Sprott Asset Management USA Client Relationship Summary

1. Introduction

Our name is Sprott Asset Management USA, Inc. We are registered with the Securities and Exchange Commission as an investment adviser. The services offered and fees charged by an investment adviser differ from those of brokerdealers and it is important that you understand the differences. Free and simple tools are available to research investment adviser firms, broker-dealers, and their financial professionals at www.Investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing.

2. Relationships and Services

What investment services and advice can you provide me?  We offer investment advisory services to retail and institutional investors. The principal investment advisory services that we offer to retail investors are through separately managed accounts (“accounts”), private funds (“funds”), registered investment companies, mutual funds, and pooled investment vehicles. A separately managed accounts may be based on a model account, or individualized you personally. There are no material limitations on our services. We monitor your investments on, at least, a quarterly basis but typically on a much more frequent basis. Monitoring of your investments is offered as part of our standard services. Our investment management agreement with you gives us the authority to buy and sell investments on your behalf. You may elect for us not to have discretion in some accounts. In these situations, while we may recommend investments to you, we do not have the authority to buy or sell investments on your behalf. You make the ultimate decision to buy or sell investments. Our advice is limited to certain types of products or investments in the resource sector. We require a minimum account size of $50,000 to open and maintain an account with us. Certain types of identification and antimoney laundering checks are also required to complete the account opening process. Please see the more detailed disclosure on the investment services and advice that we can provide to you in Items 4 and 7 of our Form ADV Part 2A or, which is available here https://www.sprottusa.com/media/2934/sam-usa-form-adv-part-2a-2b.pdf.

Conversation Starters. Given my financial situation, should I choose an investment advisory service? Why or why not? How will you choose investments to recommend to me? What is your relevant experience, including your licenses, education and other qualifications? What do these qualifications mean?

3. Fees, Costs, Conflicts, and Standard of Conduct

What fees will I pay?  You will pay us an asset-based fee ranging from 0.5% to 2% of the net assets in your account each year. Some accounts will charge you a performance-based fee ranging from 10% to 25% of the capital gains of your account each year. Most of our performance fee accounts have either a high water mark or a set amount of performance that needs to be achieved before we can charge a performance fee. Because we charge an asset-based fee, the more assets there are in your account, the more you will pay in fees, and we therefore have an incentive to encourage you to increase the assets in your account. You may also pay other fees and costs, including custodian fees, brokerage fees, interest fees, taxes, duties and other governmental charges, transfer and registration fees, foreign exchange transaction costs, fees and costs charged by other investment advisers or funds, account maintenance fees, mutual fund fees, foreign custodial fees, and other transactional fees and product-level fees as applicable to your account. If the security you purchase is a private placement, alternative investment fees may be charged. If your account is an Individual Retirement Account there is an annual fee associated with that account type. You will pay fees and costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time. Please make sure you understand what fees and costs you are paying. Please see the more detailed disclosure on our fees and costs in Items 5.A., B., C., and D of our Form ADV Part 2A, which is available here https://www.sprottusa.com/media/2934/sam-usa-form-adv-part-2a-2b.pdf.

Conversation Starters. Help me understand how these fees and costs might affect my investments. If I give you $10,000 to invest, how much will go to fees and costs, and how much will be invested for me?

What are your legal obligations to me when acting as my investment adviser? How else does your firm make money and what conflicts of interest do you have?  When we act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the investment advice we provide you. Here are some examples to help you understand what this means. The following arrangements and activities give us an incentive to make investments for you based on our own interests rather than on your needs.

  • Proprietary Products. We invest your assets in investments, including pooled investment vehicles, that are issued, sponsored, or managed by us or our affiliates. We receive additional compensation from those investments.
  • Third-Party Payments. We receive payments from third parties when we recommend or select other investment advisers / sell certain securities or investment products, including service fees from the sale of mutual funds.
  • Revenue Sharing. We make investments where the manager or sponsor of those investments or another third party shares revenue it earns on those investments with us.
  • Performance-Based Compensation. We receive compensation based on the performance of your account, which gives us an incentive to make riskier investments.
  • Broker Selection. When we choose broker-dealers to execute your transactions, we consider the research, products and services that we receive from broker-dealers and whether we receive client referrals from broker-dealers. This affects our duty to obtain best execution on your transactions.
  • Personal Trading. We invest personally in the same (or related) securities that we recommend to you. We also buy or sell securities for you at or about the same time that we buy or sell the same securities for own accounts. This gives us an incentive to favor our own accounts over your account.

Conversation Starters. How might your conflicts of interest affect me, and how will you address them?

Please see the more detailed disclosure on our conflicts of interest in Items 5, 6, 10, 11, 12, 14, and 17 of our Form ADV Part 2A, which is available here here https://www.sprottusa.com/media/2934/sam-usa-form-adv-part-2a-2b.pdf.

How do your financial professionals make money?  Our financial professionals are compensated based on factors such as: the amount of client assets they service; the product sold (i.e., differential compensation); product sales commissions; or revenue that we earn from their advisory services or recommendations. Our financial professionals are compensated based on the following factors: assets under management, amount of proprietary products directed towards client accounts, finders fees resulting from putting private placements in an advisory account. These compensation factors give our financial professionals an incentive to make riskier investments.

4. Disciplinary History

Do you or your financial professionals have legal or disciplinary history?  Yes, a few of our employees have disciplinary histories. This information is available for you to review. Visit www.Investor.gov/CRS for a free and simple search tool to research us and our financial professionals.

Conversation Starters. As a financial professional, do you have any disciplinary history? For what type of conduct?

5. Additional Information

You can find additional information about our investment advisory services on the SEC’s website and on our website. You can request up to date information and a copy of our relationship summary by contacting us at (800) 477-7853.

Conversation Starters. Who is my primary contact person? Is he or she a representative of an investment adviser or a broker-dealer? Who can I talk to if I have concerns about how this person is treating me?

 

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