Sprott Physical Silver Trust Announces Secondary Offering

As I explained previously:

Toronto, Ontario, CanadaJanuary 17, 2012Sprott Physical Silver Trust(the “Trust”) (NYSE: PSLV / TSX: PHS.U), a trust created to invest and hold substantially all of its assets in physical silver bullion and managed by Sprott Asset Management LP, announced today that it has launched afollow-on offering (the “Offering”) of transferable, redeemable units of the Trust (“Units”).

The Trust will use the net proceeds of the Offering to acquire physical silver bullion in accordance with the Trust’s objective and subject to the Trust’s investment and operating restrictions described in the prospectus related to the Offering.  Under the trust agreement governing the Trust, the net proceeds of the Offering per Unit must be not less than 100% of the most recently calculated net asset value per Unit of the Trust prior to, or upon determination of, pricing of the Offering.

The Units are listed on the NYSE Arca and the Toronto Stock Exchange under the symbols “PSLV” and “PHS.U”, respectively. The Offering will be made simultaneously in the United States and Canada by underwriters led by Morgan Stanley and RBC Capital Markets in the United States and RBC Capital Markets and Morgan Stanley in Canada.”

Although the information is not in the SEC filing, I’m told that the offering is $250 MM, with a 15% green shoe over-allotment option.  The offering should price tomorrow morning before the open.

Remember a few months ago when the Silver Blog Mafia went crazy about $PSLV ‘s $1.5 B shelf filing, thinking that it meant that Sprott was going to go buy a billion and a half bucks worth of silver and serve the imperialist bankster scumbags their heads on a platter?  Remember what I wrote at the time?

” In reality, he’ll be more likely to do smaller offerings – I would guess something in the range of perhaps $250 MM – and then maybe another slug a few months after that if the premium to NAV doesn’t get whacked too hard.”



“Will it be bullish for silver if PSLV does any secondary offering (which results in the purchase of silver bullion)?  Of course.  I told you that four months ago – I wrote a whole post about it.   It will also be bearish for PSLV’s premium to NAV:  more shares require more “investors” who believe the hype and fear and want to pay a huge premium.  Might PSLV buy $1.5B in silver over a multi-year time frame?  Absolutely.  But if you’re expecting a $1.5B lump offering and the subsequent crashing of the COMEX, you’re going to be sorely disappointed.

We’ll await the pricing details to see what sort of premium to NAV this secondary is priced at, and we’ll have to see what effect it will have on the ongoing premium as more shares come to market.   As I type this, $PSLV shares are trading down about 7% after hours, at $13.51, which is still a 16% premium to NAV.


Nov 22nd: PSLV will not go out and buy $1.5 B in silver imminently

Nov 16th: Sprott Physical Silver Trust Files Shelf

Oct 12th: Sprott Sells 1MM PSLV

Sep 30th: Sprott sells 1.5MM PSLV – The last of the hedge fund shares

Sep 19th: Sprott sells 1.754MM PSLV

Sep 12th: Sprott sells 1.827MM PSLV

Aug 26th: Sprott sells 1.6MM PSLV

Aug 11th: Sprott sells 565k PSLV

Aug 2nd: Sprott sells 700k PSLV

July 23rd: Sprott sells 1MM+ PSLV

July 14th: Sprott sells 700k+ PSLV

April 28th: Sprott sells 1.6MM PSLV

March 12th: Sprott files to sell his PSLV shares

March 8th: “Misinterpreting PSLV’s Premium to NAV

July 18th: “Ask Eric Sprott Why He Won’t Buy More Silver for PSLV


disclosure: I am long $SLV.  I have no position in $PSLV


ps – here’s an example of a comment thread exchange I actually bothered to post on a blog post titled, I kid you not, “Holy Jeepers, Sprott to Buy $1.5 B Silver Bullion.”  I don’t know how else to explain it to you, silverbugs – if you continue to listen to people who don’t know what they are talking about, you’ll continue to get bad information and get misled.    Wanting something to happen doesn’t mean that it will happen.

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