COPJ Frequently Asked Questions (FAQs)


COPJ Launch of Sprott Junior Copper Miners ETF (Nasdaq: COPJ)

On February 1, 2023, Sprott Asset Management announced the launch of four Exchange Traded Funds (ETFs): Sprott Energy Transition Materials ETF (Nasdaq: SETM)Sprott Lithium Miners ETF (Nasdaq: LITP)Sprott Junior Uranium Miners ETF (Nasdaq: URNJ) and Sprott Junior Copper Miners ETF (Nasdaq: COPJ).

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

1

How can I invest in the Sprott Junior Copper Miners ETF?

The Sprott Junior Copper Miners ETF is listed on Nasdaq® under the symbol “COPJ.” Investors can purchase COPJ in a brokerage account or by contacting their financial advisor.

2

What is the Sprott Junior Copper Miners ETF investment objective and strategy?

The Sprott Junior Copper Miners ETF (COPJ) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Nasdaq Sprott Junior Copper Miners™ Index.

The Nasdaq Sprott Junior Copper Miners™ Index is designed to track the performance of a selection of global securities in the copper industry. The Fund will, under normal circumstances, invest at least 80% of its total assets in securities of this Index.

3

What is the energy transition?

The energy transition is a significant global structural change intended to decrease our dependence on fossil fuels in favor of low-carbon and renewable energy. While we believe fossil fuels will likely continue to play a role in our future, substantial global investment and government mandates in favor of low-carbon and renewable energy are driving opportunities in the energy transition industry.

4

What is the Nasdaq Sprott Junior Copper Miners™ Index’s methodology?

The index combines Sprott’s decades of experience in the mining sector with Nasdaq’s renowned index expertise. To be eligible for inclusion in the Nasdaq Sprott Junior Copper Miners™ Index (NSCOPJ™), a company must meet the requirements that follow.

Eligibility Requirements

    • Be a security listed on an approved exchange
    • The security’s issuers must be classified by Sprott as a copper producer, developer or explorer
    • Have a market capitalization of at least $40 million or $25 million for existing constituents
    • Have a market capitalization no higher than $2.5 billion or $3.5 billion for existing constituents
    • The security must have been publicly traded at least three months prior to the reconstitution reference date
    • A security must have a three-month average daily traded value of at least $50,000 or $25,000 for existing constituents

Constituent Weighting Process

    • The index is a modified free-float market capitalization-weighted index
    • Constituents’ initial weights are determined by dividing each constituent’s free-float market value by the aggregate free-float market value of all constituents
    • Initial weights are adjusted to meet the following constraints:
      • The weight of each of the constituent may not exceed 4.75%
      • No constituent weight may be less than 0.30%

Index Rebalancing

    • The index is rebalanced semi-annually in June and December, effective at the market open on the first trading day following the third Friday
5

Who may want to consider investing in COPJ?

Investors that seek pure-play1 access to small copper companies that have the potential for significant revenue and asset growth. Junior copper miners that are upstream in the supply chain may be well positioned to benefit from increased investment in the low-carbon and renewable energy sector.

6

Who will manage the Sprott Junior Copper Miners ETF?

Sprott Asset Management USA, Inc. is the investment adviser to the Sprott Junior Copper Miners ETF. ALPS Advisors, Inc. is the sub-adviser, and ALPS Fund Services, Inc. serves as the administrator. ALPS Distributors, Inc. is the Distributor for the Sprott Junior Copper Miners ETF and is a registered broker-dealer and FINRA Member. Additionally, State Street Bank and Trust Company serves as the custodian and transfer agent.

7

What are the key benefits of investing in the Sprott Junior Copper Miners ETF?

Essential to energy transmission, copper is a critical mineral across clean energy generation sources and in electric vehicles

  • Copper provides durability, malleability, reliability and superior electrical conductivity, and can be found in the vast majority of transformers, electrical wiring cores and conductors
  • Copper is a key component in the energy grid, as well as in wind, solar, hydro and thermal renewable energy structures
  • An essential component of electric vehicles (EVs), used in the electric motors, batteries, inverters and wiring, and in charging stations

To meet net-zero carbon emissions targets, demand for copper is expected to increase for decades

  • To meet net-zero carbon emissions targets, energy transition-related demand for this critical mineral may increase nearly 4 times by 2040, relative to 20222
  • Governments are mandating the sale of EVs as soon as 2035,3 and many major auto manufacturers have plans to go fully electric as soon as 2030.4 Typical EV uses approximately 183 pounds of copper, which is nearly 4x the copper used in an internal combustion engine5
  • Compared to gas-fired power plants, solar and wind farms require significantly more copper – 300% and 200%, respectively6

The Sprott Junior Copper Miners ETF is the only* ETF to provide pure-play exposure exclusively to small copper mining equities essential to the clean energy transition

  • COPJ’s holdings are pure-play companies with business operations that are focused on the copper mining sector
  • Companies that are upstream in the supply chain may be well-positioned to benefit from the increased investment in copper necessary for the clean energy transition
8

What is clean energy?

Clean energy is energy that has zero carbon emissions and comes from renewable and nuclear energy sources. Currently, nations around the world have committed to the Paris Agreement, which is a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris in December 2015. Its goal is to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels. To meet this goal, emissions need to be reduced by 45% by 2030 to reach net-zero by 2050.7

9

What are critical minerals?

Critical minerals are natural materials that are essential to the generation, transmission and storage of clean energy. Sprott focuses on copper as the critical mineral depended upon for all clean energy transmission.

10

How does the Sprott Junior Copper Miners ETF add value?

  • Currently, investors have limited choice
    COPJ is the only ETF to provide exposure exclusively to the junior Copper miners that supply this critical mineral essential to the transition to cleaner energy.
  • Investing in individual companies that mine copper poses challenges
    Many mining companies are domiciled in foreign countries, have small market capitalizations, are volatile and may have limited liquidity, making individual equity investing more challenging for some investors. The Sprott Junior Copper Miners ETF offers investors a convenient vehicle to access junior miners that supply this critical mineral along with company diversification.
  • Existing commodity funds have limited exposure to junior copper miners
    Existing ETFs focused on the copper sector provide exposure to larger companies. Investors that seek exposure to smaller copper miners, and their potential for significant revenue and asset growth, may find COPJ to be an attractive alternative to existing ETFs.
11

What themes may be driving investor interest in the Sprott Junior Copper Miners ETF?

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

  • Energy transition/Clean energy theme
    Major nations have set aggressive decarbonization targets and goals to reduce emissions. Their proposals have begun encouraging investment in electric vehicles and infrastructure, wind and solar energy, and nuclear energy to assist in this effort. We believe that miners of critical minerals should benefit from this clean energy transition as they provide essential materials that are key to reaching decarbonization goals.
  • Energy security and sovereignty
    This issue became a top headline story in 2021 as the cost of energy spiked, which highlighted the vulnerability of relying on other nations to supply energy. Rising geopolitical risks in Europe, given the Russia-Ukraine war, help highlight the energy security that renewable energy can provide.
  • Commodity investing
    After many years out of favor, investors are returning to commodities to take advantage of supply shortages due to prolonged under-investment. The fundamentals for copper are very constructive with steady growth in demand coupled with a structural supply deficit that can only be addressed with a higher incentive price.8 Those invested in commodities and related equities should consider focusing on the potential future makeup of such markets, where we believe the energy transition sector will take a far greater market share.
  • Alternative exposure/Diversification
    Many mining companies are domiciled in foreign countries, have small market capitalizations, are volatile and may have limited liquidity, potentially limiting their inclusion in major equity indices. Exposure to the pure-play companies in COPJ’s strategy may add exposure to investor portfolios that may otherwise be lacking in traditional equity strategies.
12

Will the Sprott Junior Copper Miners ETF pay distributions?

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

 

 

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

 

* Based on Morningstar’s universe of Natural Resources Sector Equity ETFs as of 6/30/2023.


1 The term “pure-play” relates directly to the exposure that the Fund has to the total universe of investable, publicly listed securities in the investment strategy.
2 Source: “Critical Minerals Market Review”, International Energy Agency (IEA), July 2023. Data shown for Net Zero Emissions Scenario.
3 Source: Reuters, December 8, 2021.
4 Source: “Which brands are going fully electric and by when?” CarExpert, August 14, 2021.
5 Source: “ThinkCopper,” Copper Development Association (copper.org) and Navigant Research. Global Copper Outlook 2022-2040, BloombergNEF. Included for illustrative purposes only.
6 Source: “The Raw Materials Challenge,” McKinsey & Co., January 10, 2022.
7 United Nations Framework Convention on Climate Change (UNFCC).
8 Incentive price is the price at which new mining production is reasonably profitable.

 

Important Disclosures & Definitions

An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Sprott Junior Copper Miners ETF Statutory Prospectus, which contains this and other information, visit https://sprottetfs.com/copj/prospectus, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing.

The Fund is not suitable for all investors. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund's shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk. The Fund is considered non-diversified and can invest a greater portion of assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single investment could cause greater fluctuations in share price than would occur in a diversified fund.

Shares are not individually redeemable. Investors buy and sell shares of the Sprott Junior Copper Miners ETF on a secondary market. Only market makers or "authorized participants" may trade directly with the Fund, typically in blocks of 10,000 shares.

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

The Sprott Junior Copper Miners ETF seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the Nasdaq Sprott Junior Copper Miners™ Index (NSCOPJ™).

Nasdaq®, Nasdaq Junior Copper Miners™ Index, and NSCOPJ™ are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Sprott Asset Management LP. The Product(s) have not been passed on by the Corporations as to their legality or suitability. The Product(s) are not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S).

Sprott Asset Management USA, Inc. is the Investment Adviser to the Sprott Junior Copper Miners ETF. Sprott Asset Management LP is the Sponsor of the Fund. ALPS Distributors, Inc. is the Distributor for the Sprott Junior Copper Miners ETF and is a registered broker-dealer and FINRA Member.

ALPS Distributors, Inc. is not affiliated with Sprott Asset Management LP.

Invest Now

You can purchase and trade shares of Sprott ETFs directly through your online brokerage firm; these firms may include:


U.S. Investors


Canadian Investors

 

Important Message

You are now leaving SprottETFs.com and entering a linked website.

Important Message

You are now leaving SprottETFs.com and will be directed to the Sprott website at Sprott.com. ALPS Distributors, Inc. is the Distributor for the Sprott ETFs and is a registered broker-dealer and FINRA Member. Sprott Asset Management LP is the adviser for the Sprott ETFs.

Continue