Sprott Resource Holdings Press Releases

Press Release

Sprott Resource Corp. Institutes Monthly Dividend

TORONTO, Dec. 12, 2012 /CNW/ - Sprott Resource Corp. ("SRC") (TSX: SCP) announced today that its Board of Directors has declared an initial monthly dividend of $0.038 per common share (the "Initial Dividend").

The Initial Dividend will be paid on January 15, 2013 to shareholders of record at the close of business on December 31, 2012.  The full amount of the Initial Dividend is designated as an "eligible dividend" for purposes of the Income Tax Act (Canada).

Dividend Policy

SRC's Board of Directors also approved a policy (the "Dividend Policy") pursuant to which SRC intends to pay a monthly dividend at least equal to 0.833% of SRC's total equity attributable to shareholders ("SRC's Book Value") based on the most recently filed financial statements of SRC at the time the dividend is declared.  The amount of future monthly dividends will accordingly fluctuate quarterly with SRC's Book Value.

The Initial Dividend is based on SRC's Book Value as at September 30, 2012, adjusted to take into consideration the increase in SRC's Book Value due to its disposition of Waseca Energy Inc., as will be the monthly dividends that are declared prior to the filing of SRC's financial statements for the year ending December 31, 2012

"We are committed to providing shareholders with an attractive total return and increased liquidity," said Kevin Bambrough.  "We feel that our business has matured such that monetizations of our portfolio companies will be more predictable and the returns on such monetizations will support the Dividend Policy and grow SRC's Book Value per common share."

As disclosed in SRC's press release dated November 14, 2012, since inception in 2007, SRC has achieved an internal rate of return on investments(1) of approximately 28% and gross gains, excluding taxes and fees, of approximately $365 million, of which $280 million are gross realized gains.  In addition, since inception management has repurchased approximately $72 million in common shares, with over $38 million repurchased in 2012 alone.  Based on its historical returns and its return expectations, management believes that it can sustain the Dividend Policy and grow SRC's Book Value per common share over the long term.

Dividend Reinvestment Plan

SRC also intends to adopt a dividend reinvestment plan ("DRIP") early in 2013.  The DRIP will allow eligible shareholders of SRC to direct their dividends to be reinvested in additional SRC common shares which may be purchased in the market at prevailing market prices or issued from treasury at a price which may include a discount of up to 5% of the market price of SRC's common shares (as such term will be defined in the DRIP).

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 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.  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 information and statements

This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the forgoing, this news release contains forward-looking information and statements pertaining to SRC's dividend policy and its intention to adopt the DRIP.  Forward-looking statements or information are based on a number of material factors, expectations or assumptions which have been used to develop such statements and information but which may prove to be incorrect. The payment of dividends is not guaranteed and the amount and timing of any dividends payable by SRC will be at the discretion of the Board of Directors and will be established on the basis of SRC's earnings, the satisfaction of solvency tests imposed by applicable corporate law for the declaration and payment of dividends, and other relevant factors.  Although SRC believes the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because SRC can give no assurance that such expectations will prove to be correct.  The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statement, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors, which may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements, including, without limitation, those listed under the heading "Risk Factors" in SRC's annual information form dated March 27, 2012. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this release.

The forward-looking information and statements contained in this news release speak only as of the date of this news release, and SRC does not assume any obligation to publicly update or revise any of the included forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

(1) Non-IFRS Financial Measures

Internal rate of return is a rate of return measure often used in investment analysis to compare investment opportunities. The Company believes that providing an internal rate of return measure on a supplemental basis to our IFRS results is helpful to investors in assessing the overall performance of the Company over the past five years. Non-IFRS financial measures do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. Past performance is not a reliable indicator of future results.

The internal rate of return calculation incorporated cash flows beginning on September 30, 2007 related to issuance of common shares, including through the exercise of warrants and stock options, the repurchase of common shares through normal course issuer bids and the payment of management fees and incentive fees and excludes income taxes paid. The calculation also includes management's estimate of the fair value of subsidiaries and entities over which the Company has significant influence, if different from the net asset value reflected in the Company's financial statements. The internal rate of return calculation does not correlate perfectly with the performance of the Company's quoted stock price from its listing on the listed on the Toronto Stock Exchange, or the compound annual growth rate of the net asset value due to the adjustments described above.

SOURCE: Sprott Resource Corp.

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