Investing in our units involves a high degree of risk. You should purchase units only if you can afford a complete loss of your investment. See "Risk Factors" beginning on page 55 of the private placement memorandum (PPM). Significant risks relating to your investment in our units include, among others:
- An investment in CNL Sprott Strategic Asset Fund, LLC (the Fund) is considered speculative, which may include the loss of all or a substantial amount of your investment. This material does not constitute, is not part of, and does not grant permission to make an offer to sell securities and is not the solicitation of an offer to purchase the securities described herein. Consideration of these materials must be read in conjunction with the Fund's private placement memorandum (as supplemented or amended, the PPM).
- This offering is for accredited investors only; however, not all accredited investors will be suitable for this offering. This offering is complex, and investors are expected to be financially sophisticated. See the PPM for complete details on the offering. Loans are subject to interest, leverage and market risks which include the ability to timely produce natural resources internationally in countries with differing real estate and tax laws and with governments that may or may not be stable over the life of the loan.
- Precious metals experience volatile pricing.
- The Fund will invest in non-rated and below investment-grade debt securities. These securities, which may include preferred stock and debt, are predominantly speculative and involve major risk exposure to adverse conditions.
- The CNL Sprott Strategic Asset Fund is the first time CNL and Sprott have partnered. CNL Strategic Asset Management, LLC is acting as the manager. The sub-manager is Sprott Resource Lending Partnership, an Ontario partnership, an affiliate of Sprott Inc. (Sprott), publicly listed under the ticker SII, to provide certain investment management services to the manager. Each managing entity is an investment adviser registered with the U.S. Securities and Exchange Commission.
- Investors should not rely on the past performance of the managers and their respective affiliates as an indication of future performance. The Fund is a different investment vehicle with fees and risks dissimilar to the manager's and sub-manager's other funds.
- The Fund's manager, sub-manager, and their respective affiliates, face conflicts of interest, including those that result from compensation arrangements and allocations of business opportunities.
- The Fund compensates the manager, sub-manager, and CNL Securities for services provided and may also compensate the parties when certain operational and performance thresholds are met. Certain management fees will be paid by investors even if they lose money in the investment. See the PPM for details.
- The Fund typically obtains collateral for the loans. This security may be in a variety of forms including, but not limited to, mineral rights, mining claims, leasehold interests, other interests in real estate, or precious metals.
- The Fund’s natural resource projects could fail to begin production or shut down on a temporary or permanent basis due to issues including but not limited to economic conditions, lack of financial capital, flooding, fire, weather related events, mechanical malfunctions, social related issues or unrest, the failure to receive or retain permits, collapse of mining infrastructure including tailings ponds, expropriation, and other risks. These issues in the natural resource sector can occur.
- Although rare, if a natural resource project fails to produce gold or other precious metals from the mining operation, it is possible the Fund may not benefit. The Fund will generally not own or operate the mines of its natural resource credit projects and will have limited contractual rights relating to the natural resource projects.
- The Fund’s natural resource loans may be subject to regulation by state and local authorities and subject to various laws and judicial and administrative decisions.
- If the Fund does not raise sufficient funds, it may not be able to acquire targeted assets or other investments sufficient to fulfill the Fund’s investment objectives, which reduces diversification and increases the potential for another layer of volatility.
- An investment in the Fund will be subject to interest rate risk, liquidity risk, the borrower's financial condition deteriorating, and potential need to liquidate loans at less than fair market value.
- The Fund may use leverage in an amount not to exceed 50% of its net value of assets; however, given changes in valuations, currency exchange rates and other situations leverage may exceed that limit to a degree. Checks and balances are put into place by the manager and sub-manager regarding monthly and quarterly evaluation of the net asset value of the fund so that the leverage ratio can be somewhat managed on an ongoing basis.
- The Fund intends to use a small amount of derivatives, options, futures contracts, swaps contracts, and options on forward contracts, on securities and currencies in this portfolio. Such instruments may be traded on foreign exchanges. Such transactions are high risk and may not be regulated as effectively as similar transactions in the jurisdiction of the United States. Participation in the options or futures markets, in currency exchange transactions and in other derivatives, these transactions may involve investment risks and transaction costs to which the Fund would not be subject absent the use of these strategies. These instruments are considered predominantly speculative with respect to an issuer’s continuing ability to make principal and interest payments and may be more volatile than other types of securities.
- The Fund may invest without limitation in U.S. and non-U.S. targeted assets. The Fund expects that its targeted assets will usually be in countries with established investment, real estate, and mining laws.
- Many of the Fund’s investments will be made outside the United States. The return realized by the Fund from such investments may be affected by non-U.S. taxes imposed on payments to the Fund, e.g., interest and dividend withholding taxes, or on proceeds from the disposition of investments.
- Occurrence of global events similar to those in recent years, such as war, terrorist attacks, natural or environmental disasters, country instability, infectious disease epidemics, market instability, debt crises and downgrades, embargoes, tariffs, sanctions, and other trade barriers and other governmental trade or market control programs, the potential exit of a country from its respective union and related geopolitical events, may result in market volatility and may have long-lasting impacts on both the U.S. and global financial markets.
- Distributions are not guaranteed in frequency or amount. Distributions may be funded from multiple sources including offering proceeds, borrowings, net investment income from operations, expense waivers, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to the Fund. Distributions that are not derived from net income produced by the Fund's performance may not be sustainable and may dilute investors.
- An economic downturn or individual corporate developments could adversely affect the market for these loans and reduce the Fund's ability to sell these instruments at an advantageous time or price. An economic downturn may lead to a higher non-payment rate. The Fund's performance would be adversely impacted by borrower defaults. Competition for credit and gold bullion may increase the costs to obtain either which will likely reduce returns.
- The illiquidity of the natural resource loans may make it difficult for the Fund to liquidate these investments if desired and has the potential to cause the Fund to lose significant value in a down market.
- Investors should be aware that there is no assurance that gold will maintain its long-term value in terms of purchasing power in the future. In the event that the price of gold declines, the manager expects the value of an investment in the Fund’s securities (units) to decline.
- When co-investing, there will be diminished control and the co-investor may have interests that are in conflict with the Fund.
- The Fund commenced operations in February 2021 and has no operating history. It may be unable to successfully implement its business and origination strategies or meet its investment objectives. Investors will not have the opportunity to evaluate any investments prior to origination.
- Asset valuations will be estimates of fair value and do not represent the amount an investor would receive now or at any time in the future. The Fund's valuations are inherently subjective, and the NAV may not accurately reflect the actual price at which its assets could be liquidated. The realized value of units will be dependent upon market conditions that are beyond anyone's ability to control or predict.The Fund intends for transactions to be denominated in U.S. dollars; however, there will be times when that is not feasible. Using foreign currency will present the risk of potential loss or gain based upon the standing of the currency in the world economy.
Additional Risk Factors Related to Our Private Offering:
Privately offered units will neither be (i) listed on an exchange or quoted through a national quotation system for the foreseeable future, if ever, nor (ii) registered under the Securities Act and thereby be subject to a number of restrictions on transfer. Therefore, if you purchase units that are privately offered, you will have limited liquidity and may not receive a full return of your invested capital if you sell your units.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this website constitute "forward looking statements." Forward looking statements are statements that do not relate strictly to historical or current facts, but reflect management's current understandings, intentions, beliefs, plans, expectations, assumptions and/or predictions regarding the future of our business and its performance, the economy and other future conditions and forecasts of future events and circumstances. Forward looking statements are typically identified by words such as "believes," "expects," "anticipates," "intends," "estimates," "plans," "continues," "pro forma," "may," "will," "seeks," "should" and "could," and words and terms of similar substance, although not all forward-looking statements include these words.
Our forward looking statements are not guarantees of our future performance and shareholders are cautioned not to place undue reliance on any forward looking statements. While we believe our forward looking statements are reasonable, such statements are inherently susceptible to uncertainty and changes in circumstances. As with any projection or forecast, forward looking statements are necessarily dependent on assumptions, data and/or methods that may be incorrect or imprecise, and may not be realized. Our forward looking statements are based on our current expectations and a variety of risks, uncertainties and other factors, many of which are beyond our ability to control or accurately predict.
All written forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by these cautionary statements. Forward-looking statements speak only as of the date on which they are made; we undertake no obligation to, and expressly disclaim any obligation to, update or revise forward-looking statements to reflect new information, changed assumptions, the occurrence of subsequent events, or changes to future operating results over time unless otherwise required by law.