NML -Hang on to your shares -It's a keeperI apologize, it's a long post but interesting information:
Attached is a recent interview done by Bob Martin, CEO of New Millennium Capital with Express, a Newfoundland newspaper
A magnetite idea
A deposit in Labrador has been attracting Robert Martin’s interest for over 40 years
By Craig Westcott
The Express
Robert Martin has waited a long time to try and develop his Labrador magnetite deposit.
You might say, he has waited his whole career.
And he still has a ways to go. For even if everything goes according to plan, it will be 2011 at best before the deposit will go into production, giving Labrador its newest iron ore mine.
But Martin is feeling confident.
“Regardless of what happens to the ore price or the exchange rate, this project will always be a low cost producer,” Martin told a meeting of the Newfoundland Branch of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) last week.
His presentation to the CIM in St. John’s was a surprising highlight to a conference that was buoyant anyway given the amount of mineral exploration being undertaken in the province.
Martin, however, already has his sites set beyond the exploration stage, though that’s exactly where he is right now. His immediate goal is to prove there’s at least 660 million tonnes of the ore in the deposit, which is located about 30 km west of Schefferville. That would be enough for 20 years of production.
The Iron Ore Company of Canada, which owned the rights to the project for 28 years starting in 1960 — just after Martin discovered it as a geology student — had estimated the reserves as being 2.1 billion tonnes.
But that was using methods that have been replaced by more stringent standards that are being enforced throughout the industry by regulators.
“They spent an estimated $4 million on the project,” said Martin, who worked for nearly three decades with IOC.
“In 1980, IOC geologists recommended the renewal of the property, but it wasn’t renewed for reasons not related to the technical viability of the project.”
Martin said IOC walked away because of the economics of the period.
“If you recall, we had the energy crisis of the late 1970s and early ’80s. Most of the steel companies in North America were in a loss position. The Iron Ore Company of Canada was owned by steel companies, so there was no money available for exploration and development, and a decision was made to drop all exploration and development in the Schefferville area.”
‘proven technology’
Other developers picked up the magnetite property, but they failed to do much with it. So, in 2002, the provincial government cancelled their licences. That’s when Martin stepped back into the picture, acquiring the licences and putting together a team of five people with iron ore experience to look at the viability of mining it.
Martin said the results were very encouraging.
So far his company, New Millennium Capital Corporation, has managed to raise over $5 million to carry out the first phase of the project, which consists of exploration and drilling to harden the numbers on the size of the resource.
Phase two will consist of raising $4 million more for a pre-feasibility study, which will estimate the total capital and operating costs. Then it’s a matter of finding a partner with the money to finance the mine’s construction, which Martin hopes to see started in 2008.
On the surface, Martin’s development plans look substantially different than the iron ore operations in Western Labrador. Instead of pelletizing the ore on site and shipping it by train for export, Martin proposes to concentrate the ore at the deposit site in Labrador, then ship it 600 km south through a buried pipeline to Sept Isles, Que., where it would be turned into pellets for export.
“It’s a proven technology,” said Martin. “This type of pipeline has existed in the iron ore business for about 45 years. Basically you grind the iron concentrate to a fine powder, mix it with water, and pump it through a pipeline. There would probably be a pumping station at the concentrator and maybe one or two pumping stations along the route. The pipeline would be buried and insulated and the slurry might be heated. We haven’t gotten that far to know whether we have to heat the slurry.”
That’s not the only unique feature of Martin’s plan. His company has given a Quebec-based First Nations Group, the Naskapi Nation of Kawawachikamach, a 20 per cent equity share in the project and a 0.67 per cent smelter royalty. While the deposit is completely within the border of Labrador, Schefferville is near the border with Quebec and the Naskapi are native to the area.
“This is significant because it’s a first in Canadian history,” Martin said. “It’s the first time that a mining company has given a First Nations group an equity interest. And I shouldn’t use the word ‘given’ because they are a partner and they contributed financially to their portion and they will continue to do so. They will be carried through to production, but then repay New Millennium from the cash flow from production.”
Martin said the deal with the Naskapi contains a number of advantages.
“First of all it provides a local workforce,” he said. “And having lived in Schefferville for five years myself, I can assure you it’s a very difficult place to get people to stay any amount of time. So when you have people that like the area, it’s a great advantage.”
Another benefit is that the Naskapi are eager to see the project move forward, because they own a piece of it, and are willing to share some of the development costs. For instance, the Naskapi paid for the initial environmental assessment.
“When a First Nations group is part of your project, government money is often available,” Martin noted.
“And we also feel that it’s a socially responsible thing to do, it’s the right thing to do, to include the native people, not just in getting them contract work, but getting them a real equity interest in this project. This could mean in the order of $50 million per year, for many, many years, to this group. So it’s a significant benefit.”
‘nobody has asked’
One thing unclear at this point, is the financial benefit the government of Newfoundland will derive from it, seeing as how the project is split between two provinces. Asked about it after his presentation, Martin admitted he hasn’t considered where the taxes will flow.
“Nobody has asked me that question,” he said. “I would assume, and I’m only guessing, that because it would be mined in Labrador and concentrated in Labrador and then pelletized in Quebec, that somehow the taxes would be split between the two provinces. But I really don’t know.”
His more pressing concern is proving the magnetite deposit is big enough to warrant a mine, something he hopes to have accomplished by next summer. Finding buyers for any iron ore produced there isn’t a worry.
With demand for steel production growing worldwide and Canada’s reserves shrinking, Martin is certain his pellets will find a market.
“In the next 10 years,” Martin said, “We’re going to need new mines that are equivalent to 10 times what Canada produces today.”
cwestcott@theexpress.ca