F-10: Sprott Physical Platinum and Palladium Trust Files for U.S.$100 Million Trust Unit Offering

Sprott Physical Platinum and Palladium Trust is set to offer up to U.S.$100 million of its trust units over the next 25 months, as detailed in a newly filed short form base shelf prospectus.

Summary

• Sprott Physical Platinum and Palladium Trust has filed a short form base shelf prospectus to offer up to U.S.$100 million of trust units over a 25-month period.
• The trust units represent an equal, fractional, undivided beneficial interest in the net assets of the Trust.
• The Trust is a closed-end mutual fund trust managed by Sprott Asset Management LP, aiming to invest and hold substantially all assets in physical platinum and palladium bullion.
• The specific terms, including the number of trust units and offering price, will be detailed in prospectus supplements.
• The trust units are listed on the NYSE Arca under the symbol SPPP and on the TSX under the symbols SPPP (Canadian dollar denominated) and SPPP.U (U.S. dollar denominated).
• As of the last trading day prior to the prospectus date, the closing price of the trust units were U.S.$9.29 on NYSE Arca and Cdn$12.50 on the TSX.
• The Trust may sell the trust units through underwriters or dealers, directly to purchasers, or through designated agents.
• The financial information of the Trust is presented in U.S. dollars and prepared in accordance with IFRS.
• As of September 5, 2024, the daily average exchange rate was Cdn$1.00 = U.S.$0.7400.
• The total NAV of the Trust as of September 5, 2024 was U.S.$139,857,177.52.

Sentiment

Score: 7

Explanation: The document is a standard regulatory filing, presenting factual information about a potential offering. The sentiment is neutral to slightly positive, as it indicates continued activity and growth potential for the Trust.

Positives

• The Trust offers a convenient and exchange-traded investment alternative for investors interested in holding physical platinum and palladium bullion.
• The Trust is managed by Sprott Asset Management LP, a firm with approximately U.S.$31.1 billion in assets under management as of June 30, 2024.
• The Trust has the flexibility to redeem trust units for physical platinum and palladium bullion, providing direct access to the underlying assets.
• The Trust is subject to investment and operating restrictions, ensuring a focus on physical platinum and palladium bullion and limiting speculative activities.
• The Trust has obtained exemptive relief from certain provisions of National Instrument 81-102, allowing for greater flexibility in its operations.

Negatives

• Purchasing the trust units may subject investors to tax consequences in both the United States and Canada.
• The redemption price for cash can be less than 100% of the NAV per trust unit.
• The trading price of the trust units could potentially be more volatile relative to NAV.
• The Trust is responsible for the fees and expenses of any action, suit or other proceedings in which, or in relation to which, the Trustee, the Manager, the Mint, RBC Investor Services as custodian of assets other than physical platinum and palladium bullion, any sub-custodians, the registrar and transfer agent, the valuation agent or the underwriters for its offerings and any of their respective officers, directors, employees, consultants or agents is entitled to indemnity by the Trust.

Risks

• Global events outside of the Trusts control may adversely affect the Trusts business, financial condition and results of operations.
• The Trust relies on third-party service providers and key information technology systems, which could have an adverse effect on the business if disrupted.
• Large purchases of physical platinum or palladium bullion by the Trust in connection with an offering may temporarily affect the price of that metal.
• If there is a loss, damage or destruction of the Trusts physical platinum and palladium bullion in the custody of the Mint and the Manager, on behalf of the Trust, does not give timely notice, all claims against the Mint will be deemed waived.
• Canadian Registered Plans that redeem their trust units for physical platinum and palladium bullion may be subject to adverse consequences.
• The trading price of the trust units could potentially be more volatile relative to NAV.

Future Outlook

The Trust may offer up to U.S.$100,000,000 of trust units from time to time during the 25-month period that the short form base shelf prospectus remains effective.

Industry Context

This offering aligns with the broader trend of investors seeking exposure to precious metals as a hedge against economic uncertainty and inflation. Sprott Physical Platinum and Palladium Trust competes with other precious metal trusts and ETFs, offering a direct investment in physical bullion.

Comparison to Industry Standards

• Comparable companies include other physical precious metal trusts such as Sprott Physical Gold Trust (PHYS), Sprott Physical Silver Trust (PSLV), and Aberdeen Standard Physical Platinum Shares ETF (PPLT) and Aberdeen Standard Physical Palladium Shares ETF (PALL).
• These trusts also hold physical bullion and offer similar redemption features.
• The management fee of 0.50% is competitive with other similar trusts and ETFs.
• The ability to redeem trust units for physical bullion is a key differentiator compared to some ETFs that only offer cash redemptions.

Stakeholder Impact

• Shareholders may see increased liquidity and trading volume of the trust units.
• Employees of Sprott Asset Management LP will continue to manage the Trust.
• Customers (investors) will have the opportunity to invest in physical platinum and palladium bullion through the trust units.
• Suppliers of physical platinum and palladium bullion may see increased demand from the Trust.
• Creditors are not directly impacted by this offering.

Next Steps

• The Trust will file prospectus supplements to detail the specific terms of any trust units offered.
• The Trust will use the net proceeds from the issuance of trust units to acquire physical platinum and palladium bullion.

Key Dates

Keywords

platinum, palladium, trust units, Sprott, physical bullion, prospectus, investment, redemption