Frequently Asked Questions (FAQs)


Launch of Sprott Uranium Miners ETF (NYSE Arca: URNM)

On April 25, 2022, and based on shareholder approval on April 6, 2022, the North Shore Global Uranium Mining ETF was reorganized into the Sprott Uranium Miners ETF (the “Fund”) and currently trades on the New York Stock Exchange Arca (Ticker: URNM). Sprott Asset Management LP (“SAM”) will act as the Fund’s investment adviser.  SAM has extensive expertise with investments related to metals and mining, including uranium. We believe this reorganization may drive attention to the uranium investment sector, helping to build fund assets and potentially drive fund expenses lower. 

Please Note: This FAQ is not wholly inclusive of all relevant information. Investors should consult the prospectus for more information, or please reach out to your Sprott representative at 888.622.1813 or uranium@sprott.com for additional questions.

1

What is the trading symbol for Sprott Uranium Miners ETF?

The Sprott Uranium Miners ETF trades on the New York Stock Exchange under the symbol “URNM”. This is the same symbol as the North Shore Global Uranium Mining ETF. The trading symbol of the Fund’s underlying Index, the North Shore Global Uranium Mining Index, is “URNMX”.

2

What is the Sprott Uranium Miners ETF investment objective and strategy?

The objective of the Sprott Uranium Miners ETF is identical to the North Shore Global Uranium Mining ETF and is summarized below:

The Sprott Uranium Miners ETF (URNM) seeks to invest at least 80% of its total assets in securities of the North Shore Global Uranium Mining Index (URNMX). The Index is designed to track the performance of companies that devote at least 50% of their assets to the uranium mining industry, which may include mining, exploration, development and production of uranium, or holding physical uranium, owning uranium royalties or engaging in other, non-mining activities that support the uranium mining industry. The URNMX Index is rebalanced semi-annually.

3

What is the North Shore Global Uranium Mining Index’s methodology? 

To be eligible for inclusion in the North Shore Global Uranium Mining Index (URNMX), a company must:

Eligibility Requirements

    • Have a market capitalization of at least $40 million and must maintain a minimum market capitalization of $25 million.
    • Have a significant part of its business operations related to the uranium industry (in particular uranium mining, exploration for uranium, physical uranium investments and technologies related to the uranium industry).
    • Be listed on a stock exchange or regulated market.

Index Composition & Weightings

    • An aggregate weight of 82.5% of the Index is assigned to uranium miners, explorers, developers and producers and an aggregate weight of 17.5% is allocated to entities that hold physical uranium, uranium royalties or other non-mining assets.
    • The constituents within each of these buckets are then weighted by their market capitalization.
    • A maximum weighting of 15% and a minimum weighting of 0.30% are applied.
    • No more than five issuers will have a weight greater than 4.70% and the aggregate weight of all the components with a weight greater than 5% is capped at 50%.

Index Rebalancing

    • The Index is adjusted semi-annually after the close of business on the last trading day of March and September each year.
4

Will the Sprott Uranium Miners ETF start a new track record? 

No, the Sprott Uranium Miners ETF will inherit the historical track record of the North Shore Global Uranium Mining ETF, which has an inception date of December 3, 2019. The new Fund’s performance will seek to track the total return performance (before fees and expenses) of the North Shore Global Uranium Mining Index. Additionally, the North Shore Global Uranium Mining Index (URNMX) will retain its back-tested performance start date of June 30, 2017, and live inception date of August 9, 2019.

5

How are the Sprott Uranium Miners ETF fees structured? 

The Sprott Uranium Miners ETF will pay Sprott Asset Management a unitary fee with the following fee structure:

    • 0.85% on assets $0 to $500 million
    • 0.80% on assets $500 million to $1 billion
    • 0.70% on assets greater than $1 billion
6

Who will manage the Sprott Uranium Miners ETF? 

Sprott Asset Management LP is the investment adviser to the Sprott Uranium Miners ETF. ALPS Advisors, Inc. is the sub-adviser and ALPS Fund Services, Inc. serves as the administrator. Additionally, State Street Bank and Trust Company serves as the custodian and transfer agent.

7

How will the ETF’s holdings of physical uranium be managed and stored? 

The ETF will hold physical uranium via investment funds and companies whose sole purpose is to hold and store uranium. At the time of launch (April 25, 2022), the Fund held two securities that met these criteria: Sprott Physical Uranium Trust (TSX: U-U) and Yellow Cake PLC (LSE: YCA).

8

What are the key benefits of investing in the Sprott Uranium Miners ETF?* 

Uranium Miners May be Poised to Take Market Share Within the Energy Sector

    • Uranium miners are under-represented across the energy equity sector, posing upside potential.
    • Uranium miners may require large capital investment.
    • Uranium miners have historically outperformed uranium spot prices during uranium bull markets.
    • Uranium miners may complement existing portfolio allocations.

Uranium and Nuclear Energy May be Critical to the Clean Energy Transition

    • Nuclear energy is relatively more reliable, efficient, clean, safe and secure.
    • Government policies are shifting in favor of nuclear energy, an ideal complement to renewable energy sources.
    • Sentiment surrounding nuclear energy is improving.

New Uranium Bull Market is Underway, Incentivizing Miners and Investors

    • Existing uranium supply may not meet future demands, encouraging non-utility uranium buyers to enter the market.
    • Utilities are expected to accelerate purchases of uranium to ensure the security of supply and price over the long-term.
    • Availability of secondary supplies of uranium has been drawn down over the past few years.
    • Uranium spot prices have recently surged, helping drive strong and sustainable economics of uranium miners.
    • The uranium price in the term market has followed the spot price higher.

*Opinion subject to change.

9

How does the Sprott Uranium Miners ETF add value?

  • Limited Investor Choice
    There are only a few options to invest in uranium-related equity funds in the United States.>
  • Investing in Individual Uranium Equities Poses Challenges
    Many uranium mining companies are domiciled in foreign countries, have small market capitalizations, are volatile and may have limited liquidity, making individual equity investing more challenging for some investors. The Sprott Uranium Miners ETF offers investors a convenient vehicle to access the uranium mining sector along with company diversification. The ETF also provides some exposure to investments that hold physical uranium, which can potentially help to mitigate company-specific risk and overall volatility.
  • Existing Commodity Funds have Little Uranium Exposure
    Broad resource and energy-sector funds are typically heavily weighted to more traditional energy sectors, such as oil & gas, with little exposure to uranium.
10

Who may be interested in investing in the Sprott Uranium Miners ETF? 

We believe the Sprott Uranium Miners ETF has broad appeal to many investors. The following general themes are driving investor interest:

  • Energy Transition/Clean Energy Theme
    Major nations have set aggressive decarbonization targets and goals to reduce emissions. Their proposals have begun introducing nuclear energy to complement renewables to assist in this effort. We believe that uranium miners should benefit from this clean energy transition as they provide uranium, the key element in nuclear energy production.
  • Energy Security and Sovereignty
    This issue became a top headline story in 2021 as the cost of energy spiked, which highlighted the vulnerability of relying on other nations to supply energy. Rising geopolitical risks in Europe, given the Russia-Ukraine conflict, help highlight the energy security that nuclear power can provide.
  • Commodity Investors
    After many years out of favor, investors are returning to commodities to take advantage of supply shortages due to prolonged under-investment. The fundamentals for uranium are very constructive with steady growth in demand coupled with a structural supply deficit that can only be addressed with a higher incentive price.1 Those invested in commodities and related equities should consider focusing on the potential future makeup of such markets, where we believe uranium and uranium equities will take a far greater market share.
  • Complement to Physical Uranium
    We have found that many institutional and retail investors are actively investing in both physical uranium and related mining equities. Similar to the same effect seen between precious metals and precious metals equities, the inherent operational leverage within uranium miners may provide “torque” against the spot price of uranium. Investing in uranium miners may allow investors to express a more convicted bet on uranium price appreciation.
  • Alternative Exposure/Diversification
    With broad equity and fixed income indices near record-high valuations, investors may be searching for alternative sources of growth. Uranium miners have demonstrated a low/moderate correlation to traditional asset classes.2
11

Will the Sprott Uranium Miners ETF pay distributions?

The Sprott Uranium Miners ETF expects to declare and distribute all of its net investment income, if any, to shareholders as dividends at least annually and on a pro-rata basis. The Fund may distribute such income dividends and capital gains more frequently, if necessary, to reduce or eliminate federal excise or income taxes on the Fund.

12

How will Sprott Uranium Miners ETF distributions be taxed?* 

The Sprott Uranium Miners ETF intends to distribute annually to its shareholders substantially all of its investment company taxable income (computed without regard to the deduction for dividends paid), its net tax-exempt income, if any, and any net capital gain (net recognized long-term capital gains in excess of net realized short-term capital losses, taking into account any capital loss carryforwards). The distribution of investment company taxable income (as so computed) and net capital gain will be taxable to Fund shareholders regardless of whether the shareholder receives these distributions in cash or reinvests them in additional Shares.
*This does not constitute specific tax advice. Please consult your tax advisor.

 

Please reach out to your Sprott representative at 888.622.1813 or uranium@sprott.com for additional questions.

1 For uranium miners, the incentive price is the price of uranium at which new mining production is reasonably profitable.
2 Source: Bloomberg. Data is measured between 1/1/2004 and 2/28/2022 and measures the monthly correlation between The World Uranium Total Return Index (URAX Index); Goldman Sachs Commodity Index is measured by the SPGSCI Index; S&P 500 Index is measured by SPX Index; Barclays U.S. Aggregate Bond Index is measured by LBUSTRUU Index; FTSE NAREIT Index is measured by FNRE Index.

Important Disclosures

This material must be preceded or accompanied by a prospectus. An investor should consider the investment objectives, risks, charges and expenses carefully before investing. Click here to obtain a Sprott Gold Miners ETF Statutory Prospectus and Sprott Junior Gold Miners ETF Statutory Prospectus, which contains this and other information, or contact your financial professional or call 888.622.1813. Click here to obtain a Sprott Uranium Miners ETF Prospectus, which contains this and other information, or contact your financial professional or call 888.622.1813. Read each Prospectus carefully before investing.

The Funds are not suitable for all investors. There are risks involved with investing in ETFs including the loss of money. The Funds are considered non-diversified and can invest a greater portion of assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single investment could cause greater fluctuations in share price than would occur in a diversified fund.

Shares are not individually redeemable. Investors buy and sell shares of the Sprott Gold Miners ETF, Sprott Junior Gold Miners ETF and Sprott Uranium Miners ETF on a secondary market. Only market makers or "authorized participants" may trade directly with the Fund, typically in blocks of 50,000 shares.

Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of experiencing investment losses. ETFs are considered to have continuous liquidity because they allow for an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.

ALPS Distributors, Inc. is a registered broker-dealer and FINRA Member.

Schwab ETF OneSource is a trademark of Charles Schwab & Co, Inc. Used with permission.

 

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