New Millennium Capital Corp.
The New Millennium Capital Corp. story begins in 1960 when young geologist, Robert Martin, discovered a magnetic taconite deposit in Québec. Originally searching for Direct Shipping Ore (DSO)—a naturally occurring ore comprised of about 56 per cent iron—Martin saw that the taconite was highly magnetic and, at the time, it had little economic value, so he moved on. Almost 50 years later, Martin’s discovery turned out to be the largest undeveloped iron ore deposit of its type in the world, holding 5.7 billion tonnes of iron ore resources.
Between 1960 and now, things have changed in the industry. For starters, mining magnetic taconites became a lot more common. As DSO began to deplete, companies turned to taconites to derive their iron ore. It was so successful that steel makers started to prefer the pelletized iron ore for a feed. Now, there is a large commercial value attached to taconite deposits.
When taconites rose in value, Martin was quick to remember his discovery. He was working for the Iron Ore Company of Canada (IOCC) when he came back to it and began working on what is now called the LabMag deposit—one of two iron ore projects located on the Millennium Iron Range, stretching about 150 km across western Labrador to northern Quebec.
At the IOCC, Martin’s team developed a 2-billion tonne reserve on LabMag, but eventually stopped work and walked away in the early 1980s, owing to a glut of steel in global markets. From there, the property was picked up, but nothing was done with it. During that time, Martin remained interested in the deposit, waiting for his opportunity.
Finally in 2002, he heard that the property was available to be staked, so Martin jumped on it. And so New Millennium Capital Corp. began, led by Martin—now President and CEO of the company.
Getting started
In 2003, New Millennium did its initial offering on the TSX venture exchange, and in 2004, the company officially acquired the property.
Putting together a team of experts to do a scoping study, Martin’s vision was always to move iron ore products by pipeline to achieve the lowest cost operation in North America. Moving iron ore from the deposits by train costs roughly $12 per tonne, but by pipeline it’s less than $2.
“We started to work on that property in 2004, doing a drill program and eventually produced a prefeasibility study,” says Martin. “During the prefeasibility study on the LabMag deposit, we discovered another world-class deposit—the KéMag deposit—where we eventually developed a 3.4-billion tonne resource. Both deposits contain 9.1 billion tonnes of iron ore resources in total, and are located on the Millennium Iron Range.”
Subject to the completion of positive feasibility studies, project financing and project construction, the concentrate from the KéMag Project would be pumped from the property through a slurry pipeline for about 750 km to Pointe-Noire, near the Port of Sept-Iles, QC. There, it would be both pelletized and sold as concentrate. The concentrate from the LabMag Project would be pumped from the property through a slurry pipeline, about 230 kilometres, to Emeril, NL, where it would be pelletized. Then, it would board rail transportation via an existing railroad about 390 km to Pointe-Noire, near the Port of Sept-Iles. DSO products are envisioned to be transported by rail to a Port at Pointe-Noire.
These projects envision the construction and operation of ship loading facilities and related infrastructure at the Pointe-Noire terminus. From there, the various iron ore products would be shipped by ocean vessels to global markets. Why taconite? “A taconite deposit is very low grade,” explains Martin, “running at about 30 per cent iron. But if you concentrate it, you can bring it up to a 69 per cent iron in a concentrate or 67 per cent if it’s pelletized.”
Even though the taconite deposits are very expensive to develop—costing between $2.5 to $4 billion—the investment is well worth it. The deposits are world-class and are expected to generate revenues in excess of $1.5 billion per year for more than 75 years.
Community ties
There are four First Nations that are impacted by the DSO project—two are in Schefferville, where the mines are directly on their land. New Millennium is in the process of working out Impact and Benefit Agreements (IBAs) with these nations and has signed memorandums of understanding to negotiate IBAs with three of the four groups. The taconite deposits impact seven aboriginal nations.
“We’re very much involved in these communities,” says Martin. “On LabMag, the Naskapi nation owns 20 per cent of that project. They’re interested in seeing the project move ahead because it will be beneficial for everyone in terms of cash distributions, jobs, training and contracting out.”
“I worked in the area when I was young,” recalls Martin. “It’s a severe climate and difficult to get used to if you’re not born there, so it’s nice to have people from the area who want to stay and work. I believe they can run it eventually.”
Building momentum
Standing at least five years away from production on the LabMag and KéMag taconite deposits, New Millennium is hoping its strategic partner, Tata Steel, will invest in the feasibility study. Before that happens, the company is not in a position to advance either project. In the meantime, New Millennium has another project called the Direct Shipping Ore project. Acquiring 29 DSO deposits that were previously owned by the IOCC, New Millennium now owns either 100 per cent or a portion of each deposit.
“Our current focus is to put those into production as soon as possible,” says Martin. “We have a plan that will translate into production by September 2010 or May 2011. It’s a smaller operation than the taconite deposits. We would mine about 5 million tonnes per year, producing 4 million tonnes of product. Our goal is to concentrate the ore at the mine site and produce two products: lump ore and fine ore.”
By 2014, New Millennium expects to produce a total of 26 million tonnes of iron ore per year—22 million from both taconite deposits, and 4 million tonnes from the DSO project.
Striking a deal
New Millennium is preparing for an exciting future. They are in the works of an exciting deal that will make all their efforts worthwhile. “We recently entered into a strategic relationship with Tata Steel,” explains Martin. “They are the sixth largest steel company in the world. Tata Steel owns Corus Steel, a company that produces about 20 million tonnes of steel per year. In order to make 20 million tonnes of steel, you need 30 million tonnes of iron ore.”
“Tata Steel became interested in us because of our strategic location in relation to Corus and the quantity of New Millennium’s iron ore products. Now they own 19.9 per cent of the company and they’re our largest shareholder. We’re waiting until June to find out whether they want to enter into a binding agreement to advance the taconite deposits to feasibility and, most likely, until later this year to advance the DSO project to construction.” If Tata Steel advances the DSO project, New Millennium would put their 29 DSO deposits into a joint venture, and Tata Steel would contribute $300 million—the expected capital cost. Tata Steel would own 80 per cent of the joint Venture Company and New Millennium 10 per cent.
“If everything works out, it’s likely that Tata Steel will pay the total capital cost of the DSO project and take 100 per cent of the product for the life of the mine,” beams Martin. “This is advantageous for us because we are already well-financed. We only need to spend a few million to finish the DSO feasibility study. If Tata Steel advances, they’ll pay back 80 per cent of the money we spent, as well as build and manage the project while we collect 20 per cent of the profit from the operation of those mines.”
New Millennium is just getting started. There’s a lot of work to be done, but Martin is excited about where things are headed.
“We’re thrilled about the possibilities,” he says. “It’s an interesting situation for us.”
