Athabasca Minerals Inc. purchased 49.2 percent ownership of a private Alberta corporation (Privco) that owns the Montney In-Basin frac sand project located in the vicinity of Dawson Creek and Fort St John, Alberta, Canada.
The MIB Project broadens the strategic growth and advancement of the corporation’s wholly owned subsidiary, AMI Silica Inc., in becoming the “in-basin leader” for the supply of Premium Domestic Sand and frac sand solutions.
Athabasca acquired 41.6 percent in Privco for $1,498,000 in cash and an additional 7.6 percent from the issuance of 1,186,956 Athabasca shares. The corporation has the option to purchase the remaining 50.8 percent from Privco shareholders within one year following this transaction.
A joint project team will be formed. The funds invested in Privco will be used to advance the MIB Project commencing with resource delineation and validation. In early 2019, resource delineation will include an initial six-hole confirmation drilling program, followed by a 20-hole drilling program.
Drilling will focus on previously identified highly prospective zones, and on lands with logistical advantages. A National Instrument 43-101 resource estimate is planned for completion in the second quarter of 2019 to be followed by a Preliminary Economic Assessment in the third quarter of 2019.
The MIB Project consists of over 150,000 contiguous hectares strategically located in the heart of the Montney Basin. Preliminary testing has indicated a quartzose silica sand composed of a size and quality that is ideal for wells in the Montney Basin, and which supports LNG and other hydrocarbon projects in Western Canada.
Robert Beekhuizen, CEO of Athabasca Minerals and president of AMI Silica Inc., stated, “Currently 70 percent of the demand for frac sand in Western Canada is supplied from the United States requiring extensive logistics. Yet, Canada is a nation of incredible resources, including silica sand. With sand demand continuing to grow, there is a real need and opportunity for in-basin solutions. AMI Silica will be able to efficiently provide Premium Domestic Sand for both Montney and Duvernay basins from both MIB and Firebag projects. Offering attractively priced, quality domestic products with efficient in-basin transportation solutions is the business model and mission of AMI Silica. Our investment in and relationship with Privco supports the corporation’s strategic initiatives as outlined in our June 2018 AGM, and is an important directional step in expanding our portfolio.”