Victory Nickel Announces 2007 Financial Results, Provides Update of Activities
TORONTO, ONTARIO–(March 31, 2008) – Victory Nickel Inc. (“Victory Nickel” or the “Company”)(TSX:NI) (www.victorynickel.ca) today announced financial results for the fiscal period from inception, February 1, 2007, to December 31, 2007. During the period, the Company achieved the following:Corporate
- 99.77% of Nuinsco shareholders voted in favour of the Plan of Arrangement to create Victory Nickel.
- Victory Nickel began trading on the Toronto Stock Exchange under the ticker symbol Ni on February 6, 2007.
- Completed a bought deal private placement for gross proceeds of $11,500,000.
- Continued to evaluate the acquisition of nickel assets to enhance the Company’s production profile.
- In December, 2007, engaged Auramet Trading LLC (“Auramet”) to provide financial advisory services in connection with debt financing for development of the Lac Rocher nickel project.
Minago – Manitoba
- Engaged Wardrop Engineering Inc. (“Wardrop”) to complete the Minago definitive feasibility study.
- Expanded the Minago land package by 7,062 hectares to 14,496 hectares.
- Completed a 13,000 metre diamond drill program as part of the Minago definitive feasibility study.
- Delivered eight tonnes of mineralized material to SGS Mineral Services (“Lakefield”) to complete feasibility study metallurgical studies.
- Announced a 73% increase (4.0 million tonnes to 6.9 million tonnes) of potential by-product revenue from the sale of sand (including frac sand).
- Held numerous public meetings and signed a Memorandum of Understanding with the Misipawistik Cree Nation (Grand Rapids), Mosakahiken Cree Nation (Moose Lake) and Cross Lake Band of Indians.
Mel – Manitoba
- Announced a 79% increase in the amount of contained nickel.
- Completed a $2,000,000 drill program at Mel in conjunction with joint venture partner Vale Inco to test the numerous geophysical targets.
- Intersected significant grades over mineable widths, including 1.11% nickel over 13.67 metres.
- Completed its earn-in of a 100% interest in the Mel property, subject to Vale Inco’s 51% back-in right.
- Began to evaluate near-term production potential.
Lac Rocher – Quebec
- Began an environmental baseline study.
- Appointed Roche Engineering to complete a preliminary economic assessment of near-term production potential.
- Completed a 12-hole, 1,500 metre drill program.
- Announced drill results grading up to 9.5% nickel over 2.29 metres within a larger intercept of 45.92 metres grading 1.42% nickel.
- Entered into a Memorandum of Understanding with the Waswanipi Cree First Nation (“WCFN”).
- Completed metallurgical testing of Lac Rocher massive sulphide composites.
- Announced positive results for nickel recovery of 85.04% and copper recovery of 96.67% to a nickel/copper concentrate with an overall nickel equivalent grade of 12.66%.
“2007 was a very busy and productive year that began with the creation of Victory Nickel and during which we made great progress toward becoming Canada’s next mid-tier nickel producer,” said Rene Galipeau, Vice-Chairman and CEO. “As we enter 2008, we look forward to putting our first property in production at Lac Rocher, completing the definitive feasibility study of Minago and making a production decision at Mel. We will also continue to evaluate new ways to increase Victory Nickel’s market valuation by adding assets and positioning the Company to benefit from continued high nickel demand and the lack of new sulphide nickel deposits coming into production worldwide.”
As a development stage enterprise, none of Victory Nickel’s exploration or development projects have commenced commercial production and, accordingly, the Company does not yet have revenue.
For the 11-month period from inception, February 1, 2007, to December 31, 2007, the Company had a net loss of $2.2 million, or $0.01 per share. The loss resulted from general and administrative expenses of $1,643,000 and stock option compensation of $1,369,000 relating to stock options granted in the current period to officers, Directors and employees, some of which are vesting in future periods, less interest and other income of $559,000.
At December 31, 2007, the Company had working capital, including cash and cash equivalents and cash for exploration expenditures, totaling $12,385,000. Cash equivalents include bank-guaranteed investment certificates and bank discount notes. The Company does not own asset-backed commercial paper. The Company has a corporate policy of investing its available cash in Canadian government instruments and certificates of deposit or other direct obligations of major Canadian banks, unless otherwise specifically approved by the Board.
During the fiscal period, the Company used $1,145,000 in operating activities, comprising cash used in operations before changes in non-cash working capital of $1,012,000 plus a net increase in non-cash working capital balances of $133,000.
Full financial statements and management’s discussion and analysis will be posted on the Company’s website and at www.sedar.com.
2007 marked the first year of Victory Nickel’s existence and was a very busy period with respect to creating Victory Nickel and moving the Minago, Lac Rocher and Mel sulphide nickel projects toward production. 2008 should be equally eventful, as the Company expects to make the transition from developer to nickel producer with the start-up of production at the 100%-owned Lac Rocher deposit in northern Quebec, completion of the Minago definitive feasibility study and completion of an independent evaluation of the economics of developing Mel.
Recently, the Company announced the appointment of Steve Harapiak, an experienced and well-respected mining executive. Mr. Harapiak will add the leadership required to move Victory Nickel forward to becoming a nickel producer.
In late March, the Company made an investment in Wallbridge Mining Company Limited, acquiring 8.4% of its outstanding common shares. This investment gives Victory Nickel shareholders an economic and low risk means of participating in the Sudbury basin, one of the world’s most prolific nickel camps, and in the rapidly emerging Duluth Complex in northeastern Minnesota through Wallbridge’s 13% equity interest in Duluth Metals Limited, and advances the Company’s goal of creating Canada’s next mid-tier nickel company.
The market for nickel is expected to remain robust for the foreseeable future. With over 660 million pounds of in-situ nickel in National Instrument 43-101-compliant measured (154 million pounds) and indicated (511 million pounds) resources at the three projects, plus an additional 530 million pounds of in-situ nickel in inferred resources, Victory Nickel has one of Canada’s largest undeveloped sulphide nickel inventories. With near-term production potential from all three projects, Victory Nickel is moving quickly to take advantage of the worldwide shortage of sulphide nickel assets and to capitalize on strong nickel pricing.
The Company is aggressively advancing all three projects, and evaluating additional opportunities to expand nickel resources and production. Current programs on the three projects include:
Completion of the definitive feasibility study on the open pit portion of the deposit by Wardrop remains a focus for the Company. Wardrop is moving ahead rapidly with all aspects of this study.
Early in 2008, the Company embarked on a 10,000 metre diamond drilling program designed to expand the overall nickel resource, as well as an Early Works program as part of work required to meet the start-up of nickel production targeted for the fourth quarter of 2010.
The Minago scoping study identified the need for further drilling at depth in the Nose Deposit, the area containing the entire current resource, to better define lenses of higher grade mineralization.
The 2008 drill program follows up on the potential identified in the Minago scoping study and earlier drilling. The first hole in this program confirmed the presence of higher-grade nickel mineralization at depth, assaying 1.51% nickel over 38.42 metres as part of a 193.01 metre interval grading 0.59% nickel.
Drilling is also targeting the North Limb, a zone of mineralization with a known strike length of 1.5 kilometres located to the north of the Nose Deposit. In 2005, Nuinsco drilled a single 455.4 metre deep hole in the North Limb, intersecting 9.71 metres grading 1.03% nickel and 52.5 metres grading 0.64% nickel within a 337.9 metre intercept grading 0.33% nickel in rock similar to that hosting the Minago resource. In the current program, additional holes are planned to further characterize the mineralization and nickel grades along this potentially vast and underexplored area.
The Early Works program represents the first step in the design of the tailings facility, waste dumps and overall site layout in preparation for permitting and development of the Minago mine. The Early Works program consists of geotechnical drilling, hydrogeological drilling, and design of a permanent access road. Design of an early site access road to support Early Works development is already complete.
All currently scheduled drilling is expected to be complete by early in the second quarter of 2008, and the Company remains on track to complete the definitive feasibility study before the end of 2008.
Lac Rocher, located in northern Quebec, is advancing to become Victory Nickel’s first production asset in 2008. Roche Consulting Engineering is completing a preliminary economic assessment of two phases of an underground exploration and bulk sampling program to evaluate ore continuity and provide further metallurgical evaluation.
Phase I encompasses extracting approximately 50,000 tonnes of material, with Phase II extracting approximately 400,000 additional tonnes. All of the mined material will be shipped off site, and the Company is evaluating a number of options, both in the province of Quebec and elsewhere, for the processing of this material.
Positive results have been received from metallurgical tests, and the Company fully expects that Lac Rocher will be its first cash generating asset, with mining targeted to begin in late 2008.
The Mel deposit has a National Instrument 43-101-compliant indicated resource of 4.3 million tonnes grading 0.88% nickel (approximately 83 million pounds in-situ nickel) and an additional inferred resource of 1.0 million tonnes grading 0.839% nickel (approximately 19 million pounds in-situ nickel). This near-surface resource, along with a stipulation in the option agreement that joint venture partner Vale Inco shall mill ore mined from the Mel deposit at cost plus 5% (provided that the product meets Vale Inco specifications and that Vale Inco has sufficient mill capacity), makes near-term nickel production from the Mel deposit a possibility that the Company is currently evaluating.
Victory Nickel is in discussions with Vale Inco regarding its back-in right for 51% of the project. The Company expects Vale Inco’s decision, which will dictate the future direction of the project, will be made by mid-year 2008.
Based on the Company’s recent share price, and given the strength of the Minago, Mel and Lac Rocher projects, management recognizes that Victory Nickel’s assets remain significantly undervalued by the market, and is committed to realizing full value on behalf of all shareholders. These assets form a solid base on which to build a substantial Canadian nickel company.
About Victory Nickel
Victory Nickel Inc. is a Canadian company with over 660,000,000 pounds of in-situ nickel in National Instrument 43-101-compliant measured (154,000,000 pounds) and indicated (511,000,000 pounds) resources in three sulphide nickel projects: Minago and Mel on Manitoba’s Thompson nickel belt, and the high-grade Lac Rocher deposit in northwestern Quebec, and an additional 530 million pounds of in-situ nickel in inferred resources. Created from the nickel assets of Nuinsco Resources Limited (TSX:NWI), Victory Nickel is well financed and focused on becoming a substantial nickel producer by developing its existing properties and evaluating opportunities to expand its nickel asset base.
FORWARD-LOOKING STATEMENTS: This news release contains certain “forward-looking statements.” All statements, other than statements of historical fact, that address activities, events or developments that Victory Nickel believes, expects or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek,” “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend” and statements that an event or result “may,” “will,” “can,” “should,” “could,” or “might” occur or be achieved and other similar expressions. These forward-looking statements reflect the current expectations or beliefs of Victory Nickel based on information currently available to Victory Nickel. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of Victory Nickel to differ materially from those discussed in the forward-looking statements, 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 Victory Nickel. Factors that could cause actual results or events to differ materially from current expectations include, among other things, failure to successfully complete financings, capital and other costs varying significantly from estimates, production rates varying from estimates, changes in world copper, nickel and/or gold markets, changes in equity markets, uncertainties relating to the availability and costs of financing needed in the future, equipment failure, unexpected geological conditions, imprecision in resource estimates, success of future development initiatives, competition, operating performance of facilities, environmental and safety risks, delays in obtaining or failure to obtain necessary permits and approvals from government authorities, and other development and operating risks. 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, Victory Nickel disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although Victory Nickel believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.
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