Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Sprott Inc.'s 2013 Second Quarter Conference Call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. (Operator Instructions) As a reminder, this conference call is being recorded today, Thursday, August 8, 2013. On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the Safe Harbor provision of the Canadian Provincial Securities Law. Forward-looking statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are implied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectation and about material factors or assumptions applied in making forward looking statement, please consult the MD&A for this quarter and Sprott’s other filings with the Canadian securities regulator. I will turn the conference over to Mr. Peter Grosskopf, Chief Executive Officer of Sprott Inc. Please go ahead Mr. Grosskopf.

Just thank you operator. Good morning everyone and thanks for joining us today. With me today is Steve Rostowsky, our chief financial officer. Our Q2 results were released this morning and are available on our website where you can also find the financial statements and MD&A. It was a challenging second-quarter for investors in the resource space as markets concentrated on understanding the Federal Reserve’s timetables and its quantitative easing programs and called into question China's growth statistics. This uncertainty impacted virtually all real asset classes and caused precious metal investments fall especially steeply during the quarter on the order of 25%. As a result, the majority of our funds recorded losses during the period with the largest declines coming from our strategies with significant exposure to precious metals and the related equity. As you can see on slide four, our AUM decreased 7.1 billion during Q2, the vast majority of his decline coming from an 1.8 billion decrease in the market value of our portfolios. Offsetting this somewhat almost all of our funds experienced significant positive performance during the first months of the third quarter. We experienced modest net redemptions during Q2 but this trend seems to have slowed and a number of our funds generated positive net sales during the period. EBITDA was 8.1 million or $0.05 per share. The net loss for the period was 6.7 million. This loss was impacted by a non-cash 5.4 million charge on the value of carried interest as well as more than -- 9 million in unrealized losses on proprietary investment. One of the bright spots so far this year has been the success of our enhanced funds managed by John Wilson. These funds are up more than 10% year to date and have generated over 125 million in net sales year to date by resonating with investors seeking to protect capital through unpredictable markets. We continue to invest and enhancing our investment processes and on building a foundation for new investment products with the launch of the Sprott Macro Managers Fund and our JV agreement to launch a new offshore fund with Zijin Mining Group for investment by onshore Chinese investors. In July we completed the acquisition of Sprott Resource Lending Corp. This is a transformative transaction for Sprott. It strengthens our already strong balance sheet and provides us with significant capital to deploy towards new fund initiatives. It also creates a larger more liquid company with a more diversified shareholder base and I will talk more about this transaction at the end of the call. I’ll now turn it over to Steve to walk you through our results in more detail.

Thanks, Peter. I’ll start as usual with a look at our assets under management. Our AUM, ass Peter mentioned, was $7.1 billion as of June 30 2013, down from $8.5 billion at the end of Q2 last year and from $9.1 billion at the end of Q1 this year. Market value depreciation was by far the largest contributor to the decline in AUM during the quarter as the portfolio depreciated by approximately 1.8 billion. The majority of this decline was due again, as Peter mentioned, to performance of precious metals and their related equity. During the period as the Fed hinted that it may begin tapering its quantitative easing program as early as September. 1 billion of the decline came from our bullion funds load. Net redemptions for the quarter were $144 million, compared with $158 million in Q2 2012. The trend in redemptions appeared to have slowed and a number of our funds generated positive net sales during the quarter which Peter already spoke about. Looking at monthly AUM, the next slide shows AUM on a monthly basis, as you can see our AUM declined throughout the quarter and particularly in April and June, due largely to the performance of precious metals and the related equity as well as outflows from some of our funds. Net redemptions were less than 2% of beginning AUM while the net market value decline was 20% of AUM. Turning now to AUM changes by product type, we continue to be diversified across asset classes and asset type, including mutual funds, hedge funds, bullion funds and direct managed assets. Our physical bullion business which is by now the largest contributor to our total AUM declined by more than a billion during the period as gold and silver suffered a terrible quarter declining by 20%…

As I mentioned at the start of the call, the acquisition of Sprott Resource Lending has the potential to transform our business. Slide 11 provides an overview of our capital structure now that the transaction has closed and as you can see, we have close to 250 million shares outstanding, a market cap of more than 615 million and our outside shareholder base roughly tripled which provides a much more liquid flow for our company. Most importantly, we have over 350 million in capital to deploy to diversify our product shelf through the ceding and launch of new funds and the pursuit of synergistic acquisition opportunities. Before closing, I would like to walk you through a new five point action plan for the remainder of 2013. We are taking concrete steps to improve our investment and financial results and the positioning of our business to return to performance. Yesterday our Board of Directors signed off a five step plan that will form the foundation of building our firm for the next year. First, we will take an offensive approach to pursuing growth initiatives in the resource sector. We believe that this will prove to be an excellent opportunity to invest in this sector depressed valuations and to be at the forefront of investing in the sector at the lows. This will include the launch of new funds positioned to benefit from the recovery in the sector as well as additional joint ventures like the offshore resource funds with Zijin. We expect to relaunch our resource lending strategy this fall in LP format and are also working on plans for new private equity LP. Second, we will continue to aggressively build and diversify our asset management business through the sales of existing products, the launch of new products and the addition…

(Operator Instructions) Your first question comes from Steven DeLaney from JMP Securities. Steven DeLaney – JMP Securities: Peter, just the focus of the private equity funds, is that going to be Canadian, US, or what’s the geography you are going to pull to somewhere –

Well, ideally it will be the same mandate as what team has been developing to date with Sprott Resource Corp and that is, that is unconstrained in terms of geographic locations, they tend to stick to jurisdictions that have Western rule of law. They don't do anything too exotic, but they're unconstrained in terms of where they're making those investments. Steven DeLaney – JMP Securities: I guess will that be sold primarily to Canadian – will it under the global group of companies or the same kind of segment –

Well, the team is employed a SCLP, Sprott Consulting LP and that is a private division. I imagine in the new private equity format it would be taking the form of a GP and a GP would be the manager of an LP and the LP would attract investments from international investors. Steven DeLaney – JMP Securities: I guess now that the Sprott Resource Lending is closed, you mentioned a little bit about allocation of capital and that you are going to relaunch the format in an LP structure in the fall. So how much maturity is there between closing of July and when that happens, are you rolling the loans over or is that just the basically you are taking anything that’s due and parking the cash on balance sheet in the meantime?

So it’s a good question and we realize that it’s going to become a forecasting requirement for our earnings and cash flow profiles going forward. Our intention is to keep the 350 million that we have in capital as deployed in interest and earnings investments as much as we can. As such the current loan book, which sits around 150 million would hopefully be maintained until it’s close to a point as we got to a new structure as we could. So we have to allow some of those loans to roll over. We have to initiate some new loans and we have to consider very carefully the ceding process for a new LP. I think the best assumption is to assume that 125 or 150 million would be -- continue to be invested in the loans for the foreseeable future and until we start the new fund. Steven DeLaney – JMP Securities: Going forward, the economics of the loan – it’s good new interest margin, how do you decide whether – I guess putting it in the LP you structure will ultimately the structure will dictate what’s going in there. I guess the last question, you mentioned continued focus on more resource initiatives. I guess the hard question, Peter is that more – we have the same conversation at the beginning of year about focusing more on resources, that of players has been struggling this year. So how do you defend that call at this point?

Well, we need to retool our investment base and resources and that means everything from improving the performance of existing funds to launch new funds, we want to be as I mentioned at the forefront of investing at the lows and that will involve raising some new money and new funds at this time or in the foreseeable future. And it doesn't necessarily mean that we’re going to – we’re going to overweight our firm and resources, we've already been overweighted in resources. So if anything we have to build the more diversified part of our firm more aggressively, but it still means that we are going to take the offensive on the resource side. So we are not going to increasingly weigh that side of the firm, we’re just going to reinvest and reinvent it. In terms of having maintained that approach over the last two years while the sector suffered one of its worst returns in history I mean we have a very specific view in terms of where the world is going and where the financial system is going and what’s going to happen due to monetary easing. And it's been extremely disappointing to have been so narrowly focused in gold and silver when that has experienced such a big correction, but we do have faith in it. And we do think we’re going to be vindicated and that there's going to be a tremendous bounce. So we are going to stick with that as well as growing other areas of the firm.

Your next question comes from Scott Chan from Canaccord. Scott Chan – Canaccord Genuity: Just to follow up on Steven’s question just ongoing offense in the resource side, are these going to be new mandate that traditionally are not at par right now in terms perhaps like a hedge fund, long short, more of a diversified asset allocation. I am just trying to understand kind of where you guys are thinking in terms of ceding this new money and being able to track co-investments from institutional investors globally on perhaps different types of resource mandates that -- traditional resource, kind of obviously not in demand right and there is low visibility in the near future?

The answer is yes, we’ve got to consider new styles of fund mandates and for the most part, what we see is that the institutions are very interested in increasing their weighting at this time after such a big decline. And in order to attract that kind of capital you are looking at more sophisticated structures, you are looking at a more -- please up type of approach, more concentrated portfolios, LPs that have fine durations on them, so money that’s locked in for five to 10 years in many cases and certainly a more complicated than a longer-term selling process to lend these more sophisticated investors. Scott Chan – Canaccord Genuity: If you didn’t find co-investments would you be ceding some of these type of resource investments in the meantime?

We want to make it perfectly clear that we remain a management company and when we believe with the conviction of putting our own topical behind something we’re still looking to do it within the broader investment mandates with high quality clients on the other side. So I don't think it's necessary for us except in a very rare case to cede something with our own money alone. We are generally looking for partners that can either add value, raise capital or simply come on in a more support of LP type of investment context. Scott Chan – Canaccord Genuity: When you are looking at institutional partners I think you mentioned in the past Europe, Middle East, Asia where have you been finding kind of the most dialogue with these types of investors?

We are having the most dialogue right now in the US and in Asia. Scott Chan – Canaccord Genuity: Just to clarify Zijin I think will be starting in September , is that correct – is that still 100 million that they are putting in, you are ceding 10 million?

That’s right and we have some visibility on additional commitments, but they are not yet closed and what we've learned about business in Asia is you wait until they are closed before you talk about them. Scott Chan – Canaccord Genuity: Would this be additional from Zijin or other Asian –

No, we are talking to a wider base of investors, or we will start talking to them informally at the end of this month. Scott Chan – Canaccord Genuity: And you are going to commit 5% of any incremental assets still –

That’s right and I think we have a maximum there of 25 million. Scott Chan – Canaccord Genuity: And just going back to just the performance fees, looking out to the summer it’s almost there, obviously it’s very limited on your mutual and hedge funds. Can you just give us an update on the US LPs, I know you’ve marked that negative carried interest this quarter. I think the unrealized value was 50 million a couple quarters ago. If there is anything – Sprott Resource Corp that you may be missing?

So the 50 million was when we acquired the global companies sort of two and half years ago, the potential of unrealized performance fees in those LPs has come down significantly as the AUM has come down. So it’s a much lower, they are still embedded performance fees there in the low teens. And again it’s sort of up to if and when he wants to realize but lot of times investors will rather be hang in there, and wait it for things to improve and before he realizes those performance fee is good, in both cases it’s paid on the realized and return basis, not on a mark to market basis, it’s a low mark for most of our hedge funds. On the other funds, not much performance fee visibility right now for this year. We need to see some particularly large bounces, some of the funds are close to like John Wilson’s funds are closer but not quite get performance. Scott Chan – Canaccord Genuity: I would expect contributions from lending side was just closed, so it won’t be that going forward but also the – there is some potential with Sprott Resource Corp as well.

Your next question is from Paul Holden from CIBC. Paul Holden – CIBC: Peter, just want to be clear in terms of the redeployment of capital from Sprott Resource Lending, sounds like you both want to reinvest in the resource base given where commodity prices are today and diversify business sort of point one on the action plan is to put more into the resource sector, just trying to be clear in terms of the priority is number one resource sector and then diversify or – can you kind of give a better sense of how the capital to be redeployed between those two strategies?

Yeah it’s very difficult to say exactly how that would turn out just because it will depend on specific fund opportunities that will depend on investors and co-investors and when they want to pull the trigger on funds or commitments. But I’d say in the long run ideally speaking it will be a diversified pool with a very significant resource weighting. So I am not sure if it would be 100, 150 or 175 in resources but certainly even though it’s point one I think the diversification is equally important mandate that we have. Paul Holden – CIBC: And has there been any change in the credit quality of book over the last few months given the declining commodity prices, lot of producers are – have cash costs higher than commodity prices, has there been any deterioration that will leave you quite comprehensible on interest payments -

So we have been very fortunate and we see no impairment in the portfolio at this stage. There's a few situations where we have to actively work on them but the prospects I think are still quite good. So we have been very fortunate. We have had a small portfolio of liquid resources bonds, as many of you know that the resource bonds have been hit particularly hard along with the equity's and we've also been fortunate that we kept our durations very low and our investments very light and liquid. So even there there’s not much of a decline. So the book looks pretty good right now and the interest generating and fee generating potential from the book is quite good going forward, Paul Holden – CIBC: And then can you give us any early indication on the demand for the LP lending product given some of the macro factors you just highlighted?

Yeah it’s a bit of a sweet spot in terms of interest right now because the performance was been good. The value-add compared to other yield products is very high. And there's still a tremendous demand for alternative lending funds generally in a sense sounds and those lenders aren't afraid to get into the resource sector when it’s picking up. So it's actually a pretty warm sector for investment right now, I'm more concerned actually about continuing to build the book over time in the context of a larger fund. It’s a time intensive labor intensive process to get these deals well done and so I'm confident in the demand for the product, but I don't want to make any aggressive projections on size or deployment. Paul Holden – CIBC: Final question is with respect to management of cost – put your action plan is to rationalize where possible and when I look at all of the other actions you are taking specifically launching a number of new funds, it seemed to me that cost of anything will probably be going up over the next year, year and a half, so wondering – is that an appropriate expectation that cost overall will probably be going up because you are so active.

No, we are cutting costs and I'll let Steve give you more details but just as a general overview by far the biggest cost component that we have is employment expense and of course our comp systems are aligned with investor performance. So those have suffered dramatic declines and the employees here have suffered worse than anyone. So that part of our expense chases AUM and performance down naturally as well in terms of the overall cost structure we have made two rounds now of fairly significant reductions, the first one was late last year, earlier this year in the quantum of 3, $4 million and the second one is an ongoing, another 3, $4 million. Steve, do you want to –

Little bit more color on expenses, as Peer said the biggest decline is in the bonus accrual pools which have come down significantly as they drive directly off net operating income. In addition, there have been some headcount reduction. Basically we are in the same headcount position as we were in June last year. But we added for example 10 people at Toscana, we are down about 9% or 10% in Sprott asset management, we’re down in Sprott private wealth, Sprott Inc. kind of flat in global consulting and then we’ve added Toscana. So we have been reducing headcount is offset by new businesses and other initiatives. On the G&A side, again we have been really managing expenses down, where we can for example, our marketing spend was never that significant as $0.5 million less in the quarter than it was last year, for the printing postage and other general administrative costs $0.25 million lower, our fund – also several hundred thousand dollars lower in dropping and the some of this, for example, professional fees relating to the full transaction and some other activates, rent is up because we took on an office – Calgary, and sub-advisor fees up a little bit the private credit find – our capital is large and then it was a year ago. So the numbers are a bit of balance of pluses and minuses and they are fairly significant cost reduction – expenses wherever we can make them prudently without significantly negatively impact from the business overall. Paul Holden – CIBC: Historically people at Sprott have been well compensated for good performance, is there any concern of losing some of the people that you don’t want to lose, that’s probably given the decline in the bonus pool?

I don’t think so. Our employees are aligned in every way they are invested in their products , they have invested in Sprott shares, their real partners in our business all those on the production and performance side have just got their heads down and are concentrating on improving things going forward. We have a great sales organization and there have been some natural decline in numbers there, generally speaking the ones that are strong are biggest Sprott partners and shareholders and we expect to keep them on board with competitive packages.

Your next question is from Geoff Kwan from RBC Capital Markets. Geoff Kwan – RBC Capital Markets: I recall that I think with most of your funds before you guys were paying the cost of ER part of the MER. Just wondering if that is still the case or whether or not there has been – has been or might be transitioning some of that cost back into the funds themselves?

Geoff, we haven’t changed our model for charging costs to the funds. We do look it all the time, we do actively watch the MERs but we haven’t been loading any new cost into the – Geoff Kwan – RBC Capital Markets: So you are still absorbing at the corporate level pain most stores, all of the ER part of the EMR, is that correct or -----

That is correct. We only charge direct invoice third party costs to the funds.

Your next question comes from Jeff Fenwick from Cormark Securities. Jeff Fenwick – Cormark Securities: Hi I think most of my questions have been answered but just one follow up there in terms of the expense reduction, I am just looking at your fund – you certainly have a number there already, AUM is fairly small, going through fund line as it exists today and maybe contemplating emerging some of those funds together -- taking in some cost-benefit there and is there –

We look at that all the time, we are contemplating – well more than contemplating we are in the process of either merging or eliminating some really small funds that just don’t seem to be economic and sometimes we keep certain funds around for strategic reasons even though they may be in the meantime sub-economic, but we are very actively looking at that and we do and are making changes as appropriate. Jeff Fenwick – Cormark Securities: I guess with that, you mentioned – you made the change at the end of last year of having co-CIOs in there, difference in approach to the way you are managing the funds, is there any continued changes there in terms of the approach to fund management today and taking a bit more of a tactical approach of what’s going on the market to give yourself room to wait for those calls – what sort of the thinking today in terms of your approach to fund management?

The approach that has been instituted by John and Scott has been rolled out and broadly accepted by the portfolio management group and that approach involves more accountability. It involves more concentration within our portfolios involves better communication with that in particular the technical experts that we have on staff and it involves each pm being broadly responsible for not just performance but business performance as well him. We've aligned the comp systems with all of that, we’ve put greater accountability and shorter period of time with PMs. I think we've gotten exactly what we wanted out of that in the last couple of months we started to see it improve the portfolio. So it’s going well, we still got a long recovery here for some of the funds but I think we are doing the right things now.

Your next question comes from [Aram Fox from Photomine Capital].

I was wondering if you can give us an update on the CTEC, (inaudible) it wouldn’t go through in the context of all the movement of – is it possible there is a channel conflict here where it might help shareholders and clients to just simplify the asset management group.

We always look at that, we’re always very careful that we don't have funds that are in conflicting positions and mandates in the market, in that case the outcome had nothing to do with channel conflict, it’s very specific dynamics associated with negotiating a joint venture with Chinese national and we think we’re going to have success with additional ventures there, it just wasn't the right one for specific reasons. So it doesn't have broader implications on our company and in terms of simplifying the investment offerings going forward and making our company and our managers as efficient as possible we always look at doing but we operate in a lot of different markets and in lot of different jurisdictions and for instance we can't really cross similar registered representatives or US registered products with Canadian registered products or with offshore registered products or Chinese registered products. So we have to keep some of the regulatory silos that we have for very specific reasons.

You mentioned in the five point plan about aligning employee competition as one of the elements – that seems sort of obvious and it seems like you have done that, effectively they get compensated when adjusted EBITDA for our shareholders was up, the employees get compensations go up. Just curious if there any more – any big change around that business 101 concept.

We have instituted lots of specific and fairly granule --- glandular changes in the program, for instance we have a component of employee comp which now goes into a long-term trust which purchases shares. So we've got more of an alignment with the SII interest and a percentage of comp that is directly aligned with our shareholders. We've looked at not just taking the current period into account when paying out bonuses, so we’re taking performance over longer periods of time, concepts around clawbacks. So there's lots of granular changes that have tied employees in their comp more to the performance of the funds as well.

The end of MSA with Sprott power that -- alternative energy seemed to be a good little channel for you, because it’s a resource but it’s a little more predictable than precious metals or the base ones, is there a way to move back into that and perhaps in a nonoperating way in the fund or are you forbidden or do not want to do that?

The answer is it was a good area and it was a very specific situation that had us walking apart from that contract and being paid out of it. I think the conclusion of that will be in this quarter at some point and it generally provided some small positive returns. It could have done a lot better, and we are going to look at the alternative energy and infrastructure over time to see what we can do there. Both areas are very well bid right now and we want to be careful that we are going to do it property and we will have to react to a specific opportunity.

There are no further questions at this time. You may proceed.

Okay, well thanks operator and thank you everyone for participating in this call. We appreciate your interest in Sprott and we look forward to speaking to you again after our Q2 results.