Victory Nickel Improves Economics at Minago Revised Financial Model Increases IRR to 19.8% and NPV by 21% at 6% Discount Rate
Revised Financial Model Increases IRR to 19.8% and NPV by 21% at 6% Discount Rate
TORONTO, ONTARIO -- (Marketwire) -- 06/21/10 -- Victory Nickel Inc. (the 'Company') (TSX: NI) (www.victorynickel.ca) today announced improved economics for its 100%-owned Minago nickel project in Manitoba. The improvement arises from a reduction in capital cost due to the purchase of refurbished electrical equipment and revisions to the financial model. As a result, the project's base case internal rate of return (IRR) has increased to 19.8% from 17.7% and the net present value (NPV) at 6% discount rate has risen by $85 million to $487.6 million, compared with the results announced by news release on December 14, 2009. Undiscounted cash flow increases to in excess of $1 billion (all figures in $Cdn, unless otherwise indicated).
'When we announced the DFS in December we said the process of optimizing the technical and financial aspects of the project had already begun and this improvement is the first evidence of that work. We remain confident that additional economic enhancements will be realized from the efforts that are ongoing,' said Rene Galipeau, Vice-Chairman and CEO. 'While we continue to optimize the DFS, we are also moving forward with financing initiatives, permitting, sourcing equipment and evaluating alternative process technologies to enhance economic returns.'
The table below compares the revised economics with those announced in the news release of December 14, 2009:
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Minago Sulphide Nickel Project: Economic Summary Comparison June 21, 2010 -
December 14, 2009:
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Base Case, Jun. 21, 2010(1) Base Case Dec. 14, 2009(1) Increase
($millions, except %) ($millions, except %) (%)
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Undiscounted
Cash Flow 1,053.7 917.7 14.8
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NPV@8% 367.1 293.8 24.9
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NPV@6% 487.6 402.6 21.1
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NPV@4% 636.8 538.0 18.4
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IRR 19.8 17.7 11.9
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(1)Three-year trailing average US$ metal prices and exchange rate as of
market close December 10, 2009: Ni: $11.19/lb; Cu: $2.91/lb; Pd: $322.4/oz;
Pt: $1,353.98/oz; Au: $836.25/oz; Co: $27.73/lb; Ag: $14.25/oz; Rh:
$2,254.56/oz; $Can/$US exchange rate: 1.097
The Company has recently entered into an agreement to purchase refurbished electrical equipment for the main 230 kv/13.8 kv substation, the main electrical switchroom and seven 13.8 kv/600v unit substations for the process and service centres for the Minago mine site. Electrical engineering design for this phase of the work is being executed by Walter Dow Associates of Toronto and Manitoba Hydro. Early installation of electrical capacity will reduce costs during the construction period.
'Our acquisition of this refurbished power equipment provides a good indication of the potential that exists to decrease capital costs at Minago from those estimated in the DFS,' said President and COO Steve Harapiak. 'Our cost for this equipment was 54% below costs used in the DFS, and we are evaluating similar opportunities in other areas.'
Annual and Special Meeting
As a reminder, the Company's Annual and Special Meeting for Shareholders ('ASM') will take place on June 22, 2010, at 4:00 p.m. Toronto Time at the Toronto Board of Trade, 1 First Canadian Place, Toronto, Ontario. The ASM will be webcast and can be accessed through Victory Nickel's website at www.victorynickel.ca. For those attending via webcast who wish to ask questions, please e-mail sean.stokes@rogers.blackberry.net.
Qualified Persons
The revised economic model was prepared by Wardrop, A Tetra Tech Company ('Wardrop'), under the supervision of Georgi Doundarov, P. Eng., PMP, CCE, who is an independent 'Qualified Person' and employee of Wardrop. Mr. Doundarov has reviewed and approved the contents of this news release related to the economic modelling of the Minago deposit.
About Victory Nickel
Victory Nickel Inc. is a Canadian company with four sulphide nickel deposits containing significant NI 43-101-compliant nickel resources. 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. Victory Nickel also owns approximately 9% of Prophecy Resource Corp. (TSX VENTURE: PCY) and approximately 5% of Wallbridge Mining Company Limited (TSX: WM), the third largest landholder in the Sudbury Basin, which in turn owns approximately 12.9% of Duluth Metals Limited.
For further information, please visit www.victorynickel.ca. Should you wish to receive Company news via email, please email chelsea@chfir.com and specify 'Victory Nickel' in the subject line.
Forward-Looking Information: This news release contains forward-looking information. All statements, other than statements of historic fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future constitute forward-looking information. This forward-looking information reflects the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking information is subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking information, 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 the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things: uncertainty of estimates of capital and operating costs, production estimates and estimated economic return; the possibility that actual circumstances will differ from estimates and assumptions; uncertainties relating to the availability and costs of financing needed in the future; failure to establish estimated mineral resources; fluctuations in commodity prices and currency exchange rates; inflation; recoveries being less than those indicated by the testwork carried out to date (there can be no assurance that recoveries in small scale laboratory tests will be duplicated in large tests under on-site conditions or during production); changes in equity markets; operating performance of facilities; environmental and safety risks; delays in obtaining or failure to obtain necessary permits and approvals from government authorities; unavailability of plant, equipment or labour; inability to retain key management and personnel; changes to regulations or policies affecting the Company's activities; the uncertainties involved in interpreting geological data; and the other risks disclosed under the heading 'Risk Factors' and elsewhere in the Company's annual information form dated March 31, 2010 filed on SEDAR at www.sedar.com. Forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. 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.
Contacts:
Victory Nickel Inc.
Rene Galipeau or Sean Stokes
416.363.8527
admin@victorynickel.ca
www.victorynickel.ca
CHF Investor Relations
Robin Cook
416.868.1079
robin@chfir.com
CHF Investor Relations
Chelsea Jones
416.868.1079
chelsea@chfir.com