TORONTO, ONTARIO, Oct 31, 2008 (MARKET WIRE via COMTEX) -- Victory Nickel Inc. ("Victory Nickel" or the "Company")(TSX: NI) (
www.victorynickel.ca) today announced very positive results from a study completed by Outotec (USA) Inc. ("Outotec"), evaluating the hydraulic fracturing ("frac") sand plant design and capital and operating costs to produce 914,245 tonnes of frac sand annually as a by-product of nickel production at its 100%-owned Minago sulphide nickel deposit in Manitoba.
Key conclusions of the Outotec study include:
- Throughput of 1.2 million tonnes of sand per year produces 914,245 tonnes of frac sand annually over approximately nine years;
- Average life of mine operating costs of $10.37 per tonne of frac sand;
- Plant capital cost of $44.0 million; and,
- A processing plant designed to allow for production to increase should market conditions warrant.
Frac sand, which is used to improve recoveries in the oil and gas industry, forms part of the overburden that must be removed before mining nickel from the Minago open pit. Over and above processing plant capex of $44.0 million as outlined below, capital requirements include $8.8 million for construction of a rail siding and approximately $16.6 million for mining equipment. Detailed cost data and project economics will be incorporated into the Minago Feasibility study which is expected to be complete before year end.
"There is significant potential to generate substantial value from the sale of frac sand as a by-product of mining the sulphide nickel deposit at Minago," said Rene Galipeau, Chief Executive Officer. "The project is ideally located with respect to infrastructure and is in close proximity to potential markets in western Canada and the United States. Various studies completed to date indicate that the frac sand operation alone could cover the cost to pre-strip and equip the nickel open pit, and should enhance the ability to finance development of the nickel deposit."
The current plant design will allow operating hours to increase from 4,822 hours per year to 7,000 hours per year (for a throughput of 1.34 million tonnes of sand per annum producing 1,017,953 tonnes of frac sand per annum), if necessary, to meet additional market demand. Outotec estimates that the construction and commissioning of the frac sand processing plant will take approximately 16 months from the start of detailed engineering.
Capital Costs
Capital costs for the processing plant are estimated to be $44.0 million,
broken down as follows:
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Plant equipment(i) and EPCM $26.3 million
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Construction(i) $17.7 million
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Total $44.0 million
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(i)Includes 10% contingency
Operating Costs
Operating costs based on a plant throughput of 1.2 million tonnes of sand
per year are as follows:
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Cost
Category ($/tonne)
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Labour 3.76
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Power 0.40
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Thermal Energy 2.57
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Maintenance 3.39
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Loader Fuel 0.20
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Flocculent 0.06
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Total Cost Per Tonne of Product 10.37
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Operating costs based on a plant throughput of 1.34 million tonnes of sand
per year are as follows:
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Cost
Category ($/tonne)
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Labour 2.56
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Power 0.27
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Thermal Energy 2.57
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Maintenance 3.39
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Loader Fuel 0.14
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Flocculent 0.06
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Total Cost Per Tonne of Product 8.99
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An additional $1.2 million in plant capital would be required to increase annual throughput to 1.34 million tonnes. An exchange rate of US$1.00:CDN$1.13 has been used for conversion of US dollars.
As previously announced, Victory Nickel has engaged Raymond James Ltd. ("Raymond James") as its advisor to determine the most effective strategy to maximize the value of the frac sand by-product. The completion of this study will enable Raymond James to solicit expressions of interest from potential partners interested in participating in the development of this attractive by-product resource.
Paul Jones, Vice-President, Exploration, acts as a Qualified Person (QP) under National Instrument 43-101 for Victory Nickel, has reviewed and approved the contents of this news release.
About Victory Nickel
Victory Nickel Inc. is a Canadian company with three sulphide nickel deposits containing significant 43-101-compliant nickel resources. Victory Nickel is focused on becoming a mid-tier nickel producer by developing its existing properties, Minago and Mel in Manitoba, and Lac Rocher in northwestern Quebec, and by evaluating opportunities to expand its nickel asset base. Victory Nickel also owns approximately 84% of the outstanding shares of Independent Nickel Corp. ("Independent") (
CA:INI:
news,
chart,
profile) .
Forward-Looking Information: This news release contains forward-looking information. All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding estimates and/or assumptions in respect of production, revenue, cash flow, costs, economic return, net present value, mine life and financial models, mineral resource estimates, potential mineralization, potential mineral resources, timing of possible production and the Company's development plans and objectives) 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 frac sand prices and currency exchange rates; inflation; frac sand 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 August 18, 2008 filed on SEDAR at
www.sedar.com. Any forward-looking statement 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.
Contacts:
Victory Nickel Inc.
Rene Galipeau
(416) 363-8527
Victory Nickel Inc.
Steve Harapiak
(416) 363-8527
Victory Nickel Inc.
Sean Stokes
(416) 363-8527
Email: admin@victorynickel.ca
Website: www.victorynickel.ca
