Gold Reserves’ ETRs IPO
On November 29, 2011, The Royal Canadian Mint announced the closing of the initial public offering (IPO) of the Canadian Gold Reserves’ ETRs.
CAD$600 raised from Gold ETR IPO
According to The Royal Canadian Mint, the Exchange Traded Receipts (ETRs) commenced trading on the Toronto Stock Exchange (TSX) under the ticker symbol MNT on November 29, 2011. 30 million ETRs were issued at a price of CAD$20.00 per ETR raising gross proceeds of CAD$600 million. According to people familiar with the sale, this is more the double of the forecasted objective.
Premium for Gold Reserves’ ETRs
According to the Mint, after deducting the agents’ fee and expenses of the offering, net proceeds of CAD$579.4 million were applied to purchase gold bullion on behalf of the purchasers of the ETRs, at the London pm fix gold price of US$1,717 per ounce. Accordingly, at the closing of the offering, ETR holders owned an aggregate amount of gold equal to 327,010 ounces, resulting in a per ETR entitlement to gold of 0.0109003 ounces.
This results in investors in the ETRs paying a premium or markup of more than 3.55% above the value of the gold.
Minimum Physical Delivery
The minimum physical redemption on the Mint’s Canadian Gold Reserves ETR program is 10,000 ETRs which are currently worth approximately $200,000. Thus, most investors cannot demand physical delivery of their gold.
Future daily calculations of the per ETR entitlement to gold and the net asset value per ETR shall be made available on the Canadian Gold Reserves’ website at www.reserves.mint.ca.
According to the Royal Canadian Mint, the gold ETRs neither have been nor will be registered under the US Securities Act of 1933, and were not offered or sold in the US.