Victory Nickel Inc. 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, Minn.
"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 Victory Silica Ltd. "We are maintaining the sand-supply contract with the Wisconsin-based supplier and transload facility in Winona, Minn., that we have been using since start-up of the Seven Persons frac sand plant (7P) near Medicine Hat, Alberta, Canada. 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."
Victory Silica is a wholly-owned subsidiary of the Victory Nickel with a phased plan to establish itself in the frac sand market. In Phase 1, Victory Silica began sales in 2014 of premium quality Midwestern White frac sand from the 7P Plant by shipping partially-processed sand purchased in Wisconsin to the 7P Plant for final processing and distribution. 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 play well sites.
Phase 2, which includes the construction of a concentrator in Wisconsin, will reduce costs and assure security of sand supply through the control of a frac sand mine in Wisconsin.
In Phase 3, Victory Silica has identified a site in Winnipeg, Manitoba, Canada, where it plans to build a larger frac sand plant to process and distribute both imported and domestic sands, including sand mined as a co-product of development of a nickel mine at the company's 100-percent-owned Minago project in Manitoba. With margins expected to be in excess of US$25 per ton of frac sand sold, Victory Silica should generate sufficient cash flow in Phases 1 and 2 to provide the financial flexibility to expand its activities by developing a second plant as Phase 3 of its growth plan.