News Releases

Athabasca Minerals Inc. Announces Proposed Acquisition of Aggregates Management Inc.

CALGARY, ALBERTA -- May 1, 2008 -- Athabasca Minerals ("Athabasca" or the "Corporation") (TSX Venture: ABM) is pleased to announce details concerning its proposed non-arm's length acquisition of all of the issued and outstanding shares of Aggregates Management Inc. ("AMI").

About AMI

AMI is a private company with long term contracts to manage two major sand and gravel pits for the Alberta government located in the heart of the oil sands industry in the Fort McMurray region.

AMI's mandate is to manage the removal of surface materials for public use and reclaim the site after the area is depleted of the surface material. AMI is responsible for:

1. salvaging all merchantable timber;
2. soil salvaging and handling;
3. overburden management;
4. supervising and managing the removal of surface materials;
5. maintaining the road network within the pit;
6. providing aggregate washing facilities;
7. operating scales and weighing all highway trucks;
8. conducting a volumetric survey of aggregate removed;
9. reclaiming depleted areas;
10. collecting the royalties for the Crown; and
11. reporting and paying royalties collected to Alberta Sustainable Resource Development on a monthly basis.

For these services, AMI receives a management fee for each cubic metre of sand and gravel removed from the pits for the duration of the contracts.

The two sand and gravel pits are the Susan Lake Gravel Pit ("Susan Lake"), located approximately 80 km north of Fort McMurray, and the Poplar Creek Gravel Pit ("Poplar Creek"), which is located approximately 30 km north of Fort McMurray. These two sand and gravel pits are currently the two major suppliers to the Fort McMurray region.

Susan Lake is approximately 9,400 acres (3,760 hectares) in size. AMI started operating this pit in 1998. In 2006, Susan Lake produced 5.2 million tonnes of sand and gravel and in 2007 it produced 7.2 million tonnes of sand and gravel, all for use by neighbouring oil sands companies and the surrounding area of the City of Fort McMurray.

AMI started the operation of Poplar Creek pit in 2003 and there is currently very little gravel left in this pit.

The purpose of the Acquisition is that it is consistent with Athabasca's evolving business model to create and capitalize on market opportunities in the sand and gravel sector in Alberta The Acquisition will generate predictable cash flow to the company and establish Athabasca as the major sand and gravel suppler to the oil sands industry and other developments in the Fort McMurray area. An additional reason for the Acquisition is that the predictable revenue stream resulting from the Acquisition will enable management of Athabasca to finance Athabasca's exploration for minerals used in oil sands processing and construction such as salt, silica sand, gypsum and limestone.

AMI Corporate History and Structure

AMI was incorporated under the Business Corporations Act (Alberta) on June 6, 1997. The registered and records office of AMI is located at 3200, 10180 -- 101 Street, Edmonton, Alberta, T5J 3W8 and its head office is located at 9524, 27 Avenue, Edmonton, Alberta, T6N 1B2. AMI has 300 common shares (the "AMI Common Shares") issued and outstanding, and no stock options, warrants or other rights to acquire securities of AMI.

The principal shareholders of AMI (the "Vendors") are as follows:

1. DK Consulting Services Ltd. (controlled by Dom Kriangkum) of Edmonton, Alberta which owns approximately 33.33% of the outstanding AMI Common Shares;
2. Hopkins Construction (Lacombe) Ltd. (controlled by Dale Nolan and other members of his family) of Lacombe, Alberta which owns approximately 33.33% of the outstanding AMI Common Shares; and
3. Pitts Holdings Ltd. (controlled by Shaun O'Connor-Parsons and Rex Dales and his family) of Edmonton, Alberta which owns approximately 33.33% of the outstanding AMI Common Shares.

Directors and Officers of AMI

The current directors of AMI are Udomdej (Dom) Kriangkum, Dale Nolan and Shaun O'Connor-Parsons, who are all directors and officers of Athabasca.

The current officers and key personnel of AMI are Udomdej (Dom) Kriangkum P.Eng, President and CEO; Dale Nolan, Vice-President, Corporate Development and Chief Operating Officer, and Shaun O'Connor-Parsons, Vice President, Resource Development and Business Strategy.

Udomdej (Dom) Kriangkum P.Eng. has a Bachelor of Sciences in Civil Engineering from the University of Alberta. Mr. Kriangkum has been the President, Chief Executive Officer and a Director of Athabasca since January 1, 2007. Mr. Kriangkum has been the President of AMI since 1998. He is also the President of two independent engineering companies, DK Consulting Services Ltd. and DK Engineering Services Ltd., both based in Edmonton, Alberta. Mr. Kriangkum has been involved in the construction industry in Alberta for over 30 years. Mr. Kriangkum is registered with the Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA).

Dale Nolan has been a Director and officer of AMI since 1998. He is also the President of Hopkins Construction (Lacombe) Ltd., a major gravel crushing company based in Lacombe, Alberta, and has been since 1997. Mr. Nolan has served as director for the Alberta Roadbuilders and Heavy Construction Association and is a past president of the Alberta Sand and Gravel Association. He has also been involved in the gravel crushing business for over 30 years. Mr. Nolan has been the Corporate Secretary and a Director of Athabasca since December 31, 2006.

Shaun O'Connor-Parsons has been a Director and officer of AMI since 1998. He is also the President of a major Edmonton gravel company, General Gravel Sales Ltd. Mr. O'Connor-Parsons has been active in the aggregates and affiliated industries in Western Canada for over 30 years. Prior to this, he was involved in diverse commercial enterprises in East Africa, India and the Middle East, including hard wood, tea and oil. Mr. Parsons has been a Director of Athabasca since December 31, 2006 and the Vice-President, Exploration of Athabasca since January 1, 2007.

Summary of the Proposed Acquisition

Athabasca has entered into a non-arm's length letter agreement dated April 24, 2008 with AMI and the principal shareholders of AMI, pursuant to which the Corporation has agreed to acquire (the "Acquisition") all of the issued and outstanding shares of AMI from the Vendors for a purchase price of $13,500,000 (the "Purchase Price"), which shall be payable as to $9,000,000 in cash and the balance by the issuance to the Vendors of 7,500,000 common shares of Athabasca (the "Athabasca Common Shares") with a deemed value of $0.60 per share. The Purchase Price is based on an independent valuation of AMI described below.

Athabasca intends to use its "commercially reasonable efforts" to arrange debt financing sufficient to fund the $9 million cash portion of the Purchase Price (the "Athabasca Financing").

After completion of the Acquisition, Athabasca will have 27,878,165 Athabasca Common Shares outstanding.

After completion of the Acquisition, the Board of Directors of Athabasca will remain the same and Shaun O'Connor-Parsons, Dale Nolan and Dom Kriangkum will continue their positions with AMI pursuant to consulting agreements to be entered into at closing. There is not anticipated to be any change of control of Athabasca following completion of the Acquisition.

Regulatory Requirements

The Acquisition is a non-arm's length transaction as Udomdej (Dom) Kriangkum, Dale Nolan and Shaun O'Connor-Parsons, directors, officers and principal shareholders of Athabasca, are also Vendors. The related parties pursuant to the Acquisition, Udomdej (Dom) Kriangkum, Dale Nolan and Shaun O'Connor-Parsons, will increase the shares of Athabasca that they directly or indirectly own, or exercise control or direction over, as follows:  

The Acquisition is a "related party transaction" within the meaning of TSX Venture Policy 5.9 (which incorporates Ontario Securities Commission Rule 61-501) ("Policy 5.9") the Vendors are Related Parties. As a result, Ontario Securities Commission Rule 61-501 (now Multilateral Instrument 61-101) ("MI 61-101") provide that a "related party transaction", such as the Acquisition, must be approved by a majority of the votes cast by holders of securities, excluding holders of securities whose votes cannot be included for the purposes of minority approval, as that term is defined in MI 61-101. Under MI 61-101, as applied to the Acquisition, minority approval of the resolution concerning the Acquisition would require the approval by a majority of all the votes cast by minority shareholders. 

Special Committee Review

After concluding on the advice of its advisors that the Acquisition is subject to the requirements of MI 61-101, the Board of Directors of Athabasca determined it was appropriate to form a special committee to consider the Acquisition and to determine if it would be in the best interests of Athabasca and its shareholders (the "Special Committee").

Based on disclosures made by each Athabasca director respecting his relationship to and interests in the Acquisition, it was determined that Theodore Rousseau and Ray Harris were the only directors of Athabasca sufficiently independent and free from conflicts of interest to sit on the Special Committee. By unanimous resolution of the Board of Directors of Athabasca passed on November 18, 2007, the Special Committee was established with Theodore Rousseau and Ray Harris as members to review and consider the Acquisition and determine whether the Acquisition is in the best interests of Athabasca and its shareholders.

No member of the Special Committee is a Vendor pursuant to the Acquisition and no member of the Special Committee will benefit from the Acquisition in a manner that is different from the other shareholders of Athabasca.

For the purposes of discharging its mandate, the Special Committee was given the power and authority to establish its own procedures and to retain an independent valuation firm. The Special Committee was also granted all such powers as it reasonably required to discharge its mandate including, apart from its ability to retain an independent valuation firm, to retain such independent legal advisors as it considered necessary and to retain such other advisors as the Special Committee considered necessary or desirable, on such terms as the Special Committee considered appropriate. All directors, officers and employees of Athabasca were authorized and directed to make available any and all information regarding Athabasca that may be requested by the Special Committee from time to time during the course of the exercise of its mandate.

After considering a variety of factors, including the reasons for the Acquisition described herein and the independent valuation described below, the Special Committee unanimously recommended the Acquisition for approval by the Board of Directors of Athabasca.

Independent Valuation

On February 13, 2008 the Special Committee retained Evans & Evans Inc. ("Evans") to prepare a comprehensive valuation report and related fairness opinion in connection with the proposed Acquisition. Evans was selected to perform the services for the Special Committee on the basis of its expertise in such matters. Evans has been involved in a significant number of transactions involving valuations. The Special Committee had discussions with representatives of Evans and together with Evans:  

1. settled the scope and terms of Evans' engagement, including the financial terms of the engagement;
2. reviewed and considered the approaches and analysis which Evans would use in the preparation of its valuation; and
3. reviewed and considered the Independent Valuation and related fairness opinion.

The Special Committee determined that in consideration of its services, Evans would be paid an aggregate of approximately $17,500 by Athabasca, and in addition Evans would be reimbursed for reasonable out of pocket expenses incurred by it in the performance of its services. It was also agreed that Athabasca would indemnify Evans in respect of certain liabilities which may be incurred by Evans in connection with the engagement.

No limitations were imposed by the Special Committee in connection with the provision by Evans of its report.

Evans is not an insider, Associate or Affiliate (as such terms are defined in the Securities Act (Alberta) of Athabasca, or AMI or any of their Associates or Affiliates. None of Evans or any of its affiliates is an associated or affiliated entity or insider of Athabasca and Evans is not acting as advisor to Athabasca or AMI in connection with the Acquisition. Evans has not been engaged within the last twenty-four months to perform financial advisory, investment banking, underwriting or other services, for or on behalf of AMI, nor had a material financial interest in any transactions involving AMI.

There have been no prior valuations of the shares of AMI.

Summary of Independent Valuation

The Evans Report was requested to provide a valuation of 100% of the issued shares of AMI as at January 31, 2008 (the "Valuation Date") based on certain assumptions. The purpose of the Evans Report is for inclusion in public disclosure documents of Athabasca in connection with the Acquisition.

For the purposes of the Evans Report, "fair market value" is defined as the highest price available in an open and unrestricted market between informed and prudent parties, acting at arm's length and under no compulsion to act, expressed in terms of cash.

The valuation of AMI refers to their "en bloc" value being the price at which all of the shares of AMI could be sold to one or more buyers at the same time.

After considering the AMI's operations, historical financial data, and financial projections of AMI, Evans believed the most appropriate methods in determining the range of the fair market value of AMI at the Valuation Date were two separate Income Approaches, namely a Capitalized Cash Flow Method and a Capitalized Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") Method. Evans analyzed historical results and the short-term expected results of AMI and applied appropriate capitalization rates to arrive at the fair market value of AMI.

In undertaking the above valuation approaches, it was the opinion of Evans that the fair market value of AMI at the Valuation Date is in the range of CDN$12,900,000 to CDN$13,500,000.

Conditions and Other Matters

The completion of the Acquisition is subject to the approval of TSX Venture and all other necessary regulatory approval, including the completion of an independent valuation of AMI and minority shareholder approval of Athabasca pursuant to the requirements of MI 61-101. The completion of the Acquisition is also subject to additional conditions precedent, including the completion of the Athabasca Financing satisfactory completion of due diligence reviews by the parties, board of directors approval of the Corporation, the entering into of a formal agreement, the entering into of three year non-competition agreements with the Vendors and certain other usual conditions precedent.

A further announcement will be made as to the timing of the proposed shareholders meeting of Athabasca to obtain minority shareholder approval for the Acquisition.

Athabasca also announces it has reserved a price of $0.60 per share for the grant of stock options to acquire up to 10% of the number of issued and outstanding Athabasca Common Shares (the "Stock Options") in the event the Acquisition and the Athabasca Private Placement are completed. The grant of the Stock Options is subject to regulatory approval. The Stock Options will be granted to directors, officers, employees and consultants of Athabasca and AMI, as determined by the Board of Directors of Athabasca, following the completion of the Acquisition.

About Athabasca

Athabasca is an innovative exploration company formed to explore for mineral resources other than oil, gas and oil sands in northeast Alberta. Athabasca's aim is to find and develop local sources of the minerals essential to the economic development of the region, such as minerals used in oil sand processing, construction, and in the everyday requirements of community living. Athabasca's permit holdings of in excess of 800,000 hectares in the vicinity of Fort McMurray, Alberta have exploration prospects for an assortment of industrial minerals, including salt, silica sand, gypsum, limestone, and diamonds.

Independent from its mineral exploration activities, Athabasca is also pursuing sand and gravel exploration and development projects throughout northern Alberta. These activities include contract works, gravel pit management, new gravel pit development and the acquisition of other sand and gravel operations.

For Further Information

For further information contact Theodore J.A. Rousseau, Director of Athabasca at (780) 489-8334, or Dean Stuart, Boardmarker Group, at (403) 517-2270, or BTG Financial Inc. at 1-877-717-0790.

As indicated above, completion of the Acquisition is subject to a number of conditions, including but not limited to, TSX Venture acceptance and shareholder approval. The Acquisition cannot close until the required shareholder approval is obtained. There can be no assurance that the Acquisition will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Information Circular of the Corporation to be prepared in connection with the Acquisition, any information released or received with respect to the Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Acquisition and has neither approved nor disapproved the contents of this press release.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Neither Athabasca nor AMI will update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Athabasca and AMI.
 

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