Key Facts
- 89,680,224 million shares outstanding + 20,568,214 warrants (3,982,430 Warrants exercisable at $2.50, expiring September 5, 2009 + 16,585,784 new warrants exercisable at $4.25 per share until December 31, 2010)
- Share Price (July 23, 2008 closing) = $2.97
- Market capitalization = $2.97 * 110,248,438 = ~$327,437,860 million
Key Shareholders
Eric Sprott: 3,143,450 shares and 3,143,450 warrants (as of January 2008)
Rule Family Trusts: 6,350,656 shares and 2,941,000 warrants (as of January 2008)
Lundin Family Trusts: 6,580,000 shares and 6,580,000 warrants (as of January 2008)
Assets
- Cash Balance = $33.2 million (as of March 31, 2008) + $90,043,925 raised through the exercise of warrants as of July 7, 2008
- Approximately $102 million SCP should receive from the sale of 17.05 million shares of PBS Coals Corp. Pursuant to the sale, SCP will retain ownership of 27.14 million shares of PBS Coals Corp. (estimated 19.9 percent of the company – valued at approximately $162 million)
- SCP holds approximately 14.8% of High Desert Gold Corporation (or 6 million shares) valued at $840,000
- SCP also holds approximately 14.8% of High Desert Gold Corporation (or 8.6 million) valued at $2,064,000
Total Value of SCP assets = 33.2 million + 90,043,925 + 102 million + 162 million + 840,000 + 2,064,000 = $390,104,000 million
With an asset value for Sprott Resource Corp. totalling $390,104,000 million, the share price should equate to approximately $3.50/share (18% higher than the $2.97 - July 23, 2008 closing price).
Quick Overview of Projects and Investments (slides courtesy SCP presentation from January 2008)
Mantaro Phosphate Project
PBS Coals - PBS Coals Corporation is currently in the process of going public. Agents for the public offering have confirmed and allocated orders for 35,716,000 subscription receipts for a total offering size of $214,296,000 (at $6.00 per subscription receipt).
JBP – Appleton Linear Properties
The JBP Appleton Linear property is located 15 kilometres west of the town of Gander in Central Newfoundland. The property consists of 14 mineral licences (592 claims) for a total area of 14,800 hectares. There have been significant drill intercepts on the JBP Linear Property of up to 11.70 g/t gold over 3.40 metres and significant drill intercepts on Appleton Linear Property of up to 18.46 g/t gold over 8.6 metres and 304.8 g/t gold over 0.6 metres. The JBP Appleton Linear properties bear strong similarities to the Bendigo-Ballarat Gold District in Australia -- an area over 22 million ounces of past gold production. Sprott Resource Corp. can earn up to a 70% interest in the mineral licenses comprising Paragon’s JBP – Appleton Linear Property.
Under the terms of the Agreement, in order to maintain the first option in good standing and earn a 55% interest in the Mineral Licenses, SCP is required to, among other things:
(i) fund a total of $2,125,000 of work costs, or $2,375,000 of work costs if Paragon elects to contribute $125,000 of work costs in the first year, over a period of four (4) years from November 15, 2007 (the “Effective Date”), $375,000 of which is a firm commitment and payable before the end of the first year following the Effective Date; and (ii) make a total of $250,000 in cash payments to Paragon over a period of three (3) years from the Effective Date, $25,000 of which is a firm commitment and payable within five (5) days of the Effective Date.
In order to earn an additional 10% interest in the Mineral Licenses following the exercise of the first option, SCP would be required to, among other things, make a cash payment of $200,000 to Paragon upon electing to earn the second option and pay for the completion of a feasibility study on or before the date that is eight (8) years after the Effective Date. The feasibility study would be completed by the joint venture established by the parties following the exercise of the first option.
In order to earn an additional 5% interest in the Mineral Licenses following the exercise of the second option, SCP would be required to, among other things, pay for the joint venture’s costs incurred in connection with the completion of a positive production decision with arranged financing, which would have to be completed on or before the date that is ten (10) years after the Effective Date.
My Take: I would be putting in stink bids (at prices under $3.00/sh) to accumulate more shares of SCP, if i had any available cash. The stock is cheap, cheap, cheap, has stellar management/backing and has the fortune of being affiliated with Sprott Asset Management, which allows for access and notification of perhaps the best projects and deals in the resource space. The price chart indicates support in and around the $3.00 level, however with the prices of anything and everything declining in the current market environtment, patience just might turn out to be an investor's best friend. SCP is a stock, I would have no qualms holding for the next 3-5 years.
Disclosure: I own shares of Sprott Resource Corp. 
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Last update : 25-10-2008 17:11
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