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Victory Nickel Announces Closing of Convertible Note Financing
Proceeds to be used for working capital and general corporate purposes
|By Marketwired .
|July 7, 2014 05:36 PM EDT
TORONTO, ONTARIO -- (Marketwired) -- 07/07/14 -- Victory Nickel Inc. ("Victory Nickel" or the "Company") (TSX: NI) (www.victorynickel.ca) today announced that it has completed an offering of unsecured convertible promissory notes (the "Offering") having an aggregate principal amount of approximately US$5 million (each, a "Note") with a number of buyers (each, a "Lender").
The Company intends to use the proceeds for general corporate purposes and for working capital related to frac sand production managed by the Company's wholly-owned subsidiary Victory Silica Ltd. ("Victory Silica"). Victory Silica is currently completing commissioning of the Company's Seven Persons frac sand plant (the "7P Plant") near Medicine Hat, Alberta.
Each Note matures on a date which is two years following the issue date and bears interest at a rate of 14.8% calculated monthly with quarterly cash payments. Each Lender has the option to convert all or a portion of the principal amount of their Note into common shares in the capital of the Company (each, a "Common Share") at any time during the term of such Note at a conversion price of CDN$0.10 per Common Share.
Combined with a previously-completed US$2 million convertible promissory note financing on the same terms as the Note (see news release of November 11, 2013) and a US$4 million secured line of credit financing (see news release of May 15, 2014), the Offering provides the Company with sufficient capital for Phase 1 of the Company's frac sand business plan.
"We continue to see rising customer demand in the Canadian market for premium-quality Wisconsin frac sand, and expect to sell all of the frac sand produced at our 7P Plant during 2014," said Rene Galipeau, Vice-Chairman and CEO.
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 Victory Nickel 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.
Please visit the Company's website at www.victorynickel.ca. Should you wish to receive Company news via email, please email [email protected] and specify "Victory Nickel" in the subject line.
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 use of proceeds from the Offering, the Company's plans and expectations relating to future financings and 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's future working capital requirements, 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 and future demand for processed frac sand. 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 to use the proceeds of the Offering as expected, the need to obtain required approvals and permits from regulatory authorities, the volatility of frac sand and by-product prices and demand 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. 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.
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