TORONTO, ONTARIO -- (Marketwire) -- 03/26/13 -- Victory Nickel Inc. ("Victory Nickel" or the "Company") (TSX: NI) (www.victorynickel.ca) today announced that it has executed an amended and restated loan agreement (the "Amended Loan Agreement") in respect of the original $1 million secured loan facility announced on January 25, 2013 (the "Original Loan"), whereby the lender (the "Lender") has increased the amount available under the secured loan facility to up to $3.0 million (the "Amended Loan"). As with the Original Loan, the Amended Loan bears interest at 12% per annum, payable quarterly in arrears and matures on January 31, 2015.
The additional amounts available under the Amended Loan are to be used to fund capital expenditures relating to the Seven Persons sand recycling facility (the "7P Plant") located southwest of Medicine Hat, Alberta which Victory Nickel has agreed to purchase subject to certain conditions (see news release dated January 9, 2013).
At the option of the Lender and under certain circumstances, the Lender can elect to receive prepayment of $1.0 million of the Amended Loan from the proceeds of an option payment due to the Company, from the sale of a property and payable in periodic instalments through August 2014.
Prior to June 1, 2014, the Lender has the right to convert the outstanding balance of the Amended Loan into a participating interest (the "Conversion") whereby the Lender is entitled to receive a share of cash flows earned from the sale of frac sand from the 7P Plant. The Lender's participation is capped at $10 million, with a minimum of $7.5 million, and is subject to adjustment under certain circumstances. On Conversion, the Amended Loan would be considered paid in full. The Lender has also agreed to backstop an equity issue, if any is undertaken, with cash or by converting a portion of the Amended Loan into shares, at the Lender's option to an amount up to $1.5 million under certain circumstances.
"The completion of the Amended Loan Agreement is a huge step forward, as it puts Victory Nickel on the road toward generating cash flow from frac sand sales through Victory Silica Ltd. which is vitally important particularly in the current challenging equity market environment," said Rene Galipeau, Vice-Chairman and CEO. "As previously announced, the application to change the permit of the 7P Plant to a frac sand processing facility has been filed. Once that approval is received, reclamation, engineering, equipment acquisition and construction of plant upgrades to convert the 7P Plant to a 400,000 ton per annum frac sand processing plant can begin immediately."
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 (under option to Prophecy Platinum) in Manitoba, and Lac Rocher in northwestern Quebec, 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.
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