CIA.TO · 2018-11-07

Champion Iron Reports Strong FY2019 Second Quarter Results

Financials

1 The Company provides some non -IFRS measures as supplement ary information that mana gement believes may be useful to in vestors to ex plain the Company’s financial results. Please refer to note 1 5 “Non-IFRS financial performance measures” of the Company’s MD&A dated November 7 , 2018, availa ble on the Company’s website at www.championiron.com or on SEDAR at www.sedar.com for reconciliation of these measures. 2 Operating cash flow includes change in non-cash operating working capital.

PRESS RELEASE

CHAMPION IRON REPORTS STRONG FY2019 SECOND QUARTER RESULTS

Achieved its first quarter of commercial production Increases Production 20% Over Previous Quarter Montréal, November 8, 2018 – Champion Iron Limited (TSX: CIA) (ASX: CIA) (“Ch ampion Iron” or “The Comp any”) is pleased to announce strong operational and financial results for the second quarter ended September 30, 2018 of the fiscal year end March 31, 2019.

For complete details of the unaudited Condensed Consolidated Financial Sta tements and associated Management's Discussion and Analysis please refer to the Company's filings on SEDAR (www.sedar.com) or the Company's website (www.championiron.com). All amounts are in Canadian dollars unless otherwise indicated.

HIGHLIGHTS

Net income of $67.5 million for the quarter ($88.2 million for the first six months);
Revenues of $174.7 million up 16% from previous quarter ($325.4 million for the first six months);
Operating cash flow totalling2 $49.6 million for the six-month period;
Cash on hand of $115.6 million and trade receivables of $86.4 million at period end, including two shipments totalling approximately $31.0 million (US$24.2 million) received on October 2, 2018;
Production of 1,858,300 wmt of high-grade 66% iron ore concentrate and 4,024,500 wmt since the mine commenced operations;
Total cash cost1 of $45.2 per dmt sold and an all-in sustaining cost1 of $52.9 per dmt sold; “Champion Iron has reported a strong second quarter and the Company is extremely pleased to report that it was our first quarter of commercial production and included a record month, with 648,400 wmt o f iron ore con centrate produced in September, at name plate capacity ,” commented Chairman and Chief Executive Officer Michael O’Keeffe. “Going forward, we are encouraged by the outlook for high grade premium iron ore an d as such , the Company ha s commenced work on the Feasibility Study for Phase II of Bloom Lake which has the ability to double capa city and elev ate Champion Iron to a leading high-grade iron ore producer.” continued Mr. O’Keeffe.

The Company plans to continu e on the track that it’s been on of implementing operational improvements at the Bloom Lake Mine, while applying cost and capita l discipline . With $ 115,625,000 in cash on hand (at September 30, 2018) Champion Iron is in a position to focus on continuing to strengthen its financial position and pursu e furth er growth opportunities.

1. Bloom Lake Mine Operating Activities Commercial Production Three Months Ended September 2018 Pre-Commercial Production Three Months Ended June 30 2018 Six Months Ended September 30 2018 Operating Data

Waste mined (wmt) 2,978,400 3,372,900 6,351,300
Ore mined (wmt) 5,204,900 4,647,900 9,852,800
Strip ratio 0.6 0.7 0.6
Ore milled (wmt) 4,964,200 4,244,000 9,208,200
Head grade (g/t) 32.0 31.1 31.6
Recovery (%) 79.6 77.1 78.5

Iron ore concentrate produced (wmt) 1,858,300 1,542,900 3,401,200 Iron ore concentrate sold (dmt) 1,931,700 1,740,400 3,672,100 Financial Data (in thousands of dollars)

Sales 174,678 150,741 325,419
Cost of sales 87,265 95,767 183,032
Depreciation 4,084 4,425 8,509

Statistics (in dollars per dmt sold)

Average realized selling price1 90.4 86.6 88.6

Total cash cost1 (C1 cash cost1) 45.2 55.0 49.8

All-in sustaining cost1 52.9 59.9 56.1

A. Operational Performance

The Company’s iron ore concentrate production in the second quarter ended September 30, 2018 was driven by improved operating performance in both the mine and processing plant. During the quarter, over 8.2 million tonnes of material were mined compared to 8.0 million tonnes in the first quarter of the year. The ore tonnes mined increase when compared to previous quarter is due to higher productivity since declaring commercial production on June 30th, 2018 combined with a lower strip ratio when compared to the pre-production period.

During the si x-month period ended September 30, 2018, 9.8 million tonnes of ore were extracted while the ye ar to date strip ratio totalled 0.6.

The plant processed 4,964,200 tonnes of ore during the secon d quarter reac hing a monthly production record of 648,400 wmt in September at an average head grade of 32.0 g/t Fe in the second quarter of 2018 compared to 4,244,000 tonnes of ore at 31.1 g/t Fe in the previous quarter. This 17% increase is a result of ongoing optimisation a t the plant since commissioning. Although, the o verall recovery was 79.6% during the quarter compared to 77.1% in the previous quarter, the pr ocessing plant reached recovery rates as high as 86% during the period. As a result, Champion Iron produced 1,858,300 tonnes of high -grade iron concentrate of 66.57% during its first quarter of commercial pr oduction, a 2 0% increase since its first full quarter of operations for a total of 3,401,200 tonnes since the beginning of the FYE 2019. 1 The Company provides some non -IFRS measures as supplement ary information that mana gement believes may be useful to in vestors to ex plain the Company’s financial results. Please refer to note 1 5 “Non-IFRS financial performance measures” of the Company’s MD&A dated November 7 , 2018, availa ble on the Company’s website at www.championiron.com or on SEDAR at www.sedar.com for reconciliation of these measures. 2 Operating cash flow includes change in non-cash operating working capital.

B. Financial Performance

Commer cial Production Three Months Ended September 30 2018 Pre- Commercial Production Three Months Ended June 30 2018 Six Months Ended September 30 2018 Six Months Ended September 30 2017 Iron ore concentrate produced (wmt) 1,858,300 1,542,900 3,401,200 - Iron ore concentrate sold (dmt) 1,931,700 1,740,400 3,672,100 - Financial Data (in thousands of dollars, except per share

Sales 174,678 150,741 325,419 -
Operating income (loss) 77,238 40,517 117,755 (22,907)
Net income 67,497 20,749 88,246 (24,010)

Basic earnings per share attributable to

shareholders 0.10 0.03 0.13 (0.04)

Diluted earnings per share attributable to

shareholders 0.09 0.02 0.12 (0.04)

Cash and cash equivalent - end of period 97,866 71,679 97,866 1,315

Short-term investments 17,759 17,290 17,759 -
Total assets 582,637 477,513 582,637 196,920

Statistics (in dollars per dmt sold) Average realized selling price1 90.4 86.6 88.6 - Total cash cost (C1 cash cost)1 45.2 55.0 49.8 -

All-in sustaining cost1 52.9 59.9 56.1 -

The Company entered pre -commercial production on April 1, 2018 with the shipm ent o f its first v essel to China and declared commercial production on June 30th, 2018. During its first quarter of commercial production , a total o f 1,931,700 tonnes of high-grade iron ore concentrate were sold. During the period, Champion Iron realized net revenues totalling $174,678,000 for high-grade concentrate of 66.57% Fe representing a CFR China net realized price 1 of US$92.5 per tonne before shipping or US$69.1 per tonne (CA$ 90.4 per tonne 1) net of sea freight costs . Revenues increased by 16% when compared to the first quarter as the volume sold increased by 11% while the average realized iron ore concentrate price1 of $90.4 per tonne increased by 5% com pared to previous quarter. As a result, the Company generated $325 ,419,000 of revenue net of sea freight costs for its first six months of operations realizing a net average selling price1 of $88.6 per tonne. 1 The Company provides some non -IFRS measures as supplement ary information that mana gement believes may be useful to in vestors to ex plain the Company’s financial results. Please refer to note 1 5 “Non-IFRS financial performance measures” of the Company’s MD&A dated November 7 , 2018, availa ble on the Company’s website at www.championiron.com or on SEDAR at www.sedar.com for reconciliation of these measures. 2 Operating cash flow includes change in non-cash operating working capital.

Net realized selling price from P62 to average realized price Cost of sales represent mining, processing, and mine site -related general and administrative expenses. During the three - month period ended September 30, 2018, the total cash cost or C1 cash cost 1 per tonne totalled $ 45.2 per tonne, which is well below the $55.0 per tonne processed achieved during the previous quarter. The variation is mainly due to higher head grade, higher recovery rate and higher throughput during the period combined with increased efficiency and fixed costs over higher volume as the operations reached commercial production. Consequently, the Company generated a mining operating margin1 of $45.2 per tonne up 43% from $31.6 per tonne for the quarter ended June 30, 2018 and $38.8 for the six-month period ended September 30, 2018.

During the quarter ended on S eptember 30 2018, Champion Iron invested $12,875,000 in stripping and sustaining capital expenditures, repre senting a sust aining capital cost per tonne sold of $ 6.7 while the Company invested $5,919,000 as sustaining capital cost per tonne sold of $ 3.4 in the previous quarter. The variation is mainly attributable to the acceleration of the tailings related work before the end of the summer.

Based on the foregoing, the Company generated cash flow from operations2 totalling $49,607,000 during the six -month period. For the quarter ended on S eptember 30, 2018, the all-in sustaining costs 1 including general and administrativ e expenses totalled $52.9 per tonne of concentrate sold.

2. Organic Growth Champion Iron’s board of directors has a pproved a budget to undertake a feasibility study with respect to a potential expansion of the operations at its flagship asset the Bloom Lake mine (“Phase II”). The expansion would mainly involve the completion of construction wor k on a processing plant a nd other supporting infrastructure which was interrupted in November 2012 by the previous owner. The expansion aims at doubling the current operational capacity with a production of 7.5 million tonnes of high-grade 66% Fe concentra te. During the quarte r ended on S eptember 30, 2018, the Company appointed BBA (Montreal) to lead the study for which results are expected within the second half of 2019. A positive decision resulting from an economical feasibility study could translate in a construction period st arting in late 2019 or early 2020 with first pr oduction expected in 2021. Phase II would create over 500 jobs during construction and 200 permanent operational jobs.

Expenditures totalling $470,000 were incurred on a year to date basis towards the feasibility study of the Bloom lake mine Phase 2 expansion.

3. Exploration Activities In addition to the 63.2% interest in the Bloom Lake prope rty, Champion has a 100% interest i n the 752 km 2 Fermont property located in the Fermont Iron Ore District of Northeaste rn Quebec and a 100% interest in th e Gu llbridge- Powderhorn property (“Powderhorn”) in Northern Central Newfoundland. This 63 km 2 property is host to several Copper (Cu) and Zinc (Zn) showings and is at an early exploration stage. The Gullbridge Mine is a past copper producer and is located in the northern part of the property.

Exploration Program for fiscal year ending on March 31, 2019 The 2,887 met res drilling program in the Labrador trough targeted known iron mineralization areas at Peppler Lake (“Peppler”) and Jean Lake. The drilling at P eppler w ill b e us ed for geometallurgical testing of a magnetite -rich iron formation, while the drilling at Jean Lake will help define the ex tent of the know n orebody and its correlation to geophysical data. The campaign started in June 2018 and ended in September 2018. For the three -month period ended September 30th, 2018, $993,000 was incurred in exploration costs for the Labrador trough deposits.

Several zinc -rich zones were inte rsected d uring the 4,166 met res dr illing program completed in April 2018 at the Powderhorn property. The campaign was aimed at testing major electromagnetic targets to the south of the property. Due to encouraging results, Champion Iron decided to undertake a 12,000 m etres drilling progra m which commenced in September 2018. The new program is designed to t est and add geol ogical data and details to the shallow zone to potentially identify a link between the different Zn -rich zones and the distribu tion of the copper mi neralization and to confirm the continuity of the zinc mineralization. The exploration program at Po wderhorn targets the same volcanic units that host the Buchans Mine, located 60 km away, a rich volcanogenic massive sulphide deposit. To date appr oximately 4,500 metres were dr illed. For the six-month period ended Se ptember 30th, 2018, $170,000 were incu rred for Powderhorn property.

About Champion

Champion Iron is a producing iron ore company focused on developing its s ignificant iron resources in the south end of the Labrador Trough in t he province of Québec. Following the a cquisition of its flagship asset, the Bloom Lake iron ore property, the Corporation’s main focus is to implement upgrad es 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 stakehol ders. Champion’s management t eam includes professionals with mine development and oper ations 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, Chairman and Chief Executive Officer or Natacha Garoute, Chief Financial Officer at Tel. +1 514-316-4858 For additional information on Champion Iron Limited, please visit our website at www.championiron.com 1 The Company provides some non -IFRS measures as supplement ary information that mana gement believes may be useful to in vestors to ex plain the Company’s financial results. Please refer to note 1 5 “Non-IFRS financial performance measures” of the Company’s MD&A dated November 7 , 2018, availa ble on the Company’s website at www.championiron.com or on SEDAR at www.sedar.com for reconciliation of these measures. 2 Operating cash flow includes change in non-cash operating working capital.

Forward-Looking information

This news release contains certain information and statements, which may be deemed “forward-looking statements” within the meaning of applicable securities laws (collectively re ferred to herein as “forward -looking statements”). All statements other than statements of historical fact, that address future events, developments or performance that Champion Iron expects to occur including management’s expectations regarding (i) the Company’s growth; (ii) the potential expansion of the operations at Champion Iron’s flagship asset the Bloom Lake Mine; (iii) the estimated future operation capacity of the Bloom Lake Mine; (iv) the an ticipated construction schedule for a p otential expansion of the Bloom Lake Mine; (v) the anticipated production schedule for such potential expans ion of the Bloom Lake Mine; and (vi) the potential job creation related to the Bloom Lake Mine, are forward -looking statements. Forward-looking statements are statements that are not historical facts and a re generally, but not always, identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “continues”, “forecasts”, “pro jects”, “predicts”, “i ntends”, “anticipates”, “ 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 b e achieved including, without limitation, the r esults of the feasibility study with re gards to the potential expansion of the Bloom Lake Mine. Although Champion Iron believes the expectations expected in such forward -looking statements are based on reasona ble assumptions, such forward-looking statements involve known and unknown risks, unce rtainties and other factors, most of which are beyo nd the control of the Company, which may cause the Company’s actual results, performance or achievements to differ mate rially from those expressed or implied by such forward-looking statements. Factors that could cause the actual results to differ material ly from those in forward -looking statements include, without limitation: the results of the feasibility study; project delays; continued avai lability of capital and f inancing and general economic, market o r business co nditions; general economic, competitive, political and social uncertainties; future prices of Iron Ore; 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 activ ities, as well as those factors discussed in the section entitled “ Risk Factors ” of t he Company’s 2018 Annual Information Form available on S EDAR at www.sedar.com. The forward-looking statements in this news release are based on assumptions management believes to be reasonable and speak only as of the date of this news release or as of the date or dates spec ified in such statements. Champion Iron cautions that the forego ing list of risks and uncertainties is not exhaustive. Investors and others should carefully consider the above factors as well as the uncertainties they represent and th e risk they entail. Inherent in forward -looking statements are risks, uncertainties an d other fact ors beyond the Company’s ability to predict or control.

The forward-looking statements contained herein are made as of the date hereof, or such other date or dates specified in such st atements. Champion Iron undertakes no obligation to updat e publicly or otherwise revise any forward -looking statements contained herein whether as a result of new information or future events or otherwise, except as may be required by law. If the Co mpany 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.

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