TORONTO, Nov. 14, 2011 /CNW/ - (TSX: SCP) - Sprott Resource Corp. ("SRC" or the "Company") today announced its financial results for the three and nine month periods ended September 30, 2011.
"During the third quarter, the broad market decline and continued volatility drove energy prices down, despite the ongoing tightness in oil supply. We believe the fundamentals for this sector remain extremely compelling and that the recent downturn presents opportunities to invest in oil and gas producers at very attractive valuations," said Kevin Bambrough, Chief Executive Officer of the Company. "On this weakness, the Company continued to add to its position in Guide Exploration Ltd. ("Guide") (formerly Galleon Energy Inc.). We recently began a review of strategic initiatives for Waseca Energy Ltd. ("Waseca"). Since the end of 2010, Waseca's production has more than tripled to 3,400 barrels a day, which represents significant value creation for our shareholders."
"In the agriculture segment, One Earth Farms Corp. ("One Earth Farms") recently completed harvest operations on 96 thousand acres of cropland," said Steve Yuzpe, Chief Financial Officer of the Company. "The majority of the harvested crop is currently being stored for sale throughout the year as historically the average prices begin to trend up following the end of harvesting season."
Achievements by SRC and Subsidiaries in Q3 2011 (and to the date hereof):
One Earth Oil & Gas Inc. ("OEOG")
One Earth Farms
Stonegate Agricom Ltd. ("Stonegate Agricom") (TSX: ST)
SRC Q3 2011 Financial Highlights
|(in thousands)||Sept. 30, 2011||Dec. 31, 2010||% Change|
|Unconsolidated current assets|
|Cash and cash equivalents||$||37,606||$||59,512||-37%|
|Other current assets||703||1,478||-52%|
|Unconsolidated working capital|
|Unrealized mark-to-market gains on Stonegate Agricom|
|Stonegate Agricom - unrealized mark-to-market gains1,2||$||30,076||$||102,701||-71%|
|Public investments (including WestFire)3||$||157,133||$||9,334||1583%|
|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 (32.7% interest) in Stonegate Agricom.|
|3. Portfolio investments are recorded at the determinable market value for public and private companies at the applicable valuation date.|
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.
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 Guide and the potential of the Cole Hill Uranium Project and 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; the future price of uranium; 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 September 30, 2011 is the third 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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