Going Beneath the Surface: Active Management in Metals & Mining ETFs

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October 21, 2025 | (74 mins 38 secs)

For the latest standardized performance, please visit the individual website pages: GBUG and METL. Past performance is no guarantee of future results.

Webcast Overview

The powerful macro forces shaping the metals and mining sector. The explosive growth in energy demand and the rise of AI, the critical issues of energy security, resource nationalism and persistent supply-demand imbalances. Learn how first-hand experience in the mining sector can benefit equity selection in the miners of gold, silver, uranium, copper and more.

This exclusive webcast covers:

• Understand the long-term drivers of global demand for metals and miners.
• Discover why active management matters more than ever in this dynamic landscape.
• Learn how Sprott’s multidisciplinary team blends top-down sector analysis with bottom-up stock selection—and employs boots-on-the-ground analysis of mining operations.
• Navigate volatility and potentially seize opportunities across gold, silver, uranium and copper.
• Understand the unique advantages of Sprott’s active management approach to the METL and GBUG ETFs.

Webcast Transcript

Ed Coyne: Thank you, Natalie, and thank you, everyone, for joining today's webcast. Again, my name is Ed Coyne, and I am pleased to welcome our panel of featured speakers. We've had three individuals from Sprott join us today, and the first is Steve Schoffstall, Director of ETF Product Management at Sprott, with over 20 years of experience in ETFs. Also with us is Shree Kargutkar, who is a Senior Portfolio Manager at Sprott with over 15 years of experience in metals and commodities investing. Last but certainly not least, we have Justin Tolman, Senior Portfolio Manager and Economic Geologist at Sprott, with over 20 years of global mining experience and an expertise in project evaluation and portfolio management.
Gentlemen, thank you all for joining today's webcast. For those who aren't familiar with Sprott, we'll go into that in a moment, but before we go into that, I want to talk briefly about the outline of today's webcast. With Steve, we have asked him to speak specifically about the macro drivers in the metals markets, then we'll turn it over to Shree to talk about gold and silver, and then Justin to talk about uranium and copper. Then we'll open up the dialog with Shree and Justin to go specifically into digging into why active management matters in the metals and mining space. Then, before we proceed to Q&A, I'll turn it back to Steve to discuss two of our newer ETFs: the Sprott Active Metals & Mining ETF, ticker symbol METL, and the Sprott Active Gold & Silver Miners ETF, ticker symbol GBUG.

For those joining today's webcast who are new to Sprott, we are a global leader in investments in precious metals and critical materials. We're a publicly traded company and are listed on both the New York Stock Exchange and the Toronto Stock Exchange under the ticker symbol SII. Through the end of the second quarter, we had over $40 billion in assets under management. I'm pleased to report that by September, we surpassed $50 billion in assets under management.

We offer investors a way to invest specifically in precious metals and critical materials investments through exchange-listed products, managed equities, or private strategies. With that, I'd like to bring Steve on to get started in our webcast to talk specifically about the macro drivers in the metals markets. Steve?

Steve Schoffstall: Thanks, Ed. As Ed mentioned, we'll look at macro drivers. As we proceed, we'll focus specifically on critical materials. Justin will take some time to review the specific metals we'll cover here, as well as gold and silver.

I think the first thing to really focus on as we look at the macro view of critical materials is the underlying increased demand that we're expecting to see for electricity. Estimates indicate that this could increase by up to about 170% by 2050. A lot of what's driving that really depends on where you are in the world. In developed countries, factors such as the growth in AI and data centers are expected to be significant demand drivers for electricity as we move forward.

Also going with that is electrification. Consider the energy transition, EVs, and as we electrify the grid, a significant amount of resources will be required to not only meet demand but also to build out the necessary infrastructure. When examining developing countries, it's primarily about improving the standard of living and modernizing the global economy. Countries like India and China continue to build out their economies. We're seeing that, throughout many Southeast Asian countries, and also moving into Africa. All these aspects of economic growth are highly energy-intensive, and as a result, they require substantial amounts of critical materials.

Suppose we were to focus solely on AI and data center growth and what that means for future electricity demand. In that case, it's not as simple as saying that we need more electricity, so we need more critical materials. There's a whole infrastructure that must be built out. Additionally, not only must the infrastructure be built, but we also need to have electricity to power this new infrastructure.

Increasingly, we're seeing these hyperscalers are turning not only to nuclear energy, which is starting to be favored because of its reliable base-load power. We're seeing firms like Amazon, Meta, and Microsoft investing directly in nuclear energy companies, as well as in next-generation reactors or companies that are developing next-generation reactors.

Steve Schoffstall: Many of these companies also have their own clean energy mandates and are investing in technologies like wind and solar, which are also highly metal-intensive. One thing that really ties everything together would be copper. It's the second most conductible metal on earth behind silver, which is far more expensive. It can also operate at a much lower heat point, which is significantly cooler, making it very useful in the large data centers that we often see with AI. One of the largest costs they incur is running their complex computing applications and maintaining a cool environment.

Cooling costs account for a significant percentage of their overall expenses, which is why copper is being used more frequently in this application. When we examine copper specifically and its role in data centers, we expect to see that over 2% of the global copper supply and over 3% of rare earths will be utilized by AI data centers through 2030. In recent times, particularly with the rise of Rare Earths as a flash point and a hot topic, we have seen this play out in the ongoing trade friction with China, and what's happening there. That really moves us into the next aspect, beyond electricity, and securing energy and critical materials is now a national security priority, not only for the United States, but also for many Western governments.

Because of this, we're seeing an increased emphasis being placed on either within the United States borders or, in a term known as "friendshoring", where we're looking also to our allies is to secure supply chains as it relates to things like copper, rare earths, uranium, all of these aspects that are starting to become so heavily, dependent on our future economic growth and energy security.

We'll look at the next slide to illustrate how much China truly dominates a significant portion of what we're seeing, particularly in terms of production and refining capabilities for these critical materials. We've seen a lot of developments over the last couple of months related to energy security. The first being a big move that we've seen, that we haven't really seen in the United States, and to a large extent, is that we're starting to see the U.S. government, whether it's through grants that convert to equities or other means, take ownership in some of these companies. MP Materials, a rare earth producer, Lithium Americas, and Trilogy Metals are all companies that are bringing, whether it's copper, lithium, or rare earths, into production. We see the government take about a 10% stake in each one of these companies.

Just within the last week, we've had a flurry of news come online, not only from a government perspective on how they're looking to invest in the supply chain, but also from a private perspective. Just last week, JPMorgan announced that it will make $1.5 trillion available over the next 10 years to help finance and facilitate, and in some cases, directly support industries that are critical to the US's economic security. They have a robust plan as to which areas this includes. They specifically mentioned critical materials mining and processing, as well as nuclear energy. Additionally, last week, the Pentagon announced that it is looking to invest up to a billion dollars in a critical material stockpile.

This is similar to news that has come out of Australia, where they're also looking to establish their own stockpile and allowing foreign countries to invest in that stockpile. Just yesterday, the United States and Australia reached an agreement to help build out not only rare earths and the mining and refining capacity for them, but also other critical materials within Australia. We also encounter some unusual things that we're not accustomed to in the United States. For instance, last week, the Treasury Secretary announced that he could foresee an area where the administration would set price floors, particularly in relation to some of these strategic industries. That's to help incentivize investment in the United States.

One last aspect to this is that, also last week, the Trump administration announced plans to invest in critical materials, not only in mining, but also in refining capabilities throughout Africa. This is coming through the U.S. International Development Finance Corporation, which is tasked with securing critical materials. That's a high-level overview; I'll hand it back to you. Thank you.

Ed Coyne: Thank you, Steve. I'd now like to turn it over to Shree to focus on both gold and silver. Shree?

Shree Kargutkar: Thanks, Ed. Let's take a look at slide 11. The slide will likely surprise many of you listening, as it certainly did when I first came across it earlier in the year. It shows that gold hasn't only maintained its value throughout the 21st century but also has continued to do so. It has outperformed the S&P 500, the global bond index, the U.S. dollar, and even the Nasdaq.

In a world where we constantly chase the next trade, I think gold reminds us that sometimes stability is the smartest growth strategy. Slide 12 presents a slightly different yet compelling way of viewing gold. Between 1980 and 2024, in the time it took for the above-ground stockpiles of gold to increase by just 50% or double, the U.S. government managed to increase its outstanding debt by 42 times. The gold supply is constrained. It has been growing at around 1.8% annually, whereas the U.S. government debt supply appears to be unconstrained, which highlights why gold is performing as well as it is right now.

Now, let's examine the current state of the gold mining industry. A couple of major trends are particularly notable. The graph on the left is rather interesting. It shows that, despite increasing exploration budgets, the number of major gold discoveries has been trending downward. To state the obvious, easily accessible high-grade gold deposits have been mostly mined out. At Sprott, we closely monitor the mining industry, and we're finding that gold is being mined at increasingly lower grades, with underground gold mines going ever deeper every year.

The chart on the right is also worth paying attention to. It shows that despite rising gold prices, the industry has not been able to respond with higher mined output. Gold miners, both large and small, are always scrambling to maintain production, and as a result, overall gold production has not responded materially to the upside, despite gold trading near an all-time high.

Let's spend a little bit of time looking at gold equities. Gold stocks tend to outperform the bullion during bull markets. For instance, from 2001 to 2010, the price of gold rose from just under $300 per ounce to north of $1,500 per ounce. The GDM index we have used above rose nearly eight times for the same period.

I'll also mention that the widely followed HUI index for gold equities rose almost 14 times during the same period, from 2001 to 2010. Since the COVID-19 pandemic, we have seen gold equities struggle against gold bullion. This was not because miners struggle to be profitable, but rather because we believe investors chose to ignore the miners. It can only ignore value for so long because, through 2025, we've seen miners play catch-up with gold in a big way. While gold is up 55% year-to-date, the GDM index has performed a bit better. It is up 120% year-to-date.

We're starting to notice that various generalist funds around the world, particularly those in Australia and Canada, are rotating into mining equities, with a particular focus on precious metal miners. We think that this move in gold equities is just getting started, and we are still very much in the early innings.

Let's examine the gold miners in comparison to the S&P 500. We observe that gold miners offer more favorable valuations when evaluated on an EBITDA basis. They have better profit margins. They have lower leverage compared to the S&P 500. One observation I will make here is that these estimates are based on using a forward gold price of $3,500 per ounce, rather than $4,100 per ounce, which is where it currently trades. This means that the valuations look even cheaper if you were to use spot metal prices rather than metal prices that are nearly $600 lower than the spot price of gold.

Let's begin our discussion on silver with a chart that will surprise many of you, just like the chart of gold surprised you as well. Silver has managed to outperform stocks and bonds through the 21st century. We all know that the past for silver has been a little bit more volatile than that of gold. The next slide, which we're about to discuss, highlights some very important trends that are underway, and there are strong tailwinds for the price of silver in the years ahead.

Steve was touching on a few of the other critical materials, and the word "critical" has been used quite frequently lately. We have heard that “critical” is being used to describe or as a descriptor for copper, uranium, rare earths, and similar materials. We believe that silver is just as critical, particularly for high-tech applications. When you try to search for the best conductor of electricity known to man, solar energy comes up. I think it's little wonder that when we think of the best way to move electrons from one place to another, silver is front and center. It is used in semiconductor chips, 5G networks, and power grids, to name a few, and that's just a tiny example of its applications.

What we need to pay attention to here is the graph on the bottom left. The world is using more silver than it consumes, and we do not expect that deficit to be resolved anytime soon. Econ 101 will teach you that when demand exceeds supply, prices tend to rise until the said deficit is eliminated. For this reason, and this simple reason alone, we believe that silver should continue to trade higher in the months and years ahead.

Ed Coyne: Thank you, Shree. Speaking of critical materials, it's a good time now to turn it over to Justin to discuss both uranium and copper specifically. Justin?

Justin Tolman: Thanks, Ed. I thought we'd start this part of the talk with the slide that shows the interlinking contributions of various critical raw materials to some of the themes Steve discussed. I'm going to talk about copper and uranium today. Both metals are showing strength in their respective commodity prices that appears to be supported by good structural long-term factors.

We didn't choose these two by accident. We're definitely practicing what we preach here. The METL ETF that Steve will discuss later has over 20% exposure by weight to copper and 20% to uranium. That's based on genuine metal production. Copper, as you can see, is located in the second row here and is used extensively across almost all aspects of energy demand.

It's integral not just to power generation and transmission, but also to construction and transportation. Uranium, in contrast, has just one dot under “nuclear”. But don't be fooled. It's absolutely pivotal to providing clean, reliable base load energy. If “base load” is not a term you're familiar with when discussing energy, you should take some time to become familiar with it, as it's key to the energy independence that Steve alluded to earlier in the talk.

What makes uranium so special is that, unlike most commodities, there is no substitute for it. There is no demand destruction price. If you're running a nuclear reactor, this is your fuel source. Both of these metals are increasingly viewed as strategic and are being listed as critical by governments globally, benefiting from rising demand.

Let's jump into it. There's a lot going on in this graph. You can see a number of supply and demand numbers and forecasts, but what you can see is the kind of... what is that? Tan-colored inventories have essentially evaporated over the last few years. The black secondary supplies are decreasing sharply. The x-axis here has quite a long tail. It extends up to 2050 or so to highlight the disparity.

However, if we were to move that more backward-looking, what you'd see is that the rise in uranium mine supplies from 2022, which has been heading up to now, is currently failing to meet reactor requirements. Just this year, the world's two major uranium miners have been discussing challenges in bringing additional pounds to market. When we say “challenges,” it encompasses everything from development bottlenecks, construction delays, sulfuric acid shortages, and regulatory headwinds.

Now, when I look at this slide, the thesis is really simple. There's a uranium market, which is structurally undersupplied. You have utilities that have not yet returned to replacement levels of fuel buying. We can see demands not just growing, but accelerating, as countries strive for energy independence, and the power-hungry tech sector. Steve had some slides on decarbonizing power grids.

If we want to lift the supply side of this graph, the bad news for utilities is that uranium exploration has basically been on life support for much of the past decade and a half. We've had very few new greenfield discoveries. If you want to bring a new uranium mine to market, in the best-case scenario, you're talking about a decade by the time you drill it, obtain permits, and construct it. That's an aggressive timeline.

Now, Shree alluded to Econ 101 earlier. What any student will tell you here is that you need a price response. We're starting to see that play out over the last few years. Let's discuss some of these governments' efforts to achieve energy autonomy.

The U.S. government, with significant public and bipartisan support, has taken important steps to encourage the expansion of its nuclear power recently via executive orders. Nuclear is the single largest source of low-carbon power in the US. It accounts for 16% of America's electricity generation. Today, it requires approximately 47 million pounds of uranium annually. The goal is to grow that to almost 200 million pounds by 2050.

Here's the issue. The U.S. imports over 95% of the uranium it needs to fuel its 100 reactors. Currently, global production is heavily concentrated in non-Western jurisdictions. Over 40% of last year's uranium production was shipped through Russia. Most of that came through from Kazakhstan.

However, the U.S. recognizes that it requires a stable domestic fuel supply to prevent bottlenecks. You're seeing federal support through funding, legislation, Department of Energy (DOE) pilot programs, and companies moving to integrate vertically. It's not just the U.S, we could look at Europe. Those countries that already have nuclear capacity are expanding their capabilities.

The World Nuclear Association (WNA) reports that there are approximately 166 operational reactors in Europe, as of my last check, but there are also 55 reactors either under construction or planned for construction. That's where a third source of growth could come from. Several countries that have historically relied on other energy sources are now changing their legislation and attitudes.

What does that mean to uranium and uranium miners? Everyone here is clever. You can see our performance over the last few years in the U3O8 spot price and the equities. Our thesis is that the nuclear renaissance is just getting started, and we're in the early stages of a sustained up cycle here. So far, this is manifesting in higher prices and equity valuations that have been sufficient to incentivize some mines, which shut down at the bottom of the last cycle and have been on care and maintenance, to restart.

These are trickling back in. That's the rise in mine supply that we saw, sort of gently lifting. But these mines were supported by existing permits and legacy infrastructure. That's kind of the limit of the easy pounds. Contracting is still below replacement levels. Many of these companies bringing production back to market have yet to contract meaningful chunks of their output. They're looking to benefit from the supply-demand imbalance.

One other point, actually, while we're on this, which is perhaps obvious from the chart, and this will apply to much of what Shree said, as well as much of what I've said and will say. This is commodities. There is inherent volatility. It's your friend. You should expect and embrace some volatility.

It's not uncommon in the midst of broader bull runs to have meaningful pullbacks. This is obviously where it's helpful to have a Sherpa to guide you through the investing landscape like Sprott, perhaps.

Let's move to copper. As before, we'll discuss demand drivers briefly. We'll discuss supply issues briefly, and then we'll touch on how the copper price and equities are responding. However, rather than displaying another dull graph, I prefer this image with the large boxes. The increase in copper demand that you're seeing there; they've chosen 2050, but it could be any year.

This is not new, and it's not surprising for students of commodity history. Copper demand has doubled approximately every 25 years since the early 1900s. It comes in waves, but whether it's the postwar buildup in the '60s, industrial and electronic expansion in the '80s, or the Chinese industrial boom in the early 2000s.

We flash forward to today, and the drivers are different. We've got surging energy consumption from developing countries. We've got accelerating urbanization. We've got the rise of artificial intelligence and these power-hungry data centers, as well as battery-powered vehicles. It's coming, guys.

However, the key takeaway here is that when you have a regular doubling in demand over regular time periods, that's not linear growth; it's exponential. Regarding supply, there are a couple of common themes that emerge. You can see declining ore grades at the mines in the graph on the left, over time.

That's compounded by the fact that new mines, especially those of scale, are generally being located deeper and deeper underground, and they're increasingly situated outside traditional Tier 1 jurisdictions.¹ In essence, this means that the cost of extracting ore increases, creating a higher hurdle rate for new copper projects.

In the graph on the right, you can see the scarcity of discoveries. Since 2010, there has been chronic underinvestment in what we call greenfield exploration, which involves searching for new mines. As an industry, what we've done instead is work through the bear market;² operators have squeezed the Brownfields lemon harder and harder. They worked at their existing operations, where they had already amortized the plant and fixed infrastructure, and they relied on those operations for more and more marginal ore. That brings us back to the declining head grades we were discussing.

What you've got is a supply problem. Once again, bringing on a new large-scale copper mine has huge lead times. These are large capital expenditures (CapEx) investments. They've got relatively long paybacks. In the U.S., it’s pushing up against two decades to transition a mine from construction to production. Then it takes years to ramp them up. A quick supply response just isn't coming.

Here and now today, we've just had the market tip into what's probably its most significant deficit in the last two decades. Recently, we've seen considerable supply disruptions as large operations have been taken offline. They are taken out of the market, some due to factors such as politics or civil unrest. This comes back to what I was saying earlier about new mines being increasingly pushed into frontier jurisdictions. Or we've seen mature operations experience black swan events, some of which are related to seismicity, geotechnical issues, or mud rushes.

This touches on the topic of mines becoming increasingly deeper. The operators manage it, but these things happen. For perspective, the second and fifth-largest copper mines have both experienced major interruptions this year.

Last year, another top-ten copper mine was forced to close by its host country due to civil unrest. I recently saw that Scotiabank has revised its 2026 forecast for copper to a 380,000-ton shortfall. By my measure, that's 4, 5 medium-sized copper mines. I consider a medium-sized mine to produce 50,000 to 100,000 tons of copper annually, or roughly equivalent to two large copper mines that would be needed to offset that shortfall.

In the short term, you just see where that's coming from. What that means is that copper prices have surged, sort of, to $10,000 a ton. I think there's been a slight pullback today, but you can see the strength it has recently on that graph. This is up to Q3. They actually are through $10,000 a ton here. Analysts have been scrambling to update their forecasts.

As of my last check, the 12-month target price for copper has increased by an average of 15% over the past few months. Worth talking for a second here. Last week was a great big annual event. The LME week was held. This is the annual flagship event organized by the London Metal Exchange.

It brings together all stakeholders from across the supply chain, including smelters, financiers, traders, and miners. The Bank of Montreal (BMO) runs an anonymous poll each year among attendees. On the question of which of the six LME base metals will outperform over the next 12 months, copper won by a landslide. I think it received 45% of the vote, more than twice the amount of the next closest candidate.

That brings us to the copper mining equities. We should discuss the impact of mergers and acquisitions (M&A) in this space. Last month, on September 9, Anglo-American and Teck, two of the major copper heavyweights, announced what amounted to a merger of equals to form a new global champion in critical materials. It's a $53 billion deal, marking the largest copper mining transaction of the last decade. If they merge, it'll make a top-five global copper producer.

There are some good synergies. There's some strategic rationale for it. But what it means is that every other copper mining company out there suddenly has to look sideways at its peer space and ask the question, 'Well, where do I sit in the pecking order now?'

We think that's really interesting. We believe there are a handful of companies out there with undemanding multiples, meaningful growth, and a track record of delivery. As you can see on the graph, we think that equities, particularly in strong markets, are set to outperform. Maybe that's a good segue into our investment process here. I'll throw it back to Ed for a sec.

Ed Coyne: Thank you, Justin. That's spot on. I want to delve into the active management side of metals and mining, discussing why it matters, particularly to Sprott, and how we believe we can add value for investors who are tuning in to this webcast.

Why don't we start, Shree, with you and talk about the active management advantage? Let's discuss that a bit, and then we'll open up the dialogue and move forward from there.

Shree Kargutkar: Thanks for that, Ed. I would say that at Sprott, we've been focused on building a process that is not just comprehensive but is extremely repeatable. The edge we have built comes from decades of investing experience across our team.

What that really means is that we've seen a couple of different commodity cycles… At least a couple of them emerge from varying commodity cycles in our careers, if not more. It simply allows us to understand the current state of the metals and mining universe, and we are aware of how value is created in this space, particularly at different points in the cycle.
We try to meet as many management teams as possible. In any given year, we'll have at least 200 management meetings, which allows us to continue building a strong relationship with these management teams based on familiarity and credibility. We also ensure that our interests are aligned with one another.

Ultimately, when it comes to numbers, we strive to delve as deeply as possible. We're trying to understand whether the capital numbers for growth are credible. We're trying to understand the financing pathways available to companies. We're always on top of sensitivities, whether it's due to rising copper prices, gold prices, silver prices, or production costs.

Inflation used to be a significant concern for the industry in 2022 and 2023, for instance. When it comes to active management, we don't just talk about being active; we take action. We try to live active management. We have a daily call. On these calls, we have spirited discussions where we challenge our thesis on various companies and sectors through different lenses, whether financial or technical.

This daily process of engaging in internal dialogue with multiple portfolio managers who have witnessed many different cycles, combined with the regular company updates we receive, enables us to turn all that information into conviction. The conviction is not just built in front of our desktops. It also involves getting out there, getting the boots on the ground, and doing the due diligence that way as well.

Ed Coyne: Speaking of boots on the ground, Justin, you've got many stories you've shared with me on just that. Why don't you expand on that a bit and discuss how important it is to have boots on the ground and physically be present at some of these mines?

Justin Tolman: We put a lot of emphasis on the importance of site visits. There are numerous tangible and intangible benefits. How would I liken it to? You could sort of liken it to somebody trying to tell you about their restaurant, and they say, "Oh, we've got the best food. We've got the best location." It's the difference between talking about it and then going and eating there sometimes. It's where narrative meets evidence.

There are many ways to discuss this, and numerous topics, but perhaps the easiest approach is to provide a couple of examples. Sometimes it's about soft stuff. Sometimes it's about culture, and seeing a manager or a CEO present gives you something, but it's not the same as spending a couple of days on-site interacting with site teams, asking them questions, and seeing how they respond to challenges. I recall visiting a precious metals project in Western Australia, where we had to rise at 5 AM to catch a flight to the local regional airport. The CEO was there, and I'm going out on the same plane as all the fly-in, fly-out workers coming.

It's 5 AM. All anybody wants is coffee, or maybe that's just me. But the CEO was out there. He knew everybody's name, and he was working his way up and down the line in the waiting room as we were boarding, saying hello to people, asking them about their operations and their families. That kind of interaction is a great insight that you wouldn't get otherwise. Those sorts of places are going to have very low turnover where people feel seen and valued, and you can't see that otherwise.

Ultimately, Shree mentioned conviction. We can bring our own experience and knowledge to the table. I remember visiting a copper project in Latin America. The interpretation was that there's an underground mine sitting underneath an existing one that had been mined historically. 

I remember looking at the rocks on the surface and seeing, in geology, we call them boudins. It's French for sausage. But little blobs that have been stretched out. There's one in the gap and then one in the gap. I examined their drill core and observed an ore hit, a gap, an ore hit, and a gap. I looked at the old mine and sure enough, there was a stroke and a gap, and a stroke and a gap, and that wasn't what was planned.

We had a different interpretation of management, which, when they started mining, turned out that the ore wasn't all where they thought it would be, and they had some issues they had to work through. We were able to form our own convictions and work independently. One of the great things you can do with site visits is that conviction sometimes comes from being early on discoveries, which is a great way to generate good returns. The issue is how to know which discoveries actually have legs and scale, and will go on to be mines, and which don't. Getting out early to sites allows you to see potential synergies that are present. It lets you get a feel for how companies are mitigating risk and how they're engaging with stakeholders and communities for things like social license.

I could probably keep going on these, but let's leave it there for the sake of this discussion. However, for reference, I think these three images are of Morocco on the left with Maria, the Congo in the middle, looking at a drill core, and on the right are historic underground workings in Mexico. We're doing our best to be proactive here and get conviction in our investments.

Ed Coyne: Justin, maybe walk us through on this next slide that just popped up. What that looks like from an active management standpoint, how a portfolio ultimately comes to be, and how those weights are determined, may give us a little insight into why we've chosen to go this route.

Justin Tolman: This is a slide we put together on METL. It discusses the relative weights in the portfolio today, and you can see that we've given ourselves a fair amount of wiggle room there. However, what it reflects is the top-down thesis, which examines supply and demand, as well as the drivers, and, obviously, it also considers the relative size of markets. It doesn't really matter how bullish³ you are on cobalt. It's a very, very small market. If you wanted to go looking for it, you'd need to balance that risk weight.

But simplistically, you can use this as a proxy for sort of where we're going to be. Then we'll blend that with a bottom-up approach. When we examine the entire universe of companies, we identify those that we believe in most strongly - those with the best management teams, the most promising projects, and the strongest growth. These are well-run businesses that are sustainable. We'll marry those and build a portfolio from that.

A word on these tiers: they can, and you should expect them to change over time, not quarter to quarter, maybe not even year to year. However, commodities as a sector do move in cycles. They've been unloved for an extended period now. We're seeing some life coming back into the space, but they don't all move together. There are leaders and there are laggards in that space. Some of this will be reflected as these weights gently change over time.

Those of you who follow this METL progression will be able to see that in slow motion as it happens. These cycles can take years to unfold historically.

I like this slide. Let's talk about this. There's a lot going on here again, but what we've done is break out returns in the commodity space into quartiles and then display the average across the years.

The takeaway, at least for me, is that average returns can be misleading. What you see here is a long, positive tail for the statistical wonks, where the top quartile contributes most of the value. This is not unexpected, and it reflects statistical distributions that are observed in nature and the human sciences, as well as in various other fields. It turns out you see it in mining stocks. This is one area where good active management can really shine.

Based on our research, we're able to overweight our highest conviction investment ideas. The inverse is also true. You can underweight things that you have more trepidation about. That results in substantially different exposures relative to passive indices. The goal is always the same. It's to identify and exploit alpha⁴ while maintaining exposure to underlying beta.

Another interesting wrinkle in active management is not just the returns, but also the ability that Shree and I, along with the other portfolio managers, have to proactively manage volatility, which we discussed earlier, and risk. We're always working to manage volatility, minimize beta, and mitigate drawdowns.

This is our segue slide. I think we'll be passing it to Steve shortly, but I like these because they are the images of the NASDAQ congratulatory tower shots for the two ETFs we'll discuss, METL and GBUG. But what I want to talk about is always the things that make it up. When you see one of these large electronic billboards, you'll notice steel and aluminum used as structural materials to support the LED panels. Copper is there as the conductor on circuit boards. You need gold for the bonding wires on LED chips. Silver's there for, like Shree mentioned, conductivity. They also use layering to enhance brightness.

Then we move on to rare-earth phosphors for the LEDs and indium for color tuning. But I think the takeaway is these are real things. We can go out and touch them, and they're essential and increasingly essential in our modern world. All right, I'll stop there.

Ed Coyne: That's a perfect segue into bringing it back to Steve. Steve, I just want to highlight the two newer ETFs that we've rolled out: the Sprott Active Metals & Miners ETF, METL, and also discuss the Sprott Active Gold & Silver Miners ETF, GBUG. I'll talk about what's unique about those. We've heard from the analyst team and the PM team about how we can add value from an active standpoint. However, let's discuss these two funds specifically, and then we'll turn it back to Natalie before opening it up for Q&A.

Steve Schoffstall: Sounds good, thanks, Ed. These are two strategies that we're very excited about. The Sprott Active Metals & Miners ETF, ticker METL, or the metal we've taken to call it, launched last month and has already gathered about $35 million in assets. This is a strategy that's the first of its kind. It's an actively managed diversified Metals ETF, and when we say metals, we're talking mostly about mined metals.

If we were to review the tiering slide that Justin presented, this fund will provide exposure to many critical materials, including rare earths, silver, copper, and battery metals. Uranium is also included, as well as steel and platinum group metals. It has a wider mandate, which also provides exposure to miners of gold, zinc, and aluminum. This is a strategy that aims to secure critical materials, as well as other aspects of the metals market, needed to build out the infrastructure we envision.

It's truly unique in that it's the only ETF offering this active exposure. It draws on the experience of our investment team, which has over 50 years of experience in this space. As the first of its kind, we're excited to see how it's been received in the first month or so. I've seen some questions come in asking about K1s. All of our ETFs are 40 Act ETFs. METL is dedicated to mining equities, so there is no K1 involved in either METL, GBUG, or any of our other US-listed ETFs.

Looking at the makeup, we won't spend too much time on this slide, so that we can leave some time for questions. However, you can see that, largely, the country domicile is allocated to Canada, the United States, and Australia. The goal here is to provide the investment team with flexibility for this mandate. To the extent that they want to invest in countries not listed here, they have the flexibility to do so.

I would say that across our US-listed ETFs, we don't have exposure to China's A-shares, the mainland China stock market. One of the reasons we don't provide that is that we think a lot of this growth is going to come through the US and its allies, as countries look to secure their supply chains. We also have a breakdown in the materials weighting, similar to what we saw in the tiering structure, with a focus on copper, uranium, and silver at the top, as well as significant exposure to rare earths. Currently, holds 36 different companies. We'll pause for a moment on the performance as we move on to discuss GBUG.

GBUG, launched back in, this is our active Sprott Gold & Silver Miners ETF. This launched back in February and now has about 130 million in assets. It's another first of its kind, as there are no other actively managed metals ETFs or Mining ETFs that focus on providing gold and silver exposure. With this, you'll see it's somewhere around 90% gold, and the rest is mostly invested in silver. Again, drawing on the same investment team that we have here, with the addition of John Hathaway, this investment team boasts over a century of experience in this space.

As follows, this is a similar investment process to the one we see in metal, which Justin and Shree went through. A very similar process is followed up to 30 site visits per year globally. Not staying within US borders, but really going out and about. I believe the number is around 40 different countries that the investment team has visited at mine sites. Heavily weighted towards silver and gold. And again, this is one of those funds that we wanted to bring to market. We also have some passive gold miners out there, but we have found that some investors prefer active management in the gold space, and we wanted to provide this option for investors who are comfortable taking on the active manager risk.

Here's just a quick snapshot of the performance since its February launch. One of the questions is that GBUG also does not have a K-1, being that it is a 40 Act ETF. One of the questions that we often get asked is, "How do these two funds fit into a portfolio?"

If we look at GBUGs, some will use it as a precious metals exposure because it provides some operating leverage to the underlying precious metals. You could dial up or dial down your exposure to precious metals with that. Generally, we see investors allocate either through commodities or, in many cases, particularly in the metals sector, where long-term supply and demand dynamics tend to favor growth, investors may add that to a thematic sleeve within a well-diversified portfolio in the hopes of capturing some growth.

Just before I hand it back over to Ed to move on to the Q&A section, I wanted to provide a snapshot of all the ETFs we have, which are dedicated to critical materials and precious metals. One thing that really sets Sprott apart in relation to our ETF offering is that we can develop many of these indexes.

If you examine all the critical materials ETFs, as well as SLVR, these are all indexes that we've developed in collaboration with Nasdaq. We play a very active role in incorporating our expertise into the methodology of the underlying index. Twice a year, we undergo a process in which we review all mining equities globally and assign an intensity score to each equity. Essentially, that score indicates the percentage of a company's revenue or assets dedicated to silver or copper. That becomes increasingly important when you start looking at some of these different metals.

Silver is a great example, as seen in SLVR, the Sprott Silver Miners & Physical Silver ETF, which has a dedicated physical silver allocation. However, within that, it has a pure-play focus on miners. That pure play focus again is that we're looking predominantly for companies that have at least 50% of their revenue or assets tied to the mining or exploration of silver. Silver becomes increasingly important because the majority of silver is mined as a byproduct of other metals. From mining lead, copper, zinc, or other metals, what you look at is that if you take the 10 largest silver producers globally, zero of them are predominantly silver miners.

This is where a ticker like SLVR, while it's still a passive strategy, kind of has a little bit more of an active feel to it because we've taken the time up front to actually go through and build what we believe to be a very quality index, that is really going through to identify those pure play miners. I'd be happy to discuss these ETFs further with anyone after this call, as part of our sales team. I would suggest visiting sprottETFs.com if you have a few minutes to learn more about these funds. We also have a lot of great insights coming from folks like Shree and Justin, who are discussing many of these different themes. Ed, I'll kick it back to you.

Ed Coyne: Great. Thank you, Steve, and thank you all for joining the webcast today. I know we're close to the top of the hour. Still, I would like to address a couple of the recurring questions that have been raised and remind everyone that we will follow up on all the questions we received today, whether via email or phone call. Please reach out to us for further questions or to request a copy of today's presentation deck. But before we proceed to the Q&A, I would like to turn it back over to Natalie for a moment, and then we'll go live with the questions.

Footnotes