Toronto-based asset manager Sprott Inc. (TSX: SII) Wednesday reported a sharp drop in first quarter earnings as gold prices struggled.
The price of gold has declined since the beginning of the year, hitting a low of about $1,320 an ounce last month. Gold is currently trading around $1,460 an ounce.
Net income was $2.1 million, or $0.01 per share, for the three months ended March 31, a decrease of 87.7% from $16.9 million, or $0.10 per share, in the three months ended March 31, 2012/
“The first quarter and subsequent month have continued to be challenging for Sprott and our strategies concentrated on investments in precious metals and their related equities,” said Peter Grosskopf, CEO of Sprott.
“While we remain confident that this positioning will be rewarded with much better performance once markets become less comfortable with the results of quantitative easing, we also continue to build other areas of our firm to incorporate a broader range of investment strategies.
Total revenue for the first quarter decreased by 37.9% to $27.6 million from $44.4 million for the three months ended March 31, 2012.
Net redemptions for the first quarter were $0.3 billion.
Assets under management (AUM) dropped to $9.1 billion, compared to $9.7 billion as at March 31, 2012 and $9.9 billion as at Dec. 31, 2012.
Management fees fell to $26.0 million, a decrease of 21.3% compared with the three months ended March 31, 2012.
During the quarter the company named John Wilson and Scott Colbourne co-chief investment officers of subsidiary Sprott Asset Management LP.
“One of our priorities is to make our products more attractive to institutional investors,” continued Grosskopf.
“During the first quarter, we took an important step in this process with the launch of our first institutionally-focused hedge fund, which will draw on the combined strengths of our organization.”