TORONTO, Aug. 22 /CNW/ - Sprott Resource Corp. ("SRC") announced today that it has signed a lock-up agreement with Severstal Resources, the mining division of OAO Severstal ("Severstal") under which it has agreed to tender into a takeover bid (the "Offer") to be made by Severstal for all the outstanding shares of PBS Coals Limited, the resulting issuer of the proposed business combination between PBS Coals Corporation and Penfold Capital Acquisition Corporation (the "Business Combination"). The Offer will be made at C$8.30 per share of PBS Coals Limited. Assuming the proposed Business Combination is completed, SRC will own approximately 27.14 million shares of PBS Coals Limited. If the proposed take-over were completed, SRC would receive proceeds of approximately C$225.3 million. These proceeds would be in addition to proceeds (net of commissions) of approximately C$100 million that SRC will receive from its completed sale into escrow of 17.05 million shares of PBS Coals Corporation (see press release dated July 31, 2008). The Offer is subject to a number of conditions, including (i) receipt of all required regulatory and Court approvals in respect of the Offer; (ii) the completion of the Business Combination; and (iii) valid deposit of at least 66 2/3% of the outstanding shares of PBS Coals Limited (on a fully diluted basis). It is expected that the Offer will be made by September 5, 2008 (but in no event later than September 30, 2008). 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 Asset Management 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 Certain statements regarding SRC, including management's assessment of future plans, may constitute forward-looking statements under applicable securities laws and necessarily involve risk, including without limitation, the risk that the Offer will not be made, required regulatory and Court approvals will not be obtained and the Business Combination will not be completed. SRC's actual results or achievements could differ materially from those expressed in, or implied by, the forward-looking statements. No assurance can be given that any events anticipated by the forward-looking statements will occur. These forward-looking statements, which are based on management's current expectations, are made as at the date of this news release. SRC does not undertake any obligation to publicly update or revise any of these forward-looking statements, except as required by applicable securities laws.
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