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First in Quality Uniquely Positioned for Success - - PowerPoint PPT Presentation
First in Quality Uniquely Positioned for Success - - PowerPoint PPT Presentation
TSX-V: SNS | OTCQX: SLSDF Corporate Presentation | August 2018 First in Quality Uniquely Positioned for Success www.selectsands.com TSX-V: SNS | OTCQX: SLSDF Disclaimer This presentation includes forward-looking information and statements,
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www.selectsands.com
About Select Sands
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Select Sands Corp. is an industrial Silica Sand products company in production on its 100% owned project in Arkansas, U.S.A.;
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The company produces Northern White, finer mesh sand- 40/70 Mesh and 70/140 Mesh (100 Mesh) and has a combined Inferred/Indicated Resources of ~90MM tons between its properties*;
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Strategically located to oil & gas (O&G) and industrial customers in Texas, Oklahoma, Louisiana, Colorado, New Mexico and elsewhere;
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Year-round production and shipping capabilities with access to three modes of delivery by truck, rail and barge;
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Fully funded expansion plans to 1,000,000 tons of production by the end of 2018.
*Includes Bell Farm of 49.6MM tons Inferred Mineral Resources (Keinfelder, April 2017) and Sandtown of 42.0MM tons Indicated Mineral Resources (Tetra Tech, February 2016). National Instrument 43-101 technical reports are available on www.sedar.com.
Select Sands’ goal is a supplier of premium commercial silica sand and industrial frac sand to the North American markets.
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Fra c S a n d D e m a n d & O u tlo o k
25 29 37 54 44 36 76 112 133 20 40 60 80 100 120 140 2011 2012 2013 2014 2015 2016 2017 2018e 2019e
Source: TPH & Co. Research, IHS Markit, Discussions with industry participants April 9, 2018
q Tudor, Pickering, Holt & Co. estimates approximately 112 million tons of sand would be used in 2018, with 133 million tons in 2019; q 2018 consumption forecast is a 47% increase over 2017; q “The appetite for sand is strong, and the competitive new in- basin supply is not coming online as quickly as initially projected. So, we see prices continuing to move up at this point in the cycle.” (Hi-Crush Q1 earnings call). q Northern White sand is expected to see persistently strong demand due to its superior characteristics and market uncertainty over the effectiveness of alternatives
US Onshore Frac Sand Demand
In millions of tons
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q High quality sand available based on extremely tight O&G and industrial sand specifications and widely preferred over lower quality, alternative sands (such as regional or in-basin) q Predominantly mined in the North Midwestern US (Wisconsin, Minnesota and Illinois) and transported to basins in the Southern US q Over the past decade E&P companies have shifted from coarser grains and vicious fluid to finer mesh and slickwater treatments to increase recoveries q 80% of the sand consumed in the U.S. is the finer grades of 40/70 and 100
- mesh. Source: IHS Markit February 2018
N o r th e r n W h ite S ilica : A S u p e r io r P ro d u c t
ACC Thematics, AltaCorp Capital, Investing in the North American Proppant Industry, June xx, 2018
Least Restricted Hydrocarbon Flow Angularity Impedes Hydrocarbon Flow
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S trate g ic L o catio n
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q Positioned closer to the most active onshore basins (Permian, Eagle Ford, Haynesville, etc.) relative to competing Northern White sand operations for lower mine-to-market transportation costs; q Barging capabilities on Mississippi River allows for large (8-10k ton) cost-effective movements. q Year-round production, while northern mines halt production in extreme cold weather, combines favorably with a business friendly state. q Majority of shipment go to the Texas Basins with the remainder heading to Colorado, Louisiana and Oklahoma
FRAC INDUSTRIAL Strategically located for rail, barge, and highway delivery
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S e le c t S a n d s A s s ets
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Sandtown Bell Farm Ozark Operation Independence Operation Capacity 42MM Tons* 49MM Tons** 600,000 TPY 400,000TPY Type Mine Mine Wet & Dry Processing Wet & Dry Processing Status Active Mine Cleared & Ready future mining In Full Production Under Construction
* Indicated resource as per TetraTech 43-101 report 2016 ** Inferred resource as per Kleinfelder 43-101 report 2017
Rail Serviced by the Union Pacific Railroad Independence Wet Plant #2 Wet Plant #1 Rail Loading Facility Dry Plant
Sandtown 30 Miles
2 Miles
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Fu lly Fu n d e d E x p a n s io n / I n d e p e n d e n c e P ro p e r ty
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Phase 1: Construction has begun on a 400,000 TPY stand alone processing facility at Independence (estimated completion second half of 2018)
q Anticipated mine-to-plant savings of approximately $4 per ton in transportations savings;
Phase 2: Move Ozark Premium operations/equipment to Independence to further increase transportation. (targeting project in 2019). Phase 3: Option to build a rail loadout at Independence for efficient and economical loading of finished products. Phase 1 is fully funded through secured CAPEX loan & internal funding.
Sandtown 30 Miles
2 Miles
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Sandtown (30 miles) The Independence property will serve as a platform to support the company’s long-term
- perational and capacity expansion initiatives.
Phase 2: Consolidate Ozark assets to Independence (targeting project in 2019) Phase 3: Option to construct rail loadout at Independence. Phase 1: 400,000 TPY stand alone facility (complete 2nd half 2018)
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U n it Vo lu m e in To n s a n d E B I T DA
- Q4 Adjusted EBITDA restated for $270K bad debt expense collected in Q2 2018
- Q2 2018 Reverse adjustment to reflect collection noted above.
50 100 150 200 250
- $1,000
- $500
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000
Tons Adjusted EBITDA
Tons
,000’s
EBITDA ,000’s
Q1 Q2 Q3 Q4 Q1 Q2 2017 2018
*
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Fin a n c ia l H ig h lig hts
Metric Performance Revenue Growth Record revenues of $9.5M (USD) in Q2 2018, a 68% increase from Q1 2018 and over 300% from Q2 2017 EBITDA 31% margins on adjusted EBITDA of $2.9M in Q2 2018 and adjusted EBITDA growth of more than 100% from Q1 Strong Pricing Average quarterly price increase of 3% Continuing Growth Plans to ramp up to 1 million tons by end of 2018
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E B I T DA
Reconciliation of Net Income (Loss) to EBITDA to Adjusted EBITDA
* Restated in US Dollars using the average 2017 CAD/USD foreign exchange of 1.2986
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Share Structure
Data as of June 21, 2018
Shares Issued & Outstanding 83,313,316 Warrants 4,139,780 Options 5,089,333 Fully Diluted 97,542,429 Market Cap $28M USD
SNS SLSDF
q In March 2018, the Company increased its line of credit to $5M
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M a n a ge m e nt & C h a ir m a n
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ZIGURDS R. VITOLS | President & CEO / Director
- Mr. Vitols has served as the President, Mid-South Division, of Martin Marietta Material Inc. Martin Marietta, an American-based company and a member of the S&P 500 Index, is a leading supplier of
aggregates and heavy building materials, with operations spanning 32 states, Canada and the Caribbean. Mr. Vitols worked as the Northeast Regional Manager for W. R. GRACE & Co, a publicly traded company which produces specialty chemicals and materials and operates in over 40 countries. Mr. Vitols has a Masters of International Business (MBA) from Heriot Watt University, Edinburgh, Scotland & studied Civil Engineering Technology at Mohawk College, Hamilton, Canada.
DANIEL A. GILLETT| Chairman of the Board
- Mr. Gillett brings over 30 years’ experience serving as a director, investment banker, consultant and senior executive, including serving as chief executive officer and chief financial officer. Throughout his
career, he has completed over $15-billion in financing, restructuring, and merger and acquisition transactions, with the majority of those efforts being across all sectors of the oil and gas industry. Mr. Gillett received his MBA from Harvard Business School in finance and a BBA in accounting from Harding University.
RASOOL MOHAMMAD / B. Sc (Mining Engineering) | Chief Operating Officer / Director
- Mr. Mohammad received a B.Sc. (Mining Engineering) from the NWFP University of Engineering and Technology in Peshawar, Pakistan in 1991. He has over 20 years’ experience in the mining and mineral
exploration industry. Mr. Mohammad has worked for large mining and exploration companies in North and South America. He speaks English, Spanish, Urdu, and Pashto.
DARREN URQUHART / CPA, CA | Chief Financial Officer
- Mr. Urquhart is a chartered professional accountant with twenty years of experience working in public practice and industry. Mr. Urquhart operates his own public practice accounting firm offering chief
financial officer and accounting services to TSX Venture Exchange listed companies in Vancouver. He has also served as director for some of his corporate clients. Mr. Urquhart began his career working as an audit accountant with Grant Thornton LLP, then later worked as a senior tax accountant with Lohn Caulder Chartered Accountants. Mr. Urquhart obtained his chartered accountant designation in 2001 and is a member of the Chartered Professional Accountants of British Columbia. In 1995, Mr. Urquhart graduated from the University of British Columbia with a Bachelor degree of Applied Science in Electrical Engineering.
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Investment Highlights
Surging Demand | Tudor, Pickering, Holt & Co. estimates approximately 112 million tons of sand would be used in 2018, with 133
million tons in 2019;
Strategic Location | Semi-regional (Northern White) sand provider closer than Upper Midwest sources to oil & gas basins in Texas,
Oklahoma, Colorado, New Mexico and Louisiana;
Increasing Capacity | Currently expanding production capacity from 600,000 TPY to 1 million TPY; Well capitalized | Near term expansion fully funded with non-dilutive capital; Growing Revenues | Record revenue of $9.5M USD / $12.5M CAD in the second quarter of 2018, a 68% increase from the first quarter
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Non-IFRS Financial Measures The following information is included for convenience only. Generally, a non-IFRS financial measure is a numerical measure of a company’s performance, cash flows
- r financial position that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable measure calculated and presented in accordance with IFRS. EBITDA and Adjusted EBITDA are not recognized measures of financial performance (nor do they have standardized meanings) under IFRS. In evaluating non-IFRS financial measures, investors should consider that the methodology applied in calculating such measures may differ among companies and analysts. The Company uses both IFRS and certain non-IFRS measures to assess operational performance and as a component of employee remuneration. Management believes certain non-IFRS measures provide useful supplemental information to investors in order that they may evaluate Select Sand’s financial performance using the same measures as management. Management believes that, as a result, the investor is afforded greater transparency in assessing the financial performance of the Company. These non-IFRS financial measures should not be considered as a substitute for, nor superior to, measures of financial performance prepared in accordance with IFRS. EBITDA and Adjusted EBITDA The Company defines EBITDA as net income (loss) before finance costs, income taxes, depreciation and amortization and non-cash share-based compensation. The Company defines Adjusted EBITDA as net (loss) income before finance costs, income taxes, depreciation and amortization, non-cash share-based compensation, share of loss of equity investee and provision for impairment in investment in affiliate. Select Sands uses Adjusted EBITDA as a supplemental financial measure of its operational performance. Management believes Adjusted EBITDA to be an important measure as they exclude the effects of items that primarily reflect the impact of long-term investment and financing decisions, rather than the performance of the Company’s day-to-day operations. As compared to net income according to IFRS, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s business, the charges associated with impairments, termination costs
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Proposed Transaction costs. Management evaluates such items through other financial measures such as capital expenditures and cash flow provided by operating activities. The Company believes that these measurements are useful to measure a company’s ability to service debt and to meet other payment obligations or as a valuation measurement.
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