TORONTO, Oct. 3, 2011 /CNW/ - Sprott Resource Corp. ("SRC" or the "Company") (TSX: SCP) -announced today that it has completed a corporate reorganization (the "Reorganization") which will enable the Company to pursue its business goals in a more efficient and effective manner. As a result of the Reorganization, SRC will invest and operate in the natural resource sector through Sprott Resource Partnership (the "Partnership"), a partnership between SRC and Sprott Resource Consulting Limited Partnership (the "Managing Partner"), an affiliate of Sprott Consulting LP. Substantially all of the current holdings of SRC have been transferred to the Partnership.
The Managing Partner has the power and authority to transact the business of the Partnership and to deal with the Partnership assets for the use and benefit of the Partnership, including the power and authority to manage and carry on the business of the Partnership.
In connection with the Reorganization, an amended and restated management services agreement between SRC and Sprott Consulting LP has been entered into in order to give effect to the new corporate structure of SRC and a partnership agreement has been entered into between SRC and the Managing Partner. Copies of the amended and restated management services agreement and partnership agreement will be available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.SEDAR.com.
The Reorganization has not altered the overall entitlement of Sprott Consulting LP or its affiliates when compared to the prior management services agreement dated September 5, 2007. A description of the fees payable by SRC can be found in SRC's Annual Information Form dated March 28, 2011 under "Material Contracts". In addition, SRC and the Managing Partner have clarified in the partnership agreement that any distribution to the Managing Partner of 20% of the pre-tax profits of the Partnership resulting from a disposition of an asset for non-cash consideration shall not be made until the earlier of such time as * such non-cash consideration is disposed of for cash, in which event the amount of such distribution shall be based on the amount of cash received by the Partnership for such non-cash consideration; (y) the Managing Partner is removed as managing partner of the Partnership; and (z) the Partnership is liquidated or dissolved.
About Sprott Resource Corp.
SRC is a Canadian-based company, the primary purpose of which is to invest and operate in natural resources. 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.
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