TORONTO, June 10, 2011 /CNW/ - (TSX: SCP) - Sprott Resource Corp. ("SRC" or the "Company") today announced its financial results for the three months ended March 31, 2011. This is the first period that the Company has reported its results under International Financial Reporting Standards ("IFRS") rather than Canadian generally accepted accounting principles ("Canadian GAAP").
"We are pleased with the continued progress of our investee companies and the transactions we have been able to complete to date this year," said Kevin Bambrough, President and CEO of SRC.
"One Earth Farms Corp. ("One Earth Farms") significantly increased its acreage under management this year, making it Canada's largest crop and cattle farm," said Stephen Yuzpe, Chief Financial Officer of SRC and Chairman of One Earth Farms. "One Earth Farms has raised nearly $40 million of outside capital this year through a number of private placements at a 40% premium to SRC's investment cost. We are very pleased that other investors have recognized our value creation and the future potential of One Earth Farms."
"Our oil and gas segment showed strong growth year over year and is well positioned for additional growth and value creation," said Paul Dimitriadis, Chief Operating Officer of SRC and Director of Orion Oil & Gas Corporation ("Orion") and Waseca Energy Ltd. ("Waseca"). "The proposed merger between Orion and WestFire Energy Ltd. ("WestFire") will create a uniquely positioned, intermediate-sized producer focusing on the world class Viking oil resource play in Alberta and west central Saskatchewan. Waseca is advancing on its 62 well program for 2011, which we expect will increase Waseca's production to between 2,800 boe/d and 3,300 boe/d by year-end."
"We believe that the transactions we have completed to date this year, including the significant profit realized from our secondary offering of shares in Stonegate Agricom Ltd. ("Stonegate Agricom"), demonstrate the continued success of our business plan. This is a difficult investment environment, full of economic and monetary uncertainty. We continue to examine numerous investment opportunities in the resource space, but will have the discipline to wait for attractively priced acquisitions that will be accretive to our shareholders," concluded Kevin Bambrough.
Achievements by SRC Subsidiaries in Q1 2011 (and subsequent to the quarter):
Orion (TSX: OIP)
One Earth Farms
Stonegate Agricom (TSX: ST)
One Earth Oil & Gas Inc. ("OEOG")
SRC Q1 2011 Financial Highlights
|(in thousands)||Mar. 31, 2011||Dec. 31, 2010||% Change|
|Unconsolidated current assets|| |
|Cash and cash equivalents||$||83,155||$||59,512||40%|
|Other current assets||1,622||1,478||10%|
|Unconsolidated working capital|
|Unrealized mark-to-market and realized gains on public subsidiaries / liquid holdings|
|Orion - unrealized mark-to-market gains1||120,650||122,943||-2%|
|Stonegate Agricom - unrealized mark-to-market gains1 2||62,181||102,701|| -39% |
As at March 31, 2011, the Company had 113,376,783 common shares issued and outstanding. In January, the Company purchased and canceled 29,100 common shares under its normal course issuer bid. The Company believes it is in the best interest of its shareholders to purchase shares for cancellation when management believes they are trading at a significant discount relative to their value.
About Sprott Resource Corp.
SRC is a Canadian based company, the primary purpose of which is to invest, directly and indirectly, 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 Limited Partnership ("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.
Forward Looking Statements
This news release includes certain forward-looking statements respecting the future performance of SRC's business, its operations, management's objectives, strategies, beliefs and intentions, including the closing of the Orion and WestFire transaction and Waseca's future oil and gas production. These forward-looking statements represent management's best judgment based on current facts and assumptions that management considers reasonable including the assumption that the transaction between WestFire and Orion will close and that Waseca will drill its forecast number of wells the remainder of this year and that the production rates from such wells when combined with existing production will generate total production that will meet target estimates.
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, but not limited to, production rates from new wells drilled by Waseca not meeting expectations, Waseca's existing production decreasing above expectations and the inability to drill the expected number of oil and gas wells due to weather, labour disruptions or lack of capital, and the transaction between WestFire and Orion not closing due to a material breach of an agreement or the failure to obtain all required regulatory and shareholder approvals.
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.
Barrels of Oil Equivalent
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.
International Financial Reporting Standards (IFRS)
The quarter ending March 31, 2011 is the first period 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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