Champion Iron Reports FY2023 Fourth Quarter and Annual Production
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PRESS RELEASE
CHAMPION IRON REPORTS FY2023 FOURTH QUARTER
AND ANNUAL PRODUCTION
▪ Record quarterly production of 3.1M wmt and annual production of 11.2M wmt, representing a 41%
increase year-on-year
▪ Ramp-up towards Bloom Lake’s expanded nameplate capacity of 15 Mtpa nearing completion
Montréal, April 26, 2023 (Sydney, April 27, 2023) - Champion Iron Limited (TSX: CIA) (ASX: CIA) (OTCQX: CIAFF) (“Champion” or the “Company”)
is pleased to report its production results and mining operation expenditures for the financial fourth quarter ended March 31, 2023 . Detailed
operational and audited financial results are scheduled to be released prior to the Company hosting a conference call and web cast on
May 31, 2023.
Conference Call Details
Champion will host a conference call and webcast on May 31, 2023, at 8:30 AM (Montréal time) / 10:30 PM (Sydney time) to discuss the results
for the financial fourth quarter ended March 31, 2023. Call details are outlined at the end of this press release.
Champion’s CEO, Mr. David Cataford, said: “The ongoing commitment of our people significantly increased annual production by 41% , year-on-
year, as we ramp up Bloom Lake’s Phase II expansion project. We are proud to report that the completed Phase II infrastructure enabled our site
to produce at its expanded nameplate capacity on several operating days during the quarter. Additionally, in connection with our goal to
participate in the accelerating shift to reduce emissions in steelmaking, we are advanc ing our recently announced Direct Reduction Pellet Feed
(“DRPF”) Project, including an approval by the Board of Directors (the “Board”) to increase the initial budget to maintain th e project timeline.
Benefiting from our high -purity resource, the DRPF Proj ect is set to position Champion as a global leader with a rare product required by the
steel industry to reduce emissions.”
1. Highlights
Sustainability and Health & Safety
• No serious injuries nor major environmental issues reported during the period;
• Welcomed the participants of the 2023 First Nations Expedition at the Bloom Lake installations during their 4,500 km snowmobile
expedition that carried the message of reconciliation, healing and hope; and
• Bloom Lake Phase II plant officially named "Tshinan u", meaning "we, together" in the Innu language, in recognition of the Company's
partnership with First Nations since the restart of the Bloom Lake mining operations and the shared vision for a collaborative future.
Operations and Finance
• Quarterly record production of 3.1 million wmt of high -grade 66.1% Fe concentrate for the three -month period ended March 31, 2023,
an increase of 65% compared to 1.9 million wmt for the same period in 2022, attributable to the strong performance of the rec ently
commissioned Phase II concentrator. Annual production of 11.2 million wmt of high -grade 66.1% Fe concentrate, up from
7.9 million wmt last year;
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• Quarterly record iron ore concentrate sales of 3.1 million dmt for the three- month period ended March 31, 2023, compared to
1.9 million dmt for the same period in 2022, an increase of 64%, and a record 10.6 million dmt sold for the 2023 financial year, up from
7.7 million dmt last year;
• While the Company ’s facilities reached their designed nameplate capacity on several operating days during the period, quarterly
operational results were impacted by previously disclosed delays in the delivery and commissioning of mining equipment and
locomotives to service third -party rail capacity in Sept -Îles, limiting mining and haulage capacity. Quarterly operating results were
also impacted by a longer than expected planned maintenance shutdown of one of the Company's two crushers, and by a four -day
power outage which impacted third- party infrastructure at the port facility in Sept -Îles. With the recent delivery and assembly of
mining equipment and the progress on third- party infrastructure work programs and near -term anticipated locomotives delivery, the
path towards reaching Bloom Lake’s expanded nameplate capacity of 15 Mtpa in the near term has significantly improved;
• C1 cash cost1 of $79.0/dmt (US$58.4/dmt) for the three-month period ended March 31, 2023, compared to $60.0/dmt (US$47.4/dmt)
for the same period in 2022, was negatively impacted by fixed costs incurred to support the infrastructure required to achiev e the
higher anticipated production prior to achieving nameplate capacity. The Company expects those costs to decrease and to normalize
as production gradually ramps up towards Bloom Lake ’s expanded production nameplate capacity of 15 Mtpa. Cash cost 1 during the
three-month period ended March 31, 2023, was also impacted by inflationary pressures on fuel, explosives and site -related general
and administrative expenses, additional maintenance costs and higher reliance on contractors at the mine due to delays in mining
equipment deliveries; and
• Robust available liquidity2 of $673.7 million as at March 31, 2023, including $327.1 million of cash and cash equivalents and short -
term investments, compared to available liquidity of $476.0 million as at December 31, 2022.
Direct Reduction Pellet Feed Project (“DRPF Project” or the “Project”) Update
• In connection with the recently announced positive findings of the DRPF Project feasibility study, the Board approved an incr ease of
$52 million to the initial budget of $10 million announced on January 26, 2023, in order to maintain the Project’s estimated 30 -month
construction period; and
• The Project remains on schedule with detailed engineering works advancing as planned.
2. Direct Reduction Pellet Feed Project Update
On January 26, 2023 (Montréal time), the Company announced the findings of the feasibility study for the DRPF Project, conduc ted in
partnership with BBA Inc., evaluating the equipment and infrastructure required to upgrade the Bloom Lake Phase II plant to produce
approximately 7.5 Mtpa of DRPF quality iron ore at 69% Fe with combined silica and alumina content below 1.2%.
The Project is to align with the steel industry’s focus to reduce emissions and its associated impact on the raw material sup ply chain.
Accordingly, production of a DRPF product would enhance the Company’s ability to further contribute to the green steel supply chain by
engaging with additional customers focused on the Direct Reduced Iron (“DRI”) and Electric Arc Furnaces (“EAF”) steelmak ing route, which
reduces emissions in the steelmaking process by approximately half, compared to the traditional steelmaking route using Blast Furnace (“BF”)
and Basic Oxygen Furnace (“BOF”) methods. By producing the DRPF product required in the DRI -EAF steelmaking process, the Company is to
contribute to reduce the usage of coal used in the conventional BF -BOF steelmaking method, which is to significantly reduce emissions
globally. Benefiting from a high purity resource, the Company has a rare opportunity to produce one of the highest DRPF quality products
available on the seaborne market, for which Champion expects to attract a substantial premium over the Company’s current high -grade 66.2%
Fe iron ore concentrate.
The feasibility study proposed a 30-month construction period with estimated capital expenditures of $470.7 million, including additional power
and port-related infrastructure, resulting in a Net Present Value (“NVP”) of $738.2 million and an Internal Rate of Return (“IRR”) of 24.0% after
tax. To maintain the estimated project construction timeline and a project completion by the second half of calendar 2025, the Board increased
the initial $10 million budget approved on January 26, 2023, by $52 million for ordering long lead time items. The Com pany expects to fund the
Project through existing liquidity, including cash flow from operating activities, and additional non-dilutive funding sources.
During the three-month period ended March 31, 2023, detailed engineering works advanced as planned.
Additional details on the Project, including key assumptions and capital costs, can be found in the Company’s press release dated
January 26, 2023, available under its filings on SEDAR at www.sedar.com , the ASX at www.asx.com.au and on the Company’s website at
www.championiron.com.
The Company is not aware of any new information or data that materially affects the information included in the DRPF Project feasibility study
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and confirms that all material assumptions and technical parameters underpinning the estimates in the DRPF Project feasibility study continue
to apply and have not materially changed.
3. Bloom Lake Mine Operating Activities
Three Months Ended Year Ended
March 31, March 31,
2023 2022 Variance 2023 2022 Variance
Operating Data
Waste mined and hauled (wmt) 5,023,900 5,071,700 (1%) 19,574,300 20,512,500 (5%)
Ore mined and hauled (wmt) 9,193,800 5,388,200 71% 32,442,000 22,263,200 46%
Material mined and hauled (wmt) 14,217,700 10,459,900 36% 52,016,300 42,775,700 22%
Strip ratio 0.55 0.94 (41%) 0.60 0.92 (35%)
Ore milled (wmt) 9,054,600 4,904,100 85% 31,682,900 20,972,100 51%
Head grade Fe (%) 28.4 30.3 (6%) 29.2 29.9 (2%)
Fe recovery (%) 78.6 82.7 (5%) 79.3 83.2 (5%)
Product Fe (%) 66.1 66.2 —% 66.1 66.2 —%
Iron ore concentrate produced (wmt) 3,084,200 1,869,000 65% 11,186,600 7,907,300 41%
Iron ore concentrate sold (dmt) 3,092,900 1,889,900 64% 10,594,400 7,650,600 38%
Phase II Commercial Production
During the first quarter of the 2023 financial year, the Company successfully commissioned its second ore processing plant with its first
shipment of concentrate railed in May 2022. In the second quarter of the 2023 financial year, the last major on-site Phase II infrastructure work
programs were completed, enabling the Company ’s two crushers to feed both processing facilities and reduc ing bottlenecks during
maintenance periods. With major on -site work programs completed ahead of schedule, Phase II reached commercial production in
December 2022 and the Company continued to make improvements to stabilize and optimize operations.
While Phase II demonstrated its ability to reach the designed nameplate capacity on several operating days since reaching commercial
production, production during the fourth quarter of the 2023 financial year was impacted by the longer than expected maintenance shutdow n
of the Company’s newly commissioned crusher due to winter challenges, an d previously disclosed mining equipment delivery and
commissioning delays, which limited mining capacity. This short-term limitation in mining and crushing capacity created some inefficiencies
across the site, restricting the ongoing ramp -up during the quarter. With the r ecent delivery and assembly of mining equipment and current
work to increase throughput an d the recovery ratio, the path towards Bloom Lake reaching its expanded nameplate capacity of 15 Mtpa in the
near term has significantly improved.
Off-site work programs, including third -party infrastructure, continued to advan ce during the quarter, furth er positioning the Company to
benefit from the gradual ramp- up in production expected in the near term. During the three -month period ended March 31, 2023, downstream
limitations, including locomotive delivery delays and a four -day power outage at the port , negatively impacted the Company ’s operational
results.
While the Company is experiencing a short -term disconnect in upstream and downstream capacity, compared to the completed infrastructure
at Bloom Lake, Management is confident that a stable and operational balance state will be reached in the near term. Bloom Lake is currently in
its facilities synchronization period, an important step towards increasing operational capacity.
Operational Performance
In the three -month period ended March 31, 2023, 1 4.2 million tonnes of material were mined and hauled, compared to 10.5 million tonnes
during the same period in 2022, an increase of 36%. The increase in material movement was enabled through the utilization of additional
equipment. Tonnage mined and hauled for the current quarter was lower than anticipated, compared to the initial Phase II ramp- up schedule,
due to previously disclosed required mining equipment delivery delays. With the recent delivery and assembly of equipment required to increase
mining capacity towards Phase II's expected nameplate capacity, Management is confident its operations can deliver a stronger performance
in the upcoming months.
The strip ratio for the three -month period ended March 31, 2023, was impacted by the limited number of drills and haul trucks due to delivery
delays. In order to optimize plant operations in connection with transitional incremental feed requirements during the Phase II ramp-up period,
the Company chose to reduce mined waste. The Co mpany intends to gradually recover accumulated waste backlog in future periods as
additional mining equipment becomes available.
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The plants processed 9.1 million tonnes of ore during the three -month period ended March 31, 2023, compared to 4.9 million tonnes for the
same prior-year period. The mining capacity limitations resulting from previously disclosed equipment delivery delays negatively impacte d the
tonnage processed during the quarter. The plants’ performance during the three-month period ended Mar ch 31, 2023, was also impacted by a
longer than expected maintenance shutdown of one of the Company's two crushers.
The iron ore head grade for the three-month period ended March 31, 2023, was 28.4%, compared to 30.3% for the same period in 2022. The
variation in head grade is attributable to the presence of some lower -grade ore being sourced and blended from different pits, which was
anticipated and is in line with the mine plan and the life of mine head grade average.
The Company’s average Fe recovery rate of 78.6% for the three -month period ended March 31, 2023, was negatively impacted by lower
recoveries of the Phase II concentrator and was expected at this stage of the Phase II commissioning . The Company remains confident in its
ability to reach the average LoM expected Fe recovery rate target of 82.4% in the near term at Bloom Lake, as detailed in the Phase II feasibi lity
study.
Bloom Lake achieved record production of 3.1 million wmt of high -grade iron ore concentrate during the three-month per iod ended
March 31, 2023, an increase of 65%, compared to 1.9 million wmt during the same period in 2022, positively impacted by the ongoing
commissioning of the Phase II plant. Management expects to benefit from optimization work programs and equipment de liveries, which should
result in improved combined production of Bloom Lake's plants in the near term.
4. Mining Operating Expenditures
For the three-month period ended March 31, 2023, the C1 cash cost1 per tonne totalled $79.0/dmt, compared to $60.0/dmt for the same period
in 2022.
The C1 cash cost 1 per dmt sold for the three-month period ended March 31, 2023, was negatively impacted by the fixed costs incurred to
support the infrastructure required to achieve the higher anti cipated production prior to achieving nameplate capacity. The Company expects
those costs to decrease and to normalize as production gradually ramps up towards Bloom Lake's expanded production nameplate capacity of
15 Mtpa. Cash cost1 during the quarter was also affected by higher than expected utilization of contractors at the mine due do to the previously
disclosed delivery delays in required mining equipment. The C1 cash cost 1 in the three-month period ended March 31, 2023, compared to the
same period la st year, was also impacted by the higher cost of fuel and explosives used in the Company's mining activities, higher workforc e
transportation costs and global inflationary pressures that also affected contractors, rail and port operations, and food ser vices. In addition,
the longer than expected planned maintenance shutdown of one crusher and longer haul cycle times associated with the current mine plan
also contributed to a higher cash cost 1 for the three-month period ended March 31, 2023. Despite factors contributing to higher cash cost 1 per
dmt sold in the period, the economic benefits of the Phase II expansion project will continue to accrue as throughput gradual ly increases and
reaches the expected expanded nameplate capacity of 15 Mtpa.
The life of mine strip ratio used for cost capitalization was revised upward in December 2021 concurrently with the commencement of Phase II
operations. During the three -month period ended March 31, 2023, the actual strip ratio of 0. 55 was lower than the life of mine strip ratio used
for cost capitalization; therefore, no mining costs were capitalized during the period. The prior -year actual strip ratio of 0.94 was significantly
higher, positively impacting the cash cost1 for the comparative period because it resulted in the capitalization of mining costs.
5. Exploration Activities
There were no substantive changes in exploration activities in the three -month period ended March 31, 2023 . Details on exploration projects
and maps are available on the Company’s website at www.championiron.com under the section Operations & Projects.
6. Conference Call and Webcast Information
A webcast and conference call to discuss the foregoing results will be held on May 31, 2023, at 8:30 AM (Montréal time) / 10:30 PM (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 fre e +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 882582 #.
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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 sour ce energy from renewable hydroelectric power. The two concentrators have a combined nameplate capacity of 15 Mtpa and
produce a low contaminant high -grade 66.2% Fe iron ore concentrate with a proven ability to produce a 67.5% Fe direct reduction quality
concentrate. 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 Troug h, including the Kamistiatusset Project, located
a few kilometres south-east of Bloom Lake, and the Consolidated Fire Lake North iron ore project, located approximately 40 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 legislation. Forward -looking statements are statements that are not historical facts and are generally, but not always, iden tified by
the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "pr ojects", "predicts",
"intends", "anticipates", "aims", "targets" or "believes", or variations of, or the negatives of, su ch 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 f orward-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 forwar d-looking statements. Forward- looking statements include, among other things,
Management’s expectations regarding: (i) the Company's Phase II expansion project, its expected achievement of nameplate capacity,
throughput, recovery rates, economic and other benefits, impact on nameplate capacity, milestones and associated costs; (ii) the project to
upgrade the Bloom Lake iron ore concentrate to a higher grade with lower contaminants and to convert approximately half of Bl oom Lake’s
increased nameplate capacit y of 15 Mtpa to commercially produce a 69% Fe DRPF product, expected project timeline, economics, capital
expenditure, budget and financing, production metrics, technical parameters, efficiencies and economic and other benefits; (iii) the shi ft in
steel industry production methods towards reducing emissions and green steel production methods and the Company's participation there in,
contribution thereto and positioning in connection therewith, including the transition of the Company's product offering and expected benefits
thereof; (iv) collaboration between First Nations and Champion; (v) recovering accumulated waste backlog; (vi) optimization work programs
and their expected results; (vii) the Company’s operational and financial generally; and (viii) the Company’s growth and opportunities generally.
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 ca use the 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 prepa re feasibility studies;
(iii) project delays; ( iv) timing and uncertainty of industry shift to green steel and EAF; (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; (x) de lays in obtaining
governmental approvals, necessary permitting or in the completion of development or construction act ivities; 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 2022 Annual Report and Annual
Information Form for the financial year ended March 31, 2022, which are available on SEDAR at www.sedar.com, 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 b e 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 f orward-looking information contained in this press release is given as of the date hereof or such other date or dates
specified in 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 its 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.
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Abbreviations
Unless otherwise specified, all dollar figures stated herein are expressed in Canadian dollars. The following abbreviations are used throughout
this 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 ) and Phase II
(Phase II expansion project). The utilization of “Champion” or the “Company” refers t o Champion Iron Limited and/or one, or more, or all of its
subsidiaries, as applicable. "IFRS" refers to International Financial Reporting Standards.
For further information, please contact:
Michael Marcotte, CFA
Senior Vice-President, Corporate Development and Capital Markets
514-316-4858, Ext. 1128
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 CEO of Champion Iron Limited, David Cataford.
Copies of the Company’s audited Consolidated Financial Statements and associated Management’s Discussion and Analysis for the year ended
March 31, 2023 will be available under the Company’s profile on SEDAR (www.sedar.com ), on the ASX (www.asx.com.au ) and the Company’s
website (www.championiron.com) on May 31, 2023.
1 C1 cash cost is a non-IFRS financial ratio with no standard definition under IFRS and might not be comparable to similar financial measures used by other issuers. C1
cash cost is defined as cost of sales before incremental costs related to COVID-19 and Bloom Lake Phase II start-up costs divided by iron ore concentrate sold in dmt.
This metric is an important tool to monitor operating cost performance. C1 cash cost for the three-month period ended March 31, 2023, is unaudited.
2 Available liquidity is a non -IFRS financial performance measure with no standard definition under IFRS and might not be comparable to similar financial me asures
used by other issuers. Available liquidity includes cash and cash equivalents, short-term investments and undrawn amounts of the credit facilities. The Company uses
available liquidity to measure its liquidity to meet the requirements of lenders, fund capital expenditures and support opera tions. Available liquidity for the three -
month period ended March 31, 2023, is unaudited.