Select Sands Corp. has secured an option to acquire a dry processing plant, operating equipment, salable inventory, customer lists and other miscellaneous assets located near its Sandtown silica sand quarry in Arkansas.
The company has signed a binding agreement with Tutle Holding LLC and Steve Hackmann, Ozark Premium Sand LLC to buy the assets via its wholly owned subsidiary American Select Corp.
The assets include a 26-acre, fully operational drying facility, with storage located within 50 miles of the Sandtown quarry.
A successful exercise of the option will allow the company to process over 600,000 tons of sand per year, with potential for expansion in the future.
Select Sands will pay US$500,000 upon signing, giving it ownership over certain heavy equipment, and complete due diligence on the remaining assets within 60 days. A further US$250,000 will give the company ownership of additional heavy equipment.
The company can secure an option over the remaining assets with a payment of US$250,000, allowing it to make the purchase by paying an additional US$3.3 million.
The total purchase price amounts to about US$4.3 million, compared to CapEx of about US$32 million for the drying plant, equipment, storage and loadout estimated in a preliminary economic assessment for the Sandtown property.
The June 2015 study estimated a posttax net present value of US$92 million based on a portion of the current silica sand mineral resources.
Select Sands added that it is fully funded to make the first two payments from treasury and will mull over financing options to finalize the proposed transaction.
In August, the company signed an asset purchase agreement with Tutle Holdings to acquire a permitted and producing wet processing plant, along with other equipment and related assets, near the Sandtown deposit.