Not for distribution to United States newswire services or for dissemination in the United States
Montréal, Québec, Canada: Champion Iron Limited (ASX: CIA, TSX: CIA) (“Champion” or the “Company”) is pleased to announce the results of the Feasibility Study for the Bloom Lake Iron Ore Mine (“Bloom Lake”), located near the town of Fermont, in north-eastern Quebec.
The Feasibility Study demonstrates that recommencing iron ore mining operations at Bloom Lake is financially viable and would be competitive in global iron ore markets with the potential to be one of the region’s leading long-life iron ore mines. A production restart at Bloom Lake would be a major contributor to the provincial and national economy.
Champion Iron Chairman and CEO Mr Michael O’Keeffe said, “This is a major result for the Company. Based on conservative assumptions, the Feasibility Study demonstrates that the Bloom Lake Iron Ore Mine is clearly viable. In fact, very few iron ore projects offer the potential of 20+ years of production at industry-low operating costs, whilst being strategically located in close proximity to all necessary infrastructure and situated in what we consider to be a superior mining jurisdiction. I am confident that the Feasibility Study, and these attributes, will allow Champion Iron to secure investor support and funding as we bring the Bloom Lake mine back into full-scale production.”
(All quoted figures in CA$ unless stated otherwise)
Summary of Economic Parameters and Feasibility Results
|Processed tonnage (Mtpa)||20.0|
|Average Fe processing recovery (%)||83.3%|
|Average mining dilution (%)||4.3%|
|Average Recovered concentrate (Mtpa)||7.4|
|Mine Life (years)||21 years|
|Initial CAPEX including Working Capital (CA$M)||326.8|
|LOM CAPEX (CA$M)||329.5|
|LOM OPEX (CA$/t of ore)||16.85|
|LOM OPEX (CA$/t dry concentrate)||44.62|
|Gross Revenue (CA$M)||15,116|
|Shipping Costs (CA$M)||3,748|
|Cash Operating Margin (CA$M)||4,432|
|Operating Margin %||29.3%|
|After Tax Net Cash-Flow (CA$M)||2,335|
|Iron Ore Price
|LOM Av Iron Price at 66.2%Fe CFR China (US$/ton)||78.40|
|Average Exchange Rate||0.79 US$:1.0 CA$|
|Valuation Parameters||NPV – 8% Pre-Tax (CA$M)||1,675|
|NPV – 8% After-Tax (CA$M)||984|
|Pay-back (pre-tax) (years)||2.5|
|Pay-back (after-tax) (years)||3.1|
Mineral Resource and Reserve Estimates
The following table presents the mineral resource for the Bloom Lake Project estimated at a cut-off grade of 15% Fe, inside an optimized Whittle open pit shell based on a long-term iron price of USD $60/dmt concentrate for 66% Fe content. The Measured and Indicated mineral resource for the Bloom Lake Project is estimated at 911.6 Mt with an average grade of 29.7% Fe, and Inferred mineral resource at 80.4 Mt with an average grade of 25.6% Fe.
Mineral Resource Estimate for the Bloom Lake Project (notes 1-9)
Notes on Mineral Resources:
The Proven and Probable mineral reserve is estimated at 411.7 Mt at an average grade of 30.0% Fe based on a cut-off grade of 15% Fe. The mineral reserve was estimated using a long-term concentrate price of US$54/dmt for 66% Fe content and an exchange rate of 1.30 CA$/US$. The mineral reserve includes a 4.3% mining dilution at an average grade of 10.3% Fe. The average strip ratio of the open pit is 0.48.
Mineral Reserve Estimate (notes 1-8)
|Classification||Diluted Ore Tonnage (dry)||Fe||CaO||Sat||MgO||Al2O3|
Notes on Mineral Reserves:
Updated Mine Plan
The restart of operations at Bloom Lake is based on different operating assumptions which include an upgrade to the concentrator plant and a mineral reserve and mining scenario updated for the current iron ore market.
The operation consists of a conventional surface mining method using an owner mining approach with electric hydraulic shovels and mine trucks. All major mine equipment required for the restart of Bloom Lake is present on-site as this equipment was among the assets purchased by the Company’s subsidiary, Quebec Iron Ore Inc.
Updated Concentrator Plant
Quebec Iron Ore Inc. intends to use Bloom Lake’s existing crushing and storage facilities, along with the mill and the rail load-out facilities to produce 7.4 Mtpa of concentrate, with an expected recovery of 83.3% from the ore mined from the main pit.
The proposed concentrator plant upgrade was developed to improve the overall iron recovery previously achieved by the existing concentrator when Bloom Lake was in production from 2010 until 2014. The specific goal was to improve the recovery of both the coarser (+425 microns) and fine (-106 microns) iron minerals, while having no adverse effect on the recovery of other size fractions.
The concentrator upgrade development was based on proven technology for Labrador Trough iron ore deposits.
The mine already has operational processing facilities and rail loop infrastructure, with access to end markets via port and rail. The rail access consists of three separate segments. The first is the 31.9 km rail spur on-site that is operational and connects to the Quebec North Shore & Labrador (QNS&L) railway at the Wabush Mines facilities in Wabush, Labrador. The second segment uses the QNS&L railway between Wabush to the Arnaud junction in Sept-Iles. The third segment is from Arnaud to Pointe-Noire port facilities (Sept-Iles) where the concentrate will be unloaded, stockpiled and then loaded onto vessels for export.
Bloom Lake benefits from excellent access to power, water, roads, rail, ports and a highly professional mining labour market, as well as a government that continues to be supportive of new investment and mining.
Technical Report and Qualified Persons
A National Instrument 43-101 Technical Report (“Report”) will be filed under the Company’s profile on SEDAR within 45 days of the date of this news release. The Report will consist of a summary of the Feasibility Study. The Feasibility Study will also contain contributions from the following independent Qualified Persons:
Each of these Qualified Persons has reviewed and approved the technical information contained in this news release that is relevant to their area of responsibility and verified the data underlying such technical information.
About Bloom Lake
On April 11, 2016, the Company, through its subsidiary, Québec 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). Québec Iron Ore Inc. is 63.2% owned by the Company, with the remaining 36.8% equity interest owned by Ressources Québec, acting as a mandatory of the Government of Quebec.
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 Bloom Lake Mine is an open pit truck and shovel operation, with a concentrator. From the site, iron concentrate can be transported by rail, initially on the Bloom Lake Railway, to a ship loading port in Sept-Iles, Québec.
The Bloom Lake Mine has already been authorized for operation under the federal and provincial environmental authorities. The project was subject to an environmental impact assessment process under Section 31 of the Provincial Environment Quality Act, which led to the first decree issued by the Quebec government in 2008 authorizing mining activities at the Bloom Lake site.
An updated positive Feasibility Study on Bloom Lake is being completed and will be available under the Company’s profile on SEDAR (www.sedar.com) within 45 days of the date of this news release.
Champion is an iron development and exploration company, focused on developing its significant iron resources in the south end of the Labrador Trough in the province of Québec. Following the acquisition of its flagship asset, the Bloom Lake iron ore property, the Company’s main focus is to implement upgrades to the mine and processing infrastructure it now owns while also advancing 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.
For further information please contact:
Michael O’Keeffe, Executive Chairman and CEO at Tel. +1 514-316-4858
David Cataford, VP Engineering at Tel. +1 514-316-4858
For additional information on Champion Iron Limited, please visit our website at www.championiron.com.
This news release includes certain information that may constitute “forward-looking information” under applicable Canadian securities legislation. All statements, other than statements of historical facts, included in this news release that address future activities, events, developments or financial performance constitute forward-looking information. The use of any of the words “will”, “expect”, “anticipate”, “intend”, “believe”, “plan”, “potential”, “outlook”, “forecast”, “estimate” and similar expressions are intended to identify forward-looking information. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information, including the risks identified in Champion’s annual information forms, management’s discussion and analysis and other securities regulatory filings made by Champion on SEDAR (including under the heading “Risk Factors” therein). 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. All of Champion’s forward-looking information contained in this press release is given as of the date hereof 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 its forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.