Tata Steel Global Minerals Holdings, a wholly owned subsidiary of Tata Steel, announced Wednesday that it has purchased a 19.9 percent stake in Canadian iron ore miner New Millennium Capital Corporation (NML) for US$22.6 million.
In addition to acquiring 19.9 percent of NML, which controls a total of 9.1 billion mt of iron ore resources, Tata Steel will have the option to acquire an 80 percent equity interest in NML's Direct Shipping Ore project (DSO) project, located in the province of Newfoundland and Labrador (NL) and the province of Quebec. The DSO Project is expected to contain over 100 million mt of direct shipping quality ore. NML expects to produce 4 million mt per annum of iron ore products from the DSO Project commencing in 2010.
The agreement also includes an option to negotiate for NML's 80 percent-owned LabMag taconite iron ore property located in NL.
Tata will have exclusive rights to the DSO Project through the completion of a feasibility study that will be completed during the second quarter of 2009. Once the feasibility study is completed, Tata will have an option for a period of 180 days to acquire 80 percent equity interest in the project, including 100 percent of its iron ore output.
Tata will have until June 30, 2009 to negotiate a transaction with NML for the LabMag project, which includes 3.5 billion mt of mineral reserves. However, these reserves are contained within 4.6 billion mt of measured resources and 1.2 billion mt of conditional resources. Both Tata and NML will need to work together to establish a solution to move forward with the LabMag project.
Per the signed agreement, Tata will be entitled to have two nominees on the NML board of directors and will have the first right of refusal in future placement of equity securities conducted by NML.