Sprott Resource Corp. Files March 31, 2008 Quarterly Report
/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/
TORONTO, May 15 - (TSX:SCP) - Sprott Resource Corp. (the
"Company"
or "SRC") reports that it has released its unaudited consolidated
financial
statements for the first quarter ended March 31, 2008 and that these
consolidated financial statements and the related management's discussion and
analysis of financial position and results of operations ("MD&A")
can be found
on SEDAR at www.sedar.com.
The Company ended the first quarter of 2008 in a strong
financial
position with working capital of $33.2 million. This number has decreased
since the end of the quarter due to the Company's additional investment in PBS
Coals Corporation ("PBS Canada") (described below). In addition, the
Company
held portfolio investments valued at $11.1 million, plus its investment in PBS
Canada.
A number of events took place subsequent to the end of the
first quarter,
which will affect the Company going forward. First, the Company invested an
additional U.S.$24 million in PBS Canada by electing to exercise its
preemptive rights in respect of a U.S.$64.5 million share offering by PBS
Canada. PBS Canada has used the funds raised through the share offering to
subscribe for shares of its subsidiary Mincorp Acquisition Corp. ("Mincorp"),
which in turn has used the funds to acquire all outstanding warrants and 30
percent of the stock owned by management and employees. As a result of these
transactions, PBS Canada now owns over 85 percent of Mincorp. The Company
continues to own approximately 37 percent of PBS Canada.
The coal market, and in particular the metallurgical coal
market, remains
exceptionally strong, with record price settlements being reported. Analysts
expect the market to remain strong into the foreseeable future. Management is
of the view that there is a structural deficit in the market, which should
support strong pricing for some time.
Also subsequent to the end of the quarter, the Company
entered into a
letter of intent with the parties to the Mantaro Phosphate Project exploration
and option agreement, which the Company entered into in November 2007.
Pursuant to the letter of intent, the Company has agreed to buy out the future
interests of the parties under the original agreement for 1,771,308 common
shares of the Company and U.S.$1.5 million in cash payments. As well, the
Company has agreed to make additional cash payments of up to U.S.$4 million
conditional on obtaining certain licenses, agreements and permits. Assuming a
definitive agreement is reached, the Company will have 100 percent ownership
of the Mantaro Phosphate Project (subject to a 2% royalty). The revised
structure will provide the Company with greater flexibility to explore
opportunities with joint venture partners, management groups and liquidity
options.
The Company also entered into two agreements subsequent to
the end of the
quarter concerning the exploration for potash and phosphate. The first, with
Altius, concerns the exploration of the St. George's basin in Newfoundland for
potash. The Company can earn up to 60 percent of the project by spending $2.5
million over 4 years. The second, with Lara Exploration Ltd.
("Lara"),
concerns the exploration for potash, phosphate and other fertilizer feedstock
minerals outside of Canada. Lara has mineral exploration experience in
particular regions of the world. The Company hopes to leverage that experience
into the generation of attractive fertilizer feedstock minerals projects.
The Company also announced subsequent to the end of the
quarter that it
has formed a new company named One Earth Resources Corp. ("One
Earth"), to be
headed by Mr. Blaine Favel, former Grand Chief of the Federation of
Saskatchewan Indian Nations. One Earth will be focused on resource development
opportunities with the First Nations. The Company will seed One Earth with
initial capital and then invest in projects generated by One Earth on a
case-by-case basis. Management believes that there are excellent natural
resource development opportunities on First Nations' lands and is pleased to
be able to work with Mr. Favel.
Finally, the Company announced, subject to shareholder,
warrantholder and
regulatory approval, a warrant incentive program to encourage the early
exercise of 39,920,000 warrants that expire September 5, 2009. Details of this
warrant incentive program are disclosed in the Company's press release dated
May 13, 2008. Having early access to the additional capital provided by these
warrants would give the Company the ability to grow and diversify its exposure
to quality resource opportunities.
Going forward, management will continue to seek out
attractive business
opportunities in the natural resource sector and will work on advancing its
current projects.
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 or future market conditions, may constitute forward-looking
statements under applicable securities laws and necessarily involve risk,
including without limitation, risks associated with mineral exploration
projects and risks associated with commodity prices. 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. Subject to
applicable laws, SRC does not undertake any obligation to publicly update or
revise any of these forward-looking statements, except as required by
applicable securities laws.
For further information: William Filtness, Chief Financial Officer, Tel:
(416) 977-7333, Fax: (416) 977-9555