OREANDA-NEWS. Sprott Resource Corp. ("SRC" or the "Company") (TSX:SCP) today announced its financial results for the three-months ended June 30, 2016.

"We have made progress repositioning the SRC portfolio to benefit from a recovery in the natural resources sector," said Steve Yuzpe, CEO of Sprott Resource Corp. "At the end of June, the acquisition of Long Run Exploration Ltd. (“Long Run”) by Calgary Sinoenergy Investment Corp. closed, generating approximately $12 million in cash proceeds for SRC. Our outlook is cautiously optimistic but we expect that a recovery in the sector will be gradual and characterized by near-term volatility," added Mr. Yuzpe. "As such, we will focus on sectors like energy and mining, which we believe have the most promising outlooks for recovery."

Summary

  • Net Asset Value ("NAV") at June 30, 2016 of $94.7 million ($0.98 per share) compared to December 31, 2015 of $107.3 million ($1.11 per share).
  • For the three-months ended June 30, 2016, the Company recorded a net loss of $17.5 million ($0.18 loss per basic and diluted share) compared to a net loss of $10.4 million ($0.11 loss per basic and diluted share) for the three-months ended June 30, 2015. The net loss for the three-months ended June 30, 2016 is primarily comprised of unrealized losses on investments of $16.3 million.
  • As at June 30, 2016, the Company had a working capital1 deficit of $6.0 million with approximately $53 million in public company investments and $48 million in private company investments.
  • On May 10, 2016, the Company amended its debt facility with Sprott Resource Lending Corp. providing for additional flexibility by extending the term until November 11, 2016 and waiving the Company's requirement to use the Long Run proceeds to repay the debt facility.
  • In early August, the Company monetized its remaining legacy position in Stonegate Agricom for $1.2 million which was applied against the debt facility.

1 Working capital is the Company's cash and cash equivalents together with its trade and other receivables less its total liabilities.

SRC Net Asset Value as at June 30, 2016

The following table outlines SRC's equity attributable to shareholders and investment ownership as at June 30, 2016. Please see the Company's unaudited condensed interim consolidated financial statements and notes thereon, and management's discussion and analysis for the three and six-months ended June 30, 2016 for additional information.

As at June 30, 2016, the fair value of the Company's public and private company investments was $52.6 million and $48.0 million respectively.

    As at SRC Ownership
(undiluted)
(in thousands except per share amounts and issued and outstanding common shares)   June 30, 2016
       
Cash and cash equivalents   $ 442    
Trade and other receivables   12,229    
       
Investments owned, at fair value      
Energy exploration, production and services      
InPlay Oil Corp. 5,491     19.8 %
Independence Contract Drilling, Inc. 31,993     12.0 %
R.I.I. North America Inc. 5,239     15.7 %
Other 417   43,140   n/a  
       
Mining      
Corsa Coal Corp. 18,894     19.7 %
Other 1,714   20,608   n/a  
       
Agriculture      
One Earth Farms Corp. 15,364     49.98 %
Union Agriculture Group 21,533   36,897   6.3 %
       
Trade and other payables   (939 )  
Credit facility   (17,701 )  
Total equity attributable to shareholders (NAV)   $ 94,676    
           
Number of common shares issued and outstanding as at June 30, 2016     96,672,102    
           
NAV per share   $ 0.98    

 

About Sprott Resource Corp.

Sprott Resource Corp. (TSX:SCP) is a publically-listed private equity firm focused on the natural resource sector. The company currently has investments in energy exploration, production and services, mining and agriculture. SRC creates value for its investors by applying a disciplined investment process to deploy capital while managing risk within highly cyclical sectors. SRC is a business builder that is committed to being a value-added partner with proven management teams. SRC supports its investments through active management and the provision of long-term capital, as well as strategic, financial and governance oversight. Founded in 2007, the Company is based in Toronto, Canada and is managed by an experienced team of private equity specialists, supported by the technical and investment resources of Sprott Inc. and its subsidiaries and affiliates. Management of SRC is dedicated to generating long-term superior returns on capital for its shareholders, while focusing on risk management and real wealth preservation. 

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) potential recovery in the natural resource sector and (ii) the use of proceeds from the sale of LongRun. 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: (i) energy markets and the price of oil, natural gas liquids and natural gas will be higher in the future; (ii) the continued availability of quality management; (iii) the effects of regulation and tax laws of governmental agencies will not materially change; and (iv) the ability to obtain financing on acceptable terms will continue to be available. 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) risks associated with the farming industry in general (e.g., weather risks, operational risks in production; the uncertainty of estimates and projections related to livestock); (v) risks associated with the food manufacturing and retail business in general (e.g., a rise in the cost of inputs, a drop in pricing and/or sales volumes, food safety); (vi) other risks associated with SRC's portfolio companies' industries;  (vii) those risks disclosed under the heading "Risk Management" in SRC's MD&A for the quarter ended June 30, 2016; and (viii) those risks described under the heading "Risk Factors" in SRC's annual information form dated March 4, 2016.  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.