US Silica Holdings Inc. (NYSE: SLCA) plans to build a second frac sand mine and plant in West Texas to serve the Permian Basin. The new facility, located about 60 miles north of Midland, near Lamesa, Texas, is expected to produce approximately 2.6 million tons annually and is part of the company's previously announced plan to add 8 to 10 million tons of new Brownfield and Greenfield capacity to meet frac sand demand.
The $150 million project will be funded with cash on hand and cash flow from operations. The company has secured customer commitments for the purchase of 1.2 million tons per-year of sand including cash pre-payments, and for up to four Sandbox crews to deliver the sand directly from the mine to customer well sites.
Construction of the mine and plant will begin immediately, and initial production is expected in March of 2018. The 3,500-acre site has over 30 years of reserves of fine grade 40/70 and 100 mesh.
With the addition of 2.6 million tons of capacity at Lamesa, the company's total capital expansion program is now expected to deliver nearly 9.5 million tons of incremental annual supply, including 4 million tons at Crane County, and 2.8 million tons at our Tyler, Kosse, and Pacific sites collectively.