Yesterday Labrador Iron Mines Holdings (Stock Profile – TSX:LIM) and Tata Steel Minerals Canada announced they entered into a framework agreement to establish a strategic relationship to cooperate in transport and port infrastructure construction, and to coordinate the development of the Howse and Timmins 4 deposits.

New Millennium Iron Corp. (Stock Profile – TSX:NML) owns a 20% interest in Tata Steel Minerals Canada in joint venture with majority partner Tata Steel.

Raymond James analyst Brad Humphrey writes, “In our view, this is a win-win arrangement that provides LIM with a much needed infusion of C$30 million in cash, and it gives TSMC a valuable deposit that is strategically close to its processing plant that is currently under construction.”

The projects are located adjacent to one another and from 1954 to 1982 these assets were mined as one operation by the Iron Ore Company of Canada.

Humphrey continues, “The companies have cooperated in the past and previously swapped some assets, and we see this announcement as an extension and strengthening of that relationship. We suspect that these two entities could engage in additional partnership arrangements (possibly bringing in other third parties as well), given the potential infrastructure synergies available to iron ore companies operating in the same region.”

The announcements from all three companies mention that the strategic relationship involves multiple facets including: logistics, property rationalization, ancillary mutual support agreements, and potential off-take arrangements.

Raymond James maintains their “Market Perform” rating for Labrador Iron Mines Holdings with a $1.15 target price and rates New Millennium Iron “Outperform” with a $2.90 target price.