NML. Announces Positive Results for Taconite Feasibility
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LabMagKeMag
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Capex - Mine & Process (1)5,0125,227
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Capex - Infrastructure (2)2,7373,012
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Production cost per tonne of concentrate43.0342.55
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Production cost per tonne of pellet (3)52.2251.59
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Finance Lease for Infrastructure Cost per tonne of
product (4)12.5014.17
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Project IRR (before tax, 100% equity)18.2%17.5%
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Project IRR (after tax, 100% equity)14.1%13.2%
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IRR on equity (before tax, 30%-70% equity debt
ratio)28.8%28.0%
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IRR on equity (after tax, 30%-70% equity debt ratio)23.3%21.9%
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Payback before tax at 100% equity (years after
production start)4.94.9
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Payback after tax at 100% equity (years after
production start)5.65.7
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Payback before tax at 30%-70% equity debt ratio
(years after production start)3.33.3
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Payback after tax at 30%-70% equity debt ratio
(years after production start)3.53.5
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NPV @ 8% before tax (100% equity)5,8385,262
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NPV @ 8% after tax (100% equity)2,8492,241
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NPV @ 8% before tax(30% equity)5,9775,397
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NPV @8% after tax (30% equity)3,3032,697
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ProvenProbable Reserves (million tonnes)(5)3,4101,891
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Mine life (estimated years based on total low silica
reserves)63922
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Production of 22 million metric tonnes per year ("Mtpy") of concentrate
to produce 17.0 Mtpy of pellets and 6.0 Mtpy of pellet feed. (Actual
total is estimated to be 23 Mtpy due to weight gain during the
pelletizing process).
--Pellet production consists of 12 Mtpy of low silica (2.5% SiO2) blast
furnace ("BF") grade fluxed pellets and 5 Mtpy of direct reduction
("DR") grade pellets with 1.8% SiO2.
--6 Mtpy of pellet feed containing greater than 69.0% Fe and 2.2% SiO2.
--Product prices are based on a long term price forecast of US103 for 62%
Fe fines CFR North Chinese ports. This forecast was developed by World
Steel Dynamics, Englewood Cliffs, New Jersey, USA, marketing consultant
for the Study.
--After adjustment for ocean freight and quality factors, the assumed
product prices loaded into ship at the Port are as follows: Pellet Feed
US90.00 per tonne ("t"), BF grade Pellets US116.61/t and DR grade
Pellets US126.86/t.
--Exchange rates used for the cost estimates and revenues in the financial
evaluation are US0.90 and EUR 0.71 per CAD1.00.
--Project economics presented are based on a 25 year mine plan for LabMag
and 22 years for KeMag.
--Accuracy of cost estimates is considered to be /-15%.
Robert Patzelt, President and CEO of NML said, "We are very pleasedwith the results of this joint study with our strategic partner, TataSteel which is amongst the largest steelmakers in the world. Webelieve the results present a compelling case for a profitable,successful, long-term iron ore operation. We have always believedthat New Millennium has the best ore bodies in the Labrador Trough.The favourable geological and mining characteristics of the depositsare manifested in the study's operating cost estimates, which wouldplace our Taconite Project among the low cost pellet producers. Wealso want to emphasize that the project would produce premiumproducts whose supply and demand balance over the next decade isestimated to be the best for all iron ore products. It also demandsemphasis that we have been very fortunate in having support andtechnical expertise of Tata Steel. We will continue to work withgovernments at all levels, First Nations, suppliers, contractors andother stakeholders to advance the project to the next stage ofdevelopment."
Project Descriptions:
General: The Study demonstrates that each of the two project scenariohas the potential to become a significant new source of high qualitypellets to serve the global steel industry. Each project scenario isbased on primary processing consisting of mining and concentrating atthe mine site, a slurry transportation system ("Ferroduct") to thesecondary processing consisting of a pellet plant and product storageand reclaiming for transport to the terminal. Products will beshipped through a multi-user deep water dock.
LabMag and KeMag both feature Taconite ore similar to the orecurrently being mined in the Mesabi Iron Range (MIR) in Minnesota,USA. The MIR Taconites have been a mainstay for the US steel industrysince the early 1950s. The processing is based on well-proven andestablished flowsheet designs employed by the current producers. TheProject will be competitive, aiming for a favourable position on theglobal cost curve for pellet producers. Natural advantages include alow stripping ratio and magnetite ore, which reduces energy costs inthe pelletizing process. The Project's cost structure will alsobenefit from the use of large-scale and proven state of the artequipment. The concentrate will be transported from the mine throughthe ferroduct to the pellet plant. This is the most economical andenvironmentally friendly mode of transportation to the port, and willenable implementation of the Project independent of other users. Thepellet plant will utilize the largest size equipment currently inoperation. Shipping will be through a deep water dock capable ofhandling today's large-size vessels.
Geology & Mining: The Project's mining operation will have a totalmining rate of up to a nominal 86 Mtpy of crude ore at an averageDavis Tube ("DT") Weight Recovery ("WR") of between 25 to 27%. Miningwill include all facilities for pre-strip, waste rock and low gradeore stockpiling, ore delivery and mine rehabilitation. Mine planshave been considered for each of the three scenarios, viz. LabMag,KeMag and Combined scenario. The deposits are ideal for open pitmining with low strip ratio and conventional truck and shovel miningmethods have been selected. Due to the high tonnages expected to bemined, the trucks and shovels will be the largest and provenequipment available on the market. For each scenario, an optimizedpit was determined using the 3D Lerchs-Grossman algorithm and aseparate set of cut-off grades were established in order to ensurethe feed ore would consist of better liberating ores that would allowfor producing lower-silica products.
The Mineral Reserves are the portion of the Measured and IndicatedMineral Resources (refer to Table 2 below) that have been identifiedas being economically extractable, which incorporate mining lossesand the addition of waste dilution. The total reserve base for theLabMag and KeMag deposits are shown respectively in Table 3 and Table4 below.
Table 2: LabMag & KeMag Resources (Met-Chem 2013 models)
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MillionDavis Tube
BlockResource by categoryTonnesDTWR %HeadConcentrate
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(18% DTWR
cut-off)%Fe%Fe%SiO2
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LabMagMeasured3,68926.1829.8169.932.10
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Indicated63225.0329.2470.082.00
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Measured Indicated4,32126.0129.7369.962.09
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Inferred1,06325.2229.6469.881.85
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KeMagMeasured1,50726.9731.4569.692.56
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Indicated87627.3231.9569.832.51
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Measured Indicated2,38327.1031.6369.742.54
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Inferred1,00726.9731.5669.312.65
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TotalMeasured5,19626.4130.2969.862.23
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Indicated1,50826.3630.8169.932.30
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Measured Indicated6,70426.4030.4169.882.25
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Inferred2,07026.0730.5769.602.24
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Table-3: LabMag Mineral Reserves
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TonnageDTWR Crude FeDavis Tube
Category(Mt)(%)(%)Concentrate
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Fe (%)SiO2(%)
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Proven2,88527.129.969.92.1
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Probable52526.229.370.02.0
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Proven & Probable3,41027.029.869.92.1
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Note: Does not include 523 Mt of proven and probable reserves havinghigher silica content at a cut off of 4%.
Table-4: KeMag Mineral Reserves
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TonnageDTWR Crude FeDavis Tube
Category(Mt)(%)(%)Concentrate
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Fe (%)SiO2(%)
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Proven1,17227.031.269.82.2
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Probable71827.931.470.12.1
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Proven & Probable1,89127.031.369.92.2
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Note: Does not include 493 Mt of proven and probable reserves havinghigher silica content at a cut off of 4%.
Processing: The plant design will be the same whether the ore ismined from LabMag or KeMag because similar blending criteria will beused to achieve the same liberation index (DT concentrate silica) inthe plant feed. The only differences would be related to terraintopography and infrastructure which will be specific to the chosensite. The processing facility is designed with the capacity toproduce 22 Mtpy of magnetite concentrate. The process plant involvesmultiple crushing and grinding stages followed by a conventionalmagnetite recovery circuit with a flotation plant to further reducethe silica in the concentrate to produce a high grade pellet feed forthe pellet plant and the remainder to be sold as a concentrate.Traditional taconite concentrators utilize a primary crusher followedby an autogenous or semi-autogenous grinding mill (SAG) to reduce thesize of the crushed ore before feeding to the magnetic separationcircuit. Based on the results of extensive testing conducted since2007, the SAG mill will be replaced with a second stage of crushingfollowed by high pressure grinding rolls (HPGR), which have beenutilized in a similar manner in several iron ore projects around theworld. HPGR requires much lower energy and has lower operating coststhan the SAG process. Fine grinding in a ball mill, as used intraditional concentrators, will be required to produce a concentratefor the floatation circuit.
Slurry transportation: The fine grained concentrate, which is idealfor slurry transport will be pumped from the mine site to the portthrough a 28" (711mm) diameter and 600 km long ferroduct with asingle intermediate pumping station. KeMag and LabMag Projects willhave separate routings. It will have the necessary tools for leakdetection, repair equipment and emergency back-up power. Theferroduct design slopes will be limited (less than 10%) to avoidplugs in valleys even if the ferroduct is shut down full of slurry.Although the line will be buried almost its entire length, where itis not possible to bury the ferroduct, an appropriate thickness ofinsulation and heat tracing will be provided to prevent freezing.Ferroducts are used in iron ore projects in Tasmania, Mexico, Brazil,India and China. One such system is operating in Baotou, InnerMongolia, with ambient temperatures as low as -41 degrees C.Ferroducts are cost effective, ecofriendly and known to be extremelyreliable.
Pelletizing: Concentrate slurry will be dewatered and filtered.Filtered concentrate will either be sold as pellet feed or pelletizedin two 8.5 Mtpy capacity machines. These are the largest sizepelletizing equipment currently in operation. It is estimated that 16Mtpy of magnetic concentrate will be required to produce 17 Mtpy ofpellets because of the weight gain due to flux additives and to theexothermic reaction during the conversion of the magnetite intohematite. Magnetite ore has lower pelletizing costs compared tohematite because of lower energy requirements. Beginning in 2006,extensive tests were undertaken to develop the design basis for thepelletizing circuit. The final equipment configuration was tested ata leading vendor's laboratory and the equipment has been designed tomeet the throughput requirements and product quality specificationsfor seaborne pellets.
Product Stockpiling and Shipping: Concentrate and screened pelletswill be stockpiled in a yard adjacent to the pellet plant at theport. Products will be reclaimed and sent via a 7.6 km long overlandconveyor to the multi-user deep water dock. The port will be capableof loading ocean going vessels with a current maximum capacity of350,000 DWT. The rated capacity of the dock is 50 Mtpy and 38.4million has been invested by NML to reserve 15 Mtpy of this capacity(refer to NR 12-17 dated July 18, 2012).
Environmental Assessment: The Project is expected to trigger severalregimes of environmental assessment ("EA"). Discussions with theapplicable governments have been held and it is concluded that asingle environmental impact statement ("EIS") covering all thecomponents of the Project may be submitted. The Project Descriptionis a document that activates the various EA regimes and is currentlycomplete. Much of the baseline data on the Taconite Project has beencollected and has since been analyzed and reports completed.Intensive field work to collect biophysical baseline data wereconducted in fall 2011 and spring-fall 2012. The data is currentlybeing analyzed, and most of the field reports have been reviewed andapproved.
Financial Analysis, Revenues and Sensitivity Analysis: Iron oreprices are based on a long-term projection of daily spot marketprices, as quoted by an index, CFR Northern Chinese port for 62% Fesinter fine products. Based on the supply demand analysis overdifferent steel cycles, World Steel Dynamics of New Jersey, a notedsteel industry analyst, has projected a long-term base line price ofUS103.00 for 62% Fe grade CFR China. With appropriate qualityadjustments and allowing for the freight from the port to China, therevenue assumptions are based on prices of US90.00 per tonne of69.0% Fe grade pellet feed Applying a US30 spread between fines andBF grade pellets over the cycle and adjusting for 66.4% Fe grade inthe pellet, the price of the BF grade fluxed pellet is estimated tobe US116.61 per tonne. Based on a 7% over the cycle premium for DRgrade pellets compared to BF grades and adjusting for a Fe content of67.9%, the price for DR grade pellets would be US126.86. Long termexchange rate of US0.90 equivalent to CAD1.00 has been assumed forthe Study.
The project economics presented are based on the first 25 year mineplan for the LabMag and Combined Projects, and 22 years for the KeMagProject, and consider mining only the proven and probable reserves(NI 43-101 compliant) with the required liberation characteristics(DTC silica 2.1%).
The Project financials have been evaluated with capital expensesexcluding certain infrastructure-related capital expenses in themine, port and ferroduct, which are identified and proposed to beowned by third parties and serviced on the basis of long-term lease.The evaluation is based on two separate cases: one with 100% equityand the other one with 30% -70% equity ratios. The debt is assumed tobe financed at an interest rate of 7%.
The sensitivity analysis with respect to sales revenue, capital costsand operating costs for the LabMag Project is illustrated in Figure1. The figures are based on 100% equity.
To view the graph associated with this release, click the followinglink: https://media3.marketwire.com/docs/935744_c.jpg
Technical Report by Met-Chem Canada Inc.:
An NI 43-101 Technical Report ("Report") is being prepared byMet-Chem Canada Inc. ("Met-Chem") will be posted on www.sedar.comwithin 45 days of this news release. Met-Chem is working on theReport in collaboration with the Study Manager and other supportingConsultants with their own Independent Qualified Persons. Met-Chem isa firm of experienced mining and metallurgical engineeringprofessionals with expertise in exploration, mining evaluations,processing and the preparation of mineral resource/reserve estimates,especially in relation to iron ore. The Report will include updatedmineral resource and reserve estimates which were preparedrespectively by Mr. Schadrac Ibrango, P.Geo., PhD. and Mr. JeffreyCassoff, Eng. of Met-Chem. Both Mr. Ibrango and Mr. Cassoff areIndependent Qualified Persons as defined by NI 43-101. The Reportwill consist of summary results from the Study. The Report is beingprepared under the overall direction of Mr. Charles Cauchon Eng. ofMet-Chem and will be reviewed and certified by individuals who areresponsible for their respective portions of the Report. Mr. Cauchonand all other individuals providing certifications are IndependentQualified Persons as defined by NI 43-101. The financial analysiswill be reviewed and certified by an Independent Qualified Person.
About New Millennium.
The Corporation controls the emerging Millennium Iron Range, locatedin the Province of Newfoundland and Labrador and in the Province ofQuebec, which holds one of the world's largest undeveloped magneticiron ore deposits. In the same area, the Corporation and Tata SteelLimited ("Tata Steel"), one of the largest steel producers in theworld, have advanced a Direct Shipping Ore ("DSO") Project to theproduction stage, from which trial shipments have begun. Tata Steelowns approximately 26.3% of New Millennium and is the Corporation'slargest shareholder and strategic partner.
Tata Steel exercised its exclusive option to participate in the DSOProject and has a commitment to take the resulting production (seenews release 10-16 dated September 14, 2010). The DSO Project isowned and operated by Tata Steel Minerals Canada Limited ("TSMC"),which in turn is 80% owned by Tata Steel and 20% owned by NML. TheDSO Project contains 98.8 million tonnes of Measured and IndicatedMineral Resources at an average grade of 59.3% Fe, 6.7 million tonnesof Inferred Resources at an average grade of 56.3% Fe and about 20.0- 25.0 million tonnes of historical resources that are not currentlyin compliance with NI 43-101 (see news release 09-03 dated February11, 2009, news release 09-05 dated March 4, 2009, news release 09-16dated December 9, 2009, news release 10-12 dated July 8, 2010, newsrelease 12-14, dated May 31, 2012 and news release 14-02 datedFebruary 24, 2014). A qualified person has not done sufficient workto classify the historical estimate as current mineral resources ormineral reserves, the Corporation is not treating the historicalestimate as current mineral resources or mineral reserves and thehistorical estimate should not be relied upon.
LabMag contains 3.9 billion tonnes of Proven and Probable reserves ata grade of 29.7% Fe plus 376 million tonnes of Measured and Indicatedresources at an average grade of 29.6% Fe and 891.0 million tonnes ofInferred resources at an average grade of 29.3% Fe. KeMag contains2.4 billion tonnes of Proven and Probable reserves at an averagegrade of 30.6% Fe and 1.0 billion tonnes of Inferred resources at anaverage grade of 31.7% Fe (See Tables 2, 3 & 4 in news release 14-04dated March 27, 2014). Tata Steel also exercised its exclusive rightto negotiate and settle a proposed transaction in respect ofdevelopment of either or both the LabMag and the KeMag deposits (seenews release 11-09 dated March 6, 2011).
The Millennium Iron Range now hosts other taconite deposits. Thefirst is the Lac Ritchie property located at the north end of theRange. The initial 2011 drilling of 40 holes in this propertyrevealed Indicated Resources of 3.330 billion tonnes at an averagegrade of 30.3% Fe, and Inferred Resources of 1.437 billion tonnes atan average grade of 30.9% Fe (see news release NR 12-11, dated April02, 2012).
Two other taconite deposits are located south of the LabMag depositin the Millennium Iron Range. The initial 2012 drilling of 23 holesin the Sheps Lake property and of 50 holes in the Perault Lakeproperty revealed Indicated Resources of 3.580 billion tonnes at anaverage grade of 31.22%, and Inferred Resources of 795 million tonnesat an average grade of 30.56% (see news release NR 13-04, datedFebruary 11, 2013).
The Howells Lake - Howells River North deposit is located between theLabMag and KeMag deposits, and evidences mineral continuity in theRange. The 2011 and 2012 drilling of 11 holes in the Howells RiverNorth property and of 45 holes in the Howells Lake property, revealedIndicated Resources of 7.631 billion tonnes at an average grade of30.39% Fe, and Inferred Resources of 3.310 billion tonnes at anaverage grade of 29.83% Fe (see news release NR 13-15, dated May 23,2013).
The Corporation's mission is to add shareholder value through theresponsible and expeditious development of the Millennium Iron Rangeand other mineral projects to create a new large source of rawmaterials for the world's iron and steel industries.
For further information, please visit www.NMLiron.com,www.tatasteel.com, www.tatasteelcanada.com, andwww.tatasteeleurope.com.
Dean Journeaux, Eng., Moulaye Melainine, Eng., and ThiagarajanBalakrishnan, P. Geo., are the Qualified Persons as defined inNational Instrument 43-101 who have reviewed and verified thescientific and technical mining disclosure contained in this newsrelease.
Forward-Looking Statements
This news release contains certain forward looking statements andforward looking information (collectively referred to herein as"forward looking statements") within the meaning of applicableCanadian securities laws. All statements other than statements ofpresent or historical fact are forward looking statements. Forwardlooking information is often, but not always, identified by the useof words such as "could", "should", "can", "anticipate", "expect","believe", "will", "may", "projected", "sustain", "continues","strategy", "potential", "projects", "grow", "take advantage","estimate", "well positioned" or similar words suggesting futureoutcomes. In particular, this news release may contain forwardlooking statements relating to future opportunities, businessstrategies, mineral exploration, development and production plans andcompetitive advantages.
The forward looking statements regarding the Corporation are based oncertain key expectations and assumptions of the Corporationconcerning anticipated financial performance, business prospects,strategies, regulatory developments, exchange rates, tax laws, thesufficiency of budgeted capital expenditures in carrying out plannedactivities, the availability and cost of labour and services and theability to obtain financing on acceptable terms, the actual resultsof exploration and development projects being equivalent to or betterthan estimated results in technical reports or prior activities, andfuture costs and expenses being based on historical costs andexpenses, adjusted for inflation, all of which are subject to changebased on market conditions and potential timing delays. Althoughmanagement of the Corporation consider these assumptions to bereasonable based on information currently available to them, they mayprove to be incorrect.
By their very nature, forward looking statements involve inherentrisks and uncertainties (both general and specific) and risks thatforward looking statements will not be achieved. Undue relianceshould not be placed on forward looking statements, as a number ofimportant factors could cause the actual results to differ materiallyfrom the beliefs, plans, objectives, expectations and anticipations,estimates and intentions expressed in the forward looking statements,including among other things: inability of the Corporation tocontinue meet the listing requirements of stock exchanges and otherregulatory requirements, general economic and market factors,including business competition, changes in government regulations orin tax laws; general political and social uncertainties; commodityprices; the actual results of exploration, development or operationalactivities; changes in project parameters as plans continue to berefined; accidents and other risks inherent in the mining industry;lack of insurance; delay or failure to receive board or regulatoryapprovals; changes in legislation, including environmentallegislation, affecting the Corporation; timing and availability ofexternal financing on acceptable terms; conclusions of, or estimatescontained in, feasibility studies, pre-feasibility studies or othereconomic evaluations; and lack of qualified, skilled labour or lossof key individuals; as well as those factors detailed from time totime in the Corporation's interim and annual financial statements andmanagement's discussion and analysis of those statements, along withthe Corporation's annual information form, all of which are filed andavailable for review on SEDAR at www.sedar.com. Readers are cautionedthat the foregoing list is not exhaustive.
The forward looking statements contained herein are expresslyqualified in their entirety by this cautionary statement. The forwardlooking statements included in this news release are made as of thedate of this news release and the Corporation does not undertake andis not obligated to publicly update such forward looking statementsto reflect new information, subsequent events or otherwise unless sorequired by applicable securities laws.
With respect to the disclosure of historical resources in this newsrelease that are not currently in compliance with National Instrument43-101, a qualified person has not done sufficient work to classifythe historical estimate as current mineral resources or mineralreserves, the Corporation is not treating the historical estimate ascurrent mineral resources or mineral reserves and the historicalestimate should not be relied upon.