Sprott Resource Lending Corp (SII)

[NYBob]

SPROTT INC. ANNOUNCES LETTER OF INTENT FOR THE ACQUISITION OF GLOBAL RESOURCE INVESTMENTS LTD., TERRA RESOURCE INVESTMENT MANAGEMENT INC. AND RESOURCE CAPITAL INVESTMENTS CORP.

Rick Rule to Join Sprott Executive Team and be Nominated to Board of Directors

TORONTO, Sept. 22 /CNW/ - Sprott Inc. (TSX:SII) ("Sprott") today announced the signing of a letter of intent (the "LOI") reflecting an agreement in principle with Arthur Richards Rule IV and The Rule Family Trust U/A/D 12/17/98 (the "Seller") to acquire (the "Transaction") all of the outstanding stock of Rule Investments Inc. (the owner of Global Resource Investments Ltd.), Terra Resource Investment Management Inc. and Resource Capital Investments Corp. (collectively, the "Global Companies"). Upon closing of the proposed Transaction, the LOI calls for Sprott to issue 20 million common shares in the capital of Sprott ("Sprott Shares") in consideration for the acquisition of the Global Companies, with the possibility of up to an additional 8 million common shares of Sprott to be issued as additional consideration in five years upon the attainment of certain financial performance hurdles ("Earn-out Shares").

The Transaction is subject to, among other things, satisfactory results of due diligence investigations of the Global Companies and the negotiation of definitive agreements. The Transaction is an arm's length transaction and is subject to the approval of all applicable regulatory authorities, including the Toronto Stock Exchange, as well as other third parties, as necessary. In addition, the Transaction remains subject to approval by Sprott's board of directors. The parties will seek to close the Transaction by the end of the calendar year.

About the Global Companies

The Global Companies are leading experts in the natural resource investing sector providing both investment management and specialized broker services. The Global Companies are led by Rick Rule, a highly respected natural resources investor with over 35 years of experience in the investment industry, and have developed a highly specialized team of resource investing experts, including geologists and mining engineers. They offer their expertise through pooled investment vehicles, managed accounts and brokerage accounts and have delivered strong investment performance to their clients. The Global Companies are based in Carlsbad, California but invest globally. Together, the Global Companies administer or manage more than US$1.3 billion in client assets across three business lines:

- Resource Capital Investments Corp. (RCIC) was founded in 1998 and
manages US$370 million of assets for pooled investment vehicles that
invest in natural resource companies. The pooled investment vehicles
managed by RCIC generate management and performance fees and have an
average remaining duration of seven years.

- Terra Resource Investment Management (TRIM) was founded in 2006 and
is a Registered Investment Advisor that provides segregated managed
accounts for institutions and high-net worth individuals. TRIM has
US$110 million of assets under management and approximately
600 client accounts.

- Global Resource Investments Ltd. (GRIL) was founded in 1993 and is a
full service U.S. brokerage firm that specializes in natural resource
companies in the United States, Canada and Australia. GRIL has over
US$850 million in assets under administration and almost 5,000 client
accounts.

Strategic Rationale

The Transaction is expected to provide benefits across the Sprott organization and throughout the Global Companies through the sharing of intellectual capital, the development of new products, and by leveraging Sprott's products and brands in the United States and internationally.

"Rick Rule and his team are widely respected experts in the field of natural resource investing, with an excellent track record and a strong, loyal client base," commented Eric Sprott, Chairman of Sprott. "This Transaction will unite two leading asset management teams with the shared goal of continuing to deliver superior investment performance to our collective clients and shareholders."

"In the Global Companies, we are acquiring a specialized asset manager and broker dealer with an investment approach that is complementary to ours at Sprott and a product line that will further diversify our asset and earnings mix," said Peter Grosskopf, Chief Executive Officer of Sprott. "We look forward to working with Rick and his team to capitalize on numerous opportunities to co-manage and co-distribute our respective investment products and expertise to clients around the world. The Transaction will increase our assets under management by almost US$500 million, while growing our overall assets under administration by over US$850 million. We expect the Transaction to be immediately accretive to Sprott Inc. shareholders."

"We are delighted to become part of the Sprott organization. Sprott's culture of performance mirrors our own, and as a result the combination will serve both our clients well," said Rick Rule, Founder and Chairman of the Global Companies. "We also believe that the Global Companies can provide an ideal footprint for Sprott's U.S. expansion."

Based upon the information provided by the Seller, the Global Companies have generated earnings before interest, taxes, depreciation and amortization ("EBITDA") of approximately US$29.6 million, US$24.4 million, US$11.7 million and US$7.4 million in 2006, 2007, 2008 and 2009, respectively, with EBITDA margins between 45% and 70%. In the period from January 1 to August 31 2010, the Global Companies have generated approximately US$11.4 million of EBITDA(1).

Upon closing of the Transaction, Mr. Rule will join the executive management team at Sprott for a minimum three year term and will be included on management's slate of nominees for the election of directors at Sprott's next annual meeting of shareholders. Along with the recent appointment of Mr. Grosskopf as Chief Executive Officer, Mr. Rule will further strengthen the senior management team at Sprott.

Terms of the Proposed Transaction

Upon the closing of the proposed Transaction, Sprott will issue 20 million Sprott Shares in consideration for the acquisition of the Global Companies. The Seller and certain employees of the Global Companies will further be entitled to receive, on the date that is five years following the closing of the Transaction, Earn-out Shares based on the aggregate EBITDA of the Global Companies during such five year period. For every dollar that the aggregate EBITDA exceeds US$40 million, the Seller shall receive 0.145455 Earn-out Shares, up to a maximum of 8.0 million Earn-out Shares. If aggregate EBITDA of US$95 million is reached prior to the end of such five-year period, the Seller shall receive the 8.0 million Earn-out Shares at such time; provided that the Seller shall not receive such shares prior to three years after the closing of the Transaction.

Each of the Seller and the employees of the Global Companies receiving Sprott Shares or Earn-out Shares will enter into lock-up agreements with Sprott whereby they will agree not to directly or indirectly sell their shares without Sprott's consent, subject to certain conditions, with one-third of such shares being released from lock up every year for three years from the date of issuance.

Conference Call and Webcast

A conference call and webcast will be held on Wednesday, September 22, 2010, at 10:00am ET to discuss this announcement. The call will be hosted by Eric Sprott, Chairman of Sprott Inc., and Peter Grosskopf, CEO of Sprott Inc. To access the call, please dial [phone] begin_of_the_skype_highlighting [phone] end_of_the_skype_highlighting or 1-888-231-8191 begin_of_the_skype_highlighting 1-888-231-8191 end_of_the_skype_highlighting ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until October 22, 2010 at 11:59 pm by calling [phone] begin_of_the_skype_highlighting [phone] end_of_the_skype_highlighting or 1-800-642-1687 begin_of_the_skype_highlighting 1-800-642-1687 end_of_the_skype_highlighting, reference number 12962790. A live audio webcast of the conference call will be available through www.sprottinc.com or http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3232240. Participants will require Windows Media Player(TM) to listen to the webcast.

Forward-Looking Statements

This release contains "forward-looking statements" which reflect the current expectations of Sprott Inc. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements in this press release include, but are not limited to, statements with respect to the negotiation of the definitive agreements for the Transaction, the terms of such definitive agreements, the closing of the Transaction and the anticipated benefits from the Transaction including the beneficial impact of the Transaction on Sprott's assets under management, assets under administration and results of operation. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions, including with respect to the anticipated completion of the negotiation of the definitive agreements, the closing of the Transaction, the timing and receipt of all applicable regulatory approvals and third party consents, the anticipated benefits from the Transaction, the information provided by the Seller and the satisfaction of other conditions to the completion of the Transaction. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements including, without limitation, those listed under the heading "Risk Factors" in Sprott's annual information form dated March 30, 2010 as well as that the closing of the Transaction could be delayed if the necessary regulatory approvals and third party consents are not obtained on the timelines planned or the Transaction may not be completed at all if these approvals are not obtained or any other conditions to closing are not satisfied. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this release. Although the forward-looking statements contained in this release are based upon what Sprott believes to be reasonable assumptions, management cannot assure investors that actual results, performance or achievements will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and Sprott does not assume any obligation to update or revise them to reflect new events or circumstances, except as required by law.

About Sprott Inc.

Sprott Inc. is a leading independent asset manager dedicated to achieving superior returns for its clients over the long term. The company currently operates through three distinct business units: Sprott Asset Management LP, Sprott Private Wealth LP and Sprott Consulting Limited Partnership. Sprott Asset Management is the investment manager of the Sprott family of mutual funds and hedge funds and discretionary managed accounts; Sprott Private Wealth provides wealth management services to high net worth individuals; and Sprott Consulting provides management, administrative and consulting services to other companies, including Sprott Resource Corp. (TSX: SCP) and Sprott Resource Lending Corp. (TSX: SIL; NYSE Amex: SILU). Sprott Inc. is headquartered in Toronto, Canada, and is listed on the Toronto Stock Exchange under the symbol "SII". For more information on Sprott Inc., please visit www.sprottinc.com.

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(1) EBITDA does not represent and should not be considered as an
alternative to net income or cash flow from operations, as determined
by United States generally accepted accounting principles, and the
Seller's calculation of EBITDA may not be comparable to that reported
by other companies. EBITDA is included herein because it is a basis
upon which the Seller assesses its financial performance and because
it believes that it presents useful information to investors. The
Seller's definition of EBITDA may not be the same as that used by
other companies in the financial services industry or other
industries.

For further information: Investor contact information: [phone] begin_of_the_skype_highlighting [phone] end_of_the_skype_highlighting or 1 [phone] begin_of_the_skype_highlighting 1 [phone] end_of_the_skype_highlighting or [e-mail]

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