Victory Nickel Inc. has completed an Asset Purchase Agreement for the Seven Persons (7P) sand recycling facility located southwest of Medicine Hat, Alberta, Canada.
“The acquisition of the 7P Facility presents Victory Silica with an avenue to generate cash flow for Victory Nickel from frac sand production and sales in the near term,” said Rene Galipeau, vice-chairman and CEO of Victory Nickel.
At the meeting of shareholders held in June 2012, the company announced the creation of Victory Silica Ltd. VSL was created to establish Victory Nickel's presence in the frac sand market prior to commencing production of both nickel and frac sand at the 100-percent-owned Minago mine in Manitoba. The Minago feasibility study envisions production of up to 1.14 million tpy of premium-quality frac sand from the Winnipeg Formation sandstone resource that overlies the Minago nickel deposit.
In order to establish Victory Nickel as a premier frac sand supplier, VSL has planned a three-phase program.
- Phase 1 establishes production of 400,000 tons per annum of premium-quality Midwest frac sand from the 7P Facility by shipping partially processed sand purchased in Wisconsin to the 7P Facility for final processing and distribution. The 7P Facility is well-located in an area populated with fracking companies, its customers and is within only a few hours’ trucking distance of the well sites.
- Phase 2 will reduce costs and assure security of sand supply through the acquisition 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 at Minago.
“The frac sand market is constantly evolving, and this presents new opportunities to VSL,” said VSL CEO Ken Murdock. “High-quality Midwest frac sand remains at a premium, and the relationships we are establishing in the U.S. and Canada today will benefit Victory Nickel in the near-term as well as down the road when Minago financing, mine development and production moves forward. Our internal forecasts indicate that margins in excess of $25 per ton of frac sand can be realized on sales from the 7P Facility.”