written agreement signed by the parties. If the Indemnified Party and the Indemnifying Party are unable to agree as to any particular item or items or amount or amounts, then either the Indemnified Party or the Indemnifying Party may submit such dispute to a court of competent jurisdiction in accordance with this Agreement.

(c)After receipt by the Indemnifying Party of a Claim Notice of a Third-Party Claim, such Indemnifying Party may, at its option, assume the defense of the Indemnified Party against such claim (including the employment of counsel of the Indemnifying Party’s choosing) and the Indemnified Party shall cooperate in and assist in good faith in such defense and the Indemnified Party shall reasonably cooperate in and assist in good faith in such defense; provided that (x) in the case of a Third-Party Claim that is brought by a Governmental Authority (other than a taxing authority) that names only Buyer and/or its Affiliates as a party, Buyer shall be entitled to assume and control the defense of such Third-Party Claim, (y) in the case of a Third-Party Claim that is brought by a Governmental Authority (other than a taxing authority) that names only Seller and/or its Affiliates as a party, Seller shall be entitled to assume and control the defense of such Third-Party Claim and (z) in the case of a Third-Party Claim that is brought by a Governmental Authority (other than a taxing authority) that names both (1) Buyer and/or any of its Affiliates as a party and (2) Seller and/or any of its Affiliates as a party, each of Buyer and Seller shall be entitled to assume the defense of the portion of such Third-Party Claim that involves it or one of its Affiliates. The Indemnified Party shall reasonably cooperate in and assist in good faith with the compromise of, or defense against, such claim, and shall make available to the Indemnifying Party and its attorneys and accountants all pertinent information under its control relating to such claim. Except with the prior written consent of the Indemnified Party, such consent not to be unreasonably withheld or delayed, no Indemnifying Party shall settle or compromise any Third-Party Claim or permit a breach or default judgment or consent to an entry of judgment unless such settlement, compromise or judgment (i) relates solely to money damages, (ii) provides for a full release of each Indemnified Party and (iii) does not contain any admission or finding of wrongdoing on behalf of the Indemnified Party. Until the Indemnifying Party shall have so assumed the defense of the Indemnified Party against such claim following the delivery of such Claim Notice, the Indemnified Party shall undertake the defense of such claim, and if such Indemnified Party is entitled to indemnification under this Article VIII, all reasonable legal and other expenses reasonably incurred by the Indemnified Party shall be borne by the Indemnifying Party. Any Indemnified Party shall have the right to employ one separate counsel (other than local counsel) in any such action or claim and to participate in (but not control) the defense thereof at its own cost and expense (unless otherwise agreed by the Indemnifying Party) if (i) the employment of such counsel has been specifically authorized in writing by the Indemnifying Party, or (ii) in the reasonable opinion of counsel to the Indemnified Party, (A) a conflict or potential conflict exists between the Indemnified Party and the Indemnifying Party that would make such separate representation advisable or (B) there are legal defenses available to the Indemnified Party that are different from or additional to those available to the Indemnifying Party; provided that the Indemnifying Party shall bear the reasonable costs and expense of such separate counsel in the case of the foregoing clause (ii). No Indemnifying Party shall be liable to indemnify any Indemnified Party for any Losses arising out of any consent to an entry of judgment or any compromise or settlement of any such action or claim that is effected by the Indemnified Party without the consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

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Section 8.4Limitation of Liability.

(a)Notwithstanding any provision of this Agreement to the contrary, Seller shall not have any indemnification obligations for Losses under Section 8.2(a)(i), and no Buyer Indemnified Party shall be entitled to indemnification or recovery, or to otherwise make a claim for indemnity or recovery, under Section 8.2(a)(i), (i) unless and until the aggregate amount of Losses for which indemnification would otherwise be available under Section 8.2(a)(i) but for this Section 8.4(a) exceeds an amount equal to 1.0% of the Sale Consideration (the “Indemnification Deductible”), in which event Seller shall be liable only for any and all Losses suffered or incurred by the Indemnified Party in excess of the Indemnification Deductible or (ii) to the extent that the aggregate amount of all such Losses exceeds 15% of the Sale Consideration (the “Indemnification Cap”). Notwithstanding any provision of this Agreement to the contrary, the maximum aggregate obligation of Seller under Sections 8.2(a)(i) and 8.2(a)(ii) shall not exceed the amount of the Sale Consideration.

(b)Notwithstanding any provision of this Agreement to the contrary, Buyer shall not have any indemnification obligations for Losses under Section 8.2(b)(i), and Buyer Parent shall not have any indemnification obligations for Losses under Section 8.2(c)(i), and no Seller Indemnified Party shall be entitled to indemnification or recovery, or to otherwise make a claim for indemnity or recovery, under Section 8.2(b)(i) or Section 8.2(c)(i), (i) unless and until the aggregate amount of Losses for which indemnification would otherwise be available under Section 8.2(b)(i) and Section 8.2(c)(i) but for this Section 8.4(b) exceeds the Indemnification Deductible, in which event Buyer and/or Buyer Parent (as applicable) shall be liable only for any and all Losses suffered or incurred by the Indemnified Party in excess of the Indemnification Deductible or (ii) to the extent that the aggregate amount of all such Losses exceeds the Indemnification Cap. Notwithstanding any provision of this Agreement to the contrary, the maximum aggregate obligation of Buyer and Buyer Parent under Section 8.2(b)(i), Section 8.2(b)(ii), Section 8.2(c)(i) and Section 8.2(c)(ii) shall not, in the aggregate, exceed the amount of the Sale Consideration.

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(c)Notwithstanding any provision of this Agreement to the contrary, the Indemnification Deductible and Indemnification Cap limitations shall not apply to any claim for indemnification in respect of any breach of the Fundamental Representations or any representation set forth in Section 2.11(h), Section 2.11(i) or Section 2.16.

(d)All claims for indemnification pursuant to Section 8.2(a)(ii), Section 8.2(b)(ii) and Section 8.2(c)(ii) must be asserted by the party seeking indemnification, in writing in accordance with this Article VIII not later than the date on which the applicable covenant or agreement ceases to survive pursuant to Section 8.1; provided, however, that if written notice of a claim specifying the indemnification claim in reasonable specificity (including the covenants and/or agreements alleged to have been breached (as applicable)) has been given in accordance with this Article VIII prior to such date, such claim (and the relevant covenants and/or agreements of the other party) shall survive until such claim has been finally resolved pursuant to this Article VIII. Notwithstanding anything to the contrary in this agreement, all claims for indemnification under Section 8.2(a)(iii) and Section 8.2(b)(iii) shall survive indefinitely.

Section 8.5Effect on Final Purchase Price. All payments made under this Article VIII shall be treated as adjustments to the Sale Consideration for all Tax purposes, except as otherwise required pursuant to applicable Law.

Section 8.6Calculation of Losses. In calculating any amount indemnifiable hereunder in respect of Losses, Losses shall be reduced by (a) any amounts recovered by the Indemnified Party under available insurance policies, indemnification obligations or other rights of recovery with respect to such Losses, net of any deductible or any other reasonable out-of-pocket expense incurred by the Indemnified Party in obtaining such recovery, and (b) any Tax benefit actually realized by the Indemnified Party or its Affiliates arising in connection with the accrual, incurrence or payment of any such Losses in the taxable year in which such Loss was accrued, incurred or paid or in any subsequent taxable year. If an Indemnified Party or its Affiliates receives any such recovery described in clause (a) or (b) above after an indemnification payment by the Indemnifying Party has been made, then such Indemnified Party or its Affiliates shall promptly reimburse the Indemnifying Party for any payment made, but not in excess of the amount received by the Indemnified Party or its Affiliates. In the event of the occurrence of any Losses, an Indemnified Party shall seek recovery under any available insurance policies, indemnification obligations or other rights of recovery with respect to such Losses.

Section 8.7No Duplication. The amount of any Losses for which indemnification is provided under this Article VII shall be determined without duplication of any other Losses for which an indemnification claim has been made or could be made under any other covenant or agreement of this Agreement.

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Section 8.8Exclusive Remedy. Each of the parties acknowledges and agrees that (a) except for a claim for fraud on the part of a party hereto, from and after the Closing, the indemnification provisions of this Article VIII shall be the sole and exclusive monetary remedy of the parties for any breach or inaccuracy of any representation, warranty, covenant or agreement contained in this Agreement or any certificate or instrument delivered pursuant hereto at or prior to the Closing, (b) any and all such claims arising out of, or in connection with, the transactions contemplated by this Agreement must be brought under and in accordance with the terms of this Agreement and (c) no breach of any representation, warranty, covenant or agreement contained herein shall give rise to any right on the part of any party, after the consummation of the transactions contemplated by this Agreement, to rescind this Agreement or any of the transactions contemplated hereby. Each of the parties acknowledges and agrees that the right to indemnification and all other remedies based upon any representation, warranty, covenant or agreement contained in this Agreement shall not be limited, diminished or otherwise affected by any investigation conducted with respect to, or any knowledge acquired at any time, with respect to the accuracy or inaccuracy of or compliance with any such representation, warranty, covenant or agreement.

Section 8.9Assignment of Claims. The Indemnifying Party shall be subrogated to, and the Indemnified Party shall assign, any right of action (whether pursuant to contract, arising under applicable Law or otherwise) which the Indemnified Party may have against any other Person with respect to any matter giving rise to a claim for indemnification hereunder.

Article IX

MISCELLANEOUS

Section 9.1Amendments; Waiver. This Agreement may not be amended, altered or modified, and no provision hereof may be waived, except by written instrument executed by Seller and Buyer. No waiver shall constitute a waiver of, or estoppel with respect to, any subsequent or other inaccuracy, breach or failure to strictly comply with the provisions of this Agreement.

Section 9.2Entire Agreement, etc. This Agreement (including the Annexes and Exhibits, the Seller Disclosure Schedule, the Buyer Disclosure Schedule and any certificates executed or delivered by any of the parties pursuant hereto) and the Ancillary Agreements constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, except as expressly provided herein, and supersedes all prior agreements and understandings, discussions, negotiations and communications, written and oral, among the parties with respect to the subject matter hereof and thereof.

Section 9.3Interpretation.

(a)When a reference is made in this Agreement or any Ancillary Agreement to Articles, Annexes, Sections, Schedules or Exhibits, such reference is to an Article of, Annex of, Section of, Schedule to or Exhibit to this Agreement unless otherwise indicated.

(b)Any capitalized term used in any Ancillary Agreement or the Articles, Annexes, Sections, Schedules or Exhibits of this Agreement or any Ancillary Agreement but not otherwise defined therein will have the meaning given to such term in this Agreement.

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(c)The table of contents and headings contained in this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement.

(d)Whenever the words “include,” “includes” or “including” are used in this Agreement, they will be deemed to be followed by the words “without limitation.” Except as the context otherwise requires, the word “or” shall not be exclusive and shall mean “and/or.”

(e)The terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement.

(f)Any singular term in this Agreement will be deemed to include the plural, and any plural term the singular.

(g)All pronouns and variations of pronouns will be deemed to refer to the feminine, masculine or neuter, singular or plural, as the identity of the Person referred to may require.

(h)Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding or correlative meaning.

(i)References to any statute or regulation means such statute or regulation as amended, modified or supplemented from time to time and includes any successor legislation or regulation thereto and any rules and regulations promulgated thereunder, in each case through the date hereof.

(j)All references to any period of days shall be deemed to be to the relevant number of calendar days unless otherwise specified. All references to “dollars” or “$” shall be to U.S. dollars.

(k)Each of the parties hereto acknowledges that it has been represented by independent counsel of its choice throughout all negotiations that have preceded the execution and delivery of this Agreement and the Ancillary Agreements and that it has executed and delivered the same with consent and upon the advice of said independent counsel. Each of the parties hereto and its counsel cooperated in the drafting the preparation of this Agreement, the Ancillary Agreements and other documents referred to herein, and any and all drafts relating thereto shall be deemed the work product of all of the parties and may not be construed against any party by reason of its preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against the party that drafted it is of no application and is hereby expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intentions of the parties hereto and this Agreement as if drafted jointly by all of the parties hereto.

(l)References to any Person include the successors and permitted assigns of that Person.

(m)Any documents and agreements that have been posted to the Electronic Data Room and remain accessible in the Electronic Data Room on the date hereof shall be deemed to have been “delivered,” “provided,” or “made available” (or any phrase of similar import) to Buyer by Seller.

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(n)When calculating the period of time before which, within which or following which, any act is to be done or step taken under this Agreement, the date that is the reference date in calculating such period will be included. If the last day of a period measured in Business Days is a non-Business Day, the period in question will end on the next succeeding Business Day.

Section 9.4Disclosure Schedules. The disclosure of any item or matter in the Seller Disclosure Schedule or the Buyer Disclosure Schedule shall not be construed as an admission, acknowledgment, representation or indication that such item or other matter is “material” or has or would have a Seller Material Adverse Effect or that such item or other matter is required to be referred to or disclosed in the Seller Disclosure Schedule or the Buyer Disclosure Schedule (as applicable), nor shall such disclosure establish a standard of materiality for any purpose whatsoever. The disclosure of any item or matter relating to any possible breach or violation of any Law or Contract shall not be construed as an admission or indication that any such breach or violation exists or has actually occurred.

Section 9.5Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 9.6Notices. Unless otherwise provided herein, all notices, requests, demands, claims and other communications hereunder shall be in writing and shall be deemed given and received (a) if delivered in person, on the date delivered, (b) if transmitted by fax or email (provided that the receiving party delivers a written confirmation of receipt of such notice either by fax, email or any other method described in this Section 9.6), on the date sent or (c) if delivered by an express courier, on the second Business Day after mailing, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

If to Seller:

Tocqueville Asset Management L.P.

40 West 57th Street

New York, NY 10019

Attention: Robert Kleinschmidt, President and Chief Executive Officer

Email: rwk@tocqueville.com

Attention: Kelsey Graham, Legal Affairs

Email: KGraham@Tocqueville.Com

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with a copy (which shall not constitute notice) to:

Seward & Kissel LLP

One Battery Park Plaza

New York, New York 10001

Attention: Robert Van Grover, Esq.

Email: vangrover@sewkis.com

Tel.: (212) 574-1205

If to Buyer or Buyer Parent:

Sprott Asset Management LP
200 Bay Street
Royal Bank Plaza, South Tower

Toronto, Ontario, Canada M5J 2J1

Attention: Arthur Einav

Email: aeinav@sprott.com

Sprott Inc.
200 Bay Street
Royal Bank Plaza, South Tower

Toronto, Ontario, Canada M5J 2J1

Attention: Arthur Einav

Email: aeinav@sprott.com

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, NY 10036

Attention: Michael D. Dorum

Fax: (212) 735-2000

Email: Michael.Dorum@skadden.com

Stikeman Elliott LLP
5300 Commerce Court West, 199 Bay St.
Toronto, ON M5L 1B9

Attention: John Ciardullo

J.R. Laffin

Fax: (416) 947-0866

Email: jciardullo@stikeman.com and jrlaffin@stikeman.com

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Section 9.7No Assignment; Binding Effect; Persons Benefiting.

(a)This Agreement or the rights and obligations of the parties hereunder shall not be assigned, in whole or in part, by operation of law or otherwise, (i) in the case of an assignment by Seller, without the prior written consent of Buyer, or (ii) in the case of an assignment by Buyer, without the prior written consent of Seller. Notwithstanding the foregoing, Buyer may assign (and need not seek prior consent before doing so) any of its rights or obligations under this Agreement, in whole or in part (including, without limitation, the right to purchase the Purchased Assets and assume the Assumed Liabilities), to one or more of its Affiliates; provided that no such assignment shall relieve Buyer of any of its Liabilities hereunder.

(b)This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns. Except as specified herein, no provision of this Agreement is intended or shall be construed to confer upon any Person other than the parties and their respective successors and permitted assigns any right, remedy or claim under or by reason of this Agreement or any part hereof.

Section 9.8Specific Performance.

(a)The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, and that monetary damages, even if available, would not be an adequate remedy therefor. Accordingly, each party hereto may be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the performance of the terms and provisions of this Agreement, including the right of a party hereto to cause the other parties to consummate the transactions contemplated hereby. Each party hereto shall be entitled to seek to enforce specifically the performance of the terms and provisions of this Agreement in any court referred to in Section 9.12, without proof of actual damages (and each party hereto hereby waives any requirement for the securing or posting of any bond or security in connection with such remedy), such enforcement of specific performance being in addition to any other remedy to which any party may be entitled at law or in equity. The parties hereto further agree not to assert that a remedy of monetary damages would provide an adequate remedy for any breach of this Agreement. Each of the parties hereto further agrees that specific performance by or injunctive relief against any party will not cause any undue hardship to such party.

(b)Each of the parties hereto agrees and acknowledges that (i) it is the intention and desire of the parties that each party hereto be able to obtain specific performance to specifically enforce the provisions of this Agreement and prevent breaches of this Agreement. No party hereto shall be required to provide any bond or other security in connection with any order or injunction to prevent breaches of this Agreement or to enforce specifically the terms and provisions of this Agreement.

Section 9.9Counterparts. This Agreement may be executed in two or more counterparts (including by facsimile, pdf or other electronic transmission), each of which shall be deemed an original, but all of which taken together shall constitute one and the same agreement, it being understood that all of the parties need not sign the same counterpart. Delivery of an executed counterpart of a signature page to this Agreement (including by facsimile, pdf or other electronic transmission) shall be effective as delivery of an executed counterpart of this Agreement.

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Section 9.10Tax Matters.

(a)Transfer Taxes. All transfer, stamp, sales, value added, and use Taxes, and similar Taxes, assessments, levies, tariffs, imposts, tolls, customs, duties, export and import fees and charges, registration fees, and any similar costs incurred and payable under Law applicable to, or resulting from, the transactions contemplated by this Agreement, including any related interest, fines, and penalties, if any (collectively, “Transfer Taxes”), shall be paid one-half by Buyer and one-half by Seller when due, and Seller shall, at Buyer and Seller’s equal expense, file or cause to be filed all necessary Tax Returns and other documentation with respect to all such Transfer Taxes and shall promptly provide Buyer copies of any such documentation and Tax Returns.

(b)Purchase Price Allocation. Seller and Buyer shall allocate the Sale Consideration and any Liabilities assumed by Buyer (plus other relevant items) (the “Allocable Amount”) in accordance with the requirements of Sections 338 and 1060 of the Code. As soon as practicable following the Closing, Seller shall prepare a draft schedule reflecting the allocation of the Allocable Amount and shall submit such allocation to Buyer for review. Seller and Buyer shall use commercially reasonable efforts to agree on the amount and proper allocation of the Allocable Amount in accordance with Section 1060 of the Code. If Seller and Buyer have not agreed on the allocation within 90 calendar days after the Closing Date, then Seller and Buyer shall each have the right to deliver notice to the other party of its intent to refer the matter for resolution to the Independent Accountant. Seller and Buyer will each deliver to the other and to the Independent Accountant a notice setting forth in reasonable detail their proposed allocations. Within 30 calendar days after receipt thereof, the Independent Accountant will deliver the allocation schedule and provide a written description of the basis for its determination of the allocations therein (such allocations, whether agreed to by Seller and Buyer or determined by the Independent Accountant (the “Final Allocation”) shall be final, binding and conclusive on Seller and Buyer). Notwithstanding anything to the contrary, one-half of all fees, costs and expenses of retaining the Independent Accountant pursuant to this Section 9.10(b) shall be borne by Seller and one-half of such fees, costs and expenses of retaining the Independent Accountant pursuant to this Section 9.10(b) shall be borne by Buyer. Each party will bear the costs of its own counsel, witnesses (if any) and employees. The parties agree not to take any position inconsistent with the Final Allocation for Tax reporting purposes unless otherwise required by a “determination” within the meaning of Section 1313 of the Code (or similar state law) to the contrary.

Section 9.11Governing Law. This Agreement, the legal relations between the parties hereto and the adjudication and the enforcement thereof, shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware applicable to agreements made and to be performed entirely within the State of Delaware, without regard to the conflict of law provisions thereof that could result in the application of the laws of any other jurisdiction.

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Section 9.12Consent to Jurisdiction; Waiver of Jury Trial.

(a)Each party hereto irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, and the U.S. District Court sitting in the State of Delaware (and appellate courts thereof), for the purposes of any suit, action or other proceeding arising out of this Agreement or the transactions contemplated hereby. Each party hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth above shall be effective service of process for any dispute in the State of Delaware with respect to any matters to which it has submitted to jurisdiction in this Section 9.12. Each party hereto irrevocably and unconditionally waives any objection to the laying of venue of any suit, action or other proceeding in the Court of Chancery of the State of Delaware, or the U.S. District Court sitting in the State of Delaware (and appellate courts thereof), and hereby and thereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any dispute brought in any such court has been brought in an inconvenient forum.

(b)EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR FROM ANY PARTY’S PERFORMANCE UNDER THIS AGREEMENT OR FROM THE FORMATION, BREACH, TERMINATION, VALIDITY, INTERPRETATION OR ENFORCEMENT OF THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT, OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. EACH PARTY HERETO HEREBY FURTHER AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 9.13No Recourse. This Agreement may only be enforced against the named parties hereto and their successors and assigns, and all claims or causes of action based upon, arising out of or relating to this Agreement, its negotiation, execution or performance or the transactions contemplated hereby may be made only against such parties and their successors and assigns, and no past, present or future director, officer, employee incorporator, member, manager, partner, equityholder, shareholder, Affiliate, agent, attorney or other representative of any party hereto (including any person negotiating or executing this Agreement on behalf of a party hereto) or any of their respective Affiliates shall have any Liability or obligation with respect to this Agreement or with respect to any claim or cause of action, whether in tort, contract or otherwise, that may be based upon, arise out of or relate to this Agreement, its negotiation, execution or performance or the transactions contemplated hereby. Notwithstanding the foregoing provisions of this Section 9.13, nothing herein shall limit any Liability of any Person under the confidentiality provisions of Section 5.4(a) or under the provisions of the Letter Agreement.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

TOCQUEVILLE ASSET MANAGEMENT LP
By:	/s/ Robert W. Kleinschmidt
	Name: Robert W. Kleinschmidt
	Title: President and Chief Executive Officer

[Signature Pages – Asset Purchase Agreement]

SPROTT ASSET MANAGEMENT LP,
BY ITS GENERAL PARTNER, SPROTT ASSET MANAGEMENT GP INC.
By:	/s/ W. Whitney George
	Name: Whitney George
	Title: Chief Investment Officer
SPROTT INC.
By:	/s/ W. Whitney George
	Name: Whitney George
	Title: President

[Signature Pages – Asset Purchase Agreement]

Annex A - Definitions

“Adjusted Assets Under Management” shall mean, with respect to each Client, as of a specified date, the amount of assets under management by Seller as of the Base Date, as adjusted, in the case of any determination of Adjusted Assets Under Management after the Base Date, to reflect additions, withdrawals, contributions and redemptions of funds for any reason. For the avoidance of doubt, the calculation of Adjusted Assets Under Management shall not take into account any distributions of interest, dividends, income or capital gains from any account or any increase or decrease in assets under management due to market appreciation or depreciation or any currency fluctuations after the Base Date.

“Administrative Services Contract” shall mean any Contract of Seller for the purpose of providing administrative services in connection with the Business.

“Advisory Contract” shall mean any Contract of Seller for the purpose of providing investment advisory or subadvisory services in connection with the Business.

“Affiliate” shall mean any individual, partnership, corporation, entity or other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the Person specified; provided that no Client or Controlled Affiliate thereof shall be an Affiliate of Seller.

“Agreement” shall have the meaning set forth in the preamble hereto.

“Allocable Amount” shall have the meaning set forth in Section 9.10(b).

“Ancillary Agreements” shall mean the Assignment and Assumption Agreement and the Employment Agreements.

“Anti-Corruption Laws” shall mean the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder, and any comparable foreign Law that is applicable to Seller or any Fund.

“Anti-Money Laundering Laws” shall mean all Laws, financial reporting standards and recordkeeping and other requires issued, entered into, or promulgated by any Governmental Authority concerning money laundering or similar activities, in each case, to the extent applicable to Seller or any Fund.

“Assignment and Assumption Agreement” shall have the meaning set forth in the recitals hereto.

“Assumed Contracts” shall mean all of those contracts specifically set forth on Exhibit E.

“Assumed Liabilities” shall have the meaning set forth in Section 1.3.

“Base Date” shall mean June 30, 2019.

Annex A-1

“Base Revenue Run-Rate” shall have the meaning set forth in Section 2.10(a).

“Base Revenue Run-Rate Schedule” shall have the meaning set forth in Section 2.10(a).

“Broker-Dealer” shall mean Tocqueville Securities L.P., a limited partnership formed under the laws of the State of Delaware.

“Business” shall mean the business and operations of Seller and its Affiliates relating to managing, sponsoring and/or providing Investment Advisory Services to each of:

(i)Tocqueville Gold Fund (which shall include without limitation the Tocqueville Gold Fund Institutional Class);

(ix)Sprott Hathaway Special Situations Fund (Cayman) LTD.;

(x)Sprott Hathaway Special Situations Fund (US) LP; and

(xi)the Sprott Hathaway Special Situations Master Fund LP.

“Business Day” shall mean any day on which the TSX is open for trading and that is not a Saturday, a Sunday, or a day on which banks in Toronto, Canada or New York City are authorized or required to close for regular banking business.

“Buyer” shall have the meaning set forth in the preamble hereto.

“Buyer Administrative Services Contract” shall mean any Contract of Buyer for the purpose of providing administrative services to a Client or Other Client following the Closing.

“Buyer Advisory Contract” shall mean any Contract of Buyer for the purpose of providing Investment Advisory Services to a Client or Other Client following the Closing.

“Buyer Disclosure Schedule” shall have the meaning set forth in the introduction to Article III.

Annex A-2

“Buyer Distributor” shall mean SGRIL or any other Affiliate of Buyer that acts as principal underwriter (or equivalent distributor) in respect of any Client.

“Buyer Fund” shall mean a newly created “shell” investment company (or series thereof) registered under the Investment Company Act formed for the purpose of effecting the Gold Fund Reorganization.

“Buyer Fundamental Representations” shall mean the representations in Section 3.1 and Section 4.1 (Organization), and Section 3.2 and Section 4.2 (Authority).

“Buyer Indemnified Party” shall have the meaning set forth in Section 8.2(a).

“Buyer Intermediary Contract” shall mean any Contract between Buyer or Buyer Distributor (or any Affiliate thereof) and any Intermediary.

“Buyer Material Adverse Effect” shall mean any event change, effect or occurrence that prevents or materially delays the ability of Buyer, Buyer Parent or any of their respective Affiliates to perform its obligations under this Agreement or any Ancillary Agreement.

“Buyer Parent” shall have the meaning set forth in the preamble hereto.

“Buyer Party” shall mean each of Buyer and Employer.

“Claim Notice” shall have the meaning set forth in Section 8.3(a).

“Client” shall mean any Person to which Seller provides Investment Advisory Services in connection with the Business.

“Client Relationship” shall mean, with respect to any Client, all of the business relationships of Seller or its Affiliates with such Client with respect to the provision of Investment Advisory Services or administrative services in connection with the Business (whether pursuant to an Advisory Contract, Administrative Services Contract or otherwise).

“Closing” shall have the meaning set forth in Section 1.5.

“Closing Cash Consideration” shall have the meaning set forth in Section 1.7(a).

“Closing Date” shall have the meaning set forth in Section 1.5.

“Closing Revenue Run-Rate” shall mean the aggregate Revenue Run-Rate for each Client as of the Closing RRR Calculation Date (other than any Client that is a Non-Consenting Client), which consents shall, for the avoidance of doubt, be measured through the Closing Date.

“Closing RRR Calculation Date” shall mean the last Business Day of the month ending immediately prior to the Closing Date.

“Closing Share Consideration” shall mean a number of Sprott Shares equal to the quotient of (a) $5,000,000 divided by (b) the volume weighted average of the closing price of Sprott Shares on the TSX over the five trading days occurring immediately prior to the Closing Date.

Annex A-3

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Competitive Business” shall have the meaning set forth in Section 5.16.

“Contingent Payment Amount” shall mean (a) with respect to the Year 1 Calculation Date, the Year 1 Contingent Payment Amount and (b) with respect to the Year 2 Calculation Date, the Year 2 Contingent Payment Amount.

“Contingent Payment Calculation Date” shall mean each of the Year 1 Calculation Date and the Year 2 Calculation Date.

“Contingent Payment Statement” shall have the meaning set forth in Section 1.8(b).

“Contract” shall mean any contract, agreement, indenture, note, bond, loan, letter of credit, pledge, instrument, lease, mortgage, license, commitment or other arrangement or agreement to which the applicable Person is a party or by which the applicable Person or any of its properties or assets is bound.

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or partnership or other interests, by contract or otherwise. The terms “Controlling” and “Controlled” shall have correlative meanings.

“Disputed Item” shall have the meaning set forth in Section 1.8(c)(ii).

“Electronic Data Room” shall mean the electronic data room established by or on behalf Seller, as the same exists as of the date of this Agreement or on such other date as may be specified with respect thereto in the provisions of this Agreement.

“Employer” shall mean SGRIL or, as determined by Buyer in its sole and absolute discretion, Buyer or any other Affiliate of Buyer.

“Employment Agreement” shall have meaning set forth in the recitals hereto.

“Encumbrance” shall mean any lien, pledge, mortgage, security interest, claim, charge, easement or other encumbrance of any kind.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules, regulations and class exemptions of the Department of Labor thereunder.

“ERISA Affiliate” shall mean any Person that for purposes of Title I or Title IV of ERISA or Section 412 of the Code would be deemed at any relevant time to be a “single employer,” or would otherwise be aggregated with, Seller or any of its Affiliates under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.

Annex A-4

“Estimated Contingent Payment Amount” shall have the meaning set forth in Section 1.8(b).

“Estimated Year 1 Cash Portion” shall have the meaning set forth in Section 1.8(b).

“Estimated Year 1 Share Portion” shall have the meaning set forth in Section 1.8(b).

“Estimated Year 2 Contingent Payment Amount” shall have the meaning set forth in Section 1.8(d)(ii)(A).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder.

“Excluded Assets” shall have the meaning set forth in Section 1.2.

“Excluded Business” shall mean any business of Seller other than the Business.

“Excluded Taxes” shall mean (i) all Taxes not relating to the Business, the Purchased Assets or the Assumed Liabilities owed by Seller or any of its Affiliates for any period and (ii) all Taxes relating to the Business, the Purchased Assets or the Assumed Liabilities for any period (or portion thereof) ending on or prior to the Closing Date.

“Filing Party” shall have the meaning set forth in Section 5.5(b).

“Final Allocation” shall have the meaning set forth in Section 9.10(b).

“Final Year 1 Cash Portion” shall have the meaning set forth Section 1.8(c)(vi).

“Final Year 1 Contingent Payment Amount” shall have the meaning set forth in Section 1.8(c)(vi).

“Final Year 1 Share Portion” shall have the meaning set forth in Section 1.8(c)(vi).

“Final Year 2 Contingent Payment Amount” shall have the meaning set forth in Section 1.8(c)(vii).

“FINRA” shall mean the Financial Industry Regulatory Authority, Inc. and any successor thereto.

“Fund Consent Expenses” shall have the meaning set forth in Section 5.6.

“Fundamental Representations” shall mean the Buyer Fundamental Representations and the Seller Fundamental Representations.

“GAAP” shall mean the generally accepted accounting principles as used in the United States, as in effect at the time any applicable financial statements were or are prepared.

“Global Investment Performance Standards” shall mean the Global Investment Performance Standards maintained by the CFA Institute.

Annex A-5

“Gold Fund” shall mean The Tocqueville Gold Fund, a series of The Tocqueville Trust, a Massachusetts business trust.

“Gold Fund Board” shall mean the board of trustees of the Tocqueville Trust.

“Gold Fund Reorganization” shall mean the transfer by the Gold Fund of all assets and liabilities to, and reorganization of the Gold Fund with and into, the Buyer Fund pursuant to an agreement and plan of reorganization in customary form, it being understood and agreed that as a result of such asset transfer and reorganization, (i) the board of trustees of the Buyer Fund immediately following such asset transfer and reorganization shall consist of the members of the board of trustees of the Buyer Fund immediately prior to such asset transfer and reorganization and such other persons as may be selected by the board of trustees of the Buyer Fund in its sole discretion, (ii) the Buyer Fund shall become (or shall already be) party to an investment advisory agreement with Buyer and agreements with third-party service providers (including each dealer agreement, sub-transfer agency agreement and other similar agreement with a financial intermediary), which agreements shall (x) provide to the Buyer Fund substantially the same services as those provided under the Advisory Contract and such other agreements with third-party service providers in effect for the Gold Fund as of immediately prior to the closing of the Gold Fund Reorganization and (y) be on economic terms (including, for the avoidance of doubt, net fee terms) and non-economic terms that, when combined with other fees and expenses, are no less favorable in the aggregate to the Buyer Fund than the economic and non-economic terms (in the aggregate and when combined with other fees and expenses) of the Advisory Contract and such other agreements with third-party service providers in effect for the Gold Fund as of immediately prior to the closing of the Gold Fund Reorganization, and (iii) for two years from the closing date of the Gold Fund Reorganization, the economic and non-economic terms under the investment advisory agreement between Buyer and the Buyer Fund and such other agreements with third party services providers, as described in the foregoing clause (ii), shall be, when combined with other fees and expenses, no less favorable in the aggregate to the Buyer Fund than the economic and non-economic terms (in the aggregate and when combined with other fees and expenses) of the Advisory Contract and such other agreements with third-party service providers in effect for the Gold Fund as of immediately prior to the closing of the Gold Fund Reorganization (after giving effect to any applicable fee waivers and/or reimbursement arrangements in effect on such closing date).

“Gold Fund Reorganization Proxy Statement/Prospectus” shall have the meaning set forth in Section 5.2(a)(ii).

“Government Official” shall mean any officer or employee of a “Governmental Authority,” or any person acting in an official capacity on behalf of a Governmental Authority, including any party official, candidate for political office.

“Governmental Authority” shall mean any U.S. or foreign, federal, state, local or other governmental or non-governmental self-regulatory entity, body, organization, agency or authority exercising executive, legislative, judicial, regulatory or administrative functions, including the SEC.

“Governmental Consent Expenses” shall have the meaning set forth in Section 5.6.

Annex A-6

“Indebtedness” shall mean, without duplication, (a) all indebtedness for borrowed money or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices), (b) any other indebtedness (both long- and short-term) that is evidenced by a note, bond, debenture, draft or similar instrument, (c) all obligations under financing or capital leases, (d) letters of credit and any similar agreements, (e) all obligations under any interest rate, currency swap or other hedging agreement or arrangement, (f) any guarantee of any of the obligations referred to in the foregoing clauses (a) though (e), and (g) any unpaid interest, prepayment penalties, premiums, costs and fees that would arise or become due as a result of the prepayment of any of the obligations referred to in the foregoing clauses (a) through (f).

“Indemnification Cap” shall have the meaning set forth in Section 8.4(a).

“Indemnification Deductible” shall have the meaning set forth in Section 8.4(a).

“Indemnified Party” shall have the meaning set forth in Section 8.3(a).

“Indemnifying Party” shall have the meaning set forth in Section 8.3(a).

“Independent Accountant” shall have the meaning set forth in Section 1.8(c)(iv).

“Infringe” shall have the meaning set forth in Section 2.15(b).

“Intellectual Property” shall mean, in any jurisdiction, any and all (a) patents and patent applications (including reissues, reexaminations, continuations, divisions, continuations-in-part, extensions, revisions and counterparts thereof in any jurisdiction), (b) Trademarks, including all applications and registrations therefor, (c) copyrights and works of authorship (whether registered or unregistered) and all copyright registrations and applications for registration of copyrights, (d) rights in computer programs (whether in source code, object code, or other form), algorithms, databases, compilations and data, technology supporting the foregoing, (e) Trade Secrets, know-how and other proprietary information, and (f) similar, corresponding or equivalent rights anywhere in the world.

“Intermediary” shall mean any selling dealer, selected dealer, platform provider, distributor or other broker-dealer, bank or intermediary.

“Investment Advisers Act” shall mean the Investment Advisers Act of 1940, as amended, and the rules and regulations of the SEC thereunder.

“Investment Advisory Services” shall mean acting as an “investment adviser” within the meaning of the Investment Advisers Act and any other applicable Law, and performing activities related or incidental thereto or otherwise providing any of the following services for compensation: (a) the management of an investment account or fund (or portions thereof or a group of investment accounts or funds) or (b) the giving of advice, whether discretionary or non-discretionary, including sub-advisory services, with respect to the investment, disposition or reinvestment of assets or funds (or any group of assets or funds).

Annex A-7

“Investment Company Act” shall mean the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.

“Key Employee” shall mean .

“Key Employee Transfer” shall have the meaning set forth in the recitals.

“Knowledge” shall mean (a) with respect to Seller, the actual knowledge on the date hereof of any of the Persons listed on Exhibit F after having made reasonable inquiry, and (b) with respect to Buyer or Buyer Parent, the actual knowledge on the date hereof of any of the Persons listed on Exhibit G after having made reasonable inquiry.

“Law” shall mean, with respect to any Person or any property or asset, any domestic or foreign federal, state or local statute, law (whether statutory or common law), ordinance, rule, administrative interpretation, regulation, order, writ, judgment or directive (including those of any self-regulatory organization), as may be amended or modified from time to time, applicable to or legally binding on such Person (or its properties or assets) or to such property or asset from time to time.

“Letter Agreement” shall mean that certain letter agreement, dated as of May 14, 2019, by and among Sprott Inc., Buyer and Seller.

“Liability” shall mean any and all debts, liabilities, commitments or obligations, whether direct or indirect, accrued or fixed, known or unknown, absolute or contingent, matured or unmatured or determined or determinable, whether arising in the past, present or future.

“License Agreements” shall mean all Contracts pursuant to which Seller or its Affiliates (a) licenses any Transferred Intellectual Property or (b) obtains a license to use any material Intellectual Property owned by third parties that is (A) necessary for Buyer and its Affiliates to operate the Business after the Closing, and (B) primarily related to the Business during the twelve (12) months prior to the date hereof (other than off-the-shelf, shrink-wrap, click-wrap, or other readily commercially available software licenses).

“Losses” shall have the meaning set forth in Section 8.2(a).

“Material Contract” shall mean any Contract (other than the Seller Benefit Plans) to which any Seller Party or, in the case of clause (d) below, any Client is a party or by which any of the foregoing or any of their respective properties or assets is bound of the type listed below:

(a)           any Advisory Contract with a Client;

(b)           any Administrative Services Contract with a Client;

(c)           any Contract related to the Business that contains fee sharing or revenue sharing provisions, fee or expense waivers or “most favored nation” or similar obligations or agreements;

Annex A-8

(d)           any distribution agreements related to the Business for which aggregate sales in the 2018 calendar year exceeded $100,000;

(e)           any License Agreement related to the Business with annual aggregate payments exceeding $100,000;

(f)            any agreements (i) restricting the ability of Seller or any of its Affiliates to operate in any geographic area or to compete with any Person with respect to the Business or (ii) that contains any exclusive dealing obligations or provisions limiting the ability of Seller or its Affiliates to solicit potential clients in respect of the Business or Persons to invest in Clients; and

(g)           any Contract pursuant to which Seller or any of its Affiliates or any third-party service provider provides transfer agency, fund custodial or fund accounting services related to any Public Fund.

“Misrepresentation” shall mean an untrue statement of a material fact or an omission to state a material fact required or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made.

“Net Fee Revenue” shall mean,

Annex A-9

“New Plans” shall have the meaning set forth in Section 5.14(c).

“NI 51-102” means National Instrument 51-102 – Continuous Disclosure Obligations.

“Non-Consenting Client” shall mean any Client for which (i) a consent has not been obtained in accordance with Section 5.2 prior to the Closing Date and/or (ii) any consent, approval or waiver of a Governmental Authority specified in Exhibit C has not been obtained in accordance with Section 5.5 prior to the Closing Date.

“Non-Sponsored Public Fund” shall mean  .

“Notice of Disagreement” shall have the meaning set forth in Section 1.8(c)(ii).

“Organizational Documents” shall mean, with respect to any Person, any corporate, partnership or limited liability organizational documents, including certificates or articles of incorporation, bylaws, certificates of formation, operating agreements, limited liability company agreements, certificates of limited partnership, partnership agreements, shareholder agreements and certificates of existence, as applicable; in each case, as has been amended or restated and as in effect on the date hereof.

“Other Client” shall mean any Person who is not a Client that makes an investment in an account, fund or other investment vehicle or product to which Buyer provides Investment Advisory Services that (x) are provided primarily by the Key Employees and (y) relate to any investment strategy that is substantially similar to the investment strategy of any Client of any of the Business.

“Performance Record” shall have the meaning set forth in Section 2.17(b).

Annex A-10

“Permit” shall mean any domestic and foreign federal, state and other governmental permit, license, registration, consent, agreement, waiver or authorization held or used by the applicable Person in connection with its business and operations.

“Permitted Encumbrances” shall mean (a) Encumbrances for Taxes not yet due and payable or which are being contested in good faith by appropriate proceedings, or due and not yet subject to penalties for nonpayment, (b) nonexclusive licenses of, or other grants of rights to use, Intellectual Property granted by Seller or its Affiliates in the ordinary course of business consistent with past practice, and (c) such Encumbrances that would not, individually or in the aggregate, reasonably be expected to impose any material restriction on any of the Purchased Assets.

“Person” shall mean any individual, corporation, company, partnership (limited or general), limited liability company, joint venture, association, trust, Governmental Authority or other business entity.

“Personal Data” has the same meaning as the term “personal data,” “personal information,” or the equivalent under any applicable data privacy, data security, or data protection Law.

“Post-Closing Taxes” shall mean all Taxes relating to the Business, the Purchased Assets or the Assumed Liabilities for any period (or portion thereof) beginning after the Closing Date.

“Proceedings” shall have the meaning set forth in Section 2.13(a).

“Prohibited Payment” means any direct or indirect bribe, rebate, payoff, influence payment, kick-back or other payment or gift of money, property, or anything of value (including meals or entertainment) to any person, including any Government Official, made to unlawfully influence official action, to unlawfully obtain or retain business, to otherwise unlawfully secure any improper advantage or for any other purpose that is prohibited under any Anti-Corruption Laws.

“Public Fund” shall have the meaning set forth in Section 2.11(a).

“Public Fund Board” shall mean the board of directors or trustees (as applicable) of the applicable Public Fund.

“Public Fund Financial Statement” shall have the meaning set forth in Section 2.11(g).

“Purchased Assets” shall have the meaning set forth in Section 1.1(a).

Annex A-11

“Records” shall mean all books, records, files, papers, documents and information (in any form or medium) of Seller and its Affiliates that specifically pertain to the Purchased Assets or the Assumed Liabilities (including the Clients, Client Relationships and the Business), including: (i) records related to and supporting the Performance Record; (ii) documents related to Seller’s investment processes and methodologies in connection with the Business; (iii) Contracts governing the Client Relationships; (iv) all records utilized by Seller or Affiliates to administer, reflect, evidence or record information relating to the Client Relationships, including relating to any transfer agency functions of Seller and its Affiliates; (v) non-proprietary reports and data, know-your-customer reports, compliance reports and other materials relating to the Client Relationships; (vi) records maintained to comply with applicable Laws; (vii) vendor lists, mailing lists, revenue records, promotional, advertising and marketing distributions lists, brochures and sales and promotional materials and other materials associated with sales and marketing initiatives related to the Business; and (viii) records related to the Transferred Intellectual Property (including all documentation (to the extent so related), such as original registration certificates, design documentation and prosecution, enforcement and defense files, memos, notebooks, analyses, legal opinions and flings); provided that “Records” shall not include: (A) any original documents that Seller or any of its Affiliates is required to retain under any applicable Law or governmental order; (B) Seller’s minute books, stock records and other corporate or organizational records relating to corporate organization, formation or capitalization or internal corporate proceedings or corporate policies; (C) any Tax Returns and other documents, materials and information related to Taxes of Seller or any of its Affiliates; (D) any personnel files and related records (including (to the extent permitted by applicable Law) all employee benefit related files or records) of any employees of Seller or of its Affiliates (other than, with respect to Transferred Employees), (x) census data (including full name, job title, start date, service time, regularly scheduled hours, regular work week, part-time or full-time status, designation of exempt or non-exempt status, annual salary, hourly rate (if applicable), bonus opportunity, benefit plan enrollment (other than medical and dental plan enrollment, to the extent Seller and its Affiliates are prohibited or restricted from providing such information under applicable Law), tier, work address, work phone, home address, state of residence), Form I-9 and job description; (E) any books, records, files, papers, documents and information that are subject to the attorney-client privilege; (F) any books, records, files, papers, documents and information to the extent they relate to the Excluded Assets, any Excluded Business or the Retained Liabilities (it being understood that, pursuant to Section 5.3(b) (and subject to the terms thereof), Buyer shall have the right to access and make copies of all such books, records, files, papers, documents and information otherwise excluded by this clause (F) (other than any Tax Returns (except to the extent exclusively related to the Purchased Assets)) solely to the extent related to the Purchased Assets); and (G) any other books and records which Seller is prohibited from disclosing or transferring to Buyer under applicable Law.

“Regulatory Documents” shall mean, with respect to a Person, all forms, reports, registration statements, schedules and other documents filed, or required to be filed, by such Person pursuant to applicable Securities Laws or the other applicable rules and regulations of any Governmental Authority.

“Restricted Party” shall mean a Person that is: (i) listed on, or owned or controlled by a Person listed on, or acting on behalf of a Person listed on, any Sanctions List; (ii) a government of a Sanctioned Country or an agency, instrumentality of, or an entity directly or indirectly owned or controlled by, a government of a Sanctioned Country; (iii) any Person located in, incorporated under the laws of, or owned or (directly or indirectly) controlled by, or acting on behalf of, a Person in a Sanctioned Country; or (iv) otherwise a target of Sanctions (“target of Sanctions” signifying a Person with whom a Person subject to the jurisdiction of a Sanctions Authority would be prohibited or restricted from engaging in trade, business or other activities).

“Retained Liabilities” shall have the meaning set forth in Section 1.4.

Annex A-12

“Revenue Run-Rate” shall mean, with respect to any Client (other than, with respect to the Closing Revenue Run-Rate only, any Non-Consenting Client), as of a specified date, the aggregate annualized (x) investment advisory, investment management, and subadvisory fees (not including any performance-based incentive fees or similar fees (including any carried interest or profits interests), or any sales, exit, 12b-1 or similar fees), (y) administrative fees net of any subadvisory fees and sub-administration fees, and (z) distribution and services fees or 12b-1 fees payable to Seller Distributor (in the case of the Base Revenue Run-Rate) or Buyer Distributor (in the case of the Closing Revenue Run-Rate) paid to a Person other than Seller for such account payable to Seller as of such specified date, determined by multiplying the Adjusted Assets Under Management for such Client as of such specified date by the applicable fee rates for such Client under the applicable Advisory Contract, Administrative Services Contract, or distribution plan or Contract at such specified date (after, in the case of the Closing Revenue Run-Rate for a Client that was a Client as of the Base Date, reduction to reflect any fee waivers, expense limitations, reimbursement obligations or similar offsets and arrangements that were not in effect as of the Base Date but are to be in effect at the Closing or following the Closing). The calculation of the applicable annual fee rates used in the Closing Revenue Run-Rate shall be made in respect of the rates to be in effect as of the Closing Date, in a manner consistent with the methodologies used for the calculation of the applicable annual fee rates used in the Base Revenue Run-Rate.

“Reviewing Party” shall have the meaning set forth in Section 5.5(b).

“Sale Consideration” shall have the meaning set forth in Section 1.7.

“Sanctioned Country” shall mean any country or other territory subject to comprehensive country-wide or territory-wide Sanctions.

“Sanctions” shall mean the Laws, embargoes or restrictive measures concerning economic or financial sanctions administered, enacted or enforced by any Sanctions Authority.

“Sanctions Authority” shall mean the United States and its governmental institutions and agencies charged with issuing, administering, or enforcing Sanctions, including OFAC and the United States Department of State.

“Sanctions List” means, including without limitation, the “Specially Designated Nationals and Blocked Persons” list maintained by OFAC, and any other list or designation of targets of Sanctions maintained by a Sanctions Authority.

“SEC” shall mean the U.S. Securities and Exchange Commission and any successor thereto.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder.

“Securities Laws” shall mean the Securities Act, the Exchange Act, the Investment Advisers Act, the Investment Company Act, state “blue sky” securities and investment advisory laws, all similar foreign securities Laws, including the Securities Act (Ontario) and any other applicable Canadian provincial or territorial securities Laws, and the rules and regulations promulgated thereunder and the rules and regulations of the TSX.

Annex A-13

“SEDAR” shall mean the System for Electronic Document Analysis and Retrieval.

“Seller” shall have the meaning set forth in the preamble hereto.

“Seller Benefit Plan” shall mean any “employee benefit plan” (as defined in Section 3(3) of ERISA) and any other employment, bonus, deferred compensation, incentive compensation, equity or equity-based award, retention, change in control, transaction bonus, salary continuation, severance or termination pay, hospitalization, medical, dental, vision, life insurance, disability or sick leave benefit, supplemental unemployment benefits, profit-sharing, pension or retirement plan, program, agreement or arrangement or any other material fringe benefit, in each case (a) that is maintained, sponsored or contributed to by Seller in respect of any Seller Employees or (b) to which Seller has any liability; provided that in no event shall a Seller Benefit Plan include any arrangement operated by a Governmental Authority.

“Seller Disclosure Schedule” shall have the meaning set forth in the introduction to Article II.

“Seller Distributor” shall mean Tocqueville Securities L.P.

“Seller Employee” shall have the meaning set forth in Section 5.14(a).

“Seller Employees Schedule” shall have the meaning set forth in Section 5.14(a).

“Seller Fundamental Representations” shall mean shall mean the representations in Section 2.1 (other than the last sentence) (Organization and Formation), Section 2.2 (Authority) and Section 2.5 (Ownership of Purchased Assets).

“Seller Indemnified Party” shall have the meaning set forth in Section 8.2(b).

“Seller Material Adverse Effect” shall mean (x) any event, change, effect or occurrence that has had or would reasonably be expected to have a material adverse effect on the Purchased Assets, the Business or the Assumed Liabilities, in each case, taken as a whole, or (y) any event, change, effect or occurrence that prevents or materially delays the ability of Seller or any of its Affiliates to perform its obligations under this Agreement or any Ancillary Agreement; provided that any such event, change, effect or occurrence resulting from, arising in connection with or related to any of the following shall not constitute a “Seller Material Adverse Effect” and shall be excluded from any determination as to whether a Seller Material Adverse Effect has occurred or exists or would reasonably be expected to occur or exist: (a) the negotiation, execution and delivery of this Agreement and the Ancillary Agreements or the public announcement or consummation of the transactions contemplated hereby and thereby, (b) any change or condition generally affecting the investment management industry, (c) any change in economic, financial or securities market, regulatory or political conditions in the United States or any other country or region in the world (including any change in interest rates), (d) any outbreak or substantial worsening of war or hostilities, any terrorist act, calamity or natural disaster, or any similar crisis, (e) any change in Law or accounting principles or official binding interpretations, except, in the case of clauses (b), (c), (d) and (e) above, to the extent having a disproportionate impact on Seller, taken as a whole, as compared to similarly situated Persons in the investment management industry, (f) any failure of Seller to meet any internal or published projections, forecasts or revenue or earnings predictions (provided that the underlying change, event, development, state of facts, circumstance, effect or occurrence that caused or contributed to such failure shall not be excluded), (g) any reduction in assets under management or the Revenue Run-Rate of any Client (the effect of which shall be governed solely by Section 6.2(e)) (provided that the underlying change, event, development, state of facts, circumstance, effect or occurrence that caused or contributed to such reduction shall not be excluded), (h) the loss of any employees or independent contractors of Seller, or (i) any action required by this Agreement or any action taken by, or with the consent of, Buyer or any of its Affiliates.

Annex A-14

“Seller Party” means Seller and each Affiliate of Seller that is party from time to time to this Agreement or any Ancillary Agreement.

“Separate Account Client” shall mean any Client that is not a Public Fund.

“SGRIL” shall mean Sprott Global Resource Investments Ltd.

“Solvent” shall have the meaning set forth in Section 3.7.

“Sponsored Public Fund” shall mean the Gold Fund.

“Sprott Filings” shall mean all documents publicly filed under the profile of Parent on SEDAR since January 1, 2018.

“Sprott Hathaway” shall mean Sprott Hathaway Special Situations Fund (US) LP, Sprott Hathaway Special Situations Fund (Cayman) LTD, and Sprott Hathaway Special Situations Master Fund LP, collectively.

“Sprott Shares” shall mean common shares in the capital of Buyer Parent.

“Subsidiary” of a Person shall mean any other Person with respect to which the first Person (i) has the right to elect a majority of the board of directors or other Persons performing similar functions or (ii) beneficially owns 50% or more of the voting stock (or of any other form of other voting or controlling equity interest in the case of a Person that is not a corporation), in each case, directly or indirectly through one or more other Persons; provided that no Client or Controlled Affiliate thereof shall be a Subsidiary of Seller.

“Tax” or “Taxes” shall mean any and all federal, state, local, foreign and other taxes, duties, levies, tariffs, imposts, tolls, customs or other similar assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, profit share, license, lease, service, service use, value added, withholding, payroll, employment, excise, estimated, severance, stamp, occupation, premium, property, windfall profits, wealth, net wealth, net worth or similar governmental charges, together with any interests, penalties, additions to tax or other additional amounts imposed thereon.

Annex A-15

“Tax Return” shall mean any return, declaration, report, statement, form (including elections, estimates, declarations or amendments), claim for refund, or information return relating to Taxes, including any attachment, exhibit, schedule or supplement thereto and amendment thereof.

“Termination Date” shall have the meaning set forth in Section 7.1(e).

“Third-Party Claim” shall have the meaning set forth in Section 8.3(a).

“Third-Party Consent Expenses” shall have the meaning set forth in Section 5.6.

“Tocqueville Trust” shall mean the Tocqueville Trust, a Massachusetts business trust.

“Trade Secrets” shall mean trade secrets and other confidential information that derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.

“Trademarks” shall mean names, trademarks, service marks, trade names, business names, corporate names, domain names, logos, trade dress or other source indicators, whether registered or unregistered, together with all goodwill associated therewith or symbolized thereby.

“Transaction Notice” shall have the meaning set forth in Section 5.2(c)(i).

“Transfer Taxes” shall have the meaning set forth in Section 9.10(a).

“Transferred Client” shall mean any Person to which Seller provided Investment Advisory Services in connection with the Business and which was transferred to Buyer pursuant to the transactions contemplated herein.

“Transferred Employee” shall have the meaning set forth in Section 5.14(b).

“Transferred Intellectual Property” shall mean (i) all Intellectual Property that is (A) owned by Seller or its Affiliates, and (B) primarily related to the Business during the twelve (12) months prior to the date hereof, and (ii) the right to sue and otherwise recover damages for past Infringement thereof.

“TSX” shall mean the Toronto Stock Exchange.

“United States” or “U.S.” means the United States of America, including its territories and possessions.

“Wire Transfer” shall mean a payment in immediately available funds by wire transfer in lawful money of the United States to such account or to a number of accounts as shall have been designated by written notice from the receiving party to the paying party at least five Business Days prior to the date of the applicable payment.

“Year 1 Calculation Date” shall mean the first anniversary of the Closing Date.

Annex A-16

“Year 1 Carry Over Amount” shall mean the excess, if any, of the Year 1 Sum over $15,000,000. For the avoidance of doubt, the Year 1 Carry Over Amount shall not be a negative number.

“Year 1 Cash Portion” shall mean an amount in cash equal to:

(a)           if the Year 1 Contingent Payment Amount is less than or equal to $10,000,000, the Year 1 Contingent Payment Amount; and

(b)           if the Year 1 Contingent Payment Amount is greater than $10,000,000, $10,000,000.

“Year 1 Contingent Payment Amount” shall mean an amount equal to:

(a)           the product of (i) 3.5 and (ii) aggregate Net Fee Revenues for all Clients and Other Clients as of the Year 1 Calculation Date; less

(b)           $15,000,000;

provided that the Year 1 Contingent Payment Amount shall not be (A) greater than $15,000,000 or (B) less than zero.

“Year 1 Share Portion” shall mean a number of Sprott Shares equal to:

(a)           if the Year 1 Contingent Payment Amount is less than or equal to $10,000,000, zero; and

(b)           if the Year 1 Contingent Payment Amount is greater than $10,000,000, the quotient determined by dividing:

(i)           the lesser of (A) $5,000,000 and (B) the excess of (1) the Year 1 Contingent Payment Amount over (2) $10,000,000; by

(ii)          the Year 1 Share Price.

“Year 1 Share Price” shall mean the volume weighted average of the closing price of Sprott Shares on the TSX over the 5 trading days occurring immediately prior to the date of the payment of the Year 1 Contingent Payment Amount to Buyer pursuant to Section 1.8(b).

“Year 1 Sum” shall mean (a) the product of (i) 3.5 and (ii) aggregate Net Fee Revenues for all Clients and Other Clients as of the Year 1 Calculation Date; less (b) $15,000,000. The Year 1 Sum shall take into account any adjustments to the calculation of the Net Fee Revenues as of the Year 1 Calculation Date set forth in the Contingent Payment Statement, as agreed upon or finally determined pursuant to Sections 1.8(b), 1.8(c) and 1.8(d) of this Agreement.

“Year 2 Calculation Date” shall mean the second anniversary of the Closing Date.

Annex A-17

“Year 2 Contingent Payment Amount” shall mean an amount equal to:

(a)           the product of (i) 3.5 and (ii) aggregate Net Fee Revenues for all Clients and Other Clients as of the Year 2 Calculation Date; less

(b)           the sum of (i) $15,000,000 and (ii) the Year 1 Contingent Payment Amount;

provided that the Year 2 Contingent Payment Amount shall not be (A) greater than the excess of (1) $50,000,000 over (2) the sum of $15,000,000 and the Year 1 Contingent Payment Amount, or (B) less than the lesser of (x) the amount determined pursuant to the forgoing clause (A) and (y) the Year 1 Carry Over Amount.

Annex A-18

Exhibit A

Form of Assignment and Assumption Agreement

A-1

CONFIDENTIAL

FORM OF

BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) is made and entered into on [●]¹ by and among TOCQUEVILLE ASSET MANAGEMENT LP, a Delaware limited partnership (“Seller”) and SPROTT ASSET MANAGEMENT LP, a limited partnership formed under the laws of the Province of Ontario (“Buyer”) (Seller and Buyer are collectively referred to as the “Parties,” and each, individually, as a “Party”). All capitalized terms used herein without definition shall have the meanings set forth in the Asset Purchase Agreement (as defined below).

RECITALS

A.   Seller, Buyer and Sprott Inc., a corporation existing under the laws of the Province of Ontario entered into that certain Asset Purchase Agreement, dated as of [●], 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Asset Purchase Agreement”), pursuant to which Seller has agreed to sell to Buyer, and Buyer agreed to purchase from Seller, the Purchased Assets, upon the terms and subject to the conditions set forth in the Asset Purchase Agreement; and

B.   This Agreement is being executed and delivered by the Parties in connection with the consummation of the transactions contemplated by the Asset Purchase Agreement.

NOW THEREFORE, in consideration of the premises and the mutual agreements and covenants set forth in the Asset Purchase Agreement and hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

1.    Transfer of Purchased Assets. Effective as of the Closing, Buyer hereby purchases from Seller, and Seller hereby sells, assigns, transfers, conveys and delivers to Buyer, free and clear of all Encumbrances (other than Permitted Encumbrances), all of Seller’s rights, title and interest in the Purchased Assets, attached as Exhibit A. Notwithstanding anything to the contrary in this Agreement, if any Purchased Asset that is indicated by an asterisk in Exhibit A hereto (each, a “Non-Transferred Asset”)² is not able to be transferred to Buyer without the consent, approval or authorization of any third party, and such consent, approval or authorization has not been obtained on or prior to the Closing, the transfer by Seller to Buyer of such Non-Transferred Asset shall not be effective as of the Closing Date, but rather such Non-Transferred Asset shall be transferred by Seller to Buyer only upon such time as all requisite consents, approvals and authorizations with respect to the transfer of such Non-Transferred Asset have been obtained^.

2.    Assumption of Liabilities. Buyer hereby accepts the foregoing transfer and assignment, and, effective as of the Closing, and from and after the Closing, Buyer hereby assumes, and agrees to pay, perform, and discharge when due, the Assumed Liabilities, attached hereto as Exhibit B.

¹ Closing Date to be inserted.

² Non-Transferred Assets (if any) to be designated by adding asterisks to Exhibit A prior to Closing Date.

3.    Relationship to the Asset Purchase Agreement. This Agreement is intended to evidence the consummation of certain transactions contemplated by the Asset Purchase Agreement. Nothing in this Agreement, express or implied, is intended to or shall be construed to alter, modify, change, waive, expand or limit in any way the rights and obligations of the Parties under, and the terms of, the Asset Purchase Agreement, and the representations, warranties, covenants, agreements and indemnities contained in the Asset Purchase Agreement shall not be superseded or in any way affected hereby but shall remain in full force and effect to the full extent provided therein. In the event of any conflict or inconsistency between the terms of the Asset Purchase Agreement and this Agreement, the terms of the Asset Purchase Agreement shall govern, including with respect to the enforcement of the rights and obligations of the Parties.

4.    Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

5. No Assignment; Binding Effect; Persons Benefiting.

a.    This Agreement and the rights and obligations of the Parties hereunder shall not be assigned, in whole or in part, by operation of law or otherwise, (i) in the case of an assignment by Seller, without the prior written consent of Buyer, or (ii) in the case of an assignment by Buyer, without the prior written consent of Seller. Notwithstanding the foregoing, Buyer may assign (and need not seek prior consent before doing so) any of its rights or obligations under this Agreement, in whole or in part, to one or more of its Affiliates; provided that no such assignment shall relieve Buyer of any of its Liabilities hereunder.

b.    This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Except as specified herein, no provision of this Agreement is intended or shall be construed to confer upon any Person other than the Parties and their respective successors and permitted assigns any right, remedy or claim under or by reason of this Agreement or any part hereof.

6.    Amendments; Waiver. This Agreement may not be amended, altered or modified, and no provision hereof may be waived, except by written instrument executed by Seller and Buyer. No waiver shall constitute a waiver of, or estoppel with respect to, any subsequent or other inaccuracy, breach or failure to strictly comply with the provisions of this Agreement.

7.    Governing Law. This Agreement, the legal relations between the Parties and the adjudication and the enforcement thereof, shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware applicable to agreements made and to be performed entirely within the State of Delaware, without regard to the conflict of law provisions thereof that could result in the application of the laws of any other jurisdiction.

8.    Consent to Jurisdiction; Waiver of Jury Trial.

a.    Each Party irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, and the U.S. District Court sitting in the State of Delaware (and appellate courts thereof), for the purposes of any suit, action or other proceeding arising out of this Agreement or the transactions contemplated hereby. Each Party further agrees that service of any process, summons, notice or document by U.S. registered mail to such Party’s respective address set forth in Section 9.6 of the Asset Purchase Agreement shall be effective service of process for any dispute in the State of Delaware with respect to any matters to which it has submitted to jurisdiction in this Section  8. Each Party irrevocably and unconditionally waives any objection to the laying of venue of any suit, action or other proceeding in the Court of Chancery of the State of Delaware, or the U.S. District Court sitting in the State of Delaware (and appellate courts thereof), and hereby and thereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any dispute brought in any such court has been brought in an inconvenient forum.

b.    EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR FROM ANY PARTY’S PERFORMANCE UNDER THIS AGREEMENT OR FROM THE FORMATION, BREACH, TERMINATION, VALIDITY, INTERPRETATION OR ENFORCEMENT OF THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT, OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. EACH PARTY HERETO HEREBY FURTHER AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

9.    Counterparts. This Agreement may be executed in two or more counterparts (including by facsimile, pdf or other electronic transmission), each of which shall be deemed an original, but all of which taken together shall constitute one and the same agreement, it being understood that all of the Parties need not sign the same counterpart. Delivery of an executed counterpart of a signature page to this Agreement (including by facsimile, pdf or other electronic transmission) shall be effective as delivery of an executed counterpart of this Agreement.

[Signature Pages Follow]

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on the date first written above by its respective officers thereunto duly authorized.

TOCQUEVILLE ASSET MANAGEMENT LP
By:
	Name:
	Title:

[Signature Page – Bill of Sale and Assignment and Assumption Agreement]

SPROTT ASSET MANAGEMENT LP
By:
	Name:
	Title:

[Signature Page – Bill of Sale and Assignment and Assumption Agreement]

Exhibit A

Purchased Assets

(a) the Client Relationships, including all of Seller’s right, title and interest in the Advisory Contract with each Client;

(b) all accounts receivable, fees or other amounts (including any investment advisory or subadvisory fees and administrative fees) from Clients in respect of Investment Advisory Services or administrative services to be rendered on or after the Closing Date (whether such fees are paid prior to or after the Closing Date);

(c) the Records;

(d) the Transferred Intellectual Property;

(e) the Assumed Contracts;

(f) the Performance Record; and

(g) all goodwill related to the foregoing.

Exhibit B

Assumed Liabilities

(a) all Liabilities arising from or relating to any Purchased Asset; provided that to the extent that any Liabilities arise from or relate to Seller’s or its Affiliates’ operation or ownership of such Purchased Asset, in each case, on or prior to the Closing Date, then such Liabilities shall be deemed Retained Liabilities;

(b) all Liabilities in respect of any Assumed Contract to the extent related to the performance of any obligations under any such Assumed Contract arising after the Closing; and

(c) Post-Closing Taxes.

Exhibit B-1

Purchased Assets

(a) the Client Relationships, including all of Seller’s right, title and interest in the Advisory Contract with each Client;

(b) all accounts receivable, fees or other amounts (including any investment advisory or subadvisory fees and administrative fees) from Clients in respect of Investment Advisory Services or administrative services to be rendered on or after the Closing Date (whether such fees are paid prior to or after the Closing Date);

(c) the Records;

(d) the Transferred Intellectual Property;

(e) the Assumed Contracts;

(f) the Performance Record; and

(g) all goodwill related to the foregoing.

B-1

Exhibit B-2

Excluded Assets

(a) all cash, cash equivalents (including, for the avoidance of doubt, checks and drafts received by Seller or any of its Affiliates, but not yet reflected as available as of the Closing), bank deposits, securities and investments, if any, held by Seller;

(b) accounts receivable, fees or other amounts, including all fees or other amounts due to Seller or any of its Affiliates from Clients in respect of periods ending prior to the Closing Date;

(c) all furniture, fixtures, equipment (including computer hardware and data processing equipment), machinery, and other tangible personal property owned, leased or used by Seller or any of its Affiliates;

(d) all real estate leases and subleases to which Seller and its Affiliates are party;

(e) all Contracts of Seller or its Affiliates other than (x) the Advisory Contracts and (y) the Assumed Contracts;

(f) all rights of Seller and its Affiliates under this Agreement and the Ancillary Agreements;

(g) other than the Transferred Intellectual Property, and except as expressly set forth in Section 5.15, the Intellectual Property owned by Seller or any of its Affiliates that is not Transferred Intellectual Property;

(h) the sponsorship of, all amounts deposited in, and the assets of all Seller Benefit Plans;

(i) all current and prior insurance policies of Seller and all rights of any nature with respect thereto, including all benefits, proceeds, premium refunds or other insurance recoveries payable or paid thereunder and rights to assert claims with respect to any such benefits, proceeds, premium refunds or other insurance recoveries;

(j) any Permits (including, for the avoidance of doubt, any and all licenses and registrations of Seller issued by the SEC);

(k) rights of Seller to indemnification from Clients and other third parties with respect to any Retained Liabilities;

(l) all rights of Seller to any refunds, including with respect to Taxes, deposits, rights of set off, and rights of recoupment, in each case whether or not such rights are related to the Business, and all prepaid Taxes, provided that any such refunds relating to Taxes of the Business, the Purchased Assets or the Assumed Liabilities are limited to Taxes relating to any period (or portion thereof) prior to and including the Closing Date; and

(m) all books and records of Seller or its Affiliates other than the Records.

B-2

Exhibit B-3

Assumed Liabilities

(a) all Liabilities arising from or relating to any Purchased Asset; provided that to the extent that any Liabilities arise from or relate to Seller’s or its Affiliates’ operation or ownership of such Purchased Asset, in each case, on or prior to the Closing Date, then such Liabilities shall be deemed Retained Liabilities;

(b) all Liabilities in respect of any Assumed Contract to the extent related to the performance of any obligations under any such Assumed Contract arising after the Closing; and

(c) Post-Closing Taxes.

B-3

Exhibit B-4

Retained Liabilities

(a) all Liabilities of Seller and its Affiliates arising from or relating to Seller’s or its Affiliates’ operation or ownership of the Business, the Purchased Assets, the Clients or the Client Relationships, in each case, on or prior to the Closing Date, including, without limitation;

(b) all Indebtedness of Seller or any of its Affiliates;

(c) all Excluded Taxes;

(d) all Liabilities arising out of or relating to the Excluded Assets;

(e) all Liabilities arising out of or relating to the escheatment practices of Seller and its Affiliates with respect to the Business, the Clients and the Client Relationships, in each case, on or prior to the Closing Date;

(f) all Liabilities for any and all severance or other termination-related costs with respect to Seller Employees who do not become Transferred Employees;

(g) all Liabilities of Seller and its Affiliates (A) relating to the Seller Benefit Plans or arising under Title IV of ERISA or the joint and several liability provisions of the Code governing the Seller Benefit Plans or (B) arising from or in connection with the employment, retention or termination of any (1) former employee and any consultant or director of Seller or any of its Affiliates and (2) current employee of Seller or any of its Affiliates on or prior to the Closing, including without limitation, any Liabilities arising from, or in connection with, the transactions contemplated by this Agreement;

(h) all Liabilities of Seller and its Affiliates arising out of or related to any insurance policy claims made on or prior to the Closing; and

(i) except as otherwise specifically provided in this Agreement, all Liabilities relating to, arising under, or in connection with, any fees and expenses of Seller or its Affiliates incurred in connection with this Agreement or the consummation of the transactions contemplated hereby.

B-4

Exhibit C

Consents and Approvals

Cayman Islands

Filing of the updated Offering Memorandum of the and amended Mutual Fund Application Form, to the Cayman Islands Monetary Authority, to be submitted by , within 21 days of the change in investment adviser of the from Seller to Buyer.

France

1. Notification by to Autorité des marchés financiers (“AMF”) of the change in investment manager, from Seller to Buyer, of .

2. Approval of AMF for the modification of the legal documentation of the (including the prospectus and the key investor information document) to reflect the change in delegation of the investment management of from Seller to Buyer.

3. Provision of a true and complete copy, to AMF, of Buyer’s license to act as an asset manager, as granted by Buyer’s supervisory authority (the Ontario Securities Commission).

Luxembourg

4. Approval of Commission de Surveillance du Secteur Financier for the delegation of the portfolio management of by Seller to Buyer.

5. Approval of Commission de Surveillance du Secteur Financier for the updated prospectus of , including information on Buyer as the new portfolio manager.

6. Approval of Commission de Surveillance du Secteur Financier of the assignment agreement in respect of the assignment, by Seller to Buyer, of the Investment Management Agreement, dated as of August 10, 2012, among and Seller.

Switzerland

7. Approval of Swiss Financial Market Supervisory Authority, to be obtained by LLB Swiss Investment AG (formerly registered as LB (Swiss) Investment AG), for the modification of the fund contract in respect of the , such modification arising from the assignment, by Seller to Buyer, of the Investment Management Agreement, dated as of September 30, 2012, between LB (Swiss) Investment AG and Seller.

C-1

Exhibit D

Transfer Restrictions

Seller agrees and acknowledges that all Sprott Shares comprising the Sale Consideration are subject to restrictions on resale (including in connection with any Key Employee Transfer) described in this Exhibit D. In connection therewith, the Seller represents, warrants and covenants that:

(a) The Seller understands and acknowledges that the Sprott Shares will be “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, and agrees that if it decides to offer, sell, pledge or otherwise transfer any of the Sprott Shares, it will not offer, sell, pledge or otherwise transfer any of such securities, directly or indirectly, unless the transfer is:

(i) to the Buyer Parent;

(ii) made outside the United States in accordance with Rule 904 of Regulation S under the Securities Act and in compliance with applicable local laws and regulations;

(iii) made in compliance with the exemption from registration under the Securities Act provided by Rule 144 under the Securities Act, if available, and the Seller has furnished to the Buyer Parent and its transfer agent an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Buyer Parent and its transfer agent to such effect; or

(iv) in another transaction that does not require registration under the Securities Act, and the Seller has furnished to the Buyer Parent and its transfer agent an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Buyer Parent and its counsel to such effect;

and in each case in compliance with any applicable state securities laws in the United States.

Seller acknowledges that any Key Employee Transfer shall be effected pursuant to clause (iv) above, and the purchaser of such Sprott Shares shall be required to complete a United States Accredited Investor Representation Letter in the form of Schedule I to this Exhibit D.

(b) Upon the original issuance of the Sprott Shares and until such time as is no longer required under applicable requirements of the Securities Act or applicable state securities laws, all certificates or electronic records representing the Sprott Shares, and all certificates or electronic records issued in exchange therefor or in substitution thereof, shall bear a legend substantially in the following form:

D-1

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR U.S. STATE SECURITIES LAWS. THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO SPROTT INC. (THE “COMPANY”), (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S (“REGULATION S”) UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER IF AVAILABLE AND IN ACCORDANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, PROVIDED THAT, IN THE CASE OF TRANSFERS PURSUANT TO (C) OR (D) ABOVE, THE HOLDER HAS, PRIOR TO SUCH TRANSFER, FURNISHED TO THE COMPANY AND ITS TRANSFER AGENT AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”

provided, that if, the Sprott Shares are sold in compliance with the requirements of Rule 904 of Regulation S under the Securities Act and in compliance with applicable local laws and regulations, the legend may be removed by providing a declaration to Buyer Parent and its transfer agent, in the form attached as Annex B to Schedule I to this Exhibit D (or as Buyer Parent or it transfer agent may prescribe from time to time); and provided further, if any of the Sprott Shares are being sold pursuant to Rule 144 under the Securities Act, if available, the legend may be removed by delivering to Buyer Parent and its transfer agent an opinion of counsel of recognized standing in form and substance reasonably satisfactory to Buyer Parent and its transfer agent, to the effect that the legend is no longer required under applicable requirements of the Securities Act.

Notwithstanding the foregoing, the transfer agent for Buyer Parent may impose additional requirements for the removal of legends from securities sold in compliance with Rule 904 of Regulation S under the Securities Act in the future.

(c) The Seller consents to Buyer Parent making a notation on its records or giving instructions to its transfer agent in order to implement the restrictions on transfer set forth and described herein.

(d) If required by applicable Securities Laws, regulatory policy or order or by any securities commission, stock exchange or other regulatory authority, the Seller will execute, deliver, file and otherwise assist the Buyer Parent in filing reports, questionnaires, undertakings and other documents with respect to the ownership and transfer of the Sprott Shares.

D-2

Schedule I to Exhibit D

United States Accredited
Investor Representation Letter

This Representation Letter is being delivered in connection with the purchase of common shares (the “Shares”) of Sprott Inc. (the “Company”) by the undersigned (the “Purchaser”). The Purchaser represents, warrants and covenants that:

(a) The Purchaser understands and acknowledges that the Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or the securities laws of any state of the United States, and that the offer and sale of Shares to it are being made in reliance upon an exemption from registration under the Securities Act, and similar exemptions under applicable state securities laws.

(b) The Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act and has executed and delivered to the Company Annex A to this letter and is acquiring the Shares for its own account and not on behalf of any other person and not with a view to any resale, distribution or other disposition of the Shares in violation of United States federal or state securities laws.

(c) The Purchaser understands and acknowledges that the Shares will be “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, and agrees that if it decides to offer, sell, pledge or otherwise transfer any of the Shares, it will not offer, sell, pledge or otherwise transfer any of such securities, directly or indirectly, unless the transfer is:

(i) to the Company;

(ii) made outside the United States in accordance with Rule 904 of Regulation S under the Securities Act and in compliance with applicable local laws and regulations;

(iii) made in compliance with the exemption from registration under the Securities Act provided by Rule 144 under the Securities Act, if available, and the holder of the Shares has furnished to the Company and its transfer agent an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Company and its transfer agent to such effect; or

(iv) in another transaction that does not require registration under the Securities Act, and the holder of the Shares has furnished to the Company and its transfer agent an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Company and its transfer agent to such effect;

and in each case in compliance with any applicable state securities laws in the United States;

D-3

(d) Upon the original issuance of the Shares and until such time as is no longer required under applicable requirements of the Securities Act or applicable state securities laws, all certificates or electronic records representing the Shares, and all certificates or electronic records issued in exchange therefor or in substitution thereof, shall bear a legend substantially in the following form:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR U.S. STATE SECURITIES LAWS. THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO SPROTT INC. (THE “COMPANY”), (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S (“REGULATION S”) UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER IF AVAILABLE AND IN ACCORDANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, PROVIDED THAT, IN THE CASE OF TRANSFERS PURSUANT TO (C) OR (D) ABOVE, THE HOLDER HAS, PRIOR TO SUCH TRANSFER, FURNISHED TO THE COMPANY AND ITS TRANSFER AGENT AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”

provided, that if, the Shares are sold in compliance with the requirements of Rule 904 of Regulation S under the Securities Act and in compliance with applicable local laws and regulations, the legend may be removed by providing a declaration to the Company and its transfer agent, in the form attached as Annex B to this letter (or as the Company or its transfer agent may prescribe from time to time); and provided further, if any of the Shares are being sold pursuant to Rule 144 under the Securities Act, if available, the legend may be removed by delivering to the Company and its transfer agent an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Company and its transfer agent, to the effect that the legend is no longer required under applicable requirements of the Securities Act.

Notwithstanding the foregoing, the transfer agent for the Company may impose additional requirements for the removal of legends from securities sold in compliance with Rule 904 of Regulation S under the Securities Act in the future;

(e) The Purchaser consents to the Company making a notation on its records or giving instructions to its transfer agent in order to implement the restrictions on transfer set forth and described herein;

(f) If required by applicable securities laws, regulatory policy or order or by any securities commission, stock exchange or other regulatory authority, the Purchaser will execute, deliver, file and otherwise assist the Company in filing reports, questionnaires, undertakings and other documents with respect to the ownership or transfer of the Shares;

DATED at __________________________ this ___ day of _______________, 2019.

Name of Entity

Type of Entity

Signature of Person Signing

Print or Type Name and Title of Person Signing

D-4

Annex A

To United States Accredited Investor Representation Letter

In connection with the purchase of the common shares (the “Shares”) of Sprott Inc. (the “Company”) by the undersigned, the undersigned hereby represents and warrants to the Company and to the seller of such Shares that the undersigned satisfies one or more of the following accredited investor categories, within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act’) (please check the category or categories that apply):

______ Category 1. A bank, as defined in Section 3(a)(2) of the Securities Act, whether acting in its individual or fiduciary capacity; a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the United States Securities Exchange Act of 1934, as amended; an insurance company as defined in Section 2(a)(13) of the Securities Act; an investment company registered under the United States Investment Company Act of 1940, as amended; a business development company as defined in Section 2(a)(48) of the United States Investment Company Act of 1940, as amended; a small business investment company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the United States Small Business Investment Act of 1958, as amended; a plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of US$5,000,000; or an employee benefit plan within the meaning of the United States Employee Retirement Income Security Act of 1974, as amended, in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or an employee benefit plan with total assets in excess of US$5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are “accredited investors” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act); or

______ Category 2. A private business development company as defined in Section 202(a)(22) of the United States Investment Advisers Act of 1940, as amended; or

______ Category 3. An organization described in Section 501(c)(3) of the United States Internal Revenue Code of 1986, as amended, a corporation, a Massachusetts or similar business trust, a limited liability company or a partnership, not formed for the specific purpose of acquiring the Shares offered, with total assets in excess of U.S.$5,000,000; or

______ Category 4. A director or executive officer of the Company; or

______ Category 5. A natural person** with individual “net worth”, or joint “net worth” with his or her spouse, at the time of purchase in excess of US$1,000,000;

Note: For purposes of calculating “net worth” under this paragraph:

(i)          The person’s primary residence shall not be included as an asset;

(ii)         Indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of the Shares exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and

D-5

(iii)        Indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of the Shares shall be included as a liability; or

______ Category 6. A natural person** who had an individual income in excess of US$200,000 in each of the last two years or joint income with his or her spouse in excess of US$300,000 in each of those years, and who reasonably expects to reach the same income level in the current year; or

______ Category 7. A trust, with total assets in excess of U.S.$5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the Securities Act.

______ Category 8. An entity in which all of the equity owners are Accredited Investors.***

** IF THE PURCHASER IS AN INDIVIDUAL WHO HAS INITIALED BESIDE CATEGORIES 5 OR 6, THE PURCHASER WILL BE ASKED TO PROVIDE ADDITIONAL DOCUMENTATION TO CONFIRM THE PURCHASER’S NET WORTH AND/OR INCOME.

*** IF THE PURCHASER IS AN ENTITY THAT HAS INITIALED BESIDE CATEGORY 8, THE PURCHASER WILL BE ASKED TO PROVIDE ADDITIONAL DOCUMENTATION TO CONFIRM THAT EACH EQUITY OWNER OF THE ENTITY IS AN ACCREDITED INVESTOR.

Dated:	____________________	Signed:
		Print the Name of Purchaser
		Print Name and Title of Authorized Signing Officer

D-6

Annex B

To United States Accredited Investor Representation Letter

FORM OF DECLARATION FOR REMOVAL OF LEGEND

TO: Sprott Inc. (the “Company”) and its transfer agent

The undersigned (A) acknowledges that the sale of _______________________ common shares of the Company to which this declaration relates is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “Securities Act”) and (B) certifies that (1) the undersigned is not an “affiliate” of the Company as that term is defined in Rule 405 under the Securities Act, (2) the offer of such securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States or (b) the transaction was executed on or through the facilities of the Toronto Stock Exchange or another “designated offshore securities market” (as defined in Rule 902 of Regulation S under the Securities Act) and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on their behalf has engaged or will engage in any “directed selling efforts” in the United States in connection with the offer and sale of such securities, (4) the sale is bona fide and not for the purpose of washing-off the resale restrictions imposed because the securities are “restricted securities” as that term is described in Rule 144(a)(3) under the Securities Act, (5) the seller does not intend to replace such securities sold in reliance on Rule 904 of the Securities Act with fungible unrestricted securities, and (6) the contemplated sale is not a transaction, or part of a series of transactions, which, although in technical compliance with Regulation S under the Securities Act, is part of a plan or scheme to evade the registration provisions of the Securities Act. Unless otherwise specified, terms set forth above in quotation marks have the meanings given to them by Regulation S under the Securities Act.

Dated:______________________________________

Authorized Signatory

Name of Seller (please print)

Name of authorized signatory (please print)

Title of authorized signatory (please print)

Affirmation By Seller’s Broker-Dealer (required for sales in accordance with Section (B)(2)(b) above)

We have read the foregoing representations of our customer, _________________________ (the “Seller”) dated _______________________, with regard to our sale, for such Seller’s account, of the securities of the Company described therein, and on behalf of ourselves we certify and affirm that (A) we have no knowledge that the transaction had been prearranged with a buyer in the United States, (B) the transaction was executed on or through the facilities of designated offshore securities market, (C) neither we, nor any person acting on our behalf, engaged in any directed selling efforts in connection with the offer and sale of such securities, and (D) no selling concession, fee or other remuneration is being paid to us in connection with this offer and sale other than the usual and customary broker’s commission that would be received by a person executing such transaction as agent. Terms used herein have the meanings given to them by Regulation S under the Securities Act.

Name of Firm
By:
	Authorized officer

Date: ______________________

D-7

Exhibit E

Assumed Contracts

None

E-1

Exhibit F

Seller Knowledge Persons

1. Robert Kleinschmidt

F-1

Exhibit G

Buyer Knowledge Persons

With respect to Buyer:

1. Whitney George

2. John Ciampaglia

With respect to Buyer Parent:

1. Whitney George

2. Peter Grosskopf

G-1

Exhibit H

Sample “Net Fee Revenue” Calculation

H-1

EX-99.42

Exhibit 99.42

FORM 51-102F3 MATERIAL CHANGE REPORT Item 1 Name and Address of Company Sprott Inc. (“Sprott” or the “Company”) Suite 2600, South Tower, Royal Bank Plaza 200 Bay Street Toronto, Ontario M5J 2J2 Item 2 Date of Material Change August 6, 2019 Item 3 News Release A news release (the “News Release”) disclosing the material change was issued on August 7, 2019 through the facilities of GlobeNewswire. A copy of the News Release has been filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”) and is available under the Company’s profile at www.sedar.com. Item 4 Summary of Material Change On August 7, 2019, Sprott announced that Sprott Asset Management LP (“SAM”) and Tocqueville Asset Management LP (“Tocqueville”) entered into a definitive agreement (the “Purchase Agreement”) regarding the acquisition by SAM of the Tocqueville gold strategies. Item 5 Full Description of Material Change On August 7, 2019, Sprott announced that SAM and Tocqueville entered into the Purchase Agreement regarding the acquisition by SAM of the Tocqueville gold strategies. In consideration for the acquisition of the Tocqueville gold strategies, Sprott will pay Tocqueville total consideration of up to US$50 million comprised of a payment at closing of US$10 million in cash and Sprott common shares valued at US$5 million. Tocqueville will also be eligible to receive contingent consideration valued at up to an additional US$30 million in cash and Sprott common shares valued at US$5 million 1, subject to the achievement of certain financial performance conditions over the two years following the closing of the proposed transaction. The terms and conditions of the Purchase Agreement are customary for transactions of this nature and Sprott will use cash on hand to finance the cash portion of the purchase price. Approval of Sprott shareholders will not be required. The proposed transaction remains subject to security holder approval for certain acquired strategies, regulatory and stock exchange approvals, including listing approval of the Toronto Stock Exchange for the issuance of Sprott common shares to 1 The allocation of the contingent consideration between cash and common shares may vary based on Tocqueville’s financial performance over the two year period.

 

Tocqueville, and other customary conditions to closing, following which it would be expected to close in January 2020. A copy of the Purchase Agreement has been filed on SEDAR. Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102 Not applicable. Item 7 Omitted Information Not applicable. Item 8 Executive Officer For additional information with respect to the material change referred to herein, the following person may be contacted: Arthur Einav, General Counsel Telephone number: (416) 943-8099 Item 9 Date of Report This material change report is dated August 16, 2019. 

EX-99.43

Exhibit 99.43

FORM 51-102F3 MATERIAL CHANGE REPORT Item 1 Name and Address of Company Sprott Inc. (“Sprott” or the “Company”) Suite 2600, South Tower, Royal Bank Plaza 200 Bay Street Toronto, Ontario M5J 2J2 Item 2 Date of Material Change January 17, 2020 Item 3 News Release A news release (the “News Release”) disclosing the material change was issued on January 17, 2020 through the facilities of GlobeNewswire. A copy of the News Release has been filed on the System for Electronic Document Analysis and Retrieval and is available under the Company’s profile at www.sedar.com. Item 4 Summary of Material Change On January 17, 2020, Sprott announced that it successfully completed its previously announced acquisition by Sprott Asset Management LP (“SAM”) of the Tocqueville Asset Management LP (“Tocqueville”) gold strategies. Item 5 Full Description of Material Change On January 17, 2020, Sprott announced that it successfully completed its previously announced acquisition by SAM of the Tocqueville gold strategies. In consideration for the acquisition of the Tocqueville gold strategies, Sprott will pay Tocqueville total consideration of up to US$50 million, comprised of a payment of US$12.5 million in cash and US$2.5 million in Sprott common shares, based on a five-day volume weighted adjusted price, paid at the closing of the transaction (“Closing”), being 1,047,207 Sprott common shares. Tocqueville is also eligible to receive contingent consideration valued at up to an additional US$30 million in cash and Sprott common shares valued at US$5 million1, subject to the achievement of certain financial performance conditions over the two years following Closing. In addition, effective January 17, 2020, both classes of the Tocqueville Gold Fund (TGLDX and TGLIX) were successfully reorganized into classes of the Sprott Gold Equity Fund (SGDLX and SGDIX). The Falcon Gold Equity UCITS Fund was renamed the Sprott Falcon Gold Equity UCITS Fund (the “Falcon Gold Equity Fund”) and Sprott will also act as the Falcon Gold Equity Fund sub-advisor. The allocation of the contingent consideration between cash and common shares may vary based on Tocqueville’s financial performance over the two year period.

Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102 Not applicable. Item 7 Omitted Information Not applicable. Item 8 Executive Officer For additional information with respect to the material change referred to herein, the following person may be contacted: Arthur Einav, General Counsel Telephone number: (416) 943-8099 Item 9 Date of Report This material change report is dated January 23, 2020.

EX-99.44

Exhibit 99.44

Ontario Corporation Number For Ministry Use Only A rusage excfusif du ministere Denomination sociale actuelle de Ia societe (ecrire en LETTRES MAJUSCULES SEULEMENT) : Act societes par ©Queen's Printer for Ontario,2011/© Imprimeurde Ia Reine pouri'Ontario, 2011 07119 (2011/05) Page 1 of/de 2 Fonn3 Business Corporations Fonnule3 Loisurles actions ARTICLES OF AMENDMENT STATUTS DE MODIFICATION 1. The name of the corporation is:(Set out in BLOCK CAPITAL LETTERS) 2. The name of the corporation is changed to (if applicable ):{Set out in BLOCK CAPITAL LETTERS) Nouvelle denomination sociale de Ia societe (s'ily a lieu) (ecrire en LETTRES MAJUSCULES SEULEMENT) : 3. Date of incorporation/amalgamation: Date de Ia constitution ou de Ia fusion : 2008/02/13 (Year, Month, Day) (annee,mois,jour) 4. Complete only if there is a change in the number of directors or the minimum I maximum number of directors. II faut remplir cette partie seulement sile nombre d'administrateurs ou sile nombre minimalou maximal d'administrateurs a change. Number of directors is/are: minimum and maximum number of directors is/are: Nombre d'administrateurs :nombres minimum et maximum d'administrateurs : Number minimum and maximum Nombre minimum et maximum or ou 5. The articles of the corporation are amended as follows: Les statuts de Ia societe sont modifies de Ia fa«;on suivante : See attached page 1A. l I ! s p R 0 T T I N c I I Numero de Ia societe en Ontario 2163380 Exhibit 99.45

1A The Articles of the Corporation are amended as follows: 1. To consolidate the issued and outstanding common shares of the Corporation on a 10:1 basis, such that every ten (10) common shares of the Corporation shall be consolidated into one (1) common share of the Corporation. No fractional shares will be issued as a result of the share consolidation. Any 2. fractional down. shares resulting from the share consolidation will be rounded 111712156

6. The amendment has been duly authorized as required by sections 168 and 170 (as applicable) of the Business Corporations Act. La modification a ete dOment autorisee conformement aux articles 168 et 170 (selon le cas) de Ia Loi sur Jes societes par actions. 7. The resolution authorizing the amendment was approved by the shareholders/directors (as applicable) of the corporation on Les actionnaires au les administrateurs (selon le cas) de Ia societe ant approuve Ia resolution autorisant Ia modification le 202.n -os -oe (Year,Month, Day) (annee, mois, jour) These articles are signed in duplicate. Les presents statuts sont signes en double exemplaire. SPROTT INC. (Print name of corporation from Article 1 on page 1) (Veuillez ecrir le nom de Ia societe de !'article un a Ia page une). By/ Par : (Signature) ft.U..uv T"':;, lr\AV (Signature) t\Y.,-11\A 1 w:;;, • '""v 07119 (2011105) Page 2 of/de 2

EX-99.45

Exhibit 99.45

kpmg LLP	Telephone	(416) 777-8500
Chartered Professional Accountants	Fax	(416) 777-8818
Bay Adelaide Centre	Internet:	www.kpmg.ca
333 Bay Street, Suite 4600
Toronto ON M5H 2S5

Consent of Independent Registered Public Accounting Firm

The Board of Directors of Sprott Inc.

We, KPMG LLP, consent to the use of our reports incorporated by reference in the registration statement on Form 40-F, each dated:

— February 27, 2020,with respect to the consolidated financial statements of Sprott Inc. which comprise the consolidated balance sheets as at December 31, 2019 and December 31, 2018, the consolidated statements of operations and comprehensive income, changes in shareholders’ equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies; and

— February 27, 2019, with respect to the consolidated financial statements of Sprott Inc. which comprise the consolidated balance sheets as at December 31, 2018 and December 31, 2017, the consolidated statements of operations and comprehensive income, changes in shareholders’ equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

/s/ KPMG LLP

Chartered Professional Accountants, Licensed Public Accountants

May 26, 2020

Toronto, Canada

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG Canada provides services to KPMG LLP