TORONTO, ONTARIO--(Marketwired - May 15, 2014) - Victory Nickel Inc. ("Victory Nickel" or the "Company") (NI.TO) today announced that it has executed a securities purchase and line of credit agreement (the "SPA") with New York based City Hall Capital LLC (the "Purchaser") pursuant to which the Company will issue and sell to the Purchaser senior secured 14.8% notes (each, a "Note") in the aggregate principal amount of up to US$4,000,000, maturing on July 30, 2015. The initial closing on the SPA is the date of this release, May 15, 2014 (the "Initial Closing Date"). The Purchaser previously purchased a convertible note in the principal amount of US$1,000,000 pursuant to an ongoing convertible note private placement of the Company which will be converted into a Note on the Initial Closing Date. The Company has drawn down US$1,500,000 and intends to draw down the balance of US$1,500,000 prior to June 30, 2015.
The Company will issue to the Purchaser 5,000,000 common share purchase warrants (each, a "Warrant") for each US$1,000,000 Note issued to the Purchaser, subject to an increase to 10,000,000 Warrants for each US$1,000,000 Note issued if any of the Notes are prepaid and the closing price of the common shares of the Company on the Toronto Stock Exchange is $0.20 or lower on the trading day preceding the date of such prepayment. Each Warrant entitles the holder to purchase one common share of the Company at an exercise price of $0.10 for a period of 36 months from the Initial Closing Date and is subject to a four month plus one day hold period from the Initial Closing Date pursuant to applicable Canadian securities laws.
The loan proceeds will provide the Company with funding to build inventory and receivables during the ramp-up stage at the Company's 500,000 ton per annum frac sand drying and screening facility recently constructed in Seven Persons, near Medicine Hat, Alberta (the "7P Plant"), as well as to acquire equity interests in the record holder of the leasehold interest of the property on which the 7P Plant is located. The Company is currently building an inventory of premium-quality washed concentrated Jordan Formation sand from Wisconsin for finish processing into inventory of high-quality 16/30, 20/40, 30/50 and 40/70 frac sand.
About Frac Sand
Frac sand is a proppant used in the oil and gas business as a part of the hydraulic fracturing process - a means of increasing flow to the wellhead. Frac sand must have particular characteristics including achieving certain levels of crush resistance, sphericity and roundness, and it is therefore a relatively rare commodity. Vast quantities of frac sand are consumed, and more is needed all the time, as shale gas and oil plays in Canada and the US rise to prominence.
About Victory Silica Ltd.