Champion Iron subsidiary Quebec Iron Ore Inc. Signs Off-Take Agreement with Sojitz Corporation and Announces $40 Million Bridge Financing in Connection with the Bloom Lake Iron Mine Restart
Champion Iron subsidiary Quebec Iron Ore Inc. Signs Off-Take
Agreement with Sojitz Corporation and Announces $40 Million
Bridge Financing in Connection with the Bloom Lake Iron Mine
Restart
Montréal (Québec), Canada, May 18, 2017: Champion Iron Limited (ASX: CIA, TSX: CIA)
(“Champion” or the “Company”), is pleased to announce that its subsidiary, Quebec Iron Ore Inc.
(“QIO”), has signed a Framework Off -Take Agreement (the “Agreement”) with Sojitz Corporation
(“Sojitz”), a major trading company based in Tokyo, Japan , pursuant to which Sojitz would purchase
up to 3,000,000 DMT per annum from QIO after the re-commencement of commercial operations at
the Bloom Lake Iron Mine (“Bloom Lake”) located near Fermont, Quebec. Champion is also pleased
to announce that it has arranged a $40 million debt and equity bridge financing for Quebec Iron Ore
Inc. in order to restart operations at Bloom Lake.
QIO $40 Million Bridge Financing
In connection with the Bloom Lake restart and in order to benefi cially utilize the summer
construction season for required upgrades to the Bloom Lake tailings management system and other
process plant upgrades and long-lead items, CIA has arranged, on behalf of QIO, a $40 million bridge
financing, comprised of $26 mill ion in debt and $14 million in equity. The debt component consists
of a $20 million loan from Sojitz, together with a $6 million loan from Ressources Québec Inc.
(“Ressources Québec”), a 36.8% equity shareholder in Q IO, both of which are pari-passu one-year
term loans secured against the Bloom Lake fixed assets and large scale mining equipment.
The $14 million equity investment in QIO consists of a proportionate contribution from QIO’s two
shareholders, namely Champion , a 63.2% equity shareholder, and the government of Québec , who
have committed to invest $8.8 million and $5.2 million, respectively, into QIO.
In connection with its $8.8 million financing into QIO, Champion is proceeding with the non-
brokered sale of $10 million in unsecured subordinated convertible debentures (the “Debentures”),
convertible at the option of the holder at any time into Champion Ordinary Shares (“Shares”) at a
conversion price of $1.00 per Sha re. Should Champion and QIO not complete the master financing
(“Master Financing” ) of a minimum of $212 million to finance the Bloom Lake feasibility capital
expenditures by November 30, 2017 , then the conversion price will be adjusted to the lesser of
$1.00 or to the five-day weighted average trading price of the Shares on the TSX det ermined as of
the date of conversion. The Debentures will have a term to maturity of 12 months and bear interest
at a rate of 8%.
Off-Take Agreement
Pursuant to the Agreement, Sojitz will purchase up to 3,000,000 DMT per annum from QIO, upon re-
commencement of commercial operations at Bloom Lake. The Agreement is for an initial five -year
term from the date that commercial operations commence at Bloom Lake and shall automatically
extend for successive terms of five-years.
“We are extremely pleased to have si gned an off -take agreement with an exceptional and highly -
reputed partner such as Sojitz, which predominantly serves the Japanese market and selected Asian
steel mills,” stated Michael O’Keeffe, Champion and QIO’s Chairman and CEO. “This agreement
marks a significant milestone for Bloom Lake and will ensure effective long -term access for our
future high quality product to some of the world’s largest consumers of iron ore.”
Bloom Lake Restart and Master Financing
Following the recent completion of the Bloom Lake Feasibility Study, which demonstrates that
recommencing iron ore mining operations at Bloom Lake is financially viable , QIO and Champion are
proceeding with securing financing for the restart. In addition to the $40 million dollar financing
described above, QIO and Champion are proceeding expeditiously and are in advanced discussions
to obtain the necessary financing to fund the costs detailed in the “Capital Expenditures Including
Working Capital” component of the Bloom Lake Feasibility Study. Details of the Master Financing will
be announced when the terms and conditions are finalized with the lenders and investors.
About Bloom Lake
On April 11, 201 6, the Company, through its subsidiary QIO, 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 Fermon t, 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, initiall y 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 assessm ent process
under Section 31.1 of the Québec 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 has been completed and is available under the Company’s
profile on SEDAR (www.sedar.com).
About Champion
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 pr ovince 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 impro ving 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, COO 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 expression s 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
form, management’s discussion and analysis and ot her 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 th ose 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 ba sed 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 ne w information, future events or
otherwise, except as required by law.