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Tata Steel to acquire 19.9% stake in Canadian co, stk down

Posted by Yogesh on Friday, 3 October, 2008

At 10:33 am, Tata Steel was quoting at Rs 415.40, down Rs 23.25, or 5.3%. It has touched an intraday high of Rs 434.70 and an intraday low of Rs 415.10.

The company is going to acquire 19.9% stake in Canada based New Millennium Capital Corporation for Rs 106 crore, reports CNBC-TV18.

As per BSE announcement, Tata Steel Global Minerals Holdings Pte Ltd enters into a Binding Agreement with New Millennium Capital Corporation, Canada.

Tata Steel Global Minerals Holdings Pte Ltd, Singapore (“Tata Steel”), a wholly owned indirect subsidiary of Tata Steel Ltd, announced on October 01, 2008 that it has entered into a binding agreement with New Millennium Capital Corporation, Canada (“NML”) whereby Tata Steel will become a strategic investor in NML. Tata Steel will acquire 19.9% of the common shares of the expanded capital base of NML for a consideration of USD 22.6 million (Rs 106 crore) 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 to Tata Steel with respect to both the DSO Project and the LabMag taconite iron ore property located in NL, which is 80% owned by NML and 20% owned by the Naskapi Nation of Kawawachikamach.

The net proceeds from the private placement will be used by NML primarily to develop the DSO Project through a definitive feasibility study to be completed in the second quarter of 2009.

Tata Steel will have exclusivity on the DSO Project through to the completion of the feasibility study. Based on historical estimates, the DSO Project contains in excess of 100 million tonnes of direct shipping quality ore. 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 joint venture to be set up to develop and operate the DSO Project and will also have a 100% offtake right on 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.

It was trading with volumes of 270,143 shares. On Wednesday the share closed up 3.07% or Rs 13.05 at Rs 438.65. Source Moneycontrol

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