Press Release
Sprott Resource Corp announces strong third quarter 2008 results
TORONTO, Nov. 14 /CNW/ - (TSX:SCP) - Sprott Resource Corp. ("SRC") today announced its financial results for the three and nine month periods ended September 30, 2008. The consolidated financial statements and related management's discussion and analysis can be found on SEDAR (www.sedar.com).Highlights for Q3 and Year-to-Date ("YTD") periods: - Q3 2008 net earnings of $67.15 million or $0.76 per basic share compared to a net loss of $468,332 or $0.02 per basic share for Q3 2007 - YTD net earnings of $73.84 million or $1.13 per basic share compared to $707,580 or $0.05 per basic share for the prior year - Ended Q3 2008 with cash, cash equivalents and short-term investments of $155.57 million - Ended Q3 2008 with other portfolio investments of $270.46 million (including 27.14 million shares of PBS Coals Limited ("PBS") valued at $217.48 million) - Ended Q3 2008 with net assets of $370.84 million - Subsequent to quarter end, completed the sale of 27.14 million shares of PBS for proceeds of $140.82 million - Also subsequent to the quarter end, provided funding of $27,173,400 to Waseca Energy Inc. ("Waseca"), a newly created private oil and gas company, in exchange for a 79.72% interest"We had an excellent third quarter, realizing value for the investments made over the past year. This strengthened our balance sheet and demonstrated our ability to execute our strategy," said Kevin Bambrough, President and CEO of SRC. "We believe that current credit crisis will create exceptional investment opportunities in the natural resource sector. With our strong balance sheet, we are very well positioned." Financial Review For Q3 2008 net earnings were $67.15 million or $0.76 per basic share compared to a net loss of $468,332 or $0.02 per basic share for Q3 2008. YTD net earnings were $73.84 million or $1.13 per basic share compared to $707,580 or $0.05 per basic share for the prior year. The increase in net earnings was primarily a result of gains realized from the sale of securities, in particular the sale of 17.05 million PBS shares. General and administrative expenses, increased for Q3 2008 to $20 million compared to $647,318 for Q3 2007. General and administrative expenses for the YTD period increased to $22.33 million compared to $1.31 million for the prior year. The increase is due to $20.45 million in YTD management fees and incentive fees paid or accrued to Sprott Consulting Limited Partnership ("SCLP"), which are included in net earnings. At the end of Q3 2008, SRC had portfolio investments of $270.46 million, consisting of $241.08 million of publicly traded securities and $29.38 million of securities in private companies. The publicly traded securities include 27.14 million PBS shares valued at $217.48 and $9.67 million in exchange-traded funds that track the performance of gold or silver bullion. Subsequent to the quarter, SRC sold its remaining 27.14 million shares of PBS for proceeds of $140.82 million. SRC no longer owns any PBS shares. Also subsequent to Q3 2008, SRC purchased an additional $24.83 million in publicly traded securities, including $19.64 million in exchange-traded funds that track the performance of gold bullion. SRC intends to convert all its holdings in exchange-traded funds that track the performance of gold or silver bullion into gold or silver bullion during Q4 2008. The normal course issuer bid (the "NCIB") announced on August 26, 2008 has now been completed. A total of 8 million common shares were purchased for cancellation under the NCIB for an average price of $2.45 per common share. There are now 81,807,229 common shares outstanding, taking into consideration all common shares purchased under the NCIB that will be cancelled. 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 contained herein may constitute "forward-looking statements" under applicable securities laws. Some of the forward-looking statements may be identified by words such as "expects", "anticipates", "should", "believes", "plans", and similar expressions. These statements are based on current estimates, factors and assumptions, including expectations regarding the SRC's future strategy and business and the execution of its existing plans. These statements involve known and unknown risk. No assurance can be given that any events anticipated by the forward-looking statements will occur. Actual results and future events could differ materially from those expressed in, or implied by, the forward-looking statements. As a result, readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements 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.
