New Millennium to issue 19.9% of its shares to Tata

2008-10-01 13:52 ET - News Release

Mr. Robert Martin reports

NEW MILLENNIUM ENTERS INTO BINDING AGREEMENT WITH TATA STEEL GLOBAL MINERALS HOLDINGS PTE LIMITED

New Millennium Capital Corp. has entered into a binding agreement with Tata Steel Global Minerals Holdings Pte. Ltd. of Singapore, a wholly owned indirect subsidiary of Tata Steel Limited of Jamshedpur, India (listed on the Bombay Stock Exchange, Mumbai and the National Stock Exchange of India Ltd.), whereby Tata Steel will become a strategic investor of NML. Tata Steel will acquire, in a private placement, 19.9% of the common shares of the Company (the "Common Shares") and will acquire, at its option, an 80% equity interest in NML's Direct Shipping Ore project ("DSO Project") located in the Province of Newfoundland and Labrador ("NL") and the Province of Quebec ("QC"). The agreement provides exclusivity with respect to each of the DSO Project (the "DSO Exclusivity") and the LabMag taconite iron ore property located in NL (the "LabMag Exclusivity") which is 80% owned by NML and 20% owned by the Naskapi Nation of Kawawachikamach.

Robert Martin, New Millennium President and CEO, said, "The agreement with Tata Steel, the world's sixth largest steel producer, is a decisive corporate event for New Millennium. It is also a definitive recognition that the Company offers significant sources of supply, of high quality iron ore products, for the global steel industry from a country rated highly for mining investment. This agreement culminates a lengthy and thorough search for a strong strategic investor. Tata Steel is an ideal partner for New Millennium and offers our shareholders the most efficient way to realize value, in the near term, from the Company's DSO Project and in the longer term from its LabMag 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 geographical proximity, Canada is a favourable location to source raw materials for Tata Steel Group's European operations."

On closing of the private placement Tata Steel will acquire, subject to regulatory approval, 26,143,556 Common Shares of NML for aggregate gross proceeds of C$23,529,200 ($0.90 per share) and will hold 19.9% of the total issued common shares (pro forma basic common shares outstanding: 131,374,653). The net proceeds from the private placement will be used by the Company primarily to develop the DSO Project through a feasibility study to be completed in the second quarter of 2009.

Tata Steel will have an exclusivity on the DSO Project through completion of the feasibility study. After the completion of the feasibility study, Tata Steel will have an option for a 180 day period to acquire an 80% equity interest in the DSO Project. Upon exercising the option, Tata Steel will pay 80% of NML's costs incurred to the exercise date to advance the DSO Project. Tata Steel will fund up to $300 million to earn its 80% share and will commit to take 100% of the DSO Project's iron ore production for the life of the mining operation. Subject to completion of a positive feasibility study, 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. There is no assurance that the planned production and timeline will be achieved or that the DSO Project will be determined to be economically viable.

Tata Steel will also have an exclusivity to negotiate and settle a proposed transaction in respect of the LabMag project until June 30, 2009. The LabMag deposit contains 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 (News Release 07-11, July 17, 2007). The parties intend to work together to find an economically viable solution to advance this project.

In addition, Tata Steel is entitled to two nominees on the Board upon completion of the placement, the number being subject to adjustment upwards or downwards based on each 9% change in ownership, provided Tata Steel will be entitled to one nominee if it holds at least 5% of the Issuer's common shares. The identities of the nominees will be disclosed in a future news release.

Tata Steel is also entitled to a right of first refusal in connection with private placements of equity securities conducted by the Corporation and a pre-emptive right in connection with private placements (if it does not exercise its right of first refusal) and other offerings of equity securities.

Credit Suisse Securities (Canada), Inc. ("Credit Suisse") acted as lead financial advisor to NML in connection with this transaction. Certain financial advisors to NML, including Credit Suisse, are entitled to cash compensation in connection with the private placement in an aggregate amount of approximately $1.34 million.

We seek Safe Harbor.