Tata Steel will acquire 19.9% of the shares of NML for USD 22.6 million and will have an exclusive option on an 80% equity interest in NML’s Direct Shipping Ore project (DSO Project) which is located in the Provinces of Newfoundland and Labrador and Quebec, and is estimated to contain in excess of 100 million tonnes of direct shipping quality ore. The funds will be used to finance a definitive feasibility study which will be completed in the second quarter of 2009. 

On completion and subject to regulatory approvals and project financing, NML expects to produce 4 million tonnes per annum of iron ore products from the DSO Project commencing in 2010.  Tata Steel has an option to buy all the ore that it intends to produce from this project.

The agreement also provides exclusivity to Tata Steel for the LabMag taconite iron ore project in Labrador, which is 80% owned by NML and 20% owned by the Naskapi Nation of Kawawachikamach.

The project’s deposits contain 3.5 billion tonnes of proven and probable mineral reserves. These reserves are contained in 4.6 billion tonnes of measured and indicated resources and 1.2 billion tonnes of inferred resources.  Both parties intend to work together to find an economically viable solution to advance this project.

B Muthuraman, Managing Director, Tata Steel Limited, said: “Tata Steel Group is pleased to have signed this binding agreement with New Millennium, which gives Tata Steel Group the opportunity to work closely with New Millennium on the DSO and LabMag properties to develop these as a world-class project. Subject to the establishment of their economic viability, these projects may prove to be a source for part of the raw materials requirements of Tata Steel Group.  In view of its geographical proximity, Canada is a favourable location to source raw materials for Tata Steel Group’s European operations.”