TORONTO, March 29, 2012 /CNW/ - (TSX: SCP) Sprott Resource Corp. ("SRC" or the "Company") today announced that it has filed its annual audited financial statements for the twelve months ended December 31, 2011 and the related management discussion and analysis, as well as its Annual Information Form, which includes its Statement of Reserves Data and Other Oil and Gas Information. All filings can be found on SEDAR.
"In 2011, despite the volatility in the financial markets, we successfully executed on our strategy to create value for our shareholders through the continued growth of our subsidiaries and minority investments," said Kevin Bambrough, President and CEO of Sprott Resource Corp. "For the twelve-months ended December 31, 2011, we reported net income of $98.7 million ($0.90 per basic and diluted share) and increased net asset value (defined as total assets less liabilities and non-controlling interest) to $511.5 million from $433.2 million a year earlier. We continue to believe that our shares are trading well below their fair value and, as a result, we have been regularly buying back stock through our normal course issuer bid," continued Mr. Bambrough.
"Waseca Energy Inc. ("Waseca") reported tremendous production, reserves and net asset value growth last year," said Paul Dimitriadis, SRC's Chief Operating Officer and Director of Waseca. "Exit rate of production increased from 1,046 barrels of oil per day ("bbl/d") as at December 31, 2010 to 3,746 bbl/d as at December 31, 2011. Waseca's proved and probable reserves increased from 4.7 million barrels of oil equivalent ("boe") (95% heavy oil) as at December 31, 2010 to 24.5 million boe (99% heavy oil) as at December 31, 2011 and their net present value (10% discount rate and after income tax) increased from $84.4 million as at December 31, 2010 to $262.7 million as at December 31, 2011. As at December 31, 2011, the carrying value of our 81% stake in Waseca was approximately $42 million, which does not reflect the significant growth in Waseca's net present value during the year. We look forward to further growth from Waseca this year, with production targeted to exit 2012 at between 4,600 bbl/d and 5,000 bbl/d (all heavy oil)."
"In the agriculture segment, the Company invested in Potash Ridge Corporation ("Potash Ridge"), a private mineral resource company focused on its two 100% owned potash deposits in Utah. One Earth Farms Corp. ("One Earth Farms") also continued to expand its operations and, in 2012, will be exploring opportunities to develop premium-branded products from its crop and cattle operations," said Steve Yuzpe, the Company's Chief Financial Officer.
The following table outlines SRC's net asset value as at December 31, 2011 and reflects the value at which individual items are carried on SRC's balance sheet as at such date.
SRC 2011 Net Asset Value
|(in thousands)||As at|
|Dec. 31, 2011|
|Cash and Cash Equivalents1||$15,336|
|Other current assets||996|
|Consolidated investment in:3|
|OEOG (defined below)||11,493|
|One Earth Farms||47,879|
|Fair value investment in:|
|WestFire (defined below)4||162,541|
|Guide (defined below)5||48,731|
|Union Agriculture Group6||45,441|
|Potash Ridge (defined below)7||9,900|
|VA Uranium Holdings, Inc.||4,421|
|Equity investment in:|
|Less: Current Liabilities||(3,421)|
|Less: Non-Current Liabilities||(16,060)|
SRC 2011 Financial Highlights
Achievements by SRC Subsidiaries and Investees in 2011 (and to the date hereof):
One Earth Farms
About Sprott Resource Corp.
SRC is a Canadian-based company, the primary purpose of which is to invest and operate in natural resources through its subsidiaries. Through acquisitions, joint ventures and other investments, SRC seeks to provide its shareholders with exposure to the natural resource sector for the purposes of capital appreciation and real wealth preservation. SRC is well positioned to draw upon the considerable experience and expertise of both its Board of Directors and Sprott Consulting LP (SCLP), of which Sprott Inc. is the sole limited partner. Pursuant to a management services agreement between SCLP and SRC, SCLP provides day-to-day business management for SRC as well as other management and administrative services. SRC invests and operates through Sprott Resource Partnership (SRP), a partnership between SRC and Sprott Resource Consulting Limited Partnership, an affiliate of SCLP which is the managing partner of SRP.
Forward Looking Statements
This news release includes forward-looking information relating to Waseca's reserves, Waseca's 2012 production targets and One Earth Farms exploring opportunities to develop premium branded products. Forward-looking information looks into the future and provides an opinion as the effect of certain events and trends on the business of SRC and, more specifically, forward-looking information relating to "reserves" is deemed to be forward-looking information, as such information involves the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future. The forward-looking information contained in this news release is based on current expectations and various estimates, factors and assumptions including, among others: historical production in the areas in which the Waseca's reserves are located compared with production rates from similar producing areas; future commodity prices, production and development costs, royalties and capital expenditures; initial production rates; production decline rates; ultimate recovery of reserves; success of future exploitation activities; marketability of production; effects of government regulation; and other government levies that may be imposed over the producing life of reserves.
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: general economic, market and business conditions; fluctuation in market prices for petroleum and natural gas; fluctuations in foreign exchange rates; changes in laws and regulations; geological, technical, drilling and processing problems and other difficulties in producing petroleum and natural gas reserves; change in business strategy; uncertainties associated with estimating petroleum and natural gas reserves; and risks associated with oil and gas operations generally.
SRC has attempted to identify important factors that could cause its results, performance and achievements to differ materially from those contained in the forward-looking information contained in this news release. 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 the forward-looking information contained in this news release. SRC does not intend, and does not assume any obligation, to update these forward-looking information contained in this news release except as required by law. For a description of additional material factors that could cause the Company's actual results to differ materially from the forward-looking statements, please see the risks and uncertainties set out in the "Forward-Looking Statements" section and "Risk Factors" section in the Company's Annual Information Form for the year ended December 31, 2011.
Information Regarding Disclosure on Oil and Gas Information
Where amounts are expressed in a barrel of oil equivalent ("boe"), or barrel of oil equivalent per day ("boe/d"), natural gas volumes have been converted to barrels of oil equivalent on the basis that 6 thousand cubic feet ("mcf") is equal to one barrel of oil. Use of the term boe may be misleading, particularly if used in isolation. This boe conversion ratio is based on an energy equivalence methodology, and does not represent a value equivalency. Indeed, the energy and value relationships may differ widely with market conditions. The conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.
The future net revenue estimates in this news release do not represent fair market value.
International Financial Reporting Standards (IFRS)
The year ended December 31, 2011 is the first annual statements that the Company has reported its results under International Financial Reporting Standards ("IFRS") rather than Canadian GAAP. The Canadian Accounting Standards Board requires publicly accountable enterprises to adopt IFRS for fiscal years beginning on or after January 1, 2011. We have applied IFRS retrospectively as of January 1, 2010 for comparative purposes.
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