Victory Nickel Inc. reported financial results for the three and nine months ended Sept. 30, 2014. Commissioning of the company's dry frac sand processing plant in Seven Persons, Alberta, Canada, located approximately 18 km southwest of Medicine Hat was completed on Aug. 11, 2014.
The 7P Plant operated at less than its 500,000 tpy nameplate capacity throughout the third quarter, both pre- and post-commissioning; staffing and training was in progress during the quarter, limiting throughput. The 7P Plant is now fully staffed. The plant was being commissioned during the second quarter, therefore comparative numbers for prior quarters are either not available or not meaningful and are not shown.
Frac sand operations:
- Earnings before interest, taxes, depreciation and amortization from the frac sand operations was $597,000; total EBITDA for the company was $115,000.
- Gross margin was $750,000, or $21.49 per ton. Margin is expected to increase once the 7P Plant is operating at its nameplate capacity.
- 39,121 tons of frac sand was produced at the 7P Plant.
- 34,892 tons of frac sand were sold, generating revenue of $5,949,000.
- Cost of goods sold was $5,199,000, or $149.00 per ton.
- The company entered into a take-or-pay contract for approximately 20 percent of the frac sand production capacity of the 7P Plant, and continued negotiations on additional contracts.
Exploration and development and corporate activities:
- The company incurred an aggregate loss of $408,000, or $0.01 basic and diluted loss per share, after corporate administration, exploration and development and financing costs.
- The company completed the issuance of unsecured convertible notes aggregating $5,000,000.
- The company completed a share consolidation on a one-for-10 basis.
Subsequent to the end of the third quarter, the company:
- Entered into an option to acquire a 100 percent interest in a 300-acre frac sand property in southwestern Wisconsin.
- Added the fourth and final crew at the 7P Plant enabling production on a 24-hour-per-day, seven-day-per-week basis to produce up to 500,000 tpy of 16/30, 20/40, 30/50 and 40/70 Northern White frac sand.
- Received approval from the Board of Directors to proceed with Phase Two of the frac sand business plan, including construction of 1 million tpy frac sand wash plant in Wisconsin.
"I'm very pleased with our accomplishments thus far in 2014," said Victory Nickel's CEO René Galipeau. "The successful start-up of sales from the 7P Plant has proven that Phase One of Victory Nickel's business plan has succeeded and that we are able to produce, supply and distribute frac sand where and when our customers need it. The growth in demand for our Northern White frac sand during the third quarter has been tremendous, although delayed about a month; production capacity at the 7P Plant is now at 500,000 tons per year; and we anticipate contracted volumes will continue to increase. Looking ahead, we are focused on executing Phases Two and Three of our business plan, as well as the many other opportunities that we have identified to grow the company's presence in the North American frac sand sector."