Victory Nickel Inc.

Victory Nickel Inc.

November 04, 2013 12:20 ET

Victory Nickel Provides Update on Frac Sand Plant Development

Site Remediation Complete, Numerous Agreements Signed, Plant Construction Slowed

TORONTO, ONTARIO--(Marketwired - Nov. 4, 2013) - Victory Nickel Inc. ("Victory Nickel" or the "Company") (TSX:NI) today announced that it has finished the required site remediation at its Seven Persons frac sand plant (the "7P Plant") near Medicine Hat, Alberta. The completion of the final remediation report which has been submitted to the Alberta Energy Regulator paves the way for installation of the upgrades required to convert the 7P Plant to a 400,000 ton per annum frac sand production facility.

Several changes have recently been incorporated into the 7P Plant design to reduce operating costs and allow the Company's subsidiary, Victory Silica Ltd. ("VSL"), to produce the highest quality import and domestic frac sand. These improvements, along with unavoidable delays in completing the site remediation, will result in frac sand production beginning early in the first quarter of 2014 rather than prior to the end of 2013 as previously expected.

"While we have experienced some delays in developing the 7P Plant we won't be far off our target for first production and will have a more efficient plant, lower costs and a top-quality frac sand product at the end of the day," said Ken Murdock, VSL's CEO.

In addition to the on-site activities, all equipment has been sourced and is on order. Numerous contracts have been negotiated and are being documented, including agreements on the terms for the purchase of and for the washing and concentrating of Jordan Formation frac sand in Wisconsin. A rail contract and credit facility has been signed with Canadian Pacific ("CP") for the shipping of concentrated sand from Wisconsin for finishing at the 7P Plant, as has an agreement to provide access for private cars on the CP rail line. Several options for rail car leasing are being evaluated, and an agreement is expected to be signed in the very near future.

"There are many facets to consider and deal with before we can begin frac sand production at the 7P Plant but all are very advanced and I can see everything falling into place. Our new Vice-President of Marketing has been very busy meeting with potential customers and is getting good feedback and response," said René Galipeau, Vice-Chairman and CEO of Victory Nickel. "Numerous milestones have been achieved and the to-do list is getting shorter; the ultimate milestone is to generate cash flow from frac sand sales beginning early in 2014."

About Frac Sand

Frac sand is a proppant used in the oil and gas business as a part of the hydraulic fracturing process - a means of increasing flow to the wellhead. Frac sand must have particular characteristics including achieving certain levels of crush resistance, sphericity and roundness, and it is therefore a relatively rare commodity. Vast quantities of frac sand are consumed, and more is needed all the time, as shale gas plays in Canada and the US rise to prominence.

About Victory Silica Ltd.

Victory Silica is a wholly-owned subsidiary of the Company with a phased plan to establish itself in the frac sand market. In Phase 1, Victory Silica plans to begin sales of premium quality Midwest frac sand from the 7P Plant in Seven Persons, Alberta near Medicine Hat in 2014 by shipping partially-processed sand purchased in Wisconsin to the 7P Plant for final processing and distribution. The 7P Plant is well located in an area populated with fracking companies, its potential customers, and is within only a few hours' trucking distance of major oil play well sites. Phase 2, which includes the construction of a concentrator in Wisconsin, will reduce costs and assure security of sand supply through the control of a frac sand mine in Wisconsin. In Phase 3, Victory Silica has identified a site in Winnipeg, Manitoba, where it plans to build a larger frac sand plant to process and distribute both imported and domestic sands, including sand mined as a co-product of development of a nickel mine at the Company's 100%-owned Minago project in Manitoba. With margins expected to be in excess of $25 per ton of frac sand sold, Victory Silica should generate sufficient cash flow in Phases 1 and 2 to provide the financial flexibility to expand its activities by developing a second plant as Phase 3 of its growth plan.

About Victory Nickel

Victory Nickel Inc. is a Canadian company with four sulphide nickel deposits containing significant NI 43-101-compliant nickel resources. Victory Nickel is focused on becoming a mid-tier nickel producer by developing its existing properties, Minago, Mel and Lynn Lake in Manitoba, and Lac Rocher in northwestern Québec, and by evaluating opportunities to expand its nickel asset base. Through a wholly-owned subsidiary, Victory Silica Ltd., Victory Nickel is establishing a presence in the frac sand market prior to commencing frac sand production and sales from Minago.

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Forward-Looking Information: This news release contains forward-looking information. All statements, other than statements of historic fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future constitute forward-looking information. This forward-looking information reflects the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking information is subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking information, 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 the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things: uncertainty of estimates of capital and operating costs, production estimates and estimated economic return; the possibility that actual circumstances will differ from estimates and assumptions; uncertainties relating to the availability and costs of financing needed in the future; failure to establish estimated mineral resources; fluctuations in commodity prices and currency exchange rates; inflation; recoveries being less than those indicated by the testwork carried out to date (there can be no assurance that recoveries in small scale laboratory tests will be duplicated in large tests under on-site conditions or during production); changes in equity markets; operating performance of facilities; environmental and safety risks; delays in obtaining or failure to obtain necessary permits and approvals from government authorities; unavailability of plant, equipment or labour; inability to retain key management and personnel; changes to regulations or policies affecting the Company's activities; the uncertainties involved in interpreting geological data; and the other risks disclosed under the heading "Risk Factors" and elsewhere in the Company's annual information form dated March 28, 2013 filed on SEDAR at Forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.

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