India-based Tata Steel and New Millennium Capital Corp. have signed a binding heads of agreement for development of New Millennium’s LabMag and KéMag magnetite iron ore deposits located in Labrador and Quebec, respectively. Together, the two deposits, called the “Taconite Project,” hold more than 9 billion mt of reserves and resources that have the potential to produce 22 million mt/y of concentrate over a mine life of more than 100 years. Tata currently owns about 27.2% of New Millennium’s common shares. New Millennium is 100% owner of the KéMag deposit and 80% owner of the LabMag deposit, with the remaining 20% of LabMag held by the Naskapi Nation of Kawawachikamach.

The agreement calls for Tata Steel to participate in a feasibility study of the project and to contribute 64% of the study costs, estimated at $50 million. Upon successful completion of the study and Tata electing to develop one or both deposits, the companies would form a joint venture, with Tata holding 80% and New Millennium holding 20%, with an option to increase to 36%. Tata will arrange the required equity portion of the financing based on a maximum capital expenditure of up to $4.85 billion if both deposits are developed and up to $4.68 billion and $3.76 billion, respectively, if only the KéMag or LabMag deposits are developed.

The feasibility study will be NI 43-101 compliant and is expected to be completed within 21 months of its initiation. Upon conclusion of the study, Tata Steel will have a maximum of four months to make an investment decision.

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