Sprott Resource Corp. Announces Additional
US$24 Million Investment in PBS Coals Corporation
/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR
DISSEMINATION IN
THE UNITED STATES/
TORONTO, May 7 - (TSX: SCP) - Sprott
Resource Corp. ("SRC") today
announced that it has invested an additional US$24,000,000 in PBS Coals
Corporation ("PBS Coals") as part of an aggregate funding of
approximately
US$64,500,000. The PBS Coals shareholders' agreement provides that SRC, and
each other shareholder, has a pro-rata right to take up any further share
offerings of PBS Coals. SRC has been informed that substantially all of the
other shareholders have also elected to take up their pro-rata interests.
"We believe the price of metallurgical coal will stay strong
for some
time, due to a structural deficit in the market," said Kevin Bambrough,
President and CEO of SRC. "The expansion projects at PBS, including two
new
mines, an additional processing facility, the increasing of capacity at the
existing processing facility and the acquisition of additional coal properties
in the immediate area of the plants are on schedule and expected to allow the
company to produce over 5 MM
tons of primarily high quality metallurgical coal
by the year 2010. PBS is an experienced low cost producer that is well
positioned to deliver strong and steadily increasing operating and financial
results over the next few years."
PBS Coals will use the proceeds to subscribe for additional
shares of
Mincorp Acquisition Corp. ("Mincorp"),
which will use the additional funds to
purchase, for cancellation, all outstanding warrants as well as 30% of Mincorp
stock held by management. Upon the closing of the transactions SRC will
continue to own approximately 37% of PBS Coals and PBS Coals will own over 85%
of the common stock of Mincorp, with management and
employees retaining the
balance. SRC's effective diluted interest in Mincorp will increase from
approximately 22.4% to 31.6%.
Mincorp, through its wholly owned
subsidiaries PBS Coals, Inc. and
RoxCoal, Inc., currently produces over 3 MM tons per annum of
primarily high
quality, low volatility metallurgical coal in Somerset County, Pennsylvania.
Mincorp and its subsidiaries and predecessor
companies have been operating
open-pit and underground coal mines for more than 45 years, and have long
standing relationships with many of the most significant global consumers of
metallurgical coal.
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 and its investment in PBS
Coals,
including management's assessment of future plans, may constitute
forward-looking statements under applicable securities laws and necessarily
involve risk, including without limitation, risk associated with future
commodity prices, foreign exchange rate fluctuation, government regulation
relating to the production of coal, environmental risks, changes in laws,
capital expenditure cost increases, increases in mining and energy costs and
operational issues at mine sites. SRC's and PBS
Coals' 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.
For further information: Kevin Bambrough, President
and Chief Executive
Officer, Tel: (416) 977-7333, Fax: (416) 977-9555, E-mail:
info@sprottresource.com