Abaxx Technologies Inc N.ABXX

CIBC Ups Target-reinstates coverage NML

[oilandgaswells]

Institutional Equity Research

Earnings Update

March 2, 2011 Metals & Minerals

New Millennium Capital Corp.

Still Looking For A Dance Partner; We Find Out

Tata's Interest Shortly

We believe NML will continue to need a partner with a strong balance sheet

to build its larger taconite projects, which will require ~$7B to construct.

These projects represented a free option last year; recent transactions

underpin current market value for NML shareholders in these projects.

The recent $86.8MM (gross) equity financing puts NML in a good position to

begin construction of the DSO project. The extra cash will also be put to

work by further developing and engineering the KeMag deposit and

preparing it for construction financing and into production.

Our valuation for the company has been adjusted to reflect the recent

financing, the new technical information released last month for the DSO

project and revised future financing assumptions given the recent market

support for the share price.

We are reinstating coverage of NML with a SP rating and $5.00 PT (prior

$2.70). We believe clarity around the joint venture with Tata on the KeMag

and LabMag projects will have the most significant impact on the stock.

Currently we assume NML will retain 20% of both projects.

Stock Price Performance

Source: Reuters

All figures in Canadian dollars, unless otherwise stated. 11-107934 © 2011

CIBC World Markets does and seeks to do business with companies covered in

its research reports. As a result, investors should be aware that the firm may

have a conflict of interest that could affect the objectivity of this report.

Investors should consider this report as only a single factor in making their

investment decision.

See "Important Disclosures" section at the end of this report for important

required disclosures, including potential conflicts of interest.

See "Price Target Calculation" and "Key Risks to Price Target" sections at the

end of this report, where applicable.

Ian Parkinson

1 [phone]

[e-mail]

Matthew Gibson

1 [phone]

[e-mail]

Stock Rating:

Sector Performer

Sector Weighting:

Market Weight

12-18 mo. Price Target $5.00

NML-V (3/2/11) $3.95

Key Indices: None

3-5-Yr. EPS Gr. Rate (E) NM

52-week Range
.76-$4.21

Shares Outstanding 141.6M

Float 101.0M Shrs

Avg. Daily Trading Vol. 113

Market Capitalization $559.3M

Dividend/Div Yield Nil / Nil

Fiscal Year Ends December

Book Value
.40 per Shr

2011 ROE (E) NM

LT Debt NA

Preferred Nil

Common Equity $56.4M

Convertible Available No

Earnings Per Share Prev Current

2009 (
.02A)

2010 (
.03E)

2011 (
.06E) (
.05E)

P/E

2009 NM

2010 NM

2011 NM NM

Cash Flow Per Share

2009 (
.02A)

2010 (
.03E)

2011 (
.02E) (
.01E)

P/CF

2009 NM

2010 NM

2011 NM NM

Company Description

New Millennium Capital Corp. is developing some of the

world's largest iron ore assets in the Labrador Trough in

eastern Canada.

www.nmlresources.com/

Still Looking For A Dance Partner; We Find Out Tata's Interest Shortly - March 02, 2011

2

Ec

New Millennium Capital Corp (NML-V) Sector Performer

Current Price: C$3.98 Ian Parkinson - (416-956-6169) - [e-mail]

12-18 Month Target Price: C$5.00 Matthew Gibson - (416-956-6729) - [e-mail]

(All figures in US$, unless otherwise stated) Key Data

52-week trading range (C$) Low: 0.76 High: 4.21

Average daily trading volume (000) 1 63

TSX index weight nm

Shares outstanding (mm)

Basic 132.9

Fully diluted 141.6

Public float 101.0

Market capitalization - basic ($mm) 529

Q4 2009A

Cash ($mm) 10

Working capital ($mm) 11

Total debt ($mm) 0

Common equity ($mm) 57

Net debt/common equity (x) n/a

Year-end Dec. 31 2009A 2010E 2011E 2012E

EPS ($) (0.02) (0.03) (0.05) 0.35

CFPS ($) (0.02) (0.03) (0.01) 0.38

Book value ($) 5 7 5 3 1 28 1 86

NPV per share (C$) 5 .04

P/E (x) nm nm nm 11.3

CIBC Forecast 200280A09A 2010E 2011E 2012E P/CF (x) nm nm nm 12.8

P/book value (x) 9.8 10.5 4.3 3.0

Fe price (US$/dmtu) ## 1.02 1.91 2.04 2.04 P/NPV (x) 0.8

EV/EBITDA (x) nm nm nm 0.9

EV/EBIT (x) nm nm nm 1.0

EV/OpFCF (x) nm nm nm 2.0

ROE -4% -7% -9% 37%

Operating Metrics 200280A09A 2010E 2011E 2012E2013E ROCE -4% -7% -6% 31%

Dividend/share ($) 0.00 0.00 0.00 0.00

Fe production (mm tonnes) # - - 0 .4 0 .8 #

Sensitivity to ±10% Change in Forecast Price Iron Ore

# EPS ($) - 2010E nm

## NAVPS ($) 0.41

ABX

Income Statement 200280A09A 2010E 2011E 2012E Key Ratios 2009A 2010E 2011E 2012E Reserves & Resources Tonnes Grade

Revenue 1 0 0 3 86 Growth (mm) Fe (%)

EBITDA ## (3) (4) (2) 64 EBITDA YoY nm nm nm nm DSO Project (19%) M+I 6 7.1 58.89%

EBIT ## (3) (4) (8) 58 EBIT YoY nm nm nm nm Inferred 7 .2 56.76%

EBT ## (3) (4) (8) 58 EBT YoY nm nm nm nm Kemag M+I 2 ,448.0 31.27%

Reported income ## (2) (4) (8) 58 OpFCF YoY nm nm nm nm Inferred 1 ,014.0 31.15%

3-Yr CAGR EPS nm nm nm nm LabMag (20%) M+I 3 ,665.0 29.60%

EPS ($) ## (0.02) (0.03) (0.05) 0.35 3-Yr CAGR CFPS nm nm nm nm Inferred 1 ,475.0 29.60%

3-Yr CAGR EBITDA nm nm nm nm

Cash Flow 200280A09A 2010E 2011E 2012E 20131-EYr CAGR EBIT nm nm nm nm Operating Summary 2009A 2010E 2011E

Earnings after tax ## (2) (4) (8) 58 DSO 19.0%

+ Depreciation & amortization 2 0 0 0 6 Profitability Iron OreProduction (mm tonnes) 0.0 0.0 0.4

+ Deferred tax (1) (2) (1) 0 0 EBITDA margin nm nm nm 75% Cash cost (US$/lb. tonne) - - 4 5.89

+ Other 7 4 (2) 0 0 EBIT margin nm nm nm 67% Kemag 20.0%

Funds from operations ## 0 (6) (8) 64 EBT margin nm nm nm 67% Iron OreProduction (mm tonnes) 0.0 0.0 0.0

## Net margin nm nm nm 67% Cash cost (US$/lb. tonne) - - -

- Capital expenditures ## 9 9 0 35 Coverage Comparables P/NAV P/CF P/E EV/EBITDA

Dividend cover (x) nm nm nm nm Baffinland 1.0 NEG NEG NEG

Free cash flow ## (9) (15) (8) 29 Interest cover (x) nm nm nm nm New Millennium 0.9 NEG NEG NEG

Free CFPS ## (0.07) (0.12) (0.06) 0.22 Labrador Iron Ore 0.9 1 3.2 1 1.6 1 8.5

Operating free cash flow ## (9) (15) (8) 29 Consolidated Thompson 0.7 6 .1 7 .0 4 .4

Balance Sheet 200280A09A 2010E 2011E 2012E NAV Valuation (1) C$mm $/Shr. Project Locations

Cash 6 10 6 52 114 FD

Other current assets 2 2 2 2 Mining assets

Other assets 3 3 3 3 DSO Project (19%) 2 79 0 .82

Capital assets 43 43 72 68 Kemag (20%) 8 09 2 .37

Total assets 58 54 129 187 LabMag (20%) 5 83 1 .70

Current liabilities 1 1 1 1

Debt (LT & current) ## - - - -

Other liabilities - - - -

Preferred equity - - - -

Common equity 57 53 128 186

Total liabilities and equity 58 54 129 187 Total NPV of mining assets 1 ,670 4 .89

Net debt (cash) (10) (6) (52) (114) Cash 5 2 0 .39

Long-term debt - -

Enterprise Value (C$) 200280A09A 2010E 2011E 2012E

Market capitalization ## 65 529 529 529

Net debt - average ## (6) (53) (116) 0 MANAGEMENT

Preferred equity - average 0 0 0 0 0 Net asset value (C$) 1 ,723 5 .04 Lee C.G. Nichols, Chairman

Minority interest / other 0 0 0 0 0 Robert Martin, President & CEO

Other non-core 0 0 0 0 0 1. 10% real discount rate on assets, CIBC price forecasts Dean Journeaux, COO

Enterprise value ## 59 476 413 529 and after tax. Web Site www.nmlresources.com

Profile

NML is a development stage company looking to put its first project, the Direct Ship Ore, project into production, with its partner

Tata Steel. The company also holds two large taconite projects located near the DSO project that Tata will have the option to codevelop

as well.

Investment Summary

We assume that Tata Steel takes up its option for 80% of the DSO project, as well as 80% of the taconite project KeMag. We do

not attribute any value to LabMag at this time. In order to fund NML's portion of the capex for KeMag we also assume a dilutive

equity issue is used to fund the project.

Outlook

-Tata Steel has until Sept to decide to take up its option on the DSO project. It also has the option on both the LabMag and KeMag

taconite projects that will require $7.6B collectively to develop. We expect the exercise of these options to drive substantial

increases in valuation over the next 12-18 months

-Rail and port agreements will make Tata decision easier as a tremendous amount of risk will be eliminated.

0.0

0.2

0.4

0.6

0.8

2008A

2009A

2010E

2011E

2012E

2013E

Fe production (mm tonnes)

Source: Company reports, Bloomberg, Reuters, and CIBC World Markets Inc.

Still Looking For A Dance Partner; We Find Out Tata's Interest Shortly - March 02, 2011

3

Valuation And Assumptions Driving

Price Target Revision

We continue to assume that Tata (500470-BO) will take up its option of the

KeMag and LabMag projects, leaving 20% of the project for New Millennium

(NML-SP) shareholders after a definitive agreement is signed. We currently

model NML financing its required capex using a series of dilutive equity issues in

the $4.80/share-$5.00/share range for these larger projects. Should the deal

allow NML to retain more of the project, there would be upside to our target.

Retaining 30% of the projects would increase our NAV to $5.60/share. We

assume 100% of the required capex is funded through equity, slightly offsetting

the increase in value to NML on a per share basis.

The key driver for our valuation rational is related to free cash flow coming out

of the nearer-term DSO project. NML has already partnered with Tata to

construct the DSO project and we have confidence in the time to cash flow.

Using this project as the engine to drive growth for NML, we see limited cash

available for redeploying into the much higher capex taconite projects. We

estimate NML will see $200MM of free cash emerge from the DSO operations

over the next three years; this is less than one year of the expected spend on

the $4.4B KeMag project at a 20% project interest. Assuming this cash is

redeployed into the taconite projects and an equity issue, backstopped by the

valuation of the DSO assets, we believe NML has a realistic opportunity to fund

~20% of the first taconite project on its own. We believe this approach is the

most likely scenario and have seen other deals struck in the space at similar

valuation levels. The retained percentage is open to variation but we believe an

effective ownership of above 25% may be too much for NML to fund internally

and would create a large equity issue overhang. Twenty-five percent ownership

of the first taconite project will require NML to fund $1.1B, relative to its current

market capitalization of $592MM; we view this as a stretch.

With limited cash flow and a modest balance sheet, we believe it is unrealistic

that NML will be able to go it alone. Current shareholders will own less of the

taconite projects once fully funded versus today either through a joint venture

relationship or through a massive equity issue; dilution is a forgone conclusion.

In addition, both taconite projects are also susceptible to capex creep, which has

started to re-emerge in various global mining projects.

Exhibit 1. NAV Sensitivity To Iron Ore Price And Discount Rates

18.60 31.00 43.40 55.80 68.20 80.60 93.00

12% ($2.01)
.09 $2.19 $4.29 $6.39 $8.49 $10.60

10% ($2.03)
.33 $2.68 $5.04 $7.40 $9.76 $12.11

8% ($2.02)
.68 $3.38 $6.08 $8.78 $11.48 $14.18

5% ($1.90) $1.57 $5.03 $8.50 $11.96 $15.43 $18.89

3% ($1.65) $2.85 $7.34 $11.84 $16.33 $20.82 $25.32

Discount Rates

Long Term Iron Ore Fines Benchmark Price FOB Brazil (US$/dmtu)

Source: CIBC World Markets Inc.

Price Target Calculation

Our price target is derived using a 1.0x multiple applied to our NAV10%. We

derive from its assumed 19% equity stake in the DSO project (post Tata take-up

of its option) and assuming NML retains a 20% stake in its KeMag project going

forward, combined with cash on hand.