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Tata Steel to Acquire 19.9% Share in New Millennium Capital

10/02/2008 - Tata Steel signs binding agreement to acquire a 19.9% stake in New Millennium Capital with an option to acquire 80% of a joint venture that will develop New Millennium’s Direct Shipping Ore Project, which is estimated to contain in excess of 100 million tonnes of direct shipping quality ore.

Tata Steel Global Holdings Pte Limited, Singapore, a wholly owned indirect subsidiary of Tata Steel Limited, has entered into a binding agreement with New Millennium Capital Corp. (NML), Canada, for Tata’s acquisition of 19.9% of the common shares of NML’s expanded capital base of NML will
 
As part of the agreement, Tata Steel also has the option to acquire an 80% equity interest in NML’s Direct Shipping Ore (DSO) Project located in the Province of Newfoundland and Labrador and the Province of Quebec.  The agreement provides exclusivity to Tata Steel with respect to both the DSO Project and the LabMag taconite iron ore property located in Newfoundland and Labrador, which is 80% owned by NML and 20% owned by the Naskapi Nation of Kawawachikamach.
 
NML will use the net proceeds from the private placement primarily to develop the DSO Project through a definitive feasibility study to be completed in the second quarter of 2009.
 
Tata Steel will have exclusivity on the DSO Project, which is estimated to contain in excess of 100 million tonnes of direct shipping quality ore, through the end of the feasibility study. Once the study has been completed, Tata Steel will have a 180-day option to acquire an 80% equity interest in a joint venture that will develop and operate the DSO Project, and will also have a 100% offtake right on the DSO Project’s iron ore production for the life of the mining operation.
 
Beginning in 2010, NML expects to produce 4 million tonnes per annum of iron ore products from the DSO Project, subject to completion of a positive feasibility study, regulatory approvals and project financing.
 
Tata Steel will also have exclusivity to negotiate a proposed transaction for the LabMag Project, which contains 3.5 billion tonnes of proven and probable mineral reserves, until June 30, 2009. The parties intend to work together to find an economically viable solution to advance this project.
 
“Tata Steel Group is pleased to have signed this binding agreement with New Millennium, which gives Tata Steel Group the opportunity to work closely with New Millennium on the DSO and LabMag properties to develop these as a world-class project,” commented B. Muthuraman, Managing Director of Tata Steel Limited. “Subject to the establishment of their economic viability, these projects may prove to be a source for part of the raw materials requirements of Tata Steel Group.  In view of its geographical proximity, Canada is a favorable location to source raw materials for Tata Steel Group’s European operations.”
 
Under the agreement, Tata Steel will be entitled to two nominees on the NML Board upon completion of the placement. Tata Steel is also entitled to a right of first refusal in future placement of equity securities conducted by NML, and a pre-emptive right in connection with other offerings of equity securities.
 
New Millennium Capital Corp. (NML), a publicly owned Canadian mining company, is engaged in the exploration and development of iron ore properties. NML controls 9.1 billion tonnes of NI 43-101 taconite mineral resources – 6.9 billion tonnes measured and indicated and 2.2 billion tonnes inferred.  
 
Established in 1907 as Asia's first integrated private sector steel company, Tata Steel Group (including Corus) is the world’s sixth-largest steel producer with a crude steel capacity of over 28 million tonnes. It is now the world’s second-most geographically diversified steel producer, with operations in 24 countries and commercial presence in over 50 countries. With a turnover of USD 33 billion in 2007-2008, the Tata Steel Group has over 82,700 employees across four continents.