New Millennium Capital Corp. (NMCC) has recently signed a Letter of Intent (LoI) for the future sale of up to three million tons per year (mtpy) of direct reduction (DR) grade pellets or iron ore lump to Al-Tuwairqi Group of Companies. Al-Tuwairqi, headquartered in Dammam, has production facilities in the Middle East and Britain. Al-Tuwairqi currently produces 1.5 mtpy of direct reduced iron (DRI) using the Midrex DR process. The DRI is fed to electric furnaces to produce crude steel. Al-Tuwairqi is actively pursuing expansion projects in Saudi Arabia, UAE, Bahrain, Egypt and Pakistan. It plans to achieve crude steel production of 6.0 mtpy by 2011 in the Kingdom alone. NMCC expects to produce 4 mtpy of iron ore products from its project. Subject to completion of a positive feasibility study, regulatory approvals and project financing, the project is expected to start initial production in the third quarter of 2010. In a statement sent to the Saudi Gazette, NMCC President and Chief Executive Officer Robert Martin said “we are extremely pleased to have concluded this Letter of Intent from a fast growing and dynamic steel producer. The security of raw material supply is the foremost strategic need for any steel producer. NMCC's DR grade pellets were tested by the Midrex Corporation and performed well in standard Midrex tests.” “Al-Tuwairqi has also carried out satisfactory test work with NMCC's DR grade pellets in its own furnace. We believe that the resources of the Millennium Iron Range will assist in supporting Al-Tuwairqi's ambitious growth plan for many years to come.” NMCC is also pursuing the development of the KeMag project, which is expected to produce 15 mtpy of blast furnace (BF) and DR grade pellets as well as 7.0 mtpy of concentrates. Subject to completion of a positive feasibility study, regulatory approvals and project financing, the KeMag project is expected to start production in 2012. NMCC's marketing effort is targeting DRI producers in the Middle East because of the high growth projections for steel production in the area. DR grade is also a value added product that currently commands a premium price of about 10 percent more than the price of BF grade pellets. Under the LOI, Al-Tuwairqi would purchase 3 mtpy of DR grade pellets or lump ores for ten years starting in 2012. Based on the current price of $163 per ton for DR grade pellets, the purchases would generate in excess of $490 million per year or about $4.9 billion over the life of the contract. The letter of intent is an expression of interest only and any binding contract of purchase and sale will be subject to a production decision by NMCC and future negotiations related to terms and conditions of a definitive agreement, which has to be approved by each company's respective board of directors. __
