Eric Sprott To Buy $235 Million In Gold, Or Over 6 Metric Tonnes, As Part Of PHYS Follow-On Offering

Tyler Durden's picture

Eric Sprott's Physical Gold Trust (PHYS) has just announced it is issuing a follow-on offering of 18 million trust units, with an overallottment option of another 2.7 million, for a total, including the greenshoe, of 20.7 million new units. The proceeds, as expected, will be used to purchase physical gold bullion to satisfy unprecedented investor demand for a safe haven away from the central bank printing press madness. At a post-announcement per unit price of $11.40, this means Sprott will buy $235 million worth of gold in the open market. At today's gold price of $1,200 this translates into 195,833 troy ounces of gold to be acquired, or roughly 6 metric tonnes. Somehow, we don't think the LBMA will be too thrilled with this extraction of physical gold out of the controlled synthetic precious metal ponzi system.

Full press release:

Sprott Physical Gold Trust Announces Follow-On Offering of 18,000,000 Trust Units


TORONTO, ONTARIO--(Marketwire - May 25, 2010) - Sprott
Physical Gold Trust (the "Trust") (TSX:PHY.U)(NYSE:PHYS), a trust
created to invest and hold substantially all of its assets in physical
gold bullion and managed by Sprott Asset Management LP, announced today
that it plans a follow-on offering to the public (the "Offering") of
18,000,000 transferable, redeemable units of the Trust ("Units"). As
part of the Offering, the Trust expects to grant the underwriters an
over-allotment option to purchase up to 2,700,000 additional Units.

Trust intends to use the net proceeds of this Offering to acquire
physical gold bullion in accordance with the Trust's objective and
subject to the Trust's investment and operating restrictions described
in the prospectus related to this 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

The Units are listed on the NYSE Arca and the
Toronto Stock Exchange under the symbols "PHYS" and "PHY.U",
respectively. The Offering will be made simultaneously in the United
States and Canada through a syndicate of 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 this Offering may be obtained by contacting
Morgan Stanley & Co. Incorporated, 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,
or RBC Capital Markets Corporation, 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).

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.