SPROTT PHYGOLD CA UN ANNUAL INFORMATION FORM
for the fiscal year ended December 31, 2021
SPROTT PHYSICAL SILVER TRUST
(the "Trust")
March 18, 2022
TABLE OF CONTENTS | |
INVESTMENT RESTRICTIONS AND OPERATING RESTRICTIONS.................................................. | 4 |
OVERVIEW OF THE SILVER SECTOR ................................................................................................... | 7 |
DESCRIPTION OF UNITS........................................................................................................................ | 14 |
CALCULATION OF NET ASSET VALUE.............................................................................................. | 17 |
MARKET FOR THE UNITS ..................................................................................................................... | 22 |
REDEMPTION OF UNITS ........................................................................................................................ | 23 |
RESPONSIBILITY FOR OPERATION OF THE TRUST........................................................................ | 29 |
PRINCIPAL HOLDERS OF SECURITIES ............................................................................................... | 53 |
TRUST GOVERNANCE ........................................................................................................................... | 53 |
FEES AND EXPENSES............................................................................................................................. | 55 |
DISTRIBUTION POLICY ......................................................................................................................... | 57 |
MATERIAL INCOME TAX CONSIDERATIONS .................................................................................. | 59 |
RISK FACTORS ........................................................................................................................................ | 73 |
REMUNERATION OF DIRECTORS, OFFICERS, TRUSTEE AND THE IRC ..................................... | 87 |
MATERIAL CONTRACTS ....................................................................................................................... | 87 |
LEGAL AND ADMINISTRATIVE PROCEEDINGS .............................................................................. | 88 |
TERMINATION OF THE TRUST ............................................................................................................ | 88 |
EXEMPTIONS AND APPROVALS ......................................................................................................... | 89 |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this annual information form that are not purely historical are forward- looking statements. The Trust's forward-looking statements include, but are not limited to, statements regarding its or its management's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipates", "believe", "continue", "could", "estimate", "expect", "intends", "may", "might", "plan", "possible", "potential", "predicts", "project", "should", "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements contained in this annual information form are based on the current expectations and beliefs of the Trust and Sprott Asset Management LP (the "Manager") concerning future developments and their potential effects on the Trust. There can be no assurance that future developments affecting the Trust will be those that it or the Manager has anticipated. These forward- looking statements involve a number of risks, uncertainties (some of which are beyond the Trust's control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading "Risk Factors". Should one or more of these risks or uncertainties materialize, or should any of the Trust's or the Manager's assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Each of the Trust and the Manager undertakes no obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
CURRENCY
Unless otherwise noted herein, all references to "$", "US$" or "dollars" are to the currency of the United States of America (the "United States" or the "U.S.") and all references to "Cdn$" or "Canadian dollars" are to the currency of Canada. On December 31 2021, the daily rate of exchange as reported by the Bank of Canada for the conversion of U.S. dollars into Canadian dollars was US$1.00 equals Cdn$1.2678.
THE TRUST
History and Development of the Trust
Sprott Physical Silver Trust (the "Trust") was established on June 30, 2010 under the laws of the Province of Ontario, Canada, pursuant to a trust agreement between the Trust's settlor, the Manager and RBC Investor Services Trust ("RBC Investor Services" or the "Trustee"), as trustee, dated as of June 30, 2010, as amended and restated as of October 1, 2010, as amended and restated as of February 27, 2015, and as amended and restated as of November 13, 2020 (the "Trust Agreement").
On November 3, 2010, the Trust closed its initial public offering with the sale of 57,500,000 units at $10.00 per unit (which includes the exercise by the underwriters of their entire over-allotment option of 7,500,000 units), for gross proceeds of $575,000,000.
On January 23, 2012, the Trust issued 26,450,000 units at $13.20 per unit (which includes the exercise by the underwriters of their entire over-allotment option of 3,450,000 units), for gross proceeds of $349,140,000 on the first follow-on offering of the units of the Trust.
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On July 17, 2012, the Trust issued 18,100,000 units at $11.05 per unit, for gross proceeds of $200,005,000 on the second follow-on offering of the units of the Trust. On August 2, 2012, the Trust issued 1,826,752 units at $11.05 per unit, for gross proceeds of approximately $20,815,610 on the exercise by the underwriters of the over-allotment option on the second follow-on offering.
On November 14, 2012, the Trust issued 20,500,000 units at $13.15 per unit, for gross proceeds of $269,575,000 on the third follow-on offering of the units of the Trust. On November 30, 2012, the Trust issued 3,075,000 units at $13.15 per unit, for gross proceeds of $40,436,250 on the exercise by the underwriters of the over-allotment option on the third follow-on offering.
On February 27, 2015, the Trust Agreement was amended (the "UCITS Amendment") to permit investments in the Trust from Undertakings for Collective Investments in Transferable Securities ("UCITS") investors or others that are otherwise prohibited by their investment policies, guidelines or restrictions from receiving physical silver bullion. The UCITS Amendment consists of a restriction on such investors from redeeming units for physical silver bullion.
On May 27, 2015, the Manager, together with the Trust, initiated an exchange offer to acquire all of the outstanding units of Silver Bullion Trust, a trust existing under the laws of the Province of Ontario that invested in physical silver bullion, for consideration per unit consisting of units of the Trust. The exchange offer expired on January 15, 2016 without the conditions of the exchange offer being satisfied. All expenses incurred in connection with the exchange offer were borne by the Manager.
On April 13, 2016, the Trust issued 12,300,000 units at $6.09 per unit, for gross proceeds of $74,907,000 on the fourth follow-on offering of the units of the Trust. On April 18, 2016, the Trust issued 1,845,000 units at $6.09 per unit, for gross proceeds of $11,236,050 on the exercise by the underwriters of the over- allotment option on the fourth follow-on offering.
On June 24, 2016, the Trust entered into a sales agreement, as amended on January 29, 2020 (the "Sales Agreement") with Cantor Fitzgerald & Co. ("Cantor") whereby the Trust may, in its sole discretion and subject to its operating and investment restrictions, offer and sell up to $86,441,969 in value of units of the Trust (the "Placement Units") through an "at the market offering" program (the "ATM Program") in transactions on the NYSE Arca or any other existing trading market for the units of the Trust in the United States or to or through a market maker in the United States pursuant to a registration statement filed with the U.S. Securities and Exchange Commission (the "SEC") and a prospectus supplement to a short form base shelf prospectus filed with the Ontario Securities Commission, as principal regulator, and with each of the securities commissions or similar regulatory authorities in each of the provinces and territories of Canada. Under the Sales Agreement, the Trust will pay to Cantor in cash, upon each sale of Placement Units, an amount equal to up to 3.0% of the aggregate gross proceeds from each sale of Placement Units.
On June 4, 2018, the Manager, for and on behalf of the Trust, entered into a precious metals storage and custody agreement with the Mint (the "Silver Storage Agreement"), to replace the former version thereof, setting out the terms and conditions pursuant to which the Mint agrees to store the Trust's physical silver bullion at the premises of the Mint and/or any other safe storage facility located in Canada or abroad used by the Mint, including the facility of a sub-custodian. For further details concerning the Storage Agreements, see "Responsibility for Operation of the Trust - Custodians - Custodian for the Trust's Physical Silver Bullion".
On June 28, 2018, pursuant to the Trust's ATM Program, the Trust offered for sale trust units of the Trust having an aggregate sale price of up to $91,074,797 by way of a prospectus supplement dated June 28,
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2018 to a final base shelf prospectus dated June 20, 2018. The ATM Program was implemented pursuant to the Sales Agreement.
During the period from January 1, 2019 to December 31, 2019, the Trust issued 12,967,706 units of the Trust through the ATM Program. On January 29, 2020, the Trust, Cantor and Virtu Americas LLC ("Virtu") entered into an amendment agreement to the Sales Agreement ("Amendment No. 1 to the Sales Agreement") pursuant to which, among other things, Virtu became a sales agent of trust units on and subject to the terms and conditions of the Sales Agreement, as amended.
On January 29, 2020, the Trust amended and restated its prospectus supplement dated March 9, 2019 to a final base shelf prospectus dated February 25, 2019 to, among other things, reflect the terms and conditions of the Amendment No. 1 to the Sales Agreement.
On February 5, 2020, pursuant to the ATM Program, the Trust offered for sale trust units of the Trust having an aggregate sale price of up to $100,000,000 by way of a prospectus supplement dated February 5, 2020 to a final base shelf prospectus dated June 20, 2018. 30,517,995 trust units of the Trust were sold pursuant to such prospectus supplement.
On May 4, 2020, pursuant to the ATM Program, the Trust offered for sale trust units of the Trust having an aggregate sale price of up to $107,650,430 by way of a prospectus supplement dated May 4, 2020 to a final base shelf prospectus dated June 20, 2018. 14,799,833 trust units of the Trust were sold pursuant to such prospectus supplement.
On June 5, 2020, pursuant to the ATM Program, the Trust offered for sale trust units of the Trust having an aggregate sale price of up to $134,773,930 by way of a prospectus supplement dated June 5, 2020 to a final base shelf prospectus dated June 20, 2018. 13,641,791 trust units of the Trust were sold pursuant to such prospectus supplement.
On July 21, 2020, pursuant to the ATM Program, the Trust offered for sale trust units of the Trust having an aggregate sale price of up to $140,684,918 by way of a prospectus supplement dated July 21, 2020 to a final base shelf prospectus dated July 16, 2020. 26,956,897 trust units of the Trust were sold pursuant to such prospectus supplement.
On October 21, 2020, the Trust entered into an amended and restated sales agreement dated October 21, 2020 (the "Amended and Restated Sales Agreement") with the Manager, Cantor Fitzgerald & Co. ("CF&Co"), Virtu Americas LLC ("Virtu" and together with CF&Co, the "U.S. Agents") and Virtu ITG Canada Corp. (together with the U.S. Agents, the "Agents") relating to trust units offered by the prospectus supplement dated October 21, 2020 and the accompanying prospectus. The Amended and Restated Sales Agreement superseded and replaced the Sales Agreement, as amended by Amendment No. 1 to the Sales Agreement. In accordance with the Amended and Restated Sales Agreement, the trust may offer for sale trust units of the Trust having an aggregate offering price of up to US$1,218,630,164 through the Agents. As at December 31, 2021, 106,156,279 trust units of the Trust were sold pursuant to such prospectus supplement.
On March 11, 2021, pursuant to the ATM Program, the Trust offered for sale trust units of the Trust having an aggregate sale price of up to $3,000,000,000 by way of a prospectus supplement dated March 11, 2021 to a final base shelf prospectus dated March 9, 2021. As at December 31, 2021, 77,243,673 trust units of the Trust were sold pursuant to such prospectus supplement.
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Disclaimer
Sprott Physical Gold Trust published this content on 17 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 March 2022 08:57:02 UTC.
