New Millennium Capital Corp. Announces Binding Heads of Agreement With Tata Steel to Develop One of the World's Largest Undeveloped Magnetic Iron Ore Deposits


CALGARY, ALBERTA--(Marketwire - March 6, 2011) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

New Millennium Capital Corp. (TSX VENTURE:NML) ("NML" or the "Corporation") announced today that it has signed a binding heads of agreement (the "Binding HOA") with Tata Steel Global Minerals Holdings Pte Ltd ("Tata Steel") to develop the LabMag and KéMag iron ore deposits, known collectively as the Taconite Project. The remainder of the Millennium Iron Range will be retained by NML. 

Under the Binding HOA, Tata Steel shall participate in the development of a feasibility study of the Taconite Project (the "Feasibility Study") and contribute towards 64% of the costs related thereto. The parties would enter into a binding joint venture agreement upon the successful completion of the Feasibility Study and Tata Steel electing to develop one or both of the deposits. After formation of the joint venture, NML is expected to hold a 36% equity interest in the Taconite Project, including a 20% free carry equity interest. In addition, NML will have a 4% right of first refusal on future equity sales by Tata Steel to increase its equity interest to a maximum of 40%.

Tata Steel will arrange the required equity portion of the financing (excluding NML's optional equity interest) based on a maximum capital expenditure of up to $4.85 billion if both deposits are developed and up to $4.68 billion and up to $3.76 billion respectively, if only the KéMag or LabMag deposits are developed. Arranging debt financing for the project shall be the responsibility of Tata Steel. All dollar amounts in this news release are expressed in Canadian dollars unless otherwise specified.

A conference call to discuss the Binding HOA is scheduled for 11:00 a.m. ET on Monday, March 7, 2011. Details follow at the end of this news release.

Taconite Project – A Company Builder

"With the agreement we are announcing today, the Taconite Project becomes a company builder for New Millennium," said Robert A. Martin, President and Chief Executive Officer. "The binding heads of agreement with Tata Steel provides the framework to take the project through to development and ultimately to the production stage. This project has the potential to create substantial wealth for our shareholders and for Canadians. It will generate long-term jobs, taxes and infrastructure for the First Nations and other surrounding communities." 

The Taconite Project consists of two world-class magnetite iron ore deposits on the emerging Millennium Iron Range, which stretches 210 kilometres from western Labrador through eastern Quebec. The LabMag deposit is located in the Labrador portion of the range and the KéMag deposit is located in the Quebec portion. Together, the two deposits hold over 9 billion tonnes of reserves and resources that will potentially produce 22 million tonnes per year of concentrate, with a potential mine life of over 100 years.

Based on the previously disclosed KéMag pre-feasibility study (see the Corporation's news release 0901 dated January 16, 2009), it is estimated that pre-tax cash flow from the Taconite Project will be in excess of US$1.1 billion per year at an assumed pellet price of US$90 per tonne. The current price for pellets is approximately US$200 per tonne.

Highlights of the Binding HOA

Under the Binding HOA:

  • NML and Tata Steel will jointly oversee and supervise the preparation of the Feasibility Study for the Taconite Project. Tata Steel and NML will fund 64% and 36% respectively of the cost of the Feasibility Study, which is estimated at $ 50 million.
  • The Feasibility Study will be compliant with the standards of disclosure of mineral projects as stated in National Instrument 43-101 and is expected to be completed within 21 months of its initiation. The Feasibility Study would serve as the basis to secure financing for the Taconite Project.
  • Upon conclusion of the Feasibility Study, Tata Steel will have a maximum of four months to make an investment decision. A positive investment decision could involve the development of either one or both of the deposits. NML will transfer such deposit(s) along with the property and other related rights to such deposit(s) to the JVE (defined below). If Tata Steel elects to develop only one of the two deposits, NML will retain the property and related rights in respect of the remaining deposit.

The Binding HOA further provides that following a positive investment decision:

  • Tata Steel will reimburse NML 64% of the estimated $30 million in expenses that were incurred by NML on the Taconite Project up to the execution of the Binding HOA. The $600,000 facilitation fee that Tata Steel has paid to NML in exchange for the Taconite Project exclusivity extension from December 31, 2010 to February 28, 2011, will be credited to the payment.
  • Tata Steel and NML will form a joint venture enterprise ("JVE") to hold the Taconite Project, where Tata Steel and NML would hold shares in the ratio of 80% and 20% respectively, the latter being the free carry interest of NML.
  • Tata Steel will arrange the required equity portion of the financing (excluding NML's optional equity interest) based on a maximum capital expenditure of up to $4.85 billion if both deposits are developed and up to $4.68 billion and up to $3.76 billion respectively, if only the KéMag or LabMag deposits are developed.
  • Within 60 days of Tata Steel's positive investment decision, NML would also have an option to acquire up to an additional 16% paid equity, thereby bringing its total equity in the JVE from 20% to up to 36%. This additional 16% equity shall obligate NML to contribute proportionate equity funding to the JVE. 
  • Arranging debt financing for the project shall be the responsibility of Tata Steel.
  • Should Tata Steel exercise its right to invite third-party investors into the project, NML will have the right of first refusal to acquire an additional 4% of paid equity, thereby increasing its ownership in the project to a maximum of 40%.
  • The parties have an offtake right on the production in proportion to their ownership interest in the JVE.

Tata Steel – The Right Partner

"Tata Steel is a highly credible partner. They are among the top ten steel companies in the world, and they have the financial strength, operating expertise and motivation to carry this project through to production. NML could not have found a better partner," continued Mr. Martin.

"By virtue of this Binding HOA, Tata Steel commits its resources to actively participate in the Feasibility Study for the Taconite Project. A successful completion of the Feasibility Study would enable Tata Steel to consider a viable option for attaining self-sufficiency in iron ore for Tata Steel's operations in Europe," said Mr. H.M. Nerurkar, Managing Director of Tata Steel. "We are happy to strengthen our relationship with New Millennium by advancing the Taconite Project". 

Board Approval

Based in part upon the recommendations of its financial advisors Jennings Capital Inc. and CITIC Securities Ltd. and a special committee of independent directors that supervised the negotiations of the terms of the Binding HOA on behalf of NML, the Board of Directors of NML has approved the execution and performance of the Binding HOA. 

Tata Steel is a "control person" of the Corporation as it currently owns approximately 27.2% of the common shares of the Corporation. The transaction with Tata Steel is therefore a "related party transaction" pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The transaction is exempt from the formal valuation and minority approval requirements of MI 61-101 pursuant to the exemptions found in sections 5.5(a) and 5.7(1)(a) of MI 61-101 on the basis that neither the fair market value of the subject matter of the transaction nor the consideration paid by Tata Steel, will exceed 25% of NML's market capitalization. 

Further Approvals

Completion of the transactions contemplated by the Binding HOA is subject to all applicable regulatory approvals, including the approval of the TSX Venture Exchange, and approval of the limited partners of LabMag Limited Partnership, being NML and the Naskapi/LabMag Trust. The directors of LabMag GP Inc., the general partner of LabMag Limited Partnership, have unanimously approved, and recommended for approval by the limited partners, the Binding HOA. 

Conference call for investors and analysts

This release will be followed by a conference call held on Monday, March 7, 2011, at
 11:00 a.m. ET. The highlights of the Binding HOA will be presented by Mr. Robert A. Martin, President and Chief Executive Officer of NML. Mr. Martin's presentation will be followed by a question and answer period.

The call is intended for NML investors and financial analysts. They are invited to access the conference call by dialling 1-800-738-1032. Media and the public may access this conference call on a listen-only mode. A replay will be available approximately one hour after the call at 416-626-4100 or 1-800-558-5253 (passcode 21514152) until April 6, 2011 at 11:59 p.m. ET.

About New Millennium

The Corporation controls the emerging Millennium Iron Range, located in the Province of Newfoundland and Labrador and in the Province of Quebec, which holds the world's largest undeveloped magnetic iron ore deposits. In the same area, the Corporation is also advancing its Direct Shipping Ore ("DSO") Project to near term production. Tata Steel, one of the top 10 steel producers of the world, owns approximately 27.2% of New Millennium and is the Corporation's largest shareholder and strategic partner.

Tata Steel has exercised its exclusive option to participate in the DSO Project and has a commitment to take the resulting production (see news release 10-16 dated September 14, 2010).

The Millennium Iron Range currently hosts two advanced projects: LabMag contains 3.5 billion tonnes of Proven and Probable reserves at a grade of 29.6% Fe plus 1.0 billion tonnes of Measured and Indicated resources at an average grade of 29.5% Fe and 1.2 billion tonnes of Inferred resources at an average grade of 29.3% Fe (see news release 06-13 dated July 5 2006 and news release 07-11 dated July 17, 2007); KéMag contains 2.1 billion tonnes of Proven and Probable reserves at an average grade of 31.3% Fe, 0.3 billion tonnes of Measured and Indicated resources at an average grade of 31.3 % Fe and 1.0 billion tonnes of Inferred resources at an average grade of 31.2% Fe (see news release 09-01 dated January 16, 2009).

NML's DSO project contains 64.1 million tonnes of Proven and Probable Mineral Reserves at an average grade of 58.8% Fe, 8.1 million tonnes of Measured and Indicated Mineral Resources at an average grade of 58.8% Fe, 7.2 million tonnes of Inferred Resources at an average grade of 56.8% Fe and about 40.0 - 45.0 million tonnes of historical resources that are not currently in compliance with NI 43-101 (see news release 09-03 dated February 11, 2009, news release 09-05 dated March 4, 2009, news release 09-16 dated December 9, 2009 and news release 10-12 dated July 8, 2010). A qualified person has not done sufficient work to classify the historical estimate as current mineral resources and the historical estimate should not be relied upon.

The Corporation's mission is to add shareholder value through the responsible and expeditious development of the Millennium Iron Range and other mineral projects to create a new large source of raw materials for the world's iron and steel industries. For further information, please visit www.nmlresources.com, www.tatasteel.com and www.tatasteeleurope.com.

Forward-Looking Statements

This document may contain "forward-looking statements" within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995 These forward-looking statements are made as of the date of this document and the Corporation does not intend, and does not assume any obligation, to update these forward-looking statements.

Forward-looking statements relate to future events or future performance and reflect management of the Corporation's expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of resources; possible variations in ore reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors detailed from time to time in the Corporation's interim and annual financial statements and management's discussion and analysis of those statements, all of which are filed and available for review on SEDAR at www.sedar.com. Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking statements.

TO ACCESS ADDITIONAL INFORMATION ON NEW MILLENNIUM AND THE TACONITE PROJECT:

ftp://ftp.national.ca/medias/New_Millennium/
Username: presse
Password: media

Contact Information: Media
New Millennium Capital Corp.
Roch Landriault
514-249-4537
rlandriault@national.ca
or
New Millennium Capital Corp.
Cathy Dornan
Newfoundland and Labrador
709-685-3875
cathy@cathydornan.com
or
Investor Relations
New Millennium Capital Corp.
Andreas Curkovic
416-577-9927