Victory Nickel Inc.

Victory Nickel Inc.

September 20, 2010 12:05 ET

Victory Nickel Retains 100% of Mel Nickel Property

Expiry of Vale Back-in Right Means Victory Nickel Can Determine the Pace of Development

TORONTO, ONTARIO--(Marketwire - Sept. 20, 2010) - Victory Nickel Inc. (the "Company") (TSX:NI) ( today announced that it has agreed with Vale Canada Limited ("Vale") that Vale's right to earn back an interest in the Company's Mel nickel property, located approximately 25 kilometres from Thompson, Manitoba, has now expired.

Victory Nickel earned its right to acquire 100% ownership of the Mel property, subject to Vale's right to earn back a 51% interest (the "Back-in Right"), by spending $6 million on the project. The period during which Vale could exercise its back-in right had previously been extended by the Company to allow Vale an opportunity to complete metallurgical testing. Vale will retain a 10% net profits royalty, to be calculated in accordance with the original property agreement.

"We're very pleased with this outcome, because it means that we can advance Mel on our own terms and on our own schedule," said René Galipeau, Vice-Chairman and CEO. "We firmly believe that a much larger resource exists at Mel, and we now have the ability to advance the project as we see fit."

The Mel property is located within 25 kilometres of Inco's processing facilities in Thompson, Manitoba, and consists of one mineral lease (the "Mel Lease") covering approximately 750 Ha and 37 unpatented mineral claims (the "Mel Claims"), encompassing approximately 8,770 Ha. While only a small part of the total project area, the Mel Lease contains the entire NI-43-101 resource (0.50% nickel cut-off grade, see news release dated February 26, 2007):

Classification Tonnes Grade (%Ni)   Contained Ni (lbs.)
Indicated 4,279,000 0.875   82,520,515
Inferred 1,010,000 0.839   18,676,476

Mineralization on the Mel lease remains open along strike and at depth. The known resource is located between 46 and 183 metres, making low-cost ramp access a possibility. This near-surface resource, along with a stipulation in the option agreement that Vale shall mill ore mined from the Mel deposit at its cash cost plus 5% (provided that the product meets Vale's specifications and that Vale has sufficient mill capacity), makes near- term nickel production with a low capital requirement a possibility.

The Mel property is considered to be a dislocated segment of the Thompson Nickel Belt, and the larger group of Mel Claims also offers significant upside potential in all directions. Past drill programs on the Mel Claims have tested numerous geophysical anomalies associated with known nickel bearing geology, however at this point the Mel Claims remain underexplored.

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. Victory Nickel also owns shares in Prophecy Resource Corp. (TSX VENTURE:PCY) and Wallbridge Mining Company Limited (TSX:WM), the third largest landholder in the Sudbury Basin, which in turn owns approximately 12% of Duluth Metals Limited.

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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 31, 2010 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.

To view an image of Mel Geology and Claims, please visit the following link:  

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