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Victory Nickel NI.to .47



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By Bobwins

Posted: Sunday Jan 11 11:08:28AM 2015

this could be good news.  It's unlikely that Victory would be lining up secondary supplies if sales were plummenting.  Rail congestion is an ongoing problem for oil transport as well as delivering ag commodities.  

 

TORONTO, ONTARIO--(Marketwired - Jan 9, 2015) - Victory Nickel Inc. ("Victory Nickel" or the "Company") (NI.TO) today announced that it has contracted with a second Jordan formation Wisconsin-based supplier of washed concentrated Northern White frac sand and a second transload facility in St. Paul Minnesota.

 

"Having a second sand supplier in Wisconsin and transload capability north of our existing transload facility in Winona, Minnesota is just good business," said Ken Murdock, CEO of 100%-owned subsidiary Victory Silica Ltd. ("Victory Silica"). "We are maintaining the sand-supply contract with the Wisconsin-based supplier and transload facility in Winona, Minnesota that we have been using since start-up of the Seven Persons frac sand plant (the "7P Plant") near Medicine Hat, Alberta. However the rail line between Winona and St. Paul is apparently CP's busiest section in North America and as a result is subject to congestion; our St. Paul transload facility enables us to bypass that section of railway when necessary to ensure delivery of sand concentrate for processing at the 7P Plant. We believe it is always prudent to have alternatives that provide flexibility in our supply chain to fulfil our mandate of providing our customers with the best quality frac sand when and where it is needed."


By Bobwins

Posted: Thursday Jan 8 9:05:28AM 2015

Sorry, no good info.  We have the long wait until year end financials to really see whether Victory has made the transition to 24/7 operations AND is selling their full capacity of sand.  They need to demonstrate that they can sell thru the high quality sand before they are going to be able to finance the phase 2 and 3 plans they have for bigger and better operations.  

I think that they have a decent chance of doing ok in this reduced oil price environment.  If drillers are going to restrict capex and drill their best land, I am guessing they will also pay up for more sand to get the best results.  That could mean that sand sales stay at or above 2014 levels.  I don't think all drillers have moved to the higher density sand fracking that has been so successful in Texas and North Dakota.  Increasing sand by 30 to 50% for each well improves both IP rates and lowers decline rates.  Also this method avoids the extra expense of ceramic proppant.  Victory has the right product in their premium quality Wisconsin frack sand.  

On the negative side, it makes sense that the biggest companies would have the balance sheet to continue capex at reasonable rates in 2015.  Victory may not have penetrated those bigger names yet and may struggle if their smaller customers cut back on drilling more than the big boys.

The story is good if Victory can operate at 125K tons per qtr for a few qtrs and is able to finance their more ambitious phase 2 and 3 plans.  

We won't find out till late spring if sales have held up and if the operation is as profitable as promised.  

 

 

 


By dquinton

Posted: Wednesday Jan 7 9:39:55AM 2015

Bobwins - any further insight into this company given the meltdown in the energy sector?  I'm quite intrigued with their market cap and sales capacity but I have no idea how the decline in oil prices and subsequent slowdown in activity will impact forward sales.  Another company that should do very well once things start to recover but who knows when that is?  Trying to find some new exciting companies but seems that everything I uncover has some relationship to the oil and gas industry.


By Bobwins

Posted: Friday Nov 14 2:48:30PM 2014

http://finance.yahoo.com/news/victory-nickel-announces-third-quarter-210000415.html

 

this is the first full qtr of production from the Victory Silica operation.  They sold ~39K tons of sand and generated about $21/ton in gross margin.  Now that a 4th crew was added at the end of October, the plant now has the capacity to process about 125K tons/qtr.  If the plant can attain the $25/ton gross margin forecast by the company, gross margins should be $3,125,000/qtr and NI.to should be profitable.  It will take more time to get the operation operating at full efficiency and for sales to ramp up towards max capacity but the potential is there. 

I am worried about SG&A.  If mgmt doesn't control costs, the potential could be lost.  we'll see if margins rise along with sales and if costs can be controlled. 


By Bobwins

Posted: Wednesday Oct 29 10:48:55PM 2014

NI.to is now operating 24/7.  American frack sand suppliers are bigger but are valued at billion+ market caps.  NI.to is a fraction of that.  

 

7P Plant now has full production capacity to meet frac sand demand

TORONTO, ONTARIO--(Marketwired - Oct. 29, 2014) - Victory Nickel Inc. ("Victory Nickel" or the "Company") (TSX:NI) today announced that a fourth crew is now in place at its Seven Persons frac sand plant (the "7P Plant") in Alberta enabling the 7P Plant to operate on a 24-hour-per-day, seven-day-per-week schedule to produce up to 500,000 tons-per-year ("tpy") of 16/30, 20/40, 30/50 and 40/70 Wisconsin northern white frac sand.

"As previously advised, we have been operating below capacity since signing our first take-or-pay contract in August as we wanted to ensure customer demand would warrant adding the fourth and final operating team," said Ken Murdock, CEO of wholly-owned subsidiary Victory Silica Ltd. ("Victory Silica"). "We are seeing good traction in the western Canadian frac sand market and are comfortable that now is the right time to maximize the production capability at the 7P Plant."

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 Québec, and by evaluating opportunities to expand its nickel asset base. Through a wholly-owned subsidiary, Victory Silica Ltd., Victory Nickel is establishing a presence in the frac sand market prior to commencing frac sand production and sales from Minago.

About Victory Silica

Victory Silica 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 constructed a 500,000 ton-per-year dry processing plant and has begun processing and selling sand imported from Wisconsin. 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 Manitoba for this purpose.

Please visit the Company's website at www.victorynickel.ca. Should you wish to receive Company news via email, please email cathy@chfir.com and specify "Victory Nickel" in the subject line.


Read more at http://www.stockhouse.com/news/press-releases/2014/10/29/victory-nickel-adds-final-crew-to-operate-24-7-at-7p-frac-sand-plant#vuqVRruMd20ffCBI.99


By Bobwins

Posted: Wednesday Sep 24 5:19:10PM 2014

Victory Nickel is a junior nickel explorer.  They have a good nickel deposit but have struggled at current nickel prices to get it financed.  During the process of their PEA, they found that they have overburden that is silica and appropriate for fracking.  They plan to establish the value of the byproduct sand to convince lenders that they have a viable secondary income source that will improve the value of their project.  

They have a three phase plan.  1. import Wisconsin high quality sand and sell it to Canadian drillers.  2. Once they have established themselves and have cashflow, they plan to form a JV with their Wisconsin supplier to get their own supply and import that sand into Canada.  3.  Once they have established cashflow from selling fracking sand, they plan to develop their nickel project and sell the overburden as fracking sand.  

Company says no  one in Canada has frack sand that is as high quality as Wisconsin sand but their nickel project overburden is close.  Transport costs are a big part of the cost of currently imported sand so they should be able to provide Canadian drillers a competitive product at good prices.  

Victory Nickel and it's sub Victory Silica have built a 500,000 tons per annum sand processing plant near Medicine Hat, Alberta.  They are importing and selling sand now.  They expect to reach their goal of $25/ton gross margin in Q3 and become cashflow positive from the operation.

500,000 tons X $25/ton = $12.5 million potential annual cashflow.  NI.to recently did a 1 for 10 reverse split.  The price has fallen since then and could continue to show weakness if the markets continue to be weak.  Victory should rally if Q3 results show $25/ton margins.  

Share count is around 58 million for a market cap of C$27million. Actual Annual cashflow of $12.5million should substantially raise the market cap.  

http://www.victorynickel.ca/victory_presentation/

 

The main frac sand suppliers in the US are multi billion dollar stocks.  Some have been public for only a year or two.  They do have more production and revs than the phase I operation but are definitely valued at much higher levels than Victory.  Increasing the sand has proven to improve production so US and Canadian drillers are increasing the amt of sand they are using on each well.  The extra cost is more than compensated by the higher production levels.  This is a fairly recent revelation so sand demand is likely to increase over the next few years.

 

Those are the positives.  The negatives involve what Victory had to do to build the sand plant in Alberta.  They had to finance the costs by borrowing money from a variety of sources.  One of the main lenders was NWI.v.  Nuinsco is a junior explorer that has shares of Victory who has been selling into the market to raise cash for their own survival.  They have several million shares that could put a lid on the price, even if Q3 proves to be a good qtr.

They also have to share profits from the plant with a lender after Victory recovers the cost of the plant conversion.  The company expects that won't happen until 2016.  The lender will get 52% of the profits from the sand operation.  By then, Victory hopes to have phase II done and have expanded production and cashflow.   The profit sharing will be done when NWI receives around $8million.  

Also phase II and Phase III will require financing that will lead to further dilution.  

 

So unproven producer of frack sand.  Q3 will be a good indication if they can acheive $25/ton gross margin and their $12.5million potential annual cashflows.

 

 

 


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