New Millennium keeps growing

With another 7.6 billion tonnes of iron ore resource coming from its Howells River North and Howells Lake properties in Labrador, New Millennium Iron (NML-T) counts itself as one of the world’s largest iron ore resource holders.

Data collected from drilling 11 holes at its 80%-owned Howells River North property in 2011 and 2012, and from 45 holes at its 100%-owned Howells Lake property in 2006, 2011 and 2012, delineated 7.6 billion tonnes grading 30.4% iron in the indicated category and 3.3 billion tonnes at 29.8% iron in the inferred.

The drilled part of the two deposits measures 3.5 by 7.5 km with an area of 26.3 sq. km, located between the company’s LabMag and KéMag deposits. The deposits form part of the 210 km Millennium Iron Range, one of Canada’s largest iron ore occurrences. New Millennium’s Lac Ritchie deposit lies 135 km north, while its Sheps Lake and Perault Lake properties lie south.

Management believes that the maiden resource estimates for the Howells Lake and Howells River North deposits “provide even more compelling evidence” that the LabMag and KéMag deposits “are essentially continuous.”

Haywood Securities analyst Colin Healey writes that “with the new resource estimates in hand, New Millennium has continued to grow its already sizeable asset base to a current National Instrument 43-101-compliant estimate approaching 30 billion tonnes in all categories.”

New Millennium is finalizing a feasibility study on the LabMag and KéMag deposits — together known as its Taconite project — in collaboration with Tata Steel, one of the world’s largest steelmakers and the Canadian junior’s largest shareholder and strategic partner, with a 26.3% stake.

After the feasibility study Tata Steel will decide whether to invest further in the project. Healey of Haywood Securities expects that Tata’s decision will be positive, and estimates that the Taconite deposits could provide more than 15 million tonnes of pellets per year and 7 million tonnes of concentrate per year “for generations.”

He writes in a research note that “New Millennium is in a key position to mature these deposits toward production, given their heads of agreement with Tata Steel.” 

LabMag in Labrador contains 3.5 billion tonnes of proven and probable reserves at a grade of 29.6% iron, plus 1 billion tonnes of measured and indicated resources at an average grade of 29.5% iron and 1.2 billion tonnes of inferred resources at an average grade of 29.3% iron. KéMag in Quebec contains 2.1 billion tonnes of proven and probable reserves at an average grade of 31.3% iron, 0.3 billion tonnes of measured and indicated resources at an average grade of 31.3% iron, and 1 billion tonnes of inferred resources at an average grade of 31.2% iron.

In addition to the Taconite project, New Millennium and Tata Steel are partners in a joint venture that is advancing the Direct Shipping Ore (DSO) project on the western side of the Labrador Trough. New Millennium has a 20% share in this venture, with Tata owning the remaining 80%. Late last year New Millennium increased the project’s capital-cost estimate by 18% to $560 million.

The DSO project contains 64.1 million tonnes of proven and probable reserves at an average grade of 58.8% iron, 21 million tonnes of measured and indicated resources at an average grade of 59.2% iron and 10.3 million tonnes of inferred resources at an average grade of 58.3% iron. It also has up to 30 million tonnes of historical resources that do not comply with National Instrument 43-101 requirements.

New Millennium’s other Taconite deposits — Lac Ritchie at the north end of the Millennium Iron Range and Sheps Lake and Perault Lake to the south of the LabMag deposit — also have resource estimates.

Forty holes drilled at Lac Ritchie in 2011 produced an indicated resource of 3.3 billion tonnes grading 30.3% iron and inferred resources of 1.4 billion tonnes at an average grade of 30.9% iron. Last year, 23 holes drilled at Sheps Lake and 50 holes at Perault Lake produced indicated resources of 3.6 billion tonnes averaging 31.22% and inferred resources of 795 million tonnes grading 30.56% iron.

As of March 31, New Millennium held $25 million in cash, $67 million in working capital and no debt.

At press time New Millennium was trading at 84¢ per share within a 52-week trading range of 76¢ to $1.95. The company has 180 million basic shares outstanding.

Matthew Gibson of CIBC World Markets has a 12- to 18-month target price of $4.20 per share. “The total resource that now sits in the Millennium Iron Range totals 29.5 billion tonnes grading about 30% iron,” he wrote on May 23. “New Millennium continues to prove up resources on this land package, which could end up being as large as the Mesabi Iron Range, a region [in Minnesota] that has been in production for over 100 years.”

Gibson pointed to a number of catalysts for the company over the next year. He expects that the definitive feasibility study for the Taconite project will be completed before July; the DSO processing facility before October; and the process plant commissioning and first production before the end of 2013. If the new multi-user port facility in Sept-Îles is completed in the second quarter of next year or sooner, he adds, New Millennium can ship its product from the DSO “and begin a steady stream of cash flow for the joint venture.”