Victory Nickel Inc.

Victory Nickel Inc.

December 06, 2007 16:29 ET

Victory Nickel Announces 73% Increase in Sand By-Product Revenue at Minago

Favourable test results show suitability as frac sand and in numerous industrial applications

TORONTO, ONTARIO--(Marketwire - Dec. 6, 2007) - Victory Nickel Inc. ("Victory Nickel" or the "Company")(TSX:NI)( today announced that a study by Wardrop Engineering Inc. (Wardrop") indicates a 73% increase in by-product revenue from the sale of sand that forms part of the overburden in the proposed open pit at its 100%-owned Minago nickel project in Manitoba.

As part of the ongoing Minago definitive feasibility study, Wardrop has identified that approximately 6.9 million tonnes of overburden that must be removed prior to mining nickel from the Minago open pit is marketable-grade sand. Based on work to date, this sand has an average free on board (FOB) Minago mine site price of CAN$26.84/tonne, for potential net sales revenue of CAN$187 million. This represents a 73% increase in quantity and revenue compared with the 4.0 million tonnes that was estimated to be marketable as fracturing or hydraulic "frac" sand in the November, 2006 Minago scoping study. The average FOB Minago mine site price for frac sand estimated in the November, 2006 Minago scoping study was CAN$26.93/tonne for potential net sales revenue of CAN$108 million (the price FOB the Minago site is the market price less transportation cost).

Frac sand is used to enhance recoveries in the oil and gas industry. The November, 2006 scoping study estimated that approximately 25% of the total 16.2 million tonnes of sand overburden was of frac sand quality. Subsequent analysis (known as proppant testing) conducted at two independent labs, Loring Laboratories Ltd. of Calgary and the Saskatchewan Research Council in Saskatoon, confirmed the presence of frac sand in several different size fractions. The testing also determined that the sand is suitable for other uses, including glass production and as foundry sand. In total, 43% of the sand overburden has been identified as potentially saleable.

"We're pleased to report that a much broader market exists for the Minago silica sand than was originally thought," said President Brian Robertson. "With applications not only as frac sand, but also in foundries, smelters and in glass production, the sand component is a high value-added by-product credit that should have a significant positive impact in offsetting the cost of pre-stripping the Minago open pit."

Wardrop's initial calculations estimate annual production of saleable sand over 13.4 years as follows:

Average FOB Production(i), Major Market
Mine Site Price (Tonnes per year) Destination
Marketable Product (CAN$ per tonne)
20/40 frac sand $60.00 48,000 Saskatchewan
20/50 frac sand $40.00 19,200 Saskatchewan
40/70 frac sand(ii) $25.00 65,880 US
Subtotal frac sand 133,080
40/140 glass sand(ii) $20.00 112,440 Toronto
GFN 56 foundry
sand(ii) $30.00 150,000 Winnipeg
Other finer
fractions(1),(ii) $15.00 120,840
Sub total finer
sand 383,280
Total sand $26.84 516,360
(i) The production numbers are confirmed from the laboratory test analysis.
(ii)These are preliminary indications of market and transportation costs
and are currently being confirmed.
(1) Sand as a flux for smelters, pipe lining, blasting, scouring cleansers,
chemicals, filters, whole grain fillers, ceramics, filtration,
recreational uses, and silicon carbide.

Based on the positive analytical results and the early indications from the marketing study, Victory Nickel has contracted with I. M. & M. Consulting in Calgary to provide a flowsheet and a sand plant design. Additionally Outotec Ltd. in Jacksonville, Florida, has been contracted to provide testwork to attempt to increase the recovery of the higher value 20/40 frac sand. The stand-alone sand study, which will include updated processing and capital costs is expected to be complete in February, 2008. This will be included into the Minago definitive feasibility study which is due for completion in October, 2008.

Georgi Doundarov, P.Eng. of Wardrop Engineering is the Qualified Person for the sand project under National Instrument 43-101. He has reviewed and approved the contents of this section of the news release.

Limestone Represents Additional By-Product Revenue

Wardrop is also studying the marketability of the 53 metre thick limestone layer that also overlies the Minago nickel deposit. From the scoping study, approximately 104 million tonnes of limestone overburden will be removed to expose the underlying nickel ore.

Limestone is a principal source of construction aggregate, and is used as ballast in rail and road beds; testing done at the National Testing Laboratory in Winnipeg shows that the Minago limestone is exceptionally well-suited to these applications. A marketing study undertaken by Wardrop found that crushed limestone as aggregate typically sells for about $28.50/tonne. Wardrop has also identified that demand for limestone in the area is expected to continue to increase, as substantial road and rail repairs and expansion are planned within 100 kilometres of the Minago site.

About Victory Nickel

Victory Nickel Inc. is a Canadian company with over 660,000,000 pounds of in-situ nickel in National Instrument 43-101-compliant measured (154,000,000 pounds) and indicated (511,000,000 pounds) resources in three sulphide nickel projects: Minago and Mel on Manitoba's Thompson nickel belt, and the high-grade Lac Rocher deposit in northwestern Quebec, and an additional 530 million pounds of in-situ nickel in inferred resources. Created from the nickel assets of Nuinsco Resources Limited (TSX:NWI), Victory Nickel is well financed and focused on becoming a substantial nickel producer by developing its existing properties and evaluating opportunities to expand its nickel asset base.

FORWARD-LOOKING STATEMENTS: This news release contains certain "forward-looking statements." All statements, other than statements of historical fact, that address activities, events or developments that Victory Nickel believes, expects or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek," "anticipate," "believe," "plan," "estimate," "expect," and "intend" and statements that an event or result "may," "will," "can," "should," "could," or "might" occur or be achieved and other similar expressions. These forward-looking statements reflect the current expectations or beliefs of Victory Nickel based on information currently available to Victory Nickel. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of Victory Nickel to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on Victory Nickel. Factors that could cause actual results or events to differ materially from current expectations include, among other things, failure to successfully complete financings, capital and other costs varying significantly from estimates, production rates varying from estimates, changes in world copper, nickel and/or gold markets, changes in equity markets, uncertainties relating to the availability and costs of financing needed in the future, equipment failure, unexpected geological conditions, imprecision in resource estimates, success of future development initiatives, competition, operating performance of facilities, environmental and safety risks, delays in obtaining or failure to obtain necessary permits and approvals from government authorities, and other development and operating risks. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, Victory Nickel disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although Victory Nickel believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

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