Teck Resources Ltd. (TSX: TCK) announced this morning it has entered into an agreement to acquire Calgary’s SilverBirch Energy Corp. (TSX-V:SBE).
SilverBirch is a pre-production company with a portfolio of mining and oilsands properties, including 50% ownership of the Frontier and Equinox Projects
Under the arrangement, SilverBirch shareholders will receive $8.50 in cash and one share of the newly-formed SilverWillow Energy Corp. per SilverBirch common share.
Teck will contribute $25 million in working capital to SilverWillow and its 50% interest in several oilsands leases that are currently jointly owned with SilverBirch.
SilverWillow will hold all of the assets of SilverBirch other than SilverBirch’s 50% interest in the Frontier and Equinox oilsands project, the main focus of Teck’s acquisition.
The Frontier project is a proposed truck-and-shovel oilsands mine 110 kilometres north of Fort McMurray.
Teck previously owned 50% of the project and was its operator.
Don Lindsay, Teck president and CEO, said, “For a net cash outlay of $435 million, this transaction strengthens the Frontier project.”
“The Frontier ownership structure is simplified, our exposure to oilsands leases not amenable to mining is reduced, and Teck now has the opportunity to explore new potential partnerships and other alternatives to move Frontier towards development.”
SilverBirch’s board of directors has unanimously approved the transaction.
The transaction is expected to close on or before April 16.
For more on Teck’s foray into the Alberta oilsands, see “Teck Resources jumps into renewable power game with Suncor Energy but stays quiet about oilsands projects” – issue 1093; October 5-11, 2010.
Jennifer Harrison
@JHarrisonBIV