March 24, 2011 / 1:11 PM / in 7 years

UPDATE 3-Sprott Q4 profit soars eight-fold on bullion bets; shares jump

* Q4 EPS C$0.72 vs C$0.09 yr ago

* AUM at Dec. 31 C$8.5 bln

* Q4 rev up nearly 7-fold to C$241.9 mln

* Shares touch near 3-yr high (Adds analyst comments; updates shares)

By Abhiram Nandakumar

March 24 (Reuters) - Canadian asset manager Sprott Inc’s quarterly profit rose nearly eight-fold, helped by the launch of new funds with exposure to gold and silver, sending its shares up 8 percent to a near three-year high.

Sprott, probably Canada’s best-known resource investment firm, has placed its bets on precious metals as the global economic uncertainty continues and as a safeguard against a possible double-dip recession.

“We are still positioning our clients and our firm in general for a very uncertain environment and we still believe that precious metals are the primary beneficiary of the safeguard of value in uncertain times,” Chief Executive Peter Grosskopf said at the Reuters Global Mining and Steel Summit on Wednesday.

Canaccord Genuity analyst Scott Chan said the company’s will benefit from its push toward high-net-worth clients and separately managed accounts in the United States as such products have historically sold better in the country than in Canada.

“This is a pretty new area of growth for the company this year and the next,” he said, adding that the second half of 2011 is likely to be stronger for Sprott as the products gain traction and benefits of its revenue diversification strategies kick in.

Last year, the fund manager launched the Sprott Physical Gold Trust and the Sprott Physical Silver Trust . Both funds have since added over C$2 billion to the company’s managed assets.

The fund’s bets look set to pay off as the value of gold and silver are near record highs. Spot gold prices are currently hovering around the $1,440-per-ounce mark, while silver prices are at about $38 an ounce.

Separately, unit Sprott Power Corp said it signed a 20-year power purchase deal with Hydro-Quebec Distribution for the 24 megawatt Saint-Philémon wind farm in Quebec.

October-December net income rose to C$108 million, or 72 Canadian cents a share, and revenue rose seven-fold to C$241.9 million.

Analysts, on average, had expected the company to earn 74 Canadian cents a share, on revenue of C$225.9 million, according to Thomson Reuters I/B/E/S.

Assets under management jumped nearly 80 percent to $8.5 billion at December end, partly helped by net sales related to the launch of Sprott’s silver trust and growth in the net market value of its funds.

Sprott shares, which have gained more than a fifth in the last three months, were up 3 percent at C$9.58 in midday trade on Thursday on the Toronto Stock Exchange. They touched C$9.96 earlier in the day, their highest since July 2008. (Reporting by Abhiram Nandakumar; Editing by Saumyadeb Chakrabarty, Unnikrishnan Nair) (abhiram.nandakumar@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: abhiram.nandakumar.thomsonreuters.com@reuters.net)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below