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NEW MILLENNIUM IRON CORP.
SECOND QUARTER REPORT 2013 New Millennium Iron Corp.
Quaterly Report
June 30, 2013
Letter to Shareholders 1
Management’s Discussion and Analysis of the Company’s
Financial Condition and Results of Operations 2
Financial Statements 13
Condensed Interim Consolidated Statement of Financial Position 14
Condensed Interim Consolidated Statement of Comprehensive Income 15
Condensed Interim Consolidated Statement of Changes in Equity 16
Condensed Interim Consolidated Statement of Cash Flows 17
Notes to Condensed Interim Consolidated Financial Statements 18-32August, 2013
MESSAGE TO SHAREHOLDERS
New Millennium Iron Corp. (“NML” or the “Company”) is pleased to report its unaudited financial and
operational results for the three and six month periods ended June 30, 2013
The significant Second Quarter events were:
Direct Shipping Ore (“DSO”) Project
? Resumption of saleable ore production with dry crushing and screening operation.
? Advancement of construction of the covered ore processing plant and ancillary facilities.
Taconite Project
? Continuing review of preliminary feasibility study report by NML, Tata Steel and Study Manager.
Exploration
? Announcement of resource estimate for the Howells River North and Howells Lake properties.
General
? OTCQX listing.
? Succession planning initiative
The significant subsequent events were:
DSO Project
? Agreement with Iron Ore Company of Canada regarding shipments and commercial sales.
? Loading of first train with DSO products.
General
? Update on construction of new multi-user dock at Sept-Îles.
? Board of Directors resignation.
1MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE COMPANY’S
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial results of New Millennium Iron Corp. (“NML”, the
“Company”, or the “Corporation”) for the interim three and six month periods ended June 30, 2013
should be read in conjunction with the Company’s unaudited condensed interim consolidated financial
statements and related notes for the period ended June 30, 2013, and the audited consolidated financial
statements and MD&A for the years ended December 31, 2012 and 2011.
These condensed interim financial statements, including comparatives, have been prepared using
accounting policies in compliance with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB”).
All dollar figures are in Canadian dollars (“C$”), unless otherwise stated.
FORWARD LOOKING STATEMENTS
This MD&A contains certain forward looking statements and forward looking information (collectively
referred to herein as “forward looking statements”) within the meaning of applicable Canadian securities
laws. All statements other than statements of present or historical fact are forward looking statements.
Forward looking information is often, but not always, identified by the use of words such as “could”,
“should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may”, “projected”, “sustain”, “continues”, “strategy”,
“potential”, “projects”, “grow”, “take advantage”, “estimate”, “well positioned” or similar words suggesting
future outcomes. In particular, this MD&A may contain forward looking statements relating to future
opportunities, business strategies, mineral exploration, development and production plans and
competitive advantages.
The forward looking statements regarding the Corporation are based on certain key expectations and
assumptions of the Corporation concerning anticipated financial performance, business prospects,
strategies, regulatory developments, exchange rates, tax laws, the sufficiency of budgeted capital
expenditures in carrying out planned activities, the availability and cost of labour and services and the
ability to obtain financing on acceptable terms, the actual results of exploration and development projects
being equivalent to or better than estimated results in technical reports or prior activities, and future costs
and expenses being based on historical costs and expenses, adjusted for inflation, all of which are
subject to change based on market conditions and potential timing delays. Although management of the
Corporation consider these assumptions to be reasonable based on information currently available to
them, they may prove to be incorrect.
By their very nature, forward looking statements involve inherent risks and uncertainties (both general
and specific) and risks that forward looking statements will not be achieved. Undue reliance should not
be placed on forward looking statements, as a number of important factors could cause the actual results
to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and
intentions expressed in the forward looking statements, including among other things: inability of the
Corporation to continue meet the listing requirements of stock exchanges and other regulatory
requirements, general economic and market factors, including business competition, changes in
government regulations or in tax laws; general political and social uncertainties; commodity prices; the
actual results of exploration, development or operational activities; changes in project parameters as
plans continue to be refined; accidents and other risks inherent in the mining industry; lack of insurance;
delay or failure to receive board or regulatory approvals; changes in legislation, including environmental
legislation, affecting the Corporation; timing and availability of external financing on acceptable terms;
conclusions of, or estimates contained in, feasibility studies, pre-feasibility studies or other economic
evaluations; and lack of qualified, skilled labour or loss of key individuals. Readers are cautioned that the
foregoing list is not exhaustive.
2The forward looking statements contained herein are expressly qualified in their entirety by this cautionary
statement. The forward looking statements included in this MD&A are made as of the date of this MD&A
and the Corporation does not undertake and is not obligated to publicly update such forward looking
statements to reflect new information, subsequent events or otherwise unless so required by applicable
securities laws.
With respect to the disclosure of historical resources in this MD&A that are not currently in compliance
with National Instrument 43-101, a qualified person has not done sufficient work to classify the historical
estimate as current mineral resources or mineral reserves, the Corporation is not treating the historical
estimate as current mineral resources or mineral reserves and the historical estimate should not be relied
upon.
OVERALL PERFORMANCE
Overview of Business
The Corporation controls the emerging Millennium Iron Range, located in the Province of Newfoundland
and Labrador and in the Province of Quebec, which holds among the world’s largest undeveloped
magnetic iron ore deposits. In the same area, the Corporation and Tata Steel Limited (“Tata Steel”), one
of the largest steel producers in the world, have advanced a direct shipping ore project (“DSO Project”) to
the production stage, from which commercial sales will soon begin. Tata Steel Limited owns
approximately 26.3% of New Millennium and is the Corporation’s largest shareholder and strategic
partner.
Tata Steel exercised its exclusive option to participate in the DSO Project and has a commitment to take
the resulting production. The DSO Project is owned and operated by Tata Steel Minerals Canada
(“TSMC”), which in turn is 80% owned by Tata Steel and 20% owned by NML. The DSO Project contains
64.1 million tonnes of Proven and Probable Mineral Reserves at an average grade of 58.8% Fe, 21.0
million tonnes of Measured and Indicated Mineral Resources at an average grade of 59.2% Fe, 10.3
million tonnes of Inferred Resources at an average grade of 58.3% Fe and about 25.0 - 30.0 million
tonnes of historical resources that are not currently in compliance with NI 43-101. A qualified person has
not done sufficient work to classify the historical estimate as current mineral resources or mineral
reserves, and as such the Corporation is not treating the historical estimate as current mineral resources
or mineral reserves and the historical estimate should not be relied upon.
The Millennium Iron Range currently hosts two advanced projects: LabMag contains 3.5 billion tonnes of
Proven and Probable reserves at a grade of 29.6% Fe plus 1.0 billion tonnes of Measured and Indicated
resources at an average grade of 29.5% Fe and 1.2 billion tonnes of Inferred resources at an average
grade of 29.3% Fe; KéMag contains 2.1 billion tonnes of Proven and Probable reserves at an average
grade of 31.3% Fe, 0.3 billion tonnes of Measured and Indicated resources at an average grade of 31.3
% Fe and 1.0 billion tonnes of Inferred resources at an average grade of 31.2% Fe. Tata Steel also
exercised its exclusive right to negotiate and settle a proposed transaction in respect of the LabMag
Project and the KéMag Project.
The Millennium Iron Range also hosts other large taconite deposits.
The first is the Lac Ritchie property located at the north end of the Range. The initial 2011 drilling of 40
holes in this property revealed Indicated Resources of 3.330 billion tonnes at an average grade of 30.3%
Fe, and Inferred Resources of 1.437 billion tonnes at an average grade of 30.9% Fe.
Two other taconite deposits are located south of the LabMag deposit in the Millennium Iron Range. The
initial 2012 drilling of 23 holes in the Sheps Lake property and of 50 holes in the Perault Lake property
revealed Indicated Resources of 3.580 billion tonnes at an average grade of 31.22% Fe, and Inferred
Resources of 795 million tonnes at an average grade of 30.56% Fe.
The Howells Lake - Howells River North deposit is located between the LabMag and KéMag deposits,
and evidences mineral continuity in the Range. The 2011 and 2012 drilling of 11 holes in the Howells
River North property and of 45 holes in the Howells Lake property, revealed Indicated Resources of 7.631
billion tonnes at an average grade of 30.39% Fe, and Inferred Resources of 3.310 billion tonnes at an
average grade of 29.83% Fe.
3NML’s prominent iron ore resource holdings are summarized in the following table:
Summary of Millennium Iron Range Resources
Mineral Resource Estimate
(Based on a cut-off of 18% DTWR)
Property Resources Category, Million Tonnes
Proven & Probable Measured & Indicated Inferred
KéMag 2,141 307 1,014
LabMag 3,545 1,045 1,151
Lac Ritchie 3,330 1,437
Howells Lake-Howells River North 7,631 3,310
Sheps Lake 1,967 289
Perault Lake 1,612 507
Total 5,686 15,892 7,708
Note: NML owns 100% of the properties mentioned above except for LabMag, Howells River North and Shep’s Lake,
which are 80% owned through the Corporation’s interest in LabMag Limited Partnership.
Also of significance is that the results for the Howells River North and Howells Lake properties confirm
that the taconite formation occurring in this area of the MIR is a stratigraphic continuation of the LabMag
deposit that connects to the KéMag deposit.
The Corporation’s mission is to add shareholder value through the responsible and expeditious
development of the Millennium Iron Range and other mineral projects to create a new large source of raw
materials for the world’s iron and steel industries.
For further information, please visit www.NMLiron.com, www.tatasteel.com, www.tatasteelcanada.com,
and www.tatasteeleurope.com.
Dean Journeaux, Eng., and Thiagarajan Balakrishnan, P. Geo., are the Qualified Persons as defined in
National Instrument 43-101 who have reviewed and verified the scientific and technical mining disclosure
contained in this MD&A.
RESULTS OF OPERATIONS
TSMC’S DSO PROJECT
PROGRESS REPORT
The DSO Project, in which NML has a 20% interest through TSMC, has advanced to the production
stage. Upon completion, there will be two saleable product streams: 1) A crushed and screened,
approximately 62% Fe grade ore first mined and produced in 2012; and 2) higher Fe, low gangue fines in
two size ranges produced from an innovative, year round processing plant now in the advanced
construction stage.
Commercial sales of the crushed and screened ore are expected to begin in the current quarter.
Meanwhile, construction of the process plant and ancillary facilities is moving well towards completion.
Commissioning of the sizing station and plant equipment start-up are scheduled for Q4 2013 and Q1
2014, respectively. Other activity to report includes:
? Advancement on the fabric covering of the dome that will house the plant itself.
? All pre-cast foundations in place.
? Casting of larger foundations and slabs as well as erection of internal structural steel all
essentially completed.
? Start of installation of mechanical equipment.
TSMC’s objective is to complete the installation of the outside ancillary facilities, such as the sizing
station, conveyors and train loading station, prior to the onset of winter. Work on the process plant will
then continue inside in a protected environment under the covered dome.
4So that TSMC can maintain sales and revenue through the 2013/14 winter season, the crushing and
screening plant operation will continue with the addition of product drying equipment.
TACONITE PROJECT
The Taconite Project involves large-scale development of the LabMag and KéMag deposits to produce
pellets and concentrate, and is in the final feasibility stage also with Tata Steel as a partner through a
Binding Heads-of-Agreement signed in March 2011. Tata Steel and NML are funding 64% and 36% of
the feasibility work, respectively.
Building on NML’s and Tata Steel’s technical expertise, the Project aims to be innovative and competitive,
targeting a favourable position on the global cost curve for pellet producers. Natural advantages include
a low stripping ratio and magnetite ore, which reduces energy costs in the pelletizing process. The
Project would use large-scale and technologically advanced equipment.
At the end of December 2012, NML announced that a preliminary feasibility study report had been
submitted by the Study Manager along with a request for a further period to complete its internal
corporate review process, including technical aspects and finalization of the capital cost estimates. In
light of the Taconite Project’s great scale, NML and TSMC agreed and continue to work with the Study
Manager and specialized consultants to finalize the report. This process is expected to be completed
before the end of the year, after which the results will be presented to the Tata Steel and NML boards of
directors.
EXPLORATION OF OTHER PROPERTIES
Beyond the DSO and Taconite projects, NML has the opportunity to further develop the potential of its
land holdings in the MIR. Announcements over the past eighteen months have confirmed NI 43-101
mineral resource estimates for the Lac Ritchie, Perault Lake and Sheps Lake taconite properties
controlled by NML. This already important resource base was added to in the second quarter.
On May 23, 2013, NML announced a resource estimate for its 80% owned Howells River North (Naskapi
LabMag Trust through LabMag Limited Partnership owns the other 20%) and 100% owned Howells Lake
properties. Data collected from the drilling programs on each resulted in total NI 43-101 compliant
mineral resource estimates, at a cut-off grade of 18% DTWR, of 7.63 billion tonnes of Indicated Mineral
Resources and an additional 3.31 million tonnes of Inferred Mineral Resources. In accordance with NI
43-101 requirements, a Technical Report in respect of these mineral resource estimates was filed on
SEDAR on May 30, 2013.
GENERAL CORPORATE INFORMATION
OTCQX Listing
On April 10, 2013, NML announced that its common shares had begun trading in the United States on the
OTCQX International under the symbol “NWLNF”. The OTCQX is the premier marketplace on OTC
Markets Group’s highly visible electronic trading venue in the U.S. and the OTCQX International tier is
designed for non-U.S. companies listed on qualified international stock exchanges. NML expects to
benefit from its trading on the OTCQX International by gaining greater exposure, accessibility and liquidity
in the United States.
CEO Succession Planning
In July 2011, principal founder of NML Robert Martin stepped down as President and Chief Executive
Officer (“CEO”) and was succeeded by Dean Journeaux, also a co-founder. As part of the Company’s
orderly succession plan, NML had previously searched privately for a Chief Operating Officer with the
capability to become CEO. NML is now currently working with a worldwide executive search agency in
connection with the search for a replacement CEO and the process is ongoing. Following the hiring of his
successor and retirement, Mr. Journeaux will continue contributing to NML in a senior capacity.
5SUBSEQUENT EVENTS
Agreement with Iron Ore Company of Canada and Loading of First Train
Initially, the DSO Project’s commercial sales will be carried out under a confidential agreement between
TSMC and Iron Ore Company of Canada (IOC) announced on July 4, 2013 that calls for IOC to provide
material handling and marketing services for a fee. Haulage of DSO Project ore from Schefferville began
on July 10 and trains are being dispatched on a regular basis for unloading and stockpiling at IOC’s
shipping terminal at the Port of Sept-Iles. As mentioned above, the first ship is expected to be loaded
sometime in the current quarter.
Update on Construction of New Multi-User Dock at Sept-Îles
For the longer term, TSMC plans to ship over the Port of Sept-Iles’ new deep water dock, in which both
TSMC and NML are investors. In July 2013, the Company paid its second and last instalment for a total
buy-in of $38,372,000. It is also intended to have this multi-user facility service the Taconite Project.
Based on an announcement by the Port of Sept-Îles on July 9, 2013, construction is on schedule and the
new dock is expected to be operational in Q2 2014.
Board Resignation
On July 3, 2013, NML announced that Ms. Cathy Bennett had resigned from the Board of Directors,
effective July 2. Ms. Bennett’s decision to resign her position immediately followed her public
announcement that she would be seeking the Liberal Party Leadership in Newfoundland and Labrador.
FINANCIAL CONDITION
The following discussion of the Corporation’s financial performance is based on the unaudited
Condensed Interim Consolidated Financial Statements as of June 30, 2013 (“financial statements”) set
forth herein. As discussed in Note 2 to the financial statements, they are prepared in accordance with
International Accounting Standard 34, Interim Financial Reporting, as issued by the IASB.
These financial statements should be read in conjunction with the Company’s December 31, 2012
audited consolidated financial statements (“FYE 2012”).
Management is required to make estimates and assumptions that effect the reported amounts of assets
and liabilities at the date of the financial statements and revenue and expenses for the period then ended.
The unaudited Condensed Interim Consolidated Statement of Financial Position as of June 30, 2013
indicates cash and cash equivalents of $47,255,194, short-term investments of $15,231,640, sales taxes,
other receivables and prepaid expenses of $1,534,445, and the current portion of tax credits and mining
duties receivable of $5,392,368 resulting in total current assets of $69,413,647, a decrease of $5,897,012
from FYE 2012. The non-current assets are comprised of the long-term portion of tax credits and mining
duties receivable of $2,310,700, mineral exploration and evaluation assets of $57,910,172, other assets
of $19,316,275, deposits on contracts of $1,241,881, property and equipment of $666,301 and long-term
investments of $31,542,605. The total assets of $182,401,581 are a decrease of $6,962,649 from FYE
2012.
The Company’s current liabilities at June 30, 2013 are its trade and other payables of $4,088,790, and
advances from Tata Steel of $2,457,402 for a total of $6,546,192, a decrease of $5,725,298 from FYE
2012. Non-current liabilities consist of an amount due to Naskapi/LabMag Trust of $285,324 for total
liabilities of $6,831,516 which is a decrease of $5,725,298 from FYE 2012. Equity attributable to
shareholders of the parent company is $175,331,714, a decrease of $1,237,351 from FYE 2012, and is
comprised of share capital of $177,153,492, contributed surplus of $18,450,135, less shares subject to
cancellation of $176,940 and the deficit of $20,094,973. The non-controlling interest of $238,351 remains
unchanged from FYE 2012, for total equity of $175,570,065.
6For the three months ended June 30, 2013, the Company realized a net loss of $2,244,249, or $0.01 per
share, compared to a net loss of $1,596,355 or $0.01 per share for the comparative period in 2012. This
loss represents operating expenses of $2,507,894, (2012 - $2,044,044), net of service fee revenue of
$35,739 (2012 – $147,458) and investment income of $227,906 (2012 - $300,231). The increase in this
period’s operating expenses is mainly due to an increase in stock-based compensation expense from
$951,106 in Q2 2012 to $1,168,601 in Q2 2013 and an increase in office and administrative expenses
from $537,619 in Q2 2012 to $806,582 in Q2 2013.
The Company expects to continue incurring losses until it begins receiving dividends from TSMC. These
losses are expected to be funded by the current cash, investments and then if necessary, through equity
and or debt financing or investments by strategic partners.
As at June 30, 2013, the deferred income tax assets, which arose as a result of applying the capital and
non-capital losses carried forward to taxable income, have not been recognized in the accounts due to
uncertainty regarding their utilization.
All costs associated with mineral properties, totalling $57,910,172 as outlined in Note 9 to the June 30,
2013 financial statements, have been classified as mineral exploration and evaluation assets. The
expenditures are divided between the properties as follows: LabMag Property $25,916,273, KéMag
Property $15,433,997, Lac Ritchie Property $2,420,554, Perault Lake Property $4,785,247, Sheps Lake
Property $1,149,339, Howell’s Lake-Howell’s River North Properties $4,947,107 and Other Properties
$3,257,655. The cost centers for these capitalized expenditures are: mineral licenses $2,965,501, drilling
$34,310,579, resource evaluation $33,935,685, environmental $17,135,888, and amortization of property
and equipment $106,541. These expenditures are partially offset by tax credits and mining duties of
$12,702,889 and the Tata Steel payments of $17,841,133. The non-controlling interest of $238,351
relates to LabMag Limited Partnership whose properties include the LabMag Property, Sheps Lake
Property and Howell’s River North Property. The carrying value of the mineral exploration and evaluation
assets are reviewed by the Company on a quarterly basis by reference to the project economics,
including the timing of the exploration and evaluation work, the work programs and exploration results
achieved by the Company. At June 30, 2013, the Company believes that the carrying values of the
properties are less than their net recoverable amounts and as such there has been no impairment of
value on any of these properties.
SUMMARY OF QUARTERLY RESULTS
The following table sets out selected unaudited quarterly financial information of the Company for the
eight quarters ended June 30, 2013. This information is derived from unaudited quarterly financial
statements prepared by management. The Company's condensed interim consolidated financial
statements are prepared in accordance with IFRS and expressed in Canadian dollars.
Jun-13 Mar-13 Dec-12 Sept-12 Jun-12 Mar-12 Dec-11 Sept-11
Investment
Income 227,906 193,683 228,842 247,373 300,231 315,225 252,073 258,075
Net Income
(Loss) (2,244,249) (2,001,421) (2,187,017) (3,086,419) (1,596,355) (2,192,428) 28,564,955(2) (1,849,133)
Income (Loss)
Per Share(1) (0.01) (0.01) (0.01) (0.02) (0.01) (0.01) 0.16 (0.01)
Diluted income
per share(1)
-
- - - - - 0.16 -
(1) The effect of the exercise of stock options would be anti-dilutive for the purposes of calculating the fully
diluted earnings per share for all periods prior to and subsequent to the three months ended
December 31, 2011.
(2) The net income for the three months ended December 31, 2011, was the result of the gain on sale of
the DSO Properties during the quarter in the amount of $31,162,000.
7SECOND QUARTER RESULTS
The most significant items comparing the results of operations in the second quarter of 2013 versus the
same period in 2012 is a increase in general and administrative expenses to $2,508,000 in Q2 2013 from
$2,044,000 in Q2 2012. Added to this increase in expenses is a decrease in service fee revenue to
$36,000 in Q2 2013 from $147,000 in Q2 2012 and a decrease in investment income to $228,000 in Q2
2013 from $300,000 in Q2 2012.
The most significant items affecting general and administrative expenses are an increase in stock-based
compensation to $1,169,000 compared with $951,000 in Q2 2012, a decrease in Q2 2013 of market
development expense to $185,000 for which the corresponding expense in Q2 2012 is $239,000, an
increase in professional fees in Q2 2013 to $278,000 compared with $234,000 in Q2 2012 and an
increase in office and administrative expenses to $807,000 compared with $538,000 in Q2 2012. The
decrease in investment income is due to lower levels of investments held during Q2 2013 versus Q2
2012. The service fee revenue decreased as TSMC is utilizing less of NML’s resources as they build up
their own team.
As a result, the Company’s net loss for the second quarter ended June 30, 2013 totalled approximately
$2,244,000 (loss of $0.01 per share) compared to a net loss of approximately $1,596,000 (loss of $0.01
per share) for the comparative period in 2012.
USE OF ACCOUNTING ESTIMATES AND JUDGMENTS
The information is provided in Note 3 of the financial statements.
STANDARDS ISSUED BUT NOT YET EFFECTIVE
The information is provided in Note 4 of the financial statements.
FINANCIAL INSTRUMENTS
All financial instruments are recognized when the Company becomes a party to the contractual provisions
of the financial instrument and are initially measured at fair value plus transaction costs, except for
financial assets and financial liabilities carried at fair value through profit or loss, which are measured
initially at fair value. Financial assets are derecognized when the contractual right to the cash flows from
the financial assets expire, or when the financial asset and all substantial risks and rewards are
transferred.
An extended description of the Company’s financial instruments and their fair values is provided in Note
17 of 2012 annual financial statements.
FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES
In the normal course of operations, the Company is exposed to various financial risks. The Company
does not enter into financial instrument agreements including derivative financial instruments for
speculative purposes. Please refer to Note 13 accompanying financial statements for an extended
description of the Company’s main financial risks, objectives and policies.
8CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The information is provided in Note 16 of the financial statements.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital
Working capital at June 30, 2013 of $62,867,455 represents a decrease of $171,714 from the FYE 2012
total of $63,039,169. This decrease in working capital is due to the usage of cash and cash equivalents
and short-term investments for the Company’s investment in the exploration and evaluation of its mineral
assets as well as funding its operational loss for the period only partly being offset by the increase in the
current portion of tax credits and mining duties receivable, decrease in trade and other payables and
decrease in the advances from Tata Steel.
The Company’s working capital has been mainly invested in cash, guaranteed investment certificates, a
promissory note and commercial paper with relatively short maturities all either issued by or guaranteed
by Canadian Federal and Provincial governments or their crown corporations. These investments have
been classified as cash and cash equivalents and as short-term investments. NML used its cash and
cash equivalents and short-term investments from December 31, 2012 to pay its trade and other
payables, fund its operations and the continuing exploration and evaluation of its mineral assets. The
Company intends to use a portion of its cash and cash equivalents and short term investments in order to
fund its portion of the Taconite Feasibility Study, perform new drilling projects in the taconite anomalies
located in the Millennium Iron Range in order to fulfill assessment work required to maintain claims, pay
for the second instalment of the Port agreement, and pay future corporate operating expenses.
Capital Expenditures
There was $335,993 of acquisitions of property and equipment during the first six months of 2013
compared to $239,306 in the corresponding period in 2012. This acquisition is for the purchase of land to
be used in operations in Schefferville, Quebec.
Capital Resources
At June 30, 2013, NML has paid up capital of $177,153,492 (December 31, 2012 - $175,877,147)
representing 180,219,146 (December 31, 2012 – 179,221,646) common shares and contributed surplus
of $18,450,135 (December 31, 2012 - $16,531,035) that is partially offset by shares subject to
cancellation of $176,940 (2012 – Nil) and a deficit of $20,094,973 (December 31, 2012 - $15,839,117)
resulting in total equity attributable to shareholders of the Company of $175,331,714 (December 31, 2012
- $176,569,065). In addition there is a non-controlling interest of $238,351 (December 31, 2012 –
$238,351) resulting in total equity of $175,570,065 (December 31, 2012 - $176,807,416).
Commitments
Please refer to Note 17 of the accompanying financial statements for a summary of the Company’s
commitments.
TRANSACTIONS WITH RELATED PARTIES
Please refer to Note 15 of the accompanying financial statements for a summary of the Company’s
transactions with related parties and the related period end balances.
9CONTROLS AND PROCEDURES OVER FINANCIAL REPORTING
In compliance with the Canadian Securities Administrators’ National Instrument 52-109, the Company has
filed certificates signed by the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”)
that, among other things, report on the design and effectiveness of disclosure controls and procedures,
and the design and effectiveness of internal control over financial reporting.
Disclosure Control and Procedures
The CEO and the CFO have designed disclosure controls and procedures, or have caused them to be
designed under their supervision, in order to provide reasonable assurance that:
? material information relating to the Company has been made known to them; and
? information required to be disclosed in the Company’s filings is recorded, processed, summarized
and reported within the time periods specified in securities legislation.
An evaluation was carried out, under the supervision of the CEO and the CFO, of the design and
effectiveness of the disclosure controls and procedures. Based on this evaluation, the CEO and the CFO
concluded that the disclosure controls and procedures are effective at June 30, 2013.
Internal Control over Financial Reporting
The CEO and the CFO have also designed internal control over financial reporting, or have caused them
to be designed under their supervision, in order to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for financial reporting purposes in
accordance with IFRS.
An evaluation was carried out, under the supervision of the CEO and the CFO, of the design and
operating effectiveness of most critical aspects of our internal control over financial reporting. Based on
this evaluation, the CEO and the CFO concluded that the internal controls over financial reporting are
effective at June 30, 2013, using the criteria set forth by the Committee of Sponsoring Organizations
(COSO) of the Treadway Commission on Internal Control – Integrated Framework. The remaining
aspects of our internal control over financial reporting will be evaluated during the coming quarters.
Changes to Internal Control over Financial Reporting
No changes were made to our internal control over financial reporting during the quarter ended June 30,
2013, that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
MARKET REVIEW AND OUTLOOK
According to the World Steel Association’s (WSA) statistics, world crude steel production in its 64
reporting countries was 790 million metric tons (Mt) for the first six months of 2013, which represented an
increase of 2.0% over the same period in 2012.
The growth came mainly from Asia with a rate of 5.5%, of which China was a strong 7.4%. Meanwhile,
the EU-27, other Europe, North America and South America were all down from comparable 2012 levels.
The overall reporting countries’ crude steel capacity utilization rate was 79.2% in June, down by 1.5%
from the year-earlier rate. Overcapacity continues to be a drag on the steel market.
Looking ahead, however, there is more optimism in the World Steel Association’s latest, semi-annual
Short Range Outlook released on April 11th, with world Apparent Steel Use (ASU) of finished steel
10products expected to grow by 2.9% from 2012 to 2013, and by a further 3.2% in 2014 as a broadly based
recovery extends to Europe. Even if the rate of growth in China is moderating, the steel industry’s scale
there now involves significant volumes in absolute terms as illustrated by the WSA’s forecasted jump in
ASU of 40 million tonnes between 2012 and 2014.
The iron ore market remained volatile in the second quarter as Chinese steel makers continued to
purchase iron ore cautiously. Pricing as measured by the 62% Fe Fines CFR China reference started
April at approximately US$137 per tonne and ended June at just over US$116 per tonne, with
movements above and below this range over the period.
Forward curve pricing continued to anticipate more supply coming onto the market in the near-to-medium
term, a sentiment fuelled by the ramping up of production by Australia’s major producers in particular. At
the same time, the presently very difficult environment for new entry iron ore projects, coupled with
questions over Chinese domestic production and the future role of exports from India, makes the overall
supply development timeframe unclear.
DISCLOSURE OF OUTSTANDING SHARE DATA
The following information relates to share data of the Company as at June 30, 2013.
1. Share capital
(a) Authorized:
Unlimited number of common voting shares.
Unlimited number of preferred shares, without nominal or par value, issuable in series.
(b) Issued as of June 30, 2013: The Corporation has 180,219,146 common shares issued
($177,153,492).
(c) Issued as of August 12, 2013: The Corporation has 180,009,146 common shares issued
($176,947,062).
2. Options
The Corporation has adopted an incentive stock option plan whereby options may be granted from time to
time to directors, officers, employees and consultants to the Corporation with shares reserved for
issuance as options not to exceed 10% of the issued and outstanding common shares.
As of August 12, 2013, there were 16,443,000 common shares reserved for issuance pursuant to the
exercise of stock options (June 30, 2013 – 16,793,000) as follows:
Number of Outstanding Options Exercise Price Expiry Date
1,470,000 $0.37 January 20, 2014
33,000 $0.65 October 9, 2014
3,262,500 $0.90 June 30, 2015
36,000 $0.87 August 31, 2015
42,000 $3.52 February 8, 2016
3,017,500 $3.36 April 1, 2016
175,000 $3.16 April 29, 2016
52,000 $2.48 May 16, 2016
40,000 $2.48 July 18, 2016
72,000 $2.65 July 26 , 2016
32,000 $1.61 October 18, 2016
135,000 $1.65 November 1, 2016
110,000 $1.16 November 28, 2016
350,000 $1.43 December 6, 2016
11Number of Outstanding Options Exercise Price Expiry Date
160,000 $1.23 December 20, 2016
38,000 $1.65 January 4, 2017
37,000 $1.72 January 11, 2017
70,000 $2.02 January 24, 2017
65,000 $2.08 April 5, 2017
100,000 $1.93 April 11, 2017
56,000 $2.03 April 16, 2017
48,000 $1.59 July 2, 2017
3,635,000 $1.35 July 27, 2017
50,000 $1.30 September 10, 2017
80,000 $1.45 September 18, 2017
200,000 $1.57 October 4, 2017
40,000 $1.04 December 10, 2017
52,000 $1.62 January 8, 2018
2,985,000 $0.89 April 24, 2018
3. Warrants
At August 12, 2013, there were no common shares reserved for issuance pursuant to the exercise of
outstanding warrants (June 30, 2013 – Nil).
ADDITIONAL INFORMATION
Additional information relating to the Company is available on SEDAR at www.sedar.com
12Financial Statements 13
Condensed Interim Consolidated Statement of Financial Position 14
Condensed Interim Consolidated Statement of Comprehensive Income 15
Condensed Interim Consolidated Statement of Changes in Equity 16
Condensed Interim Consolidated Statement of Cash Flows 17
Notes to Condensed Interim Consolidated Financial Statements 18-32
New Millennium Iron Corp.
Unaudited Condensed Interim
Consolidated Financial Statements
June 30, 2013
13New Millennium Iron Corp.
Condensed Interim Consolidated Statement of Financial Position
(Unaudited)
(Expressed in Canadian Dollars)
June 30, 2013 December 31, 2012
$ $
ASSETS
Current assets
Cash and cash equivalents (Note 5) 47,255,194 8,514,976
Short-term investments (Note 6) 15,231,640 59,332,129
Sales taxes, other receivables and prepaid expenses (Note 15) 1,534,445 3,097,908
Tax credits and mining duties receivable 5,392,368 4,365,646
69,413,647 75,310,659
Non-current assets
Tax credits and mining duties receivable 2,310,700 5,820,468
Deposits on contracts 1,241,881 2,813,384
Other assets (Note 7) 19,316,275 19,253,723
Long-term investment (Note 8) 31,542,605 31,542,605
Mineral exploration and evaluation assets (Note 9) 57,910,172 54,141,322
Property and equipment 666,301 482,069
Total assets 182,401,581 189,364,230
EQUITY AND LIABILITIES
LIABILITIES
Current liabilities
Trade and other payables (Note 15) 4,088,790 7,755,190
Advance from Tata Steel (Note 9 and 15) 2,457,402 4,516,300
6,546,192 12,271,490
Non-current liabilities
Due to NNK Trust 285,324 285,324
Total liabilities 6,831,516 12,556,814
EQUITY
Share capital (Note 10) 177,153,492 175,877,147
Shares subject to cancellation (Note 10) (176,940) –
Contributed surplus 18,450,135 16,531,035
Deficit (20,094,973) (15,839,117)
Equity attributable to shareholdersof the parent Company 175,331,714 176,569,065
Non-controlling interest 238,351 238,351
Total equity 175,570,065 176,807,416
Total liabilities and equity 182,401,581 189,364,230
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Approved and authorized for issue by the Board of Directors on August 12, 2013 and signed on their behalf by:
/S/ Dean Journeaux /S/ Pierre Seccareccia
Director Director
14New Millennium Iron Corp.
Condensed Interim Consolidated Statement of Comprehensive Income
(Unaudited)
Six months ended June 30, 2013 and 2012
(Expressed in Canadian Dollars)
3 months ended June 30 6 months ended June 30
2013 2012 2013 2012
$ $ $$
Service fee revenue 35,739 147,458 141,460 437,051
Expenses
General and administrative (Note 11) 2,507,894 2,044,044 4,820,955 4,841,650
Loss before other items (2,472,155) (1,896,586) (4,679,495) (4,404,599)
Other items
Other income
– – 2,050 –
Investment income 227,906 300,231 421,589 615,456
227,906 300,231 423,639 615,456
Net loss and comprehensive loss (2,244,249) (1,596,355) (4,255,856) (3,789,143)
Attributable to:
Non-controlling interest – – – –
Shareholders of the parent Company (2,244,249) (1,596,355) (4,255,856) (3,789,143)
Net loss and comprehensive loss (2,244,249) (1,596,355) (4,255,856) (3,789,143)
Loss per share - basic and diluted (0.01) (0.01) (0.02) (0.02)
Weighted average number of shares
outstanding 180,220,794 178,206,554 180,082,599 177,878,046
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
15New Millennium Iron Corp.
Condensed Interim Consolidated Statement of Changes in Equity
(Unaudited)
Six months ended June 30, 2013 and 2012
(Expressed in Canadian Dollars)
Total
Share Capital Attributable to Non
Number of Shares subject Contributed Shareholders of Controlling Total
Shares Issued Amount to cancellation Surplus Deficit the parent Company Interest Equity
and Fully Paid $ $ $ $ $ $ $
Balance at January 1, 2012 176,267,964 172,344,038 -
12,665,152 (6,776,898) 178,232,292 238,351 178,470,643
Net loss - - - - (3,789,143) (3,789,143) - (3,789,143)
Share-based remuneration
- employees and directors - - -
2,671,075 -
2,671,075 - 2,671,075
- consultants - - -
59,989 -
59,989 - 59,989
Share capital issued 233,682 338,558 ---
338,558 - 338,558
Exercise of stock options 1,800,000 1,992,103 - (777,708) -
1,214,395 - 1,214,395
Balance at June 30, 2012 178,301,646 174,674,699 -
14,618,508 (10,566,041) 178,727,166 238,351 178,965,517
Balance at January 1, 2013 179,221,646 175,877,147 -
16,531,035 176,569,065 (15,839,117) 238,351 176,807,416
Net loss - - - - (4,255,856) (4,255,856) - (4,255,856)
Share-based remuneration
- employees and directors - - -
2,116,483 -
2,116,483 - 2,116,483
- consultants - - -
255,277 -
255,277 - 255,277
Share capital repurchased and cancelled (10,000) (9,830) - 280 - (9,550) - (9,550)
Shares subject to cancellation - - (176,940)
37,260 - (139,680) - (139,680)
Exercise of stock options 1,007,500 1,286,175 - (490,200) -
795,975 - 795,975
Balance at June 30, 2013 180,219,146 177,153,492 18,450,135 (176,940) (20,094,973) 175,331,714 238,351 175,570,065
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
16New Millennium Iron Corp.
Condensed Interim Consolidated Statement of Cash Flows
(Unaudited)
Six months ended June 30, 2013 and 2012
(Expressed in Canadian Dollars)
2013 2012
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss and comprehensive loss (4,255,856) (3,789,143)
Adjustments for:
Share-based remuneration
- Employees and directors 2,116,483 2,671,075
- Consultants 255,277 59,989
Depreciation of property and equipment 129,358 88,447
Loss on disposal of property and equipment 11,651 -
Interest income (421,589) (615,456)
2,091,180 2,204,055
Net changes in working capital items (Note 14) 1,108,448 227,432
Cash flows used by operating activities (1,056,228) (1,357,656)
CASH FLOW FROM INVESTING ACTIVITIES
Net redemption (purchases) of short term treasury bills, term deposits and GIC's 26,994,110 (2,592,454)
Purchase of bonds and GIC's with original maturities over one year - (11,300,000)
Redemption of bonds and GIC's with an original maturities over one year 16,844,692 11,811,240
Interest received 683,277 479,461
Deposits on contracts (133,598) (1,168,223)
Acquisition of property and equipment (335,993) (239,306)
Proceeds on disposition of property and equipment 6,500 -
Increase in other assets (62,552) -
Decrease in advance from Tata Steel (2,058,899) -
Tax credits and mining duties received 3,706,183 1,601,612
Additions to mineral exploration and evaluation assets (9,793,522) (11,711,836)
Allocation of Tata Steel payment to mineral exploration and
evaluation assets 3,299,503 4,782,580
Cash flows used by investing activities 39,149,701 (8,336,926)
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of common shares 786,425 1,552,953
Purchase of treasury shares (139,680) -
Cash flows provided by financing activities 646,745 1,552,953
Net increase (decrease) in cash and cash equivalents 38,740,218 (8,141,629)
Cash and cash equivalents, beginning of period 8,514,976 31,116,221
Cash and cash equivalents, end of period 47,255,194 22,974,592
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
17New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
1 - GOVERNING STATUTES AND NATURE OF OPERATIONS
The current principal activities of New Millennium Iron Corp. (“the Parent Company”) and its
subsidiaries (“the Company” or “NML”) are the exploration and evaluation of mineral properties.
The Parent Company was incorporated pursuant to the provisions of the Alberta Business
Corporations Act on August 8, 2003.
The address of the Company’s executive office is 2nd floor, 1303 Greene Avenue, Westmount,
Quebec, H3Z 2A7 and its head office is 800, 734 – 7 Avenue SW, Calgary, Alberta, T2P 3P8 and
its registered and records office is 1000, 250-2nd Street SW, Calgary, Alberta, T2P OC1.
2 - SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
These condensed interim consolidated financial statements have been prepared using
accounting policies consistent with International Financial Reporting Standards (“IFRS”) and in
accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting. The
unaudited condensed interim consolidated financial statements do not include all of the
information required for full annual financial statements, and should be read in conjunction with
the annual consolidated financial statements for the year ended December 31, 2012, as they
follow the same accounting policies and methods of application, except for the following new
accounting pronouncements which have been adopted on January 1, 2013:
IFRS 7 Financial Instruments – Disclosures
The amendment contains new disclosure requirements for financial assets and financial liabilities
that are offset in the statement of financial position or subject to master netting arrangements or
familiar agreements. The adoption of this amendment did not result in any changes to the
condensed interim consolidated financial statements.
IFRS 13 Fair Value Measurement
IFRS 13 defines fair value, sets out in a single IFRS a framework for measuring fair value and
requires disclosures about fair value measurements. IFRS 13 applies when other IFRSs require
or permit fair value measurements. It does not introduce any new requirements to measure an
asset or a liability at fair value, change what is measured at fair value in IFRS or address how to
present changes in fair value. The new standard clarifies that fair value is the price that would be
received to sell an asset, or paid to transfer a liability in an orderly transaction between market
participants, at the measurement date. Under existing IFRS, guidance on measuring and
disclosing fair value is dispersed among the specific standards requiring fair value measurements
and in many cases does not reflect a clear measurement basis or consistent disclosures. The
adoption of this new standard did not result in any changes of the condensed interim consolidated
financial statements.
IAS 1 Presentation of Items of Other Comprehensive Income
These amendments included a requirement for entities to group items presented in Other
Comprehensive Income (“OCI”) on the basis of whether they are potentially reclassifiable to profit
or loss subsequently (reclassification adjustment), and emphasize the importance of presenting
profit or loss and OCI together and with equal prominence. The adoption of this amendment did
not result in any changes to the condensed interim consolidated financial statements.
18New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
2 - SIGNIFICANT ACCOUNTING POLICIES (continued)
Consolidation standards
In May 2011, the International Accounting Standards Board published four new and amended
standards addressing the accounting for consolidation, involvements in joint arrangements and
disclosure of involvements with other entities as listed below:
IFRS 10 Consolidated Financial Statements
IFRS 10 replaces the consolidation guidance in IAS 27, Consolidated and Separate Financial
Statements, and Standing Interpretations Committee Interpretation 12, – Consolidation - Special
Purpose Entities, by introducing a single consolidation model for all entities based on control,
irrespective of the nature of the investee. Under IFRS 10, control is based on whether an
investor has: 1) power over the investee; 2) exposure, or rights, to variable returns from its
involvement with the investee; and 3) the ability to use its power over the investee to affect the
amount of the returns. The adoption of this new standard did not result in any changes to the
condensed interim consolidated financial statements.
IFRS 11 Joint Arrangements
IFRS 11 replaces the guidance on “Joint ventures” in IAS 31. The new standard introduces a
principles-based approach to accounting for joint arrangements that requires a party to a joint
arrangement to recognize its rights and obligations arising from the arrangement. The new
standard requires that joint ventures be accounted for under the equity method thus eliminating
the option to proportionally consolidate such ventures. The Company does not currently have
any joint arrangements and as such, the adoption of this standard did not result in any changes to
the condensed interim consolidated financial statements.
IFRS 12 Disclosures of Involvement with Other Entities
IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of
interests in other entities, including joint arrangements, associates, special purpose vehicles and
other off balance sheet vehicles. The adoption of this standard did not result in any changes to
the condensed interim consolidated financial statements.
Basis of presentation
The condensed interim consolidated financial statements have been prepared on the basis that
the Company will continue as a going concern, which assumes that the Company will be able to
realize its assets, and discharge its liabilities in the normal course of operations.
Basis of measurement
The condensed interim consolidated financial statements are prepared using the historical cost
basis, except for certain financial instruments that are recognized at fair value. These condensed
interim consolidated financial statements are presented in Canadian dollars ($), which is also the
Company’s functional currency and the functional currency of each of its subsidiaries.
19New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
3 - USE OF ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of the condensed interim consolidated financial statements requires
management to undertake a number of judgments, estimates and assumptions about recognition
and measurement of assets, liabilities, income and expenses. The actual results may differ from
these judgments and estimates. These estimates and judgments are based on management’s
best knowledge of the events or circumstances and actions the Company may take in the future.
The estimates are reviewed on an ongoing basis. Information about the significant judgments,
estimates and assumptions that have the most significant effect on the recognition and
measurement of assets, liabilities, income and expenses are discussed in Note 3 of the
Company’s 2012 annual financial statements and are still applicable for the period ending June
30, 2013.
4 - STANDARDS ISSUED BUT NOT YET EFFECTIVE
A number of new standards, amendments to standards and interpretations have been issued but
are not yet effective for the period ended June 30, 2013. Accordingly, they have not been applied
in preparing these condensed interim consolidated financial statements. The Company is
currently assessing the impact that these standards will have on the consolidated financial
statements.
The standards issued but not yet effective that are expected to be relevant to the Company’s
consolidated financial statements are provided below. Certain other new standards and
interpretations have been issued but are not expected to have a material impact on the
Company’s consolidated financial statements.
IAS 32 Financial Instruments: Presentation
IAS 32 was amended by the IASB in December 2011. The amendment clarifies that an entity
that has a legally enforceable right to offset financial assets and financial liabilities if that right is
not contingent on a future event and it is enforceable both in the normal course of business and in
the event of default, insolvency or bankruptcy of the entity and all counterparties. The
amendments to IAS 32 are effective for annual periods beginning on or after January 1, 2014,
with earlier adoption permitted.
IFRS 9 Financial Instruments classification and measurement
This is the first part of a new standard on classification and measurement of financial assets that
will replace IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 has two
measurement categories: amortized cost and fair value. All equity instruments are measured at
fair value. A debt instrument is at amortized cost only if the entity is holding it to collect
contractual cash flows and the cash flows represent principal and interest. Otherwise it is at fair
value through profit and loss. Guidance is also provided on financial liabilities and de-recognition
of financial instruments. This new standard is effective for years beginning on or after January 1,
2015.
20New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
5 - CASH AND CASH EQUIVALENTS
Cash and cash equivalents include the following components:
June 30,
2013
$
December 31,
2012
$
Cash in bank 29,866,579 7,308,847
Money market funds
Short term investments
1,215,180
16,173,435
1,206,129
-
47,255,194 8,514,976
At June 30, 2013 and December 31, 2012, the money market funds have no specific maturity
date, bear interest at 1.5% and can be sold at any time. The short term investments consist of
GIC’s, a promissory note and commercial paper having original maturities of three months or less
from the acquisition date that are readily convertible into known amounts of cash. The GIC’s
mature between July and September 2013 and bear interest between 1.40% and 1.60%. The
promissory note matures August 2013 and bears interest at 1.02%. The commercial paper
matures July 2013 and bears interest at 1.14%.
As disclosed in Notes 7 and 17, NML has provided cash and cash equivalents as security for
irrevocable letters of credit toalling $19,436,000. Security was granted on cash with a carrying
value of $20,143,957.
6 - SHORT-TERM INVESTMENTS
At June 30, 2013, investments include:
Security
Carrying
Value
$ Maturity Interest Rate
GIC’s 10,156,112 Between September 2013 and April 2014 1.55%
Promissory Note 5,075,528 July 2013 1.07%
15,231,640
At December 31, 2012, investments include:
Security
Carrying
Value
$ Maturity Interest Rate
GIC’s 19,619,987 Between January and September 2013 Between 0.5% and 2.19%
Treasury Bills 20,580,284 Between January and June 2013 Between 0.97% and 1.11%
Promissory Note 5,048,890 July 2013 1.07%
Bonds 14,082,968 Between February and June 2013 Between 1.00% and 1.18%
59,332,129
21New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
6 - SHORT-TERM INVESTMENTS (continued)
Included in the above investments are GIC’s of $10,156,112 (At December 31, 2012 –
$7,575,045) and a promissory note of $5,075,528 (At December 31, 2012 – $5,048,890) that are
classified as available for sale.
As disclosed in Notes 7 and 17, NML has provided investments as security for irrevocable letters
of credit totalling $19,436,000. Security was granted on a promissory note with a carrying value
of $5,075,528.
7 - OTHER ASSETS
On July 13, 2012, the Company entered into an agreement with the Sept Iles Port authority (“Port
Authority”) providing NML with access to a new multi user deep water dock facility. As part of the
agreement, NML has a minimum annual shipping capacity of 15 million tons a year for 20 years,
with options to renew for four more five year terms. Construction of the port is expected to be
completed in 2014. NML’s buy-in for this agreement is calculated at $38,372,000. Of this amount,
$19,186,000 (50%) was disbursed on July 16, 2012 and is reflected in these financial statements
as other assets. The remaining 50%, or $19,186,000, is due and has been paid in July 2013 for
which NML has provided the Port Authority with an irrevocable letter of credit as described in
Note 17. As a result of these payments, NML will have access to the dock facility at favourable
shipping rates.
8 - LONG-TERM INVESTMENT
June 30,
2013
$
December 31,
2012
$
TSMC 31,542,605 31,542,605
This represents a 20% ownership interest in Tata Steel Minerals Canada Ltd. (“TSMC”).
Tata Steel Global Minerals Holdings PTE Ltd. (“Tata Steel”) will arrange funding of the capital
costs of TSMC’s DSO properties development up to $300 million and has committed to purchase,
at world prices, 100% of DSO’s iron ore production meeting certain quality specifications for the
life of the mining operation. At statement date, there has been no formal request made to the
Company to contribute capital to TSMC.
22New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
9 - MINERAL EXPLORATION AND EVALUATION ASSETS
LabMag
Property
KéMag
Property
Lac
Ritchie
Property
Perault
Lake
Property
Sheps
Lake
Property
Howell’s
LakeHowell’s
River
North
Properties
Other
Properties
Balance as
at June 30
2013
Balance as
at Dec. 31
2012
$ $ $ $ $ $ $ $ $
Balance, at
December 31,
2012 24,319,885 14,313,040 2,385,040 4,674,938 1,098,842 4,903,852 2,445,725 - -
Mineral licenses - 17,680 22,624 19,460 12,400 850 96,075 2,965,501 2,796,412
Drilling 39,985 63,333 4,092 38,974 5,409 38,613 838,231 34,310,579 33,281,942
Resource
evaluation 2,913,854 2,350,991 2,654 25,379 32,688 28,792 60,047 33,935,685 28,521,280
Environmental 702,215 969,901 - 26,496 - (25,000) 1,496 17,135,888 15,460,780
Amortization of
property and
equipment - - - - - - 4,253 106,541 102,288
3,656,054 3,384,225 6,746 90,849 38,097 42,405 904,027 85,488,693 77,366,290
Tax credits and
mining duties - (1,041,111) 6,144 - - - (188,172) (12,702,889) (11,479,750)
Tata Steel
payment (2,059,666) (1,239,837) - - - - - (17,841,133) (14,541,630)
(2,059,666) (2,280,948) 6,144 - - (188,172) (30,544,022) (26,021,380)
Balance, at
June 30, 2013 25,916,273 15,433,997 2,420,554 4,785,247 1,149,339 4,947,107 3,257,655 57,910,172 54,141,322
23
NEW MILLENNIUM IRON CORP.
SECOND QUARTER REPORT 2013 New Millennium Iron Corp.
Quaterly Report
June 30, 2013
Letter to Shareholders 1
Management’s Discussion and Analysis of the Company’s
Financial Condition and Results of Operations 2
Financial Statements 13
Condensed Interim Consolidated Statement of Financial Position 14
Condensed Interim Consolidated Statement of Comprehensive Income 15
Condensed Interim Consolidated Statement of Changes in Equity 16
Condensed Interim Consolidated Statement of Cash Flows 17
Notes to Condensed Interim Consolidated Financial Statements 18-32August, 2013
MESSAGE TO SHAREHOLDERS
New Millennium Iron Corp. (“NML” or the “Company”) is pleased to report its unaudited financial and
operational results for the three and six month periods ended June 30, 2013
The significant Second Quarter events were:
Direct Shipping Ore (“DSO”) Project
? Resumption of saleable ore production with dry crushing and screening operation.
? Advancement of construction of the covered ore processing plant and ancillary facilities.
Taconite Project
? Continuing review of preliminary feasibility study report by NML, Tata Steel and Study Manager.
Exploration
? Announcement of resource estimate for the Howells River North and Howells Lake properties.
General
? OTCQX listing.
? Succession planning initiative
The significant subsequent events were:
DSO Project
? Agreement with Iron Ore Company of Canada regarding shipments and commercial sales.
? Loading of first train with DSO products.
General
? Update on construction of new multi-user dock at Sept-Îles.
? Board of Directors resignation.
1MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE COMPANY’S
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial results of New Millennium Iron Corp. (“NML”, the
“Company”, or the “Corporation”) for the interim three and six month periods ended June 30, 2013
should be read in conjunction with the Company’s unaudited condensed interim consolidated financial
statements and related notes for the period ended June 30, 2013, and the audited consolidated financial
statements and MD&A for the years ended December 31, 2012 and 2011.
These condensed interim financial statements, including comparatives, have been prepared using
accounting policies in compliance with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB”).
All dollar figures are in Canadian dollars (“C$”), unless otherwise stated.
FORWARD LOOKING STATEMENTS
This MD&A contains certain forward looking statements and forward looking information (collectively
referred to herein as “forward looking statements”) within the meaning of applicable Canadian securities
laws. All statements other than statements of present or historical fact are forward looking statements.
Forward looking information is often, but not always, identified by the use of words such as “could”,
“should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may”, “projected”, “sustain”, “continues”, “strategy”,
“potential”, “projects”, “grow”, “take advantage”, “estimate”, “well positioned” or similar words suggesting
future outcomes. In particular, this MD&A may contain forward looking statements relating to future
opportunities, business strategies, mineral exploration, development and production plans and
competitive advantages.
The forward looking statements regarding the Corporation are based on certain key expectations and
assumptions of the Corporation concerning anticipated financial performance, business prospects,
strategies, regulatory developments, exchange rates, tax laws, the sufficiency of budgeted capital
expenditures in carrying out planned activities, the availability and cost of labour and services and the
ability to obtain financing on acceptable terms, the actual results of exploration and development projects
being equivalent to or better than estimated results in technical reports or prior activities, and future costs
and expenses being based on historical costs and expenses, adjusted for inflation, all of which are
subject to change based on market conditions and potential timing delays. Although management of the
Corporation consider these assumptions to be reasonable based on information currently available to
them, they may prove to be incorrect.
By their very nature, forward looking statements involve inherent risks and uncertainties (both general
and specific) and risks that forward looking statements will not be achieved. Undue reliance should not
be placed on forward looking statements, as a number of important factors could cause the actual results
to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and
intentions expressed in the forward looking statements, including among other things: inability of the
Corporation to continue meet the listing requirements of stock exchanges and other regulatory
requirements, general economic and market factors, including business competition, changes in
government regulations or in tax laws; general political and social uncertainties; commodity prices; the
actual results of exploration, development or operational activities; changes in project parameters as
plans continue to be refined; accidents and other risks inherent in the mining industry; lack of insurance;
delay or failure to receive board or regulatory approvals; changes in legislation, including environmental
legislation, affecting the Corporation; timing and availability of external financing on acceptable terms;
conclusions of, or estimates contained in, feasibility studies, pre-feasibility studies or other economic
evaluations; and lack of qualified, skilled labour or loss of key individuals. Readers are cautioned that the
foregoing list is not exhaustive.
2The forward looking statements contained herein are expressly qualified in their entirety by this cautionary
statement. The forward looking statements included in this MD&A are made as of the date of this MD&A
and the Corporation does not undertake and is not obligated to publicly update such forward looking
statements to reflect new information, subsequent events or otherwise unless so required by applicable
securities laws.
With respect to the disclosure of historical resources in this MD&A that are not currently in compliance
with National Instrument 43-101, a qualified person has not done sufficient work to classify the historical
estimate as current mineral resources or mineral reserves, the Corporation is not treating the historical
estimate as current mineral resources or mineral reserves and the historical estimate should not be relied
upon.
OVERALL PERFORMANCE
Overview of Business
The Corporation controls the emerging Millennium Iron Range, located in the Province of Newfoundland
and Labrador and in the Province of Quebec, which holds among the world’s largest undeveloped
magnetic iron ore deposits. In the same area, the Corporation and Tata Steel Limited (“Tata Steel”), one
of the largest steel producers in the world, have advanced a direct shipping ore project (“DSO Project”) to
the production stage, from which commercial sales will soon begin. Tata Steel Limited owns
approximately 26.3% of New Millennium and is the Corporation’s largest shareholder and strategic
partner.
Tata Steel exercised its exclusive option to participate in the DSO Project and has a commitment to take
the resulting production. The DSO Project is owned and operated by Tata Steel Minerals Canada
(“TSMC”), which in turn is 80% owned by Tata Steel and 20% owned by NML. The DSO Project contains
64.1 million tonnes of Proven and Probable Mineral Reserves at an average grade of 58.8% Fe, 21.0
million tonnes of Measured and Indicated Mineral Resources at an average grade of 59.2% Fe, 10.3
million tonnes of Inferred Resources at an average grade of 58.3% Fe and about 25.0 - 30.0 million
tonnes of historical resources that are not currently in compliance with NI 43-101. A qualified person has
not done sufficient work to classify the historical estimate as current mineral resources or mineral
reserves, and as such the Corporation is not treating the historical estimate as current mineral resources
or mineral reserves and the historical estimate should not be relied upon.
The Millennium Iron Range currently hosts two advanced projects: LabMag contains 3.5 billion tonnes of
Proven and Probable reserves at a grade of 29.6% Fe plus 1.0 billion tonnes of Measured and Indicated
resources at an average grade of 29.5% Fe and 1.2 billion tonnes of Inferred resources at an average
grade of 29.3% Fe; KéMag contains 2.1 billion tonnes of Proven and Probable reserves at an average
grade of 31.3% Fe, 0.3 billion tonnes of Measured and Indicated resources at an average grade of 31.3
% Fe and 1.0 billion tonnes of Inferred resources at an average grade of 31.2% Fe. Tata Steel also
exercised its exclusive right to negotiate and settle a proposed transaction in respect of the LabMag
Project and the KéMag Project.
The Millennium Iron Range also hosts other large taconite deposits.
The first is the Lac Ritchie property located at the north end of the Range. The initial 2011 drilling of 40
holes in this property revealed Indicated Resources of 3.330 billion tonnes at an average grade of 30.3%
Fe, and Inferred Resources of 1.437 billion tonnes at an average grade of 30.9% Fe.
Two other taconite deposits are located south of the LabMag deposit in the Millennium Iron Range. The
initial 2012 drilling of 23 holes in the Sheps Lake property and of 50 holes in the Perault Lake property
revealed Indicated Resources of 3.580 billion tonnes at an average grade of 31.22% Fe, and Inferred
Resources of 795 million tonnes at an average grade of 30.56% Fe.
The Howells Lake - Howells River North deposit is located between the LabMag and KéMag deposits,
and evidences mineral continuity in the Range. The 2011 and 2012 drilling of 11 holes in the Howells
River North property and of 45 holes in the Howells Lake property, revealed Indicated Resources of 7.631
billion tonnes at an average grade of 30.39% Fe, and Inferred Resources of 3.310 billion tonnes at an
average grade of 29.83% Fe.
3NML’s prominent iron ore resource holdings are summarized in the following table:
Summary of Millennium Iron Range Resources
Mineral Resource Estimate
(Based on a cut-off of 18% DTWR)
Property Resources Category, Million Tonnes
Proven & Probable Measured & Indicated Inferred
KéMag 2,141 307 1,014
LabMag 3,545 1,045 1,151
Lac Ritchie 3,330 1,437
Howells Lake-Howells River North 7,631 3,310
Sheps Lake 1,967 289
Perault Lake 1,612 507
Total 5,686 15,892 7,708
Note: NML owns 100% of the properties mentioned above except for LabMag, Howells River North and Shep’s Lake,
which are 80% owned through the Corporation’s interest in LabMag Limited Partnership.
Also of significance is that the results for the Howells River North and Howells Lake properties confirm
that the taconite formation occurring in this area of the MIR is a stratigraphic continuation of the LabMag
deposit that connects to the KéMag deposit.
The Corporation’s mission is to add shareholder value through the responsible and expeditious
development of the Millennium Iron Range and other mineral projects to create a new large source of raw
materials for the world’s iron and steel industries.
For further information, please visit www.NMLiron.com, www.tatasteel.com, www.tatasteelcanada.com,
and www.tatasteeleurope.com.
Dean Journeaux, Eng., and Thiagarajan Balakrishnan, P. Geo., are the Qualified Persons as defined in
National Instrument 43-101 who have reviewed and verified the scientific and technical mining disclosure
contained in this MD&A.
RESULTS OF OPERATIONS
TSMC’S DSO PROJECT
PROGRESS REPORT
The DSO Project, in which NML has a 20% interest through TSMC, has advanced to the production
stage. Upon completion, there will be two saleable product streams: 1) A crushed and screened,
approximately 62% Fe grade ore first mined and produced in 2012; and 2) higher Fe, low gangue fines in
two size ranges produced from an innovative, year round processing plant now in the advanced
construction stage.
Commercial sales of the crushed and screened ore are expected to begin in the current quarter.
Meanwhile, construction of the process plant and ancillary facilities is moving well towards completion.
Commissioning of the sizing station and plant equipment start-up are scheduled for Q4 2013 and Q1
2014, respectively. Other activity to report includes:
? Advancement on the fabric covering of the dome that will house the plant itself.
? All pre-cast foundations in place.
? Casting of larger foundations and slabs as well as erection of internal structural steel all
essentially completed.
? Start of installation of mechanical equipment.
TSMC’s objective is to complete the installation of the outside ancillary facilities, such as the sizing
station, conveyors and train loading station, prior to the onset of winter. Work on the process plant will
then continue inside in a protected environment under the covered dome.
4So that TSMC can maintain sales and revenue through the 2013/14 winter season, the crushing and
screening plant operation will continue with the addition of product drying equipment.
TACONITE PROJECT
The Taconite Project involves large-scale development of the LabMag and KéMag deposits to produce
pellets and concentrate, and is in the final feasibility stage also with Tata Steel as a partner through a
Binding Heads-of-Agreement signed in March 2011. Tata Steel and NML are funding 64% and 36% of
the feasibility work, respectively.
Building on NML’s and Tata Steel’s technical expertise, the Project aims to be innovative and competitive,
targeting a favourable position on the global cost curve for pellet producers. Natural advantages include
a low stripping ratio and magnetite ore, which reduces energy costs in the pelletizing process. The
Project would use large-scale and technologically advanced equipment.
At the end of December 2012, NML announced that a preliminary feasibility study report had been
submitted by the Study Manager along with a request for a further period to complete its internal
corporate review process, including technical aspects and finalization of the capital cost estimates. In
light of the Taconite Project’s great scale, NML and TSMC agreed and continue to work with the Study
Manager and specialized consultants to finalize the report. This process is expected to be completed
before the end of the year, after which the results will be presented to the Tata Steel and NML boards of
directors.
EXPLORATION OF OTHER PROPERTIES
Beyond the DSO and Taconite projects, NML has the opportunity to further develop the potential of its
land holdings in the MIR. Announcements over the past eighteen months have confirmed NI 43-101
mineral resource estimates for the Lac Ritchie, Perault Lake and Sheps Lake taconite properties
controlled by NML. This already important resource base was added to in the second quarter.
On May 23, 2013, NML announced a resource estimate for its 80% owned Howells River North (Naskapi
LabMag Trust through LabMag Limited Partnership owns the other 20%) and 100% owned Howells Lake
properties. Data collected from the drilling programs on each resulted in total NI 43-101 compliant
mineral resource estimates, at a cut-off grade of 18% DTWR, of 7.63 billion tonnes of Indicated Mineral
Resources and an additional 3.31 million tonnes of Inferred Mineral Resources. In accordance with NI
43-101 requirements, a Technical Report in respect of these mineral resource estimates was filed on
SEDAR on May 30, 2013.
GENERAL CORPORATE INFORMATION
OTCQX Listing
On April 10, 2013, NML announced that its common shares had begun trading in the United States on the
OTCQX International under the symbol “NWLNF”. The OTCQX is the premier marketplace on OTC
Markets Group’s highly visible electronic trading venue in the U.S. and the OTCQX International tier is
designed for non-U.S. companies listed on qualified international stock exchanges. NML expects to
benefit from its trading on the OTCQX International by gaining greater exposure, accessibility and liquidity
in the United States.
CEO Succession Planning
In July 2011, principal founder of NML Robert Martin stepped down as President and Chief Executive
Officer (“CEO”) and was succeeded by Dean Journeaux, also a co-founder. As part of the Company’s
orderly succession plan, NML had previously searched privately for a Chief Operating Officer with the
capability to become CEO. NML is now currently working with a worldwide executive search agency in
connection with the search for a replacement CEO and the process is ongoing. Following the hiring of his
successor and retirement, Mr. Journeaux will continue contributing to NML in a senior capacity.
5SUBSEQUENT EVENTS
Agreement with Iron Ore Company of Canada and Loading of First Train
Initially, the DSO Project’s commercial sales will be carried out under a confidential agreement between
TSMC and Iron Ore Company of Canada (IOC) announced on July 4, 2013 that calls for IOC to provide
material handling and marketing services for a fee. Haulage of DSO Project ore from Schefferville began
on July 10 and trains are being dispatched on a regular basis for unloading and stockpiling at IOC’s
shipping terminal at the Port of Sept-Iles. As mentioned above, the first ship is expected to be loaded
sometime in the current quarter.
Update on Construction of New Multi-User Dock at Sept-Îles
For the longer term, TSMC plans to ship over the Port of Sept-Iles’ new deep water dock, in which both
TSMC and NML are investors. In July 2013, the Company paid its second and last instalment for a total
buy-in of $38,372,000. It is also intended to have this multi-user facility service the Taconite Project.
Based on an announcement by the Port of Sept-Îles on July 9, 2013, construction is on schedule and the
new dock is expected to be operational in Q2 2014.
Board Resignation
On July 3, 2013, NML announced that Ms. Cathy Bennett had resigned from the Board of Directors,
effective July 2. Ms. Bennett’s decision to resign her position immediately followed her public
announcement that she would be seeking the Liberal Party Leadership in Newfoundland and Labrador.
FINANCIAL CONDITION
The following discussion of the Corporation’s financial performance is based on the unaudited
Condensed Interim Consolidated Financial Statements as of June 30, 2013 (“financial statements”) set
forth herein. As discussed in Note 2 to the financial statements, they are prepared in accordance with
International Accounting Standard 34, Interim Financial Reporting, as issued by the IASB.
These financial statements should be read in conjunction with the Company’s December 31, 2012
audited consolidated financial statements (“FYE 2012”).
Management is required to make estimates and assumptions that effect the reported amounts of assets
and liabilities at the date of the financial statements and revenue and expenses for the period then ended.
The unaudited Condensed Interim Consolidated Statement of Financial Position as of June 30, 2013
indicates cash and cash equivalents of $47,255,194, short-term investments of $15,231,640, sales taxes,
other receivables and prepaid expenses of $1,534,445, and the current portion of tax credits and mining
duties receivable of $5,392,368 resulting in total current assets of $69,413,647, a decrease of $5,897,012
from FYE 2012. The non-current assets are comprised of the long-term portion of tax credits and mining
duties receivable of $2,310,700, mineral exploration and evaluation assets of $57,910,172, other assets
of $19,316,275, deposits on contracts of $1,241,881, property and equipment of $666,301 and long-term
investments of $31,542,605. The total assets of $182,401,581 are a decrease of $6,962,649 from FYE
2012.
The Company’s current liabilities at June 30, 2013 are its trade and other payables of $4,088,790, and
advances from Tata Steel of $2,457,402 for a total of $6,546,192, a decrease of $5,725,298 from FYE
2012. Non-current liabilities consist of an amount due to Naskapi/LabMag Trust of $285,324 for total
liabilities of $6,831,516 which is a decrease of $5,725,298 from FYE 2012. Equity attributable to
shareholders of the parent company is $175,331,714, a decrease of $1,237,351 from FYE 2012, and is
comprised of share capital of $177,153,492, contributed surplus of $18,450,135, less shares subject to
cancellation of $176,940 and the deficit of $20,094,973. The non-controlling interest of $238,351 remains
unchanged from FYE 2012, for total equity of $175,570,065.
6For the three months ended June 30, 2013, the Company realized a net loss of $2,244,249, or $0.01 per
share, compared to a net loss of $1,596,355 or $0.01 per share for the comparative period in 2012. This
loss represents operating expenses of $2,507,894, (2012 - $2,044,044), net of service fee revenue of
$35,739 (2012 – $147,458) and investment income of $227,906 (2012 - $300,231). The increase in this
period’s operating expenses is mainly due to an increase in stock-based compensation expense from
$951,106 in Q2 2012 to $1,168,601 in Q2 2013 and an increase in office and administrative expenses
from $537,619 in Q2 2012 to $806,582 in Q2 2013.
The Company expects to continue incurring losses until it begins receiving dividends from TSMC. These
losses are expected to be funded by the current cash, investments and then if necessary, through equity
and or debt financing or investments by strategic partners.
As at June 30, 2013, the deferred income tax assets, which arose as a result of applying the capital and
non-capital losses carried forward to taxable income, have not been recognized in the accounts due to
uncertainty regarding their utilization.
All costs associated with mineral properties, totalling $57,910,172 as outlined in Note 9 to the June 30,
2013 financial statements, have been classified as mineral exploration and evaluation assets. The
expenditures are divided between the properties as follows: LabMag Property $25,916,273, KéMag
Property $15,433,997, Lac Ritchie Property $2,420,554, Perault Lake Property $4,785,247, Sheps Lake
Property $1,149,339, Howell’s Lake-Howell’s River North Properties $4,947,107 and Other Properties
$3,257,655. The cost centers for these capitalized expenditures are: mineral licenses $2,965,501, drilling
$34,310,579, resource evaluation $33,935,685, environmental $17,135,888, and amortization of property
and equipment $106,541. These expenditures are partially offset by tax credits and mining duties of
$12,702,889 and the Tata Steel payments of $17,841,133. The non-controlling interest of $238,351
relates to LabMag Limited Partnership whose properties include the LabMag Property, Sheps Lake
Property and Howell’s River North Property. The carrying value of the mineral exploration and evaluation
assets are reviewed by the Company on a quarterly basis by reference to the project economics,
including the timing of the exploration and evaluation work, the work programs and exploration results
achieved by the Company. At June 30, 2013, the Company believes that the carrying values of the
properties are less than their net recoverable amounts and as such there has been no impairment of
value on any of these properties.
SUMMARY OF QUARTERLY RESULTS
The following table sets out selected unaudited quarterly financial information of the Company for the
eight quarters ended June 30, 2013. This information is derived from unaudited quarterly financial
statements prepared by management. The Company's condensed interim consolidated financial
statements are prepared in accordance with IFRS and expressed in Canadian dollars.
Jun-13 Mar-13 Dec-12 Sept-12 Jun-12 Mar-12 Dec-11 Sept-11
Investment
Income 227,906 193,683 228,842 247,373 300,231 315,225 252,073 258,075
Net Income
(Loss) (2,244,249) (2,001,421) (2,187,017) (3,086,419) (1,596,355) (2,192,428) 28,564,955(2) (1,849,133)
Income (Loss)
Per Share(1) (0.01) (0.01) (0.01) (0.02) (0.01) (0.01) 0.16 (0.01)
Diluted income
per share(1)
-
- - - - - 0.16 -
(1) The effect of the exercise of stock options would be anti-dilutive for the purposes of calculating the fully
diluted earnings per share for all periods prior to and subsequent to the three months ended
December 31, 2011.
(2) The net income for the three months ended December 31, 2011, was the result of the gain on sale of
the DSO Properties during the quarter in the amount of $31,162,000.
7SECOND QUARTER RESULTS
The most significant items comparing the results of operations in the second quarter of 2013 versus the
same period in 2012 is a increase in general and administrative expenses to $2,508,000 in Q2 2013 from
$2,044,000 in Q2 2012. Added to this increase in expenses is a decrease in service fee revenue to
$36,000 in Q2 2013 from $147,000 in Q2 2012 and a decrease in investment income to $228,000 in Q2
2013 from $300,000 in Q2 2012.
The most significant items affecting general and administrative expenses are an increase in stock-based
compensation to $1,169,000 compared with $951,000 in Q2 2012, a decrease in Q2 2013 of market
development expense to $185,000 for which the corresponding expense in Q2 2012 is $239,000, an
increase in professional fees in Q2 2013 to $278,000 compared with $234,000 in Q2 2012 and an
increase in office and administrative expenses to $807,000 compared with $538,000 in Q2 2012. The
decrease in investment income is due to lower levels of investments held during Q2 2013 versus Q2
2012. The service fee revenue decreased as TSMC is utilizing less of NML’s resources as they build up
their own team.
As a result, the Company’s net loss for the second quarter ended June 30, 2013 totalled approximately
$2,244,000 (loss of $0.01 per share) compared to a net loss of approximately $1,596,000 (loss of $0.01
per share) for the comparative period in 2012.
USE OF ACCOUNTING ESTIMATES AND JUDGMENTS
The information is provided in Note 3 of the financial statements.
STANDARDS ISSUED BUT NOT YET EFFECTIVE
The information is provided in Note 4 of the financial statements.
FINANCIAL INSTRUMENTS
All financial instruments are recognized when the Company becomes a party to the contractual provisions
of the financial instrument and are initially measured at fair value plus transaction costs, except for
financial assets and financial liabilities carried at fair value through profit or loss, which are measured
initially at fair value. Financial assets are derecognized when the contractual right to the cash flows from
the financial assets expire, or when the financial asset and all substantial risks and rewards are
transferred.
An extended description of the Company’s financial instruments and their fair values is provided in Note
17 of 2012 annual financial statements.
FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES
In the normal course of operations, the Company is exposed to various financial risks. The Company
does not enter into financial instrument agreements including derivative financial instruments for
speculative purposes. Please refer to Note 13 accompanying financial statements for an extended
description of the Company’s main financial risks, objectives and policies.
8CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The information is provided in Note 16 of the financial statements.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital
Working capital at June 30, 2013 of $62,867,455 represents a decrease of $171,714 from the FYE 2012
total of $63,039,169. This decrease in working capital is due to the usage of cash and cash equivalents
and short-term investments for the Company’s investment in the exploration and evaluation of its mineral
assets as well as funding its operational loss for the period only partly being offset by the increase in the
current portion of tax credits and mining duties receivable, decrease in trade and other payables and
decrease in the advances from Tata Steel.
The Company’s working capital has been mainly invested in cash, guaranteed investment certificates, a
promissory note and commercial paper with relatively short maturities all either issued by or guaranteed
by Canadian Federal and Provincial governments or their crown corporations. These investments have
been classified as cash and cash equivalents and as short-term investments. NML used its cash and
cash equivalents and short-term investments from December 31, 2012 to pay its trade and other
payables, fund its operations and the continuing exploration and evaluation of its mineral assets. The
Company intends to use a portion of its cash and cash equivalents and short term investments in order to
fund its portion of the Taconite Feasibility Study, perform new drilling projects in the taconite anomalies
located in the Millennium Iron Range in order to fulfill assessment work required to maintain claims, pay
for the second instalment of the Port agreement, and pay future corporate operating expenses.
Capital Expenditures
There was $335,993 of acquisitions of property and equipment during the first six months of 2013
compared to $239,306 in the corresponding period in 2012. This acquisition is for the purchase of land to
be used in operations in Schefferville, Quebec.
Capital Resources
At June 30, 2013, NML has paid up capital of $177,153,492 (December 31, 2012 - $175,877,147)
representing 180,219,146 (December 31, 2012 – 179,221,646) common shares and contributed surplus
of $18,450,135 (December 31, 2012 - $16,531,035) that is partially offset by shares subject to
cancellation of $176,940 (2012 – Nil) and a deficit of $20,094,973 (December 31, 2012 - $15,839,117)
resulting in total equity attributable to shareholders of the Company of $175,331,714 (December 31, 2012
- $176,569,065). In addition there is a non-controlling interest of $238,351 (December 31, 2012 –
$238,351) resulting in total equity of $175,570,065 (December 31, 2012 - $176,807,416).
Commitments
Please refer to Note 17 of the accompanying financial statements for a summary of the Company’s
commitments.
TRANSACTIONS WITH RELATED PARTIES
Please refer to Note 15 of the accompanying financial statements for a summary of the Company’s
transactions with related parties and the related period end balances.
9CONTROLS AND PROCEDURES OVER FINANCIAL REPORTING
In compliance with the Canadian Securities Administrators’ National Instrument 52-109, the Company has
filed certificates signed by the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”)
that, among other things, report on the design and effectiveness of disclosure controls and procedures,
and the design and effectiveness of internal control over financial reporting.
Disclosure Control and Procedures
The CEO and the CFO have designed disclosure controls and procedures, or have caused them to be
designed under their supervision, in order to provide reasonable assurance that:
? material information relating to the Company has been made known to them; and
? information required to be disclosed in the Company’s filings is recorded, processed, summarized
and reported within the time periods specified in securities legislation.
An evaluation was carried out, under the supervision of the CEO and the CFO, of the design and
effectiveness of the disclosure controls and procedures. Based on this evaluation, the CEO and the CFO
concluded that the disclosure controls and procedures are effective at June 30, 2013.
Internal Control over Financial Reporting
The CEO and the CFO have also designed internal control over financial reporting, or have caused them
to be designed under their supervision, in order to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for financial reporting purposes in
accordance with IFRS.
An evaluation was carried out, under the supervision of the CEO and the CFO, of the design and
operating effectiveness of most critical aspects of our internal control over financial reporting. Based on
this evaluation, the CEO and the CFO concluded that the internal controls over financial reporting are
effective at June 30, 2013, using the criteria set forth by the Committee of Sponsoring Organizations
(COSO) of the Treadway Commission on Internal Control – Integrated Framework. The remaining
aspects of our internal control over financial reporting will be evaluated during the coming quarters.
Changes to Internal Control over Financial Reporting
No changes were made to our internal control over financial reporting during the quarter ended June 30,
2013, that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
MARKET REVIEW AND OUTLOOK
According to the World Steel Association’s (WSA) statistics, world crude steel production in its 64
reporting countries was 790 million metric tons (Mt) for the first six months of 2013, which represented an
increase of 2.0% over the same period in 2012.
The growth came mainly from Asia with a rate of 5.5%, of which China was a strong 7.4%. Meanwhile,
the EU-27, other Europe, North America and South America were all down from comparable 2012 levels.
The overall reporting countries’ crude steel capacity utilization rate was 79.2% in June, down by 1.5%
from the year-earlier rate. Overcapacity continues to be a drag on the steel market.
Looking ahead, however, there is more optimism in the World Steel Association’s latest, semi-annual
Short Range Outlook released on April 11th, with world Apparent Steel Use (ASU) of finished steel
10products expected to grow by 2.9% from 2012 to 2013, and by a further 3.2% in 2014 as a broadly based
recovery extends to Europe. Even if the rate of growth in China is moderating, the steel industry’s scale
there now involves significant volumes in absolute terms as illustrated by the WSA’s forecasted jump in
ASU of 40 million tonnes between 2012 and 2014.
The iron ore market remained volatile in the second quarter as Chinese steel makers continued to
purchase iron ore cautiously. Pricing as measured by the 62% Fe Fines CFR China reference started
April at approximately US$137 per tonne and ended June at just over US$116 per tonne, with
movements above and below this range over the period.
Forward curve pricing continued to anticipate more supply coming onto the market in the near-to-medium
term, a sentiment fuelled by the ramping up of production by Australia’s major producers in particular. At
the same time, the presently very difficult environment for new entry iron ore projects, coupled with
questions over Chinese domestic production and the future role of exports from India, makes the overall
supply development timeframe unclear.
DISCLOSURE OF OUTSTANDING SHARE DATA
The following information relates to share data of the Company as at June 30, 2013.
1. Share capital
(a) Authorized:
Unlimited number of common voting shares.
Unlimited number of preferred shares, without nominal or par value, issuable in series.
(b) Issued as of June 30, 2013: The Corporation has 180,219,146 common shares issued
($177,153,492).
(c) Issued as of August 12, 2013: The Corporation has 180,009,146 common shares issued
($176,947,062).
2. Options
The Corporation has adopted an incentive stock option plan whereby options may be granted from time to
time to directors, officers, employees and consultants to the Corporation with shares reserved for
issuance as options not to exceed 10% of the issued and outstanding common shares.
As of August 12, 2013, there were 16,443,000 common shares reserved for issuance pursuant to the
exercise of stock options (June 30, 2013 – 16,793,000) as follows:
Number of Outstanding Options Exercise Price Expiry Date
1,470,000 $0.37 January 20, 2014
33,000 $0.65 October 9, 2014
3,262,500 $0.90 June 30, 2015
36,000 $0.87 August 31, 2015
42,000 $3.52 February 8, 2016
3,017,500 $3.36 April 1, 2016
175,000 $3.16 April 29, 2016
52,000 $2.48 May 16, 2016
40,000 $2.48 July 18, 2016
72,000 $2.65 July 26 , 2016
32,000 $1.61 October 18, 2016
135,000 $1.65 November 1, 2016
110,000 $1.16 November 28, 2016
350,000 $1.43 December 6, 2016
11Number of Outstanding Options Exercise Price Expiry Date
160,000 $1.23 December 20, 2016
38,000 $1.65 January 4, 2017
37,000 $1.72 January 11, 2017
70,000 $2.02 January 24, 2017
65,000 $2.08 April 5, 2017
100,000 $1.93 April 11, 2017
56,000 $2.03 April 16, 2017
48,000 $1.59 July 2, 2017
3,635,000 $1.35 July 27, 2017
50,000 $1.30 September 10, 2017
80,000 $1.45 September 18, 2017
200,000 $1.57 October 4, 2017
40,000 $1.04 December 10, 2017
52,000 $1.62 January 8, 2018
2,985,000 $0.89 April 24, 2018
3. Warrants
At August 12, 2013, there were no common shares reserved for issuance pursuant to the exercise of
outstanding warrants (June 30, 2013 – Nil).
ADDITIONAL INFORMATION
Additional information relating to the Company is available on SEDAR at www.sedar.com
12Financial Statements 13
Condensed Interim Consolidated Statement of Financial Position 14
Condensed Interim Consolidated Statement of Comprehensive Income 15
Condensed Interim Consolidated Statement of Changes in Equity 16
Condensed Interim Consolidated Statement of Cash Flows 17
Notes to Condensed Interim Consolidated Financial Statements 18-32
New Millennium Iron Corp.
Unaudited Condensed Interim
Consolidated Financial Statements
June 30, 2013
13New Millennium Iron Corp.
Condensed Interim Consolidated Statement of Financial Position
(Unaudited)
(Expressed in Canadian Dollars)
June 30, 2013 December 31, 2012
$ $
ASSETS
Current assets
Cash and cash equivalents (Note 5) 47,255,194 8,514,976
Short-term investments (Note 6) 15,231,640 59,332,129
Sales taxes, other receivables and prepaid expenses (Note 15) 1,534,445 3,097,908
Tax credits and mining duties receivable 5,392,368 4,365,646
69,413,647 75,310,659
Non-current assets
Tax credits and mining duties receivable 2,310,700 5,820,468
Deposits on contracts 1,241,881 2,813,384
Other assets (Note 7) 19,316,275 19,253,723
Long-term investment (Note 8) 31,542,605 31,542,605
Mineral exploration and evaluation assets (Note 9) 57,910,172 54,141,322
Property and equipment 666,301 482,069
Total assets 182,401,581 189,364,230
EQUITY AND LIABILITIES
LIABILITIES
Current liabilities
Trade and other payables (Note 15) 4,088,790 7,755,190
Advance from Tata Steel (Note 9 and 15) 2,457,402 4,516,300
6,546,192 12,271,490
Non-current liabilities
Due to NNK Trust 285,324 285,324
Total liabilities 6,831,516 12,556,814
EQUITY
Share capital (Note 10) 177,153,492 175,877,147
Shares subject to cancellation (Note 10) (176,940) –
Contributed surplus 18,450,135 16,531,035
Deficit (20,094,973) (15,839,117)
Equity attributable to shareholdersof the parent Company 175,331,714 176,569,065
Non-controlling interest 238,351 238,351
Total equity 175,570,065 176,807,416
Total liabilities and equity 182,401,581 189,364,230
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Approved and authorized for issue by the Board of Directors on August 12, 2013 and signed on their behalf by:
/S/ Dean Journeaux /S/ Pierre Seccareccia
Director Director
14New Millennium Iron Corp.
Condensed Interim Consolidated Statement of Comprehensive Income
(Unaudited)
Six months ended June 30, 2013 and 2012
(Expressed in Canadian Dollars)
3 months ended June 30 6 months ended June 30
2013 2012 2013 2012
$ $ $$
Service fee revenue 35,739 147,458 141,460 437,051
Expenses
General and administrative (Note 11) 2,507,894 2,044,044 4,820,955 4,841,650
Loss before other items (2,472,155) (1,896,586) (4,679,495) (4,404,599)
Other items
Other income
– – 2,050 –
Investment income 227,906 300,231 421,589 615,456
227,906 300,231 423,639 615,456
Net loss and comprehensive loss (2,244,249) (1,596,355) (4,255,856) (3,789,143)
Attributable to:
Non-controlling interest – – – –
Shareholders of the parent Company (2,244,249) (1,596,355) (4,255,856) (3,789,143)
Net loss and comprehensive loss (2,244,249) (1,596,355) (4,255,856) (3,789,143)
Loss per share - basic and diluted (0.01) (0.01) (0.02) (0.02)
Weighted average number of shares
outstanding 180,220,794 178,206,554 180,082,599 177,878,046
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
15New Millennium Iron Corp.
Condensed Interim Consolidated Statement of Changes in Equity
(Unaudited)
Six months ended June 30, 2013 and 2012
(Expressed in Canadian Dollars)
Total
Share Capital Attributable to Non
Number of Shares subject Contributed Shareholders of Controlling Total
Shares Issued Amount to cancellation Surplus Deficit the parent Company Interest Equity
and Fully Paid $ $ $ $ $ $ $
Balance at January 1, 2012 176,267,964 172,344,038 -
12,665,152 (6,776,898) 178,232,292 238,351 178,470,643
Net loss - - - - (3,789,143) (3,789,143) - (3,789,143)
Share-based remuneration
- employees and directors - - -
2,671,075 -
2,671,075 - 2,671,075
- consultants - - -
59,989 -
59,989 - 59,989
Share capital issued 233,682 338,558 ---
338,558 - 338,558
Exercise of stock options 1,800,000 1,992,103 - (777,708) -
1,214,395 - 1,214,395
Balance at June 30, 2012 178,301,646 174,674,699 -
14,618,508 (10,566,041) 178,727,166 238,351 178,965,517
Balance at January 1, 2013 179,221,646 175,877,147 -
16,531,035 176,569,065 (15,839,117) 238,351 176,807,416
Net loss - - - - (4,255,856) (4,255,856) - (4,255,856)
Share-based remuneration
- employees and directors - - -
2,116,483 -
2,116,483 - 2,116,483
- consultants - - -
255,277 -
255,277 - 255,277
Share capital repurchased and cancelled (10,000) (9,830) - 280 - (9,550) - (9,550)
Shares subject to cancellation - - (176,940)
37,260 - (139,680) - (139,680)
Exercise of stock options 1,007,500 1,286,175 - (490,200) -
795,975 - 795,975
Balance at June 30, 2013 180,219,146 177,153,492 18,450,135 (176,940) (20,094,973) 175,331,714 238,351 175,570,065
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
16New Millennium Iron Corp.
Condensed Interim Consolidated Statement of Cash Flows
(Unaudited)
Six months ended June 30, 2013 and 2012
(Expressed in Canadian Dollars)
2013 2012
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss and comprehensive loss (4,255,856) (3,789,143)
Adjustments for:
Share-based remuneration
- Employees and directors 2,116,483 2,671,075
- Consultants 255,277 59,989
Depreciation of property and equipment 129,358 88,447
Loss on disposal of property and equipment 11,651 -
Interest income (421,589) (615,456)
2,091,180 2,204,055
Net changes in working capital items (Note 14) 1,108,448 227,432
Cash flows used by operating activities (1,056,228) (1,357,656)
CASH FLOW FROM INVESTING ACTIVITIES
Net redemption (purchases) of short term treasury bills, term deposits and GIC's 26,994,110 (2,592,454)
Purchase of bonds and GIC's with original maturities over one year - (11,300,000)
Redemption of bonds and GIC's with an original maturities over one year 16,844,692 11,811,240
Interest received 683,277 479,461
Deposits on contracts (133,598) (1,168,223)
Acquisition of property and equipment (335,993) (239,306)
Proceeds on disposition of property and equipment 6,500 -
Increase in other assets (62,552) -
Decrease in advance from Tata Steel (2,058,899) -
Tax credits and mining duties received 3,706,183 1,601,612
Additions to mineral exploration and evaluation assets (9,793,522) (11,711,836)
Allocation of Tata Steel payment to mineral exploration and
evaluation assets 3,299,503 4,782,580
Cash flows used by investing activities 39,149,701 (8,336,926)
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of common shares 786,425 1,552,953
Purchase of treasury shares (139,680) -
Cash flows provided by financing activities 646,745 1,552,953
Net increase (decrease) in cash and cash equivalents 38,740,218 (8,141,629)
Cash and cash equivalents, beginning of period 8,514,976 31,116,221
Cash and cash equivalents, end of period 47,255,194 22,974,592
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
17New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
1 - GOVERNING STATUTES AND NATURE OF OPERATIONS
The current principal activities of New Millennium Iron Corp. (“the Parent Company”) and its
subsidiaries (“the Company” or “NML”) are the exploration and evaluation of mineral properties.
The Parent Company was incorporated pursuant to the provisions of the Alberta Business
Corporations Act on August 8, 2003.
The address of the Company’s executive office is 2nd floor, 1303 Greene Avenue, Westmount,
Quebec, H3Z 2A7 and its head office is 800, 734 – 7 Avenue SW, Calgary, Alberta, T2P 3P8 and
its registered and records office is 1000, 250-2nd Street SW, Calgary, Alberta, T2P OC1.
2 - SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
These condensed interim consolidated financial statements have been prepared using
accounting policies consistent with International Financial Reporting Standards (“IFRS”) and in
accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting. The
unaudited condensed interim consolidated financial statements do not include all of the
information required for full annual financial statements, and should be read in conjunction with
the annual consolidated financial statements for the year ended December 31, 2012, as they
follow the same accounting policies and methods of application, except for the following new
accounting pronouncements which have been adopted on January 1, 2013:
IFRS 7 Financial Instruments – Disclosures
The amendment contains new disclosure requirements for financial assets and financial liabilities
that are offset in the statement of financial position or subject to master netting arrangements or
familiar agreements. The adoption of this amendment did not result in any changes to the
condensed interim consolidated financial statements.
IFRS 13 Fair Value Measurement
IFRS 13 defines fair value, sets out in a single IFRS a framework for measuring fair value and
requires disclosures about fair value measurements. IFRS 13 applies when other IFRSs require
or permit fair value measurements. It does not introduce any new requirements to measure an
asset or a liability at fair value, change what is measured at fair value in IFRS or address how to
present changes in fair value. The new standard clarifies that fair value is the price that would be
received to sell an asset, or paid to transfer a liability in an orderly transaction between market
participants, at the measurement date. Under existing IFRS, guidance on measuring and
disclosing fair value is dispersed among the specific standards requiring fair value measurements
and in many cases does not reflect a clear measurement basis or consistent disclosures. The
adoption of this new standard did not result in any changes of the condensed interim consolidated
financial statements.
IAS 1 Presentation of Items of Other Comprehensive Income
These amendments included a requirement for entities to group items presented in Other
Comprehensive Income (“OCI”) on the basis of whether they are potentially reclassifiable to profit
or loss subsequently (reclassification adjustment), and emphasize the importance of presenting
profit or loss and OCI together and with equal prominence. The adoption of this amendment did
not result in any changes to the condensed interim consolidated financial statements.
18New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
2 - SIGNIFICANT ACCOUNTING POLICIES (continued)
Consolidation standards
In May 2011, the International Accounting Standards Board published four new and amended
standards addressing the accounting for consolidation, involvements in joint arrangements and
disclosure of involvements with other entities as listed below:
IFRS 10 Consolidated Financial Statements
IFRS 10 replaces the consolidation guidance in IAS 27, Consolidated and Separate Financial
Statements, and Standing Interpretations Committee Interpretation 12, – Consolidation - Special
Purpose Entities, by introducing a single consolidation model for all entities based on control,
irrespective of the nature of the investee. Under IFRS 10, control is based on whether an
investor has: 1) power over the investee; 2) exposure, or rights, to variable returns from its
involvement with the investee; and 3) the ability to use its power over the investee to affect the
amount of the returns. The adoption of this new standard did not result in any changes to the
condensed interim consolidated financial statements.
IFRS 11 Joint Arrangements
IFRS 11 replaces the guidance on “Joint ventures” in IAS 31. The new standard introduces a
principles-based approach to accounting for joint arrangements that requires a party to a joint
arrangement to recognize its rights and obligations arising from the arrangement. The new
standard requires that joint ventures be accounted for under the equity method thus eliminating
the option to proportionally consolidate such ventures. The Company does not currently have
any joint arrangements and as such, the adoption of this standard did not result in any changes to
the condensed interim consolidated financial statements.
IFRS 12 Disclosures of Involvement with Other Entities
IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of
interests in other entities, including joint arrangements, associates, special purpose vehicles and
other off balance sheet vehicles. The adoption of this standard did not result in any changes to
the condensed interim consolidated financial statements.
Basis of presentation
The condensed interim consolidated financial statements have been prepared on the basis that
the Company will continue as a going concern, which assumes that the Company will be able to
realize its assets, and discharge its liabilities in the normal course of operations.
Basis of measurement
The condensed interim consolidated financial statements are prepared using the historical cost
basis, except for certain financial instruments that are recognized at fair value. These condensed
interim consolidated financial statements are presented in Canadian dollars ($), which is also the
Company’s functional currency and the functional currency of each of its subsidiaries.
19New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
3 - USE OF ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of the condensed interim consolidated financial statements requires
management to undertake a number of judgments, estimates and assumptions about recognition
and measurement of assets, liabilities, income and expenses. The actual results may differ from
these judgments and estimates. These estimates and judgments are based on management’s
best knowledge of the events or circumstances and actions the Company may take in the future.
The estimates are reviewed on an ongoing basis. Information about the significant judgments,
estimates and assumptions that have the most significant effect on the recognition and
measurement of assets, liabilities, income and expenses are discussed in Note 3 of the
Company’s 2012 annual financial statements and are still applicable for the period ending June
30, 2013.
4 - STANDARDS ISSUED BUT NOT YET EFFECTIVE
A number of new standards, amendments to standards and interpretations have been issued but
are not yet effective for the period ended June 30, 2013. Accordingly, they have not been applied
in preparing these condensed interim consolidated financial statements. The Company is
currently assessing the impact that these standards will have on the consolidated financial
statements.
The standards issued but not yet effective that are expected to be relevant to the Company’s
consolidated financial statements are provided below. Certain other new standards and
interpretations have been issued but are not expected to have a material impact on the
Company’s consolidated financial statements.
IAS 32 Financial Instruments: Presentation
IAS 32 was amended by the IASB in December 2011. The amendment clarifies that an entity
that has a legally enforceable right to offset financial assets and financial liabilities if that right is
not contingent on a future event and it is enforceable both in the normal course of business and in
the event of default, insolvency or bankruptcy of the entity and all counterparties. The
amendments to IAS 32 are effective for annual periods beginning on or after January 1, 2014,
with earlier adoption permitted.
IFRS 9 Financial Instruments classification and measurement
This is the first part of a new standard on classification and measurement of financial assets that
will replace IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 has two
measurement categories: amortized cost and fair value. All equity instruments are measured at
fair value. A debt instrument is at amortized cost only if the entity is holding it to collect
contractual cash flows and the cash flows represent principal and interest. Otherwise it is at fair
value through profit and loss. Guidance is also provided on financial liabilities and de-recognition
of financial instruments. This new standard is effective for years beginning on or after January 1,
2015.
20New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
5 - CASH AND CASH EQUIVALENTS
Cash and cash equivalents include the following components:
June 30,
2013
$
December 31,
2012
$
Cash in bank 29,866,579 7,308,847
Money market funds
Short term investments
1,215,180
16,173,435
1,206,129
-
47,255,194 8,514,976
At June 30, 2013 and December 31, 2012, the money market funds have no specific maturity
date, bear interest at 1.5% and can be sold at any time. The short term investments consist of
GIC’s, a promissory note and commercial paper having original maturities of three months or less
from the acquisition date that are readily convertible into known amounts of cash. The GIC’s
mature between July and September 2013 and bear interest between 1.40% and 1.60%. The
promissory note matures August 2013 and bears interest at 1.02%. The commercial paper
matures July 2013 and bears interest at 1.14%.
As disclosed in Notes 7 and 17, NML has provided cash and cash equivalents as security for
irrevocable letters of credit toalling $19,436,000. Security was granted on cash with a carrying
value of $20,143,957.
6 - SHORT-TERM INVESTMENTS
At June 30, 2013, investments include:
Security
Carrying
Value
$ Maturity Interest Rate
GIC’s 10,156,112 Between September 2013 and April 2014 1.55%
Promissory Note 5,075,528 July 2013 1.07%
15,231,640
At December 31, 2012, investments include:
Security
Carrying
Value
$ Maturity Interest Rate
GIC’s 19,619,987 Between January and September 2013 Between 0.5% and 2.19%
Treasury Bills 20,580,284 Between January and June 2013 Between 0.97% and 1.11%
Promissory Note 5,048,890 July 2013 1.07%
Bonds 14,082,968 Between February and June 2013 Between 1.00% and 1.18%
59,332,129
21New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
6 - SHORT-TERM INVESTMENTS (continued)
Included in the above investments are GIC’s of $10,156,112 (At December 31, 2012 –
$7,575,045) and a promissory note of $5,075,528 (At December 31, 2012 – $5,048,890) that are
classified as available for sale.
As disclosed in Notes 7 and 17, NML has provided investments as security for irrevocable letters
of credit totalling $19,436,000. Security was granted on a promissory note with a carrying value
of $5,075,528.
7 - OTHER ASSETS
On July 13, 2012, the Company entered into an agreement with the Sept Iles Port authority (“Port
Authority”) providing NML with access to a new multi user deep water dock facility. As part of the
agreement, NML has a minimum annual shipping capacity of 15 million tons a year for 20 years,
with options to renew for four more five year terms. Construction of the port is expected to be
completed in 2014. NML’s buy-in for this agreement is calculated at $38,372,000. Of this amount,
$19,186,000 (50%) was disbursed on July 16, 2012 and is reflected in these financial statements
as other assets. The remaining 50%, or $19,186,000, is due and has been paid in July 2013 for
which NML has provided the Port Authority with an irrevocable letter of credit as described in
Note 17. As a result of these payments, NML will have access to the dock facility at favourable
shipping rates.
8 - LONG-TERM INVESTMENT
June 30,
2013
$
December 31,
2012
$
TSMC 31,542,605 31,542,605
This represents a 20% ownership interest in Tata Steel Minerals Canada Ltd. (“TSMC”).
Tata Steel Global Minerals Holdings PTE Ltd. (“Tata Steel”) will arrange funding of the capital
costs of TSMC’s DSO properties development up to $300 million and has committed to purchase,
at world prices, 100% of DSO’s iron ore production meeting certain quality specifications for the
life of the mining operation. At statement date, there has been no formal request made to the
Company to contribute capital to TSMC.
22New Millennium Iron Corp.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
June 30, 2013
(Expressed in Canadian Dollars)
9 - MINERAL EXPLORATION AND EVALUATION ASSETS
LabMag
Property
KéMag
Property
Lac
Ritchie
Property
Perault
Lake
Property
Sheps
Lake
Property
Howell’s
LakeHowell’s
River
North
Properties
Other
Properties
Balance as
at June 30
2013
Balance as
at Dec. 31
2012
$ $ $ $ $ $ $ $ $
Balance, at
December 31,
2012 24,319,885 14,313,040 2,385,040 4,674,938 1,098,842 4,903,852 2,445,725 - -
Mineral licenses - 17,680 22,624 19,460 12,400 850 96,075 2,965,501 2,796,412
Drilling 39,985 63,333 4,092 38,974 5,409 38,613 838,231 34,310,579 33,281,942
Resource
evaluation 2,913,854 2,350,991 2,654 25,379 32,688 28,792 60,047 33,935,685 28,521,280
Environmental 702,215 969,901 - 26,496 - (25,000) 1,496 17,135,888 15,460,780
Amortization of
property and
equipment - - - - - - 4,253 106,541 102,288
3,656,054 3,384,225 6,746 90,849 38,097 42,405 904,027 85,488,693 77,366,290
Tax credits and
mining duties - (1,041,111) 6,144 - - - (188,172) (12,702,889) (11,479,750)
Tata Steel
payment (2,059,666) (1,239,837) - - - - - (17,841,133) (14,541,630)
(2,059,666) (2,280,948) 6,144 - - (188,172) (30,544,022) (26,021,380)
Balance, at
June 30, 2013 25,916,273 15,433,997 2,420,554 4,785,247 1,149,339 4,947,107 3,257,655 57,910,172 54,141,322
23
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