CHAMPION IRON REPORTS RECORD PRODUCTION FOR ITS FY2023 SECOND QUARTER Record quarterly production of 2.9M wmt, adjusted EPS1 of $0.06 and EBITDA1 of $84.3 million; Bloom Lake Phase II expansion ramping-up as scheduled, contributing towards reducing operating costs metrics; Declares a
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PRESS RELEASE
CHAMPION IRON REPORTS RECORD PRODUCTION FOR ITS
FY2023 SECOND QUARTER
Record quarterly production of 2.9M wmt, adjusted EPS1 of $0.06 and EBITDA1 of $84.3 million; Bloom Lake
Phase II expansion ramping-up as scheduled, contributing towards reducing operating costs metrics; Declares a
dividend of $0.10 per ordinary share
Montréal, October 26, 2022 - Champion Iron Limited (TSX: CIA) (ASX: CIA) (OTCQX: CIAFF) (“Champion” or the “Company”) is pleased to
announce operational and financial results for the financial second quarter ended September 30, 2022.
Conference Call Details
Champion will host a conference call and webcast on October 27, 2022 at 8:30 AM (Montréal time) / 11:30 PM (Sydney time) to discuss the
results for the second quarter ended September 30, 2022. Call details are outlined at the end of this press release.
Champion’s CEO, Mr. David Cataford, said: “Our record production is attributable to the hard work and dedication of our team as Phase II
continues to ramp -up as scheduled, despite the challenging environment. As a result, our iron ore volumes sold in the q uarter increased by
nearly 43% year on year. With Phase II on track to reach commercial production by the end of the calendar year, the higher pr oduction volumes
are also contributing towards normalizing our operating costs per tonne sold. In addition, our team is finalizing the feasibility study evaluating
the production of a Direct Reduction (“DR”) pellet feed product, which will be the foundation towards our potential transition to higher value
products in the green steel supply chain.”
1. Highlights
Sustainability
• No major environmental issues reported during the period;
• Partnership with Innu Takuaikan Uashat Mak Mani -Utenam and Comité sectoriel de main d'oeuvre de l'industrie des mines, to
implement training programs aimed at increasing collaboration between Innu partners and Champion;
• Workshops and commemoration activities aimed at familiarizing Champion's employees with the Innu culture were organized on th e
National Day fo r Truth and Reconciliation on September 30, 2022, as part of an annual commitment, in line with our Company's
values; and
• Fundraising organized by the Company at Fermont and Montréal attracted record participation, with more than 240 individuals
running or walking in an event benefiting Cancer Fermont, a charitable organization improving the quality of life of local residents
fighting cancer, as well as a significant donation to l’Envol -Maison de la Famille Sept -Îles, a help center which provides support fo r
struggling local families.
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Operations and Financial
• Record production of 2,857,300 wmt of high -grade 66.1% Fe concentrate for the three -month period ended September 30, 2022,
driven by the commissioning of Phase II, compared to 2,089,100 wmt of high -grade 66.3% Fe concentrate for the same period in
2021;
• C1 cash cost 1 of $65.9/dmt (US$50.5/dmt)2 for the three -month period ended September 30, 2022, comparing favourably with the
cash cost 1 of $74.0/dmt for the previous quarter ended June 30, 2022, as the Company begins to benefit from higher production
volumes generated from the Phase II project;
• Record iron ore concentrate sold for the three-month period ended September 30, 2022, contributing to revenues of $300.6 million
($331.0 million for the same period in 2021), net cash flow from operating activities of $87.1 million ($374.1 million for the same period
in 2021), EBITDA1 of $84.3 million ($200.0 million for the same period in 2021) and net income of $19.5 million (EPS of $0.04) ($114.6
million and EPS of $0.23 for the same period in 2021);
• Financial results during the quarter were positively impacted by the higher iron ore volumes sold, and were more than offset by
decreasing iron ore index prices, expected transitional start-up costs to support Phase II commercial production , anticipated lower
recovery circuit rates in relation to the Phase II ramp -up, scheduled seasonal tailings related work programs and increased operating
costs attributable to global inflationary pressure s. The economic benefits of the Phase II expansion project should be progressive as
throughput gradually increases towards Bloom Lake's revised nameplate capacity of 15 Mtpa;
• Available liquidity1 of $586.4 million as at September 30, 2022, including $277.4 million of cash and cash equivalents and short -term
investments, compared to $571.0 million as at June 30, 2022; and
• Dividend of $0.10 per ordinary share declared on October 26, 2022 (Montréal time) / October 27, 2022 (Sydney time), in connection
with the semi-annual results for the period ended September 30, 2022.
Phase II Milestones
• Commissioning activities continue as scheduled, including ongoing system optimization work related to commercial production,
scheduled to commence by the end of calendar 20223, with nameplate capacity anticipated to be achieved in calendar 20233; and
• Last major on-site work program in relation to the Phase II equipment has been completed, enabling the Company's two crushers to
feed both facilities and reduce bottlenecks during maintenance periods.
Growth and Development
• The feasibility study evaluating the reprocessing and infrastructure required to convert approximately half of Bloom Lake’s in creased
nameplate capacity of 15 Mtpa towards commercially producing a 69% Fe DR pellet feed product is nearing completion;
• In collaboration with a major international steelmaking partner, a feasibility study evaluating the re -commissioning of the Pointe -
Noire Iron Ore Pelletizing Facility (the “Pellet Plant”) to produce DR grade pellets is a dvancing, with an anticipated completion date in
the second half of calendar 2023;
• The Kamistiatusset iron ore project's (the “Kami Project”) feasibility study, whereby the project is being evaluated for its capability to
produce DR grade pellet feed product, is expected to be completed in the first half of calendar 2023; and
• Freight agreements signed, contracting two vessels per month, from January 2023 to December 2023, expected to reduce the
Company's freight premium volatility by using an agreed- upon price premium above the average C3 Baltic Capesize Index per tonne,
plus an additional seasonal premium for winter conditions.
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2. Bloom Lake Mine Operating Activities
Three Months Ended Six Months Ended
September 30, September 30,
2022 2021 Variance 2022 2021 Variance
Operating Data
Waste mined and hauled (wmt) 4,572,900 5,299,600 (14%) 10,178,900 9,999,100 2%
Ore mined and hauled (wmt) 8,214,700 5,713,900 44% 14,407,800 11,357,800 27%
Material mined and hauled (wmt) 12,787,600 11,013,500 16% 24,586,700 21,356,900 15%
Strip ratio 0.56 0.93 (40%) 0.71 0.88 (19%)
Ore milled (wmt) 8,102,700 5,679,800 43% 14,124,900 10,907,000 30%
Head grade Fe (%) 29.5 29.1 1% 30.2 29.4 3%
Fe recovery (%) 78.6 83.3 (6%) 79.3 83.1 (5%)
Product Fe (%) 66.1 66.3 —% 66.1 66.3 —%
Iron ore concentrate produced (wmt) 2,857,300 2,089,100 37% 5,139,900 4,025,100 28%
Iron ore concentrate sold (dmt) 2,793,400 1,953,900 43% 4,807,300 3,928,600 22%
Phase II Commissioning
During the first quarter of the 2023 financial year, the Company initiated and advanced the commissioning of Phase II and at the end of
April 2022, the first of two Phase II plant production lines was commissioned. The first shipments were railed on May 3, 2022. In June 2022, the
Company successfully started the second line as scheduled in the ramp-up sequencing of the project. Accordingly, both operating lines were in
service at the end of the first quarter . During the three -month period ended September 30, 2022, commissioning activities progressed as
scheduled. The Company made adjustments and improvements in some areas to stabilize operations (including work to increase th roughput
and the recovery ratio) and reach expected performance, positioning the Company to achieve, as scheduled, commercial production by the end
of calendar 2022 3 and nameplate capacity in calendar 2023 3. The last major on -site work program relating to the Phase II equipment was
completed during the three -month period ended September 30, 2022, enabling the Company's two crushers to feed both facilities and reduce
bottlenecks during maintenance periods. Final minor on -site work programs are expected to be completed as planned during the third and
fourth quarters of the 2023 financial yea r. While on -site work programs are being delivered ahead of schedule, off -site work programs,
including third-party infrastructure, continue to advance as scheduled.
Operational Performance
Second Quarter of the 2023 Financial Year vs Second Quarter of the 2022 Financial Year
In the three-month period ended September 30, 2022, 12.8 million tonnes of material were mined and hauled, compared to 11.0 million tonnes
during the same period in 2021, an increase of 16%. The increase in material movement was enabled through the utilization of additional
equipment compared to the same prior -year period, offset by a longer haul cycle as material was sourced from different pits, including those
that deepened with mining activities over time. The lower st rip ratio for the three -month period ended September 30, 2022, is in line with the
revised mine plan in connection with transitional incremental feed requirements during the Phase II ramp-up period.
The iron ore head grade for the three-month period ended September 30, 2022, was 29.5%, compared to 29.1% for the same period in 2021. The
variation in head grade is attributable to the presence of some higher -grade ore being sourced and blended from diffe rent pits, which was
anticipated and is in line with the mine plan and the LoM head grade average.
The Company's average Fe recovery rate for the three-month period ended September 30, 2022, was negatively impacted by the anticipated
lower recoveries duri ng the commissioning of the Phase II concentrator, but is in line with Management’s expectations at this stage of the
Phase II commissioning. The slight decrease in the Fe recovery rate during the three-month period ended September 30, 2022, compared to the
first quarter, was due to a higher proportion of tonnes processed by the second concentrator together with stability impacts on Phase I
attributable to the finalization of the Phase II tie-in program, as the utilization of the second plant is increasing over time. The Company expects
to reach a stable Fe recovery circuit when Phase II achieves commercial production, anticipated to occur by the end of calendar 20223.
During the three-month period ended September 30, 2022, operational activities were impac ted by a scheduled semi- annual maintenance on
the second concentrator, while no shutdown occurred in the same prior -year period. A shutdown is now planned every quarter, alternating
between the two concentrators and related facilities . A non-recurring 20-day scheduled shutdow n of specific equipment was required for the
tie-in of the first crusher to the A-Frame dome as part of the Phase II project ramp-up, which also impacted operational activities in the quarter.
Despite these factors, Bloom Lake produced 2.9 million wmt of high -grade iron ore concentrate during the three -month period ended
September 30, 2022, an increase of 37%, compared to 2.1 million wmt during the same period in 2021. The Company achieved record
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production in connection with the commiss ioning of the second plant at the mine site. Higher throughput and head grade also contributed to
higher production volumes, despite a lower global recovery. The commissioned Phase II project's production compares favourabl y to the
scheduled production volumes. The plants processed 8.1 million tonnes of ore during the three-month period ended September 30, 2022,
compared to 5.7 million tonnes for the same prior -year period. The throughput for the period was positively affected by higher availability of
mined ore and the commissioning of Phase II operations in the previous quarters.
First Six Months of the 2023 Financial Year vs First Six Months of the 2022 Financial Year
The Company mined and hauled 24.6 million tonnes of material during the six -month period ended September 30, 2022 , compared to 21.4
million tonnes for the same period in 2021. This increase in material mined and hauled is attributable to the commissioning of additional
operational equipment compared to the same prior -year period. The strip ratio was 0.71 for the six-month period ended September 30, 2022,
compared to 0.88 for the same period in 2021, and is consistent with the revised mine plan.
The iron ore head grade of 30.2% for the six-month period ended September 30, 2022, was attributable to different sourcing pits, compared to
29.4% for the same period in 2021, and is consistent with the LoM head grade average. The lower average Fe recovery rate for the six-month
period ended September 30, 2022, was attributable to the commissioning of the Phase II concentrator as detailed above.
The plant processed 14.1 million tonnes of ore during the six-month period ended September 30, 2022, an increase of 30% over the same period
in 2021, and produced 5.1 million wmt of high -grade iron ore concentrate, compared to 4.0 million wmt for the same period in 2021, mainly
attributable to the commissioning of the Phase II project.
3. Financial Performance
Three Months Ended Six Months Ended
September 30, September 30,
2022 2021 Variance 2022 2021 Variance
Financial Data (in thousands of dollars)
Revenues 300,621 331,006 (9%) 579,942 876,414 (34%)
Cost of sales 199,841 110,884 80% 369,248 231,730 59%
Other expenses 16,839 20,313 (17%) 32,444 34,873 (7%)
Net finance costs 10,765 1,012 964% 14,955 5,399 177%
Net income 19,530 114,596 (83%) 61,084 338,935 (82%)
EBITDA1 84,331 200,013 (58%) 179,261 605,752 (70%)
Statistics (in dollars per dmt sold)
Gross average realized selling price1 157.0 218.8 (28%) 171.0 249.4 (31%)
Net average realized selling price1 107.6 169.4 (36%) 120.6 223.1 (46%)
C1 cash cost1 65.9 56.2 17% 69.3 58.2 19%
All-in sustaining cost (“AISC”)1 81.9 73.6 11% 86.8 73.1 19%
Cash operating margin1 25.7 95.8 (73%) 33.8 150.0 (77%)
A. Revenues
Second Quarter of the 2023 Financial Year vs Second Quarter of the 2022 Financial Year
During the three-month period ended September 30, 2022, 2.8 million tonnes of high-grade iron ore concentrate were sold at a gross average
realized price1 of US$120.6/dmt, before freight and other costs and provisional pricing adjustments, compared to US$174.6/dmt for the same
prior-year period. The decrease in gross average realized selling price 1 reflects lower index prices during the three-month period ended
September 30, 2022, compared to the same prior -year period. Despite lower index prices, the gross average realized selling price 1 of
US$120.6/dmt represents a premium of 1 6.7% over the benchmark IODEX 62% Fe CFR China Index (“P62”) price for the period, compared to a
premium of 7.2% for the same period in 2021.
During the three-month period ended September 30, 2022, the IODEX 65% Fe CFR China Index (“P65”) for high-grade iron ore fluctuated from a
high of US$131.5 /dmt to a low of US$107.2 /dmt. The P65 index average price for the period was US$115.5 /dmt, a decrease of 39% from the
same prior-year quarter, resulting in an average premium of 11.8% over the P62 reference price of US$103.3/dmt. The gross average realized
selling price 1 of US$120.6/dmt was higher than the P65 index average price for the period of US$115.5 /dmt due to sales based on fixed
backward-looking iron ore prices, when prices were higher com pared to the P65 index average for the current period. This factor was partially
offset by the negative impact of 1.3 million tonnes which were in transit as at September 30, 2022, provisionally priced using an average
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forward price of US$112.3/dmt, which was lower than the P65 index average price for the period. After accounting for sea freight and other
costs and provisional pricing adjustments, the Company's net realized FOB selling price 1 was US$83.2/dmt, compared to US$134.7/dmt for the
same period in 2021.
The average C3 Baltic Capesize Index for the three -month period ended September 30, 2022, was US$24.0/t compared to US$31.7/t for the
same period in 2021, representing a decrease of 24%, which contributed to lower freight costs in the three-month period ended
September 30, 2022, compared to the same prior -year period. The lower freight rates for the three -month period ended September 30, 2022,
can be partially attributed to decreased fue l prices and lower iron ore shipments from Brazil. Simultaneously, the partial removal of COVID -19
lockdowns in China reduced port congestion, further influencing the decreasing freight rates, with lower seaborn iron ore vol umes as marginal
suppliers facin g profitability challenges curtailed operations. Champion typically contracts vessels three to four weeks prior to the desire d
laycan period. This creates a natural delay between the freight paid and the C3 route index price. The effects of these delay s are eventually
reconciled since the Company ships its high-grade iron ore concentrate uniformly throughout the year.
Provisional pricing adjustments on previous sales, which were directly correlated to the decrease in the P65 index during the quarter,
contributed to decreasing the net average realized selling price 1. During the three -month period ended September 30, 2022, a final price of
US$116.2/dmt was established for the 0.7 million tonnes of iron ore that were in transit as at June 30, 2022, and which were previously
evaluated using an average expected price of US$138.4/dmt. Accordingly, during the three -month period ended September 30, 2022, net
negative provisional pricing adjustments of $20.9 million were recorded as a decrease in revenues for the 0. 7 million tonnes, representing a
negative impact of US$5.3/dmt over the total volume of 2.8 million dmt sold during the current period, comparable to the nega tive impact for
the same period in 2021.
After taking into account sea freight and other costs of US$32.1/dmt and the negative provisional pricing adjustment of US$5.3 /dmt, the
Company obtained a net average realized selling price 1 of US$83.2/dmt (CA$ 107.6/dmt) for its high -grade iron ore delivered to the end
customer. Revenues totalled $300.6 million for the three -month period ended September 30, 2022, compared to $331.0 million for the same
period in 2021, reflecting the lower net average realized selling price 1 partially offset by a significantly higher sales volume and the weakening
Canadian dollar.
First Six Months of the 2023 Financial Year vs First Six Months of the 2022 Financial Year
For the six-month period ended September 30, 2022 , the Company sold 4.8 million tonnes of iron ore concentrate, mainly to customers in
China, Japan, South Korea and Europe . While the high -grade iron ore P65 index price fluctuated between a low of US$107.2 /dmt and a high of
US$185/dmt during the six-month period ended September 30, 2022, the Company sold its product at a gross average realized selling price 1 of
US$132.7/dmt before sea freight and other costs and provisional pricing adjustments. The P65 index average price for the six-month period
ended September 30, 2022 , was US$137.3/dmt, a decrease of 35% from the same period in 2021, resulting in an average premium of 14.2%
over the P62 index reference price of US$120.2/dmt. The gross average realized selling price1 is lower than the average P65 high-grade index of
US$137.3/dmt for the period due to sales provisionally priced using an average forward price of US$112.3/dmt at the end of the period, which
was significantly lower than the average P65 index for the period. The Company expects its iron ore concentrate pricing to trac k the P65 index
in the long term.
Combining the gross average realized selling price1 with the negative provisional pricing adjustment of US$5.8/dmt, the Company sold its high-
grade iron ore at a price of US$126.9 /dmt during the six-month period ended September 30, 2022 , compared to the P65 high -grade index
average of US$137.3/dmt. Deducting sea freight and other costs of US$33.1 /dmt, the Company obtained a net average realized selling price 1 of
US$93.8/dmt (CA$ 120.6/dmt) for its high -grade iron ore. As su ch, revenues totalled $579.9 million for the six-month period ended
September 30, 2022, compared to $876.4 million for the same period in 2021, mainly as a result of a lower gross average realized selling price1,
partially offset by a significantly higher sales volume and the weakening Canadian dollar. A negative provisional pricing adjustment during the
six-month period ended September 30, 2022 , compared to a positive provisional pricing adjustment during the same period in 2021, also
contributed to the decrease in revenues.
B. Cost of Sales and C1 Cash Cost1
The cost of sales represents mining, processing, and mine site -related general and G&A expenses as well as rail and port operation costs. It
also includes specific and incremental costs related to COVID -19 and, starting in April 2022, it includes Bloom Lake Phase II start -up costs
incurred after commissioning. These start -up costs mainly in clude abnormal operational costs attributable to the facility not having reached
the normalized expected level of output.
For the three-month period ended September 30, 2022, the cost of sales totalled $199.8 million, compared to $110.9 million for the same period
in 2021. During the three-month period ended September 30, 2022, the C1 cash cost 1 per tonne, excluding specific and incremental costs
related to COVID-19 and Phase II start-up costs, totalled $65.9/dmt, compared to $56.2/dmt for the same period in 2021.
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The C1 cash cost 1 per dmt sold for the three-month period ended September 30, 2022, benefited from higher volumes of iron ore concentrate
sold associated with increased production volumes from the Phase II project, but were more than fully offset by global inflationary pressures,
impacting cost of fuel used in the Company's mining activities and land transportation, explosives costs as well as rail and port operations. The
life of mine stripping ratio used for cost capitalization for the thr ee-month period ended September 30, 2021, was also significantly lower,
positively impacting the prior-year period cash cost1. The lower recoveries associated with the commissioning of the Phase II concentrator also
negatively impacted cash cost 1 for the p eriod as the concentrate volume produced was lower than standard level. Finally, longer haul cycle
times associated with the current mine plan also contributes quarter-over-quarter to higher mining costs.
For the six-month period ended September 30, 2022, the Company produced high- grade iron ore at a C1 cash cost 1 amounting to $69.3/dmt,
compared to $58.2/dmt for the six-month period ended September 30, 2021. The variation is attributable to the same factors that affected the
C1 cash cost1 for the three-month period ended September 30, 2022.
In addition, unplanned third- party shutdowns, planned maintenance of additional facilities, as well as increased headcount and subcontractor
usage in relation to the commissioning of the Phase II project during the first quarter, also contributed to the higher cash cost1 for the six-month
period ended September 30, 2022.
C. Net Income & EBITDA1
Second Quarter of the 2023 Financial Year vs Second Quarter of the 2022 Financial Year
For the three -month period ended Se ptember 30, 2022, the Company generated net income of $19.5 million (EPS of $0.04), compared to
$114.6 million (EPS of $0.23) for the same period in 2021. The net income was mainly affected by a lower P65 index average price during the
period, as well as a higher cash cost 1, compared to the same prior -year period. The decrease in net income is partially offset by a higher sales
volume driven by the solid ramp-up of Phase II and lower current income and mining taxes.
For the three -month period ended Septem ber 30, 2022, the Company generated EBITDA 1 of $84.3 million, representing an EBITDA margin 1 of
28%, compared to $200.0 million, representing an EBITDA margin 1 of 60%, for the same period in 2021. The decrease in EBITDA 1 period-over-
period is primarily due to lower net average realized selling prices 1 and higher cash costs 1. This decrease is partially offset by a higher sales
volume driven by the solid ramp-up of Phase II.
First Six Months of the 2023 Financial Year vs First Six Months of the 2022 Financial Year
For the six-month period ended September 30, 2022 , the Company generated net income of $61.1 million (EPS of $0.12), compared to
$338.9 million (EPS of $0.67) for the same period in 2021. The decrease in net income is mainly due to lower iron ore index prices and higher
cash costs, partially offset by a higher sales volume driven by the solid commissioning of Phase II and lower current income and mining taxes.
For the six-month period ended September 30, 2022, the Company generated an EBITDA 1 of $179.3 million, representing an EBITDA margin 1 of
31%, compared to $605.8 million, representing an EBITDA margin 1 of 69% for the same period in 2021. This decrease in EBITDA1 is mainly
attributable to the decrease in the net average realized selling price 1 and higher production costs, partially offset by a higher sales volume
following the Phase II commissioning.
D. All In Sustaining Cost (“AISC”)1 and Cash Operating Margin1
During the three-month period ended September 30, 2022, the Company realized an AISC 1 of $81.9/dmt, compared to $73.6/dmt for the same
period in 2021. The increase relates to higher C1 cash costs 1, partially offset by the positive impact of higher volumes of iron ore concentrate
sold.
The Company generated a cash operating margin 1 of $25.7/dmt for each tonne of high-grade iron ore concentrate sold during the three-month
period ended September 30, 2022, compared to $95.8/dmt for the same prior -year period. The variation is mainly due to a lower net average
realized selling price1 and higher AISC1 for the period.
During the six-month period ended September 30, 2022, the Company recorded an AISC 1 of $86.8/dmt, compared to $73.1/dmt for the same
period in 2021. The variation is mainly due to higher C1 cash costs 1 and higher sustaining capital expenditures mainly related to higher
investments made in tailings lifts. The Company is actively working to ensure everything is in place to support Phase II operations, including
hiring additional personnel and incurring the necessary sustaining capital expenditures. Refer to section 5 - Cash flow for details on sustaining
capital expenditures.
The cash operating margin 1 totalled $33.8/dmt for the six-month period ended September 30, 2022, compared to $150.0/dmt for the same
period in 2021. The variation is mainly due to a lower net average realized selling price1 and higher AISC1.
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4. Exploration Activities
During the three and six-month periods ended September 30, 2022, 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 six -month periods ended September 30, 2022, $0.9 million and
$3.1 million in exploration and evaluation expenditures were incurred, respectively, compared to $2.0 million and $2.7 million for the same
periods in 2021. During the three and six -month periods ended September 30, 2022, exploration and evaluation expenditures mainly consisted
of costs associated with resource development and drilling, work related to updating the Kami Project feasibility study and c laim renewal fees.
During the six-month period ended September 30, 2022, 4,430 metres of diamond drilling was completed on the Bloom Lake property. Drilling
at Bloom Lake was undertaken mainly for the conversion of resources. Geological mapping and assessment were started on exploration claims
localized south of Bloom Lake. In addition, late in September, the Company started a diamond drilling campaign at Lamêlée South.
Details on exploration projects and maps are available on the Company’s website at www.championiron.com under the section Operations &
Projects.
5. Cash Flows — Purchase of Property, Plant and Equipment
Three Months Ended Six Months Ended
September 30, September 30,
2022 2021 2022 2021
(in thousands of dollars)
Tailings lifts 28,440 14,174 37,425 20,512
Stripping and mining activities 3,730 8,684 14,793 17,218
Mining equipment rebuild 4,011 3,603 10,908 5,498
Sustaining capital expenditures 36,181 26,461 63,126 43,228
Other capital development expenditures at Bloom Lake 42,403 127,192 138,072 220,364
Purchase of property, plant and equipment as per cash flows 78,584 153,653 201,198 263,592
Sustaining Capital Expenditures
The increase in tailings -related investments for the three and six -month periods ended September 30, 2022, is due to the reclassification of
preparation work performed on Phase II dikes from other capital development expenditures in the comparative periods to tailin gs lifts. In
addition, during the three and six -month periods ended September 30, 2022, weather conditions were more favourable than in the same prior -
year periods, enabling the Company to advance work performed on the dikes. As part of the Company's ongoing and thorough tail ings
infrastructure monitoring and inspections, the Company continues to in vest in its safe tailings strategy and is developing a long -term tailings
investment plan.
The decrease in stripping and mining activities during the three and six -month periods ended September 30, 2022, compared to the same
periods in 2021, is in line with the mine plan, inclusive of Phase II operations. The variation in stripping activities is attributable to the revised
stripping ratio used to capitalize some of the mining cost since the fourth quarter of the 2022 financial year. The new ratio considers the
Company's mineral reserves as per the execution of the Phase II mine plan. Higher stripping and mining activities in the comparative periods
were associated with the preparation for the Phase II project operations.
The increase in the Company's minin g equipment maintenance program for the three and six -month periods ended September 30, 2022, is
attributable to the addition of mining operating equipment and the high utilization rate for this equipment. Mining equipment rebuild
expenditures were also negatively affected by global inflation during the three and six-month periods ended September 30, 2022.
Other Capital Development Expenditures at Bloom Lake
During the three -month period ended September 30, 2022, other capital development expenditures at Bloom Lake totalled $42.4 million,
compared to $127.2 million in the same period in 2021. During the three -month period ended September 30, 2022, the expenditures mainly
consisted of $26.2 million in Phase II capital expenditures, $5.1 million in borrowing costs which were capitalized during the development of the
Phase II project, and $4.5 million in deposits for production equipment to be commissioned and financed in the future through the finance
agreement with Caterpillar Financial Services Limited. Dur ing the three -month period ended September 30, 2022, other capital development
expenditures were offset by the receipt of a government grant totalling $5.2 million related to the Company’s greenhouse gas emissions and
energy consumption reduction initiatives, compared to $6.2 million in the same prior -year period. The Company qualified for total grant s of up
to $21.8 million.
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During the six-month peri od ended September 30, 2022, other capital development expenditures at Bloom Lake totalled $138.1 million,
compared to $220.4 million in the same prior -year period. During the six -month period ended September 30, 2022, the expenditures mainly
consisted of $94.0 million in Phase II capital expenditures, $19.2 million in deposits for production equipment, and $9.6 million in borrowing
costs. Other capital development expenditures were offset by the receipt of a government grant totalling $5.2 million as detai led above,
compared to $6.2 million in the same period in 2021.
During the three and six -month periods ended September 30, 2021, the expenditures mainly comprised of Phase II capital expenditures,
lodging infrastructure investments at the mine site requir ed to accommodate an increasing workforce, prepayments for production equipment
and increases in mill capacity and other infrastructure improvements.
6. Conference Call and Webcast Information
A webcast and conference call to discuss the foregoing results will be held on October 27, 2022 at 8:30 AM (Montréal time) / 11:30 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 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 477793 #.
About Champion Iron Limited
Champion Iron Limited, through its 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 Bloom Lake Phase I and Phase II plants have a combined namepl ate 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 the Bloom Lake Mining Complex, 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 Consolidated Fire Lake North iron ore p roject,
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, 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.
All statements other than statements of historical facts included in this press release tha t address future events, developments or
performance that Champion expects to occur are forward -looking statements. Forward- looking statements include Management’s
expectations regarding: (i) the partnership with Innu Takuaikan Uashat Mak Mani -Utenam and C omité sectoriel de main d'oeuvre de l'industrie
des mines, to implement training programs aimed at increasing collaboration between Innu partners and Champion; (ii) the Company's Phase II
expansion project, its expected transitional start -up costs to suppo rt commercial production, lower recovery circuit rates, economic benefits,
impact on nameplate capacity and milestones; (iii) the potential to upgrade the Bloom Lake iron ore concentrate to a higher grade with lower
contaminants and the feasibility study e valuating the reprocessing and infrastructure required to convert approximately half of Bloom Lake’s
increased nameplate capacity of 15 Mtpa towards commercially producing a 69% Fe DR pellet feed product and its completion timeline; (iv) the
feasibility study evaluating the re-commissioning of the Pointe-Noire Iron Ore Pelletizing Facility to produce DR grade pellets and its anticipated
completion date; (v) the Kami Project's feasibility, its purpose and anticipated completion date; (vi) the reduction of th e Company's freight
premium volatility under freight agreements; ( vii) the shift in steel industry production methods and expected rising demand for higher -grade
iron ore products and the transition of the Company’s product offering; and (viii) the impact of iron ore prices fluctuations on the Company and
the occurrence of certain events and their impact on iron ore prices and demand for high-grade iron ore products.