About the Canadian Gold Reserve
The Royal Canadian Mint established the Canadian Gold Reserves Program in order to provide an exchange-traded investment vehicle that tracks the price of gold and makes investing directly in physical gold available to institutional and retail investors. Exchange-Traded Receipts ("ETRs") are listed on the Toronto Stock Exchange (the "TSX") and may be bought and sold on the TSX like any other exchange-listed securities.
The Mint is a commercial federal Crown Corporation producing circulation, numismatic and bullion coins for the domestic and international markets. Since 1908, the Royal Canadian Mint has earned a world-renowned reputation for quality, excellence and security. The Mint operates full-service gold and silver refineries with a range of services from refining to assaying and secure storage. Subject to the terms of the ETRs, each ETR will constitute a direct unconditional obligation of the Mint, an agent of Her Majesty in right of Canada and as such will constitute a direct unconditional obligation of Her Majesty in right of Canada. ETR holders will have no recourse to the Mint or the Government of Canada for any loss on their investment.
Each ETR will represent an undivided beneficial interest in gold bullion to be held in custody by the Mint. The gold bullion will be beneficially owned by the ETR Holders and not by the Mint. The amount of gold bullion purchased will be equal to the proceeds of the offering, after deduction of the expenses of the offering, divided by the average price per ounce of the gold bullion paid to third party sellers at the date of the closing of the offering.
Per ETR Entitlement to Gold
The Per ETR Entitlement to Gold will be fixed on the Issue Date and will be expressed as a fraction of one fine troy ounce of gold as of the Issue Date, reduced daily by the 0.35% per annum Service Fee charged by the Mint.
The Mint will charge a Service Fee in respect of its management, storage and custodial services. The Service Fee will be calculated and accrued daily at an annual rate of 0.35% of the Per ETR Entitlement to Gold on each day of all outstanding ETRs and paid monthly in arrears on the 15th day of each month (or if not a business day, on the next succeeding business day). Each month, the Mint will withdraw an amount of gold bullion equal to the Service Fee. Accordingly, the amount of gold bullion underlying each ETR will decrease over time as the Service Fee is accrued. The Service Fee may be varied by the Mint on 90 days' advance notice.
The Mint, which has been providing gold storage services since its founding in 1908, will act as custodian of the gold bullion on behalf of ETR Holders and will hold the gold bullion in its facilities in Ottawa, Ontario. Beneficial ownership of the gold bullion will at all times remain with ETR Holders. The gold bullion underlying the ETRs will be stored by the Mint on an unallocated basis, such that the gold bullion owned by an ETR Holder will not be held separately from the other gold bullion held at the Mint, including the gold bullion underlying other ETRs.