Victory Silica Ltd. The Right Product. The Right Place. January - - PowerPoint PPT Presentation
Victory Silica Ltd. The Right Product. The Right Place. January 2014 The Right Time. Company Profile Victory Nickel NI:TSX Share Capital Structure Shares Outstanding ~567 million Victory Victory Fully Diluted
NI:TSX – Share Capital Structure
Shares Outstanding ~567 million Fully Diluted Shares* ~712 million Market Capitalization $17.0 million Cash $4.1 million
Major Shareholders
12.2%
5.7%
4.1%
2.1%
*Includes A&M
*~32 M options ($0.08 average exercise price); ~113 M warrants ($0.035 exercise price)
Victory Silica Ltd.
(100%)
Victory Nickel Inc.
A New Story with Extreme Value
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René R. Galipeau /Chairman
35+ years mining experience with Hudson Bay, Breakwater Resources, Lac Minerals, Rio Algom. Current Vice-Chairman and CEO of Victory Nickel.
Ken Murdock /CEO & Director
Engineer with over 25 years experience in the aggregate/construction & oilfield materials industries. President IM&M Consulting (raw materials acquisition, waste disposal and manufacturing consultant to industrial mineral, glass and oilfield industries). Formerly with Canfrac Sands Ltd. (operations), United Industrial Services Ltd. (design, permitting, construction, operation and marketing of a silica sand project in Peace River) and Lafarge Cement. M.Eng., McGill University
Extensive marketing experience in the frac sand industry. Formerly Vice-President, Operations / Marketing & General Manager with Canfrac Sands Ltd. Prior to that, held a variety of operations and marketing positions in the oil & gas sector over the course of 26 years for companies including Gulf Canada Resources Ltd., Amerada Hess Canada Ltd. and Apache Canada.
Phillip Birmingham /General Manager, Seven Persons Frac Sand Facility
Diverse background, including seven years with the British Army's Royal Mechanical and Electrical Engineers and operations and management positions with Crane Canada, Allwest Compressor Services and most recently as General Manager with 3R Sand Ltd. (the previous operator of the Seven Persons frac sand facility) and Clean Earth Environmental Ltd.
Troy Bergen /Plant Manager, Seven Persons Frac Sand Facility
Operated the Seven Persons frac sand facility between 2008 and 2010 with previous owner 3R Sand Ltd. Prior to that, he was Operations Manager with Clean Earth Environmental Ltd. 4
Establish immediate entry in frac sand market Use resulting cash flow to support growth
domestic frac sand products to the Canadian market
Unlock the long-term value of the Minago premium frac
scale
vast natural gas and oil resources
landscape, with a “sand boom” being a resulting factor
expected to rise to 80% by 2040.” (The Globe & Mail, August 21, 2013)
by 323% between 2007 and 2012, and is expected to increase by 73% by 2017
Proppant (such as frac sand) holds the formation open, increases porosity, and increases oil/gas flow to the wellhead
and for use in the oil & gas industry as a proppant
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Victory Silica Frac Sand
30/50 20/40
North American Proppant Demand (billion pounds) % Annual Growth Item 2007 2012 2017 2007-2012 2012-2017 Proppant Demand 13.960 59.100 102.400 33.5 11.6 By Country: U.S. 12.270 53.260 89.950 34.1 11.1 Canada 1.690 5.840 12.450 28.1 16.3 By Type: Sand 12.276 53.550 93.900 34.3 11.9 Ceramic 1.639 5.272 8.040 26.3 8.8 Other 45 278 460 43.9 10.6
Source: The Freedonia Group, Inc. Oh, Canada!
Winnipeg Minago Wisconsin Mine Medicine Hat (Seven Persons)
Phase 1: Seven Persons – processing infrastructure in Alberta Phase 2:
Wisconsin Mine – security of supply, higher margins
Phase 3:
Winnipeg Facility – superior logistics, unlock value of Minago
On-going: Potential consolidation opportunities in a fragmented industry
sand (concentrate) at $35/ton from existing mines in Wisconsin
capacity to 400,000 tpa
Phase 1 Capex (financed) US$3.5 million Working Capital (Phases 1&2) US$4.3 million Annual Sales Capacity 400,000 tons Estimated Margin ~$25/ton
Construct concentrator at Mine
Phase 2 Capex US$4.4 million Annual Sales Capacity 400,000 tons Estimated Margin $>25/ton
Source: Wisconsin Geological and Natural History Survey
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Phase 3 Capex US$26.1 million Working Capital US$15.3 million Annual Sales Capacity 1,040,000 tons Estimated Margin $>25/ton
Minago Development – 100-year+ frac sand potential Advanced custom processing discussions:
Potential to reach new markets Fixed production cost, contract-based, no capital cost
US processing facility:
Reach active Pennsylvania market
1,000,000 tons annual capacity; ideal location identified with available infrastructure, capital cost of ~ $32 million
Acquire and permit additional well located mines supplying high quality sand from Wisconsin/Minnesota Potential future consolidation of industry
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Phase Production (tons) Capex (US$) Working Capital (US$)
(imminent production)
(3 months from start)
(18-month construction period)
$200 M acquisition Jan. 2012 (private)
$200 M IPO Feb. 2012 ($1.8 B market cap)
$225 M IPO Aug. 2012 ($1.0 B market cap)
$140 M IPO May 2013 ($943 M market cap)
Nine Months Annualized ($US) Emerge Energy Services (NYSE: EMES) Hi-Crush Partners (NYSE: HCLP) US Silica Holdings (NYSE: SLCA) Victory Silica (Forecast) Phase 1,2 Phase 3 Phase 1,2,3 Cash Raised on IPO Capex Requirements $140 M $225 M $200 M $ 7.9 M $ 26.1 M $ 34 M Frac Sand Tons Sold 2,510,000 1,430,000 3,950,000 400,000 1,040,000 1,440,000
$81 M $59 M $63 M $63 M $166 M $120 M $12 M** $26 M $38 M** Forecast EBITDA / Ton Sold EBITDA / Frac Sand Ton Sold $23.41 $43.85 $30.39 $25.00 $32.55* $25.00 $32.55* $25.00 $32.55* Market Cap (Nov 20, 2013) Enterprise Value (EV) $943 M $1,014 M $1,019 M $1,165 M $1,771 M $ 2,009 M $17 M $15 M
12.6x 18.6x 12.1x 14.4x* 14.4x* 14.4x* Implied Market Cap @ $25/ton EBITDA margin based on Phase 1 @ known industry average EBITDA margin ($32.55) $ 172 M $ 188 M $ 374 M $ 488 M $ 547 M $ 675 M Implied Price/Share @ $25/ton EBITDA margin based on Phase 1 @ known industry average EBITDA margin ($32.55)
*average of Emerge, Hi-Crush, and US Silica **includes Phase 2 margin improvement
$ 0.30 $ 0.33 $ 0.66 $ 0.86 $ 0.96 $ 1.19
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One of Canada’s undeveloped sulphide nickel resources Positive completed; for production
a significant value driver: US$2.90/lb Ni in co-product value
based on feasibility study
: Manitoba; road, rail, power access
11.2 million tonne frac sand resource, potential Valuable “ ” on nickel at $10.00/lb+
Feasibility Study Highlights
sand in pit footprint alone
= $4.04 (US$3.68); optimized: $3.18 (US$2.90)
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Existing resource within current pit shell: 15 Mt Existing & proposed quarry leases: 75 Mt Proposed quarry exploration permits: 475 Mt Entire land package (mineral leases + mining claims): 2 Bt
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Over one billion pounds of nickel in Measured and Indicated resources and 300 million pounds of Inferred resources, NI 43-101 compliant
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potential
pit only
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8.6-year mine life
resource)
compliant ETMI
north and at depth
mine life of <20 years
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Minago Sulphide Nickel Project: Economic Summary Comparison Base Case
($million except % & yrs)
Base Case July 19, 20111,2
($million except % & yrs)
Undiscounted cash flow 917.7 1,418.4 NPV @ 8% 293.8 513.0 NPV @ 6% 402.6 669.3 NPV @ 4% 538.0 864.6 IRR 17.66% 22.4% Pre-Production Capital 593.0 585.1 Breakeven price $5.06 $4.28 Open Pit mine life 7 years 8.6 years
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1. Three-year trailing average US$ 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; $Can/$US exchange rate: 1.097 2. Updated resource
*Net C1 costs increase when metal production increases without corresponding frac sand increase (same size pit)
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René R. Galipeau /CEO & Director –Victory Nickel Inc.
30+ years mining experience with Hudson Bay, Breakwater Resources, Lac Minerals, Rio Algom
Steve Harapiak /President & COO –Victory Nickel Inc.
Engineer with 30+ years experience, including Hudson Bay, Noranda, Denison and CEO of Potash Corp. (Crown Corp.)
Alison Sutcliffe /VP Finance & CFO –Victory Nickel Inc.
CA with 20+ years experience, most recently with Dundee Corp.
Paul L. Jones /VP Exploration –Victory Nickel Inc.
Geologist and QP with 25+ years experience with more than 20 juniors
Sean Stokes /VP Corporate Affairs & Corporate Secretary –Victory Nickel Inc.
20+ years communications/business development/finance experience, incl. Tiberon Minerals, Liberty Minerals, Scandinavian Minerals
David Mchaina /VP Environment & Sustainable Development –Victory Nickel Inc.
Ph.D. with 20+ years experience, including Boliden, Westmin, Goldcorp
Cynthia Thomas /Chair
MBA, 20+ years international mining and project finance, former Director Mining Investment Banking – ScotiaMcLeod
René R. Galipeau /CEO & Director Peter R. Jones
Engineer, former CEO of Hudbay Minerals, 40+ years mining experience with Hudbay, Cominco, Cape Breton Development, Granduc Operating Co. and Adanac Molybdenum
Alireza Moghadam
International investor and businessman, Chairman of the AMIDT Group, a privately-held company focused on the physical production, engineering and trading of ferrous and non-ferrous metals, minerals, chemicals, alloys and scraps.
Michael Anderson
Lawyer, nine years as General Counsel and Secretary with Denison Mines, previously a partner with Gowling Lafleur Henderson LLP, in- house counsel with John Labatt, General Counsel for Swift Canadian
Roland Horst
35 years mining experience as a CEO, banker, investment banker and geologist, current CEO of CBay Minerals 30
Some of the statements contained in the following material may be "forward-looking statements." All statements, other than statements of historical fact, that address activities, events or developments that Victory Nickel believes, expects or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek," "anticipate," "believe," "plan," "estimate," "expect," and "intend" and statements that an event or result "may," "will," "can," "should," "could," or "might" occur or be achieved and other similar expressions. These forward-looking statements reflect the current expectations or beliefs of Victory Nickel based on information currently available to Victory Nickel. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of Victory Nickel to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to,
things, failure to successfully complete intended financings, capital and other costs varying significantly from estimates, production rates varying from estimates, changes in world copper and/or gold markets, changes in equity markets, uncertainties relating to the availability and costs of financing needed in the future, equipment failure, unexpected geological conditions, imprecision in resource estimates, success of future development initiatives, competition, operating performance of facilities, environmental and safety risks, delays in obtaining or failure to obtain necessary permits and approvals from government authorities, and other development and operating risks. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, Victory Nickel disclaims any intent or
Victory Nickel believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. Victory Nickel resources are as follows: Minago: Measured: 11.1 million tonnes grading 0.56% Ni, Indicated: 43.1 million tonnes grading 0.51% Ni, Inferred: 14.6 million tonnes grading 0.53% Ni; Lynn Lake: Measured: 1.0 million tonnes grading 0.76% Ni, Indicated: 21.9 million tonnes grading 0.56% Ni, Inferred: 8.1 million tonnes grading 0.51% Ni; Mel: Indicated: 4.3 million tonnes grading 0.88% Ni, Inferred: 1.0 million tonnes grading 0.84% Ni; Lac Rocher: 0.29 million tonnes grading 1.23% Ni, Indicated: 0.51 million tonnes grading 1.05% Ni, inferred: 0.44 million tonnes grading 0.65% Ni. The mineral resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council December 11, 2005.
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