Sprott 2012 Flow-Through Limited Partnership

Investment Team

  • Eric Nuttall
    Portfolio Manager

Fund Details

Eligible for Registered Plans No

Fund Objective

The Partnership’s investment objective is to provide for a tax-assisted investment in a diversified portfolio of Flow-Through Shares and other securities, if any, of Resource Issuers with a view to achieving capital appreciation and significant tax benefits for Limited Partners.

The Partnership's investment strategy will be to invest in flow-through shares and other securities, if any, of lower risk Resource Issuers whose principal business will be: (i) mining exploration, development, and/or production, and (ii) oil and gas exploration, development, and/or production and certain energy production that may incur CRCE.

The Sprott Flow-Through Advantage

Sprott believes that it has several competitive advantages in terms of its ability to generate attractive returns investing in flow-through shares:

  • Ability to leverage Sprott's existing relationships with hundreds of Canadian resource companies; 
  • Sprott's long history of investing in common shares of Canadian Resource Issuers; 
  • Significant experience in investing in the small and mid-cap sectors; 
  • Breadth of management team with significant experience investing in the natural resource sector; and 
  • Issuing only one flow-through limited partnership a year enables the Manager to take advantage of attractive flow-through issues throughout the calendar year with fewer conflicts.

Significant Tax Benefits 

  • Investment is expected to be at least 100% tax-deductible against 2012 taxable income
  • Tax deferred rollover to a Sprott corporate class mutual fund expected in 2014
  • Investment converts otherwise fully taxable income into future, tax-advantaged capital gains

What are Flow-Through shares?

The Income Tax Act (Canada) contains provisions that allow investors to access expenses incurred by a company, in an effort to assist in financing of resource exploration projects in Canada. Resource Issuers1 can renounce certain exploration expenses2 to investors, who are then able to deduct these expenses against their own income.

What is a Flow-Through Limited Partnership?

Investors can buy flow-through shares directly from Resource Issuers, but in many cases such companies represent high-risk investments. A flow-through limited partnership is an investment vehicle that offers professional management and, most importantly, diversification. The use of a limited partnership permits income tax deductions to be allocated to, and utilized by, limited partners while at the same time providing for limited liability, subject to certain qualifications.

Tax Planning for Individuals

The following table set forth certain financial aspects, based on the estimates and assumptions in the notes to the tables below, for a Limited Partner who is an individual (other than a trust), who has invested $1,000, assuming the investor is an Ontario resident in top marginal tax rate of 46.41%, BC resident in top marginal tax rate of 43.70% and Alberta resident in top marginal tax rate of 39.00% (for further details, please refer to illustrative tables in the Prospectus Summary).

The indicated rates of return for series A/class A securities of the Funds are based on the historical annual compounded total returns including changes in unit/share value and reinvestment of all distributions or dividends and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. This communication does not constitute an offer to sell or solicitation to purchase securities of the Funds.

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