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Sprott Resource Corp. Announces 2015 Annual Results

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TORONTO, March 07, 2016 (GLOBE NEWSWIRE) -- Sprott Resource Corp. (TSX:SCP) ("SRC" or the "Company") today announced its financial results for the year ended December 31, 2015.

Summary

  • Net Asset Value ("NAV") at December 31, 2015 of $107.3 million ($1.11 per share) compared to December 31, 2014 of $227.7 million ($2.33 per share).
  • For the year ended December 31, 2015, the Company recorded a net loss of $119.5 million ($1.23 loss per basic and diluted share) compared to a net loss of $135.6 million ($1.38 loss per basic and diluted share) for the year ended December 31, 2014. The net loss for the year ended December 31, 2015 is primarily comprised of unrealized losses net of foreign exchange gains on investments of $110.6 million.
  • As at December 31, 2015, the Company's cash position less its debt was negative $12.9 million with approximately $50 million in public company investments.
  • Subsequent to the Company's year end, Long Run Exploration Ltd. ("Long Run") announced it had received (i) security holder approval and (ii) approval from the Court of Queen's Bench of Alberta for the plan of arrangement ("Arrangement") pursuant to which Calgary Sinoenergy Investment Corp. will acquire all of the outstanding common shares of Long Run and all of Long Run's outstanding 6.40% convertible unsecured subordinated debentures. Completion of the Arrangement is subject to various closing conditions, including the receipt of regulatory approvals which would result in approximately $12 million of cash to the Company. The Arrangement is expected to close in late April 2016.

"These are tough times for resource investors and our portfolio has not been spared from the widespread declines in the sector," said Steve Yuzpe, CEO of SRC. "We have significant investments in energy, coal and agriculture and in a few cases, our near-term outlook towards specific commodities have been challenged. We continue to believe in our theses and the value creation potential of our portfolio of real asset investments. However, as a result of the protracted bear market for many commodities, in certain cases our timeline to exit these investments has been extended."

"We continue to actively pursue monetizations of mature investments while seeking to conserve capital," continued Mr. Yuzpe. "We are working with our portfolio companies to capitalize on the next upswing in the volatile commodities cycle."

SRC Net Asset Value as at December 31, 2015

The following table outlines SRC's equity attributable to shareholders and investment ownership as at December 31, 2015. Please see the Company's audited consolidated financial statements and notes thereon, and management's discussion and analysis for the year ended December 31, 2015 for additional information.

As at December 31, 2015, the fair value of the Company's public and private company investments was $49.2 million and $71.6 million respectively.

    
  As atSRC Ownership
(undiluted)
(in thousands except share and per share amounts) December 31,
2015
    
Cash and cash equivalents $674  
Other assets 173  
    
Investments owned, at fair value   
Energy exploration, production and services   
Long Run Exploration Ltd.8,280  11.9%
InPlay Oil Corp.8,602  19.9%
Independence Contract Drilling, Inc.31,654  18.4%
R.I.I. North America Inc.5,239  16.3%
Other473 54,248 n/a 
    
Mining   
Corsa Coal Corp.6,574  19.1%
Other2,702 9,276 n/a 
    
Agriculture   
One Earth Farms Corp.28,056  49.9%
Union Agriculture Group29,187 57,243 6.3%
    
Trade and other payables (666) 
Credit facility (13,621) 
Total equity attributable to shareholders (NAV) $107,327  
      
Number of common shares issued and outstanding as at December 31, 2015   96,672,102  
      
NAV per share $1.11  
      

SRC corporate developments:

  • The Company reported a net loss of $28.5 million for the three-months ended December 31, 2015 compared to a net loss of $137.9 million for the three-months ended December 31, 2014. The current quarter's loss was primarily comprised of unrealized losses on the investment portfolio.
  • Expenses for the three-months ended December 31, 2015 were $1.5 million, compared to $3.1 million for the three-months ended December 31, 2014
  • The Company's discount to NAV at December 31, 2015 was 57.7% compared to 19.3% at December 31, 2014
  • As at December 31, 2015, the Company's cash position less its debt was negative $12.9 million

Conference Call Details

SRC will hold a conference call to discuss its 2015 annual results on Monday, March 7, 2016 at 11:00am ET. To participate in the call, please dial (866) 322-9569 ten minutes prior to the scheduled start of the call and provide conference ID: 63255545. A taped replay of the conference call will be available until Monday, March 14, 2016 by calling (855) 859-2056. The conference call will be webcast live at www.sprottresource.com and http://edge.media-server.com/m/p/jmwvnw9d

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. 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) the receipt of cash from the possible sale by the Company of its Long Run shares; (ii) continued belief in the Company's theses and the value creation potential of its portfolio of real asset investments; and (iii) the Company's belief in its ability to capitalize on the next upswing in the volatile commodities cycle. 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 year ended December 31, 2015; 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.

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

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