I was very surprised to see that the Sprott Physical Silver Trust has taken their cash levels, newly replenished by a follow-on offering, down to less than $2 million US dollars with the acquisition of additional ounces of silver bullion. They recently raised at least $270 million in a follow-on offering.
Their press releases do not clearly indicate if the underwriters actually executed on their additional allotment which would have brought this to $310 million. All of it has apparently been used to purchase silver bullion.
No one can say that Eric Sprott and his team is not bullish on silver at these prices.
I have not been able to independently calculate the current 'burn rate' on salaries and expenses because of the persistent activity of expansion, but it does seem that another offering is in the cards for sometime in the first quarter of 2013, unless there is some unbooked cashed still coming or a future redemption of units.
From their September 30, 2012 financial release:
"Operating expenses for the period July 1, 2012 to September 30, 2012 amounted to $377,778 (not including applicable Canadian taxes) compared to $173,762 for the same period in 2011. Operating expenses for the period from January 1, 2012 to September 30, 2012 amounted to $1,343,411 (not including applicable Canadian taxes) compared to $701,448 for the same period in 2011.Sprott Silver has not yet updated their listing of silver bars in inventory from this most recent expansion. As they stated in their press release:
The increase in expenses was primarily due to higher legal, audit and listing fees over these periods, as well as an increase in the bullion storage fees associated with the higher volume of physical bullion held by the Trust. Operating expenses for the period from July 1, 2012 to September 30, 2012 amounted to 0.13% of the average net assets during the period on an annualized basis, compared to 0.08% for the same period in 2011.
"As of November 12, 2012, the Trust has contracted to purchase a total of approximately 7.127 million troy ounces of physical silver bullion. Once the Trust has taken delivery of all the silver bullion, it will publish the serial numbers of all bars held by the Trust on its website."So it appears that Sprott Silver is telling the global bullion market, 'stand and deliver,' in London good delivery bars of silver, and not paper promises.
I took my own cash levels down considerably this morning, although I do remain hedged.