LITP Frequently Asked Questions (FAQs)

How can I invest in the Sprott Lithium Miners ETF?

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

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

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

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

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.

What is the Nasdaq Sprott Lithium 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 Lithium Miners™ Index (NSLITP™), 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 lithium producer, developer or explorer
  • Have a free-float market capitalization of at least $40 million or $25 million 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

Constituent Weighting Process

• • The index is a modified free-float market capitalization-weighted index
  • A theme-adjusted free-float market capitalization is calculated for each constituent
    • Free-float market capitalization is used to weight companies with an intensity score¹ greater than 50%
    • Companies with an intensity score of 25% to 50% are given an adjusted market capitalization by multiplying the theme intensity score and its free-float market capitalization, and the company’s weight in the index is determined by its adjusted market capitalization
  • For stocks without revenue or for which revenue is an inappropriate characteristic, the intensity score is given at 50%
  • Constituents’ initial weights are determined by dividing each constituent’s theme-adjusted free-float market value by the aggregate theme-adjusted free-float market value of all constituents
  • Initial weights are adjusted to meet the following constraints:
    • No constituent weight may be less than 0.30%
    • For each stock in the top five by initial weight, the maximum weight is set to 9.75%
    • For each constituent not in the top five, weight may not exceed 4.75%
    • In the event the sum of securities weights that have theme intensity scores between 25% to 50% are higher than 15%, the sum of these securities weights is set to 15%

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

Who may want to consider investing in LITP?

Investors that seek pure-play² access to lithium through companies that are upstream in the supply chain. Lithium miners may be well positioned to benefit from increased investment in the low-carbon and renewable energy sector.

Who will manage the Sprott Lithium Miners ETF?

Sprott Asset Management USA, Inc. is the investment adviser to the Sprott Lithium 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 Lithium 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.

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

Increased investment is driving growth in the critical minerals necessary for the energy transition

• Globally, $1.8 trillion was invested in the energy transition sector in 2023, far exceeding fossil fuel’s supply investment³
  
  • The electrified transportation sector saw $634 billion of investment³
  • Investment in renewable energy totaled $623 billion³
  • The nuclear energy and electrified heating sectors saw $96 billion in investment in 2023
• Investments in electric transportation grew by 28% in the United States in 2023³

Lithium is a vital component in the batteries used in the growing hybrid and electric vehicle (EV) markets

• Lithium-ion batteries are favored in hybrid and electric vehicle batteries given they are long-lasting, charge quickly and have a high density, allowing for more battery in a lighter package
• Compared with other countries, the United States is lagging in EV usage, but is nearing a tipping point of mass EV adoption⁴
• Global sales of EVs doubled in the last 2 years⁵, and all net growth in global car sales in 2021 came from EVs⁴
• Governments are mandating the sale of EVs as soon as 2035,⁶ and many major auto manufacturers have plans to go fully electric as soon as 2030⁷

Electric vehicles are the largest consumers of lithium, and demand for this critical mineral is expected to increase significantly

• Expected supply from existing mines and projects under construction is estimated to meet only 50% of projected lithium demand in the late 2030s³
• Mining capacity needs to expand to meet the growing demand for lithium. In order to keep up with demand, production may need to increase nearly 900% for lithium, by 2040 relative to 2022⁸
• Recycling of end-of-life lithium-ion batteries is expected to account for little more than 6% of total lithium production by 2030⁹
• The U.S. government is awarded grants totaling $2.8b to boost domestic manufacturing of EV batteries in 12 states¹⁰

The Sprott Lithium Miners ETF is the only* ETF to provide pure-play exposure to lithium mining equities essential to the electric vehicle revolution

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

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 2050.¹¹

What are critical minerals?

Critical minerals are natural materials that are essential to the generation, transmission and storage of clean energy. Sprott focuses on lithium as a major battery metal that is crucial to energy storage and the batteries powering the electric vehicle revolution.

How does the Sprott Lithium Miners ETF add value?

• Currently, investors have limited choice
  LITP is the only ETF to provide pure-play exposure to the lithium miners that supply this critical mineral essential to the transition to cleaner energy.
• Investing in individual companies that mine lithium 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 Lithium Miners ETF offers investors a convenient vehicle to access to miners that supply this critical mineral along with company diversification.
• Existing commodity funds have limited exposure to lithium miners
  Most ETFs focused on the lithium sector provide exposure to companies that are end users of lithium, such as electric vehicle manufacturers, or companies that only devote a small portion of their revenue/operations to this critical mineral. What sets LITP apart is the index’s comprehensive selection process to identify pure-play companies that are upstream in the supply chain that may be well-positioned to benefit from the increased investment in this critical mineral necessary for the clean energy transition.

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

We believe the Sprott Lithium 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 lithium are very constructive with steady growth in demand coupled with a structural supply deficit that can only be addressed with a higher incentive price.¹² 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 LITP’s strategy may add exposure to investor portfolios that may otherwise be lacking in traditional equity strategies.

Will the Sprott Lithium Miners ETF pay distributions?

The Sprott Lithium 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.