TORONTO, ONTARIO, Jun. 21 -- 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 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 email@example.com.
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.