In line with its strategy to provide a full suite of import and domestic frac sand products to the northern oil and gas markets, Victory Nickel Inc. announced that its subsidiary Victory Silica Ltd. has entered into an agreement with Short Grass Ranches Ltd. giving the company the option to mine frac sand from one of the owner’s properties.
The Short Grass Property is located approximately 52 km from the company’s Seven Persons frac sand plant (7P Plant) near Medicine Hat, Alberta, Canada.
The Exploration and Option Agreement gives the company the potential to produce an in-basin domestic sand, which has grown in popularity in North America as a means to reduce overall frac cost. Any sand mined from the Short Grass Property would be trucked to the 7P Plant for processing and sale alongside side the Northern White products.
“As a result of increased demand from certain customers for domestic frac sand in particular applications, the company has been aggressively searching for high-potential properties in the vicinity of the 7P Plant,” said Ken Murdock, chief executive of Victory Silica. “Our business plan always contemplated sales of domestic frac sand from both our own Minago project in Manitoba and from other strategically-located Canadian frac sand deposits in addition to sales of Northern White. With the signing of the Exploration and Option Agreement, the company has the potential to join its American competitors in offering both imported Northern White and an in-basin domestic alternative. Broadening its product offering will allow Victory Nickel to appeal to a wider variety of customers and better take advantage of opportunities as the frac sand market evolves.”
Under the terms of the Exploration and Option Agreement, the company has a 180-day period to evaluate the Short Grass Property. Should the company exercise its right to develop a commercial frac sand mine, it will pay the owner a royalty for frac sand sold from the Short Grass Property. The initial term of the option would be for five years with the ability to extend for additional five-year terms.