TORONTO, ONTARIO--(Marketwired - March 24, 2014) - Victory Nickel Inc. ("Victory Nickel" or the "Company") (TSX:NI) today announced that it has started sales of frac sand produced at its Seven Persons frac sand plant (the "7P Plant") near Medicine Hat, Alberta. Sand produced during commissioning is being sold and delivered on a spot basis and the Company's first supply agreement is being negotiated.
The 7P Plant is a 500,000 ton-per-year dry frac sand processing facility built by the Company during 2013/2014. Situated in an ideal location to consistently supply the highest quality Midwestern white frac sand to customers in Alberta, BC, Manitoba, Saskatchewan and North Dakota, the 7P Plant has 22,000 tons of dry sand storage capacity. The 7P Plant's capacity, inventory and location will ensure timely availability of commercial quantities of the highest quality 16/30, 20/40, 30/50 and 40/70 premium Midwestern white frac sand when and where customers need it.
"We're very pleased to announce that 7P Plant construction is now complete," said Ken Murdock, CEO of the Company's wholly-owned subsidiary Victory Silica Limited. "Commissioning is proceeding well and the Company is now delivering sand made during the commissioning stage. Our marketing team is actively engaging potential customers throughout western Canada and in North Dakota and the outlook is very optimistic as we build the required frac sand inventories."
"This is a very exciting time for Victory Nickel and Victory Silica," said René Galipeau, Victory Nickel's CEO. "It has taken a lot of effort to achieve this milestone and I commend the entire team for getting us to where we are today. It's important to remember that this is only the first step in our three-phased plan to enter the frac sand market. With Phase 1 construction now complete, the immediate goals are to optimize 7P Plant performance, expand sales and marketing activities and continue to implement Phases 2 and 3. The goal of Phase 2 is to enhance the Company's ownership of frac sand resources, strengthen quality-control capability in Wisconsin and reduce operating costs. Phase 3 is designed to improve market reach by increasing frac sand production and sales capacity."
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 and oil plays in Canada and the US rise to prominence.
About Victory Silica Ltd.
Victory Silica is a wholly-owned subsidiary of the Company and is charged with a phased plan to establish the Company in the frac sand market. In Phase 1, the Company has begun sales of premium quality midwestern white frac sand from the 7P Plant in Seven Persons, Alberta near Medicine Hat 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 or gas play well sites. Phase 2, which includes the construction of a concentrator in Wisconsin, is expected to 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, the Company 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 and a significant frac sand resource at its Minago project. 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.
Please visit the Company's website at www.victorynickel.ca. Should you wish to receive Company news via email, please email cathy@chfir.com and specify "Victory Nickel" in the subject line.
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 www.sedar.com. 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.