- Record quarterly production of 4.0M wmt, surpassing Bloom Lake's expanded
nameplate capacity, revenue of $507M,
EBITDA of $247M1 and EPS
of $0.24
- Advanced work programs in connection with the final investment
decision for the DRPF Project
- Positive results from the Kami Project Study, positioning the
Company to consider strategic partnerships to advance the
project
MONTRÉAL, Jan. 30,
2024 /CNW/ - (Sydney, January 31,
2024) - Champion Iron Limited (TSX: CIA) (ASX: CIA) (OTCQX:
CIAFF) ("Champion" or the "Company") is pleased to announce its
operational and financial results for the 2024 financial year third
quarter ended December 31, 2023.
Champion's CEO, Mr. David
Cataford, said: "We are excited to implement key elements of
our expansion strategy, with the receipt of an allocation of
additional hydroelectric power from Hydro-Québec and our recently
secured additional financing. Central to this, our Board provided a
final investment decision for the DRPF project. This carbon neutral
project, which remains on schedule to be completed in calendar
H2/2025, positions the Company and the region to contribute to the
accelerating green steel transition, particularly considering the
recent decisions by the governments of Québec and Newfoundland and Labrador to include high-purity iron ore on
their critical mineral lists. Bloom Lake demonstrated its ability
to produce at or above its recently expanded nameplate capacity,
resulting in a quarterly production record and robust financial
results. Our team also achieved another important milestone by
announcing the details of the Kami Project Study which evaluated
the construction of a 9.0M wmt per
year DR quality iron ore operation. The Study enables the Company
to consider strategic partnerships prior to advancing the project,
providing an opportunity to capitalize on the growing demand for
green steel."
Conference Call Details
Champion will host a conference call and webcast on January 31, 2024, at 9:00
AM (Montréal time) / February 1,
2024, at 1:00 AM (Sydney time) to discuss the results for the
financial third quarter ended December 31,
2023. Call details are outlined at the end of this press
release.
1. Quarterly Highlights
Operations and Sustainability
- No serious injuries and no major environmental incidents
reported in the quarter;
- Published Champion's 2023 Annual Modern Slavery Statement,
highlighting the Company's commitment to upholding human
rights;
- Production exceeded Bloom Lake's recently expanded nameplate
capacity, resulting in a record quarterly production of 4.0 million
wmt (3.9 million dmt) of high-grade 66.3% Fe concentrate for the
three-month period ended December 31,
2023, up 17% from the previous quarter, and 36% over the
same period last year;
- Record quarterly iron ore concentrate sales of 3.2 million dmt
for the three-month period ended December
31, 2023, up 12% and 20% from the previous quarter and the
prior-year period, respectively; and
- While Bloom Lake's production capacity increased during the
period, exceeding its expanded nameplate capacity, the rail
operator did not haul at contracted levels. This haulage shortfall
resulted in the inability to ship all of the iron ore concentrate
produced during the period. Additionally, rail service was
interrupted for several days after heavy rains in late December.
Accordingly, iron ore concentrate stockpiled at Bloom Lake
increased by 0.8 million wmt to 2.4 million wmt during the
three-month period ended December 31,
2023. The Company is engaging with the rail operator to
receive contracted haulage services to ensure that Bloom Lake's
increased production, as well as iron ore concentrate currently
stockpiled at Bloom Lake, is hauled over future periods.
Financial Results
- Gross realized selling price of US$144.0/dmt1, compared to the P65
index average of US$138.7/dmt in the
period;
- Net realized selling price of US$115.6/dmt1, representing a 15%
increase quarter-on-quarter, and a 20% increase year-on-year;
- C1 cash cost of $73.0/dmt1 (US$53.6/dmt)2, a decrease of 1%
quarter-on-quarter, and 4% year-on-year, respectively;
- EBITDA of $246.6
million1, an increase of 59% quarter-on-quarter,
and 109% year-on-year, respectively;
- Net income of $126.5 million, an
increase of 94% quarter-on-quarter, and 146% year-on-year,
respectively;
- EPS of $0.24, an increase of 85%
quarter-on-quarter, and 140% year-on-year, respectively;
- Strong cash position at quarter-end with $387.4 million in cash and cash equivalents as at
December 31, 2023, an increase of
$70.8 million since September 30, 2023;
- Procured a new US$230 million
term loan, maturing in November 2028
with no principal repayment before June
2026 (the "Financing"). Repaid the US$180 million outstanding balance from the
Company's existing US$400 million
revolving facility, with the proceeds of the Financing, and
extended its maturity from May 2026
to November 2027;
- Available liquidity, including amounts available from the
Company's credit facilities, totalling $937.6 million1 at quarter-end,
compared to $645.9
million1 as at September
30, 2023, to support growth initiatives; and
- Paid the fifth semi-annual dividend of $0.10 per ordinary share on November 28, 2023, totalling $51.8 million.
Kamistiatusset Project (the "Kami Project" or the "Project")
Study Highlights
- The Kami Project Study (the "Study") evaluated the construction
of mining and processing facilities to produce Direct Reduction
("DR") grade pellet feed iron ore from the mining properties of the
Kami mine located in the Labrador Trough in southwestern
Labrador and Newfoundland. The Study details a 25-year life
of mine with average annual DR quality iron ore concentrate
production of approximately 9.0M wmt
per annum at above 67.5% Fe;
- Project construction period is estimated at 48 months,
following a final investment decision, and it benefits from
permitting work completed by the Project's previous owner;
- Total capital expenditures of $3,864
million, resulting in a Net Present Value ("NPV") of
$541 million and Internal Rate of
Return ("IRR") of 9.8% after-tax, based on conservative pricing
dynamics compared to prevailing iron ore prices; NPV of
$2,195 million and IRR of 14.8%
after-tax, based on the previous three calendar year average of the
P65 index price;
- Benefiting from expected access to hydroelectric power and
significant investments to reduce its GHG emissions, including a
near pit crushing facility and conveyor circuit for ore and waste,
the Project is expected to have an emission intensity of
approximately 6.7 kilogram of CO2 per tonne of DR grade
pellet feed iron ore produced, positioning the Project as
potentially one of the lowest emitting producers of DR grade pellet
feed iron ore locally and globally; and
- Completion of the Study enables the Company to evaluate the
Project in relation to its portfolio of other organic growth
opportunities, while aiming to maintain a prudent balance sheet and
avoid equity dilution. The Company expects to continue optimizing
the Project, engage with stakeholders, evaluate opportunities to
improve its economics, advance permitting and work on strategic
partnership opportunities prior to considering a final investment
decision.
Direct Reduction Pellet Feed Project Update
- With significant available liquidity and allocation of
additional hydroelectric power from Hydro-Québec, securing access
to renewable power required for the DRPF project, the Board
provided a final investment decision to proceed with the DRPF
project on January 30, 2024 (Montréal
time);
- The DRPF project final investment decision secures the
project's expected commissioning in the second half of calendar
year 2025, a timeline which is subject to completing key
construction milestones in mid-2024 calendar year; and
- Project remains on budget, with quarterly investments of
$31.0 million and a cumulative
investment of $59.9 million, as at
December 31, 2023, from the total
capital expenditures of $470.7
million as estimated in the results of the study released in
January 2023.
Other Growth and Development
- Recognizing its positive impact in reducing GHG emissions in
steelmaking and its importance in the green steel supply chain,
high-purity iron ore was listed on the province of Québec's and
Newfoundland and Labrador's critical minerals lists, joining
other minerals such as nickel, copper and cobalt; and
- Advanced a study, which is expected to be completed in the near
term, in collaboration with a major international steelmaking
partner, to re-commission the Pointe-Noire Iron Ore Pelletizing
Facility (the "Pellet Plant") to produce DR grade pellets.
2. Kami Project Study
Project Description
The Kami Project is a DR grade quality iron ore project near
available infrastructure, situated only a few kilometers south-east
of the Company's operating Bloom Lake mine, in the Labrador Trough
geological belt in southwestern Labrador and Newfoundland, near the Québec eastern border.
The Study evaluated the construction of mining and processing
facilities, including a concentrator, tailings facilities and
related infrastructure to produce DRPF iron ore from the mining
properties of the Kami mine.
The Project is expected to benefit from several competitive
advantages including:
- a sizeable high-purity iron resource, significantly de-risked
by the Project's previous owners;
- location near available infrastructure and Bloom Lake, enabling
potential synergies;
- potential Project ranking as one of the lowest emitting
high-purity iron ore projects, both locally and globally, by
leveraging expected access to hydroelectric power;
- a supportive Newfoundland and
Labrador government which
identified high-purity iron ore within their critical minerals
plan; and
- advanced permitting work completed by the previous owner.
The Study did not incorporate prospects for potential economic
support from governments to encourage development of critical
minerals, preferential funding opportunities or other economic
incentives, which could improve economics and influence a final
investment decision.
Economic Summary and Key Assumptions
KEY ASSUMPTION
SUMMARY
|
UNIT
|
|
Mineral
reserves
|
M dmt
|
643
|
Production life of
mine
|
Years
|
25
|
Average annual
production
|
M dmt
|
8.6
|
Average annual
production wet
|
M wmt
|
9.0
|
Average Fe In-situ
grade to plant
|
%
|
29.2 %
|
Average Fe
metallurgical recovery
|
%
|
76.4 %
|
Average concentrate
grade sold
|
% Fe
|
DR quality iron ore
above 67.5%
|
Average stripping
ratio
|
Waste:Ore
|
1.6
|
MACROECONOMIC AND
MARKET ASSUMPTIONS
|
|
C$
|
US$
|
P65 Index CFR China
Iron ore price (Kami iron ore
concentrate gross realized price is based on (i) P65 index
and (ii) an additional premium for DR grade quality iron
ore)
|
$/dmt
|
156.0
|
120.0
|
Average shipping
cost
|
$/dmt
|
28.6
|
22.0
|
Average foreign
exchange rate
|
C$:US$
|
1.30
|
CAPITAL
COSTS
|
|
C$
|
US$
|
Construction
period
|
Months
|
48
|
Initial
CAPEX
|
M
|
3,864
|
2,972
|
OPERATING COST PER
TONNE SOLD
|
|
C$
|
US$
|
Total cash cost (C1
Cost)
|
$/dmt
|
76.1
|
58.5
|
Total AISC
|
$/dmt
|
89.5
|
68.9
|
ECONOMIC
RESULTS
|
BASE PRICE
SCENARIO
|
MARKET PRICE
SCENARIO
(3-Year Trailing
Scenario: CY2021-2023)
|
|
C$
|
US$
|
C$
|
US$
|
P65 Index CFR China
Iron ore price (Kami iron ore
concentrate gross realized price is based on (i) P65
index and (ii) an additional premium for DR grade
quality iron ore)
|
156.0
|
120.0
|
197.9
|
152.2
|
C3 Index price
($/wmt)
|
28.6
|
22.0
|
31.2
|
24.0
|
PRE-TAX
|
|
|
|
|
NPV in M at 8% discount
rate
|
1,482
|
1,140
|
4,034
|
3,103
|
IRR
|
12.1 %
|
18.0 %
|
AFTER-TAX
|
|
|
|
|
NPV in M at 8% discount
rate
|
541
|
416
|
2,195
|
1,688
|
IRR
|
9.8 %
|
14.8 %
|
Payback period
(years)
|
7
|
5
|
All other
assumptions besides P65 index and C3 index are held
constant
|
|
|
Mine
The Kami Project is planned as a conventional open-pit mine
combined with an In-Pit Crushing System ("IPCS") for waste rock.
Mining operations will utilize drills, haul trucks coupled with
hydraulic shovels, and a semi-mobile waste IPCS, with the ore
crusher located at the pit exit on the East side. The Project
contains the Rose pit, which is to be split into three phases. The
peak mining rate is expected to be 81.0 Mtpa over a life of mine of
25 years. A total of 643 Mt of ore
will be mined at an average total iron ore grade of 29.2% with a
total of 1,019.5 Mt of combined waste and overburden, resulting in
a stripping ratio of 1.6 tonnes of waste per tonne of ore
mined.
Concentrator Plant
The proposed Kami concentrator plant is based on the flowsheet
developed and contained in previous studies completed by the
Project's former owner, the 2023 test work and input from the
Company and its advisors' engineering teams and manufacturers. The
proposed concentrator is designed to process ore grading at 29.2%
total Fe over a 25-year mine life. The test work conducted during
2023 resulted in the redesign of a revised process flowsheet that
will enable the production of a DR quality iron ore concentrate at
or above 67.5% Fe and below 2.5% SiO2 +
Al2O3, with an iron recovery of 76.4%,
allowing an average life of mine production of 9.0M wmt per year.
The flowsheet includes proven and modern technologies for
processing iron ore, including a gyratory crusher, autogenous mill,
gravity separation circuit consisting of spirals and
Reflux™ Classifiers currently operating in the
Bloom Lake Phase II concentrator, a magnetic separation circuit
consisting of a ball mill, and low intensity magnetic separators.
The flowsheet will also include regrind mills and a reverse
flotation circuit that will enable the production of DR quality
iron ore concentrate.
Infrastructure and Regional Advantages
The Kami Project is expected to benefit from access to renewable
hydroelectric power, water, roads, existing rail and port
facilities in a proven regional labour market in a mining friendly
jurisdiction with a long history of supporting iron ore
operations.
The Kami Project is located directly south of Bloom Lake's
existing and operational rail loop infrastructure, with access to
end markets via port and rail. Rail access for the Kami Project is
expected to consist of three separate segments. The first segment,
a new rail spur, will be required to connect the mine site to the
Quebec North Shore & Labrador ("QNS&L") railway line north
of the Wabush-Labrador airport. The second segment would
utilize the existing QNS&L railway, connecting Wabush to the Arnaud junction in Sept-Îles,
Québec. The third and last segment, the existing Arnaud railroad,
connects the Arnaud junction to the Société Ferroviaire et
Porturaire of Pointe-Noire ("SFPPN") port facilities in Sept-Îles,
currently utilized by Bloom Lake, where unloading facilities will
be upgraded. Once unloaded, the DR quality iron ore will be
stockpiled, then loaded onto vessels to supply the Company's global
customers. Modifications are expected to be required to the
existing railway segments and port infrastructure to accommodate
the increased capacity from the Kami Project.
Tailings Management
The Tailings Management Facility ("TMF") will consist of a total
of five centerline construction method dams built in nine total
embankment stages over the life of the facility. Tailings slurry
will be pumped from the plant in two streams, coarse and fines. In
addition, the TMF will enable the storage of solid waste tailings
from the processing plant, as well as operational, storm and snow
water management. Contact water, consisting of runoff and
embankment seepage, will be collected with collection ditches.
DRPF Quality Iron Ore and Pricing
The Project is expected to produce a DR quality iron ore. With
an increased focus on reducing GHG emissions in the steelmaking
processes, the steel industry is experiencing a structural shift in
its production methods. This dynamic is expected to create
additional demand for higher-purity iron ore products, as the
industry transitions towards using alternative technologies to
produce liquid iron, such as the use of Direct Reduced Iron in
Electric Arc Furnaces instead of Blast Furnaces and Basic Oxygen
Furnaces.
As DR grade quality iron ore is a niche product in the iron ore
industry, representing approximately 5% of the global seaborne iron
ore production, pricing tends to be directly negotiated between
producers and buyers without an available global pricing index. Due
to its higher Fe content and lower impurities, pricing for DR grade
iron ore product, used as a raw material input to make DR grade
pellets, is expected to attract a significant premium over the
traditional high-grade iron ore P65 index and correlates with the
DR grade pellet indices. The Company believes, in tandem with
several market experts, that the accelerating transition to reduce
emissions in the steelmaking process will result in rising demand
for DRPF products. As a result of this expected rising demand and
product scarcity, the Company believes that its industry leading
DRPF quality product will attract increasing premiums over time. In
addition to Bloom Lake's expected production of DRPF quality iron
ore, the potential production of Kami Project DRPF quality iron ore
would further enable the Company to diversify its customer mix,
including steelmakers in closer proximity to the Port of Sept-Îles,
which could result in freight advantages for the Company.
The Study's base case economic assumption utilizes a
conservative blended net realized price based on a P65 index price
of US$120.0/t for the life of mine, a
C3 index price of US$22.0/t and a
conservative premium for DR quality iron ore. The P65 index price
of US$120.0/t utilized in the Study
compares to the trailing three calendar years' average price of
US$152.2/t and the trailing five
calendar years' average price of US$136.5/t.
Project Timeline
The Project benefits from the permitting work completed by its
previous owner and has an estimated construction period of
approximately 48 months following a final investment decision. The
Kami Project is one of several organic growth opportunities
currently being considered by the Company. The Company will
continue to optimize the Project, engage with stakeholders,
evaluate opportunities to upgrade its economics, advance permitting
and consider strategic partnerships prior to considering a final
investment decision.
Study and Qualified Persons
The Study will be filed under the Company's profile on SEDAR+ at
www.sedarplus.ca, the ASX at www.asx.com.au and the Company's
website at www.championiron.com within 45 days of the date of this
news release. The following Qualified Persons participated in the
preparation of the Study:
- André Allaire, P. Eng. – BBA Inc.
- Christian Beaulieu, P.Geo. –
consultant for G Mining Services Inc.
- Alexandre Dorval, P.Eng. – G
Mining Services Inc.
- Mathieu Girard, P.Eng. –
Soutex
- Siavash Farhangi, P.Eng. – WSP
Canada Inc.
- Marie-Hélène Paquette, P. Eng. – AtkinsRéalis Inc.
- Emmanuelle Millet, P. Geo. –
AtkinsRéalis Inc.
- Tarek Khoury, P. Eng. – Systra
Canada Inc.
Each of these Qualified Persons has reviewed and approved, or
has prepared, as applicable, the disclosure of the scientific and
technical information contained in this news release that is
relevant to their area of responsibility and verified the data
underlying such technical information. Reference is made to the
Study that will be filed under the Company's profile on SEDAR+ at
www.sedarplus.ca, the ASX at www.asx.com.au and the Company's
website at www.championiron.com.
Mineral Resource and Mineral Reserve Estimates
The following table presents the mineral resource estimate for
the Kami Project, estimated at a cut-off grade of 15% Fe, inside an
optimized open-pit shell based on a long-term reference P62 index
iron price of US$95/dmt (C$124/dmt) and P65 index iron ore price of
US$115/dmt (C$150/dmt). An exchange rate of 1.30 C$/US$ was used. The open-pit measured and
indicated mineral resources for the Kami Project, including the
Rose and Mills Lake pits, are estimated at 975.5 Mt with an average
grade of 29.6% Fe, and the open-pit inferred mineral resources at
163.0 Mt with an average grade of 29.2% Fe. Mineral resources that
are not mineral reserves have not demonstrated economic
viability.
Mineral Resource Estimate
|
Category
|
Density
|
Mass
|
TFe
|
Mag
Fe
|
Hem
Fe
|
Mag+Hem
Fe
|
MnO
|
SiO2
|
|
(t/m3)
|
(Mt)
|
( %)
|
( %)
|
( %)
|
( %)
|
( %)
|
( %)
|
Rose
Central
|
Measured
|
3.47
|
93.8
|
29.3
|
16.9
|
9.37
|
26.3
|
2.2
|
45.1
|
Indicated
|
3.46
|
363.7
|
28.9
|
17.4
|
7.39
|
24.8
|
1.9
|
45.6
|
M&I
|
3.46
|
457.5
|
29.0
|
17.3
|
7.80
|
25.1
|
1.9
|
45.5
|
Inferred
|
3.44
|
59.8
|
28.0
|
16.7
|
7.47
|
24.2
|
1.6
|
46.1
|
Rose
North
|
Measured
|
3.48
|
81.7
|
31.0
|
9.2
|
19.8
|
29.1
|
1.2
|
50.7
|
Indicated
|
3.45
|
338.5
|
29.9
|
13.9
|
13.6
|
27.5
|
1.2
|
50.0
|
M&I
|
3.46
|
420.2
|
30.1
|
13.0
|
14.8
|
27.8
|
1.2
|
50.2
|
Inferred
|
3.30
|
89.8
|
29.9
|
11.7
|
16.1
|
27.8
|
0.9
|
49.5
|
Mills
Lake
|
Measured
|
3.59
|
37.0
|
30.5
|
21.4
|
7.10
|
28.5
|
1.3
|
46.5
|
Indicated
|
3.57
|
60.8
|
30.3
|
21.5
|
5.91
|
27.4
|
1.2
|
46.0
|
M&I
|
3.58
|
97.8
|
30.4
|
21.5
|
6.36
|
27.8
|
1.3
|
46.2
|
Inferred
|
3.55
|
13.4
|
29.6
|
23.1
|
3.34
|
26.5
|
1.2
|
46.1
|
Total
|
Measured
|
3.49
|
212.4
|
30.2
|
14.8
|
13.0
|
27.8
|
1.6
|
47.5
|
Indicated
|
3.46
|
763.0
|
29.5
|
16.2
|
10.0
|
26.2
|
1.5
|
47.6
|
M&I
|
3.47
|
975.5
|
29.6
|
15.9
|
10.7
|
26.6
|
1.5
|
47.6
|
Inferred
|
3.37
|
163.0
|
29.2
|
14.5
|
11.9
|
26.4
|
1.2
|
48.0
|
Notes on Mineral Resources:
1.
|
The Mineral Resource
estimate described above has been prepared in accordance with the
CIM Standards (Canadian Institute of Mining, Metallurgy and
Petroleum, 2014) and follows the Best Practices Guidelines outlined
by the CIM (2019).
|
2.
|
The qualified person
for this Mineral Resource Estimate is Christian Beaulieu, P.Geo.,
consultant for G Mining Services Inc. Mr. Beaulieu is a member of
the Professional Engineers and Geoscientists of Newfoundland &
Labrador (#10653) and of l'Ordre des géologues du Québec
(#1072).
|
3.
|
The effective date of
the Mineral Resource Estimate is November 15, 2022.
|
4.
|
The cut-off grade used
to report Open Pit Mineral Resources is 15.0% total iron
(TFe).
|
5.
|
Density is applied by
rock type and is related to the amount of iron in each
block.
|
6.
|
Pit optimization
parameters are described as follows:
|
|
i.
|
Based on a P65 index
iron price of US$115/dmt
|
|
ii.
|
Concentrate grade of
65.2% Fe
|
|
iii.
|
Exchange rate of 1.30
C$:US$
|
|
iv.
|
Metallurgical
recoveries of 83.55%
|
|
v.
|
Mining costs of
US$2.11/t mined
|
|
vi.
|
Total ore based costs
of US$5.33/dmt
|
|
vii.
|
Overall slope angle
varies from 48.4° to 51.6° for the footwall and hanging wall
domains respectively.
|
7.
|
Measured, indicated and
inferred mineral resources have been defined mainly based on drill
hole spacing.
|
8.
|
Mineral resources (Rose
Central, Rose North and Mills Lake combined) have a stripping ratio
of 2.0:1 (W:O).
|
9.
|
The tonnages and grades
outlined above are reported inside a block model with parent block
size of 10 m x 20 m x 10 m, and subblocks of 5 m x 10 m x 5
m.
|
10.
|
Tonnages have been
expressed in the metric system and metal content as percentages.
Totals may not add up due to rounding.
|
11.
|
Mineral resources are
not mineral reserves as they have not demonstrated economic
viability. The quantity and grade of reported inferred mineral
resources are uncertain in nature.
|
12.
|
The qualified person is
not aware of any factors or issues that materially affect the
mineral resource estimate other than normal risks faced by mining
projects in the province in terms of environmental, permitting,
taxation, socio-economic, marketing, political factors and
additional risk factors regarding indicated and inferred
resources.
|
13.
|
See the appendix to the
Company's quarterly activities report filed on January 31, 2024, on
the ASX at www.asx.com.au on January 31, 2024, for
additional information regarding Joint Ore Reserves Committee
("JORC").
|
The proven and probable mineral reserves for the Kami Project
are estimated at 643.0 Mt at an average grade of 29.2% Fe based on
a cut-off grade of 15% Fe. The mineral reserves were estimated
using a long-term P62 index iron ore price of US$80/dmt, a long-term P65 index iron ore price
of US$100/dmt and an exchange rate of
1.30 C$/US$. The mineral reserves
include mining dilution and ore loss calculated on a block-by-block
basis, based on the neighbouring blocks lithology and grade. The
average stripping ratio of the open pit is 1.6.
Mineral Reserve Estimate
Mineral Reserves by
Category
|
Unit
|
Proven
|
Probable
|
Proven &
Probable
|
Crude Ore
Tonnage
|
Mt
|
167
|
476
|
643
|
Crude Hematite
Grade
|
% HemFe
|
13.84
|
10.6
|
11.4
|
Crude Magnetite
Grade
|
% MagFe
|
13.18
|
15.1
|
14.6
|
Crude Total Iron
Grade
|
% TotFe
|
29.7
|
29.0
|
29.2
|
Concentrate
Tonnage
|
Mt
|
54.8
|
157.6
|
212.4
|
Concentrate Iron
Grade
|
% Fe
|
67.6
|
67.6
|
67.6
|
Notes on Mineral
Reserves:
|
|
1.
|
The qualified person
for this Mineral Reserve Estimate is Alexandre Dorval, mining
engineer at G Mining Services Inc. Mr. Dorval is a member of the
Professional Engineers and Geoscientists of Newfoundland &
Labrador (#11042), of the Professional Engineers of Ontario
(#100214598) and of l'Ordre des Ingénieurs du Québec
(#5027189).
|
2
|
Mineral Reserves based
on an updated Lidar dated September 2011.
|
3.
|
Mineral Reserves are
estimated using a long-term iron price reference price (Platt's
62%) of US$ 80/dmt and an exchange rate of 1.30 C$/US$. An Fe
concentrate price adjustment of US$ 20/dmt was added as an iron
grade premium.
|
4.
|
The effective date of
the Mineral Reserve Estimate is November 15, 2022.
|
5.
|
Bulk density of ore is
variable but averages 3.1 t/m3.
|
6.
|
Cut-Off Grade of 15%
TotFe used to calculate reserves.
|
7.
|
The average stripping
ratio is 1.6:1 W:O.
|
8.
|
The Mineral Reserve
includes a 1.4% mining dilution.
|
9.
|
The number of metric
tonnes was rounded to the nearest thousand. Any discrepancies in
the totals are due to rounding; with rounding following the
recommendations detailed in National Instrument 43-101 – Standards
of Disclosure for Mineral Projects ("NI 43-101").
|
10.
|
See the appendix to the
Company's quarterly activities report filed on January 31, 2024, on
the ASX at www.asx.com.au on January 31, 2024, for
additional information regarding Joint Ore Reserves Committee
("JORC").
|
3. Bloom Lake Mine Operating Activities
Phase II and Rail Capacity Update
While the Phase II project was completed as planned and ahead of
schedule, the Company faced challenges regarding delays in
deliveries and commissioning of additional required mining
equipment, creating inefficiencies across the site, which
negatively impacted the Company's ability to reach its expanded
nameplate capacity. Despite such challenges, Phase II reached
commercial production in December
2022 and produced at nameplate capacity for thirty
consecutive days for the first time during the first quarter of the
2024 financial year. Further to the improvements to stabilize and
optimize operations, Bloom Lake demonstrated additional stability
during the three-month period ended December
31, 2023, to produce above its recently expanded nameplate
capacity over a significant period.
Phase II work on third-party infrastructure was completed in the
second quarter of the 2024 financial year, further positioning the
Company to benefit from additional flexibility and capacity to
handle the Company's expanded nameplate capacity at the port
facilities in Sept-Îles. The commissioning of three additional
locomotives, an additional stacker reclaimer and associated
conveyors, positively impacted the Company's shipment capacity and
vessel loading time, required to support the expanded production
capacity at Bloom Lake.
Although the commissioning in August
2023 of three additional locomotives, received earlier in
June, positively impacted the volume of concentrate transported to
Sept-Îles, it was offset by reduced railway services as well as
planned and unplanned maintenance activities at the port facilities
in Sept-Îles. As a result of the disconnect in railway services and
Bloom Lake's increasing production capacity, the iron ore
concentrate stockpiled at Bloom Lake increased from 1.6 million wmt
at the prior quarter-end to 2.4 million wmt as at December 31, 2023.
The Company is engaging with the rail operator to receive
contracted haulage services to ensure that Bloom Lake's increased
production, as well as iron ore concentrate currently stockpiled at
Bloom Lake, is hauled over future periods. The Company expects to
incur additional rehandling costs in future periods to reclaim the
iron ore concentrate from the stockpile.
Impact of Forest Fires
Forest fires emerged on May 28,
2023, north of Sept-Îles, Québec, resulting in railway
service interruptions between Bloom Lake and the port of Sept-Îles
from May 30 to June 10, 2023. As
forest fires subsided in the region, railway services resumed at
partial capacity on June 10, 2023,
until they returned to pre-forest fire levels during the
three-month period ended September 30,
2023. As a result, shipments and sales were impacted in the
first half of the 2024 financial year.
Despite supply chain challenges caused by multiple highway
closures impacting operations during the quarter ended September 30, 2023, Bloom Lake operated
continuously throughout the railway interruptions and iron ore
concentrate was stockpiled at the mining complex. The Company
responded to the situation by triggering its emergency response
plan and managed supply chain risks by focusing mine operations on
critical activities required to feed the two plants. This impacted
the Company's ability to move waste and generate blasted ore
inventory in the first quarter of the 2024 financial year. The
Company also used its crusher's stockpiles to supply the two plants
during that period.
Operational Performance
|
|
Q3 FY24
|
Q2 FY24
|
Q/Q Change
|
|
Q3 FY23
|
Y/Y Change
|
|
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
|
|
Waste mined and hauled
(wmt)
|
|
6,993,200
|
6,264,600
|
12 %
|
|
4,371,500
|
60 %
|
Ore mined and hauled
(wmt)
|
|
11,215,800
|
10,593,600
|
6 %
|
|
8,840,400
|
27 %
|
Material mined and
hauled (wmt)
|
|
18,209,000
|
16,858,200
|
8 %
|
|
13,211,900
|
38 %
|
|
|
|
|
|
|
|
|
Stripping
ratio
|
|
0.62
|
0.59
|
5 %
|
|
0.49
|
27 %
|
|
|
|
|
|
|
|
|
Ore milled
(wmt)
|
|
11,137,000
|
10,339,700
|
8 %
|
|
8,503,400
|
31 %
|
Head grade Fe
(%)
|
|
29.4
|
28.2
|
4 %
|
|
28.5
|
3 %
|
Fe recovery
(%)
|
|
81.4
|
77.8
|
5 %
|
|
80.1
|
2 %
|
Product Fe
(%)
|
|
66.3
|
66.1
|
— %
|
|
66.0
|
— %
|
Iron ore concentrate
produced (wmt)
|
|
4,042,600
|
3,447,200
|
17 %
|
|
2,962,500
|
36 %
|
Iron ore concentrate
sold (dmt)
|
|
3,227,500
|
2,883,800
|
12 %
|
|
2,694,200
|
20 %
|
During the three-month period ended December 31, 2023, 18.2 million tonnes of
material were mined and hauled, compared to 13.2 million tonnes
during the same period in 2022, an increase of 38%, and 16.9
million tonnes during the previous quarter, a quarter-over-quarter
increase of 8%. Additional material mined and hauled is
attributable to the contribution of additional equipment
commissioned during the 2024 financial year, a higher utilization
and availability of mining equipment, and reduced trucking cycle
time associated with the construction of additional ramp accesses.
The stripping ratio of 0.62 for the three-month period ended
December 31, 2023, was higher than in
the same prior-year period, and increased as planned, compared to
0.59 in the previous quarter. The Company plans to gradually
increase stripping activities in accordance with the LoM plan.
During the three-month period ended December 31, 2023, the two plants processed 11.1
million tonnes of ore, compared to 8.5 million tonnes for the same
prior-year period and 10.3 million tonnes in the previous quarter,
an increase of 31% and 8%, respectively, as the Company surpassed
Bloom Lake's expanded nameplate capacity of 15 Mtpa during the
three-month period ended December 31,
2023.
The iron ore head grade for the three-month period ended
December 31, 2023, was 29.4%,
compared to 28.5% for the same period in 2022, and 28.2% during the
previous quarter. The variation in head grade was within expected
normal variations in the mine plan.
The Company's average Fe recovery rate was 81.4% for the
three-month period ended December 31,
2023, compared to 80.1% for the same period in 2022, and
77.8% during the previous quarter. The increase in Fe recovery is
attributable to work programs that aimed to increase throughput and
ore recoveries and optimize operations. Significant improvements
were also made to increase the reliability and productivity of the
Company's crushed ore conveying systems, which allowed the Company
to optimize its recovery circuits level in line with its expected
Fe recovery rate target of 82.0% in upcoming quarters, as detailed
in the technical report, in respect of Bloom Lake, prepared
pursuant to NI 43-101 and Chapter 5 of the ASX Listing Rules
entitled "Mineral Resources and Mineral Reserves for the Bloom Lake
Mine, Fermont, Québec,
Canada", prepared by BBA Inc., SRK
Consulting (U.S.) Inc., Soutex and Quebec Iron Ore Inc. and dated
September 28, 2023 (the "2023
Technical Report").
With higher head grade and Fe recovery, Bloom Lake delivered
record production of 4.0 million wmt (3.9 million dmt) of
high-grade iron ore concentrate during the three-month period ended
December 31, 2023, an increase of 36%
compared to 3.0 million wmt (2.9 million dmt) during the same
period in 2022, and an increase of 17% compared to the previous
quarter.
4. Financial Performance
|
|
Q3 FY24
|
Q2 FY24
|
Q/Q Change
|
|
Q3 FY23
|
Y/Y Change
|
|
|
|
|
|
|
|
|
Financial Data
(in thousands of dollars)
|
|
|
|
|
|
|
|
Revenues
|
|
506,891
|
387,568
|
31 %
|
|
351,233
|
44 %
|
Cost of
sales
|
|
235,457
|
212,584
|
11 %
|
|
209,070
|
13 %
|
Other
expenses
|
|
27,219
|
20,192
|
35 %
|
|
23,780
|
14 %
|
Net finance
costs
|
|
8,747
|
11,634
|
(25 %)
|
|
1,858
|
371 %
|
Net income
|
|
126,462
|
65,281
|
94 %
|
|
51,406
|
146 %
|
EBITDA1
|
|
246,609
|
155,036
|
59 %
|
|
118,206
|
109 %
|
|
|
|
|
|
|
|
|
Statistics
(in dollars per dmt sold)
|
|
|
|
|
|
|
|
Gross average realized
selling price1
|
|
195.8
|
169.4
|
16 %
|
|
171.6
|
14 %
|
Net average realized
selling price1
|
|
157.1
|
134.4
|
17 %
|
|
130.4
|
20 %
|
C1 cash
cost1
|
|
73.0
|
73.7
|
(1 %)
|
|
76.0
|
(4 %)
|
AISC1
|
|
83.9
|
99.1
|
(15 %)
|
|
86.7
|
(3 %)
|
Cash operating
margin1
|
|
73.2
|
35.3
|
107 %
|
|
43.7
|
68 %
|
A. Revenues
Revenues totalled $506.9 million
for the three-month period ended December
31, 2023, compared to $351.2
million for the same period in 2022, mainly due to sales
volume increasing to 3.2 million tonnes of high-grade iron ore
concentrate from 2.7 million tonnes for the same period in 2022,
and a higher P65 index price. Sales volume during the quarter was
impacted by lower rail services, unplanned maintenance at the port
facilities and several days of rail service outages after heavy
rains in December 2023.
The gross average realized selling price was US$144.0/dmt1 during the third quarter
of the 2024 financial year, up from US$126.5/dmt1 for the same period last
year, benefiting from higher P65 index prices. During the
three-month period ended December 31,
2023, the P65 index averaged US$138.7/dmt, an increase of 25% from the same
quarter last year. The P65 index premium was only 8.1% over the P62
index average price of US$128.3/dmt
during the quarter, down from a premium of 9.6% in the previous
quarter. The high-grade P65 index premium over the P62 index
averaged 12.0% during the three-month period ended December 31, 2022. The depressed premiums for
high-grade iron ore, compared to recent periods, are mainly
attributable to lower European steel output, a key consuming region
for high-grade iron ore, struggling profitability at global steel
mills, together with the lack of environmental control for the
steel industry in China.
The gross average realized selling price of US$144.0/dmt1 for the three-month
period ended December 31, 2023, was
higher than the P65 index average price of US$138.7/dmt for the period due to the 1.8
million tonnes in transit as at December 31,
2023, provisionally priced using an average forward price of
US$149.6/dmt, which is higher than
the P65 index average price for the period. This was partially
offset by sales contracts using backward-looking iron ore index
prices, when prices were lower than the P65 index average price for
the period.
The average C3 Baltic Capesize Index ("C3 index") for the
three-month period ended December 31,
2023, was US$24.9/t compared
to US$20.6/t for the same period in
2022, representing an increase of 21%, which is higher than the
increase in freight and other costs of 11%. Champion typically
books vessels three to five weeks prior to the desired laycan
period when contracting vessels on the spot market, which creates a
delay between the freight paid and the C3 index. The effect of this
delay is eventually reconciled since Champion ships its high-grade
iron ore concentrate uniformly throughout the year. Freight and
other costs during the three-month period ended December 31, 2023, were also impacted by higher
demurrage expenses resulting from a combination of higher demurrage
rates, compared to the same period last year, and lower than
expected shipment.
Provisional pricing adjustments on prior quarter sales of
$16.0 million were recorded during
the three-month period ended December 31,
2023, representing a positive impact of US$3.8/dmt over the total volume of 3.2 million
dmt sold during the period, due to an increase in the P65 index
average in the period. During the three-month period ended
December 31, 2023, a final average
price of US$135.4/dmt was established
for the 1.3 million tonnes of iron ore that were in transit as at
September 30, 2023, and which were
previously evaluated using an average expected price of
US$125.9/dmt.
After taking into account sea freight and other costs of
US$32.2/dmt and the positive
provisional pricing adjustment of US$3.8/dmt, the Company obtained a net average
realized selling price of US$115.6/dmt (C$157.1/dmt)1 for its high-grade iron
ore shipped during the period.
B. Cost of Sales and C1 Cash Cost
For the three-month period ended December 31, 2023,
the cost of sales totalled $235.5 million with a C1 cash cost of
$73.0/dmt1, compared to
$209.1 million with a C1 cash
cost of $76.0/dmt1 for the
same period in 2022, and $212.6 million with a C1 cash cost of
$73.7/dmt1 in the previous
quarter. These improvements were mostly driven by production
achieving nameplate capacity during the quarter, and to increased
shipments amortizing fixed production and handling costs.
The cost of sales and C1 cash cost for the three-month period
ended December 31, 2023, continued to
be negatively impacted by higher than planned utilization of
contractors to fill vacant positions, and below expected run rate
shipment levels during the quarter to amortize mostly fixed costs
at the port facilities in Sept-Îles. The cost of sales and C1 cash
cost for the three-month period ended December 31, 2023, benefitted from lower fuel and
explosives prices, much higher production levels and lower rail
service costs due to semi-annual fuel price adjustments based on
trailing prices, compared to the same prior-year period.
Mining and processing costs for the 3.9 million dmt produced in
the three-month period ended December 31,
2023, totalled $45.3/dmt
produced, a decrease of 4% compared to $47.3/dmt produced in the previous quarter,
reflecting a stronger mining performance, lower
quarter-over-quarter planned maintenance activities and production
exceeding nameplate capacity.
C. Net Income & EBITDA
For the three-month period ended December 31, 2023,
the Company generated EBITDA of $246.6 million1, representing an
EBITDA margin of 49%1, compared to $118.2 million1, representing an
EBITDA margin of 34%1, for the same period in 2022.
Higher EBITDA was mainly due to higher sales volume and net
average realized selling price and lower cash cost, as described
above.
For the three-month period ended December
31, 2023, the Company generated net income of $126.5 million (EPS of $0.24), compared to $51.4
million (EPS of $0.10) for the
same prior-year period. The year-over-year increase in net income
is attributable to higher gross profits partially offset by higher
current income and mining taxes.
D. All In Sustaining Cost & Cash Operating Margin
During the three-month period ended
December 31, 2023, the Company realized an AISC of
$83.9/dmt1, compared to
$86.7/dmt1 for the same
period in 2022. The decrease was attributable to lower C1 cash
costs which benefited from Bloom Lake achieving nameplate capacity,
partially offset by slightly higher sustaining capital
expenditures. Refer to section 6 — Cash Flows for details on
sustaining capital expenditures.
The Company generated a cash operating margin of $73.2/dmt1 for each tonne of
high-grade iron ore concentrate sold during the three-month period
ended December 31, 2023, compared to $43.7/dmt1 for the same prior-year
period. The variation is due to a higher net average realized
selling price for the period and lower AISC.
5. Exploration Activities
During the three and nine-month periods ended
December 31, 2023, the Company maintained all of its
properties in good standing and did not enter into any
farm-in/farm-out arrangements. During the three and nine-month
periods ended December 31, 2023, $5.8 million and $13.1 million in exploration and evaluation
expenditures were incurred, respectively, compared to $3.8 million and $6.8 million, respectively, for the same
prior-year periods. During the three and nine-month periods ended
December 31, 2023, exploration and evaluation
expenditures mainly consisted of costs associated with work related
to updating the Kami Project feasibility study (refer to section 2
— Kami Project Study), claim renewal fees and claim staking around
the Kami property. In addition, the Company completed a
1,400 m diamond drill campaign for
hydrogeological characterization. Details on exploration projects
and maps are available on the Company's website at
www.championiron.com under the section Operations &
Projects.
6. Cash Flows — Purchase of Property, Plant and
Equipment
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
Tailings
lifts
|
|
11,662
|
|
10,547
|
|
66,649
|
|
47,972
|
Stripping and mining
activities
|
|
7,227
|
|
3,207
|
|
17,032
|
|
18,000
|
Mining equipment
rebuild and replacement
|
|
5,095
|
|
5,741
|
|
20,330
|
|
16,649
|
Other sustaining
capital expenditures
|
|
47
|
|
—
|
|
269
|
|
—
|
Sustaining capital
expenditures
|
|
24,031
|
|
19,495
|
|
104,280
|
|
82,621
|
|
|
|
|
|
|
|
|
|
DRPF project
|
|
30,989
|
|
—
|
|
59,010
|
|
—
|
Other capital
development expenditures at Bloom Lake
|
|
41,656
|
|
36,822
|
|
79,442
|
|
174,894
|
Purchase of property,
plant and equipment as per cash flows
|
|
96,676
|
|
56,317
|
|
242,732
|
|
257,515
|
Sustaining Capital Expenditures
The increases in tailings-related investments for the three and
nine-month periods ended December 31,
2023, are part of the Company's long-term plan to prepare
the site for a higher level of operations with the commissioning of
Phase II. As part of the Company's ongoing and thorough tailings
infrastructure monitoring and inspections, the Company continues to
invest in its safe tailings strategy and is implementing its
long-term tailings investment plan. The Company's tailings work
programs are typically completed in the first half of the financial
year due to more favourable weather conditions.
Stripping and mining activities for the three-month period ended
December 31, 2023, included
$1.6 million of capitalized stripping
costs (nil for the same prior-year period) and $5.7 million of other mine development costs,
including access ramps, topographic and pre-cut drilling
($3.2 million for the same prior-year
period). For the nine-month period ended December 31, 2023, capitalized stripping costs
totalled $1.8 million ($6.1 million for the same prior-year period) and
other mining development costs totalled $15.2 million ($11.9
million for the same prior-year period). The stripping and
mining activities for the nine-month period ended December 31, 2023, were slightly lower than
planned for the 2024 financial year, due to the prioritization of
critical activities to mitigate the impacts of the forest fires in
the first quarter.
The increase in the Company's mining equipment rebuild program
for the nine-month period ended December 31,
2023, is attributable to the major overhaul of its growing
mining fleet over the last two years, used to prepare for
additional mining activities driven by the Company's expansion. The
mining equipment rebuild program is in line with the Company's
fleet management program for the 2024 financial year.
DRPF Project
During the three and nine-month periods ended December 31, 2023, $31.0
million and $59.0 million,
respectively, were spent in capital expenditures related to the
DRPF project. Investments mainly consisted of on-site preparation
activities, engineering work, long lead-time equipment purchasing
and the construction of a lodging complex. Cumulative investments
of $59.9 million were deployed on the
DRPF project as at December 31, 2023,
with an estimated capital expenditure of $470.7 million, as per the study released in
January 2023.
Other Capital Development Expenditures at Bloom Lake
During the three-month period ended December 31, 2023, other capital development
expenditures at Bloom Lake totalled $41.7
million ($36.8 million for the
same period in 2022), including $17.9
million for third-party facilities in Sept-Îles to handle
additional production from Phase II ($5.3
million for the same period last year), $9.3 million in infrastructure improvements and
conformity ($9.9 million for the same
prior-year period), $5.4 million for
the garage expansion to support the expanded truck fleet, and
$7.7 million in deposits for a shovel
and a loader at the mine ($15.8
million for the same prior-year period).
During the nine-month period ended December 31, 2023, other capital development
expenditures at Bloom Lake totalled $79.4
million ($174.9 million for
the same period in 2022) and comprised $23.3
million in infrastructure improvements and conformity,
including the construction of two pads to expand the mine's
capacity to stockpile concentrate near the loadout ($19.7 million for the same prior-year period),
$20.5 million for the garage
expansion, $17.7 million for
third-party facilities in Sept-Îles to handle additional production
from Phase II ($99.3 million for the
same prior-year period) and $19.4
million for mining equipment deposit, including a drill, a
haul truck, two loaders as well as a shovel ($35.0 million for the same prior-year period).
The addition of this mining equipment made a significant
contribution to the Company's recent performance. The expenditures
for the nine-month period ended December 31,
2023, also included $1.3
million in capitalized borrowing costs ($14.4 million for the same prior-year period).
During the nine-month periods ended December
31, 2023 and 2022, other capital development expenditures
were partially offset by the receipt of a $5.2 million government grant related to the
Company's GHG emissions and energy consumption reduction
initiatives.
7. Qualified Person and Data Verification
Mr. Vincent Blanchet, P. Eng.,
Engineer at Quebec Iron Ore Inc., the Company's subsidiary and
operator of Bloom Lake, is a "qualified person" as defined by
NI 43-101 and has reviewed and approved, or has prepared, as
applicable, the disclosure of the scientific and technical
information contained in this document and has confirmed that the
relevant information is an accurate representation of the available
data and studies for the relevant projects. Mr. Blanchet's review
and approval does not include statements as to the Company's
knowledge or awareness of new information or data or any material
changes to the material assumptions and technical parameters
underpinning the 2023 Technical Report. Mr. Blanchet is a member of
the Ordre des ingénieurs du Québec.
The mineral resource qualified person, Christian Beaulieu, P.Geo., undertook data
verification and validation of information included in section 2 -
Kami Project Study, including, but not limited to, drill core
inspection of sampling, logging and mineralization style, outcrop
inspection, drill hole collar location, quality assurance and
quality control results review, independent sampling, and database
verification against laboratory certificates. The qualified person
is of the opinion that the drilling database and supporting
information can be used for a mineral resource estimate. No major
issues were found during data validation, both digitally and on the
field.
8. Conference Call and Webcast Information
A webcast and conference call to discuss the foregoing results
will be held on January 31, 2024, at 9:00 AM (Montréal time) / February 1, 2024, at 1:00 AM (Sydney time). Listeners may access a live
webcast of the conference call from the Investors section of the
Company's website at
www.championiron.com/investors/events-presentations or by dialing
toll free +1-888-390-0546 within North
America or +1-800-076-068 from Australia.
An online archive of the webcast will be available by accessing
the Company's website at
www.championiron.com/investors/events-presentations. A telephone
replay will be available for one week after the call by dialing
+1-888-390-0541 within North
America or +1-416-764-8677 overseas, and entering passcode
228228#.
About Champion Iron Limited
Champion, through its wholly-owned subsidiary Quebec Iron Ore
Inc., owns and operates the Bloom Lake Mining Complex, located on
the south end of the Labrador Trough, approximately 13 km north of
Fermont, Québec. Bloom Lake is an
open-pit operation with two concentrators that primarily source
energy from renewable hydroelectric power. The two concentrators
have a combined nameplate capacity of 15 Mtpa and produce low
contaminant high-grade 66.2% Fe iron ore concentrate with a proven
ability to produce a 67.5% Fe direct reduction quality iron ore
concentrate. Benefiting from one of the highest purity resources
globally, the Company is investing to upgrade half of the Bloom
Lake mine capacity to a direct reduction quality pellet feed iron
ore with up to 69% Fe. Bloom Lake's high-grade and low contaminant
iron ore products have attracted a premium to the Platts IODEX 62%
Fe iron ore benchmark. The Company ships iron ore concentrate from
Bloom Lake by rail, to a ship loading port in Sept-Îles, Québec,
and has sold its iron ore concentrate to customers globally,
including in China, Japan, the Middle
East, Europe, South Korea, India and Canada. In addition to Bloom Lake, Champion
owns a portfolio of exploration and development projects in the
Labrador Trough, including the Kamistiatusset Project, located a
few kilometres south-east of Bloom Lake, and the Cluster II
portfolio of properties, located within 60 km south of Bloom
Lake.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain information and statements
that may constitute "forward-looking information" under applicable
Canadian securities laws. Forward-looking statements are statements
that are not historical facts and are generally, but not always,
identified by the use of words such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "continues",
"forecasts", "projects", "predicts", "intends", "anticipates",
"aims", "targets" or "believes", or variations of, or the negatives
of, such words and phrases or state that certain actions, events or
results "may", "could", "would", "should", "might" or "will" be
taken, occur or be achieved. Inherent in forward-looking statements
are risks, uncertainties and other factors beyond the Company's
ability to predict or control.
Specific Forward-Looking Statements
All statements, other than statements of historical facts
included in this press release that address future events,
developments or performance that Champion expects to occur are
forward-looking statements. Forward-looking statements include,
among other things, Management's expectations regarding: (i) the
Company's Phase II expansion project, its impact on nameplate
capacity, economic and other benefits and associated costs; (ii)
Bloom Lake's life of mine, recovery rates, production, economic and
other benefits; (iii) the project to upgrade the Bloom Lake iron
ore concentrate to a higher grade with lower contaminants and to
convert approximately half of Bloom Lake's increased nameplate
capacity of 15 Mtpa to commercially produce a DR quality pellet
feed iron ore, expected project timeline, economics, capital
expenditure, budget and financing, production metrics, technical
parameters, permitting and approvals, efficiencies and economic and
other benefits; (iv) the study evaluating the re-commissioning of
the Pointe-Noire Iron Ore Pelletizing Facility to produce DR grade
pellets, including its anticipated completion timeline; (v) the
Kami Project's Study, its purpose, including evaluating the
potential to produce a DR grade product, expected project timeline,
economics, capital expenditure, budget and financing, production
and financial metrics, technical parameters, flowsheet, permitting
and approvals, available and planned infrastructure, expected
environmental footprint, efficiencies and economic and other
benefits and related engagement with stakeholders and strategic
partners; (vi) the shift in steel industry production methods
towards reducing emissions and green steel production methods,
including expected rising demand for higher-grade iron ore products
and related market deficit and higher premiums, and the Company's
participation therein, contribution thereto and positioning in
connection therewith, including related research and development
and the transition of the Company's product offering (including
producing high quality DRPF products) and expected benefits
thereof; (vii) greenhouse gas and CO2 emissions
reduction initiatives, objectives, targets and expectations; (viii)
increasing stripping activities; (ix) stockpiled ore levels,
shipping and sales of accumulated concentrate inventories and
related rehandling costs; * increased shipments of iron ore and
related railway and port capacity and transportation and handling
costs; (xi) the Company's mining equipment rebuild program, fleet
management program, tailings investment plan and related
investments and benefits; (xii) production and recovery rate
targets and the Company's performance; (xiii) pricing of the
Company's products; (xiv) the Company's expected iron ore
concentrate production and sales; (xv) available liquidity to
support the Company's growth projects; and (xvi) the Company's
growth and opportunities generally.
Deemed Forward-Looking Statements
Statements relating to "reserves" or "resources" are deemed to
be forward-looking statements as they involve the implied
assessment, based on certain estimates and assumptions, that the
reserves and resources described exist in the quantities predicted
or estimated and that the reserves can be profitably mined in the
future. Actual reserves and resources may be greater or less than
the estimates provided herein.
Risks
Although Champion believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such forward-looking statements involve known and unknown risks,
uncertainties and other factors, most of which are beyond the
control of the Company, which may cause the Company's actual
results, performance or achievements to differ materially from
those expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially from
those expressed in forward-looking statements include, without
limitation: (i) the results of feasibility studies; (ii) changes in
the assumptions used to prepare feasibility studies; (iii) project
delays; (iv) timing and uncertainty of industry shift to green
steel and Electric Arc Furnaces; (v) continued availability of
capital and financing and general economic, market or business
conditions; (vi) general economic, competitive, political and
social uncertainties; (vii) future prices of iron ore; (viii)
future transportation costs; (ix) failure of plant, equipment or
processes to operate as anticipated; * delays in obtaining
governmental approvals, necessary permitting or in the completion
of development or construction activities; and (xi) the effects of
catastrophes and public health crises, including the impact of
COVID-19 on the global economy, the iron ore market and Champion's
operations, as well as those factors discussed in the section
entitled "Risk Factors" of the Company's 2023 Annual Report, Annual
Information Form and MD&A for the financial year ended
March 31, 2023, which are available
on SEDAR+ at www.sedarplus.ca, the ASX at www.asx.com.au and the
Company's website at www.championiron.com. There can be no
assurance that such information will prove to be accurate as actual
results and future events could differ materially from those
anticipated in such forward-looking information. Accordingly,
readers should not place undue reliance on forward-looking
information.
Additional Updates
All of Champion's forward-looking information contained in this
press release is given as of the date hereof or such other date or
dates specified in the forward-looking statements and is based upon
the opinions and estimates of Champion's Management and information
available to Management as at the date hereof. Champion disclaims
any intention or obligation to update or revise any of the
forward-looking information, whether as a result of new
information, future events or otherwise, except as required by law.
If the Company does update one or more forward-looking statements,
no inference should be drawn that it will make additional updates
with respect to those or other forward-looking statements. Champion
cautions that the foregoing list of risks and uncertainties is not
exhaustive. Readers should carefully consider the above factors as
well as the uncertainties they represent and the risks they
entail.
Abbreviations
Unless otherwise specified, all dollar figures stated herein are
expressed in millions of Canadian dollars, except for: (i) tabular
amounts which are in thousands of Canadian dollars; and (ii) per
share or per tonne amounts. The following abbreviations and
definitions are used throughout this press release: US$
(United States dollar), C$
(Canadian dollar), Fe (iron ore), wmt (wet metric tonnes), dmt (dry
metric tonnes), Mtpa (million tonnes per annum), M (million), km
(kilometers), LoM (life of mine), Bloom Lake or Bloom Lake Mine
(Bloom Lake Mining Complex), Phase II (Phase II expansion project),
DRPF (direct reduction pellet feed), GHG (greenhouse gas), G&A
(general and administrative), P62 index (Platts IODEX 62% Fe CFR
China index), P65 index (Platts IODEX 65% Fe CFR China index), C3
index (C3 Baltic Capesize index), CAPEX (capital expenditures),
EBITDA (earnings before interest, tax, depreciation and
amortization), AISC (all-in sustaining cost), EPS (earnings per
share) and Management (Champion's management team). The utilization
of "Champion" or the "Company" refers to Champion Iron Limited
and/or one, or more, or all of its subsidiaries, as applicable.
"IFRS" refers to International Financial Reporting Standards.
For additional information on Champion Iron Limited, please
visit our website at: www.championiron.com.
This document has been authorized for release to the market by
the Chief Executive Officer of Champion Iron Limited, David Cataford.
The Company's unaudited Condensed Consolidated Financial
Statements for the three and nine-month periods ended
December 31, 2023 (the "Financial Statements") and
associated Management's Discussion and Analysis ("MD&A") are
available under the Company's profile on SEDAR+ (www.sedarplus.ca),
on the ASX (www.asx.com.au) and the Company's website
(www.championiron.com).
_______________________________
|
1 This is a
non-IFRS financial measure, ratio or other financial measure. The
measure is not a standardized financial measure under the financial
reporting framework used to prepare the financial statements and
might not be comparable to similar financial measures used by other
issuers. Refer to the section below — Non-IFRS and Other Financial
Measures for definitions of these metrics and reconciliations to
the most comparable IFRS measure when applicable. Additional
details for these non-IFRS and other financial measures, have been
incorporated by reference and can be found in section 21 of the
Company's MD&A for the three and nine-month periods ended
December 31, 2023, available on SEDAR+ at
www.sedarplus.ca, the ASX at www.asx.com.au and on the Company's
website under the Investors section at
www.championiron.com.
|
2 See the
"Currency" section of the MD&A for the three and nine-month
periods ended December 31, 2023, included in note 7 — Key
Drivers, available on SEDAR+ at www.sedarplus.ca, the ASX at
www.asx.com.au and on the Company's website under the Investors
section at www.championiron.com.
|
Non-IFRS and Other Financial Measures
The Company has included certain non-IFRS financial measures,
ratios and supplementary financial measures in this press release
to provide investors with additional information in order to help
them evaluate the underlying performance of the Company. These
measures are mainly derived from the Financial Statements but do
not have any standardized meaning prescribed by IFRS and,
therefore, may not be comparable to similar measures presented by
other companies. Management believes that these measures, in
addition to conventional measures prepared in accordance with IFRS,
provide investors with an improved ability to understand the
results of the Company's operations. Non-IFRS and other financial
measures should not be considered in isolation or as substitutes
for measures of performance prepared in accordance with IFRS. The
exclusion of certain items from non-IFRS financial measures does
not imply that these items are necessarily non-recurring.
The Company presents certain of its non-IFRS measures and other
financial measures in U.S. dollars in addition to Canadian dollars
to facilitate comparability with measures presented by other
companies.
EBITDA and EBITDA Margin
|
|
Q3 FY24
|
Q2 FY24
|
Q3 FY23
|
|
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
Income before income
and mining taxes
|
|
204,981
|
112,187
|
85,629
|
Net finance
costs
|
|
8,747
|
11,634
|
1,858
|
Depreciation
|
|
32,881
|
31,215
|
30,719
|
EBITDA
|
|
246,609
|
155,036
|
118,206
|
Revenues
|
|
506,891
|
387,568
|
351,233
|
EBITDA
margin
|
|
49 %
|
40 %
|
34 %
|
Available Liquidity
|
|
As at
December 31,
|
|
As at
September 30,
|
|
|
2023
|
|
2023
|
|
|
|
|
|
Cash and cash
equivalents
|
|
387,373
|
|
316,530
|
Undrawn amounts under
credit facilities
|
|
550,253
|
|
329,386
|
Available
liquidity
|
|
937,626
|
|
645,916
|
C1 Cash Cost
|
|
Q3 FY24
|
Q2 FY24
|
Q3 FY23
|
|
|
|
|
|
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
3,227,500
|
2,883,800
|
2,694,200
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
Cost of
sales
|
|
235,457
|
212,584
|
209,070
|
Less: Bloom Lake Phase
II start-up costs
|
|
—
|
—
|
(4,292)
|
|
|
235,457
|
212,584
|
204,778
|
|
|
|
|
|
C1 cash cost (per dmt
sold)
|
|
73.0
|
73.7
|
76.0
|
All-In Sustaining Cost
|
|
Q3 FY24
|
Q2 FY24
|
Q3 FY23
|
|
|
|
|
|
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
3,227,500
|
2,883,800
|
2,694,200
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
Cost of
sales
|
|
235,457
|
212,584
|
209,070
|
Less: Bloom Lake Phase
II start-up costs
|
|
—
|
—
|
(4,292)
|
Sustaining capital
expenditures
|
|
24,031
|
60,446
|
19,495
|
G&A
expenses
|
|
11,206
|
12,729
|
9,212
|
|
|
270,694
|
285,759
|
233,485
|
|
|
|
|
|
AISC (per dmt
sold)
|
|
83.9
|
99.1
|
86.7
|
Cash Operating Margin and Cash Profit Margin
|
|
Q3 FY24
|
Q2 FY24
|
Q3 FY23
|
|
|
|
|
|
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
3,227,500
|
2,883,800
|
2,694,200
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
Revenues
|
|
506,891
|
387,568
|
351,233
|
Net average realized
selling price (per dmt sold)
|
|
157.1
|
134.4
|
130.4
|
|
|
|
|
|
AISC (per dmt
sold)
|
|
83.9
|
99.1
|
86.7
|
Cash operating margin
(per dmt sold)
|
|
73.2
|
35.3
|
43.7
|
Cash profit
margin
|
|
47 %
|
26 %
|
34 %
|
Gross Average Realized Selling Price per dmt Sold
|
Q3 FY24
|
Q2 FY24
|
Q3 FY23
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
3,227,500
|
2,883,800
|
2,694,200
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
Revenues
|
506,891
|
387,568
|
351,233
|
Provisional pricing
adjustments
|
(15,997)
|
(1,559)
|
5,205
|
Freight and other
costs
|
140,971
|
102,411
|
105,987
|
Gross
revenues
|
631,865
|
488,420
|
462,425
|
|
|
|
|
Gross average realized
selling price (per dmt sold)
|
195.8
|
169.4
|
171.6
|
SOURCE Champion Iron Limited