TORONTO, Aug. 14, 2013 /CNW/ - (TSX: SCP) - Sprott Resource Corp. ("SRC" or the "Company") today announced financial results for the three and six-months ended June 30, 2013.
"The second quarter was a challenging period for the Company as the sharp sell off in precious metals had a significant negative impact on the value of our physical gold bullion holdings," said Kevin Bambrough, Chief Executive Officer of SRC. "As a result, our Board of Directors has elected to cancel our dividend policy and dividend reinvestment plan and to cease paying monthly dividends in order to preserve capital and protect our ability to continue effectively executing our business plan. This was a difficult decision but we believe that the long-term interests of our shareholders will be best served by SRC maintaining sufficient financial flexibility to acquire and dispose of assets at the optimal times in the commodities cycle."
"We are bullish on gold over the long term, but recognize that if the resource markets continue to decline in the short term, SRC may elect to sell the gold bullion as a source of liquidity. SRC remains committed to the practice of enhancing shareholder value when management believes that the market price does not reflect the underlying asset value of the business," said Mr. Bambrough.
SRC intends to apply in September 2013 to the Toronto Stock Exchange (the "TSX") to commence a normal course issuer bid (the "New Bid") to repurchase and cancel additional Shares. Purchases under the New Bid will be made for cancellation through the facilities of the TSX or other Canadian market places at the prevailing market price of the Shares.
"We continue to be pleased with the progress of our investee companies and believe the portfolio is well-positioned in sectors that are poised for significant recoveries over the long term," continued Mr. Bambrough. "The outlook for natural gas, in particular, is positive and we have positioned ourselves well to benefit from its recovery through investments in businesses like Independence Contract Drilling, Inc. ("ICD") and Long Run Exploration Ltd. ("Long Run"), which has significant oil and natural gas assets in Alberta."
SRC Equity attributable to shareholders as at June 30, 2013 and to the date hereof
The following table outlines SRC's equity attributable to shareholders as at June 30, 2013 and reflects the value at which individual items are carried on SRC's balance sheet.
|(in thousands)||June 30, 2013|
|Cash and Cash Equivalents1||$||2,171|
|Other Current Assets||2,171|
|Consolidated investment in:3|
|OEOG (defined below)||16,517|
|One Earth Farms (defined below)||36,820|
|Fair value investment in:|
|Union Agriculture Group5||36,849|
|Virginia Energy (defined below)6||2,125|
|Potash Ridge (defined below)7||9,340|
|Equity investment in:|
|Less: Current Liabilities||(62,368)|
|Less: Non-Current Liabilities||(384)|
|Total equity attributable to shareholders (NAV)||$||346,818|
Financial Highlights for the three-months ended June 30, 2013
Achievements by SRC Subsidiaries and Investees for the three-months ended June 30, 2013 and to the date hereof:
Stonegate Agricom Issues Common Shares to SRC
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 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) potential future normal course issuer bids; (iii) SRC's dividend policy and dividend reinvestment plan; (iv) potential for a rebound in the energy sector; and (v) the future outlook for natural gas and the Company's position to benefit from its recovery through the Company's investments. 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 the future outlook for the energy sector and, in particular, natural gas as well as required regulatory approvals. 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 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); (iv) 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; (v) risks associated with rig construction projects (e.g., delays, cost overruns, start-up complications, operational problems); (vi) the ability of the Corporation to repurchase its securities will be limited by applicable corporate law; and (vii) those listed under the heading "Risk Factors" in SRC's annual information form dated March 28, 2013. 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.
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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