Select Sands Responds To Press Release From Shareholder Group And Provides Corporate Update
Vancouver, BC – Select Sands Corp. (TSX-V:SNS | OTCQX: SLSDF) (the “Company”) is pleased to provide an update on the status of certain actions being taken by management to contain costs during the industry wide over supply of frac sand and to respond to certain allegations made by a group of shareholders (the “Shareholder Group“) in their press release dated August 8, 2019.
The board of directors and management of the Company recognize the recent period of low pricing in the frac sand market and the impact that this has had on the Company and in response have initiated a number of measures to contain costs while the market returns to a more balanced state of supply and demand. In addition, during the past year management and the board have been actively reviewing and pursuing other business opportunities that would allow the Company to diversify within the industrial materials sector, a sector in which Select Sands has invested a great amount of time and effort, developed enduring business relationships and internal expertise.
The Company’s cost containment measures have materially lowered the Company’s burn rate while keeping the Company’s operations open for business and ready to execute on new business. Cost cutting measures have included, among other things, a voluntary 25% reduction in the salary of Zig Vitols, the Company’s President and Chief Executive Officer effective August 1, 2019 (as well as a very substantial reduction of any potential severance package in the event of his termination), a reduction in compensation for directors effective July 1, 2019, the laying off of certain hourly workers (while maintaining sufficient staff to continue production), salary reductions for all salaried positions to take effect by the end of August, curtailment of overtime, consolidation of equipment loans, a reduction in director fees and the elimination of the Chief Operating Officer position.
The Company continues to carefully manage its costs and currently projects a cash position of approximately $1.5 to $1.7 million at the end of its third quarter (September 30, 2019) This compares to a cash balance at the end of the second quarter (June 30, 2019) of approximately $1.9 million. Due to the cost containment actions undertaken to date, the weekly burn rate to the end of the year is projected to be reduced by approximately 51% when compared to the first half of the year. Contrary to recent comments, the Company is confident it will have sufficient cash to continue operations into 2020. This is a direct contradiction to the erroneous statements and misleading information regarding the state of the Company’s finances reported by the Shareholder Group in their press release.
Full financial results for Q2 will be released later in the month. Management has focused on two primary objectives along with holding costs in line. The first is continuing and generating new sales as 2020 contracts are negotiated during Q4, 2019 and secondly, pursuing M&A opportunities including in-basin-sand and synergistic alternative streams of revenue. Staff levels are being set to effectively meet those objectives.
While there continues to be a niche market for high quality Northern White Sands (NWS), the Company has been actively investigating over a dozen M&A opportunities that are In-Basin Sand (IBS) sources. Other businesses are also being pursued that may have the synergistic effect of serving the same markets and customer base. Some of these opportunities are in advanced stages of discussion. Further announcements will be released if and when these opportunities reach a stage where disclosure is appropriate. At this time there is no assurance that any of these opportunities will be completed.
Shareholder Group Proposal
The Shareholder Group proposes to reduce the size of the board to three directors and to elect the three nominees proposed by them. Based on the Shareholder Group’s press release and circular two of the three directors have no experience in the frac sand industry and the third nominee is Rasool Mohammad, the Company’s previous Chief Operating Officer who resigned on July 31, 2019. Prior to his resignation Mr. Mohammad was largely disengaged from the business and was pursuing other ventures despite the fact that he had an obligation to devote all of his time to the Company and was continuing to receive compensation from the Company.
Mr. Mohammad’s lack of leadership and disregard for the Company during this difficult period despite repeated requests to fulfil his duties are evidence of the fact that he is not suitable to act as a director or to take a leadership role with the Company.
The Shareholder Group has not outlined a plan for the Company moving forward. Instead the Shareholder Group has made false and misleading statements to scare shareholders. Current management have significant industry experience and relationships, have been reducing costs during the industry downturn and continue to actively seek opportunities to strengthen the Company. Although management recognizes that this has been a difficult period for the Company given industry wide conditions, management has a plan for the Company and the experience to execute on the plan.
In order to ensure a fair process for all shareholders, the Company will be monitoring the Shareholder Group’s activities closely to ensure that they are in compliance with applicable laws relating to the solicitation of proxies in connection with the upcoming annual and special meeting of shareholders to be held at 10:00 a.m. (Houston time) on August 15, 2019.
As set forth in the Company’s press release dated August 7, 2019, the Company will propose at the meeting to amend the resolution fixing the number of directors from six to five and to remove Mr. Mohammad as a management director nominee.
WE ENCOURAGE ALL SHAREHOLDERS TO VOTE FOR MANAGEMENT’S BOARD NOMINEES AND PROVIDE MANAGEMENT WITH THEIR PROXY. THE DEADLINE FOR RECEIPT OF PROXIES IS 10:00 A.M. (HOUSTON TIME) ON TUESDAY, AUGUST 13, 2019.
If you are a registered shareholder, to ensure your vote is counted, we encourage you to complete, date and execute the management form of proxy that you received in your meeting materials and deliver it by no later than 10:00 a.m. (Houston time) on August 13, 2019 by facsimile, by email, by hand or by mail in accordance with the instructions set out in the form of proxy and in the management proxy circular.
Shareholders holding shares through a broker or other intermediary are encouraged to follow the instructions sent to them by their broker or other intermediary to ensure that their votes are counted.
About Select Sands Corp.
Select Sands Corp. is an industrial Silica Product company developing its 100% owned, 520-acre Northern White, Tier-1, silica sands project located in Arkansas, U.S.A. Select Sands’ Arkansas property has a significant logistical advantage of being significantly closer to oil and gas markets located in Oklahoma, Texas, New Mexico, and Louisiana compared to sources from the Wisconsin region.
For more information about Select Sands Corp., please visit www.selectsandscorp.com or
President & CEO.
Phone: (604) 639-4533
Certain statements contained in this news release may constitute “forward-looking information” as such term is used in applicable Canadian and US securities laws. Any information or statements contained herein that express or involve discussions with respect to predictions, expectations, plans, projections, objectives, assumptions or future events should be viewed as forward-looking
information. Such information relate to analyses and other information that are based upon forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Such forward-looking information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Select Sands to be materially different than those results, performance or achievements expressed or implied by
such forward-looking information.
Forward‐looking information is based on management’s beliefs, expectations, estimates and opinions on the date statements are made and Select Sands undertakes no obligation to update forward-looking information and whether the beliefs, expectations, estimates and opinions upon which such forward-looking information is based has changed, except as required by applicable