As
filed with the Securities and Exchange Commission on September 6, 2024
Registration
No. 333-
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM
F-10
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SPROTT
PHYSICAL GOLD TRUST
(Exact name of Registrant as specified in its charter)
| |
|
|
|
|
Province
of Ontario, Canada
(Province or other jurisdiction of
incorporation or organization) |
|
1040
(Primary Standard Industrial
Classification Code Number) |
|
N/A
(I.R.S. Employer
Identification No.) |
Royal
Bank Plaza,
South Tower
200 Bay Street, Suite 2600
Toronto, Ontario,
Canada M5J 2J1
(416) 943-8099
(Address and telephone number of Registrant’s principal executive offices)
Puglisi &
Associates
850 Library Avenue, Suite 204
Newark, Delaware 19711
(302) 738-6680
(Name, address (including zip code) and telephone number (including area code)
of agent for service in the United States)
Lara
Misner
Sprott Asset Management LP
Royal Bank Plaza,
South Tower,
200 Bay Street, Suite 2600
Toronto, Ontario,
Canada M5J 2J1
(416) 943-8099 |
|
John
Laffin, Esq.
Stikeman Elliot LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario, Canada
M5L 1B9
(416) 869-5289 |
|
Anthony
Tu-Sekine, Esq.
Seward & Kissel LLP
901 K Street N.W.
Washington, D.C. 20001
(202) 737-8833 |
Approximate
date of commencement of proposed sale of the securities to the public:
From time to time after the effective date of this Registration Statement.
It
is proposed that this filing shall become effective (check appropriate box)
| |
|
|
|
|
|
| |
A. |
|
☒ |
|
upon filing with the Commission, pursuant to
Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada). |
| |
B. |
|
☐ |
|
at some future date (check the appropriate box
below) |
| |
1. |
|
☐ |
|
pursuant to Rule 467(b) on (date) at (time)
(designate a time not sooner than 7 calendar days after filing). |
| |
2. |
|
☐ |
|
pursuant to Rule 467(b) on (date) at (time)
(designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction
has issued a receipt or notification of clearance on (date). |
| |
3. |
|
☐ |
|
pursuant to Rule 467(b) as soon as practicable
after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction
that a receipt or notification of clearance has been issued with respect hereto. |
| |
4. |
|
☐ |
|
after the filing of the next amendment to this
Form (if preliminary material is being filed). |
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction’s
shelf prospectus offering procedures, check the following box. ☒
This
short form prospectus has been filed under legislation in all provinces and territories of Canada that permits certain information
about these securities to be determined after this prospectus has become final and that permits the omission from this prospectus
of that information. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information
within a specified period of time after agreeing to purchase any of these securities.
No
securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise.
This short form prospectus constitutes a public offering of the securities only in those jurisdictions where they may be lawfully
offered for sale and therein only by persons permitted to sell such securities.
Information
has been incorporated by reference in this short form base shelf prospectus from documents filed with the securities commissions
or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request
without charge from Sprott Asset Management LP, the manager of Sprott Physical Gold Trust, located at Royal Bank Plaza, South
Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, Canada M5J 2J1, Telephone: (416) 943-8099, and are also available electronically
at www.sedarplus.ca.
SHORT
FORM BASE SHELF PROSPECTUS
| New
Issue |
September
6, 2024 |
SPROTT
PHYSICAL GOLD TRUST
U.S.$2,000,000,000
Trust
Units
Sprott
Physical Gold Trust (the “Trust”) may offer from time to time, during the 25 month period that this short form base
shelf prospectus (including any amendments hereto) (this “prospectus”) remains effective, up to U.S.$2,000,000,000
of transferable, redeemable trust units (the “trust units”). Each trust unit represents an equal, fractional, undivided
beneficial interest in the net assets of the Trust attributable to the particular class of trust units. The Trust is a closed-end
mutual fund trust established under the laws of the Province of Ontario and is managed by Sprott Asset Management LP (the “Manager”).
See “Sprott Physical Gold Trust - Management of the Trust - The Manager” for further information about the Manager.
The Trust was established to invest and hold substantially all of its assets in physical gold bullion. See “Sprott Physical
Gold Trust - Business of the Trust - Investment Objectives of the Trust” for further information about the Trust’s
investment objectives.
The
specific terms of the trust units offered, including the number of trust units offered and the offering price (or the manner of
determination thereof if offered on a non-fixed price basis, including sales in transactions that are deemed to be “at-the-market”
distributions as defined in National Instrument 44-102 – Shelf Distribution (“NI 44-102”)), will be described
in supplements to this prospectus (each a “prospectus supplement”). All shelf information omitted from this prospectus
under applicable laws will be contained in one or more prospectus supplements. Each prospectus supplement will be incorporated
by reference into this prospectus for the purposes of securities legislation as of the date of the prospectus supplement and only
for the purposes of the distribution of the trust units to which the prospectus supplement pertains. A prospectus supplement may
include specific terms pertaining to the trust units that are not within the alternatives or parameters described in this prospectus.
You should read this prospectus and any applicable prospectus supplement carefully before you invest.
This
prospectus may qualify an “at-the-market” distribution as defined in NI 44-102.
The
trust units are listed and posted for trading on the New York Stock Exchange Arca (the “NYSE Arca”) under the symbol
“PHYS” and on the Toronto Stock Exchange (the “TSX”) under the symbols “PHYS” (Canadian dollar
denominated) and “PHYS.U” (U.S. dollar denominated). On the last trading day prior to the date hereof, the closing
price of the trust units on NYSE Arca and the TSX were U.S.$19.59 and Cdn$26.45,
respectively.
The
Trust may sell the trust units to or through underwriters or dealers purchasing as principals to one or more purchasers directly,
or through agents designated from time to time by the Manager on behalf of the Trust. Subject to the provisions of the Trust Agreement
(as defined below) pursuant to which the Trust is governed, the trust units may be sold at fixed prices or non-fixed prices, such
as prices determined by reference to the prevailing market price of the trust units or at prices to be negotiated with purchasers,
which prices may vary between purchasers and during the period of distribution of the trust units. The prospectus supplement relating
to a particular offering of the trust units will identify each underwriter, dealer or agent engaged by the Trust in connection
with the offering and sale of the trust units, and will set forth the terms of the offering of such trust units, the method of
distribution of such trust units including, to the extent applicable, the proceeds to the Trust, and any fees, discounts or any
other compensation payable to underwriters, dealers or agents and any other material term of the plan of distribution. In connection
with such offering, other than an “at-the-market” distribution, the underwriters, dealers or agents, as the case may
be, may over-allot or effect transactions intended to stabilize or maintain the market price of the trust units at levels other
than those which otherwise might prevail on the open market. Such transactions, if commenced, may be discontinued at any time.
See “Plan of Distribution”.
The
Trust is not a trust company and does not carry on business as a trust company and, accordingly, the Trust is not registered under
the trust company legislation of any jurisdiction. Trust units are not “deposits” within the meaning of the Canada
Deposit Insurance Corporation Act (Canada) and are not insured under provisions of that Act or any other legislation.
No
underwriter or dealer involved in an “at-the-market” distribution, no affiliate of such underwriter or dealer and
no person or company acting jointly or in concert with such underwriter or dealer, may, in connection with the distribution, enter
into any transaction that is intended to stabilize or maintain the market price of the trust units or securities of the same class
as the trust units distributed under the “at-the-market” prospectus including selling an aggregate number or principal
amount of trust units that would result in the underwriter or dealer creating an over-allocation position in the trust units.
NEITHER
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) NOR ANY U.S. STATE SECURITIES REGULATOR HAS APPROVED
OR DISAPPROVED OF THE TRUST UNITS OR PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENCE.
The
Trust is permitted, under a multi-jurisdictional disclosure system adopted by the securities regulatory authorities in Canada
and the United States (the “MJDS”), to prepare this prospectus in accordance with Canadian disclosure requirements,
which are different from those of the United States. The Trust prepares its financial statements, which are incorporated by reference
in this prospectus, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board (“IFRS”). These financial statements may not be comparable to the financial statements of United States issuers.
Purchasing
the trust units may subject you to tax consequences both in the United States and Canada. This prospectus or any prospectus supplement
may not describe these tax consequences fully. You should read the tax discussion in this prospectus and any applicable prospectus
supplement.
Your
ability to enforce civil liabilities under United States federal securities laws or securities laws of other relevant jurisdictions
may be affected adversely because we are a mutual fund trust established under the laws of the Province of Ontario. Each of the
Trust, the Manager, and Sprott Asset Management GP Inc. (the “GP”), which is the general partner of the Manager, is
organized under the laws of the Province of Ontario, Canada, and the Trust’s trustee, RBC Investor Services Trust (“RBC
Investor Services” or the “Trustee”), is organized under the federal laws of Canada, and all of their executive
offices and substantially all of the administrative activities and a majority of their assets are located outside the United States
or EU Member States. In addition, the directors and officers of the Trustee and the GP are residents of jurisdictions other than
the United States or EU Member States and all or a substantial portion of the assets of those persons are or may be located outside
such jurisdictions.
Whitney
George, a director of the GP, resides outside of Canada. Mr. George has appointed the Trust, located at Royal Bank Plaza, South
Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, M5J 2J1, as his agent for service of process in Canada. It may not be possible
for you to enforce judgments obtained in Canada against any person who resides outside of Canada, even if the person has appointed
an agent for service of process.
See
“Risk Factors” for a discussion of certain considerations relevant to an investment in the trust units offered hereby.
In the opinion of Stikeman Elliott LLP, counsel to the Trust, the trust units, once offered under a prospectus supplement, will
be qualified investments for certain funds, plans and accounts under the Income Tax Act (Canada) (the “Tax Act”)
subject to the qualifications set out under the heading “Eligibility Under the Tax Act for Investment by Canadian Exempt
Plans”.
The
financial information of the Trust incorporated by reference herein is presented in U.S. dollars. Unless otherwise noted herein,
all references to “$”, “U.S.$”, “United States dollars”, “U.S. dollars” or “dollars”
are to the currency of the United States and all references to “Cdn$” or “Canadian dollars” are to the
currency of Canada.
The
registered and head office of the Trust is located at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario,
M5J 2J1.
TABLE
OF CONTENTS
FINANCIAL
INFORMATION AND ACCOUNTING PRINCIPLES
Unless
otherwise indicated, financial information in this prospectus has been prepared in accordance with IFRS. The financial information
of the Trust incorporated by reference herein is presented in U.S. dollars. Unless otherwise noted herein, all references to
“$”, “U.S.$”, “United States dollars”, “U.S. dollars” or “dollars”
are to the currency of the United States and all references to “Cdn$” or “Canadian dollars” are to the
currency of Canada.
EXCHANGE
RATE
The
following table sets out certain exchange rates based upon the daily average rate published by the Bank of Canada. The rates are
set out as United States dollars per Cdn$1.00.
| | | |
Years Ended
December 31, | |
| | | |
2022 | | |
2023 | |
| Low | | |
$0.7217 | | |
$0.7207 | |
| High | | |
$0.8031 | | |
$0.7617 | |
| Average | | |
$0.7692 | | |
$0.7410 | |
| End | | |
$0.7383 | | |
$0.7561 | |
On
September 5, 2024, the daily average rate for United States dollars in terms of Canadian dollars, as quoted by the Bank of Canada
was Cdn$1.00 = U.S.$0.7400.
DOCUMENTS
INCORPORATED BY REFERENCE
Incorporated
by reference in this prospectus is certain information contained in documents filed by the Trust with the securities regulatory
authorities in each of the provinces and territories of Canada. This means that the Trust is disclosing important information
to you by referring you to those documents. The information incorporated by reference is deemed to be part of this prospectus,
except for any information superseded by information contained directly in this prospectus or in any other subsequently-filed
document which also is or is deemed to be incorporated by reference herein.
You
may obtain copies of the documents incorporated by reference in this prospectus on request without charge by contacting the Manager,
located at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, Canada M5J 2J1, Telephone: (416) 943-8099
(toll free number: 1-855-943-8099), as well as through the sources described below under “Additional Information”.
The
following documents are specifically incorporated by reference in this prospectus:
| (a) | the
annual information form of the Trust for its fiscal year ended December 31, 2023, dated
March 25, 2024 (the “AIF”); |
| (b) | the
audited annual financial statements of the Trust as of and for its fiscal year ended
December 31, 2023 (the “Annual Financial Statements”), and the report of
the independent registered public accounting firm thereon; |
| (c) | the
management report of fund performance of the Trust for its fiscal year ended December
31, 2023 (the “Annual MRFP”); |
| (d) | the
unaudited interim financial statements of the Trust as at and for the three and six month
periods ended June 30, 2024 (the “Interim Financial Statements”); and |
| (e) | the
management report of fund performance of the Trust for the three and six month periods
ended June 30, 2024 (the “Interim MRFP”). |
Any
documents of the type referred to in the preceding paragraph with respect to the Trust or material change reports (other than
confidential material change reports) or any document of the type referred to in section 11.1 of Form 44-101F1 of National Instrument
44-101 - Short Form Prospectus Distributions (“NI 44-101”) required to be incorporated by reference herein
pursuant to NI 44-101, as well as all prospectus supplements (solely for the purposes of the offering of trust units covered by
that prospectus supplement unless otherwise provided therein) disclosing additional or updated information filed by the Trust
with the securities regulatory authorities in Canada subsequent to the date of this prospectus and prior to 25 months from the
date of issuance of the receipt for this prospectus, shall be deemed to be incorporated by reference in this prospectus.
When
new documents of the type referred to in the paragraphs above are filed by the Trust with the securities regulatory authorities
in Canada during the currency of this prospectus, such documents will be deemed to be incorporated by reference in this prospectus
and the previous documents of the type referred to in the paragraphs above and all material change reports, unaudited interim
financial statements (and management reports of fund performance of the Trust relating thereto) and certain prospectus supplements
filed by the Trust with the securities regulatory authorities in Canada before the commencement of the financial year in which
the new documents are filed will no longer be deemed to be incorporated by reference in this prospectus.
The
documents identified above as incorporated by reference into this prospectus have been filed with the SEC as follows: (1) the
AIF has been filed as Exhibit 99.5 to the Trust’s annual report on Form 40-F filed with the SEC on March 25, 2024; (2) the
Annual Financial Statements have been filed as Exhibit 99.6 to the Trust’s annual report on Form 40-F filed with the SEC
on March 25, 2024; (3) the Annual MRFP has been filed as Exhibit 99.6 to the Trust’s annual report on Form 40-F filed with
the SEC on March 25, 2024; and (4) the Interim Financial Statements and the Interim MRFP have been filed as Exhibit 99.1 to the
Trust’s Report on Form 6-K filed with the SEC on August 16, 2024.
In
addition, to the extent that any document or information incorporated by reference into this prospectus is included in any report
on Form 6-K, Form 40-F or Form 20-F (or any respective successor form) that is filed with or furnished to the SEC after the date
of this prospectus, such document or information shall be deemed to be incorporated by reference as an exhibit to the registration
statement of which this prospectus forms a part. In addition, the Trust may incorporate by reference into this prospectus, or
the registration statement of which it forms a part, other information from documents that the Trust will file with or furnish
to the SEC pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”),
if and to the extent expressly provided therein.
A
prospectus supplement containing the specific terms of any trust units offered will be deemed to be incorporated by reference
in this prospectus as of the date of the prospectus supplement solely for the purposes of the offering of trust units covered
by that prospectus supplement unless otherwise provided therein.
Any
statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus
shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or
include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding
statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted
a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated
or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified
or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
ADDITIONAL
INFORMATION
The
Trust intends to file with the SEC a registration statement on Form F-10 of which this prospectus will form a part. This prospectus
does not contain all the information set out in the registration statement. For further information about the Trust and the trust
units, please refer to the registration statement, including the exhibits to the registration statement.
The
Trust is subject to the information requirements of the Exchange Act and applicable Canadian securities legislation, and in accordance
therewith, the Trust files reports and other information with the SEC and with the securities regulatory authorities of each of
the provinces and territories of Canada. Under the MJDS, the Trust may generally prepare these reports and other information in
accordance with the disclosure requirements of Canada. These requirements are different from those of the United States. As a
foreign private issuer, the Trust is exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy
statements, and officers, directors and principal unitholders of the Trust are exempt from the reporting and short-swing profit
recovery provisions contained in Section 16 of the Exchange Act. In addition, the Trust is not required to publish financial statements
as promptly as United States companies.
The
SEC maintains a website (www.sec.gov) that makes available reports and other information that the Trust files electronically with
it, including the registration statement that the Trust has filed with respect hereto.
Copies
of reports, statements and other information that the Trust files with the Canadian provincial and territorial securities regulatory
authorities are electronically available from the Canadian System for Electronic Document Analysis and Retrieval (www.sedarplus.ca).
ENFORCEABILITY
OF CIVIL LIABILITIES
Each
of the Trust, the Manager, and the GP is organized under the laws of the Province of Ontario, Canada and the Trustee is organized
under the federal laws of Canada, and all of their executive offices and substantially all of the administrative activities and
a majority of their assets are located outside the United States or EU Member States. In addition, the directors and officers
of the Trustee and the GP are residents of jurisdictions other than the United States or EU Member States and all or a substantial
portion of the assets of those persons are or may be located outside such jurisdictions.
As
a result, you may have difficulty serving legal process within your jurisdiction upon any of the Trust, the Trustee, the Manager
or the GP or any of their directors or officers, as applicable, or enforcing judgments obtained in courts in your jurisdiction
against any of them or the assets of any of them located outside your jurisdiction, or enforcing against them in the appropriate
Canadian court judgments obtained in courts of your jurisdiction, including, but not limited to, judgments predicated upon the
civil liability provisions of the federal securities laws of the United States or an EU Member State, or bringing an original
action in the appropriate Canadian courts to enforce liabilities against the Trust, the Trustee, the Manager, the GP or any of
their directors or officers, as applicable, based upon the United States federal securities laws or securities laws of an EU Member
State.
While
you, whether or not a resident of the United States or United Kingdom, may be able to commence an action in Canada relating to
the Trust and may also be able to petition Canadian courts to enforce judgments obtained in the courts of any part of the United
States or United Kingdom against any of the Trust, the Trustee, the Manager or the GP or any of their directors or officers, in
the case of the United Kingdom, in accordance with the Convention between the Government of Canada and the Government of the United
Kingdom of Great Britain and Northern Ireland providing for the Reciprocal Recognition and Enforcement of Judgments in Civil and
Commercial Matters (in force since January 1, 1987), you may face additional requirements serving legal process within the United
States or United Kingdom upon or enforcing judgments obtained in the United States or United Kingdom courts against any of them
or the assets of any of them located outside the United States or United Kingdom, or enforcing against any of them in the appropriate
Canadian courts judgments obtained in the courts of any part of the United States or United Kingdom, or bringing an original action
in the appropriate Canadian courts to enforce liabilities against the Trust, the Trustee, the Manager, the GP or any of their
directors or officers, as applicable.
In
the United States, the Trust and the Trustee will each file with the SEC, concurrently with the Trust’s registration statement
on Form F-10, an appointment of agent for service of process on separate Forms F-X. Under such Forms F-X, the Trust and the Trustee
will appoint Puglisi & Associates as their agent.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
The
statements contained in this prospectus, including any documents incorporated by reference, 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. Forward-looking statements in this prospectus may include, for example, statements about:
| ● | trading
of the trust units on NYSE Arca or the TSX; |
| ● | the
Trust’s objectives and strategies to achieve the objectives; |
| ● | success
in obtaining physical gold bullion in a timely manner and allocating such gold; |
| ● | success
in retaining or recruiting, or changes required in, the officers or key employees of
the Manager; and |
| ● | the
gold industry, sources of and demand for physical gold bullion, and the performance of
the gold market. |
The
forward-looking statements contained in this prospectus, including any document incorporated by reference, are based on the Trust’s
current expectations and beliefs 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 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,
uncertainties and assumptions include those factors described under the heading “Risk Factors” in this prospectus
and in any prospectus supplement. Should one or more of these risks or uncertainties materialize, or should any of the Trust’s
assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
The Trust 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.
SPROTT
PHYSICAL GOLD TRUST
The
following is a summary of information pertaining to the Trust and does not contain all the information about the Trust that may
be important to you. You should read the more detailed information, including but not limited to the AIF, the Annual Financial
Statements, the Annual MRFP, the Interim Financial Statements and the Interim MRFP that are incorporated by reference into and
are considered to be a part of this prospectus.
Organization
of the Trust
Sprott
Physical Gold Trust was established on August 28, 2009 under the laws of the Province of Ontario, Canada, pursuant to a trust
agreement dated as of August 28, 2009, as amended and restated as of December 7, 2009 and as further amended and restated as at
February 1, 2010 and as further amended and restated as of February 27, 2015 and as further amended as of November 13, 2020 (the
“Trust Agreement”). The Trust has received relief from certain provisions of National Instrument 81-102 - Investment
Funds (“NI 81-102”), and, as such, the Trust is not subject to certain of the policies and regulations of the
Canadian Securities Administrators that apply to other funds. See “Exemptions and Approvals”.
Management
of the Trust
The
Manager
Sprott
Asset Management LP is the Manager of the Trust. The Manager acts as the manager of the Trust pursuant to the Trust Agreement
and the management agreement between the Trust and the Manager. The Manager is a limited partnership formed and organized under
the laws of the Province of Ontario, Canada, pursuant to the Limited Partnerships Act (Ontario) by declaration dated as
of September 17, 2008. The general partner of the Manager is the GP, which is a corporation incorporated under the laws of the
Province of Ontario, Canada, on September 17, 2008. The GP is a wholly-owned subsidiary of Sprott Inc., which is a corporation
incorporated under the laws of the Province of Ontario, Canada, on February 13, 2008. Sprott Inc. is also the sole limited partner
of the Manager. Sprott Inc. is a public company whose common shares are listed and posted for trading on the TSX and the NYSE
under the symbol “SII”. See “Responsibility for Operation of the Trust - The Manager” in the AIF for further
information.
As
of June 30, 2024, the Manager, together with its affiliates and related entities, had assets under management totaling approximately
U.S.$31.1 billion, and provided management and investment advisory services to many entities, including private investment funds,
exchange-listed products, mutual funds and discretionary managed accounts. The Manager also acts as: (A) manager of (i) the Sprott
Physical Uranium Trust, a non-redeemable investment fund whose trust units are listed and posted on the TSX that invests and holds
substantially all of its assets in physical uranium, (ii) the Sprott Physical Silver Trust, a closed-end mutual fund trust whose
trust units are listed and posted for trading on the TSX and the NYSE Arca that invests and holds substantially all of its assets
in physical silver bullion, (iii) the Sprott Physical Copper Trust, a closed-end trust whose trust units are listed and posted
for trading on the TSX and the NYSE Arca that invests and holds substantially all of its assets in physical copper, (iv) the Sprott
Physical Gold and Silver Trust, a closed-end mutual fund trust whose trust units are listed and posted for trading on the TSX
and the NYSE Arca that invests and holds substantially all of its assets in physical gold and silver bullion, and (v) the Sprott
Physical Platinum and Palladium Trust, a closed-end mutual fund trust whose units are listed and posted for trading on the TSX
and the NYSE Arca that invests and holds substantially all of its assets in physical platinum and palladium bullion; and (B) sub-advisor
for certain funds managed by Ninepoint LP, a Canadian public mutual fund manager.
The
Manager is responsible for the day-to-day business and administration of the Trust, including management of the Trust’s
portfolio and all clerical, administrative and operational services. The Trust maintains a public website that contains information
about the Trust and the trust units. The internet address of the website is https://sprott.com/investment-strategies/physical-bullion-trusts/.
This internet address is provided here only as a convenience to you, and the information contained on or connected to the website
is not incorporated into, and does not form part of, this prospectus.
The
Trustee
The
Trustee, a trust company organized under the federal laws of Canada, is the trustee of the Trust. The Trustee holds title to the
Trust’s assets and has, together with the Manager, exclusive authority over the assets and affairs of the Trust. The Trustee
has a fiduciary responsibility to act in the best interest of the unitholders.
The
Custodians
The
Trust employs two custodians. The Royal Canadian Mint (the “Mint”), acts as custodian for the Trust’s physical
gold bullion pursuant to a precious metals storage and custody agreement (the “Gold Storage Agreement”). The Mint
is a Canadian Crown corporation, which acts as an agent of the Canadian Government, and its obligations generally constitute unconditional
obligations of the Canadian Government. The Mint is responsible for and bears all risk of the loss of, and damage to, the Trust’s
physical gold bullion that is in the Mint’s custody, subject to certain limitations, including events beyond the Mint’s
control and proper notice by the Manager.
RBC
Investor Services acts as custodian on behalf of the Trust for the Trust’s assets other than physical gold bullion. RBC
Investor Services is only responsible for the Trust’s assets that are directly held by it, its affiliates or appointed sub-custodian.
Under
the Trust Agreement the Manager, with the consent of the Trustee, may determine to change the custodial arrangements of the Trust.
Principal
Offices
The
Trust’s office is located at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, Canada M5J 2J1.
The Manager’s office is located at Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2600, Toronto, Ontario, Canada M5J
2J1 and its telephone number is (416) 943-8099 (toll free: 1-855-943-8099). The Trustee’s office is located at 155 Wellington
Street West, 10th Floor, Toronto, Ontario, Canada M5V 3L3. The custodian for the Trust’s physical gold bullion,
the Mint, has its office located at 320 Sussex Drive, Ottawa, Ontario, Canada K1A 0G8, and the custodian for the Trust’s
assets other than physical gold bullion, RBC Investor Services, has its office located at 155 Wellington Street West, Street Level,
Toronto, Ontario, Canada M5V 3L3.
Business
of the Trust
Investment
Objectives of the Trust
The
Trust was created to invest and hold substantially all of its assets in physical gold bullion. Many investors are unwilling to
invest directly in physical gold bullion due to inconveniences such as transaction, handling, storage, insurance and other costs
that are typical of a direct investment in physical gold bullion. The Trust seeks to provide a secure, convenient and exchange-traded
investment alternative for investors interested in holding physical gold bullion without the inconvenience that is typical of
a direct investment in physical gold bullion. The Trust invests primarily in long-term holdings of unencumbered, fully allocated,
physical gold bullion and will not speculate with regard to short-term changes in gold prices. The Trust has only purchased and
expects only to own “London Good Delivery” bars as defined by LBMA, with each bar purchased being verified against
the LBMA source. The Trust does not anticipate making regular cash distributions to unitholders. The Trust holds no assets that
are subject to special arrangements arising from their illiquid nature (to the extent that any such assets are held, in compliance
at all times with the Investment and Operating Restrictions (as defined below)).
Investment
Strategies of the Trust
The
Trust is expressly prohibited from investing in units or shares of other investment funds or collective investment schemes other
than money market mutual funds and then only to the extent that its interest does not exceed 10% of the total net assets of the
Trust.
The
Trust may not borrow funds except under limited circumstances as set out in NI 81-102 and, in any event, not in excess of 10%
of the total net assets of the Trust.
Borrowing
Arrangements
The
Trust has no borrowing arrangements in place and is unleveraged. The Trust has historically not used leverage and the Manager
has no intention of doing so in the future (save for the short-term borrowings to settle trades). Unitholders will be notified
of any changes to the Trust’s use of leverage.
Calculating
Net Asset Value (“NAV”)
The
value of the net assets of the Trust and the net asset value for a particular class or series of a class of trust units (the “Class
Net Asset Value”) are determined daily as of 4:00 p.m., Toronto time, on each business day by the Trust’s valuation agent,
which is RBC Investor Services. Throughout this prospectus, unless otherwise indicated, the term “business day” refers to
any day on which NYSE Arca or the TSX is open for trading. In addition, the Manager may calculate the value of the net assets of the
Trust, the Class Net Asset Value and the NAV per trust unit at such other times as the Manager deems appropriate. The value of the net
assets of the Trust on any such day is equal to the aggregate fair market value of the assets of the Trust as of such date, less an amount
equal to the fair value of the liabilities of the Trust (excluding all liabilities represented by outstanding trust units, if any) as
of such date. The valuation agent calculates the NAV by dividing the value of the net assets of the class of the Trust represented by
the trust units on that day by the total number of trust units of that class then outstanding on such day. The total NAV of the Trust
as of September 5, 2024 was U.S.$8,123,894,335.20.
Redemption
of Trust Units for Physical Gold Bullion
Subject
to the terms of the Trust Agreement, trust units may be redeemed at the option of a unitholder for physical gold bullion in any
month. Trust units redeemed for physical gold bullion will be entitled to a redemption price equal to 100% of the NAV of the redeemed
trust units on the last day of the month on which NYSE Arca is open for trading for the month in which the redemption request
is processed. Redemption requests for gold must be for amounts that are at least equivalent in value to one London Good Delivery
bar or an integral multiple thereof, plus applicable expenses. A “London Good Delivery bar” weighs between 350 and
430 troy ounces (generally, most bars weigh between 390 and 410 troy ounces).
Any
fractional amount of redemption proceeds in excess of a London Good Delivery bar or an integral multiple thereof will be paid
in cash at a rate equal to 100% of the NAV of such excess amount. The ability of a unitholder to redeem trust units for physical
gold bullion may be limited by the sizes of London Good Delivery bars held by the Trust at the time of redemption. A unitholder
redeeming trust units for physical gold bullion will be responsible for expenses in connection with effecting the redemption and
applicable delivery expenses, including the handling of the notice of redemption, the delivery of the physical gold bullion for
trust units that are being redeemed and the applicable fees charged by the Mint in connection with such redemption, including
but not limited to gold storage redemption fees, pallet repackaging fees, pallet banding fees and administrative fees.
Notwithstanding
the foregoing, unitholders that are constituted and authorized as Undertakings for Collective Investments in Transferable Securities
(“UCITS”) or are otherwise prohibited by their investment policies, guidelines or restrictions from receiving physical
gold bullion may only redeem trust units for cash.
Since
inception, 124,708,380 trust units have been redeemed for physical gold bullion.
A
unitholder that owns a sufficient number of units who desires to exercise redemption privileges for physical gold bullion must
do so by instructing his, her or its broker, who must be a direct or indirect participant of CDS Clearing and Depository Services
Inc. or The Depository Trust Company, to deliver to the transfer agent, TSX Trust Company, on behalf of the unitholder a written
notice (the “Gold Redemption Notice”), of the unitholder’s intention to redeem trust units for physical gold
bullion (the transfer agent is permitted to directly accept redemption requests. See “Exemptions and Approvals”).
If a unitholder desires to redeem trust units for bullion, and such unitholder holds his, her or its units through the direct
registration system (“DRS”), the holder first has to request and then receive a trust unit certificate before engaging
in the redemption process. A Gold Redemption Notice must be received by the transfer agent no later than 4:00 p.m., Toronto time,
on the 15th day of the month in which the Gold Redemption Notice will be processed or, if such day is not a business day, then
on the immediately following day that is a business day. Any Gold Redemption Notice received after such time will be processed
in the next month. Any Gold Redemption Notice must include a valid signature guarantee to be deemed valid by the Trust.
Physical
gold bullion received by a unitholder as a result of a redemption of trust units will be delivered by armoured transportation
service carrier pursuant to delivery instructions provided by the unitholder to the Manager, provided that the delivery instructions
are acceptable to the armoured transportation service carrier. Physical gold bullion delivered to an institution located in North
America authorized to accept and hold London Good Delivery bars will likely retain its London Good Delivery status while in the
custody of such institution; physical gold bullion delivered pursuant to a unitholder’s delivery instruction to a destination
other than such an institution located in North America will no longer be deemed London Good Delivery once received by the unitholder.
Redemption
of Trust Units for Cash
Unitholders
whose trust units are redeemed for cash will be entitled to a redemption price equal to 95% of the lesser of (i) the volume-weighted
average trading price of the trust units traded on NYSE Arca or, if trading has been suspended on NYSE Arca, the trading price
of the trust units traded on the TSX, for the last five days on which the respective exchange is open for trading for the month
in which the redemption request is processed, and (ii) the NAV of the redeemed trust units as of 4:00 p.m., Toronto time, on the
last day of the month on which NYSE Arca is open for trading for the month in which the redemption request is processed. Cash
redemption proceeds will be transferred to a redeeming unitholder approximately three business days after the end of the month
in which the redemption notice is processed.
Since
inception, 1,508,904 trust units have been redeemed for cash.
To
redeem trust units for cash, a unitholder must instruct the unitholder’s broker to deliver a notice to redeem trust units
for cash (the “Cash Redemption Notice”) to the transfer agent (the transfer agent is permitted to accept redemption
requests. See “Exemptions and Approvals”). If a unitholder desires to redeem trust units for cash, and such unitholder
holds his, her or its trust units through DRS, the holder first has to request and then receive a trust unit certificate before
engaging in the redemption process. A Cash Redemption Notice must be received by the transfer agent no later than 4:00 p.m., Toronto
time, on the 15th day of the month in which the Cash Redemption Notice will be processed or, if such day is not a business day,
then on the immediately following day that is a business day. Any Cash Redemption Notice received after such time will be processed
in the next month. Any Cash Redemption Notice must include a valid signature guarantee to be deemed valid by the Trust.
Investment
and Operating Restrictions
In
making investments on behalf of the Trust, the Manager is subject to certain investment and operating restrictions, (the “Investment
and Operating Restrictions”), which are set out in the Trust Agreement. The Investment and Operating Restrictions may not
be changed without the prior approval of unitholders by way of an extraordinary resolution, which must be approved, in person
or by proxy, by unitholders holding trust units representing in aggregate not less than 662/3% of the value of the
net assets of the Trust as determined in accordance with the Trust Agreement, at a duly constituted meeting of unitholders, or
at any adjournment thereof, called and held in accordance with the Trust Agreement, or a written resolution signed by unitholders
holding trust units representing in aggregate not less than 662/3% of the value of the net assets of the Trust as determined
in accordance with the Trust Agreement, unless such change or changes are necessary to ensure compliance with applicable laws,
regulations or other requirements imposed from time to time by applicable securities regulatory authorities.
The
Investment and Operating Restrictions provide that the Trust:
| (a) | will
invest in and hold a minimum of 90% of the total net assets of the Trust in physical
gold bullion in London Good Delivery bar form and hold no more than 10% of the total
net assets of the Trust, at the discretion of the Manager, in physical gold bullion (in
London Good Delivery bar form or otherwise), gold coins, debt obligations of or guaranteed
by the Government of Canada or a province of Canada or by the Government of the United
States of America or a state thereof, short-term commercial paper obligations of a corporation
or other person whose short-term commercial paper is rated R-1 (or its equivalent, or
higher) by Dominion Bond Rating Service Limited or its successors or assigns or F1 (or
its equivalent, or higher) by Fitch Ratings or its successors or assigns or A-1 (or its
equivalent, or higher) by Standard & Poor’s or its successors or assigns or
P-1 (or its equivalent, or higher) by Moody’s Investor Service or its successors
or assigns, interest-bearing accounts and short-term certificates of deposit issued or
guaranteed by a Canadian chartered bank or trust company, money market mutual funds,
short-term government debt or short-term investment grade corporate debt, or other short-term
debt obligations approved by the Manager from time to time (for the purpose of this paragraph,
the term “short-term” means having a date of maturity or call for payment
not more than 182 days from the date on which the investment is made), except during
the 60-day period following the closing of an offering of trust units or additional offerings
or prior to the distribution of the assets of the Trust; |
| (b) | will
store all physical gold bullion owned by the Trust at the Mint or in the treasury vaults
of a Schedule I Canadian chartered bank or an affiliate or division thereof in Canada
on a fully allocated basis, provided that the physical gold bullion held in London Good
Delivery bar form may be stored with a custodian only if the physical gold bullion will
remain London Good Delivery while with that custodian; |
| (c) | will
not hold any “taxable Canadian property” within the meaning of the Tax Act; |
| (d) | will
not purchase, sell or hold derivatives; |
| (e) | will
not issue trust units except (i) if the net proceeds per trust unit to be received by
the Trust are not less than 100% of the most recently calculated NAV per trust unit prior
to, or upon, the determination of the pricing of such issuance or (ii) by way of trust
unit distribution in connection with an income distribution; |
| (f) | will
ensure that no part of the stored physical gold bullion may be delivered out of safekeeping
by the Mint or, if the physical gold bullion is held by another custodian, that custodian,
without receipt of an instruction from the Manager in the form specified by the Mint
or such other custodian indicating the purpose of the delivery and giving direction with
respect to the specific amount; |
| (g) | will
ensure that no director or officer of the Manager or director or officer of the GP, or
representative of the Trust or the Manager will be authorized to enter into the physical
gold bullion storage vaults without being accompanied by at least one representative
of the Mint or, if the physical gold bullion is held by another custodian, that custodian,
as the case may be; |
| (h) | will
ensure that the physical gold bullion remains unencumbered; |
| (i) | will
inspect or cause to be inspected the stored physical gold bullion periodically on a spot
inspection basis and, together with a representative of the Trust’s external auditor,
physically audit gold bars to confirm bar numbers on at least an annual basis; |
| (j) | will
not guarantee the securities or obligations of any person other than the Manager, and
then only in respect of the activities of the Trust; |
| (k) | in
connection with requirements of the Tax Act, will not make or hold any investment that
would result in the Trust failing to qualify as a “mutual fund trust” within
the meaning of the Tax Act; |
| (l) | in
connection with requirements of the Tax Act, will not invest in any security that would
be a “tax shelter investment” within the meaning of section 143.2 of the
Tax Act; |
| (m) | in
connection with requirements of the Tax Act, will not invest in the securities of any
non-resident corporation, trust or other non-resident entity (or of any partnership that
holds such securities) if the Trust (or the partnership) would be required to include
any significant amount in income under any of sections 94, 94.1 or 94.2 of the Tax Act; |
| (n) | in
connection with requirements of the Tax Act, will not invest in any security of an issuer
that would be a foreign affiliate of the Trust for purposes of the Tax Act; and |
| (o) | in
connection with requirements of the Tax Act, will not carry on any business and make
or hold any investments that would result in the Trust itself being subject to the tax
for specified investment flow-through (“SIFT”) trusts as provided for in section
122 of the Tax Act (the “SIFT Rules”). |
Termination
of the Trust
The
Trust does not have a fixed termination date but will be terminated in the event there are no trust units outstanding, the Trustee
resigns or is removed and no successor trustee is appointed by the Manager by the time the resignation or removal becomes effective,
the Manager resigns and no successor manager is appointed by the Manager and approved by unitholders by the time the resignation
becomes effective, the Manager is, in the opinion of the Trustee, in material default of its obligations under the Trust Agreement
and such default continues for 120 days from the date that the Manager receives notice of such default from the Trustee and no
successor manager has been appointed by the unitholders of the Trust, the Manager experiences certain insolvency events or the
assets of the Manager are seized or confiscated by a public or governmental authority. In addition, the Manager may, in its discretion,
terminate the Trust, without unitholder approval, if, in the opinion of the Manager, after consulting with the independent review
committee, the value of the net assets of the Trust has been reduced such that it is no longer economically feasible to continue
the Trust and it would be in the best interests of the unitholders to terminate the Trust, by giving the Trustee and each holder
of trust units at the time at least 90 days’ notice. To the extent such termination in the discretion of the Manager may
involve a matter that would be a “conflict of interest matter” as set forth in applicable Canadian regulations, the
matter will be referred by the Manager to the independent review committee for its recommendation. In connection with the termination
of the Trust, the Trust will, to the extent possible, convert its assets into cash and, after paying or making adequate provision
for all of the Trust’s liabilities, distribute the net assets of the Trust to unitholders, on a pro rata basis, as soon
as practicable after the termination date.
FEES
AND EXPENSES
This
table lists the fees and expenses that the Trust pays for the continued operation of its business and that unitholders may have
to pay if they invest in the Trust. Payment of these fees and expenses will reduce the value of the unitholders’ investment
in the Trust. The unitholders will have to pay fees and expenses directly if they redeem their trust units for physical gold bullion.
Fees
and Expenses Payable by the Trust
| Type
of Fee |
Amount
and Description |
| Management
Fee: |
The
Trust pays the Manager a monthly management fee equal to 1/12 of 0.35% of the value of net assets of the Trust (determined
in accordance with the Trust Agreement), plus any applicable Canadian taxes. The management fee is calculated and accrued
daily and payable monthly in arrears on the last day of each month. |
| Operating
Expenses: |
Except
as otherwise described and subject to the expense cap described below, the Trust is responsible for all costs and expenses
incurred in connection with the ongoing operation and administration of the Trust including, but not limited to: the fees
and expenses payable to and incurred by the Trustee, the Manager, any investment manager, the Mint, RBC Investor Services
as custodian, any sub-custodians, the registrar and transfer agent and the valuation agent of the Trust; transaction and handling
costs for the physical gold bullion; storage fees for the physical gold bullion; custodian settlement fees; counterparty fees;
legal, audit, accounting, bookkeeping and record keeping fees and expenses; costs and expenses of reporting to unitholders
and conducting unitholder meetings; printing and mailing costs; filing and listing fees payable to applicable securities regulatory
authorities and stock exchanges; other administrative expenses and costs incurred in connection with the Trust’s continuous
disclosure public filing requirements and investor relations; any applicable Canadian taxes payable by the Trust or to which
the Trust may be subject including federal and provincial income taxes, goods and services tax, and withholding taxes; interest
expenses and borrowing costs, if any; brokerage expenses and commissions; costs and expenses relating to the issuance of trust
units, including fees payable to Cantor Fitzgerald & Co., Virtu Canada Corp. and Virtu Americas LLC upon sale of trust
units under the sales agreement; costs and expenses of preparing financial and other reports; any expenses associated with
the implementation and ongoing operation of the independent review committee of the Trust; costs and expenses arising as a
result of complying with all applicable laws; and any expenditures incurred upon the termination of the Trust. |
| Other
Fees and Expenses: |
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, any sub-custodians, the valuation agent, the registrar
and transfer agent or the underwriters for its offerings and/or any of their respective officers, directors, employees, consultants
or agents is entitled to indemnity by the Trust. |
| Type
of Fee |
Amount
and Description |
| Expense
Cap: |
The
Manager has contractually agreed that, if the expenses of the Trust, including the management
fee, at the end of any month exceed an amount equal to 1/12 of 0.65% of the value of
net assets of the Trust, the management fee payable to the Manager for such month will
be reduced by the amount of such excess up to the gross amount of the management fee
earned by the Manager from the Trust for such month. Any such reduction in the management
fee will not be carried forward or payable to the Manager in future months.
In
calculating the expenses of the Trust for purposes of the expense cap, the following will be excluded: any applicable taxes payable
by the Trust or to which the Trust may be subject; and any extraordinary expenses of the Trust. |
The
Trust has retained cash from the net proceeds of each of its offerings of trust units in an amount not exceeding 3% of the net
proceeds of each such offering, which has been added to its available funds to be used for its ongoing expenses and cash redemptions.
From time to time, the Trust will sell physical gold bullion to replenish this cash reserve to meet its expenses and cash redemptions.
Fees
and Expenses Payable Directly by Unitholders
| Type
of Fee |
Amount
and Description |
| Redemption
and Delivery Costs: |
Except
as set forth above, there are no redemption fees payable upon the redemption of trust units for cash. However, if a unitholder
chooses to receive physical gold bullion upon redemption of trust units, the unitholder will be responsible for expenses in
connection with effecting the redemption and applicable delivery expenses, including the handling of the notice of redemption,
the delivery of the physical gold bullion for trust units that are being redeemed and the applicable gold storage redemption
fees. |
| Other
Fees and Expenses: |
No
other charges apply. If applicable, the unitholder may be subject to brokerage commissions or other fees associated with trading
the trust units. |
RISK
FACTORS
You
should consider carefully the risks described below before making an investment decision. You should also refer to the
other information included and incorporated by reference herein, including but not limited to the AIF and the Annual Financial
Statements and Interim Financial Statements and the related notes. See “Documents Incorporated by Reference”.
The
Canada Revenue Agency (“CRA”) tax treatment of realized gains and losses.
The
CRA has expressed the opinion that gains (or losses) resulting from certain transactions in commodities should generally be treated
for purposes of the Tax Act as being derived from an adventure in the nature in trade, so that, subject to the particular facts,
such transactions give rise to ordinary income rather than capital gains. As the Manager intends for the Trust to be a long-term
holder of physical gold bullion and does not anticipate that the Trust will sell its physical gold bullion (otherwise than where
necessary to fund expenses of the Trust), the Manager anticipates that the Trust generally will treat gains (or losses) as a result
of dispositions of physical gold bullion as capital gains (or capital losses). If any transactions of the Trust are reported by
it on capital account but are subsequently determined by the CRA to be on income account, there may be an increase in the net
income of the Trust for tax purposes and the taxable component of any amounts distributed to unitholders, with the result that
Canadian-resident unitholders could be reassessed by the CRA to increase their taxable income by the amount of such increase,
and non-resident unitholders potentially could be assessed directly by the CRA for Canadian withholding tax on the amount of net
gains on such transactions that were treated by the CRA as having been distributed to them. The CRA can assess the Trust for a
failure of the Trust to withhold tax on distributions made by it to non-resident unitholders that are subject to withholding tax,
and typically would do so rather than assessing the non-resident unitholders directly. Accordingly, any such re-determination
by the CRA may result in the Trust being liable for unremitted withholding taxes on prior distributions made to unitholders who
were not resident in Canada for the purposes of the Tax Act at the time of the distribution.
If
the Trust experiences a “loss restriction event” it could result in unintended tax consequences for unitholders.
The
Tax Act contains loss restriction rules that could result in unintended tax consequences for unitholders, including an unscheduled
allocation of income or capital gains that must be included in a unitholder’s income for Canadian income tax purposes. If
the Trust experiences a “loss restriction event”, it will: (i) be deemed to have a year-end for Canadian tax purposes
whether or not the Trust has losses (which would trigger an allocation of the Trust’s net income and net realized capital
gains to unitholders to ensure that the Trust itself is not subject to tax on such amounts); and (ii) the Trust will become subject
to the Canadian loss restriction rules that generally apply to corporations, including a deemed realization of any unrealized
capital losses and disallowance of its ability to carry forward capital losses. Generally, the Trust will be subject to a loss
restriction event if a person becomes a “majority-interest beneficiary”, or a group of persons becomes a “majority-interest
group of beneficiaries”, of the Trust, as those terms are defined in the affiliated persons rules contained in the Tax Act,
with certain modifications. Generally, a majority-interest beneficiary of a Trust is a beneficiary in the income or capital, as
the case may be, of the Trust who, together with the beneficial interests of persons and partnerships with whom the beneficiary
is affiliated, has a fair market value that is greater than 50% of the fair market value of all the interests in the income or
capital, as the case may be, of the Trust. A loss restriction event could occur because a particular unitholder or an affiliate
acquires trust units. Please see “Material Tax Considerations - Material Canadian Federal Income Tax Considerations - Canadian
Taxation of Unitholders” for the tax consequences of a distribution to unitholders.
Global
events outside of the Trust’s control may adversely affect the Trust’s business, financial condition and results of
operations.
The
Trust cautions that global events outside the Trust’s control may have a significant negative effect on the Trust and may
negatively impact the Trust’s business, financial condition and results of operations, including the ability of the Trust
to provide services. The success of the Trust’s activities may be affected by general market conditions, the outbreak of
pandemics or contagious diseases, armed conflict, flooding and other natural disasters, interest rates, availability of credit,
inflation rates, economic uncertainty, changes in laws, global disruptions to information technology systems and national and
international political circumstances. Examples of recent global events include the COVID19 pandemic, Russia’s invasion
of Ukraine, the Israel-Hamas war, the conflict between Israel and Iran and the CrowdStrike outage. In addition, unexpected volatility
or illiquidity could have a significant negative effect on the Trust. These as well as other global or macroeconomic events may
also result in market uncertainty, which could have a material adverse impact on taxation, liquidity of units and other unitholder
rights generally.
Our
reliance on third-party service providers and key information technology systems could have an adverse effect on our business.
We
depend on key information technology systems to accurately and efficiently transact our business, provide information to management
and prepare financial reports. We rely on third-party providers for various networking, application hosting and related business
process services that support our key information systems, as well as those that collect, maintain and process data about customers,
employees, business partners and others, including information about individuals, as well as proprietary information belonging
to our business such as trade secrets. Our business activities may be materially disrupted in the event of a partial or complete
failure of any of these systems, or those of our third-party providers, which could result from, among other things, natural disasters,
war, terrorism or other hostile acts, software malfunctions, equipment or telecommunications failures, processing errors, computer
viruses, ransomware, phishing, hackers, other security issues or supplier defaults, increased bandwidth requirements or other
events beyond our control. For example, the recent global CrowdStrike outage resulted in prolonged interruptions to the availability
and functionality of Microsoft applications, which we and our third-party providers rely upon to perform a number of operations.
In addition, cyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are becoming
increasingly sophisticated in using techniques and tools - including artificial intelligence - that circumvent security controls,
evade detection and remove forensic evidence. As a result, we may be unable to detect, investigate, remediate or recover from
future attacks or incidents, or to avoid a material adverse impact to our business.
Any
damage, significant disruption or breach of our third-party providers’ information technology systems, preventing them to
perform as expected, could potentially lead to improper use of our information technology systems, unauthorized access, use, disclosure,
loss, modification or destruction of confidential information, information about our customers, employees, and other individuals
and operational disruptions. In addition, a cyber-related attack or other system disruption could result in other negative consequences,
including damage to our reputation or competitiveness, costly and time-consuming remediation or increased protection actions,
compliance and regulatory costs, fines, and penalties, litigation (including class actions), or regulatory action. Our security
measures, backup and disaster recovery capabilities, business continuity plans and crisis management procedures may not be adequate
or implemented properly to avoid such disruptions or failures. We cannot guarantee that any costs and liabilities incurred in
relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available
to us in the future on economically reasonable terms or at all.
A
large purchase of physical gold bullion by the Trust in connection with an offering may temporarily affect the price of gold.
Depending
on the size of an offering, the amount of gold that the Trust will purchase in connection with an offering may be significant
on a short term basis and such purchase may have the effect of temporarily increasing the spot price of physical gold bullion.
In the event that the purchase of physical gold bullion by the Trust in connection with an offering temporarily increases the
spot price of physical gold bullion, the Trust will be able to purchase a smaller amount of physical gold bullion with the proceeds
of an offering than otherwise, and if the spot price of physical gold bullion decreases after the purchase of physical gold bullion
by the Trust, such decrease would decrease the NAV of the Trust.
A
delay in the purchase by the Trust of physical gold bullion with the net proceeds of an offering may result in the Trust purchasing
less physical gold bullion than it could have purchased earlier.
The
Trust intends to purchase physical gold bullion with the net proceeds of an offering as described in this prospectus as soon as
practicable. The Trust may not be able to purchase immediately all of the required physical gold bullion. Although the Trust will
endeavor to complete the necessary purchases as quickly as practicable, there may be a delay in the completion of the Trust’s
purchases of physical gold bullion. If physical gold bullion prices increase between the time of completion of an offering and
the time the Trust completes its purchases of physical gold bullion, whether or not caused by the Trust’s acquisition of
physical gold bullion, the amount of physical gold bullion the Trust will be able to purchase will be less than it would have
been able to purchase had it been able to complete its purchases of the required physical gold bullion immediately. In either
of these circumstances, the quantity of physical gold bullion purchased per trust unit will be reduced, which will have a negative
effect on the value of the trust units.
If
there is a loss, damage or destruction of the Trust’s physical gold bullion in the custody of the Mint and the Trust does
not give timely notice, all claims against the Mint will be deemed waived.
If
either party to the Gold Storage Agreement discovers loss, damage or destruction of the Trust’s physical gold bullion in
the Mint’s custody, care and control, such party must give written notice to the other party within five Mint business days,
in the case of the Manager’s notice, and one Mint business day, in the case of the Mint’s notice, after its discovery
of any such loss, damage or destruction, but, in the event that the Manager receives a written notice from the Mint in which a
discrepancy in the quantity of physical gold bullion first appears, it shall give the Mint a notice of loss no later than 60 days
following receipt of such written statement. If such notice is not given in a timely manner, all claims against the Mint will
be deemed to have been waived. In addition, no action, suit or other proceeding to recover any loss or shortage can be brought
against the Mint unless timely notice of such loss or shortage has been given and such action, suit or proceeding will have commenced
within 12 months from the time a claim is made. The loss of the right to make a claim or of the ability to bring an action, suit
or other proceeding against the Mint may mean that any such loss will be non-recoverable, which will have an adverse effect on
the value of the net assets of the Trust and the NAV.
Canadian
Registered Plans that redeem their trust units for physical gold bullion may be subject to adverse consequences.
Physical
gold bullion received by a Registered Plan (as defined below) that is a resident of Canada, such as a registered retirement savings
plan (“RRSP”), on a redemption of trust units for physical gold bullion will not be a qualified investment for such
plan. Accordingly, such plans (and in the case of certain plans, the annuitants or beneficiaries thereunder or holders thereof)
may be subject to adverse Canadian tax consequences.
The
trading price of the trust units could potentially be more volatile relative to NAV.
The
trading price of the trust units may become more volatile relative to NAV and could be impacted by various factors which may be
unrelated or disproportionate to the price of physical gold bullion, including market trends and the sentiment of investors toward
physical gold bullion.
USE
OF PROCEEDS
Unless
otherwise specified in a prospectus supplement, the net proceeds that the Trust will receive from the issue of its trust units
will be used to acquire physical gold bullion in accordance with the Trust’s objective and subject to the Trust’s
investment and operating restrictions described herein. See “Sprott Physical Gold Trust - Business of the Trust - Investment
Objectives of the Trust” and “Sprott Physical Gold Trust - Investment and Operating Restrictions”.
CAPITALIZATION
There
have been no material changes in the Trust’s capitalization since the date of the Interim Financial Statements, being the most
recently filed financial statements of the Trust, other than: (i) changes as a result of changes in the price of gold; and (ii) as described
in “Prior Sales”. On September 5, 2024, the total NAV of the Trust and the NAV per unit of the Trust were U.S.$8,123,894,335.20
and U.S.$19.7783, respectively, and there were a total of 410,747,206 units of the Trust issued and outstanding.
DESCRIPTION
OF THE TRUST UNITS
The
Trust is authorized to issue an unlimited number of trust units in one or more classes and series of a class. Currently, the Trust
has issued only one class or series of trust units, which are the class of trust units that will be qualified by this prospectus.
Each trust unit of a class or series of a class represents an undivided ownership interest in the net assets of the Trust attributable
to that class or series of a class of trust units. Trust units are transferable and redeemable at the option of the unitholder
in accordance with the provisions set forth in the Trust Agreement. All trust units of the same class or series of a class have
equal rights and privileges with respect to all matters, including voting, receipt of distributions from the Trust, liquidation
and other events in connection with the Trust. Trust units and fractions thereof are issued only as fully paid and non-assessable.
Trust units have no preference, conversion, exchange or pre-emptive rights. Each whole trust unit of a particular class or series
of a class entitles the holder thereof to a vote at meetings of unitholders where all classes vote together, or to a vote at meetings
of unitholders where that particular class or series of a class of unitholders votes separately as a class.
The
Trust may not issue trust units except (i) if the net proceeds per trust unit to be received by the Trust are not less than 100%
of the most recently calculated NAV per trust unit immediately prior to, or upon, the determination of the pricing of such issuance
or (ii) by way of trust unit distribution in connection with an income distribution.
PRIOR
SALES
The
following table summarizes the trust units that have been issued from treasury during the 12-month period before the date of this
prospectus, all of which have been issued pursuant to the sales agreement.
| Date |
Price
Per Trust Unit (U.S.$) |
Number
of Trust Units Issued |
| October
13, 2023 |
14.8263 |
3,213,753 |
| October
13, 2023 |
14.8589 |
266,100 |
| November
14, 2023 |
15.3944 |
119,281 |
| November
16, 2023 |
15.4579 |
180,300 |
| November
16, 2023 |
15.4852 |
449,639 |
| November
21, 2023 |
15.6408 |
474,305 |
| November
28, 2023 |
15.9043 |
462,212 |
| December
1, 2023 |
16.0970 |
539,397 |
| December
13, 2023 |
15.6601 |
709,003 |
| March
1, 2024 |
16.1508 |
898,522 |
| March
4, 2024 |
16.4355 |
429,616 |
| March
4, 2024 |
16.4114 |
534,600 |
| March
28, 2024 |
17.3049 |
266,285 |
| April
2, 2024 |
17.7400 |
87,454 |
| April
5, 2024 |
18.0386 |
885,600 |
| April
5, 2024 |
18.0553 |
642,950 |
| April
11, 2024 |
18.3906 |
350,000 |
| April
12, 2024 |
18.7141 |
763,545 |
| April
12, 2024 |
18.6748 |
1,229,700 |
| May
1, 2024 |
18.0218 |
33,120 |
| May
17, 2024 |
18.7320 |
815,300 |
| May
17, 2024 |
18.7283 |
170,600 |
| June
14, 2024 |
18.1400 |
110,851 |
| June
14, 2024 |
18.1136 |
74,000 |
| June
20, 2024 |
18.3550 |
152,037 |
| June
27, 2024 |
18.1042 |
64,937 |
| July
3, 2024 |
18.3581 |
417,600 |
| July
5, 2024 |
18.5509 |
425,000 |
| July
5, 2024 |
18.5408 |
324,600 |
| July
11, 2024 |
18.6879 |
1,390,000 |
| Date |
Price
Per Trust Unit (U.S.$) |
Number
of Trust Units Issued |
| July
11, 2024 |
18.6963 |
1,065,400 |
| July
16, 2024 |
19.0792 |
886,606 |
| July
16, 2024 |
19.0637 |
243,200 |
| July
31, 2024 |
18.9775 |
1,025,000 |
| August
2, 2024 |
19.2489 |
28,094 |
| August
8, 2024 |
18.7785 |
1,630,000 |
| August
8, 2024 |
18.7795 |
515,300 |
| August
12, 2024 |
19.1376 |
952,711 |
| August
12, 2024 |
19.1218 |
123,900 |
| August
16, 2024 |
19.3613 |
3,207,129 |
| August
16, 2024 |
19.3666 |
80,700 |
| August
23, 2024 |
19.5440 |
644,182 |
MARKET
PRICE OF TRUST UNITS
The
trust units are traded on NYSE Arca under the symbol “PHYS” and on the TSX under the symbols “PHYS” (Canadian
dollar denominated) and “PHYS.U” (U.S. dollar denominated). The following table sets forth the reported high and low
trading prices and average trading volume of the trust units on the TSX (as reported by TSX) and the NYSE Arca (as reported by
the NYSE Arca) for each month during the 12-month period before the date of this prospectus.
Calendar
Period |
NYSE
ARCA |
TSX |
High
($) |
Low
($) |
Average
Volume(1) |
High
(Cdn$) |
Low
(Cdn$) |
Average
Volume |
| September
2023 |
15.24 |
14.30 |
1,505,732 |
20.62 |
19.41 |
19,025 |
| October
2023 |
15.66 |
14.00 |
3,762,108 |
21.70 |
19.15 |
32,539 |
| November
2023 |
15.96 |
15.09 |
1,707,570 |
21.69 |
20.86 |
31,878 |
| December
2023 |
16.15 |
15.34 |
1,821,371 |
21.75 |
20.82 |
29,675 |
| January
2024 |
15.99 |
15.44 |
2,029,123 |
21.46 |
20.86 |
22,812 |
| February
2024 |
15.96 |
15.31 |
1,723,989 |
21.43 |
20.78 |
30,254 |
| March
2024 |
17.34 |
15.81 |
2,007,862 |
23.45 |
21.48 |
33,915 |
| April
2024 |
18.75 |
17.36 |
2,851,424 |
25.77 |
23.59 |
105,525 |
| May
2024 |
18.93 |
17.64 |
1,745,096 |
25.78 |
24.06 |
46,003 |
| June
2024 |
18.49 |
17.80 |
1,552,036 |
25.30 |
24.44 |
58,670 |
| July
2024 |
19.22 |
18.03 |
1,755,580 |
26.24 |
24.75 |
60,214 |
| August
2024 |
19.67 |
18.54 |
2,617,210 |
26.75 |
25.53 |
47,994 |
| September
1 – 5, 2024 |
19.62 |
19.24 |
1,517,184 |
26.52 |
26.10 |
36,193 |
Note:
| (1) | Includes
volume traded on other United States exchanges and trading markets. |
PLAN
OF DISTRIBUTION
The
Trust may sell the trust units to or through underwriters or dealers purchasing as principals to one or more purchasers directly,
or through agents designated from time to time by the Manager on behalf of the Trust. Subject to the provisions of the Trust Agreement
pursuant to which the Trust is governed, the trust units may be sold at fixed prices or non-fixed prices, such as prices determined
by reference to the prevailing market price of the trust units at the time of sale or at prices to be negotiated with purchasers,
which prices may vary between purchasers and during the period of distribution of the trust units. The prospectus supplement for
any of the trust units being offered thereby will set forth the terms of the offering of such trust units, including the name
or names of underwriters, dealers or agents, any underwriting discounts and other items constituting underwriters’ compensation,
any public offering price (or the manner of determination thereof if offered on a non-fixed price basis, including sales in transactions
that are deemed to be “at the market” distributions as defined in NI 44-102) and any discounts or concessions allowed
or paid to dealers or agents. Only underwriters so named in the relevant prospectus supplement will be deemed to be underwriters
in connection with the trust units offered thereby.
In
accordance with paragraph 9.3(2) of NI 81-102, the issue price of the trust units will not (a) as far as reasonably practicable,
be a price that causes dilution of the NAV of the Trust’s other outstanding securities at the time of issue and (b) be a
price that is less than the most recently calculated NAV per trust unit. Accordingly, the trust units sold pursuant to the offering
will not be sold at an issue price that is less than 100% of the most recently calculated NAV per trust unit immediately prior
to, or upon, the determination of the pricing of such issuance.
If
underwriters are used in connection with an offering, other than an “at-the-market” distribution, the trust units
will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations
of the underwriters to purchase such trust units will be subject to certain conditions precedent, and the underwriters will be
obligated to purchase all the trust units offered by the prospectus supplement if any of such trust units are purchased. Any public
offering price and any discounts or concessions allowed or paid to dealers may be changed from time to time.
In
connection with an offering, the underwriters, dealers or agents, as the case may be, may over-allot or effect transactions intended
to fix or stabilize the market price of the trust units at a level above that which might otherwise prevail in the open market.
An over-allotment, if any, involves sales in excess of the offering size, which creates a short position. Stabilizing transactions
involve bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. These transactions
may cause the price of the trust units sold in an offering to be higher than they would otherwise be. The size of the over-allotment,
if any, is not known at this time. Such transactions, if commenced, may be discontinued at any time.
No
underwriter or dealer involved in an “at-the-market” distribution, no affiliate of such underwriter or dealer, and
no person or company acting jointly or in concert with such underwriter or dealer, may, in connection with the distribution, enter
into any transaction that is intended to stabilize or maintain the market price of the trust units or securities of the same class
as the trust units distributed under the “at-the-market” prospectus, including selling an aggregate number or principal
amount of trust units that would result in the underwriter or dealer creating an over-allocation position in the trust units.
The
trust units may also be sold directly by the Trust at such prices and upon such terms as are agreed to by the Manager, on behalf
of the Trust, and the purchaser or through agents designated by the Manager on behalf of the Trust from time to time. Any agent
involved in the offering and sale of the trust units in respect of which this prospectus is delivered will be named, and any commissions
payable by the Trust to such agent will be set forth, in a prospectus supplement. Unless otherwise indicated in the prospectus
supplement, any agent would be acting on a best-efforts basis for the period of its appointment.
Underwriters,
dealers and agents who participate in the distribution of the trust units may be entitled, under agreements to be entered into
with the Trust, to indemnification by the Trust against certain liabilities, including liabilities under securities legislation,
or to contribution with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof.
MATERIAL
TAX CONSIDERATIONS
Material
U.S. Federal Income Tax Considerations
The
following are the material U.S. federal income tax consequences to U.S. Holders (as defined below) of the ownership and disposition
of trust units. This discussion does not purport to deal with the tax consequences of owning trust units to all categories of
investors, some of which, such as dealers in securities, regulated investment companies, tax-exempt organizations, investors whose
functional currency is not the U.S. dollar and investors that own, actually or under applicable constructive ownership rules,
10% or more of the trust units, may be subject to special rules. This discussion does not address U.S. state or local tax, U.S.
federal estate or gift tax or foreign tax consequences of the ownership and disposition of trust units. This discussion deals
only with unitholders who hold the trust units as a capital asset. You are encouraged to consult your own tax advisors concerning
the overall tax consequences arising in your own particular situation under U.S. federal, state, local or foreign law of the ownership
of trust units.
The
following discussion of U.S. federal income tax matters is based on the U.S. Internal Revenue Code of 1986, as amended, (the “Code”),
judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the U.S. Department of the
Treasury (the “Treasury Regulations”), all of which are subject to change, possibly with retroactive effect.
U.S.
Federal Income Tax Classification of the Trust
The
Trust has filed an affirmative election with the Internal Revenue Service (“IRS”) to be classified as an association
taxable as a corporation for U.S. federal income tax purposes.
U.S.
Federal Income Taxation of U.S. Holders
As
used herein, the term “U.S. Holder” means a beneficial owner of less than 10% of trust units that is a U.S. citizen
or resident for U.S. federal income tax purposes, a U.S. corporation or other U.S. entity taxable as a corporation, an estate
the income of which is subject to U.S. federal income taxation regardless of its source, or a trust if a court within the United
States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority
to control all substantial decisions of the trust.
If
a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds the trust units, the tax
treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. However,
a U.S. person that is an individual, trust or estate and that owns trust units through a partnership generally will be eligible
for the reduced rates of taxation described below that are applicable to U.S. Individual Holders (as defined below). If a unitholder
is a partner in a partnership holding the trust units, such unitholder should consult with his, her or its tax advisor.
Distributions
The
Trust does not anticipate making regular cash distributions to unitholders. Subject to the passive foreign investment company
(“PFIC”) discussion below, any distributions made by the Trust with respect to the trust units to a U.S. Holder will
generally constitute dividends, which will generally be taxable as ordinary income to the extent of the Trust’s current
or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of the Trust’s
earnings and profits will be treated first as a non-taxable return of capital to the extent of the U.S. Holder’s tax basis
in his, her or its trust units on a dollar-for-dollar basis and thereafter as gain from the disposition of trust units. Since
the Trust will be a PFIC, as described below, dividends paid on the trust units to a U.S. Holder who is an individual, trust or
estate (a “U.S. Individual Holder”), will generally not be treated as “qualified dividend income” that
is taxable to U.S. Individual Holders at preferential tax rates. Any dividends generally will be treated as foreign-source income
for U.S. foreign tax credit limitation purposes.
Redemption
of Trust Units
As
described under “Sprott Physical Gold Trust - Business of the Trust - Redemption of Trust Units for Physical Gold Bullion”
and “Sprott Physical Gold Trust - Business of the Trust - Redemption of Trust Units for Cash”, a U.S. Holder may have
trust units redeemed for cash or physical gold bullion. Under Section 302 of the Code, a U.S. Holder generally will be treated
as having sold his, her or its trust units (rather than having received a distribution on the trust units) upon the redemption
of trust units if the redemption completely terminates or significantly reduces the U.S. Holder’s interest in the Trust.
In such case, the redemption will be treated as described in the relevant section below depending on whether the U.S. Holder makes
a qualified electing fund (“QEF”) election, a mark-to-market election or makes no election and therefore is subject
to the Default PFIC Regime (as defined below).
PFIC
Status and Significant Tax Consequences
Special
U.S. federal income tax rules apply to a U.S. Holder that holds stock in a foreign corporation classified as a PFIC for U.S. federal
income tax purposes. In general, the Trust will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in
which such U.S. Holder held the trust units, either:
| ● | at
least 75% of the Trust’s gross income for such taxable year consists of passive
income; or |
| ● | at
least 50% of the average value of the assets held by the Trust during such taxable year
produce, or are held for the production of, passive income. |
For
purposes of these tests, “passive income” includes dividends, interest, and gains from the sale or exchange of investment
property (including commodities). The income that the Trust derives from its sales of physical gold bullion is expected to be
treated as passive income for this purpose. Since substantially all of the Trust’s assets will consist of physical gold
bullion and the Trust expects to derive substantially all of its income from the sales of physical gold bullion, it is expected
the Trust will be treated as a PFIC for each of its taxable years.
Assuming
the Trust is a PFIC, a U.S. Holder will be subject to different taxation rules depending on whether the U.S. Holder (1) makes
an election to treat the Trust as a QEF, which is referred to as a QEF election, (2) makes a mark-to- market election with respect
to the trust units, or (3) makes no election and therefore is subject to the Default PFIC Regime. As discussed in detail below,
making a QEF election or a mark-to-market election generally will mitigate the otherwise adverse U.S. federal income tax consequences
under the Default PFIC Regime. However, the mark-to-market election may not be as favorable as the QEF election because a U.S.
Holder generally will recognize income each year attributable to any appreciation in the U.S. Holder’s trust units without
a corresponding distribution of cash or other property.
Assuming
that the Trust is a PFIC, a U.S. Holder is required to file an annual report with the IRS reporting his, her or its investment
in the Trust.
Taxation
of U.S. Holders Making a Timely QEF Election
Making
the Election. A U.S. Holder would make a QEF election with respect to any year that the Trust is a PFIC by filing IRS Form
8621 with his, her or its U.S. federal income tax return. The Trust intends to annually provide each U.S. Holder with all necessary
information in order to make and maintain a QEF election. A U.S. Holder who makes a QEF election for the first taxable year in
which he, she or it owns trust units, or an Electing Holder, will not be subject to the Default PFIC Regime for any taxable year.
We will refer to an Electing Holder that is a U.S. Individual Holder as a Non-Corporate Electing Holder. A U.S. Holder who does
not make a timely QEF election would be subject to the Default PFIC Regime for taxable years during his, her or its holding period
in which a QEF election was not in effect, unless such U.S. Holder makes a special “purging” election. A U.S. Holder
who does not make a timely QEF election is encouraged to consult such U.S. Holder’s tax advisor regarding the availability
of such purging election.
Current
Taxation and Dividends. An Electing Holder must report each year for U.S. federal income tax purposes his, her or its pro
rata share of the Trust’s ordinary earnings and the Trust’s net capital gain, if any, for the Trust’s taxable
year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were received
from the Trust by the Electing Holder. A Non-Corporate Electing Holder’s pro rata share of the Trust’s net capital
gain generally will be taxable at a maximum rate of 28% under current law to the extent attributable to sales of physical gold
bullion by the Trust if the Trust has held the gold bullion for more than one year. Otherwise, such gain generally will be treated
as ordinary income.
If
any unitholder redeems his, her or its trust units for physical gold bullion (regardless of whether the unitholder requesting
redemption is a U.S. Holder or an Electing Holder), the Trust will be treated as if it sold physical gold bullion for its fair
market value in order to redeem the unitholder’s trust units. As a result, any Electing Holder will be required to currently
include in income his, her or its pro rata share of the Trust’s gain from such deemed disposition (taxable to a Non-Corporate
Electing Holder at a maximum rate of 28% under current law if the Trust has held the physical gold bullion for more than one year)
even though the deemed disposition by the Trust is not attributable to any action on the Electing Holder’s part. If any
unitholder redeems trust units for cash and the Trust sells physical gold bullion to fund the redemption (regardless of whether
the unitholder requesting redemption is a U.S. Holder or an Electing Holder), an Electing Holder similarly will include in income
his, her or its pro rata share of the Trust’s gain from the sale of the physical gold bullion, which will be taxable as
described above even though the Trust’s sale of physical gold bullion is not attributable to any action on the Electing
Holder’s part. An Electing Holder’s adjusted tax basis in the trust units will be increased to reflect any amounts
currently included in income under the QEF rules. Distributions of earnings and profits that had been previously included in income
will result in a corresponding reduction in the adjusted tax basis in the trust units and will not be taxed again once distributed.
Any other distributions generally will be treated as discussed above under “Material Tax Considerations - Material U.S.
Federal Income Tax Considerations - Distributions”.
Income
inclusions under the QEF rules described above generally should be treated as foreign-source income for U.S. foreign tax credit
limitation purposes, but Electing Holders should consult their tax advisors in this regard.
Sale,
Exchange or Other Disposition. An Electing Holder will generally recognize capital gain or loss on the sale, exchange, or
other disposition of the trust units in an amount equal to the excess of the amount realized on such disposition over the Electing
Holder’s adjusted tax basis in the trust units. Such gain or loss will be treated as a long-term capital gain or loss if
the Electing Holder’s holding period in the trust units is greater than one year at the time of the sale, exchange or other
disposition. Long-term capital gains of U.S. Individual Holders currently are taxable at a maximum rate of 20%. An Electing Holder’s
ability to deduct capital losses is subject to certain limitations. Any gain or loss generally will be treated as U.S.- source
gain or loss for U.S. foreign tax credit limitation purposes.
An
Electing Holder that redeems his, her or its trust units will be required to currently include in income his, her or its pro rata
share of the Trust’s gain from the deemed or actual disposition of physical gold bullion, as described above, which will
be taxable to a Non-Corporate Electing Holder at a maximum rate of 28% under current law if the Trust has held the physical gold
bullion for more than one year. The Electing Holder’s adjusted tax basis in the trust units will be increased to reflect
such gain that is included in income. The Electing Holder will further recognize capital gain or loss on the redemption in an
amount equal to the excess of the fair market value of the physical gold bullion or cash received upon redemption over the Electing
Holder’s adjusted tax basis in the trust units. Such gain or loss will be treated as described in the preceding paragraph.
Taxation
of U.S. Holders Making a Mark-to-Market Election
Making
the Election. Alternatively, if, as is anticipated, the trust units are treated as “marketable stock”, a U.S.
Holder would be allowed to make a mark-to-market election with respect to the trust units, provided the U.S. Holder completes
and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. The trust units will be
treated as marketable stock for this purpose if they are regularly traded on a qualified exchange or other market. The trust units
will be regularly traded on a qualified exchange or other market for any calendar year during which they are traded (other than
in de minimis quantities) on at least 15 days during each calendar quarter. A qualified exchange or other market means either
a U.S. national securities exchange that is registered with the SEC, the NASDAQ, or a foreign securities exchange that is regulated
or supervised by a governmental authority of the country in which the market is located and which satisfies certain regulatory
and other requirements. The Trust believes that both the TSX and NYSE Arca should be treated as a qualified exchange or other
market for this purpose.
Current
Taxation and Dividends. If the mark-to-market election is made, the U.S. Holder generally would include as ordinary income
in each taxable year the excess, if any, of the fair market value of the trust units at the end of the taxable year over such
U.S. Holder’s adjusted tax basis in the trust units. The U.S. Holder would also be permitted an ordinary loss in respect
of the excess, if any, of the U.S. Holder’s adjusted tax basis in the trust units over their fair market value at the end
of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market
election. Any income inclusion or loss under the preceding rules should be treated as gain or loss from the sale of trust units
for purposes of determining the source of the income or loss. Accordingly, any such gain or loss generally should be treated as
U.S.-source income or loss for U.S. foreign tax credit limitation purposes. A U.S. Holder’s tax basis in his, her or its
trust units would be adjusted to reflect any such income or loss amount. Distributions by the Trust to a U.S. Holder who has made
a mark-to-market election generally will be treated as discussed above under “Material Tax Considerations - Material U.S.
Federal Income Tax Considerations - Distributions.”
Sale,
Exchange or Other Disposition. Gain realized on the sale, exchange, redemption or other disposition of the trust units would
be treated as ordinary income, and any loss realized on the sale, exchange, redemption or other disposition of the trust units
would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included
by the U.S. Holder. Any loss in excess of such previous inclusions would be treated as a capital loss by the U.S. Holder. A U.S.
Holder’s ability to deduct capital losses is subject to certain limitations. Any such gain or loss generally should be treated
as U.S.-source income or loss for U.S. foreign tax credit limitation purposes.
Taxation
of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election
Finally,
a U.S. Holder who does not make either a QEF election or a mark-to-market election for that year, or a Non-Electing Holder, would
be subject to special rules (the “Default PFIC Regime”) with respect to (1) any excess distribution (i.e., the portion
of any distributions received by the Non-Electing Holder on the trust units in a taxable year in excess of 125% of the average
annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing
Holder’s holding period for the trust units), and (2) any gain realized on the sale, exchange, redemption or other disposition
of the trust units.
Under
the Default PFIC Regime:
| ● | the
excess distribution or gain would be allocated rateably over the Non-Electing Holder’s
aggregate holding period for the trust units; |
| ● | the
amount allocated to the current taxable year and any taxable year before the Trust became
a PFIC would be taxed as ordinary income; and |
| ● | the
amount allocated to each of the other taxable years would be subject to tax at the highest
rate of tax in effect for the applicable class of taxpayer for that year, and an interest
charge for the deemed tax deferral benefit would be imposed with respect to the resulting
tax attributable to each such other taxable year. |
Any
distributions other than “excess distributions” by the Trust to a Non-Electing Holder will be treated as discussed
above under “Material Tax Considerations - Material U.S. Federal Income Tax Considerations - Distributions”.
The
penalties would not apply to a pension or profit sharing trust or other tax-exempt organization that did not borrow funds or otherwise
utilize leverage in connection with its acquisition of the trust units. If a Non-Electing Holder who is an individual dies while
owning the trust units, such Non-Electing Holder’s successor generally would not receive a step- up in tax basis with respect
to the trust units.
3.8%
Tax on Net Investment Income
For
taxable years beginning after December 31, 2012, a U.S. Holder that is an individual, estate, or, in certain cases, a trust, will
generally be subject to a 3.8% tax on the lesser of (1) the U.S. Holder’s net investment income for the taxable year; and
(2) the excess of the U.S. Holder’s modified adjusted gross income for the taxable year over a certain threshold (which
in the case of individuals will be between $125,000 and $250,000). A U.S. Holder’s net investment income will generally
include dividends distributed by the Trust and capital gains from the sale, redemption or other disposition of the trust units.
This tax is in addition to any income taxes due on such investment income.
Under
Treasury Regulations generally effective for taxable years after December 31, 2013, income inclusions under the QEF rules would
not be considered “net investment income” unless: (1) the Electing Holder holds the trust units in connection with
a trade or business of trading in financial instruments or commodities; or (2) the Electing Holder elects to treat the income
inclusion under the QEF rules as “net investment income”. If an Electing Holder does not make this election, such
holder’s tax basis in the trust units would not be increased by the amount of income inclusions under the QEF rules for
purposes of calculating “net investment income” upon the sale, redemption or other disposition of the trust units.
With respect to a U.S. Holder that has made a mark-to-market election with respect to the trust units, income inclusions under
the mark-to-market election would be included in the calculation of “net investment income”. An excess distribution
made to a U.S. Holder subject to the Default PFIC Regime would be included in “net investment income” to the extent
that such distribution constitutes a dividend for U.S. federal income tax purposes.
If
you are a U.S. Holder that is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability
of the 3.8% tax on net investment income to your trust units.
Foreign
Taxes
Distributions,
if any, by the Trust may be subject to Canadian withholding taxes as discussed under “Material Tax Considerations - Material
Canadian Federal Income Tax Considerations - Canadian Taxation of Unitholders - Unitholders Not Resident in Canada”. A U.S.
Holder may elect to either treat such taxes as a credit against U.S. federal income taxes, subject to certain limitations, or
deduct his, her or its share of such taxes in computing such U.S. Holder’s U.S. federal taxable income. No deduction for
foreign taxes may be claimed by an individual who does not itemize deductions.
Backup
Withholding and Information Reporting
Payments
made within the United States, or by a U.S. payor or U.S. middleman, of dividends on, or proceeds arising from the sale or other
taxable disposition of, trust units generally will be subject to information reporting and backup withholding, currently at the
rate of 24%, if a U.S. Holder fails to furnish its correct U.S. taxpayer identification number (generally on IRS Form W-9), and
to make certain certifications, or otherwise fails to establish an exemption. Backup withholding tax is not an additional tax.
Rather, a U.S. Holder generally may obtain a refund of any amounts withheld under backup withholding rules that exceed his, her,
or its U.S. federal income tax liability by filing a refund claim with the IRS.
U.S.
Holders may be subject to certain IRS filing requirements as a result of holding trust units. For example, a U.S. person who transfers
property (including cash) to a foreign corporation in exchange for stock in the corporation is in some cases required to file
an information return on IRS Form 926 with the IRS with respect to such transfer. Accordingly, a U.S. Holder may be required to
file Form 926 with respect to its acquisition of trust units in an offering. Depending on the number of trust units held, acquired
or disposed of by a U.S. Holder, the U.S. Holder may also be required to file an information return on IRS Form 5471 with the
IRS. U.S. Holders also may be required to file FinCEN Form 114 (Report of Foreign Bank and Financial Accounts) with respect to
their investment in the Trust.
Pursuant
to recently enacted legislation, U.S. Holders who are individuals (and to the extent specified in applicable Treasury Regulations,
certain U.S. entities) who hold “specified foreign financial assets” (as defined in Section 6038D of the Code) are
required to file IRS Form 8938 with information relating to the asset for each taxable year in which the aggregate value of all
such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year (or such higher
dollar amount as prescribed by applicable Treasury Regulations). Specified foreign financial assets would include, among other
assets, the trust units, unless the trust units are held through an account maintained with a U.S. financial institution. Substantial
penalties apply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not
due to willful neglect. Additionally, in the event a U.S. Holder who is an individual (and to the extent specified in applicable
Treasury regulations, a U.S. entity) that is required to file IRS Form 8938 does not file such form, the statute of limitations
on the assessment and collection of U.S. federal income taxes of such holder for the related tax year may not close until three
years after the date that the required information is filed. U.S. Holders should consult their own tax advisors with respect to
their reporting obligations under this legislation or any other applicable filing requirements.
Foreign
Account Tax Compliance Act
The
Foreign Account Tax Compliance Act provisions of Hiring Incentives to Restore Employment Act (“FATCA”) provide
that the Trust must disclose the name, address and taxpayer identification number of certain U.S. persons that own, directly or
indirectly, an interest in the Trust, as well as certain other information relating to any such interest pursuant to an Intergovernmental
Agreement between the United States and Canada (the “Canadian IGA”) and any applicable Canadian legislation or regulations
implementing the Canadian IGA. If the Trust fails to comply with these requirements, then a 30% withholding tax will be imposed
on payments to the Trust of U.S. source income and proceeds from the sale of property that could give rise to U.S. source interest
or dividends. The withholding tax provisions of FATCA became effective on July 1, 2014 with respect to income; and the withholding
provisions of FATCA applicable to proceeds from the sale of property that could give rise to U.S. source interest or dividends
have been delayed by temporary Treasury regulations and would be eliminated by proposed Treasury regulations.
Material
Canadian Federal Income Tax Considerations
The
following is, as of the date hereof, a general description of the principal Canadian federal income tax considerations generally
applicable under the Tax Act to the acquisition, holding and disposition of trust units by a unitholder. This description is generally
applicable to a unitholder who deals at arm’s length and is not affiliated with the Trust and holds trust units as capital
property. Trust units will generally be considered capital property to a unitholder unless the unitholder holds the trust units
in the course of carrying on a business of trading or dealing in securities or has acquired the trust units in a transaction or
transactions considered to be an adventure in the nature of trade. Certain Canadian-resident unitholders who might not otherwise
be considered to hold their trust units as capital property may be entitled to have their trust units (and every other “Canadian
security” owned by them in that taxation year or any subsequent taxation year) treated as capital property by making the
irrevocable election permitted by subsection 39(4) of the Tax Act. Such unitholders should consult their own tax advisors regarding
the availability and appropriateness of making this election having regard to their particular circumstances.
This
description is not applicable to a unitholder: (i) that is a “financial institution”, (ii) that is a “specified
financial institution”, (iii) that has elected to determine its “Canadian tax results” in accordance with the
“functional currency” rules in the Tax Act, (iv) an interest in which is a “tax shelter investment”, or
(v) who enters into a “derivative forward agreement” with respect to the trust units (as all such terms are defined
in the Tax Act). This description assumes that the Trust is not subject to a “loss restriction event”, as defined
in the Tax Act. In addition, this description does not address the deductibility of interest by a unitholder who has borrowed
to acquire trust units. All such unitholders should consult with their own tax advisors.
This
description is also based on the assumption (discussed below under “Material Tax Considerations – Material Canadian
Federal Income Tax Considerations – Canadian Taxation of the Trust - SIFT Trust Rules”) that the Trust will at no
time be a “SIFT trust” as defined in the Tax Act and that the Trust will qualify at all times as a “unit trust”
and a “mutual fund trust” within the meaning of the Tax Act. The Manager expects that the Trust will meet the requirements
necessary for it to qualify as a mutual fund trust at all times.
This
description is based on the current provisions of the Tax Act, the regulations thereunder, all specific proposals to amend the
Tax Act and the regulations publicly announced by the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”),
and an understanding of the current administrative and assessing policies of the CRA. There can be no assurance that the Tax Proposals
will be implemented in their current form or at all, nor can there be any assurance that the CRA will not change its administrative
or assessing practices. This description further assumes that the Trust will comply with the Trust Agreement and that the Manager
and the Trust will comply with a certificate issued to Canadian counsel regarding certain factual matters. Except for the Tax
Proposals, this description does not otherwise take into account or anticipate any change in the law, whether by legislative,
governmental or judicial decision or action, which may affect adversely any income tax consequences described herein, and does
not take into account provincial, territorial or foreign tax considerations, which may differ significantly from those described
herein.
This
description is not exhaustive of all possible Canadian federal tax considerations applicable to an investment in trust units.
Moreover, the income and other tax consequences of acquiring, holding or disposing of trust units will vary depending on a taxpayer’s
particular circumstances. Accordingly, this description is of a general nature only and is not intended to constitute legal or
tax advice to any unitholder or prospective purchaser of trust units. You should consult with your own tax advisors about tax
consequences of an investment in trust units based on your particular circumstances.
For
the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of trust units (including distributions,
adjusted cost base and proceeds of disposition), or transactions of the Trust, must be expressed in Canadian dollars. Amounts
denominated in United States dollars must be converted into Canadian dollars using the rate of exchange quoted by the Bank of
Canada on the day on which the amount first arose or such other rate of exchange as is acceptable to the CRA.
Qualification
as a Mutual Fund Trust
One
of the conditions to qualify as a mutual fund trust for the purposes of the Tax Act is that the Trust has not been established
or maintained primarily for the benefit of non-residents unless, at all times, all or substantially all of the Trust’s property
consists of property other than “taxable Canadian property” within the meaning of the Tax Act. Physical gold bullion
is not “taxable Canadian property”. Accordingly, based on the investment objectives and investment restrictions, the
Trust should not hold any such property.
In
addition, to qualify as a mutual fund trust: (i) the Trust must be a Canadian resident “unit trust” for purposes of
the Tax Act; (ii) the only undertaking of the Trust must be (a) the investing of its funds in property (other than real property
or interests in real property), or (b) the acquiring, holding, maintaining, improving, leasing or managing of any real property
(or interest in real property) that is capital property of the Trust, or (c) any combination of the activities described in (a)
and (b); and (iii) the Trust must comply with certain minimum requirements regarding the ownership and dispersal of trust units
(the “minimum distribution requirements”). In this regard, the Manager intends to cause the Trust to qualify as a
unit trust throughout the life of the Trust; that the Trust’s undertaking conforms with the restrictions for mutual fund
trusts; and that it has no reason to believe at the date hereof that the Trust will not comply with the minimum distribution requirements
at all material times.
If
the Trust were not to qualify as a mutual fund trust at all times, the income tax considerations described in this description
and under “Eligibility Under the Tax Act for Investment by Canadian Exempt Plans” would, in some respects, be materially
and adversely different.
Canadian
Taxation of the Trust
Each
taxation year of the Trust will end on December 31. In each taxation year, the Trust will be subject to tax under Part I of the
Tax Act on any income for the year, including net realized taxable capital gains, less the portion thereof that it deducts in
respect of the amounts paid or payable in the year to unitholders. An amount will be considered to be payable to a unitholder
in a taxation year if it is paid to the unitholder in the year by the Trust or if the unitholder is entitled in that year to enforce
payment of the amount. The Trust intends to deduct, in computing its income in each taxation year, such amount in each year as
will be sufficient to ensure that the Trust will generally not be liable for income tax under Part I of the Tax Act. The Trust
will be entitled for each taxation year to reduce (or receive a refund in respect of) its liability, if any, for tax on its capital
gains by an amount determined under the Tax Act based on the redemption of trust units during the year. Based on the foregoing,
the Trust will generally not be liable for income tax under Part I of the Tax Act.
Under
the currently enacted rules in the Tax Act, one-half of the amount of any capital gain (a “taxable capital gain”)
realized by the Trust in a taxation year must be included in computing the Trust’s income for the year, and one-half of
the amount of any capital loss (an “allowable capital loss”) realized by the Trust in a taxation year must be deducted
against any taxable capital gains realized by the Trust in the year. Any excess of allowable capital losses over taxable capital
gains for a taxation year may be carried back and deducted in any of the three preceding taxation years or carried forward and
deducted in any subsequent taxation year against net taxable capital gains realized by the Trust to the extent and under the circumstances
described in the Tax Act. Pursuant to Tax Proposals released on August 12, 2024 (the “Capital Gains Proposals”), subject
to certain transitional rules, the portion of a capital gain or capital loss included in the taxable capital gain or allowable
capital loss of the Trust is increased from one-half to two-thirds in respect of dispositions made by the Trust on or after June
25, 2024. The Capital Gains Proposals are discussed in more detail below under “Canadian Taxation of Unitholders - Unitholders
Resident in Canada”.
The
CRA has expressed the opinion that gains (or losses) of mutual fund trusts resulting from transactions in commodities should generally
be treated for purposes of the Tax Act as being derived from an adventure in the nature in trade, so that such transactions give
rise to ordinary income rather than capital gains – although the treatment in each particular case remains a question of
fact to be determined having regard to all the circumstances. In the view of Canadian counsel, the holding by the Trust of physical
gold bullion with no intention of disposing of such bullion except in specie on a redemption of trust units likely would
not represent an adventure in the nature of trade so that a disposition, on a redemption of trust units, of physical gold bullion
that previously had been acquired with such intention would likely give rise to a capital gain (or capital loss) to the Trust.
As the Manager intends for the Trust to be a long-term holder of physical gold bullion and does not anticipate that the Trust
will sell its physical gold bullion (otherwise than where necessary to fund expenses of the Trust), the Manager anticipates that
the Trust generally will treat gains (or losses) as a result of dispositions of physical gold bullion as capital gains (or capital
losses). If the CRA were to assess or reassess the Trust on the basis that gains realized on dispositions of physical gold bullion
were not on capital account, then the Trust could be required to pay Canadian income tax on such gains under Part I of the Tax
Act to the extent such gains were not distributed to unitholders, which could reduce the NAV for all unitholders.
The
Trust will also be required to include in its income for each taxation year all interest that accrues to it to the end of the
year, or becomes receivable or is received by it before the end of the year, except to the extent that such interest was included
in computing its income for a preceding taxation year. Upon the actual or deemed disposition of indebtedness, the Trust will be
required to include in computing its income for the year of disposition all interest that accrued on such indebtedness from the
last interest payment date to the date of disposition except to the extent such interest was included in computing the Trust’s
income for that or another taxation year, and such income inclusion will reduce the proceeds of disposition for purposes of computing
any capital gain or loss.
The
Trust is entitled to deduct in computing its income reasonable administrative and other operating expenses (other than certain
expenses on account of capital) incurred by it for the purposes of earning income (other than taxable capital gains). No assurance
can be provided that administration expenses of the Trust will not be considered to be on account of capital. The Trust generally
may also deduct from its income for the year a portion of the reasonable expenses incurred by it to issue trust units. The portion
of the issue expenses deductible by the Trust in a taxation year is 20% of the total issue expenses, pro rated where the Trust’s
taxation year is less than 365 days.
Losses
incurred by the Trust in a taxation year cannot be allocated to unitholders, but may be deducted by the Trust in future years
in accordance with the Tax Act.
SIFT
Trust Rules
The
Trust will be a “SIFT trust” as defined in the Tax Act for a taxation year of the Trust if in that year the trust
units are listed or traded on a stock exchange or other public market and the Trust holds one or more “non-portfolio properties,”
as defined in the Tax Act. If the Trust were a SIFT trust for a taxation year of the Trust, it would effectively be taxed similarly
to a corporation on income and capital gains in respect of such non-portfolio properties at a combined federal/provincial tax
rate comparable to rates that apply to income earned and distributed by Canadian corporations. Distributions of such income received
by unitholders would be treated as dividends from a taxable Canadian corporation.
Physical
gold bullion and other property of the Trust will be non-portfolio property if such property is used by the Trust (or by a person
or partnership with which it does not deal at arm’s length within the meaning of the Tax Act) in the course of carrying
on a business in Canada. In some circumstances, significant holdings of “securities” (the term “security”
is broadly defined in the Tax Act) of other entities could also be non-portfolio property.
The
Trust is subject to investment restrictions, including a prohibition against carrying on any business, that are intended to ensure
that it will not be a SIFT trust. The mere holding by the Trust of physical gold bullion as capital property (or as an adventure
in the nature of trade) would not represent the use of such property in carrying on a business in Canada and, therefore, would
not by itself cause the Trust to be a SIFT trust.
Canadian
Taxation of Unitholders
Unitholders
Resident in Canada
This
part of the general description of the principal Canadian federal income tax considerations is applicable to a unitholder who,
for the purposes of the Tax Act and any applicable tax treaty, is, or is deemed to be, resident in Canada at all relevant times
(a “Canadian unitholder”). This portion of the description is primarily directed at unitholders who are individuals.
Unitholders who are Canadian resident corporations, trusts or other entities should consult their own tax advisors regarding their
particular circumstances.
Canadian
unitholders will generally be required to include in their income for tax purposes for a particular year the portion of the income
of the Trust for that particular taxation year, including net realized taxable capital gains, if any, that is paid or payable
to the Canadian unitholder in the particular taxation year, whether such amount is received in additional trust units or cash.
Provided that appropriate designations are made by the Trust, such portion of its net taxable capital gains as is paid or payable
to a Canadian unitholder will effectively retain its character and be treated as such in the hands of the unitholder for purposes
of the Tax Act.
The
non-taxable portion of any net realized capital gains of the Trust that is paid or payable to a Canadian unitholder in a taxation
year will not be included in computing the Canadian unitholder’s income for the year. Any other amount in excess of the
income of the Trust that is paid or payable to a Canadian unitholder in such year also will not generally be included in the Canadian
unitholder’s income for the year. However, where such other amount is paid or payable to a Canadian unitholder (other than
as proceeds of disposition of trust units), the Canadian unitholder generally will be required to reduce the adjusted cost base
of a trust unit to the Canadian unitholder by such amount. To the extent that the adjusted cost base of a trust unit would otherwise
be less than zero, the negative amount will be deemed to be a capital gain realized by the Canadian unitholder from the disposition
of the trust unit and the Canadian unitholder’s adjusted cost base in respect of the trust unit will be increased by the
amount of such deemed capital gain to zero.
Upon
the actual or deemed disposition of a trust unit, including its redemption, a capital gain (or a capital loss) will generally
be realized to the extent that the proceeds of disposition of the trust unit exceed (or are exceeded by) the aggregate of the
adjusted cost base of the trust unit to the Canadian unitholder and any costs of disposition. For the purpose of determining the
adjusted cost base to a Canadian unitholder of a trust unit, when a trust unit is acquired, the cost of the newly acquired trust
unit will be averaged with the adjusted cost base of all trust units owned by the Canadian unitholder as capital property that
were acquired before that time. For this purpose, the cost of trust units that have been issued as an additional distribution
will generally be equal to the amount of the net income or capital gain distributed to the Canadian unitholder in trust units.
A consolidation of trust units following a distribution paid in the form of additional trust units will not be regarded as a disposition
of trust units and will not affect the aggregate adjusted cost base to a Canadian unitholder of trust units.
Under
the currently enacted rules in the Tax Act, one-half of capital gains (“taxable capital gains”) are included in an
individual’s income and one-half of capital losses (“allowable capital losses”) are generally deductible only
against taxable capital gains. Any unused allowable capital losses may be carried back up to three taxation years and forward
indefinitely and deducted against net taxable capital gains realized in any such other year to the extent and under the circumstances
described in the Tax Act. Capital gains realized by individuals may give rise to alternative minimum tax.
The
Capital Gains Proposals would increase a Canadian unitholder’s capital gains inclusion rate for a taxation year ending after
June 24, 2024 from one-half to two-thirds, subject to a transitional rule applicable for a Canadian unitholder’s 2024 taxation
year that would reduce the capital gains inclusion rate for that taxation year to, in effect, be one-half for net capital gains
realized before June 25, 2024. The Capital Gains Proposals also include provisions that would, generally, offset the increase
in the capital gains inclusion rate for up to Cdn$250,000 of capital gains realized by a Canadian unitholder that is an individual
(excluding certain types of trusts) in a year, calculated net of any capital losses incurred in the year (or the portion of the
year ending after June 24, 2024 in the case of the 2024 taxation year), and which are not offset by net capital losses from prior
years which are deducted against taxable capital gains in the year. If the Capital Gains Proposals are enacted as proposed, capital
losses realized prior to June 25, 2024 which are deductible against capital gains included in income for the 2024 or subsequent
taxation years will offset an equivalent capital gain regardless of the inclusion rate which applied at the time such capital
losses were realized.
Pursuant
to the Capital Gains Proposals, net capital gains of the Trust that are included in the Canadian unitholder’s income for
the year (and for which appropriate designations are made by the Trust) should benefit from the lower 50% capital gains inclusion
rate to the Canadian unitholder up to the Cdn$250,000 annual threshold discussed above. For the taxation year of the Trust that
begins before June 25, 2024 and ends after June 24, 2024, based on the Capital Gains Proposals, the amount designated to unitholders
in respect of the Trust’s net taxable capital gains will be grossed up (doubled for gains in the pre-June 25 period and
increased by 3/2 for gains in the post-June 24 period) and deemed to be capital gains realized by the Canadian unitholder in the
period that the Trust disposed of the relevant capital property (either pre-June 25 or post-June 24). The Trust will be required
to disclose to its unitholders in prescribed form the portion of the deemed capital gains that relates to dispositions of property
that occurred in each period. If the Trust does not disclose this information, the deemed capital gains would be deemed to have
been realized after June 24, 2024. The Trust also has the option of electing the deemed capital gains allocated to its unitholders
to have been realized by them proportionally within the two periods based on the number of days in each period divided by the
number of days in the Trust’s taxation year. Canadian unitholders should consult their own tax advisors having regard to
their own circumstances.
If,
at any time, the Trust delivers physical gold bullion to any Canadian unitholder upon a redemption of a Canadian unitholder’s
trust units, the Canadian unitholder’s proceeds of disposition of the trust units will generally be equal to the aggregate
of the fair market value of the distributed physical gold bullion and the amount of any cash received, less any capital gain or
income realized by the Trust on the disposition of such physical gold bullion and allocated to the Canadian unitholder. The cost
of any physical gold bullion distributed by the Trust in specie will generally be equal to the fair market value of such
physical gold bullion at the time of the distribution.
The
Manager anticipates that the Trust generally will treat gains as a result of dispositions of physical gold bullion as capital
gains (see above under “Material Tax Considerations – Material Canadian Federal Income Tax Considerations –
Canadian Taxation of the Trust”). When the Trust distributes physical gold bullion on the redemption of trust units by Canadian
unitholders, any resulting taxable capital gains of the Trust (to the extent that there are resulting net realized capital gains
of the Trust for the related taxation year) may be designated as taxable capital gains of such unitholders, subject to the rules
relating to the allocation of capital gains to redeeming unitholders discussed below.
A
trust that is a “mutual fund trust” for purposes of the Tax Act throughout a taxation year that paid or made payable
to a unitholder an amount on a redemption of units (the “allocated amount”) will be denied a deduction in computing
its income for the taxation year in respect of the portion of the allocated amount (a) that would be, without reference to subsection
104(6) of the Tax Act, an amount paid out of the income (other than taxable capital gains) of the trust, and (b) that is a capital
gain of the trust designated to a unitholder on a redemption of units that exceeds the capital gain that would otherwise have
been realized by the unitholder on the redemption, if the unitholder’s proceeds from the disposition of that unit do not
include the allocated amount. To the extent the Trust would be denied a deduction in respect of taxable capital gains that would
otherwise have been designated to redeeming unitholders, such taxable capital gains may be made payable to the remaining, non-redeeming
unitholders to ensure the Trust will not be liable for non-refundable income tax thereon. Accordingly, the amounts of taxable
distributions made to unitholders of the Trust may be greater than they would have been in the absence of such rules.
If
any transactions of the Trust are reported by it on capital account but are subsequently determined by the CRA to be on income
account, there may be an increase in the net income of the Trust for tax purposes and the taxable component of redemption proceeds
(or any other amounts) distributed to unitholders, with the result that Canadian unitholders could be reassessed by the CRA to
increase their taxable income by the amount of such increase.
Unitholders
Not Resident in Canada
This
portion of the description is applicable to a unitholder who, at all relevant times for purposes of the Tax Act, has not been
and is not resident in Canada or deemed to be resident in Canada and does not use or hold, and is not deemed to use or hold its
trust units in connection with a business that the unitholder carries on, or is deemed to carry on, in Canada at any time, and
is not an insurer or bank who carries on an insurance or banking business or is deemed to carry on an insurance or banking business
in Canada and elsewhere (a “Non-Canadian unitholder”). Prospective non-resident purchasers of trust units should consult
their own tax advisors to determine their entitlement to relief under any income tax treaty between Canada and their jurisdiction
of residence, based on their particular circumstances.
Any
amount paid or credited by the Trust to a Non-Canadian unitholder as income of or from the Trust, whether such amount is received
in additional trust units or cash (other than an amount that the Trust has designated in accordance with the Tax Act as a taxable
capital gain) generally will be subject to Canadian withholding tax at a rate of 25%, unless such rate is reduced under the provisions
of an income tax treaty between Canada and the Non-Canadian unitholder’s jurisdiction of residence. Pursuant to the Convention
Between Canada and the United States of America With Respect to Taxes on Income and on Capital, as amended (the “Treaty”),
a Non-Canadian unitholder who is a resident of the United States and entitled to benefits under the Treaty will generally be entitled
to have the rate of Canadian withholding tax reduced to 15% of the amount of any distribution that is paid or credited as income
of or from the Trust. A Non-Canadian unitholder that is a religious, scientific, literary, educational or charitable organization
that is resident in, and exempt from tax in, the United States may be exempt from Canadian withholding tax under the Treaty, provided
that certain administrative procedures are observed regarding the registration of such unitholder.
Any
amount paid or credited by the Trust to a Non-Canadian unitholder that the Trust has validly designated in accordance with the
Tax Act as a taxable capital gain, including such an amount paid on a redemption of trust units, generally will not be subject
to Canadian withholding tax or otherwise be subject to tax under the Tax Act.
The
Trust does not presently own any “taxable Canadian property” and does not intend to own any taxable Canadian property.
However, if the Trust realizes a capital gain on the disposition of a taxable Canadian property and that gain is treated under
the Tax Act and in accordance with a designation by the Trust as being distributed to a Non-Canadian unitholder, there may be
Canadian withholding tax at the rate of 25% (unless reduced by an applicable tax treaty) on both the taxable and non-taxable portions
of the gain. Pursuant to the Capital Gains Proposals, the Canadian withholding tax at the rate of 25% will increase to 35% for
dispositions occurring on or after January 1, 2025.
Any
amount in excess of the income of the Trust that is paid or payable by the Trust to a Non-Canadian unitholder (including the non-taxable
portion of capital gains realized by the Trust) generally will not be subject to Canadian withholding tax. Where such excess amount
is paid or becomes payable to a Non-Canadian unitholder, otherwise than as proceeds of disposition or deemed disposition of trust
units or any part thereof, the amount generally will reduce the adjusted cost base of the trust units held by such Non-Canadian
unitholder. (However, the non-taxable portion of net realized capital gains of the Trust that is paid or payable to a Non-Canadian
unitholder will not reduce the adjusted cost base of the trust units held by the Non-Canadian unitholder). If, as a result of
such reduction, the adjusted cost base to the Non-Canadian unitholder in any taxation year of trust units would otherwise be a
negative amount, the Non-Canadian unitholder will be deemed to realize a capital gain in such amount for that year from the disposition
of trust units. Such capital gain will not be subject to tax under the Tax Act, unless the trust units represent “taxable
Canadian property” to such Non-Canadian unitholder. The Non-Canadian unitholder’s adjusted cost base in respect of
trust units will, immediately after the realization of such capital gain, be zero.
A
disposition or deemed disposition of a trust unit by a Non-Canadian unitholder, whether on a redemption or otherwise, will not
give rise to any capital gain subject to tax under the Tax Act, provided that the trust unit does not constitute “taxable
Canadian property” of the Non-Canadian unitholder for purposes of the Tax Act. Trust units will not be “taxable Canadian
property” of a Non-Canadian unitholder unless at any time during the 60-month period immediately preceding their disposition
by such Non-Canadian unitholder, (i) 25% or more of the issued trust units were owned by or belonged to one or more of the Non-Canadian
unitholder, persons with whom the Non-Canadian unitholder did not deal at arm’s length and partnerships in which the Non-Canadian
unitholder or persons with whom the non-Canadian unitholder did not deal at arm’s length holds a membership interest directly
or indirectly through one or more partnerships; and (ii) the trust units derived directly or indirectly more than 50% of their
fair market value from any combination of “Canadian resource properties” (which definition in the Tax Act does not
include gold bullion), real or immovable property situated in Canada, “timber resource properties” (as defined in
the Tax Act) or options in respect of, or interests in, or for civil law rights in, such properties, whether or not such property
exists, or the trust units were otherwise deemed to be taxable Canadian property. Assuming that the Trust adheres to its mandate
to invest and hold substantially all of its assets in physical gold bullion, the trust units should not be taxable Canadian property.
Even
if trust units held by a Non-Canadian unitholder were “taxable Canadian property”, a capital gain from the disposition
of trust units may be exempted from tax under the Tax Act pursuant to an applicable income tax treaty or convention. A capital
gain realized on the disposition of trust units by a Non-Canadian unitholder entitled to benefits under the Treaty (and who is
not a former resident of Canada for purposes of the Treaty) should be exempt from tax under the Tax Act.
Non-Canadian
unitholders whose trust units constitute “taxable Canadian property” and who are not entitled to relief under an applicable
income tax treaty are referred to the discussion above under “Material Tax Considerations - Material Canadian Federal Income
Tax Considerations - Canadian Taxation of Unitholders - Unitholders Resident in Canada” relating to the Canadian tax consequences
in respect of a disposition of a trust unit.
The
Manager anticipates that the Trust generally will treat gains as a result of dispositions of physical gold bullion as capital
gains (see above under “Material Tax Considerations - Material Canadian Federal Income Tax Considerations - Canadian Taxation
of the Trust”) and that it anticipates that when the Trust distributes physical gold bullion on the redemption of trust
units by Non-Canadian unitholders, any resulting taxable capital gains of the Trust (to the extent that there are resulting net
realized capital gains of the Trust for the related taxation year) for which the Trust is not entitled to a capital gains refund,
as described under “Material Tax Considerations - Material Canadian Federal Income Tax Considerations - Canadian Taxation
of the Trust” generally will be designated as taxable capital gains of such unitholders, subject to the rules relating to
the allocation of capital gains to redeeming unitholders discussed above. If such treatment is accepted by the CRA, there will
be no Canadian withholding tax applicable to such distributions, and Non-Canadian unitholders will not be subject to tax under
the Tax Act on amounts so designated. However, if the CRA were to consider that such gains instead were gains from an adventure
in the nature of trade, the distribution of such gains generally would be subject to Canadian withholding tax, as discussed above.
Similarly, if the Trust disposed of physical gold bullion (or other assets) at a gain and designated the relevant portion of that
gain as a taxable capital gain of a Non-Canadian unitholder who had redeemed trust units for cash, the full amount of such gain
generally would be subject to Canadian withholding tax if the CRA were to treat such gain as being from an adventure in the nature
of trade rather than as a capital gain.
In
addition to the foregoing, if the CRA were to assess or reassess the Trust itself on the basis that gains were not on capital
account, then the Trust could be required to pay Canadian income tax on such gains under Part I of the Tax Act, which could reduce
the NAV for all unitholders, including Non-Canadian unitholders.
International
Information Reporting
Generally,
investors will be required to provide their dealer with information related to their tax residency or citizenship and, if applicable,
a foreign tax identification number. If an investor does not provide the information or is identified as a U.S. citizen or a foreign
(including U.S.) tax resident, additional details about the investor and their investment in the Trust will be reported to the
CRA, unless the investment is held within a Registered Plan (as defined below). The CRA will provide that information to the U.S.
Internal Revenue Service (in the case of U.S. tax residents or citizens) or the relevant tax authority of any country that is
a signatory of the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information or that has
otherwise agreed to a bilateral information exchange with Canada.
Taxation
of Registered Plans
Provided
that either (i) the Trust qualifies as a “mutual fund trust” within the meaning of the Tax Act or (ii) the trust units
are listed on a “designated stock exchange” (which currently includes the TSX and the NYSE Arca) for purposes of the
Tax Act, the trust units, if issued on the date hereof, will be qualified investments under the Tax Act and the regulations thereunder
for deferred profit sharing plans, tax-free savings accounts (“TFSAs”), registered disability savings plans (“RDSPs”),
registered education savings plans (“RESPs”), first home savings accounts (“FHSAs”), RRSPs and registered
retirement income funds (“RRIFs”) collectively (“Registered Plans”).
Notwithstanding
that the trust units may be qualified investments for RRSPs, RRIFs, RESPs, RDSPs, FHSAs and TFSAs, the subscriber of a RESP, the
holder of a RDSP, FHSA or TFSA, or the annuitant under a RRSP or RRIF, as the case may be, will be subject to penalty taxes in
respect of the trust units if such properties are a “prohibited investment” (as defined in the Tax Act) for the RESP,
RDSP, FHSA, TFSA, RRSP or RRIF, as applicable. Trust units will not generally be a prohibited investment provided that the subscriber,
holder or annuitant, as applicable, deals at arm’s length with the Trust for purposes of the Tax Act and does not have a
“significant interest” (within the meaning of the Tax Act) in the Trust. Generally, a subscriber, holder or annuitant,
as the case may be, will not have a “significant interest” in the Trust unless the subscriber, holder, or annuitant,
as the case may be, owns interests as a beneficiary under the Trust that have a fair market value of 10% or more of the fair market
value of the interests of all beneficiaries under the Trust, either alone or together with persons and partnerships with which
the subscriber, holder or annuitant, as the case may be, does not deal at arm’s length. In addition, the trust units will
not be a “prohibited investment” if such units are “excluded property” as defined in the Tax Act for a
trust governed by a RESP, RDSP, FHSA, TFSA, RRSP or RRIF.
Amounts
of income and capital gains included in a Registered Plan’s income are generally not taxable under Part I of the Tax Act,
provided that the trust units are qualified investments for the Registered Plan. Unitholders should consult their own advisors
regarding the tax implications of establishing, amending, terminating or withdrawing amounts from a Registered Plan.
U.S.
ERISA CONSIDERATIONS
The
following disclosure is a summary of certain aspects of laws and regulations applicable to retirement plan investments as in existence
on the date hereof, all of which are subject to change. This summary is general in nature and does not address every issue that
may be applicable to the trust units or a particular investor.
The
U.S. Employee Retirement Income Security Act of 1974, as amended, (“ERISA”), imposes certain requirements on employee
benefit plans subject to Title I of ERISA and on entities that are deemed to hold the assets of such plans (collectively, “ERISA
Plans”), and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to
ERISA’s general fiduciary requirements, including, but not limited to, the requirement of investment prudence and diversification
and the requirement that an ERISA Plan’s investments be made in accordance with the documents governing the ERISA Plan.
Section
406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan as well as those
plans and accounts that are not subject to ERISA but which are subject to Section 4975 of the Code, such as individual retirement
accounts, and entities that are deemed to hold the assets of such plans and accounts (together with ERISA Plans, the “Plans”)
and certain persons (“parties in interest” or “disqualified persons”) having certain relationships to
such Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified
person who engages in a prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA
and the Code.
Any
Plan fiduciary that proposes to cause a Plan to purchase the trust units should consult with his, her or its counsel regarding
the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code
to such an investment, and to confirm that such purchase will not constitute or result in a non-exempt prohibited transaction
or any other violation of an applicable requirement of ERISA or the Code.
Non-US.
plans, governmental plans (as defined in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA),
while not subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of ERISA and Section
4975 of the Code, may nevertheless be subject to other federal, state, local or non-US. laws or regulations that are substantially
similar to the foregoing provisions of ERISA and the Code (“Similar Law”). Fiduciaries of any such plans should consult
with their counsel before purchasing the trust units to determine the need for, if necessary, and the availability of, any exemptive
relief under any Similar Law.
Under
ERISA and the U.S. Department of Labor’s “Plan Asset Regulations” at 29 C.F.R. §2510.3-101, as modified
by Section 3(42) of ERISA, when a Plan acquires an equity interest in an entity that is neither a “publicly-offered security”
nor a security issued by an investment company registered under the Investment Company Act of 1940, as amended, the Plan’s
assets include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is
established that either less than 25 percent of the total value of each class of equity interests in the entity is held by “benefit
plan investors” (as defined in Section 3(42) of ERISA), which we refer to as the “25 percent test”, or the entity
is an “operating company”, as defined in the Plan Asset Regulations. In order to be considered a “publicly offered
security,” the trust units must be (i) freely transferable, (ii) part of a class of securities that is owned by l00 or more
investors independent of the Trust and of one another, and (iii) either (1) part of a class of securities registered under Section
12(b) or 12(g) of the Exchange Act or (2) sold to the Plan as part of an offering of securities to the public pursuant to an effective
registration statement under the Securities Act, and the class of securities of which the securities are a part is registered
under the Exchange Act within 120 days (or such later time as may be allowed by the SEC) after the end of the Trust’s fiscal
year during which the offering of such securities to the public occurred. It is anticipated that the Trust will not qualify as
an “operating company”, and the Trust does not intend to monitor investment by benefit plan investors in the Trust
for purposes of satisfying the 25 percent test. The Trust anticipates, however, that it will qualify for the exemption under the
Plan Asset Regulations for “publicly offered securities”, although there can be no assurance in that regard.
ELIGIBILITY
UNDER THE TAX ACT FOR INVESTMENT BY CANADIAN EXEMPT PLANS
In
the opinion of Stikeman Elliott LLP, counsel for the Trust, provided that either: (i) the Trust qualifies as a “mutual fund
trust” within the meaning of the Tax Act; or (ii) the trust units are listed on a “designated stock exchange”
for purposes of the Tax Act, the trust units, if issued on the date hereof, will be qualified investments under the Tax Act and
the regulations thereunder for RRSPs, RRIFs, deferred profit sharing plans, RDSPs, FHSAs, RESPs and TFSAs.
Notwithstanding
that the trust units may be qualified investments for RESPs, RDSPs, FHSAs, TFSAs, RRSPs and RRIFs, the subscriber of a RESP, the
holder of a RDSP, FHSA or TFSA, as the case may be, or the annuitant under an RRSP or RRIF, as the case may be, will be subject
to penalty taxes in respect of the trust units if such properties are a “prohibited investment” for the RESP, RDSP,
FHSA, TFSA, RRSP or RRIF, as applicable. Trust units will not generally be a prohibited investment provided that the subscriber,
holder or annuitant, as applicable, deals at arm’s length with the Trust for purposes of the Tax Act and does not have a
“significant interest” in the Trust. Generally, a subscriber, holder or annuitant, as the case may be, will not have
a “significant interest” in the Trust unless the subscriber, holder, or annuitant, as the case may be, owns interests
as a beneficiary under the Trust that have a fair market value of 10% or more of the fair market value of the interests of all
beneficiaries under the Trust, either alone or together with persons and partnerships with which the subscriber, holder or annuitant,
as the case may be, does not deal at arm’s length, In addition, the trust units will not be a “prohibited investment”
if such units are “excluded property” as defined in the Tax Act for a trust governed by a RESP, RDSP, FHSA, TFSA,
RRSP or RRIF.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
Annual Financial Statements, incorporated in this prospectus by reference, have been audited by KPMG LLP, Chartered Professional
Accountants, Licensed Public Accountants, as stated in their report, which is incorporated herein by reference. KPMG LLP has confirmed
that they are independent with respect to the Trust within the meaning of the relevant rules and related interpretations prescribed
by the relevant professional bodies in Canada and any applicable legislation or regulation, and that they are independent accountants
with respect to the Trust under all relevant U.S. professional and regulatory standards for the period under audit in respect
of the Trust’s financial year ended December 31, 2023.
LEGAL
MATTERS
Certain
legal matters relating to the trust units offered by this prospectus will be passed upon for us by Stikeman Elliott LLP, Toronto,
Ontario, Canada with respect to matters of Canadian law, and Seward & Kissel LLP, New York, New York with respect to matters
of United States law. As of the date hereof, the “designated professionals” (as such term is defined in Form 51-102F2
– Annual Information Form) of Stikeman Elliott LLP beneficially own, directly or indirectly, less than 1% of any
class of trust units issued by the Trust.
DOCUMENTS
FILED AS PART OF THE REGISTRATION STATEMENT
The
following documents have been filed or will be filed with the SEC as part of the registration statement of which this prospectus
forms a part: the documents listed under “Documents Incorporated by Reference”; consents of accountants and counsel;
and powers of attorney.
EXEMPTIONS
AND APPROVALS
The
Trust has obtained exemptive relief from the Canadian securities regulatory authorities for relief from NI 81- 102 to permit (i)
the Trust to invest up to 100% of its assets, taken at market value at the time of purchase, in physical gold bullion; (ii) the
appointment of the Mint as custodian of the Trust’s physical gold bullion assets; (iii) purchases of trust units on NYSE
Arca and the TSX and redemption requests to be submitted directly to the registrar and transfer agent of the Trust; (iv) the redemption
of trust units and payment upon redemption of trust units all as described under “Sprott Physical Gold Trust - Business
of the Trust - Redemption of Trust Units for Physical Gold Bullion” and “Sprott Physical Gold Trust - Business of
the Trust - Redemption of Trust Units for Cash”; and (v) the Trust to establish a record date for distributions in accordance
with the policies of the TSX and NYSE Arca. The Trust has also obtained exemptive relief from the requirement to file compliance
reports or audit reports in accordance with Appendix B-1 of NI 81-102.
Pursuant
to a decision of the Autorité des marchés financiers dated August 30, 2024, the Trust was granted a permanent exemption
from the requirement to translate into French this prospectus as well as the documents incorporated by reference therein and any
prospectus supplement to be filed in relation to an “at-the-market” distribution. This exemption is granted on the
condition that this prospectus and any prospectus supplement (other than in relation to an “at-the-market” distribution)
be translated into French if the Trust offers securities to Québec purchasers in connection with an offering other than
in relation to an “at-the-market” distribution.
PART
II
INFORMATION
NOT REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
Indemnification
of Directors and Officers.
The
Business Corporations Act (Ontario) provides that a corporation may indemnify a director or officer of the corporation,
a former director or officer of the corporation or another individual who acts or acted at the corporation’s request as a director
or officer, or an individual acting in a similar capacity, of another entity (each of the foregoing, an “individual”),
against all costs, charges and expenses reasonably incurred by the individual in respect of any civil, criminal, administrative,
investigative or other proceeding in which the individual is involved because of that association with the corporation or other
entity. A corporation shall not indemnify such an individual unless the individual acted honestly and in good faith with a view
to the best interests of the corporation or, as the case may be, to the best interests of the other entity for which the individual
acted as a director or officer or in a similar capacity at the corporation’s request. In addition to the conditions set out above,
the Business Corporations Act (Ontario) provides that, in the case of a criminal or administrative action or proceeding
that is enforced by monetary penalty, the corporation shall not indemnify an individual described above unless the director or
officer had reasonable grounds for believing that his or her conduct was lawful. Where an individual has met the conditions set
out under (a) and (b) above and was not judged by the court or other competent authority in such a proceeding to have
committed any fault or omitted to do anything that the individual ought to have done, such individual is entitled to indemnification
from the corporation for such costs, charges and expenses which were reasonably incurred.
Both
the trust agreement and the management agreement provide that the Trust will indemnify and hold harmless the Manager and its partners,
officers, agents and employees from and against any and all expenses, losses, damages, liabilities, demands, charges, costs and
claims of any kind or nature whatsoever (including legal fees, judgments and amounts paid in settlement, provided that the Trust
has approved such settlement in accordance with the trust agreement) in respect of the acts, omissions, transactions, duties,
obligations or responsibilities of the Manager as manager to the Trust, except where such expenses, losses, damages, liabilities,
demands, charges, costs or claims are caused by acts or omissions of the Manager done or suffered in breach of its standard of
care or through the Manager’s own negligence, willful misconduct, willful neglect, default, bad faith or dishonesty or a material
failure in complying with applicable Canadian laws or the provisions set forth in the management agreement or the trust agreement.
The
Trust does not carry any insurance to cover such potential obligations and, to the Manager’s knowledge, none of the foregoing
parties are insured for losses for which the Trust has agreed to indemnify them.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Trust pursuant to the foregoing provisions, the Trust has been informed that in the opinion of the U.S. Securities
and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
EXHIBITS
| |
|
|
|
Exhibit
Number |
|
Description
|
| |
4.1 |
|
Annual information form of the Trust for the
fiscal year ended December 31, 2023, dated March 25, 2024 (incorporated by reference to the Trust’s Annual Report on Form
40-F for the fiscal year ended December 31, 2023, filed with the Commission on March 25, 2024). |
| |
4.2 |
|
Audited comparative
financial statements of the Trust and the notes thereto for the financial year ended December 31, 2023, together with the
report of the Independent Registered Public Accounting Firm thereon (incorporated by reference to the Trust’s Annual Report on Form 40-F for the fiscal year ended
December 31, 2023, filed with the Commission on March 25, 2024). |
| |
4.3 |
|
Management’s discussion
and analysis of the financial condition and results of operations of the Trust for the fiscal year ended December 31, 2023
(incorporated by reference to the Trust’s Annual Report on Form 40-F for the fiscal year ended December 31, 2023, filed with
the Commission on March 25, 2024) and management's discussion and analysis of the financial condition and results of operations of the Trust for the three and six month
periods ended June 30, 2024 and 2023, respectively (incorporated by reference to Exhibit 99.1 of the Trust's Form 6-K filed with the Commission
on August 16, 2024). |
| |
4.4 |
|
Unaudited interim statement of financial position of the Trust as at June 30, 2024 and the unaudited interim statements of comprehensive income (loss), changes in equity and cash flows for the three and six month periods ended June 30, 2024 and 2023, respectively (incorporated by reference to Exhibit 99.1 of the Trust’s Form 6-K, filed with the Commission on August 16, 2024). |
| |
5.1 |
|
Consent of KPMG LLP. |
| |
5.2 |
|
Consent of Stikeman Elliot LLP. |
| |
5.3 |
|
Consent of Seward & Kissel LLP. |
| |
5.4 |
|
Powers of Attorney (included on signature page hereto). |
| |
107 |
|
Calculation of Filing Fee Table |
PART
III
UNDERTAKING
AND CONSENT TO SERVICE OF PROCESS
Item 1. Undertaking.
The
Trust undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission
staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities registered
pursuant to this Form F-10 or to transactions in said securities.
Item 2. Consent
to Service of Process.
| (a) | Concurrent
with the filing of this Registration Statement on Form F-10, dated September 6,
2024, the Trust filed with the Commission a written irrevocable consent and power of
attorney on Form F-X. |
| (b) | Concurrent
with the filing of this Registration Statement on Form F-10, dated September 6,
2024, the Trustee filed with the Commission a written irrevocable consent and power of
attorney on Form F-X. |
| (c) | Any
change to the name or address of the agent for service of the Trust or the Trustee shall
be communicated promptly to the Commission by amendment to Form F-X referencing
the file number of the relevant registration statement. |
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Trust certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form F-10 and has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Province of Ontario, Canada, on September 6, 2024.
| |
|
SPROTT PHYSICAL GOLD TRUST
By Sprott Asset Management LP, as manager of the Trust |
| |
|
|
| |
|
By: |
|
/s/ JOHN CIAMPAGLIA |
| |
|
|
|
Name: |
|
John Ciampaglia |
| |
|
|
|
Title: |
|
Chief Executive Officer |
KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Anthony Tu-Sekine and Joseph
Nardello, or any of them, with full power to act alone, his or her true lawful attorneys-in-fact and agents, with full powers
of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign
any or all amendments or supplements to this registration statement, whether pre-effective or post-effective, and to file the
same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing necessary to be
done, as fully for all intents and purposes as he or she might or could do in person hereby ratifying and confirming all that
said attorneys-in-fact and agents, or his or her substitute, may lawfully do or cause to be done by virtue hereof.
This
Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original, but which taken together
shall constitute one instrument.
Pursuant
to the requirements of the Securities Act, this registration statement has been signed below by or on behalf of the following
persons in the capacities indicated on September 6, 2024.
| |
|
|
| Signature
|
|
Title
|
| |
|
|
Sprott Asset Management LP,
Manager of the Trust
|
|
|
| /s/ JOHN CIAMPAGLIA |
|
Chief Executive Officer
and Director* (Principal Executive Officer) |
|
|
|
| John Ciampaglia |
|
|
| |
|
|
| /s/ VARINDER
BHATHAL |
|
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer) |
|
|
|
| Varinder Bhathal |
|
|
|
|
|
| /s/ KEVIN HIBBERT |
|
Director* |
|
|
|
| Kevin Hibbert |
|
|
| |
|
|
| /s/ WHITNEY
GEORGE |
|
Director* |
|
|
|
| Whitney George |
|
|
* Director
of Sprott Asset Management GP Inc., general partner of the Manager of the Trust
AUTHORIZED
REPRESENTATIVE
Pursuant
to the requirements of Section 6(a) of the Securities Act of 1933 the Authorized Representative has duly caused this registration
statement to be signed on its behalf by the undersigned, solely in its capacity as the duly authorized representative of the Trust
in the United States, in the City of Newark, State of Delaware, September 6, 2024.
| |
|
|
|
| |
PUGLISI & ASSOCIATES
(Authorized Representative) |
| |
|
| |
By: |
/s/ DONALD J. PUGLISI |
| |
|
Name: |
Donald J. Puglisi |
| |
|
Title: |
Managing Director |
SPROTT PHYSICAL GOLD TRUST F-10
Exhibit
5.1
kpmg
LLP
Bay Adelaide Centre
333 Bay Street, Suite
4600
Toronto, ON M5H 2S5
Canada
Tel 416-777-8500
Fax 416-777-8818
Consent
of Independent Registered Public Accounting Firm
To Sprott Asset Management
LP, Manager of Sprott Physical Gold Trust
We KPMG LLP, consent
to the use of our report dated March 25, 2024, on the financial statements of Sprott Physical Gold Trust, which comprise
the statements of financial position as of December 31, 2023 and 2022, the related statements of comprehensive income (loss),
changes in equity, and cash flows for each of the years ended December 31, 2023 and 2022, and the related notes, and our report
dated March 25, 2024 on the effectiveness of internal control over financial reporting as of December 31, 2023.
/s/ KPMG LLP
Chartered Professional
Accountants, Licensed Public Accountants
September 6, 2024
Toronto, Canada
SPROTT PHYSICAL GOLD TRUST F-10
Exhibit 5.2
STIKEMAN ELLIOT LLP
September 6, 2024
We
hereby consent to the use of our name in the Registration Statement on Form F-10 filed by Sprott Physical Gold Trust on September
6, 2024, as such may thereafter be amended or supplemented, and in the base prospectus contained therein, on the cover page and
under the caption “Eligibility Under the Tax Act for Investment by Canadian Exempt Plans” and “Legal Matters”.
In giving such consent we do not thereby admit that we are in the category of persons whose consent is required under Section 7
of the United States Securities Act 1933, as amended.
| |
/s/ STIKEMAN ELLIOT |
|
|
| |
Stikeman
Elliot LLP
|
SPROTT PHYSICAL GOLD TRUST F-10
Exhibit 5.3
SEWARD & KISSEL LLP
901 K STREET, N.W., SUITE 800
WASHINGTON, D.C. 20001
TELEPHONE: (202) 737-8833
FACSIMILE: (202) 737-5184
WWW.SEWKIS.COM |
ONE BATTERY PARK PLAZA
NEW YORK, NEW YORK 10004
TELEPHONE: (212) 574-1200
FACSIMILE: (212) 480-8421 |
We
hereby consent to the use of our name in the Registration Statement on Form F-10 filed by Sprott Physical Gold Trust (the “Trust”)
on September 6, 2024, as such may thereafter be amended or supplemented, and in the base prospectus contained therein, under the
caption “Legal Matters”, without admitting we are “experts” within the meaning of the Securities Act of 1933,
as amended, or the rules and regulations of the U.S. Securities and Exchange Commission thereunder with respect to any part
of the Registration Statement.
Washington, D.C.
September 6, 2024
| |
Very truly yours, |
| |
|
| |
/s/ SEWARD & KISSEL LLP |
|
|
| |
Seward & Kissel LLP
|
SPROTT PHYSICAL GOLD TRUST F-10
Exhibit 107
Calculation of Filing Fee Tables
F-10
(Form
Type)
Sprott Physical Gold Trust
(Exact
Name of Registrant as Specified in its Charter)
Table
1: Newly Registered Securities
| |
Security Type |
Security
Class
Title |
Fee
Calculation
Rule or
Instruction |
Amount
Registered |
Proposed
Maximum
Offering
Price Per
Unit |
Maximum
Aggregate
Offering
Price |
Fee Rate |
Amount of
Registration
Fee |
|
Fees to Be
Paid |
Unallocated (Universal) Shelf |
Units |
457(o) |
(1) |
(1) |
$2,000,000,000(2) |
$0.00014760 |
$295,200 |
Fees
Previously
Paid |
— |
— |
— |
— |
— |
— |
— |
— |
| |
Total Offering Amounts |
|
$2,000,000,000 |
|
$295,200 |
| |
Total Fees Previously Paid |
|
|
|
$0 |
| |
Total Fee Offsets |
|
|
|
$127,465 |
| |
Net Fee Due |
|
|
|
$167,735 |
(1) Such
amount in U.S. dollars or the equivalent thereof in foreign currencies as shall result in an aggregate public offering price of
$2,000,000,000 for all units sold by Sprott Physical Gold Trust (the “Registrant”) pursuant to this registration
statement.
(2) Estimated solely for the purpose of calculating the amount
of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. In no event will the aggregate offering
price of all units sold by the Registrant pursuant to this registration statement exceed $2,000,000,000.
Table 2: Fee Offset Claims and Sources
| |
Registrant
or
Filer
Name |
Form
or Filing Type |
File
Number |
Initial
Filing Date |
Filing
Date |
Fee
Offset Claimed |
Security
Type
Associated
with
Fee
Offset
Claimed |
Security
Title
Associated
with Fee
Offset
Claimed |
Unsold
Securities
Associated
with Fee
Offset
Claimed |
Unsold
Aggregate
Offering
Amount
Associated
with Fee
Offset
Claimed |
Fee
Paid
with Fee
Offset
Source |
| Rule
457(p) |
| Fee
Offset Claims |
Sprott
Physical Gold Trust |
F-10 |
333-266758 |
08/11/2022 |
|
$127,465(1) |
Unallocated
(Universal) Shelf |
Units |
Units |
$1,375,027,885(2) |
|
| Fee
Offset Sources |
Sprott
Physical Gold Trust |
F-10 |
333-266758 |
|
08/11/2022 |
|
|
|
|
|
$144,804(1) |
| (1) | The Registrant previously paid $185,400 in registration fees (Registrant transferred
funds of $144,804 and used available offsets to cover the remaining portion of the fee) with respect to the Registration Statement
on Form F-10 (File No. 333-266758) filed on August 11, 2022 (the “2022 Registration Statement”), pertaining to
the registration of $2,000,000,000 of securities of the Registrant, $127,465 of the registration fees remained unutilized. As the
total filing fee required for this Registration Statement is $295,200, taking into consideration the available offset of $127,465
from the 2022 Registration Statement, the amount paid herewith is $167,735. |
| (2) | The registrant has terminated or completed any offering that included the unsold securities under the 2022 Registration Statement. |
Sprott Physical Gold (AMEX:PHYS)
과거 데이터 주식 차트
부터 10월(10) 2024 으로 11월(11) 2024
Sprott Physical Gold (AMEX:PHYS)
과거 데이터 주식 차트
부터 11월(11) 2023 으로 11월(11) 2024
