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Gold/Mining/Energy : Sprott Resource Corp (SCP.TO)
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From: TheSlowLane10/31/2010 6:58:48 AM
1 Recommendation   of 247
 
I got a call from the cfo on Friday who was responding to an e-mail I had sent a while ago asking about OEF. He said that they have finished the harvest for all but about 2000 acres. 37K acres were seeded this year out of 62K under management. Due to the very wet weather lots of acres could not be seeded. The govt pays $80/acre for the unseeded acres.

They are planning operations for next year. This year they had 8000 acres allocated to "custom farming" which is contract farming. They have 1800 head of cattle on 50K acres (using 22K). They are looking to increase the acreage for cattle to 93K acres. 125K acres is the 2011 goal for cropland and 10-15K custom farming. Goal of 1MM acres in 5-6 years.

The spent a lot on G&A this year in order to prepare the operation to scale to a much larger size. They are making the investments in people and infrastructure that will enable them to grow the business rapidly and manage that growth properly. Because of their backing, OEF is able to access resources that are not available to most regular farms.

SRC is still sitting on $100MM in gold bullion. I asked if they had any plans for that. He said that they like having the security of that asset on the balance sheet. They can borrow against it if they want. If they found something that was really compelling and they needed cash then he said they could sell some but he didn't seem to red hot on that idea.

SRC has cash coming in from exercise of warrants that expire in December. Potential of $70MM if all warrants are exercised.
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