TORONTO, May 13, 2014 /CNW/ - (TSX: SCP) - Sprott Resource Corp. ("SRC" or the "Company") today announced its financial results for the three-months ended March 31, 2014.
- Net Asset Value ("NAV") at March 31, 2014 of $378.6 million ($3.85 per share) compared to December 31, 2013 of $366.2 million ($3.71 per share).
- For the three-months ended March 31, 2014, the Company recorded net income of $13.4 million ($0.14 earnings per basic and diluted share) compared to a net loss for the Company of $12.9 million ($0.13 loss per basic and diluted share) for the three-months ended March 31, 2013.
- In April of 2014, the Company announced the sale of approximately one third of its holdings of Long Run Exploration Ltd. ("Long Run") and expects proceeds of $64.3 million upon closing.
- Revised financial reporting to present the Company's investments at fair value with restated comparative balances.
"The early months of 2014 have been a very active period for Sprott Resource Corp. both within our existing portfolio of investments and through a strong pipeline of attractive new investment opportunities," said Steve Yuzpe, President and Chief Executive Officer of Sprott Resource Corp. "We recently entered into an agreement to sell approximately one third of our holdings in Long Run. This transaction will provide SRC with net proceeds before tax of $64.3 million to pursue new accretive investment opportunities and, where appropriate, support our existing investment portfolio. After the completion of this transaction, we will continue to hold 23 million shares of Long Run, which will generate approximately $9.7 million in annual dividend income. We remain strong supporters of Long Run's management team and will maintain our seat on the company's board of directors."
SRC Net Asset Value as at March 31, 2014
The following table outlines SRC's equity attributable to shareholders as at March 31, 2014. The Company adopted several accounting pronouncements on January 1, 2014 resulting in the retroactive restatement of its operations and financial position. The accounting pronouncements required changes to (i) the presentation of the financial statements and (ii) the valuation of investments. Please see the Company's unaudited condensed interim consolidated financial statements and notes thereon, and management's discussion and analysis as at and for the three-months ended March 31, 2014 for additional information.
|(in thousands except share and per share amounts)||March 31, 2014|
|Cash and Cash Equivalents (note 1)||$||14,848|
|Other Current Assets||2,324|
|Other Non-Current Assets||1,643|
|Investments, at fair value|
|OEOG (defined below, note 2)||27,081|
|OEF (defined below, note 2)||25,259|
|Stonegate Agricom (defined below, note 3)||12,666|
|ICD (defined below, note 4)||58,039|
|Long Run (note 5)||188,970|
|Union Agriculture Group (note 6)||35,544|
|Virginia Energy (defined below, note 7)||944|
|Potash Ridge (defined below, note 8)||9,571|
|Less: Current Liabilities||1,722|
|Less: Non-Current Liabilities||—|
|Total equity attributable to shareholders (NAV)||$||378,636|
|Number of shares issued and outstanding as at March 31, 20149||98,406,831|
|NAV per share||$||3.85|
|1.||Cash and cash equivalents held by SRC.|
|2.||One Earth Oil & Gas Inc. ("OEOG") and One Earth Farms Corp. ("OEF") are recorded at fair value. Previously, OEOG and OEF were reported as subsidiaries and consolidated for accounting purposes.|
|3.||As at March 31, 2014, SRC owned 36.5% of Stonegate Agricom Ltd. ("Stonegate Agricom"), recorded at fair value of $0.17 per share.|
|4.||As at March 31, 2014, SRC owned 31.7% of Independence Contract Drilling Inc. ("ICD"), recorded at fair value. Previously ICD was reported as an associate and accounted for using the equity method of accounting.|
|5.||As at March 31, 2014, SRC owned 28.4% of Long Run (common shares and non-voting preferred shares), recorded at fair value of $5.30 per share.|
|6.||As at March 31, 2014, SRC owned 6.9% of Union Agriculture Group, recorded at fair value.|
|7.||As at March 31, 2014, SRC owned 16.5% of Virginia Energy Resources Inc. ("Virginia Energy"), recorded at fair value of $0.10 per share.|
|8.||As at March 31, 2014, SRC owned 26% of Potash Ridge Corporation ("Potash Ridge") (common shares and non-voting preferred shares), recorded at fair value of $0.43 per share.|
|9.||As of the date hereof, SRC has 98,406,831 common shares issued and outstanding.|
SRC corporate and portfolio company developments:
- The Company reported investment income of $17.3 million for the three-months ended March 31, 2014 that was primarily comprised of increases in the fair value of ICD of $7.8 million and Potash Ridge of $5.1 million. The Company also began receiving dividends from its holdings of Long Run in the amount of $3.6 million. Expenses for the quarter were $2.6 million including management fees of $1.7 million.
- In December 2013, the Company committed $5 million to a royalty interest in a number of wells to be drilled by a Calgary-based company that explores, develops and produces oil and natural gas in Northwestern Alberta. The royalty on the wells is received until an agreed upon rate of return is achieved, at which time the royalty will be extinguished on all wells. The transaction was entered into together with other members of the Sprott Group of Companies. SRC began receiving royalty payments from this investment in April 2014.
Conference Call Details
SRC will hold a conference call to discuss its 2014 first quarter results on May 14, 2014 at 8:00am 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. A taped replay of the conference call will be available until Wednesday, May 21, 2014 by calling 416-849-0833 or 1-855-859-2056, reference number 34567616. The conference call will be webcast live at www.sprottresource.com and http://www.newswire.ca/en/webcast/detail/1342781/1484459
About Sprott Resource Corp.
SRC is a Canadian-based company, the primary purpose of which is to invest in natural resources companies. 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 LP ("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. SRC invests and operates through Sprott Resource Partnership ("SRP"), a partnership between SRC and Sprott Resource Consulting Limited Partnership, an affiliate of SCLP which is the managing partner of SRP.
Forward-Looking Information and Statements
This news release contains certain forward-looking information and statements (collectively referred to herein as "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 news release contains Forward-Looking Statements pertaining to: (i) the net proceeds provided by the sale of approximately one third of SRC's holdings in Long Run and the expected use of such proceeds; (ii) SRC continuing to hold its remaining position in Long Run and maintaining its seat on Long Run's board of directors; (iii) the cash flows provided by Long Run's annual dividend; and (iv) expectations with respect to SRC's activity throughout 2014. Forward-Looking Statements are based on a number of expectations or assumptions which have been used to develop such information and statements but which may prove to be incorrect, including, but not limited to the following: (i) energy markets and the price of oil, natural gas liquids and natural gas will be consistent with the current environment; (ii) Long Run will maintain its dividend; (iii) the impact of increasing competition in each business in which the Company's subsidiaries operate will not materially change; (iv) conditions in general economic and financial markets will be consistent with the current environment; (v) the effects of regulation and tax laws of governmental agencies will not materially change; and (vi) future operating costs will be consistent with the current environment. Although SRC believes the expectations and assumptions reflected in such Forward-Looking Statements are reasonable, undue reliance should not be placed on Forward-Looking Statements because SRC can give no assurance that such expectations and assumptions will prove to be correct. The Forward-Looking Statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statements, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors, which may cause actual results or events to differ materially from those anticipated in such Forward-Looking Statements, including, without limitation, (i) market volatility that would affect the ability to enter or exit investments; (ii) adverse market conditions; (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 listed under the heading "Risk Factors" in SRC's annual information form dated March 25, 2014; and (v) other risks, which are beyond the control of SRC or its subsidiaries. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the Forward-Looking Statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the Forward-Looking Statements contained in this news release. The Forward-Looking Statements contained in this new release speak only as of the date of this news release, and SRC does not assume any obligation to publicly update or revise any of the included Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
SOURCE: Sprott Resource Corp.
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