La Ronge Gold Corp. has entered into a letter of intent to acquire the assets and business of a private company producing frac sand in the Western Canada Sedimentary basin. The unnamed company currently sells into the Canadian frac sand market and has fixed sales contracts with various oil and gas service providers in Canada, according to La Ronge.
The acquisition is expected to be completed for a cash purchase price of $4.5 million, subject to standard industry adjustments. Completion of the transaction is subject to the parties negotiating a formal purchase and sale agreement containing standard industry terms and conditions, including required board, shareholder and regulatory approvals, on or before April 7.
The transaction remains subject to the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange. In connection with the acquisition, La Ronge expects to conduct a financing of approximately $7 million to fund the acquisition and capital investments and to provide for general working capital.
La Ronge’s President and CEO Rasool Mohammad commented, “We value this opportunity of getting involved in the energy-services-sector and we believe there is a significant upside potential.”