Sprott Resource Corp. Announces Third Quarter Results
TORONTO, Nov.
12 - Sprott Resource Corp. ("SRC" or the "Company") today announced its
financial results for the three and nine month periods ended September
30, 2010.
Q3 2010 and Q4 to date Highlights:
- Orion
Oil & Gas Corporation ("Orion") achieved an exit rate of approximately 5,000 boe/d, an 11%
increase from the second quarter of 2010 and a 100% increase from December
31, 2009. Orion's production has increased to over 5,800 boe/d since the
end of the third quarter.
- Waseca
Energy Inc. ("Waseca") achieved an exit rate of 533 bbl/d.
Waseca's production has since increased to approximately 850 bbl/d since
the end of the third quarter.
- One
Earth Farms Corp. ("One Earth Farms") has completed its 2010
harvest and is currently planning field operations for 2011. One Earth
Farms anticipates becoming the largest crop farm in Canada in 2011.
- One
Earth Oil and Gas Inc. ("One Earth Oil & Gas") completed an $8.1
million private placement to fund its 2010 capital program.
As part of that private placement, SRC purchased 7 million common shares
for $1.00 each. Building upon that success, One
Earth Oil and Gas has entered into joint venture and lease agreements with
First Nations and private companies in Canada
and the United States, and has commenced exploration
drilling under these agreements.
- The
market value of the Company's gold bullion holdings has increased to $99.7
million as at the end of Q3 and $104.2 million
as at November 11, 2010. The Company's gold bullion
is recorded at cost ($75.4 million as at the end of Q3) on its
financial statements.
- During
and subsequent to quarter end, a total of 3.9 million share purchase
warrants (exercisable at $4.25) were exercised for
total proceeds of $16.5 million. The remaining 12.7 million
warrants expire on December 31, 2010 and represent $53.9
million of proceeds if exercised in full.
"We continue to build value in each of our
subsidiaries and investments," said Kevin Bambrough,
President and CEO of Sprott Resource Corp. "In
our view, energy, agriculture and precious metals are the sectors that will
continue to outperform over time as global currency devaluations continue and
investor demand for alternative stores of wealth grows."
"We are also pleased with our most recently announced proposed acquisition
of a 19.9% stake in the Coles Hill Uranium Project, located in Virginia U.S.A.
This project has many attractive attributes and we look forward to being part
of its development."
Financial Highlights:
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Consolidated Income Statements
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Three Months Ended
September 30, 2010
|
Three Months Ended
September 30, 2009
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Net loss ($000's)
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($6,194)
|
($3,040)
|
Loss per share - basic
|
($0.07)
|
($0.04)
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Loss per share - diluted
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($0.07)
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($0.04)
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Consolidated Balance Sheets
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As
at
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September
30,
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Dec.
31, 2009
|
|
2010 ($000's)
|
($000's)
|
Cash and cash equivalents
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$51,354
|
$107,085
|
Gold bullion (at cost)
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$75,392
|
$75,392
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Portfolio investments
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$44,138
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$33,750
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Total Assets
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$446,686
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$408,602
|
|
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Current liabilities
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$39,068
|
$21,930
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Long-term liabilities (including non-controlling
interest)
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$63,996
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$52,110
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Shareholders' equity
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$343,622
|
$334,562
|
Financial Review
Working Capital
As at September 30, 2010, the Company had current assets
of $156.3 million, consisting primarily of cash and
cash equivalents ($51.4 million), gold bullion ($75.4 million),
accounts receivable ($17.2 million) and inventory ($6.7 million).. Current liabilities of $39.1 million
consist of accounts payable and accrued liabilities ($39.0 million)
and capital tax payable ($77 thousand).
For the quarter ended September 30, 2010, working capital (defined as
current assets minus current liabilities) has decreased to $117.3
million from $176.0 million as at Dec. 31, 2009.
The decrease in working capital compared to the year-ended December
31, 2009, is attributable to the net purchase of private
securities, the purchase of long-term assets and operating losses at the
Company and its subsidiaries.
Oil and Gas Revenue (net of royalties)
For the three-months ended September 30, 2010, oil and gas revenue net of
royalties increased to $18.7 million from $699 thousand
in the third quarter of 2009. For the nine-months ended September 30, 2010,
oil and gas revenues net of royalties increased to $52.7 million
from $1.7 million during the same period in 2009. The
increase resulted from continuing increases in Orion's and Waseca's production.
As at September 30, 2010, Orion's exit rate of production
was approximately 5,000 boe/d
and Waseca's exit rate of production was 533 bbl/d.
Farming Revenue, Production Costs and
Operations Update
During the third quarter of 2010, One Earth Farms
reported revenue of $2.8 million, comprised of $132 thousand
from the Company's custom farming operation, $692 thousand
from the sale of crops and livestock, a $329 thousand
market value adjustment to inventory and $1.6 million
from crop insurance receipts.
For the nine-months ended September 30, 2010, One Earth Farms generated $4.9
million in revenue.
Other Income and Expenses
Other income and expenses includes general and administrative expenses,
management fees, incentive fees, oil and gas operating and production expenses,
farm production expenses, gains on the disposition of investments and other
miscellaneous income and expenses. In the third quarter of 2010, the Company
recorded $30.6 million in other income and expenses, compared
to $5.3 million in the third quarter of 2009. The increase
was primarily the result of growth in general and administrative expenses and
oil and gas operating and production costs.
For the nine-months ended September 30, 2010, the Company reported $64.9
million of net expenses in other income and expenses, compared to
$7.0
million during the same period in 2009.
As at September 30, 2010, the Company had 99,827,427
common shares issued and outstanding.
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
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
This news release includes certain
forward-looking statements respecting the future performance of SRC's business,
its operations, management's objectives, strategies, beliefs and intentions,
including the closing of the proposed transaction regarding the Coles Hill
Uranium Project and the belief that the energy, agriculture and precious metals
sectors will outperform other sectors. These forward-looking statements
represent management's best judgment based on current facts and assumptions
that management considers reasonable including the assumption that the
acquisition of SRC's interest in the Coles Hill Uranium Project will close and
that the energy, agriculture and precious metals sectors will outperform other
sectors. All forward-looking information is inherently uncertain and subject to
a variety of risks, uncertainties and other factors that may cause SRC's actual
results, performance or achievements to be materially different from those
expressed or implied from such information, including, that the acquisition of
the Coles Hill Uranium Project may not close due to a failure to agree to final
terms or a failure to get regulatory approvals, that economic factors such as
exchange rates, interest rates, commodity prices may result in the energy,
agriculture and precious metals sectors underperforming other sectors. SRC has
attempted to identify important factors that could cause its actual results,
performance and achievements to differ materially from those contained in
forward-looking statements. However, there can be other factors that cause
results, performance and achievements not to be as anticipated, estimated or
intended. There can be no assurance that such information will prove to be
accurate or that management's expectations or estimates of future developments,
circumstances or results will materialize. Accordingly, readers should not place
undue reliance on forward-looking statements and the information contained
therein. SRC does not intend, and does not assume any
obligation, to update these forward- looking statements except as required by
law.
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.
For further information:
Stephen Yuzpe
Chief Financial Officer
Tel: (416) 977-7333
Fax: (416) 977-9555
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