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A Best 2011 Idea: Sprott Resource Corp

Wednesday 2-2-2011

 

Dr. John L. Faessel

ON THE MARKET

Commentary and Insights

 

A Best 2011 Idea:

 

For my entire list of Best Ideas for 2011 request: Dr.Faessel@onthemar.com

 

Sprott Resource Corp (SCP – TSX) (OTCPK:SCPZF) $5.31 Nasdaq

 

[I Rx’d (OTCPK:SCPZF) at $4.82 on 12-28-2010]

 

Sprott Resource Corp., through its subsidiaries, invests and operates in agriculture, energy, precious metals, and other materials sectors in Canada. Has a market-cap of $602 million with has $52 million in cash, no debt, a great chart and is buying back 7.3% of their stock.  The story here is about Management that as they used to say “knows the (natural resource) territory; “in spades” I might add. Here is an anecdotal story that will give you "pause" in considering the shares. In 2007 Sprott invested $55 million in PBS Coals, in 2008 they sold their interest to the Russians for $240 million. Good trade Eh? And oh, they requested and got paid in gold bullion. Sprott has also had another big payday when they in 2009 took a $100 million interest in Orien Oil and Gas, now the value is two or three times that. Sprott also owns a large percentage of an emerging phosphate producer plus a chunk of Potash Corp. (POT). As you may well know potash/fertilizer is a red-hot item; over the last two years (POT) shares have jumped from $65 to $150. Sprott also have just increased their percentage of ownership to 80% from 66.7% of its One Earth Farms Corp (not yet public) subsidiary that is occupied in growing feed and then serving it to all the cattle that they own. The deal will make it Canada's largest operating crop and cattle farm in 2011. Global farmland values are increasing, as are crop prices. (Jimmy Rodgers says agriculture is his best idea for the next 10 to 15 years). Sprott management is remarkably prescient in their deal selection. Website: http://www.sprottresource.com

 

For my list of Best Ideas for 2011 please send an e-mail request to: Dr.Faessel@onthemar.com

 

* Disclaimer; I own shares in each of them