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Sprott Resource Corp. Announces US$33.4 Million Investment in Corsa Coal Corp. to Fund Strategic Acquisition of PBS Coals Ltd.

T.SCP

TORONTO, July 15, 2014 /CNW/ - Sprott Resource Corp. ("SRC" or "the Company") (TSX: SCP) announced today that it has entered into an agreement to invest US$33.4 million for 19.9%1 of the outstanding shares of Corsa Coal Corp. ("Corsa") (TSX-V: CSO). SRC has agreed to purchase 236,963,302 Corsa shares, at a price of C$0.15 per share, upon the completion of Corsa's US$60 million acquisition of metallurgical coal producer PBS Coals Ltd. ("PBS Coals"). SRC previously invested in PBS coals in 2007 before it was acquired by OAO Severstal in 2008.

"This transaction has the potential to create tremendous value for our shareholders while providing the added benefit of diversifying SRC's investment portfolio," said Steve Yuzpe, President and Chief Executive Officer of SRC. "We are excited to be involved in reacquiring the PBS Coals assets and we believe that Corsa has the management team and experience necessary to maximize their value."

Other key investors in Corsa include Quintana Capital Group, an established energy investor with more than US$950 million committed to the sector; and the Lundin Group, an internationally recognized group of public companies with investments in the mining and energy sectors.

"We are pleased to be investing alongside strong partners in Sprott Resource Corp. and the Lundin Group, both of which have long histories and outstanding track records investing in the natural resource sector," added Corbin Robertson III, a member of the Board of Quintana Capital Group and Chairman of Corsa.

Metallurgical coal's main industrial use is the production of steel. Following the completion of the transaction, Corsa's strategy is to become primarily a metallurgical coal producer. PBS Coals has two modern preparation plants and produces metallurgical coal from three active deep mines located in Somerset County, Pennsylvania. Corsa's two principal operating assets are its Wilson Creek metallurgical coal mines in Somerset, Pennsylvania and its Kopper Glo thermal and industrial coal mines in Knoxville, Tennessee.

"With the completion of this acquisition, Corsa and PBS Coals together will represent a significant player in the U.S. low volatile metallurgical coal market with excellent growth potential," said George Dethlefsen, Director of Corsa and a Managing Director at Quintana Capital Group. "With substantial infrastructure in place and access to both local and export markets, the combined entity is well positioned to benefit from economies of scale as the market recovers."

"SRC seeks to create shareholder value by investing counter-cyclically in out-of-favour commodity sectors," said Arthur Einav, Managing Director of SRC. "Metallurgical coal is currently in a bear market, with the benchmark price having decreased by more than 50% over the past three years. We expect that, on a combined basis, Corsa and PBS will pursue a program of operational improvements and initiatives to realize cost synergies, while also positioning the combined entity to be a growing producer for domestic and export metallurgical coal markets."

Mr. Einav is expected to be nominated to the Corsa Board of Directors upon completion of the transaction.

Conference Call Details

On July 15 at 11:00am EST, SRC and Corsa will host a conference call to discuss the details of the transaction. To participate, please dial 647-427-7450 or 1-888-231-8191, ten minutes prior to the scheduled start of the call and provide Conference ID: 74742708. A taped replay will be available until July 28, 2014 by calling 416-849-0833 or 1-855-859-2056, reference number 74742708. The conference call will be webcast live at www.sprottresource.com and http://event.on24.com/r.htm?e=825598&s=1&k=F35FEB54CB06053A6118402830A8EC70.

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1. 17.4% on a diluted basis taking into account redeemable units in Wilson Creek Energy held by affiliates of Quintana.

About Sprott Resource Corp.

Sprott Resource Corp. (TSX: SCP) is a resource-focused private equity investor managed by one of Canada's leading teams of resource private equity specialists. The company currently has investments in oil and gas, mining, agriculture and agricultural nutrients. SRC takes an active involvement in the companies in which it invests. Management is dedicated to generating consistently superior returns on capital for its shareholders, while focusing on risk management and real wealth preservation. SRC invests and operates through Sprott Resource Partnership ("SRP"), a partnership between SRC and Sprott Resource Consulting Limited Partnership, which is the managing partner of SRP and an affiliate of Sprott Inc. SRC intends to indirectly own, through SRP, the Corsa shares to be purchased and to hold such shares for investment purposes. SRC does not currently own or control any outstanding securities of Corsa and may purchase or sell further Corsa shares in the future on the open market, in private transactions or otherwise, depending on market conditions and other factors material to the investment decisions of SRC. SRC intends to file an early warning report under Corsa's profile on SEDAR at www.sedar.com and, once filed, a copy of such report may be obtained from the SRC contact noted below. To learn more about Corsa or SRC's other portfolio holdings, please visit www.sprottresource.com.

Forward-Looking Statements

Certain statements in this news 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 news release contains Forward-Looking Statements pertaining to: (i) the anticipated completion of Corsa's US$60 million acquisition of PBS Coals (the "Acquisition"); (ii) the ability of the parties to satisfy the conditions to, and to complete, SRC's investment in Corsa (the "Transaction"); (iii) the anticipated benefits of the Transaction; (iv) Corsa's ability to maximize the value of the PBS Coals assets; (iv) Corsa's strategy to become primarily a metallurgical coal producer; (v) the anticipated benefits of the Acquisition to Corsa and its securityholders, including its position in the marketplace and potential growth; (vi) Corsa's future initiatives and benefits derived therefrom; and (vii) the nomination of Mr. Einav to the Corsa Board of Directors upon completion of the Transaction.  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) that the metallurgical coal market will improve; and (ii) Corsa and PBS together will be able to execute its program of operational improvements and initiatives to realize cost synergies.  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) the failure to obtain TSX Venture Exchange and other necessary approvals or to otherwise satisfy the conditions of the completion of the Acquisition and the Transaction, in a timely manner, or at all; (ii) failure to obtain the foregoing approvals, or the failure of the parties to otherwise satisfy the conditions to or complete the Acquisition or Transaction, may result in the Acquisition or Transaction not being completed on the proposed terms, or at all; (iii) market volatility that would affect the ability to enter or exit investments; (iv) adverse market conditions; (v) risks associated with the coal mining industry in general (e.g. those risks described under the heading "Risk Factors Relating to the Company and the Coal Mining Industry in Corsa's MD&A for the year ended December 31, 2013); and (vi) those risks described under the heading "Risk Factors" in SRC's annual information form dated March 25, 2014.  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.

SOURCE Sprott Resource Corp.

Glen Williams
Director of Communications
Sprott Resource Corp.
200 Bay Street, Suite 2750
Toronto, Ontario
M5J 2J2
T: (416) 943-4394
E: gwilliams@sprott.com

Copyright CNW Group 2014

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