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Our Business Model

Victory Nickel was formed in 2007 as a nickel development company. The flagship project, Minago, hosts a large nickel resource in Manitoba, Canada. Minago also has a significant frac sand resource overlying the nickel. Minago is permitted, however the capital cost to develop the Minago nickel and frac sand resources is projected to be in excess of $500 million.

An opportunity to enter the frac sand market in advance of Minago being developed was identified by management. A three-phased business model has been created, and the implementation of Phase 1 began in earnest in 2013.

Making frac sand is a two-stage process: first, mining and washing the raw sand (the wet stage); second, drying and sorting the finished sand (the dry stage). Phase 1 of the business model focuses on purchasing mined and washed wet sand “concentrate” from existing Wisconsin sand mines, then drying and screening finished product at Victory’s wholly-owned 500,000 ton per year (“TPY”) nominal capacity 7P Plant 18 km south of Medicine Hat, Alberta. Wisconsin is home to the highest quality raw frac sand and is well-serviced by rail for delivery of concentrate to the 7P Plant.

The 7P Plant has 22,000 tons of finished product storage capacity to help efficiently serve potential customers. These include North America’s largest pressure pumping energy service companies, most of which have operations in Medicine Hat. Efficient inventory management is vital in the frac sand business, and Victory’s well-located 7P Plant is a strategic asset because it is within trucking distance of major oil and natural gas drilling centres.

The goal of Phase 2 is vertical integration by purchasing a Wisconsin frac sand mine to enhance margins, increase quality control and improve security of sand supply. An option agreement is in place whereby Victory would build a wet plant/sand concentrator at or near the mine location and the mine/land owner would vend its permitted Wisconsin mines into a 50/50 joint venture.

In Phase 3, an ~1,000,000 TPY plant would be built in Winnipeg, Manitoba to increase production capacity and market reach, and to further improve margins. Sand from Minago could be processed at this plant.

Victory Silica

What Is Frac Sand?
Our Business Model
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