Sprott Announces $230 Million Follow-On for PSLV

Wondering why silver suddenly just popped $1.00?
Sprott Asset Management has just announced a $200-$230 million follow-on offering for the PSLV.
As Sprott will once again be draining all available physical supply from the market to complete the placement, it is safe to say we have likely seen a bottom in silver.

 

TORONTO, July 12, 2012 /CNW/ – Sprott 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 priced its follow-on offering of 18,100,000 transferable, redeemable units of the Trust (“Units”) at a price of US$11.05 per Unit (the “Offering”). As part of the Offering, the Trust has granted the underwriters an over-allotment option to purchase up to 2,715,000 additional Units. The gross proceeds from the Offering will be US$200,005,000 (US$230,005,750 if the underwriters exercise in full the over-allotment option).

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 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.

Copies of the U.S. prospectus related to the Offering may be obtained by contacting Morgan Stanley & Co. LLC, 180 Varick Street, 2nd Floor, New York, New York 10014 Attention: Prospectus Department (telephone 866-718-1649 (toll free) or 917-606-8474) or by e-mailing prospectus@morganstanley.com, or RBC Capital Markets, LLC, Attention: Prospectus Department, Three World Financial Center, 200 Vesey Street, 8th floor, New York, New York 10281-8098 (telephone: 212-428-6670, fax: 212-428-6260). Copies of the Canadian prospectus related to this Offering may be obtained by contacting RBC Capital Markets, Attention: Distribution Centre, 277 Front St. W., 5th Floor, Toronto, Ontario M5V 2X4 (fax: 416-313-6066) or Morgan Stanley & Co. LLC 180 Varick Street, 2nd Floor, New York, New York 10014 Attention: Prospectus Department (telephone 866-718-1649 (toll free) or 917-606-8474) or by e-mailing prospectus@morganstanley.com. The Offering in Canada is only being made by the Canadian prospectus, which includes important detailed information about the Units being offered.

This news release does not constitute an offer to sell or a solicitation of an offer to buy the Units, nor shall there be any sale of the Units in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Investor Contact Information:
Sprott Physical Silver Trust
(416) 203-2310 or Toll Free: 1 (877) 403-2310
Email: bullion@sprott.com

Canada Newswire
July 12, 2012 – 10:01 AM EDT

Comments

  1. Wowzers now thats interesting………looks like phizzz is really going to get scarce…..

  2. Good Humor!   You have to love Erik Sprott!

  3. Avatar of Got Goldies says:

    I don’t trust anything anymore. Especially after some if the blog entries doc has put up here. Remember the one about how ”the euro has crashed”.? 

    I just continue to trade frn’s for silver every week or so no matter what the price.  My coin dealer yesterday stated he is selling silver at spot and can get any quantity anyone would want, incuding bos. He also say’s silver eventually go parrobolic, and i agree. But we could see further declines.

    And this….”it is safe to say we have likely seen a bottom in silver.”

     Doc has called a bottom. We’ll see how that goes….:/

  4. Mr. Sprott knows how to buy the dip. I’ve been wondering why he hadn’t made a move. A couple years ago he picked up the phyzz for about $26.85, (I think it was) and that’s about where it was drooping along this time.  Maybe he will buy contracts outright from the comex and get them scrambling around looking for some metal.

  5. Sprott nailed the bottom again.

  6. Wanted to repost because I don’t think anyone noticed this message from the 700k ounce withdrawl thread.

    I want to point out something very important.  SLV is allowed to increase its inventory through paper contracts, physical, and futures.  If you look at the SLV inventory for July 10, 2012 you’ll see it increased from 311,271,605.500 ounces up to 312,823,227.900.  This is a net increase of: 1,551,622.4 ounces.
    Remember that number.
    Scotia has lost a lot of (supposedly physical) silver in their COMEX vaults on the following dates:
    July 11, 2012 – 651306 ounces withdrawn
    July 10, 2012 – 996615 ounces withdrawn
    Add these up and you get: 1,646,921 ounces removed from the vaults.  This is extremely close and only about 6% different.  Its so close and when you’re talking over a million ounces moving around, these are big movements.  Remember how hard it was for Eric Sprott to get physical silver in quantity?  Well, I can tell you these two movements are very likely connected.
    We need only look to the famous FOFOA for an explanation of the relationship between ETFs and actual physical/delivery demands:  http://fofoa.blogspot.com/2011/01/who-is-draining-gld.html
    So here is what is likely going on:
    The authorized participants need more physical silver urgently.  A large withdraw request was thrown at the Scotia Mocatta vault to deliver the physical.  Once the receipt was available, the SLV ETF was able to consider the silver purchased and part of their inventory.  It takes time to move large quantities of silver, so the movement was done over two days.
    Now we’re left to wonder why they so urgently needed physical in the SLV ETF…
    Go back to FOFOA and Victor’s explanation and we realize that someone needs to borrow the silver out of “the central bank of the bullion banks” and this was done to load up the ETF with actual physical (rather than paper claims or derivatives on silver which are normally part of the SLV inventory)… or maybe…. just maybe a bank has resupplied physical silver they borrowed from their “central bank” — that being the SLV ETF.
  7. A followup to that earlier post:

    It is entirely possible that Eric Sprott can and maybe will acquire the physical silver from the SLV ETF.  Eric can source the physical from anywhere he wants at the going price, so it is entirely possible that one of the bullion banks knew this PSLV offering was about to come and quickly deposited physical into SLV to make delivery in the coming days to Eric via an Authorized Participant withdrawal.
  8. Stack on Sprott

  9. You are on to something important Saddle and it bears watching.  I take a quick look at the total SLVand the bullion bank totals as these stats are posted weekly.   There was a time a few months ago that SLV hit 331 MOZ.  Ted Butler  has stated regularly that the SLV shorts have a big impact on this ETF (not that I know exactly how but it probably involves JPM)  His rants against the  huge short positions so got under their skin they realized that it was actually  costing them the income they derived from their silver holdings/leases/sales etc.

    Then there is the custodian of SLV that bears watching. It’s JPM if I recall.   In any case, SLV is a fat hog  the banks et al will slice it into bits when the time comes.  There is always the chance that Willie and Butler are right  If the vaults are depleted there will be hell to pay and another entity that will scream for silver to make things right and that will not happen.  If they ask me nicely for my stack, and at $1,000 an oz,  I might consider. 

  10. I’d like to put an exclamation point on Doc’s statement, “…it is safe to say we have likely seen a bottom in silver.”  It’s the same bottom we’ve seen set over and over and over again in the last few months.  $26 has proven to be super strong support, a level at which the physical buyers come in and take down HUGE orders.  Heck, there’s even some evidence that JPM has been among the buyers as they reduce their short position from time to time. 

    Some have attempted to make the goofy case that we are in a physical silver surplus position.  They’ve been schooled on “new math,” I guess.  As far as I’m concerned the market price action these past few months speaks for itself w/ respect to the $26 level and we wouldn’t have a pop like today on the Sprott news if in fact the physical silver market wasn’t tight.

    saddie:

    Good insights.  Thanks.  For whatever it’s worth, I tend to doubt Sprott would source from the SLV because that would create extra political baggage.  It’s possible, but the buying already irritates the heck out of the cartel.  Sourcing from the SLV is like punching the cartel in the face twice — once for the physical removal, and second, given the fact that large drawdowns can help destabilize the SLV inventory shell game.  Simply going to the London market and launching multiple open orders over time and at desired price points lets Sprott get the silver without having to poke JPM, SLV’s custodian, directly in the eye.

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