|By Marketwired .||
|May 15, 2014 05:00 PM EDT||
TORONTO, ONTARIO -- (Marketwired) -- 05/15/14 -- Victory Nickel Inc. ("Victory Nickel" or the "Company") (TSX:NI) today announced that it has executed a securities purchase and line of credit agreement (the "SPA") with New York based City Hall Capital LLC (the "Purchaser") pursuant to which the Company will issue and sell to the Purchaser senior secured 14.8% notes (each, a "Note") in the aggregate principal amount of up to US$4,000,000, maturing on July 30, 2015. The initial closing on the SPA is the date of this release, May 15, 2014 (the "Initial Closing Date"). The Purchaser previously purchased a convertible note in the principal amount of US$1,000,000 pursuant to an ongoing convertible note private placement of the Company which will be converted into a Note on the Initial Closing Date. The Company has drawn down US$1,500,000 and intends to draw down the balance of US$1,500,000 prior to June 30, 2015.
The Company will issue to the Purchaser 5,000,000 common share purchase warrants (each, a "Warrant") for each US$1,000,000 Note issued to the Purchaser, subject to an increase to 10,000,000 Warrants for each US$1,000,000 Note issued if any of the Notes are prepaid and the closing price of the common shares of the Company on the Toronto Stock Exchange is $0.20 or lower on the trading day preceding the date of such prepayment. Each Warrant entitles the holder to purchase one common share of the Company at an exercise price of $0.10 for a period of 36 months from the Initial Closing Date and is subject to a four month plus one day hold period from the Initial Closing Date pursuant to applicable Canadian securities laws.
The loan proceeds will provide the Company with funding to build inventory and receivables during the ramp-up stage at the Company's 500,000 ton per annum frac sand drying and screening facility recently constructed in Seven Persons, near Medicine Hat, Alberta (the "7P Plant"), as well as to acquire equity interests in the record holder of the leasehold interest of the property on which the 7P Plant is located. The Company is currently building an inventory of premium-quality washed concentrated Jordan Formation sand from Wisconsin for finish processing into inventory of high-quality 16/30, 20/40, 30/50 and 40/70 frac sand.
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 Ltd. 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 processing sand imported from Wisconsin at the 7P Plant and selling the processed frac sand to customers on a spot basis. 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, the Company intends to construct a larger frac sand plant to process and distribute both imported and domestic sand, which may potentially, but not necessarily, include sand mined as a co-product of development at the Company's Minago project. The Company has already identified a site in Winnipeg, Manitoba for this purpose.
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 Quebec, and by evaluating opportunities to expand its nickel asset base. Through a wholly-owned subsidiary, Victory Silica Ltd., Victory Nickel is attempting to establish a presence in the frac sand market prior to commencing frac sand production and sales from Minago.
About City Hall Capital LLC
City Hall Capital LLC is a global investment firm focused on private equity, structured finance, real estate and wealth management. City Hall Capital LLC and its affiliates look to partner with and invest in selective growth opportunities across various sectors with a focus on long term capital appreciation.
Forward-Looking Information: This news release contains certain forward-looking information. All information, other than information regarding historical fact, that addresses activities, events or developments that the Company believes, expects or anticipates will or may occur in the future is forward-looking information. Forward-looking information contained in this news release includes, but may not be limited to, the future issuances of Notes and Warrants to the Purchaser and the timing thereto, the availability of funds and the aggregate amount available to the Company pursuant to the SPA and the timing thereto, the Company's plans and expectations regarding the progress and success of the Company's projects, including the Company's goals and business plan with respect to the frac sand business and the future demand for frac sand. The forward-looking information contained in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. With respect to the forward-looking information contained in this news release, the Company has made assumptions regarding, among other things, the Company and the Purchaser's ability to satisfy their respective conditions and obligations contained in the SPA, the Company's ability to generate sufficient cash flow from operations and access existing credit facilities and capital markets to meet its future obligations, goals and business plan, future prices for frac sand and by-products, future demand for processed frac sand and the Company's ability to obtain qualified staff and equipment in a timely and cost-efficient manner to meet the Company's demand. The forward-looking information contained in this news release is subject to a number of risks and uncertainties that may cause actual results or events to differ materially from current expectations, including the inability of the Company or the Purchaser to satisfy their respective conditions and obligations contained in the SPA, the need to obtain required approvals and permits from regulatory authorities, the volatility of frac sand and by-product prices and geological, technical, drilling and processing problems. Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable law, the Company disclaims any obligation to update or modify such forward-looking information, either because of new information, future events or for any other reason.
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