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Resource Clips

Posts tagged ‘New Millennium Iron Corp (NML)’

Frontier prudence

July 2nd, 2013

Champion Iron Mines steps back from its Labrador Trough rail proposal

by Greg Klein

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Another transportation setback has highlighted the challenges of reaching Canada’s resource-rich hinterlands. Champion Iron Mines TSX:CHM announced July 2 it had terminated an agreement to use facilities at the deep-sea port of Sept-Iles, Quebec. The decision saved the company a $25.6-million payment due to the port by July 1. But it places further uncertainty on transportation proposals to the Labrador Trough straddling northern Quebec and Labrador. The news followed a June 12 announcement that Cliffs Natural Resources was suspending its Ontario chromite project and, along with it, a province-backed road proposal for the Ring of Fire. In February CN TSX:CNR stated it had suspended its feasibility study on an estimated $5-billion, 800-kilometre Quebec rail line to the Trough.

Champion attributed its decision to a failure to gain private and public backing for a new railway. Estimated at $1.33 billion in the company’s February pre-feasibility report for the Consolidated Fire Lake North iron ore project, the 310-kilometre line would connect the southern Trough with Sept-Isles, on the St. Lawrence River’s north shore. The company studied the project despite the fact that Champion had already signed a collaboration framework agreement backing CN’s proposal.

Champion Iron Mines steps back from its Labrador Trough rail proposal

One of two existing railways in the Trough, the Quebec North Shore
and Labrador line runs a 418-kilometre route between
Labrador City and Sept-Isles.

Champion reverted to Plan A following CN’s February decision. Discussions resumed with private and public interests to finance, build and operate a multi-user railway. But they failed to make progress by the July 1 payment deadline.

Of course market conditions played their role. Iron ore prices have been falling since a February high of about $154 per dry metric tonne. The following month the Melbourne Herald Sun reported that Rio Tinto chief economist Vivek Tulpule expected prices to fall to nearly $100 by September 2014. On June 24, however, Platts quoted Macquarie bank analysts who spoke of a potential recovery later this year. A July 2 report from China’s Xinhua news service stated, “Although there might be fluctuations, prices of iron ore imports will see a falling trend in the longer term.”

“The past year has been a very challenging period for iron ore developers,” conceded Champion president/CEO Tom Larsen in his July 2 statement. But he emphasized the company remains committed to its flagship and to “securing transportation and port-handling services that will permit the company to place among the lowest-cost iron producers in the Labrador Trough.”

Even without Champion’s proposed railway, the region benefits from mines, plants, power and two existing rail lines. The Iron Ore Company of Canada owns and operates the Quebec North Shore and Labrador route, which connects its Labrador City facility in the southern Trough to Sept-Isles, 418 kilometres away. As a common carrier, the QNSL is required to ship other companies’ goods as well.

An ArcelorMittal subsidiary runs a private carrier called the Cartier Railway from the company’s Mont-Wright operation, 40 kilometres southwest of Labrador City, to Sept-Isles.

Iron ore prices notwithstanding, Asian investment in the Trough has continued. Chinese companies are said to be looking at Rio’s 58.7% interest in the Iron Ore Company of Canada, of which Mitsubishi holds another 26.2%. The Anglo-Australian giant reportedly wants to sell its stake for up to $4 billion.

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Labrador Trough derailed

February 12th, 2013

CN suspends feasibility for rail link to Quebec/Labrador iron ore range

by Greg Klein

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The Labrador Trough might hold some of the world’s largest undeveloped iron ore resources. But is the market ready? That’s a question some people are asking as CN TSX:CNR shelves a feasibility study to build what might have been a $5-billion, 800-kilometre rail line to the isolated Quebec/Labrador iron ore range.

CN formally announced the decision February 12, citing “current market realities.” The rail giant added that “mine construction schedules and diverging needs for each specific individual project will make it difficult to obtain the critical volumes of iron ore necessary.” Also a factor was “the decision by some miners in the region not to join the group of mining companies supporting the CN infrastructure project.” The study was originally scheduled for release in May.

CN suspends feasibility for link to Quebec/Labrador iron ore range

This Adriana Resources map shows the company’s Lac Otelnuk project,
the Labrador Trough and two existing railways, Cartier to the west and
QNS&L to the east. The latter route now terminates at Labrador City,
not Schefferville.

It began last August under a partnership of the continental railway, pension/insurance fund manager Caisse de depot et placement du Quebec and a group of mining companies.

In separate February 12 announcements, two of those companies announced they were unaffected by the suspension. Referring to its Taconite project straddling the Quebec/Labrador border, New Millennium Iron TSX:NML stated the “base case for product transportation is through a ferroduct and does not depend on a new rail line.”

The project’s KeMag deposit pre-feas suggests pumping concentrate along a 700-kilometre slurry ferroduct to the St. Lawrence port of Sept-Iles. “Slurry transportation is being used in many iron ore projects located in Brazil, India and Australia because of its low-cost advantage compared to rail transportation,” the company states. “This has the potential to make KeMag the lowest-cost pellet producer in North America.”

Another CN partner, Alderon Iron Ore TSX:ADV stated its Kami project “feasibility study capital and operating cost projections are based on using the [Quebec North Shore and Labrador] Railway.”

The region also has a second, private rail line operated by the Cartier Railway Company, a subsidiary of ArcelorMittal. The 420-kilometre route connects the company’s Mont-Wright operation with Sept-Iles.

The 415-kilometre QNS&L Railway links Labrador City with Sept-Iles. Although it’s owned by the Iron Ore Company of Canada (itself owned 58.7% by Rio Tinto and 26.2% by Mitsubishi), Alderon president/CEO Tayfun Eldem emphasized that the QNS&L is “a common carrier that operates with the legal obligation to accommodate third-party traffic. It currently has ample surplus capacity and runs within 15 kilometres of the Kami property.”

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How Big Is Big Enough?

February 27th, 2012

Cap-Ex Could Be Canada’s Next Major Iron Ore Player

By Ted Niles

Brian Penney has no doubt Cap-Ex Ventures TSXV:CEV will be the company to take the Block 103 iron property to production. Indeed it is for this very purpose that the Chairman of Operations was brought to the project in December 2011—when Cap-Ex entered into a management agreement with merchant bank Forbes & Manhattan. An alumnus of the Iron Ore Company of Canada (a subsidiary of Rio Tinto), Penney says, “That’s the expertise I bring to this picture.”

Penney continues, “I’m a metallurgist, and my whole career has been on the operating side of iron ore rather than the exploration side. That’s one of the reasons why Cap-Ex joined with Forbes & Manhattan. I am myself a Forbes employee. We understand the blueprint in terms of removing the risk to allow us to get to production, and that’s what we’re here to do.”

Cap-Ex Could Be Canada's Next Major Iron Ore Player

Besides Penney, the arrangement with Forbes saw François Laurin appointed President and CEO. As the CFO of Consolidated Thompson Iron Mines—itself a Forbes company—Laurin helped develop from scratch the Bloom Lake Iron Ore Mine which, like Cap-Ex’s Block 103, is located in northern Quebec’s Labrador Trough. It was for Bloom Lake that Cliffs Natural Resources acquired Consolidated Thompson in January 2011 for $4.9 billion, and Cap-Ex also hopes to succeed in the region. “The group that led the 2011 program [at Block 103] did a very good job recognizing the potential and staking the claims that they have,” Penney notes. “[But] from a resource perspective and the requirements to get into production, I think they realized that they needed some help at this stage because of the immensity of the project. That’s where Forbes can bring their expertise.”

The Labrador Trough extends through northern Quebec and Labrador and produces 99% of Canada’s iron ore. The 7,175-hectare Block 103 property is located 30 kilometres northwest of the town of Schefferville, Quebec. While the property does not yet have a resource estimate, it finds itself strategically situated between the LabMag and KéMag deposits currently being developed by New Millennium TSX:NML in joint venture with Tata Steel Limited—the 10th largest steel producer in the world. With a feasibility study underway, the LabMag deposit has measured and indicated resources of 4.59 billion tonnes grading 29.45% iron and 1.15 billion tonnes at 29.32% inferred; KéMag has 2.45 billion tonnes at 31.27% measured and indicated and 1.01 billion tonnes at 31.15% inferred.

Penney comments, “New Millennium seems to think there’s a mineralization zone extending between KéMag and LabMag, and if so—and this is supported by our drill holes in the area as well—it will run right through Block 103. Based on the magnetic signature, based on the history, and based on the geology in the area, we think the possibilities for Block 103 are limitless. I’ve seen enough iron ore to know that there’s plenty there.”

Cap-Ex undertook a 6,000-metre drill campaign in 2011; February 7 results from the Northwest zone include

  • 30.6% iron over 148.4 metres
  • 31% iron over 118.9 metres
  • 31.5% iron over 91.4 metres

January 26 assays of the Greenbrush zone include

  • 30.9% iron over 204.2 metres
  • 29.9% iron over 194.2 metres
  • 30.3% iron over 128 metres
  • 30.1% iron over 152.4 metres

Penney remarks, “The assays are consistent with almost every assay we’ve put out to date, which is very positive for Block 103. The grades are fairly consistent with New Millennium’s results from a magnetite deposit—pretty typical 30% iron, delivering the Davis Tube quality concentrate at 68% iron. We were going approximately 200 metres from surface, and at times the drill holes ended in mineralization. It’s just an indication of how much potential resource is there.”

Based on the magnetic signature, based on the history, and based on the geology in the area, we think the possibilities for Block 103 are limitless. I’ve seen enough iron ore to know that there’s plenty there —Brian Penney

Given the size of the project, Cap-Ex finds itself with an enviable problem. “The question is, how big is big enough?” Penney says. “Block 103 is 18 kilometres long and 9 kilometres wide, so if we want to drill the entire extent, even at an inferred level, we will be many years doing so.” Cap-Ex has planned a 15,000- to 20,000-metre drill program for 2012, to begin mid-May, and it will focus on the Northwest and Greenbrush zones. The company’s maiden resource estimate will be based on the Greenbrush drilling and is expected to be released 4Q 2012. Penney reports that to mitigate the problem posed by the property’s size, “What we’re also doing in 2012 is bringing on the engineering program. We’ll commence that within the next month or two, and that will really detail the timeline to production. We hope by the end of 1Q 2013 to issue our preliminary economic assessment.”

Cap-Ex will also conduct a 5,000-metre drill campaign this year at its Redmond property, located 10 kilometres south of Schefferville and on strike with Labrador Iron Mines’ TSX:LIM property of the same name. Labrador Iron Mines’ Redmond deposits produced, during the 1970s and early 1980s, roughly 35 million tonnes of direct shipping ore (DSO) grading between 52% and 54% iron.

Formerly a mining town, Schefferville ceased operations in 1982, and while it has rail access to the Port of Sept-Îles, Penney acknowledges that significant infrastructural improvements will be necessary. However, between the advantages of Quebec’s abundant and cheap hydro power, federal investment in a new deep-water port at Sept-Îles and the Quebec government’s $80-billion Plan Nord infrastructure development program Penney declares that Quebec is “quite possibly the best province in Canada from a resource development perspective.”

He concludes, “I’m very excited about 2012. It’s going to be a big year for Cap-Ex. And in 1Q 2013, with our PEA release and our maiden resource, you’re going to see [our] market cap increase significantly. I think we’re going to prove up a deposit that will be comparable to New Millennium’s.”

At press time, Cap-Ex had 57 million shares trading at $1.09 per share for a market cap of $62.1 million. In January, it closed a $10.2-million private placement. The company’s other projects in the Labrador Trough are Lac Connelly, Redmond, Porky Lake and Snelgrove.