Sprott Inc. reported a drop in fourth-quarter profit Thursday as the asset management firm was battered by sharp drops in management and performance fee revenues.

Net income for the quarter ended Dec. 31, 2008, was $20.4 million, or 14¢ a share. That compared with $27.6 million, or 21¢ a share in the prior year period.

Total revenue for the quarter was $57.7 million compared to $163.3 million in the prior year period.

Sprott said management fees decreased by 30% to $21.7 million primarily as a result of a 19% decline in average monthly assets under management.

Performance Fees fell by $85.3 million to $42.4 million, of which $35.6 million related to fees earned by Sprott Consulting. B

For fiscal 2008, assets under management decreased to $4.4 billion, compared to $6.2 billion at December 31, 2007.

Net sales were $95 million; however, market values declined by $1.9 billion resulting in a net decrease in AUM of $1.8 billion in 2008.

The fourth quarter saw assets under management decline by $1.2 billion from $5.6 billion at September 30, 2008. The decrease reflected a combination of $0.6 billion in net redemptions and $0.6 billion in net market value depreciation. The majority of fourth quarter redemptions related to offshore hedge funds, the company said.

“Against an industry backdrop of massive net redemptions, we had net positive sales in 2008. This is a testament to our track record of success, loyal client base, new products and relatively strong performance from our hedge funds,” said Eric Sprott, president and CEO of Sprott Inc.

“At the end of 2008, the company remains financially strong with a healthy cash balance and no debt,” he added.

IE