Athabasca Minerals Inc. announced that it has executed and closed a definitive sale agreement with an “independent, arm’s length purchaser” to divest certain non-core assets within the aggregates division for total cash consideration of C$3.2 million, before normal closing adjustments. The sale agreement had a closing date of June 27, 2023, and no finder’s fees are associated with the transaction.
The disposition includes the sale of five surface mineral leases, including Coffey Lake, the Warrensville South and North properties, two inventory stockpiles, one metallic and industrial minerals lease, and equipment associated with select pits.
The disposed assets represent less than 5% of the corporation’s total asset holdings and would require ongoing capital expenditures to support their current growth profiles.
The total cash consideration of $3.2 million includes an initial payment of $2.9 million upon closing with $300,000 in holdbacks. $200,000 will be held and then released upon the full assignment and transfer of the leases and an additional $100,000 will be held pending the completion of outstanding regulatory obligations on one of the leases.
In addition to the cash consideration, the disposition is expected to have a positive effect on the corporation’s working capital as it is anticipated to remove significant environmental reclamation obligation liabilities as well as release over $700,000 in cash deposits that are currently held for these resource properties.
“The disposition of these non-core assets is consistent with the strategic realignment and restructuring previously announced by the corporation. This transaction allows us to divest of mainly non-operated assets and will allow the corporation to focus on its core business, that is the production and sale of premium silica sand. In addition to the cash proceeds from the disposition, the corporation will also receive significant reimbursement of cash deposits which will help support our corporate working capital requirements as we continue to assess strategic alternatives for the corporation,” said Dana Archibald, chief executive officer.