New Millennium Capital Corp.

New Millennium Capital Corp.

March 04, 2009 08:00 ET

New Millennium Capital Corp. Announces Positive Results of DSO Project Pre-Feasibility Study Upgrade of Mineral Resources to Reserves

CALGARY, ALBERTA--(Marketwire - March 4, 2009) -


New Millennium Capital Corp. ("NML" or "the Corporation") (TSX VENTURE:NML) announced today the positive results of the Pre-Feasibility Study ("the Study") on its 100% owned DSO properties ("the Project"). The Consulting Engineer Met-Chem Canada Inc. ("Met-Chem") located in Montreal, Quebec assisted in the preparation of the Study. The estimated mineral resources supporting the Study were established earlier by SGS Geostat Inc. ("Geostat"), also of Montreal. The Study was reviewed by others with expertise critical to some aspects of the Project. An updated National Instrument ("NI") 43-101 Technical Report, prepared with the assistance of Met-Chem, which includes the results of the 2008 drilling program is required to be filed on SEDAR within 45 days of this news release.

The study demonstrates that the DSO Project has the potential to achieve significant near term cash flow for the Corporation. The positive project economics of the Study have allowed the Mineral Resources to be reclassified as reserves according to NI 43-101 guidelines. The Mineral Reserves, which are based on 2008 reverse circulation drilling results, are outlined in Table 1.

Highlights of the DSO Project Pre-Feasibility Study:

- Production assumption of 4 million tonnes per year ("mtpy") Lump ores and Sinter Fine products.

- Proven and Probable Mineral Reserves of 52.5 million tonnes ("mt").

- Reserves are based on 2008 drilling data over a 10 year mine evaluation period.

- Stripping ratio varies from mine to mine and averages 1.18 over the life of the mines for the DSO operation.

- Total initial capital cost of US$ 289 million and working capital of about US$ 4.0 million.

- Internal rate of return ("IRR") of 39% (unleveraged and before corporate taxes and mining taxes).

- Net present value ("NPV") of US$ 488 million (before corporate taxes and mining taxes)(1)

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

- Direct jobs creation of 188 at the mine and wash plant.

- Selling Price: Lump Ore US$ 68.25/tonne, Sinter Fines US$55.25/tonne.

(1) Based on an 8% discount rate.

Robert Martin, President and CEO, stated: "This study demonstrates that New Millennium is poised to develop near term cash flow and supports the Corporation's transition to becoming a production mining company. The IRR and NPV are robust and relatively insensitive to different cost and pricing variations including prices that are significantly lower than the current iron ore contract price. The Corporation plans to drill and convert the remaining 45 to 50 million tonnes of historical resources to NI 43-101 compliant resources and reserves. However, NML's currently established proven and probable reserves, technical results and financial analysis allows the Corporation to move at this stage to the feasibility study phase. This phase is on track and is expected to be completed by end of Q2 2009. A positive feasibility study will reduce project risk and provide a high degree of certainty that our strategic partner, Tata Steel, will exercise their option to advance the project. Our expectation is to start production by September 2010, subject to regulatory approvals, and advanced engineering and procurement."

The historical estimates contained in this news release of quantities of direct shipping quality ore are not in accordance with the mineral resources or mineral reserves classifications contained in the CIM Definition Standards on Mineral Resources and Mineral Reserves, as required by National Instrument 43-101 ("NI 43-101"). Accordingly, NML is not treating these historical estimates as current mineral resources or mineral reserves as defined in NI 43-101 and such historical estimates should not be relied upon. A qualified person has not done sufficient work to date to classify the historical estimates as current mineral resources or mineral reserves.

Upgrading of Resources to Reserves:

Table 1
Iron Ore Mineral Reserves (Met-Chem 2008)
(Using cut-off grades of Fe+Mn equal to or greater than 50%, SiO2 less than
18% and Mn less than 3.5%)

Reserve Tonnes % Fe % SiO2 % Mn
Classification (in millions)
Proven 20.7 59.9 5.9 0.13
Probable 31.8 58.2 8.7 0.84
Total P+P 52.5 58.9 7.6 0.56

The Mineral Reserves were established using the following parameters:

- In pit mining recovery of 100%.

- Cut-off grades as indicated above.

- Overall pit slope angle of 50 degrees in the hanging wall.

- Dilution accounted for in the bench compositing.

In addition to the 52.5 mt of proven and probable reserves, there are remaining Measured (1.7 mt) and Indicated (1.8 mt) Mineral resources, and Inferred Mineral Resources estimated at 5.8 million tonnes.

Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these inferred mineral resources will be converted to measured and indicated mineral resource categories through further drilling, or into mineral reserves once economic considerations are applied.

Pre-feasibility Study:

NML owns 29 deposits in different locations as shown in the attached map (Figure 1). NML's current development models for the project involve commencement of development in Areas 2 and 3, and then moving the mining operations to Area 4. The proposed wash plant will be located at Timmins in Area 3. The ore will be hauled by truck to the crushing station located in the wash plant area. The crushing and upgrading process involves screening, jigging, hydro-separation, and wet high intensity magnetic separation (WHIMS). The flowsheet is designed to produce a product grade containing less than 5% SiO2 at an optimum recovery rate.

The previous railway track to the Timmins wash plant site will be rebuilt from the junction at Mile Post 353 on the existing railway line from Sept-Iles to Schefferville. At the wash plant a train loading station will be built to minimize the turnaround time of the ore trains. The trains will be hauled to the Pointe Noire Terminal in Sept-Iles, where a car dumper will be built and the products will be stockpiled in a designated location. It is assumed that the existing dock owned by Sept-Iles Port Authority (SIPA) will be used to load vessels using the existing shiploading equipment. Discussions are progressing with the railroads for hauling the ore and terminal operators for the use of the handling and ship loading equipment.

Other Project Highlights:

- Anticipated start of construction during Q3 2009, subject to exercise of the participation option by Tata Steel, regulatory approvals and successful completion of project financing.

- Anticipated start of commercial production in Q3, 2010.

- Accuracy of the cost estimates in the Study is considered to be +/- 25%.

- Exchange rates used for cost estimates and revenues are 0.85 US$ per CDN$.

- Average operating cash cost of about US$ 26 per tonne of product over the mine life.

- Total undiscounted Cash Flow of US$ 801 million.

- Forecast average yearly Cash Flow after debt payments exceeds US$ 80 million.

- Economics presented are based on an estimated 10 year mine plan.

Financial Analysis, Revenues and Sensitivity Analysis of the Study:

The revenue assumptions are based on prices of US$ 68.25 (US$ 1.05 per dry metric tonne unit (DMTU)) per tonne of lump ore and US$ 55.25 (US$ 0.85 per DMTU) per tonne of sinter fines. The assumed prices are on average, 60% of the contract price in 2008 which had increased by 65% over the 2007 price. Sinter fine prices started to increase rapidly in 2005 and have grown over 350% since 2004. The lump premium over fines has increased from US cents 10/ (DMTU) in 2004 to US cents 57 DMTU. This underscores the strong fundamentals that underpin the demand for lump ores and sinter fines.

Before the current financial crisis, analysts were projecting another 10-20% increase in 2009. The severe monetary crisis and the resulting credit crunch worldwide have affected the demand for steel. As a result, there are new projections of a 20-30% decline in the price in 2009. However, most analysts are of the opinion that the steel market will start stabilizing in 2010. Long term prices projected by these analysts are in line with NML's assumptions.

The sensitivity analysis illustrated below, indicates that project economics are expected to remain strong even in the case of iron ore prices falling below the base prices used in the Study. The impact of capital and operating costs is also demonstrated by the model and are relatively insensitive.

Table 2 - Sensitivity of IRR

Variation Sales in fixed Operating
(%) revenue assets costs
-20% 21% 51% 47%
-16% 25% 49% 46%
-12% 29% 46% 44%
-8% 32% 44% 43%
-4% 36% 42% 41%
0% 39% 39% 39%
4% 43% 38% 38%
8% 47% 36% 36%
12% 50% 34% 35%
16% 54% 33% 33%
20% 57% 31% 31%

To view an image of Figure 1 - Sensitivity of IRR, please click on the following link:

Market Projections:

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

NML expects that the trend towards continued growth in market demand and higher long term prices by historical standards will continue. Despite the current slump in the demand for steel products, the markets are expected to recover by 2010/11 due to, among other things, various stimulative measures put in place by major Western and developing economies. NML's strategic partner, Tata Steel Limited (Tata Steel), if it exercises its option to participate in the project, is required to purchase, at prevailing world prices, 100% of all of the DSO Project's iron ore products during the life of the mine.

Technical Report by Met-Chem:

An updated NI 43-101 Technical Report by Met-Chem is required to be posted on within 45 days of the date of this news release. This will include a summary of the results from the DSO Pre-Feasibility Study. Met-Chem and their Independent 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. The forthcoming NI 43-101 report is prepared under the direction of Andre Boilard, Eng, Project Manager, Daniel Gagnon, Eng., Senior Mining Engineer and Alain Dorval, Eng., Senior Metallurgist. Messrs Boilard, Gagnon and Dorval are all independent 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. 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 sixth 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 fund the DSO Project, a commitment to take the resulting production, and an exclusive right to negotiate and settle a proposed transaction in respect of the LabMag Project (see news release 0817, October 1, 2008). The Millennium Iron Range currently hosts two advanced projects: LabMag contains 3.5 billion tonnes of Proven and Probable reserves plus 1.0 billion tonnes of Measured and Indicated resources and 1.2 billion tonnes of Inferred resources; KeMag contains 2.1 billion tonnes of Proven and Probable reserves, 0.3 billion tonnes of Measured and Indicated resources and 1.0 billion tonnes of Inferred resources.

The Corporation's DSO project contains 52.5 million tonnes of Proven and Probable Mineral Reserves, 3.5 million tonnes of measured and indicated Mineral Resources, 5.8 million tonnes of Inferred Resources and about 45.0 to 50.0 million tonnes of historical resources that are not currently in compliance with NI 43-101.

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, and

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 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 an image of Figure 2: Property Overview, please click on the following link:

Neither the TSX Venture exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture exchange) accepts responsibility for the adequacy or accuracy of this release.

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