Select Sands Corp. has entered into an asset purchase agreement (APA) whereby the company will buy certain assets of Tutle Holdings. The assets to be acquired include a permitted and producing wet processing plant, equipment and related assets, all near its Sandtown silica sands deposit in Arkansas.
In consideration of the sale and transfer of the assets, Select Sands will pay Tutle $475,000 in cash and $75,000 in Select Sands common shares for a total purchase price of $550,000.
The number of common shares will be calculated by dividing $75,000 by the 20-day volume weighted average price of Select Sands' common shares on the TSX Venture Exchange with Canadian dollars converted to U.S. dollars at the noon rate of Exchange for Cdn/U.S. dollars on the closing date as posted on the Bank of Canada's website.
Completion of the transaction is subject to receipt of the approval of the TSX Venture Exchange.
In June 2015, Tetra Tech completed a mineral resource estimate and preliminary economic assessment (PEA) report which concluded the initial capital cost for a processing facility to produce Tier 1 sand from the Sandtown deposit was estimated to be $42.3 million, of which the wet processing plant costs were estimated to be $11.47 million.
Tutle Holdings, (Tutle & Tutle Trucking), which owns the plant, is the largest frac sand trucking company in the United States providing "last mile trucking" to the wellhead in all major oil and gas markets in the United States. Paul Tutle, CEO of Tutle Holdings said: "We are pleased to complete this initial transaction with Select Sands and to take a small equity position in the company. We expect the company will quickly become a player in the market and look forward to working with Select Sands in the future."
Select Sands President & CEO Rasool Mohammad commented: "This acquisition is expected to lower production costs of our 40/70 and 100 mesh silica sand products and better position the company to service the growing demand in the oil and gas markets. We are very pleased to be working with Tutle, a well-respected company, which is additionally positioned to benefit from marketing and growing our customer base for our Tier 1 Northern White silica sand products."
The wet processing plant is currently being contracted by Select Sands to produce Northern White 40/70 and 100 mesh silica sand products with daily capacity of 1,500 tpd. The wet processing plant includes feed hopper, conveyor, classifiers, cyclones and control building, and is optimized to increase its daily capacity at minimal cost as needed.
Select Sands continues to seek additional opportunities in the region to secure strategic assets that will continue to optimize production and capture the intrinsic value of the Sandtown deposit for its shareholders.