Nuinsco release- today
Nuinsco investee Victory Nickel ships frac sand to 7P
2014-02-24 13:36 ET - News Release
Mr. Sean Stokes reports
NUINSCO PROVIDES UPDATE ON PROGRESS TOWARD FRAC SAND SALES BY VICTORY NICKEL
Nuinsco Resources Ltd. provided an update on the status of the development of a frac sand production and marketing operation by its investee company Victory Nickel Inc., from which Nuinsco stands to benefit through participation in net cash flow derived from the sale of processed frac sand.
In a series of recent news releases, Victory Nickel has announced the shipping and arrival of rail consignments of partially processed frac sand at its 500,000-tonne-per-year Seven Persons (7P) frac sand plant near Medicine Hat, Alta. A regular, continuing schedule of sand shipments from Wisconsin, United States, to the 7P plant has been developed, and the production of commercial quantities of finished, premium-quality, Midwest frac sand is anticipated imminently from the 7P plant.
"Nuinsco is obviously closely monitoring the progress of Victory Nickel and its subsidiary Victory Silica towards frac sand production and sales," said Paul Jones, Nuinsco's chief executive officer. "The potential benefit to Nuinsco from participation in this project cannot be overstated as it is expected to provide financial stability to Nuinsco, distinguishing it from many peers and providing the financial means to continue to aggressively explore its outstanding exploration projects and to evaluate new opportunities as they arise."
In March, 2013, Nuinsco provided a secured loan to Victory Nickel (see news release dated March 26, 2013) to assist in financing acquisition and construction of the 7P plant. Nuinsco also provided a backstop to last year's Victory Nickel rights offering. Under terms of the loan agreement, Nuinsco has the right to convert the outstanding balance of the loan into a participating interest in cash flow from the sale of frac sand from the 7P plant. As reported by Victory Nickel, the 7P plant is now being commissioned, with frac sand sales anticipated shortly. Nuinsco can elect, following recovery of capital costs by Victory Nickel, to participate in net cash flows from the sale of frac sand through a net-cash-flow-sharing formula and thereby obtain a non-dilutive income stream to the company. In addition, Nuinsco is a substantial shareholder of Victory Nickel and anticipates benefiting financially from an appreciation in Victory Nickel's share price following commencement of commercial production.