Source Energy Services entered into an asset purchase agreement to acquire a Northern White proppant mine in Blair, WI, two large frac sand terminals located in Chetwynd and Fort Nelson, BC and exploration rights to more than 3,600 acres of land in the Peace River Valley of Alberta from certain affiliates of Preferred Sands.

The consideration for the acquisition includes $80 million in cash, subject to closing and post-closing adjustments. The acquisition is consistent with Source’s strategy of expanding its Northern White proppant processing capacity and its integrated terminal network to meet the increasing proppant needs of its customers in the WCSB.

Source is financing the acquisition through a combination of a $25.1 million public bought deal equity financing, a $65.0 million concurrent private placement equity financing with certain accredited investors and draws on its credit facilities. Source expects to increase its revolver limit under its credit facilities from $35 million to $70 million and add The Bank of Nova Scotia as one of its lenders. Approximately $20 million of the revolver limit will be utilized to finance the acquisition.

Scotiabank is acting as exclusive financial advisor to Source in connection with the acquisition. Norton Rose Fulbright Canada is acting as Source’s legal advisor. Stikeman Elliott is acting as Source’s legal advisor in connection with the offerings. Blake, Cassels & Graydon is acting as legal advisor to Scotiabank. Ernst and Young were also engaged by Source in the conduct of its due diligence activities.