Select Sands has started a reconstruction project to optimize and consolidate processing assets to improve costs. The company has also completed the purchase of the Diaz Rail Loading Facility, located in Diaz, Ark., for the remaining payment of $968,747. Under the lease-to-purchase agreement, the total cost of the Diaz Rail Facility was $2,050,000 with prior lease payments applied to the total purchase price.
The plant reconfiguration project includes installation of dry-process equipment at the Diaz Rail Facility, thereby increasing process efficiency by reducing inter-plant transportation costs. Dry processing at Diaz will immediately save approximately 16 miles of interplant transportation and over one hour in transload logistics. In addition, the company has implemented a program to increase its own truck fleet.
On a per mile basis, costs savings are estimated to be approximately 25% compared to outside contract trucking. Logistical improvements will also be carried out at the company’s Sandtown Quarry. No disruption to production or shipping are expected to be experienced during the Plant Reconfiguration Project.
The final payment for the Diaz Rail Facility and the plant reconfiguration project are being funded by a secured bank loan of up to $4,500,000 being provided to the company’s wholly owned subsidiary Select Sands America Corp. The loan bears interest at a rate of 5.25% per annum, matures on July 9, 2023, and is secured by a general security agreement and guaranteed by the company.
Select Sands President and CEO Zig Vitols remarked, “Shipments starting at the beginning of the year for our long-term supply contract made it an opportune time to leverage our high capacity transload facility located in George West, Texas by optimizing operations in Arkansas. The start of the year has been very encouraging, and we look forward to building volume into the second quarter. At the same time the company remains focused on securing other potential opportunities across all basins for our high quality Northern White Sand.”
Sales volume for Select Sands’ Northern White Sand during the first quarter of 2020 projected to be between 45,000 and 55,000 tons, and is expected to continue to increase in the second quarter of 2020 when volumes are projected to be between 70,000 to 90,000 tons, as the transload facility in George West, Texas, ramps up operations.