ASA Gold and Precious Metals Limited Announces Increase To Semi-Annual Distribution and Additional Voluntary Fee Waiver by its Adviser

Rhea-AI Summary

ASA Gold and Precious Metals (ASA) declares a distribution of $0.02 per common share, doubling the rate since 2018. Merk Investments waives a portion of its advisory fee in response to a proxy contest initiated by Saba Capital Management, L.P.

Positive

• The Company declared a distribution of $0.02 per common share payable on May 16, 2024, representing a $0.01 increase from the previous rate.
• Merk Investments voluntarily waived a portion of its advisory fee in recognition of the expenses incurred due to a proxy contest initiated by Saba Capital Management, L.P.
• The Company has paid uninterrupted distributions since 1959 and employs bottom-up fundamental analysis for investment decisions.

Negative

• None.

Insights

Financial Analyst

The increase in distribution from $0.01 to $0.02 per common share by ASA Gold and Precious Metals Limited is a notable change for shareholders, effectively doubling the previous rate. This adjustment suggests that the company is experiencing positive cash flow or a strategic shift to enhance shareholder value. It also signifies a consistent commitment to returning value to shareholders, as evidenced by the uninterrupted distribution since 1959. The implications for investors are twofold: there is the immediate benefit of increased income from the distribution and there is also the potential for this to be a positive signal about the company's financial health and future prospects.

Furthermore, the voluntary fee waiver by Merk Investments LLC points to a strategic partnership between the investment adviser and ASA, aimed at mitigating the financial impact of extraordinary expenses due to the ongoing proxy contest with Saba Capital. This move may be perceived favorably by investors, as it demonstrates Merk's alignment with shareholder interests and its commitment to the fund's performance despite external challenges.

Market Research Analyst

ASA Gold and Precious Metals Limited's focus on precious metals and minerals is of particular interest given the current economic climate. Precious metals often serve as a hedge against inflation and currency devaluation, which could be driving increased investor interest in such funds. The company's bottom-up fundamental analysis and primary research approach indicate a thorough and potentially more reliable investment strategy, which could be attractive to investors seeking exposure to the commodities market.

The announcement of the distribution increase and fee waiver might also reflect broader industry trends where funds are seeking to differentiate themselves and attract investors through both performance and cost-efficiency. This could lead to competitive responses from other funds in the sector, potentially benefiting investors through improved terms and returns across the industry.

Tax Advisor

The classification of ASA Gold and Precious Metals Limited as a 'passive foreign investment company' (PFIC) has significant implications for U.S. shareholders. The PFIC status affects the taxation of distributions and gains from the sale of shares. Investors in PFICs may be subject to different tax rates or additional reporting requirements. The company's encouragement for shareholders to consult with tax advisors suggests that these tax consequences could be complex and materially impact the net benefit of the investment. Shareholders should consider the tax implications of the increased distribution in the context of the PFIC rules to understand the actual after-tax return on their investment.

PORTLAND, Maine--(BUSINESS WIRE)-- ASA Gold and Precious Metals Limited (the “Company”) (NYSE: ASA) announced today that it has declared a distribution of $0.02 per common share of the Company payable on May 16, 2024 to shareholders of record of the Company’s common shares as of the close of business on May 6, 2024. This distribution represents a $0.01 per common share increase in the Company’s distribution, doubling the rate per share that has been paid on a semi-annual basis since November 2018. The Company has paid periodic distributions on an uninterrupted basis since 1959.

In addition, the Company announced that Merk Investments LLC (“Merk”), the investment adviser for the Company, has voluntarily agreed to waive a portion of its advisory fee, equal to an annual rate of 0.05% of the Company’s managed net assets exceeding $100 million and less than $300 million, effective for the period April 1, 2024 through March 31, 2025. Merk is making this voluntary waiver in recognition of the extraordinary expenses being borne by the Company as a result of a proxy contest initiated by Saba Capital Management, L.P. (“Saba Capital”) to replace the Company’s Board of Directors, as initially disclosed by Saba Capital in its 13D filing of December 5, 2023, and subsequent public filings.

This voluntary waiver is separate from, and in addition to, Merk’s ongoing waiver arrangement. Since December 1, 2020, Merk has continued to waive a portion of its advisory fee equal to an annual rate of 0.05% of the Company’s managed net assets exceeding $300 million, and an additional 0.10% of the Company’s managed net assets exceeding $500 million.

The Company is a non-diversified, closed-end fund that seeks long-term capital appreciation primarily through investing in companies engaged in the exploration for, development of projects in, or mining of precious metals and minerals.

It is a fundamental policy of the Company that at least 80% of its total assets must be (i) invested in common shares or securities convertible into common shares of companies engaged, directly or indirectly, in the exploration, mining or processing of gold, silver, platinum, diamonds or other precious minerals, (ii) held as bullion or other direct forms of gold, silver, platinum or other precious minerals, (iii) invested in instruments representing interests in gold, silver, platinum or other precious minerals such as certificates of deposit therefor, and/or (iv) invested in securities of investment companies, including exchange traded funds, or other securities that seek to replicate the price movement of gold, silver or platinum bullion.

The Company employs bottom-up fundamental analysis and relies on detailed primary research including meetings with company executives, site visits to key operating assets, and proprietary financial analysis in making its investment decisions.

Investors are encouraged to visit the Company’s website for additional information, including historical and current share prices, news releases, financial statements, tax and supplemental information. The site may be found at www.asaltd.com, or you may contact the Company directly at (800) 432-3378.

Investment advisory services for the Company are provided by Merk Investments LLC (Merk), an SEC registered investment adviser. Merk provides investment advice on liquid global markets, including domestic and international equities, fixed income, commodities and currencies and their respective derivative markets.

Certain Tax Information

The Company is a “passive foreign investment company” for United States federal income tax purposes. As a result, United States shareholders holding shares in taxable accounts are encouraged to consult their tax advisors regarding the tax consequences of their investment in the Company’s common shares.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240403171738/en/

Axel Merk

Chief Operating Officer

(650) 376-3135 or (800) 432-3378

info@asaltd.com

Source: ASA Gold and Precious Metals Limited

FAQ

What is the distribution per common share declared by ASA?

ASA declared a distribution of $0.02 per common share, doubling the rate since November 2018.

Why did Merk Investments waive a portion of its advisory fee?

Merk waived a portion of its advisory fee in response to a proxy contest initiated by Saba Capital Management, L.P., to replace the Company's Board of Directors.

How long has the Company been paying periodic distributions?

The Company has been paying periodic distributions on an uninterrupted basis since 1959.

What is the primary investment focus of ASA Gold and Precious Metals ?

ASA primarily seeks long-term capital appreciation through investing in companies engaged in the exploration, development, or mining of precious metals and minerals.

How can investors access additional information about ASA?

Investors can visit ASA's website at www.asaltd.com or contact the Company directly at (800) 432-3378 for historical and current share prices, news releases, financial statements, and more.