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Corporate Spotlight

Champion Iron Ltd is the largest emerging global producer of high-grade iron ore. With premium quality hematite reserves, this profitable low-cost producer is on a fast track to double production from 7.5M to 15M tpa through secured access to infrastructure and already advanced expansion.
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QUEBEC IRON ORE / BLOOM LAKE FACILITIES

TEN MILLIONTH TONNE

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CHAMPION IRON SHIPS TEN MILLIONTH TONNE OF HIGH-QUALITY IRON ORE FROM BLOOM LAKE 

ASX Announcement 13 August 2019 


Montreal, August 12, 2019 - Champion Iron Limited (TSX: CIA) (ASX: CIA) (“Champion” or the “Company”) is pleased to announce that its subsidiary, Quebec Iron Ore Inc. (“QIO”), shipped its tenth million tonne of high-grade 66.2% Fe iron concentrate from the Port of Sept-Îles multi-user terminal from its production at the Bloom Lake Iron Mine (“Bloom Lake”), located near Fermont, Quebec.


The achievement of this significant milestone occurred less than eighteen months after Bloom Lake was recommissioned on February 16, 2018, and achieved its annual full nameplate capacity of 7.4 Mtpa in its first year of operation. Champion benefits from access to world class infrastructure, including access to a deep-water terminal where a capesize vessel can be loaded in less than 40 hours. The delivery and sale of the Bloom Lake highgrade iron ore concentrate to end-users in Asia, Europe and the Middle East is being completed at a time of rising demand for high-grade iron ore concentrate with low impurities.


“The ten millionth tonne is a significant milestone for our Company after recommissioning the Bloom Lake Mine in February 2018. We are proud to have a leading role in the development of the Labrador Trough, a region that has a proud history in mining and world-class infrastructure that has the capacity to handle the proposed Phase II expansion of Bloom Lake,” said Mr. Cataford, CEO of Champion. “On behalf of our entire team, I would like to thank all of the agencies partnered with our Company including the Port of Sept-Îles, the Société Ferroviaire et Portuaire de Pointe-Noire, the Québec North Shore and Labrador Railway and Genessee Wyoming. It is extremely motivating to be leading a competent team that is setting historical production records at Bloom Lake and we are fortunate to benefit from our partners’ personnel consistently engaged in the region contributing and working with our Company to achieve new milestones.” 


About the Bloom Lake Mining Complex 

On April 11, 2016, Champion, through its subsidiary Quebec Iron Ore Inc., acquired the Bloom Lake assets from affiliates of Cliffs Natural Resources Inc. that were subject to restructuring proceedings under the Companies’ Creditors Arrangement Act (Canada). Following the release of a feasibility study on February 16, 2017, Champion recommissioned Bloom Lake in February 2018, which completed its first shipment on April 1, 2018. QIO is 63.2% owned by Champion, with the remaining 36.8% equity interest owned by Ressources Québec, acting as a mandatary of the Government of Quebec. On May 29, 2019, Champion announced the terms of an agreement with Ressources Québec whereby Champion would acquire 100% of QIO.


The Bloom Lake property is located on the south end of the Labrador Trough, approximately 13 km north of Fermont, Quebec, and 10 km north of the Mount-Wright iron ore mining operation of ArcelorMittal Mines Canada. The mine is an open-pit truck and shovel operation with a concentrator. From the site, iron concentrate is transported by rail, initially on the Bloom Lake Railway, to a ship loading port in Sept-Îles, Quebec.


About Champion Iron Limited 

Champion is a producing iron development and exploration company, focused on developing its significant iron resources in the south end of the Labrador Trough in the province of Quebec. Following the acquisition of its flagship asset, the Bloom Lake iron ore property, the Company implemented upgrades to the mine and processing infrastructure and has partnered in projects associated with improving access to global iron markets, including rail and port infrastructure initiatives with government and other key industry and community stakeholders. Champion’s management team includes professionals with mine development and operations expertise, who also have vast experience from geotechnical work to green field development, brown field management including logistics development and financing of all stages in the mining industry


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FEASIBILITY STUDY CONFIRMS LOW COSTS

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CHAMPION IRON ANNOUNCES AN AFTER-TAX IRR OF 33.4% IN FEASIBILITY STUDY FOR THE PHASE II EXPANSION AT BLOOM LAKE 

ASX Announcement 21 June 2019 


After-Tax NPV of $956 Million with a 2.4-Year Payback on Initial Capital Results Support the Approval of a $68 Million Budget to Secure Timetable


Montreal, June 20, 2019 - Champion Iron Limited (TSX: CIA) (ASX: CIA) (“Champion” or the “Company”) is pleased to announce positive results of the Phase II Feasibility Study (“Feasibility Study” or “Study”) prepared pursuant to National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) for the Bloom Lake Mining Complex (“Bloom Lake”), located near the town of Fermont, in north-eastern Quebec. The Feasibility Study envisions further exploiting Bloom Lake which would increase overall capacity from 7.4Mtpa to 15Mtpa of 66.2% Fe iron ore concentrate.


Conference Call Details 

Champion will host a conference call and webcast at 8:30 AM EDT (Montreal Time), on Thursday June 20, 2019 to discuss the Feasibility Study results. Call details are outlined at the end of this news release.


All amounts stated in this news release are in Canadian dollars unless otherwise indicated.


1. FEASIBILITY STUDY HIGHLIGHTS – PHASE II 


Champion Iron CEO, Mr David Cataford, said, "This is a positive outcome for the Company as Phase II would further position Champion as one of the largest high-grade iron ore producers in the world. Based on conservative assumptions compared to current spot price, the Phase II Feasibility Study demonstrates that this expansion at Bloom Lake may drive additional value to shareholders and allow the Company to continue on its recent growth trajectory. In fact, we believe that very few iron ore projects offer the potential of 20+ years of production at industry-low operating costs, whilst being strategically located inclose proximity to all necessary infrastructure and situated in what we consider to be a superior mining jurisdiction. Consistent with our commitment to offer accretive growth while managing dilution, we are approaching the project diligently by advancing key long-lead time items and will look at optimal sources of capital to further advance the project in due time." 


The Feasibility Study conducted by BBA Inc. evaluated the life-of-mine ("LoM") option for expanded mining and processing to maximize the value of the mineral resource at Bloom Lake. The Feasibility Study evaluates the combined Phase I and II mining plan, current concentrator plant at Phase I and completion of the Phase II concentrator plant. Results of the Study recommend an expansion of Bloom Lake, resulting in a LoM production averaging 15 Mtpa of 66.2% Fe iron ore concentrate. Based on the new optimized mine plan, the mining rate at Bloom Lake would also be increased to accelerate the supply of ore to the expanded facilities, while maintaining a LoM of 20 years. Pursuant to the strong economics outlined in the Feasibility Study, the Company’s board of directors has approved an initial budget of $68 million to advance the project during the remainder of 2019, which is expected to meet the timetable detailed in the Feasibility Study. The approved budget will be funded from cash on hand and existing debt facilities. Finalization of additional funding sources for the project is expected to be completed before mid-2020.


The processing plant for the Phase II concentrator is based on the currently operating Phase I design with minor changes to further improve performance. The recovery circuit is very similar to the Phase I concentrator with the addition of a stage of scavenger up current classifier to increase recovery and improve response to feed variations.


Most of the major equipment, with the exception of the gravity circuit equipment that was used as part of the Phase I restart project, was sourced on-site from the previous owner's Phase II expansion project which was interrupted in 2012.


The base case economic assumption utilizes a conservative blended average gross realized price at 66.2% Fe CFR China of US$84.1/t for the LoM. The P65 analyst consensus was utilized for years 1 to 3. For the remaining LoM, the iron price at 66.2% is based on the average of the P65 analyst long-term consensus and the P62 3-year trailing average with a 15% premium. These price assumptions compare with a spot price at P65 of US$124.7/t as of June 13, 2019, of which Bloom Lake's 66.2% Fe material receives a premium. 


2. ECONOMIC SUMMARY 

The economic sensitivity analysis uses the P65 pricing which compares to a spot price of US$124.7 (as at June 13, 2019).




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100% ACQUISITION OF BLOOM LAKE

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FAST TRACK TO DOUBLE PRODUCTION

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Today: Champion Iron Ltd is the largest emerging globally listed pure play producer of high-grade iron ore.


Value proposition for investors:


Profitable low-cost high-quality iron ore producer with a clear pathway to double production.


  • Champion is the largest pure play producer of high-grade iron ore publicly listed in the world;
  • Backed by well-known mining entrepreneur, Michael O’Keeffe. Management currently owns well over 10% of the company, aligning goals with investors;
  • The Company took advantage of market weakness in 2015 to purchase a world-class operating site, Bloom Lake, which required operational turnaround;
  • Champion Iron inherited substantial capital invested at Bloom Lake of nearly US$4B, including nearly 75% of capital required to complete an expansion at Bloom Lake;
  • Today, Champion Iron is competitively positioned on the global cost curve, and is currently producing at a nameplate capacity of 7.4M tpa of 66.2% Fe iron ore concentrate, being substantially higher grade than the benchmark products (62% Fe) often quoted in the industry;
  • Champion Iron has proven its ability to deliver iron ore sub US$40/t FOB (Free on board), with high-grade iron ore prices currently exceeding US$100/t;
  • Champion has already reached its nameplate capacity and generated nearly C$100M in net income during its first two commercial quarters;
  • Champion has access to rail capacity and access to a deep-water port newly built by the Canadian federal government; 
  • Champion Iron deposits are located in the top tier mining jurisdiction of Quebec, Canada. The Labrador Trough is already the second largest producing hub of high-grade iron ore in the world, harbouring the operations of industrial leaders like Rio Tinto, Arcelor Mittal, Tata Steel & Champion Iron.  
  • Champion has a strong relationship with First Nations and developed a strong environmental focus, including initiatives to reduce greenhouse gas emissions equivalent to 7,000+ cars’ average annual fuel consumption; 


Global iron ore market is growing, iron ore prices are increasing.


  • Global iron ore dynamics have drastically changed in recent years following the transition to more complex steel production technologies and industrial standards in China as well as higher consumption of white goods across Asia. Such transformation has triggered an increasing demand for higher quality iron ore;
  • In the last two years, China has implemented a ‘blue sky initiative’, restricting CO2  emissions for the steel industry and forcing producers to utilize higher quality iron ore material; 
  • The global high-grade iron ore market is estimated to reach approximately 500M tonnes of annual production in 2019 within a global 2.2B tpa iron ore market. VALE controls over 60%+ market share, making this product a near monopoly within an oligopolistic industry (BHP, RIO, VALE and Fortescue control approx. 70% of global seaborn market, making iron ore one of the largest oligopolies in the world and helping to control prices throughout cycles);
  • High-grade ore, now in high demand, is expected to attract premium pricing over the traditional benchmark given such structural shifts in the industry;
  • Despite higher transport cost compared to Australian iron ore producers, Champion’s premium pricing on high-grade material more than offsets freight differentials when compared to Australian peers who are geographically closer to the world’s largest iron ore consumers in Asia.



The key risks for expansion have been mitigated: 75% CAPEX secured, access to infrastructure and local support


  • A feasibility study is expected to be released in the summer of 2019 to further detail final requirements to finish an expansion which would double the capacity of Bloom Lake from 7.4M tpa to 15M tpa;
  • Over US$1.2B has already been committed to the expansion by predecessor operators of Bloom Lake; 
  • Champion has access to rail capacity and access to a deep-water port newly built by the Canadian federal government; 
  • Champion has formalized an agreement with First Nations, allowing to complete the expansion
  • Champion has a strong balance sheet to complete the considered expansion and has received local financial support from a government-backed entity, Caisse de Depot de Placement du Quebec – the largest financial institution in Quebec.


Project is enabled by highly credentialed management team with interests aligned to those of shareholders


Michael O’Keeffe, Executive Chairman of the Board Proven global leadership track record


  • Michael started his career as an executive with Mount Isa Mines Ltd, a part of the Glencore group of companies in Australia. The company has pioneered several significant mining industry innovations and commercialized a number of mining technologies. Michael successfully led the delivery of feasibility studies for copper smelting and pursued global refining opportunities.
  • Under Michael’s leadership, Glencore Australia grew into one of the global commodity trader’s largest divisions, driving group sales from approximatively US$100M to over US$2.4B during his tenure in 1995-2004.
  • In 2005, Michael founded Riversdale Mining Ltd, acquiring BHP’s Zululand anthracite coal project for A$14M. He later expanded the project into Mozambique, finalizing the transaction with Rio Tinto by selling it in 2011 for US$4B. 
  • Michael assumed control of the Bloom Lake Project, acquired by Champion Iron (CIA) for only C$9.75M with assumed liabilities of C$43M. Champion’s market capitalization today is nearing C$1B. 
  • Michael is one of Champion Iron’s significant shareholders, owning approximately 10% of outstanding shares in the company, ensuring strategic alignment with the investors’ interests.


David Cataford, Chief Executive Officer– Strong operational capabilities combined with deep understanding of iron ore sector and mining in the region


  • David Cataford brings a proven track record in bringing mining assets into production. David’s comprehensive understanding of iron ore processing and mining operations in the Labrador Trough further strengthens Champion Iron’s ability to deliver a long-life, low-cost mining operation.
  • Before joining Champion, David held various management positions at Cliffs Natural Resources Inc., including senior roles at their major iron ore mine, Bloom Lake, in Quebec. He was part of the management team at Bloom Lake that increased mining capacity by 80%. David was also instrumental in delivering the completion of the Bloom Lake plant’s Phase 1 ramp-up.
  • Previously, David was a research committee member of COREM, the largest organization in Canada focused on mineral processing research and development. He chaired and co-founded the North Shore and Labrador Mineral Processing Society which hosts an annual conference for Labrador Trough projects. David also served on the Board of Canadian Mineral Processors.

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