Labrador Iron to get $30 million cash as part of pact with Tata Steel Minerals

TORONTO -- Labrador Iron Mines Holdings Ltd. and a subsidiary of India's Tata Steel Ltd. have reached a strategic co-operation pact on operations near the Quebec-Labrador border.

Labrador Iron has agreed to sell a 51 per cent stake in its Howse iron deposit to Tata Steel Minerals Canada for $30 million cash and the right to acquire an ore deposit from TSMC.

Tata Steel will have the option to raise its share of the Howse deposit to 70 per cent by paying an additional $25 million to LIM.

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The agreement also calls for the companies to share a rail line and other equipment to carry ore from the Labrador-Quebec border area to the port of Sept-Iles, Que.

The companies will formalize arrangements to develop a rebuilt rail line that passes from TSMC's new processing plant for the Timmins deposit through the Silver Yards facilities owned by Labrador Iron.

The will also co-operate on workforce camps, rail rolling stock and repair shops and infrastructure at the Port of Sept-Iles.

Tata Steel, part of one of India's largest industrial groups, has already been co-operating with another Canadian mining company working in the Labrador Trough, which has major iron deposits.

Tata Steel owns 26 per cent of Calgary-headquartered New Millennium Iron Corp. which, in turn, owns 20 per cent of Tata Steel Minerals Canada Ltd.