TORONTO, Nov. 9 /CNW/ - (TSX: SCP) - Sprott Resource Corp. ("SRC") today announced that it has agreed, subject to the execution of definitive agreements, board approval and all necessary regulatory approvals, to purchase a 19.9% interest in VA Uranium Holdings Inc. ("VAUH"), a private company and sole shareholder of Virginia Uranium, Inc. ("Virginia Uranium"), which operates the Coles Hill Uranium Project in Virginia, U.S.A. Virginia Energy Resources Inc. (TSXV:VAE) ("Virginia Energy") owns 28.5% of the outstanding shares of VAUH and has a right, if exercised within 90 days of the closing of SRC's financing, to invest in VAUH on the same terms as SRC so as to maintain its current 28.5% ownership position in VAUH.
Kevin Bambrough, CEO of Sprott Resource Corp. commented: "This is an exciting project - one of only a handful of very large undeveloped uranium projects with compelling economics. The world needs more uranium production and a resource of this size is simply too important from a geopolitical perspective to remain idle. We look forward to providing the financial and strategic support necessary to see this project through to success."
Virginia Energy's CEO and President, Walter Coles Jr. commented: "We are delighted to have Sprott Resource Corp. as a partner in the project. The Sprott organization is recognized globally as one of the most astute investors in the natural resource space. Their investment is a tremendous vote of confidence in the project and management team, as well as the positive fundamental outlook for the industry."
Mr. Coles Jr. added: "Annual uranium production in the United States is less than 4 million pounds per year, compared to annual domestic uranium consumption of approximately 55 million pounds per year. The United States remains critically dependent on foreign uranium supplies to fuel its fleet of nuclear power plants. As China rapidly builds out its nuclear power infrastructure, the global competition for uranium resources will intensify. The Coles Hill Uranium Project offers the potential for significant local job creation and energy security for America. Modern techniques for uranium mining emphasize safety and environmental sustainability - the same will hold true for the Coles Hill Uranium Project."
SRC intends to purchase 16,752,523 VAUH shares from treasury at a price of C$0.358155 per share for total consideration of CAD$6 million. In addition, certain VAUH shareholders intend to exchange 16,154,319 shares of VAUH for 1,327,007 shares of SRC. The exchange ratio equates to one SRC share being issued for every 12.1735 VAUH shares transferred to SRC. Following the completion of the transaction, VAUH would have 165,707,411 shares outstanding.
About Sprott Resource Corp.
SRC is a Canadian based company, the primary purpose of which is to invest and operate in natural resources, including oil and gas, uranium, agriculture and agricultural nutrients as well as holding a large position in physical gold bullion. SRC seeks to provide its shareholders with capital appreciation and real wealth preservation. SRC draws upon the considerable experience and expertise of both its Board of Directors and Sprott Consulting Limited Partnership (SCLP), of which Sprott Inc. is the sole limited partner. SRC's shares trade on the Toronto Stock Exchange under the symbol SCP.
About Virginia Energy Resources Inc.
Virginia Energy Resources Inc. is a uranium development and exploration company. The company holds a 28.5% stake in the advanced stage Coles Hill uranium project in Virginia. Additionally, the company is pursuing active exploration programs in the Athabasca Basin on its Murphy River and Hatchet River uranium properties, which are held in a 50-50 Joint Venture with Denison Mines Ltd., and its 100% owned uranium properties in the Otish Basin of Quebec. The company is also a 32.7% shareholder of Boss Power Corporation. Virginia Energy Resources Inc. trades on the Toronto Venture Stock Exchange under the symbol VAE.
Forward Looking Statements
This news release includes certain forward-looking statements or information respecting the future performance of SRC's business, its operations, management's objectives, strategies, beliefs and intentions, including the expectation that SRC will complete the proposed transactions outlined in this press release. These forward-looking statements represent management's best judgment based on current facts and assumptions that management considers reasonable including the assumption that SRC will be able to reach a definitive agreement and obtain all necessary regulatory approvals in order to complete the transaction on the terms outlined in this press release. All forward-looking information is inherently uncertain and subject to a variety of risks, uncertainties and other factors that may cause SRC's actual results, performance or achievements to be materially different from those expressed or implied from such information, including failure to reach definitive agreement and failure to obtain regulatory approval. SRC has attempted to identify important factors that could cause its actual results, performance and achievements to differ materially from those contained in forward-looking statements. However, there can be other factors that cause results, performance and achievements not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. Accordingly, readers should not place undue reliance on forward-looking statements and the information contained therein. SRC does not intend, and does not assume any obligation, to update these forward- looking statements except as required by law.
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