New Millennium Capital Corp.
TSX VENTURE : NML

New Millennium Capital Corp.

February 25, 2010 09:00 ET

New Millennium Capital Corp. Announces Positive Feasibility Study Results for Its DSO Project

CALGARY, ALBERTA--(Marketwire - Feb. 25, 2010) - New Millennium Capital Corp. ("NML" or "the Corporation") (TSX VENTURE:NML) announced today the results of the Feasibility Study ("the Study") to develop a project to mine its 100% owned DSO properties (the "DSO Project" or the "Project"). The Study updates the earlier pre-feasibility study which was prepared in assistance with Consulting Engineer Met-Chem Canada Inc. ("Met-Chem") located in Montreal, Quebec. The estimated mineral resources supporting the Study were updated based on 2009 drilling results that were established earlier by SGS Geostat Inc. ("Geostat"), also of Montreal (see News Release 09-16 dated December 9, 2009). This update was done by NML with contributions and review by others, including Met-Chem, with expertise critical to some aspects of the Project. An updated National Instrument ("NI") 43-101 Technical Report, which includes the results of the 2009 drilling program, will be filed on SEDAR within 45 days of this news release.

Highlights of the DSO Project Feasibility Study:

- Production assumption of 4 million tonnes per year ("mtpy") of Sinter Fines and Super Fines products.

- Proven and Probable Mineral Reserves of 64.1 million tonnes ("mt").

- Variable stripping ratio, from mine to mine, with an average of 1.03 over the life of the mines.

- Total initial capital cost of US$ 300 million and working capital of about US$ 13.5 million.

- Sustaining capital, capital leasing, mine rehabilitation and Goodwood development at US$ 115 million

- Internal rate of return ("IRR") of 29% (unleveraged and before corporate taxes and mining taxes).

- Payback of 3 years after the start of commercial production.

- Direct jobs creation of about 200 at the mine, wash plant and administrative areas.

- Anticipated start of commercial production in Q3, 2011, provided that certain advanced engineering, purchases of equipment and site infrastructure development are made in March, 2010.

Robert Martin, President and CEO, stated: "I am very pleased that the optimized Study continues to demonstrate a financially robust project. New Millennium has now taken a decisive step closer to becoming a producing mining company with a source of near term cash flow to pursue its mission to increase shareholder value. We have worked closely with Tata Steel's personnel during the Study to ensure that we have properly optimized our operating processes. Even though we have not concluded all required Project agreements, based on negotiations to date and information received from various sources, we are confident that our operating cost estimate is also within the accuracy of the Study. Our expectation is to start production in 2011, subject to regulatory approvals, financing, advanced engineering and procurement."

The Study will now be reviewed by Tata Steel, in order to make a decision to fund the Project. Tata and NML have recently signed a joint venture agreement (JVA), which will enable the parties to form a joint venture company (JVC) to develop and operate the Project after an investment decision is made (see News Release 09-14 dated November 6, 2009) no later than 180 days after receipt of the Feasibility Study by Tata Steel.

Summary of the Feasibility Study:

The DSO Project is a brownfield project, near Schefferville, Que., which is located in the historic iron ore producing region of Canada. From 1954 to 1982, the Iron Ore Company of Canada (IOCC) had extensive operations to mine DSO ores. NML now owns 22 of these DSO deposits which are located in different areas as shown in the attached map (see Map 1).

Following the completion of the DSO Pre-feasibility Study (PFS) in February 2009, review meetings were held with Tata Steel to modify and optimize the Study criteria as described below:

- Because of the friability of the ore and degradation during transportation, it was determined that no lump ore would be produced to maximize the production of sinter fines.

- The DSO products will contain a minimum of 64.5% Fe and a maximum of 4.5% of combined SiO2 +Al2O3.

- The ore will also be extensively blended to deliver a consistent feed to the process plant in order to meet the above specifications.

- Mining, processing and shipping to the port will be carried out throughout the year to maximize the utilization of capital assets and optimize operating costs.

- Products will be dried to a low enough moisture to prevent freezing in ore cars during winter.

GEOLOGY:

The DSO deposits were derived from the iron bearing sediments of the Sokoman Formation and Ruth Formation. The ores comprising blue and red hematite with goethite and limonite were formed by the leaching of the gangue minerals such as chert, silicates and carbonates. The primary breakdown of the ores was into three color groups controlled by stratigraphy. The color groups are:

Blue Ore: Derived from the middle and upper sections of the Sokoman Formation; it is generally coarse-grained and friable, and consists of hematite and martite, with minor chert.

Red Ore: Derived from the Ruth Formation; it is made up of earthy red hematite and retains the clay/slate characteristics of the original formation.

Yellow Ore: Derived from the lower section of the Sokoman Formation; it is made up of goethite and very fine-grained limonite that retains a high moisture content.

Drilling started in 2008 and continued through the summer of 2009. Reverse circulation drills were used in 2008 and a sonic drill in 2009. Altogether 10 deposits were selected for drilling. A total of 10,300 meters were drilled in 215 holes and 3140 samples were analyzed. The current 43-101 compliant reserves are outlined in Table 1:



Table 1
Iron Ore Mineral Reserves: 2008 and 2009 Drilling
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Reserve Tonnage (Millions) Tonnage (Millions)
Classification 2008 Drilling 2008-2009 Drilling % Fe % Mn % SiO2
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Proven 20.7 21.1 59.87 0.130 5.89
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Probable 31.8 43.0 58.38 0.559 9.26
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Total P+P 52.5 64.1 58.87 0.418 8.15
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There are Measured (1.3 million tonnes), Indicated (1.7 million tonnes), and Inferred (7.3 million tonnes) of Mineral Resources remaining. Mineral resources that are not mineral reserves do not have demonstrated economic viability. In addition, approximately 40 million tonnes of historical resources (non-NI 43-101 compliant) remain. A qualified person has not done sufficient work to classify historical estimate as current mineral resources and the historical estimate should not be relied upon.

As NML owns 769 partially unexplored DSO claims (297.9 km(2)), it is anticipated that future iron ore exploration may lead to the discovery of additional DSO ore bodies.

MINING:

At this stage 10 deposits were selected for development and therefore formed the basis of the mining operation. Resource block models were created by Geostat using ore envelops that were derived from exploration drilling. Three dimensional mining block models were created from the resource block models. Each block contained various data, such as the Fe grade, percentages of SiO2 and Al2O3, loss on ignition (LOI) and weight recovery. The pits were designed by MineSight software, which uses a Lerch-Grossman 3D pit optimization algorithm to determine the optimum pit shell. The reserves were calculated based on an assumed slope of 50 Degrees, ramp width of 21 m at 8% maximum gradient and Fe cut-off grade of 50%. The mine schedule was prepared to achieve the required blend, a minimum of stripping and a balanced equipment fleet. The current schedule was based on a mine life of 10 years.

PROCESSING:

IOCC did not upgrade the DSO ores prior to shipment to its customers. NML undertook extensive bulk sampling and testing to determine an optimum flowsheet to process the blended ore to produce products to the Tata specified grade. Over 2000 tonnes of bulk samples were collected from 10 selected deposits. Samples were crushed and screened at the site and 110 tonnes, were shipped to testing laboratories for flowsheet development. The upgrading process selected in the Study is by gravity followed by magnetic separation.

Two pilot plant tests were performed at the facilities of MBE-Coal & Mineral Technologies (CMT) and Studien Gesellschaft fur Eisenerzaufbereitung (SGA), both located in Germany. The tests have established, with a high degree of confidence, that the products will meet the chemical and physical specifications required by Tata. About 80% of the plant production is expected to be comprised of sinter fines and the remainder to be comprised of super fines.

MINE INFRASTRUCTURE:

Mining will start in Area 3 (see Map 1), where IOCC was mining just prior to the closure of its Schefferville operations. Some of the pits are partially mined or stripped and therefore can be restarted with a minimum of capital. A rail bed from the main line exists and is in excellent condition. A 28 km long rail link from the main line will be established up to the Timmins area, where a processing plant, offices, laboratories, maintenance and service facilities etc. will be located (see Map 3). A portion of this rail will be constructed by other parties in the adjoining area. All facilities will be housed under a 106 m wide x 170 m long x 35 m high air supported dome (see Map 2). In addition to providing adequate protection from weather elements, the dome will be more economical than having separate buildings for individual facilities. Personnel will be transported by air on a Fly-in/Fly-out basis, and a campsite will be built near the dome to accommodate first construction workers and later production personnel.

Tailings from the process plant will be pumped to a nearby mined out pit and the reclaimed water will be pumped back to be used as process water. Hydro power will be available during the summer months from the Menihek power station. An electrical transmission line will be re-established from a nearby substation to feed the installations. Since adequate hydro power will not be available, especially during winter, diesel generating sets will be used to supply additional power. The exhaust from the generators will be used to pre-heat air to the dryer and generate steam for filtering. The products from the process plant will be stored in silos. It is expected that every two days, a 240 car train will be loaded through a rapid loading system.

Mining will start in Area 4 during the second year which will be necessary to achieve the required blend for the plant feed. A 35 km long haul road will be built to bring the ore for processing to the Timmins area. Only essential servicing facilities will be built in the "greenfield" site at Area 4. A diesel generator will supply the required power.

TRANSPORTATION AND SHIPPING:

The DSO ore trains will be hauled to the Pointe Noire Terminal at Sept-Iles, where a car dumper will be built and the products stockpiled. The existing dock owned by the Sept-Iles Port Authority (SIPA) will be used to load vessels using the ship loading equipment owned by Wabush Mines. The transportation and port handling costs constitute a major part of the total cash operating costs. NML is conducting intensive negotiations with three rail carriers, which are designated as common carriers, regarding the tariff to haul the ore to the port. Similar negotiations are in progress with the terminal operator regarding the use of the handling and ship loading equipment. NML is working to conclude Project agreements in an expedient manner in order to ensure certainty regarding the operating costs. The current estimates are based on information available on similar operations and estimates provided by experts in these areas.

ENVIRONMENTAL:

NML submitted an Environmental Impact Statement (EIS) for Area 3 to the Government of Newfoundland and Labrador (GNL) at the end of 2009. Based on NML's knowledge of the GNL's procedures, an approval is expected by May, 2010. The deposits in Area 4 are located both in Quebec and Labrador and therefore project notices have been submitted to the respective Governments. These deposits will be mined starting in 2012 in order to blend with the ores from Area 3. Preparation of the GNL and Quebec EIS for Area 4 is in progress and is expected to be submitted to the Governments in April, 2010.

FIRST NATIONS:

Four First Nations will be affected by the project. Two of the four First Nations, namely Naskapi Nation of Kawawachikamach (NNK) and Nation Innu Matimekush-Lac John (NIMLJ) live in the immediate area of the mines. NML has provided employment to both First Nations during summer drilling seasons since 2005 and has maintained a close relationship with their communities. NML has held meetings with members of the communities and Band Councils to explain the long term benefits of the project. All Nations have been provided with details of the financial and other benefits offered by NML. Negotiations to conclude Impacts and Benefits Agreements (IBAs) have been initiated with all of the affected Nations, including the Sept-Iles Innu (Innu Takuaikan Uashat Mak Mani-Utenam) and the Innu Nation (Labrador).

Market Projections

NML has engaged market specialists and reviewed independent market studies and long term price forecasts by recognized iron ore market experts. It also monitors, on a regular basis, iron ore consumption, market trends, and pricing for iron ore products.

During the global financial crisis that started in 2008, iron ore demand weakened as steelmakers in the developed world reduced their production by 50%. Iron ore benchmark prices fell by 33%, the first decrease since 2004 when prices rose 350% in 2008. However, due to the stimulus package introduced by the Government of the People's Republic of China in 2009, spending on infrastructure and construction rose markedly and increased the demand for iron ore. With international iron ore prices at a low level, Chinese steelmakers started to buy higher quality imported ores, which drove the spot market price to a higher level. From its peak of $200.00 per tonne (CIF basis) in March 2008, the price fell to below $70.00 per tonne (CIF) in November, 2008. By the end of 2009, the spot price had reached $130-135 (CIF) per tonne. In 2009, Chinese steel production was 13.8% higher than in 2008 and iron ore imports were 628 million tonnes, 41.5% higher than in 2008. This has led Analysts to predict a 20%-50% increase in the benchmark price in 2010, with prices projected to go up again in 2011.

NML expects that, driven by China and India, the trend towards growth of demand and higher long term prices by historical standards will continue for the foreseeable future. Despite a worldwide slump in the demand for steel products, the markets have recovered and are expected to grow in 2010 and 2011. If NML's strategic partner Tata Steel, exercises its option to participate in the DSO Project, it will be required to purchase, at the prevailing world price, 100% of the Project's products meeting certain quality specifications during the life of mine.

Financial Analysis, Revenues and Sensitivity Analysis of the Study:

The revenue assumptions are based on prices of US$ 64.50 (US$ 1.00 per dry metric tonne unit (DMTU)) per tonne of sinter fines and US$ 62.00 (US$ 0.96 per DMTU) per tonne of super fines. The assumed prices are based on the projections of longer term prices by several Analysts and NML's Marketing Consultant. The cash operating cost is estimated at US$30 per tonne of product on board ship at Sept-Iles. The Net present value ("NPV") discounted at 8% for the project is US$ 418 million (before corporate taxes and mining taxes). The project economics presented are based on an estimated 10 year mine plan which includes mining only the current proven and probable reserves (NI 43-101 compliant).

The sensitivity analysis with respect to sales revenue, capital costs and operating costs is illustrated below (see Table 2 and Figure 1).



Table 2 - Sensitivity of IRR
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Increase
Sales in fixed Operating
Variation revenue assets costs
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-20.00% 15.08% 36.55% 35.12%
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-16.00% 18.13% 34.84% 33.94%
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-12.00% 21.04% 33.25% 32.74%
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-8.00% 23.81% 31.77% 31.53%
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-4.00% 26.49% 30.38% 30.31%
----------------------------------------------------------------------------
0.00% 29.07% 29.07% 29.07%
----------------------------------------------------------------------------
4.00% 31.58% 27.84% 27.82%
----------------------------------------------------------------------------
8.00% 34.01% 26.68% 26.55%
----------------------------------------------------------------------------
12.00% 36.39% 25.58% 25.26%
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16.00% 38.71% 24.54% 23.95%
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20.00% 40.97% 23.55% 22.62%
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To view Figure 1 - Sensitivity of IRR, please click on the following link: http://media3.marketwire.com/docs/225nml1.pdf

Updated Technical Report

An updated NI 43-101 Technical Report is required to be posted on www.sedar.com within 45 days of the date of this news release. This will include a summary of the results from the DSO Feasibility Study. NML's Qualified Persons are experienced mining and metallurgical engineering professionals in the field of exploration and mining evaluations and Mineral Resource/Reserve estimates, with particular expertise in iron ore. NML is supported by others with expertise critical to some aspects of the Project. The forthcoming NI 43-101 report is prepared under the direction of Dean Journeaux, Eng, Chief Operating Officer, Jean Charles Bourassa, Eng., Vice President-Mining, Moulaye Melainine Eng., Vice President-Development, and Rock Gagnon, Eng., Senior Metallurgist. Messrs Journeaux, Bourassa, Melainine, and Gagnon are all Qualified Persons as defined by NI 43-101. Other contributions to the Study related to the design of the Pointe Noire terminal facilities is by GENIVAR, an engineering corporation located in Sept- Iles, Quebec, under the direction of Denis Blouin, Eng., an Independent Qualified Person as defined by NI 43-101. Robert de l'Etoile, Eng., of Geostat, an Independent Qualified Person as defined by NI 43-101, was responsible for the mineral resource estimates.

Dean Journeaux, Eng., Jean-Charles Bourassa, Eng. and Moulaye Melainine, Eng., are the Qualified Persons as defined in NI 43-101 who have reviewed and verified the scientific and technical mining disclosure contained in this news release on behalf of NML.

About New Millennium

New Millennium 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 to near term production its DSO (Direct Shipping Ore) Project. Tata Steel, the world's eighth largest steel corporation, owns 19.9% of New Millennium and is the Corporation's largest shareholder and strategic partner. Tata has an exclusive option to participate in the DSO Project, a commitment to take the resulting production if the option is exercised, and an exclusive right to negotiate and settle a proposed transaction in respect of the LabMag Project and the KeMag Project (see news release 08-17, October 1, 2008 and news release 09-11, June 30, 2009). 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, July 5, 2006 and 07-11, July 17, 2007); KeMag 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, January 15, 2009).

The Corporation's DSO project contains 63.5 million tonnes of Proven and Probable Mineral Reserves at an average grade of 58.8% Fe, 4.6 million tonnes of Measured and Indicated Mineral Resources at an average grade of 58.9% Fe, 7.15 million tonnes of Inferred Resources at an average grade of 55.9% Fe and approximately 40.0 million tonnes of historical resources that are not currently in compliance with NI 43-101 (see news release 09-03, February 11, 2009, news release 09-05, March 4, 2009 and news release 09-16, December 9, 2009). 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.corusgroup.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 view Map 1: Location of DSO Claims, please click on the following link: http://media3.marketwire.com/docs/225nml2.pdf

To view Map 2: Process Plant, please click on the following link: http://media3.marketwire.com/docs/225nml3.pdf

To view Map 3: Railway Routing, please click on the following link: http://media3.marketwire.com/docs/225nml4.pdf

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Contact Information

  • New Millennium Capital Corp.
    Robert Martin
    President & CEO
    (514) 935-3204
    rmartin@nmlresources.com
    or
    New Millennium Capital Corp.
    Andreas Curkovic
    Investor Relations
    (416) 577-9927