Records net income of $84.8 million for the six month period ended June 30, 2011
TORONTO, Aug. 15, 2011 /CNW/ - (TSX: SCP) - Sprott Resource Corp. ("SRC" or the "Company") today announced its financial results for the three and six month periods ended June 30, 2011.
"Our investment philosophy is rooted in the belief that investments in hard assets such as gold bullion, energy and agriculture are the best means to protect and build wealth," said Kevin Bambrough, Chief Executive Officer of the Company. "Over the last four years, we have built a strong portfolio of investments that is well positioned to withstand the impact of the deteriorating economic environment and preserve our shareholders' wealth, despite rising deficits, falling credit ratings and a widespread loss of confidence in fiat currencies and other faith-based assets."
"During the second quarter, we continued to build value in our energy subsidiaries. In June, we concluded the merger of Orion Oil & Gas Corporation ("Orion") with WestFire Energy Ltd. ("WestFire")" said Paul Dimitriadis, Chief Operating Officer of the Company. "As well, Waseca Energy Inc. ("Waseca") continues to show impressive growth in production, achieving an exit rate of more than 2,000 barrels of oil per day ("boe/d") of heavy oil as at June 30, 2011, an increase of 31% over the first quarter of 2011."
"In the agriculture segment, despite wet weather conditions this spring, One Earth Farms Corp. ("One Earth Farms") successfully seeded 98% of its acres under management and experienced strong crop growth to date," said Steve Yuzpe, Chief Financial Officer of the Company. "We expect One Earth Farms' crop harvest to begin in late August or early September."
"With more than $165 million in cash and gold bullion at June 30, 2011, we have the financial strength to consider new investment opportunities and support our existing subsidiaries," concluded Mr. Bambrough. "However, we will maintain our disciplined approach and wait for attractively priced acquisitions that will be immediately accretive to our shareholders."
Achievements by SRC Subsidiaries in Q2 2011 (and to the date hereof):
One Earth Farms
Stonegate Agricom Ltd. ("Stonegate Agricom") (TSX: ST)
One Earth Oil & Gas Inc. ("OEOG")
SRC Q2 2011 Financial Highlights
|(in thousands)||Jun. 30, 2011||Dec. 31, 2010|
|Unconsolidated current assets|
|Cash and cash equivalents||$ 62,492||$ 59,512|
|Other current assets||827||1,478|
|Total||$ 170,195||$ 166,587|
|Unconsolidated working capital|
|Current assets||$ 170,195||$ 166,587|
|Total||$ 154,527||$ 165,499|
|Unrealized mark-to-market and realized gains on public subsidiaries / liquid holdings|
|Stonegate Agricom - unrealized mark-to-market gains1, 2||$ 31,591||$ 102,701|
|Total||$ 31,591||$ 102,701|
|Public investments (including WestFire)3||$ 221,102||$ 9,334|
|Total||$ 268,728||$ 66,057|
|1. Mark-to-market gains calculated as market value at the applicable valuation date less book (carrying) value.|
|2. In 2011 the Company has sold 28,750,000 common shares at a price of $1.75 per share for aggregate gross proceeds of $50.3 million. The Company has recorded a gain of $35.8 million on the sale. The company currently holds 46,912,000 common shares (32.8% interest) in Stonegate Agricom.|
|3. Portfolio investments are recorded at the determinable market value for public and private companies at the applicable valuation date.|
In the second quarter, the Company purchased and canceled 250 thousand common shares of SRC 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. As at June 30, 2011, the Company had 113,126,510 common shares issued and outstanding.
SRC Corporate Announcement
The board of directors of SRC today announced that Michael Winn has agreed to become Chairman of the Board of SRC effective today. Mr. Bambrough said "We are pleased that Mr. Sprott will continue on the board of directors to work with Mr. Winn, the rest of the board and the management team on the Company's strategic direction."
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 contains forward-looking statements including those relating to expected land to be farmed and harvested and grazed by One Earth Farms, expected oil and gas production and drilling plans by Waseca and OEOG, the purchase or sale of securities in Galleon and the potential of Stonegate Agricom's Mantaro project and Paris Hills project. Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. These forward looking statements are based on current expectations and various estimates, factors and assumptions including: expected oil and gas production results from future drilling by Waseca and OEOG; expected rates of production by Waseca and OEOG; oil and gas reserves of Waseca and OEOG; the merger between Orion and WestFire Energy Ltd., including any anticipated benefits of such transaction; the successful crop harvest and purchase of cattle by One Earth Farms; expected mineral reserves and resources; results of Stonegate Agricom's exploration and drilling programs; and expectations regarding future legislative changes.
These forward-looking statements involve known and unknown risks, including, but not limited to: general economic, market and business conditions; fluctuations in oil and gas prices; the results of exploration and development drilling and related activities; the uncertainty of reserve and resource estimates; changes in environmental and other regulations; risks associated with oil and gas operations; weather risk associated with farming operations; operational risk associated with farming; mining risks; commodity price changes; and other risks, which are beyond the control of the Company or its subsidiaries.
Readers are cautioned not to place undue reliance on these statements as the Company's actual results, performance or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements if known or unknown risks, uncertainties or other factors affect the Company's business, or if the Company's estimates or assumptions prove inaccurate and as such the Company cannot provide any assurance that forward-looking statements will materialize. Subject to applicable laws, the Company assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason. 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, 2010.
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 June 30, 2011 is the second 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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