(Disclosure: The following represents my opinions only. I am not receiving any compensation for writing this article, nor does Hydra Capital have any business relationship with companies mentioned in this post. I am long ABM.V)
Athabasca Minerals (ABM-V, C$1.00) Reports Attrition Scrubbing Results; Releases PEA Document
Link here for the full press release: http://www.athabascaminerals.com/s/news.asp?ReportID=699868
Link here for a PDF version of the Preliminary Economic Assessment: http://www.athabascaminerals.com/i/pdf/Preliminary-Economic-Assessment.pdf
Athabasca has reported the results of additional testing on its Firebag frac sand. The results are best summarized by the following table and comments by the company quoted below:
These results, together with test results previously announced on June 10th, 2011, July 28th, 2011 and September 23rd, 2014, provide positive confirmation that the Corporation's Firebag Project silica sand is suitable for use as proppants in hydraulic fracturing."
Then consider the following portion of the economic model presented in the preliminary economic assessment for the Firebag project. By the time you get to 2023, well, you get the point… The stated project life is 25 years, but in reality I suspect it is at least twice that. Recall that the economic model in the PEA projects that an $85mm initial capital investment will generate over $1B of after-tax operating cash flow over the life of the project. Also recall that this is from a domestic sand source in the heart of Alberta's energy industry that is not subject to cross-border rail bottlenecks -- those delays in sand arriving aren't cheap when the whole completion crew and equipment circus is on standby. Not to mention that as an E&P company, securing your own sand source can lead to big cost savings… just ask Pioneer Resources. Pioneer paid US$300 million for a frac sand operation in 2012, saying it would save them around $70 million per year (link to press release here). Enough said.