Sprott Resource Corp

i like the way this guy thinks.
i like that this fund is mostly in cash and gold/silver.
i like this stock trading at a DISCOUNT to net asset value.



Sprott Resource Corp. rides volatile 2008 to net profit of $134.2 million

By Kristine Owram, The Canadian Press

TORONTO - Sprott Resource Corp. (TSX: SCP.TO) chief executive Kevin Bambrough says he believes there will be plenty of acquisition and investment opportunities in the resource sector soon, but he won't be rushing into any deals just yet.

'Plenty of opportunities are going to be around, but unfortunately right now I think ... there's going to be better opportunities still because of the deleveraging process that's going on,' Bambrough said Tuesday after the investment company reported a big quarterly profit.

'The main thing is I want to see the price get down to a level where I see enough mines, enough projects shutting down, where the supply-demand balance is going to be levelled out, and right now the economy is still contracting at such a sharp rate that supply of almost every commodity is not being reduced enough to create that balance,' he added.

Bambrough said his company will be keeping an eye on coal producers, many of which have shares that are off 80 per cent or more from their highs, as well as base metals companies, which have also declined substantially in value.

'Some sectors are going probably to start bottoming in the next quarter or two. The actual price of the commodities may not bottom out, but the equities will,' Bambrough said.

'Knowing that those opportunities are going to be coming, we're going to stay well-positioned, be very conservative and wait for those truly great opportunities.'

Earlier Tuesday, Sprott Resource reported net earnings of $134.2 million for 2008, compared with $2 million in 2007. The big profit jump primarily reflected the sale of its holding in U.S.-based PBS Coals Ltd. last year at the height of the commodity boom.

Bambrough said the company invested $31 million in Pennsylvania-based PBS when coal prices where hovering around US$40 a tonne.

'At the time, coal prices were extremely low, there were bankruptcies afoot in the coal sector,' Bambrough said in an interview.

Bambrough felt coal prices couldn't go much lower, so he invested in PBS, watched prices climb, then sold his stake in the privately held company to Russian steel and industrial conglomerate OAO Severstal (LSE: SVS.L) last August.

Since then, amid slumping financial markets and a collapsing economy, Bambrough said Sprott Resource, a unit of Toronto-based asset manager Sprott Inc. (TSX: SII.TO) has been selling assets, focusing on its cash and gold holdings, and preserving capital.

Sprott Resource, which invests directly and indirectly in natural resources through acquisitions, joint ventures and other investments, said its earnings per share for the year increased to $1.94 from nine cents.

The company said it ended 2008 with $203.5 million in cash and short-term investments, along with gold and silver valued at $68 million. Its portfolio investments were worth $28.6 million at year-end.

The year's general and administrative expenses increased to $43.3 million from $2 million, due to $39.6 million in management and incentive fees for the Sprott Consulting Limited Partnership.

Sprott Resource shares traded on the TSX on Tuesday at $2.32, up seven cents or 3.1 per cent."