URNJ Frequently Asked Questions (FAQs)


URNJ Launch of Junior Uranium Miners ETF (Nasdaq: URNJ)

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 uranium@sprott.com for additional questions.

1

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

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

2

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

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

The Nasdaq Sprott Junior Uranium Miners™ Index is designed to track the performance of a selection of global securities in the uranium 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 Junior Uranium 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 Uranium Miners™ Index (NSURNJ™), a company must meet the requirements that follow.

Eligibility Requirements

    • Be a security listed on an approved exchange
    • A security’s issuer must be classified by Sprott as a Uranium Producer, Developer, Explorer, or Royalty Company; or as a company that engages in supplying uranium.
    • Have a market capitalization of at least $30 million or $25 million for existing constituents
    • Have a market capitalization no higher than $3 billion or $5 billion for existing constituents
    • The security must have been publicly traded at least three months prior to the reconstitution reference date

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 four largest constituents by free-float market cap should not exceed 12%
      • The weight of each of the remaining constituents may not exceed 4.75%

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 URNJ?

Investors that seek pure-play1 access to small uranium companies that have the potential for significant revenue and asset growth. Junior Uranium 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

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 2050.2

7

What are critical minerals?

Critical minerals are natural materials that are essential to the generation, transmission and storage of clean energy. Sprott focuses on uranium as a critical energy-generation mineral because it’s essential to nuclear energy.

8

Who will manage the Sprott Junior Uranium Miners ETF?

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

9

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

Uranium miners may be poised to take market share within the energy sector

  • Uranium miners are under-represented across the energy equity sector, posing upside potential.
  • Uranium miners may require large capital investment.
  • Uranium miners have historically outperformed uranium spot prices during uranium bull markets.
  • Uranium miners may complement existing portfolio allocations.

Uranium and nuclear energy may be critical to the clean energy transition

  • Nuclear energy is relatively more reliable, efficient, clean, safe and secure.
  • Government policies are shifting in favor of nuclear energy, an ideal complement to renewable energy sources.
  • Sentiment surrounding nuclear energy is improving.

A new uranium bull market may be underway, incentivizing miners and investors to explore and develop new mines

  • Existing uranium supply may not meet future demands, encouraging non-utility uranium buyers to enter the market.
  • Utilities are expected to accelerate purchases of uranium to ensure the security of supply and price over the long term.
  • Availability of secondary supplies of uranium has been drawn down over the past few years.
  • Uranium spot prices have recently surged, helping drive strong and sustainable economics of uranium miners.
  • The uranium price in the term market has followed the spot price higher.
10

How does the Sprott Junior Uranium Miners ETF add value?

  • Currently, Investors Have Limited Choice
    URNJ is the only* ETF to provide exposure exclusively to the junior uranium miners that supply this critical mineral essential to the transition to cleaner energy.
  • Investing in individual companies that mine uranium 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 Uranium 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 uranium miners
    Existing ETFs focused on the uranium sector provide exposure to larger companies and physical uranium. Investors that seek exposure to smaller uranium miners, and their potential for significant revenue and asset growth, may find URNJ to be an attractive alternative to existing ETFs.
11

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

We believe the Sprott Junior Uranium 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 critical minerals are very constructive, with steady growth in demand coupled with a structural supply deficit that can only be addressed with a higher incentive price. 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.
  • 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 uranium are very constructive with steady growth in demand coupled with a structural supply deficit that can only be addressed with a higher incentive price.3 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 URNJ’s strategy may add exposure to investor portfolios that may otherwise be lacking in traditional equity strategies.
12

Will the Sprott Junior Uranium Miners ETF pay distributions?

The Sprott Junior Uranium 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 uranium@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 United Nations Framework Convention on Climate Change (UNFCC).
3 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 Uranium Miners ETF Statutory Prospectus, which contains this and other information, visit https://sprottetfs.com/urnj/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 non-diversified and can invest a more significant portion of assets in securities of individual issuers than a diversified fund. As a result, changes in a single investment's market value could cause more significant share price fluctuations than in a diversified fund.

Shares are not individually redeemable. Investors buy and sell shares of the Sprott Junior Uranium 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 Uranium Miners ETF seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the Nasdaq Sprott Junior Uranium Miners™ Index (NSURNJ™).

Nasdaq®, Nasdaq Junior Uranium Miners™ Index, and NSURNJ™ 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 advisor to the Sprott Junior Uranium Miners ETF. Sprott Asset Management LP is the Sponsor of the Fund. ALPS Distributors, Inc. is the Distributor for the Sprott Junior Uranium Miners ETF and is a registered broker-dealer and FINRA Member.

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

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