Athabasca Minerals is to acquire ownership of Privco2, a private corporation which holds the Duvernay Frac Sand Project in Alberta, Canada. The project is expected to strengthen Athabasca's in-basin’ frac sand business in Western Canada through its subsidiary AMI Silica.
AMI invested $280,000 in cash and the issuance of 420,000 Athabasca shares was made for 16.2% interest in Privco2. An additional 33.4% interest will be acquired for $742,000 and the issuance of 1,680,000 Athabasca shares pending resource delineation results expected in April-2019. Also, AMI has the option to purchase the remaining 50.4% from Privco2 shareholders within one year following the transaction.
Robert Beekhuizen, CEO of Athabasca Minerals and president of AMI Silica, says the deal has allowed AMI Silica to expand and position its portfolio with a 'book end' project which serves the Duvernay and Deep Basins in Alberta and complements its Montney In-basin Project.
"The quality of the Duvernay Project frac sand benchmarks well against imported Tier-1 Wisconsin / Northern White sands. Considering that 30% of the frac sand used in the Western Canadian Oil & Gas sector is deployed in Duvernay and Deep Basins, and 55% in the Montney Basin, AMI Silica's assets cater to 85% of market demand with premium domestic in-basin resources. Additionally, the Corporation's Duvernay and Montney Projects offer important supply and logistics alternatives to local industry that simplify product delivery, double-handling risks, reduce transportation costs and a continued dependence on 70% imported American frac sand," Beekhuizen adds.
The early laboratory results of the Duvernay Project sand provided preliminary results which showed that complies with API Standard 19C specifications for sands used in hydraulic fracturing.
Athabasca and Privco2 have formed a joint project team and will commence initial exploration activities immediately. The funds invested in Privco2 will be used to advance the Duvernay Project starting with resource delineation and validation in Q1-2019.
