Sprott Resource Corp. Announces 2014 Annual Results

TORONTO, March 4, 2015 /CNW/ - (TSX: SCP) - Sprott Resource Corp. ("SRC" or the "Company") today announced its financial results for the year ended December 31, 2014. 

Summary

  • Net Asset Value ("NAV") at December 31, 2014 of $227.7 million ($2.33 per share) compared to December 31, 2013 of $366.2 million ($3.71 per share)
  • For the three-months ended December 31, 2014, the Company recorded a net loss of $137.9 million ($1.41 loss per basic and diluted share) compared to a net loss of $27.6 million ($0.28 loss per basic and diluted share) for the three-months ended December 31, 2013. The majority of the Company's net loss for the period was attributable to unrealized losses on its energy-related investments
  • For the year ended December 31, 2014, the Company recorded a net loss of $135.6 million ($1.38 loss per basic and diluted share) compared to a net loss of $68.2 million ($0.68 loss per basic and diluted share) for the year ended December 31, 2013. The majority of the Company's net loss for the year was attributable to unrealized losses on its energy-related investments
  • SRC completed $14.8 million in new investments during the final quarter of 2014
  • In November 2014, SRC secured a $20 million credit facility from Sprott Resource Lending Corp., a subsidiary of Sprott Inc.

"The severe downturn in energy prices during the fourth quarter of 2014 and early part of 2015 negatively impacted our portfolio, particularly our publicly-traded oil and gas investments," said Steve Yuzpe, President and CEO of Sprott Resource Corp. "However, like many investors in the energy sector, we believe the selloff has been overdone. Over time, supply and demand fundamentals will drive a recovery in oil prices and a corresponding increase in the value of our energy holdings. However, we realize that any recovery will be gradual. As such, our current focus is on conserving our capital and helping our portfolio companies position themselves to emerge from this downturn in the best position to capitalize on the next upswing in the commodities cycle."

"Despite the setback that we experienced during the fourth quarter, we made solid progress towards our key priorities in 2014," added Mr. Yuzpe. "We completed a number of transactions, sourced numerous co-investment opportunities with other private equity investors, and narrowed the discount to Net Asset Value at which our shares trade. We remain confident in our investment process, the long-term fundamentals for hard assets and the quality of our investment portfolio. Over time, we believe our discipline and patience will be rewarded."

SRC Net Asset Value as at December 31, 2014

The following table outlines SRC's equity attributable to shareholders and investment ownership as at December 31, 2014. Please see the Company's audited consolidated financial statements and notes thereon, and management's discussion and analysis as at and for the year ended December 31, 2014 for additional information.


As at

SRC Ownership

 (undiluted)

(in thousands except share and per share amounts)

December 31, 2014






Cash and cash equivalents

$

1,713




Other current assets

2,806




Investments, at fair value






Long Run Exploration Ltd.

34,500


11.9

%


One Earth Oil & Gas Inc.

16,639


97.1

%


InPlay Oil Corp.

24,342


19.9

%


Corsa Coal Corp.

43,838


19.9

%


Independence Contract Drilling, Inc.

27,400


18.6

%


Stonegate Agricom Ltd.

3,318


36.5

%


Potash Ridge Corporation

3,604


24.4

%


One Earth Farms Corp.

31,000


49.9

%


Union Agriculture Group

38,677


6.6

%


Other investments

13,880


n/a







Liabilities






Less: current liabilities

3,967





Less: non-current liabilities

10,019




Total equity attributable to shareholders (NAV)

$

227,731








Number of common shares issued and outstanding as at December 31, 2014

97,874,503







NAV per share

$

2.33








 

SRC corporate and portfolio company developments:

  • The Company reported an investment loss of $130.1 million for the three-months ended December 31, 2014 that was comprised of a net loss on investments of $132.9 million and dividend, royalty and interest income of $2.8 million. Expenses for the three-months ended December 31, 2014 were $3.1 million including management fees of $1.7 million and transaction costs of $0.2 million.
  • The Company's discount to NAV narrowed to 19% as at December 31, 2014 from 37% as at December 31, 2013.
  • As at December 31, 2014, the Company's cash position was $1.7 million with debt of $10 million.
  • In February 2015, subsequent to year-end, Long Run announced plans to suspend its dividend and scale back aggregate capital expenditures.

Conference Call Details

SRC will hold a conference call to discuss its 2014 annual results on March 4, 2015 at 10:00am ET. To participate in the call, please dial 647-427-7450 or 1-888-231-8191 ten minutes prior to the scheduled start of the call. Conference ID: 94510110. A taped replay of the conference call will be available until Wednesday, March 11, 2015 by calling 416-849-0833 or 1-855-859-2056, reference number 94510110. The conference call will be webcast live at www.sprottresource.com and http://event.on24.com/r.htm?e=957557&s=1&k=3CCEE8F5F74E4B272DAC73F2F767EF28

About Sprott Resource Corp.

Sprott Resource Corp. (TSX: SCP) is a resource-focused private equity investor managed by one of Canada's leading teams of resource private equity specialists. The company currently has investments in oil and gas, mining, agriculture and agricultural nutrients. SRC takes an active involvement in the companies in which it invests. Management is dedicated to generating consistently superior returns on capital for its shareholders, while focusing on risk management and real wealth preservation. To learn more, please visit www.sprottresource.com.

Forward-Looking Information

Certain statements in this press release contain forward-looking information (collectively referred to herein as the "Forward-Looking 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 Statements. In particular, but without limiting the forgoing, this press release contains Forward-Looking Statements pertaining to: (i) expectations with respect to the oil and gas industry and markets, including a gradual recovery in oil prices and a corresponding increase in the value of the Company's energy holdings;  (ii) expectations with respect to positioning of the Company's portfolio companies to capitalize on the anticipated next upswing in the commodities cycle; and (iii) the belief that, over time, the Company's discipline and patience will be rewarded.  Although SRC believes that the Forward-Looking Statements are reasonable, they are not guarantees of future results, performance or achievements.  A number of factors or assumptions have been used to develop the Forward-Looking Statements, including, energy markets and the price of oil, natural gas liquids and natural gas will be higher in the future.  Actual results, performance or achievements could vary materially from those expressed or implied by the Forward-Looking Statements should assumptions underlying the Forward-Looking Statements prove incorrect or should one or more risks or other factors materialize, including: (i) general economic, market and business conditions; (ii) commodity price fluctuations and uncertainties and, in particular the price of oil and gas; (iii)  risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to reserves, production, costs and expenses, and health, safety and environmental risks);  (iv) those risks disclosed under the heading "Financial Instruments and Risk Management" in SRC's MD&A for the year ended December 31, 2014; and (vii) those risks described under the heading "Risk Factors" in SRC's annual information form dated March 3, 2015.  The Forward-Looking Statements speak only as of the date hereof, unless otherwise specifically noted, and SRC does not assume any obligation to publicly update any Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable Canadian securities laws.

SOURCE Sprott Resource Corp.

For further information: Glen Williams, Director of Communications, T: (416) 943-4394, E: gwilliams@sprott.com

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