Updating Lab. West

New Millennium Capital Corp. hopes its direct shipping ore (DSO) project near Schefferville will get the green light in time for production in 2011.

Positive feasibility study

Dean Journeaux, chief operating officer for New Millennium (NML), was in Lab. West March 2 to update the town councils on the DSO project near Schefferville, where IOC had extensive operations from 1954 to 1982. NML now owns 22 of the DSO deposits, which are located in different areas of Labrador and Quebec.

"We announced the feasibility study on the DSO project (Feb. 25)," he explained. "It's positive and we have given it over to our partner, Tata Steel, and they have 180 days to decide whether they want to continue with a big investment or not, which is somewhere in the range of $300 million."

Project lies in partner's hands

Journeaux said there is a chance Tata Steel will decide against investing in the project - which would force NML to look for another partner - but he anticipates a favourable response from the India-based company.

He said Tata Steel would purchase 100 per cent of the project's product if it exercises its option to proceed and because it owns 80 per cent of the project, the company will get quite a dividend.

"Iron ore prices are holding and may even be increasing next year," he pointed out. "With Tata Steel being the eighth largest steelmaker in the world and owning Corus in Europe, which is the second largest producer of steel in Europe - they don't have any captive sources of supply - so we believe they will go ahead with this. They need the ore and we can produce it at a relatively competitive cost."

Can produce four million tonnes a year

Journeaux said Corus uses about 30 million tonnes of iron ore a year when it's at full capacity and New Millennium expects it will be able to produce four million tonnes a year from the DSO project.

The COO explained NML submitted an Environmental Impact Statement to the provincial and federal government in December and is expecting approval by April, which would likely allow construction of the 20-kilometre railroad extension to begin this summer.

Hoping for production in 2011

"Our plans are to go into production in mid-2011," he stated. "We'll truck the ore from the various pits to the crusher, process it, crush it and screen it, wash it and upgrade it to a higher grade ore. We're going to increase iron content to about 64.5 per cent iron, so it's a product that's quite sellable on the market."

After it's processed, Journeaux explained, the ore will be hauled by rail to the Pointe Noire terminal in Sept Iles.

Slow-moving project

A lot of the infrastructure required for the project - roads, power, railway, mining pits - is already on site, but NML still needs a plant, crushing and load-out systems, a manufacturing facility, drilling equipment and a campsite.

"Things are moving slow, but deliberate," Journeaux noted. "We'd like it to move a little faster, but once the investment is done, we'll move very quickly."

Two others looming

He said NML has been working on the DSO project since 2005, and it also has two other projects - LabMag and KÉMag - on the back burner.

LabMag, he said, is a large deposit near Howell's River in Labrador, which requires a capital investment of $4 billion to get off the ground, while KÉMag, near Lac Harris, Quebec, has about half the resources of LabMag, and would cost about the same to develop.

Tata, Journeaux said, has the exclusive right to negotiate and settle a proposed transaction in respect to the LabMag and KÉMag projects until the end of the year.

DSO easier

The DSO project, Journeaux said, is much easier to get moving and will employ about 200 people in the construction phase and 200 when it's operational.

He knows it won't be easy to recruit the skilled workers necessary for the project - the company needs equipment operators, plant operators, mechanics, electricians, supervisors, support staff and good management - but he noted there are a lot of people in the province looking for jobs.

Opportunities available

People from Lab. City will be targeted for jobs first, he said; then it will be opened up to the rest of Labrador and the province, if necessary.

"We have 1,800 First Nations people who live in Schefferville as well," he explained. "We have the Labrador Innu in Sheshatshiu and Natuashish, so we'll be employing some of those people as well."

Journeaux said NML is planning to implement training programs to help with the recruitment effort and will be working with communities in Labrador to help eliminate social barriers to employment.

Working on social issues

"Social problems currently exist in places like Schefferville, Labrador City and many other cities," he pointed out. "We have to somehow find out how to overcome that situation. There are programs that are currently available through government and we plan to encourage and support the local communities in embarking on those programs."

If the DSO project goes ahead, Journeaux said employees of NML will live at a campsite about 25 kilometres away from Schefferville and will fly-in and out of the campsite every few weeks.

Benefits outweighnegative impacts

He admitted the locals in and around Schefferville are having some issues with the idea of newcomers coming into the community - there are concerns about how the mining operation will impact the social fabric of the area - but NML is committed to minimizing impacts, while maximizing benefits.

"The social benefits associated with a project like this are large," Journeaux stated. "There are always negative impacts on anything you do, but the social impacts are so beneficial, not just to Lab. City or Wabush, but to the local people who live in that area. This project will allow them to work and earn a decent living fairly near to their home."

The COO said he hopes to hear from Tata Steel soon on whether they will partner on the DSO project and NML will keep in close contact with people in Labrador West as the operation moves forward.

New Millennium controls the emerging Millennium Iron Range, located in the Province of Newfoundland and Labrador and in the Province of Quebec, which holds the world's largest undeveloped magnetic iron ore deposits. Tata Steel owns 19.9 per cent of New Millennium and is the Corporation's largest shareholder and strategic partner.