/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/ TORONTO, May 13 /CNW/ - (TSX:SCP) - Sprott Resource Corp. ("SRC") announces today a warrant incentive program (the "Warrant Incentive Program") to encourage the early exercise of 39,920,000 warrants that expire September 5, 2009 (the "Warrants"). The Warrant Incentive Program is subject to shareholder, warrantholder and regulatory approval. The Warrants were issued as part of a financing completed in September 2007 and can be exercised at $2.50 per share. In order to encourage the early exercise of the Warrants, SRC will be seeking to amend the terms of the Warrants so that holders who exercise their Warrants after all necessary approvals have been obtained (being on or about June 16, 2008) and before July 7, 2008 (the "Deadline") will also receive one-half of one new common share purchase warrant (a "New Warrant"). Each whole New Warrant will be exercisable for one common share at a price of $4.25 until December 31, 2010, subject to SRC's ability to call the New Warrant if the trading price of SRC's common shares is equal to or greater than $6.00 for 20 consecutive trading days. Warrants that are not exercised prior to the Deadline will remain unchanged. New Warrants will be issued immediately upon exercise of any Warrants prior to the Deadline date, provided that each New Warrant will be subject to a four-month hold period from the Deadline date regardless of the date of issue. SRC intends to apply to TSX to list the New Warrants upon the expiry of such four-month hold period. The New Warrants will be governed pursuant to the terms of a warrant indenture, which will contain standard anti-dilution provisions. There are currently 51,741,346 common shares outstanding and 39,920,000 Warrants. The proposed issuance of common shares upon exercise of all of the 19,960,000 New Warrants would represent 38.6% of the currently outstanding common shares excluding the exercise of the Warrants, but would represent 21.8% of the outstanding common shares taking into account the exercise of the Warrants. To implement the warrant incentive program the TSX requires that we obtain disinterested shareholder approval, for among other things, the amendment to the terms of the Warrants which are currently "in-the-money warrants" and Warrants being held by insiders. This approval requires the approval of a majority of the votes cast by all of the shareholders of common shares excluding votes attached to shares beneficially owned by insiders (including their affiliates or associates) who own Warrants. The amount of common shares and Warrants held by such insiders (including their affiliates and associates) will be disclosed in the materials sent to shareholders and in a future press release. In lieu of a shareholders' meeting, we are obtaining the appropriate approvals through written consent. The Warrant Incentive Program, including amendments to the existing warrant indenture for the Warrants by way of supplemental indenture, must also be approved by holders of not less than 66 2/3% of the Warrants outstanding. SRC will deliver instructions to shareholders and warrantholders regarding the approval of the Warrant Incentive Program to be effected by written consent. The Corporation will issue a press release and notify holders of Warrants when all requisite approvals have been obtained. Exercising the Warrants will provide the Corporation with up to $99.8 million in additional capital to acquire additional interests in natural resource properties and assets. The gross proceeds, if all the New Warrants were exercised, would be $84.8 million. The Corporation has concluded that, with the current state of the equity markets, the Warrant Incentive Program provides a way to raise capital that is quick, relatively inexpensive, as there would be no broker commissions or fees, and less dilutive to shareholders than other means. "We feel that this in the best interest of shareholders and warrantholders, and is the least dilutive way to raise additional funds at this time given that the Warrants already exist and that the exercise price for the New Warrants is above market," said Kevin Bambrough, President and CEO of SRC. "We are hopeful that warrantholders and shareholders will approve the program and that warrantholders will elect to exercise their warrants early, as we are currently reviewing many interesting transactions, which we feel would be accretive to our shareholders. Having early access to this additional capital will give SRC the ability to grow and diversify its exposure to quality resource opportunities." This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of the securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful. 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 future transactions may not be accretive to shareholders. 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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