AD: One of my favorites in the general resource area would be Sprott Resource Corp. (TSX:SCP). If you buy Sprott, which is quite a liquid company, you’re getting it at a discount to net asset value (NAV). NAV is about $5.20; the stock’s been trading at about $4.35. You’re also getting great management—Kevin Bambrough and company—and a great balance sheet.
Sprott has direct and indirect investments in different resource areas, buying whole companies, sponsoring companies or growing them. The four main areas it’s in now are: 1) gold, primarily gold bullion; 2) oil and gas; 3) agriculture; and 4) fertilizer. When the companies reach a certain level, ideally it will spin off a certain amount of the shareholding in a public company. Sprott is extremely disciplined and has done this a few times already—with Orion Oil & Gas Corp. (TSX:OIP), for example, which started trading on the Toronto Stock Exchange almost a year ago.
Sprott also has JVs, including one in phosphates with Altius, and owns shares in Lara Exploration Ltd. (TSX.V:LRA). The agriculture play is very interesting—One Earth Farms Corp.—a JV with First Nations, which owns more than a million acres of farmland. It’s going to be a big business, one of the largest commercial farms in North America. It’s really quite staggering. It’s still a private company, but it’s selling some shares in a secondary offering, raising $40M–$80M. If it brings in the maximum, it will take Sprott’s stake down to 24%. In a year or two, it’ll IPO. That’s what it’s trying to do—take a direct investment, build up the company and IPO it.