New Millennium Capital Corp said it extended the exclusivity agreement with India's Tata Steel for the development of its iron ore projects in Quebec by two months, sending its shares up more than 14 percent.
New Millennium extended the period to Feb. 28 from Dec. 31, 2010 and Tata Steel committed to pay C$600 000 ($604 500) to facilitate the extension for its option to have the first right on the development of the KeMag and LabMag projects.
Tata Steel, which expressed its original interest as a potential partner in October 2008, already owns over 27 percent in New Millennium and agreed to fund the initial capital cost of $300 million for an 80 percent stake in the Direct Shipping Ore (DSO) project last September.
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"In the event that Tata chooses not to exercise its option, we expect other steelmakers to have interest in these large-scale projects," Raymond James analyst Tom Meyer, who has an "outperform" rating on the Canadian junior miner's stock, said.
"We expect the project to start commercial production in mid-2012," Meyer said.
Canada, the eighth largest producer of iron ore, has seen a lot of interest from global giants, such as ArcelorMittal, which is in a tussle with a private player to acquire Baffinland Iron Mines Corp.
The steel giants are looking to break the stranglehold of the three biggest miners that control two-third of the global $88-billion seaborne trade in the commodity.
Shares of New Millennium were trading up more than 8 percent at C$2,17 on Tuesday on the Toronto Venture Exchange. They had touched a high of C$2,29 earlier in the day.
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