Lynn Lake

December 5, 2007
Lynn Lake Mine Prefeasibility Study - Full Report

The Lynn Lake sulphide nickel deposit is located in northern Manitoba, about 320 kilometres by road northwest of the Thompson mining camp. The Lynn Lake mine was operated by Sherritt-Gordon from 1953 to 1976. During its 23 years of operation, the mine produced over 20 million tonnes of Ni-Cu ore at a grade of 1.02% Ni and 0.54% Cu, making it the third largest nickel producer in North America.

A prefeasibility study dated December 2007 gave the project a net present value of $131 million at an 8% discount rate ($179 million at a 5% discount rate), and a bioleach option that could enhance returns continues to be evaluated.

Highlights of the prefeasibility study dated December 2007 are as follows:

• Pre-tax IRR of 29%;
• Payback on mine costs of three years;
• Pre-tax profit over an initial 11-year mine life of $296 million; and
• Likelihood of extending mine life via continued mine exploration, conversion of inferred resources to reserves.

In October 2009, the Company optioned Lynn Lake to Prophecy Resource Corp. ("Prophecy")(TSX-V:PYC).

Under the terms of the agreement, Prophecy can acquire a 100% interest in the Lynn Lake Project by paying Victory Nickel an aggregate of $4,000,000 over approximately four-and-a-half-years, by incurring $3,000,000 in exploration expenditures over approximately three years and by issuing Victory Nickel 10% of Prophecy's outstanding shares subsequent to Prophecy completing a private placement. The Company also has the right to participate in future equity financings on a pro-rata basis to maintain its 10% interest in Prophecy.