Jan. 9 (Bloomberg) -- Sprott Molybdenum Participation Corp., the fund started by Canadian money manager Eric Sprott, said it will cease operations less than two years after it was formed because the price of the metal plunged.

Most or all the assets of the closed-end fund will be distributed to shareholders because of the “unfavorable outlook” for the metal, the Toronto-based fund said today in a statement. The timing of the closing will be announced at a later date, Sprott said.

Molybdenum, used to strengthen oil pipelines, soared more than 15-fold from the end of 2000 to June 2005, prompting companies such as Freeport McMoRan Copper & Gold Inc. to increase output. Since Sprott raised C$200 million ($167.9 million) in April 2007 to invest in molybdenum supplies and shares of producers, molybdenum prices fell by 57 percent and the fund’s value plunged 76 percent through yesterday.

Eric Sprott is the founder and chief executive officer of Canadian hedge fund manager Sprott Inc.

The drop in metal prices caused declines for producers of the metal such as Freeport, the world’s largest, which fell 76 percent last year. General Moly Inc., developing a new mine in Nevada, dropped 90 percent in 2008.

Sprott Molybdenum rose 18 cents, or 13 percent, to C$1.57 at 4:15 p.m. in Toronto Stock Exchange trading.