TORONTO, March 28, 2013 /CNW/ - (TSX: SCP) - Sprott Resource Corp. ("SRC" or the "Company") today announced financial results for the twelve-months ended December 31, 2012.
"Throughout 2012, we continued to support the growth and development of our investee companies," said Kevin Bambrough, Chief Executive Officer of SRC. "During the year, we completed the successful disposition of one business and made new investments in the energy services and agricultural nutrients sectors. In keeping with our commitment to providing our shareholders with an attractive total return and increased liquidity, we also continued to buy back stock through our normal course issuer bid and, in December, we implemented a monthly dividend that will pay approximately 10% of SRC's average annual total equity attributable to shareholders."
"In November, we completed the disposition of our investment in Waseca Energy Ltd. ("Waseca") for gross proceeds of $111.7 million compared to an investment of $44.2 million," added Paul Dimitriadis, SRC's Chief Operating Officer. "We continue to have a positive view of the energy sector and look forward to working with management teams to build value in our oil and gas investments in 2013."
"We are pleased with the progress of one of our newer investments, Independence Contract Drilling Inc. ("ICD"), as management executes on its three-year strategic plan. ICD's strategy is to continue to build and contract its leading edge technology rigs for the drilling operations of global E&P companies," said Arthur Einav, SRC's General Counsel and Managing Director.
"Our agricultural investments continued to make progress in 2012," said Steve Yuzpe, Chief Financial Officer of SRC. "Most notably, One Earth Farms Corp. ("One Earth Farms" or "OEF") completed the acquisition of Beretta Farms Inc. ("Beretta Farms"), a purveyor of hormone free and antibiotic free natural and organic branded meat products in Ontario and British Columbia. This transaction is an important milestone in One Earth Farms' strategy of vertical integration and branded food products to meet the needs of retailers and consumers, while generating increased margins from an integrated supply chain."
"In 2012, SRC marked five years in operation and, since inception to December 31, 2012, has delivered a 27%1 internal rate of return ("IRR") on our investments," added Mr. Bambrough. "We are very proud of this achievement, which places us near the top of all comparable resource-focused private equity strategies over the same time period. We believe that our investment process is proven, disciplined and repeatable and look forward to continuing to create value for our shareholders in the years ahead."
SRC 2012 Equity attributable to shareholders to the date hereof
The following table outlines SRC's equity attributable to shareholders as at December 31, 2012 and reflects the value at which individual items are carried on SRC's balance sheet.
|(in thousands)||December 31, 2012|
|Cash and Cash Equivalents1||$||5,405|
|Other current assets||1,470|
|Loan receivable from associate||4,500|
|Consolidated investment in:3|
|OEOG (defined below)||7,228|
|One Earth Farms||42,416|
|Fair value investment in:|
|Long Run (defined below)4||173,282|
|Union Agriculture Group5||38,729|
|Virginia Energy (defined below)6||3,228|
|Anthem Resources (defined below)7||263|
|Potash Ridge (defined below)8||14,667|
|Equity investment in:|
|Stonegate Agricom Ltd.9||15,332|
|Less: Current Liabilities||(10,712 )|
|Less: Non-Current Liabilities||(12,316 )|
|Total equity attributable to shareholders (NAV)||$||459,872|
Financial Highlights for the twelve-months ended December 31, 2012
Achievements by SRC Subsidiaries and Investees for the twelve-months ended December 31, 2012 (and to the date hereof):
SRC passes five-year anniversary and establishes performance track record
Institutes and maintains dividend policy and introduces dividend reinvestment plan
One Earth Farms
The merger of WestFire Energy Ltd. and Guide Exploration Ltd. to form Long Run
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 contains certain forward-looking information and statements (collectively referred to herein as "Forward-Looking Statements") within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify Forward-Looking Statements. In particular, but without limiting the forgoing, this news release contains Forward-Looking Statements pertaining to: (i) SRC's future strategies, outlook, investment opportunities and anticipated events or results; (ii) the creation of value for SRC shareholders in the future; (iii) SRC's Dividend Policy, future dividend payments and DRIP (including any applicable discounts in the purchase price); (iv) the building of value in the Company's oil and gas investments in 2013; (v) One Earth Farms' strategy of vertical integration and branded food products and the expectation that it will allow OEF to meet the needs of retailers and consumers, while generating increased margins from an integrated supply chain; and (vi) the anticipated production of Gift Lake heavy oil project. Forward-Looking Statements are based on a number of expectations or assumptions which have been used to develop such information and statements but which may prove to be incorrect, including, but not limited to: (i) the benefits of investments; (ii) expected sales and margins of Beretta Farms; (iii) oil and gas reserves; (iv) expected oil and gas production results from future drilling by OEOG; and (v) expected rates of production by OEOG. Although SRC believes the expectations and assumptions reflected in such Forward-Looking Statements are reasonable, undue reliance should not be placed on Forward-Looking Statements because SRC can give no assurance that such expectations and assumptions will prove to be correct. The Forward-Looking Statements included in this new release are not guarantees of future performance and should not be unduly relied upon. Such information and statements, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors, which may cause actual results or events to differ materially from those anticipated in such Forward-Looking Statements, including, without limitation: (i) general economic, market and business conditions; (ii) market volatility that would affect the ability to enter or exit investments; (iii) risks associated with the farming industry in general (e.g., weather risks, operational risks in production; the uncertainty of estimates and projections related to crop and cattle); (iv) risks associated with the food product and retail business (e.g. food safety risks and fluctuations in the price of inputs and sales volumes); (v) risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to reserves, production, costs and expenses, and health, safety and environmental risks); (vi) commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures; (vii) mining risks; (viii) the uncertainty of mineral reserves and resources; (ix) changes in environmental and other regulations; and * those listed under the heading "Risk Factors" in SRC's annual information form dated March 28, 2013. In addition, the payment of dividends is not guaranteed and the amount and timing of any dividends payable by SRC will be at the discretion of the Board of Directors and will be established on the basis of SRC's earnings, the satisfaction of solvency tests imposed by applicable corporate law for the declaration and payment of dividends, and other relevant factors. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the Forward-Looking Statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the Forward-Looking Statements contained in this news release. The Forward-Looking Statements contained in this news release speak only as of the date of this news release, and SRC does not assume any obligation to publicly update or revise any of the included Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
Non-IFRS Financial Measures
(1) Internal rate of return is a rate of return measure often used in investment analysis to compare investment opportunities. The Company believes that providing an internal rate of return measure on a supplemental basis to our IFRS results is helpful to investors in assessing the overall performance of the Company over the past five years. Non-IFRS financial measures do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. Past performance is not a reliable indicator of future results.
The internal rate of return calculation incorporated cash flows beginning on September 30, 2007 related to issuance of common shares, including through the exercise of warrants and stock options, the repurchase of common shares through normal course issuer bids and the payment of management fees and incentive fees and excludes income taxes paid. The calculation also includes management's estimate of the fair value of subsidiaries and entities over which the Company has significant influence, if different from the net asset value reflected in the Company's financial statements. The internal rate of return calculation does not correlate perfectly with the performance of the Company's quoted stock price from its listing on the listed on the Toronto Stock Exchange, or the compound annual growth rate of the net asset value due to the adjustments described above.
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.
SOURCE: Sprott Resource Corp.
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