USD180M debt financing positions Bloom Lake Iron Ore Mine for a production restart
July 13, 2017
USD180M debt financing positions Bloom Lake Iron Ore Mine for a
production restart
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES
Montréal, Québec, Canada: Champion Iron Limited (ASX: CIA, TSX: CIA) (“Champion” or
the “Compan y”) is pleased to announce that they secured debt financing conditional
commitments of USD180 million for its subsidiary Québec Iron Ore Inc. (“QIO”) from la
Caisse de dépôt et placement du Québec (“Caisse”) and Sprott Resource Lending (“Sprott”).
This financing is part of the restart of Bloom Lake Iron Ore Mine ’s operations, located near
Fermont, Québec.
With the completion and filing of the Bloo m Lake Feasibility Study earlier this year,
demonstrating that mining operations at Bloom Lake are financially viable, Champion has
focused on securing the financing required for the iron ore mine’s restart, potentially as early
as Q1 2018. Following the completion of the CAD40 million bridge financing announced in
May, which included a CAD20 million loan from Sojitz Corporation , QIO and Champion
announces it has obtained further debt financing conditional commitment s for up to
USD180 million to partially fund the costs of resuming the operations at Bloom Lake.
Champion and QIO Chairman and CEO, Michael O’Keeffe, stated, “We recognize and
greatly appreciate the confidence and support shown by Caisse and Sprott in providing a
key element of the required financing to restart Bloom Lake. We are pleased to be working
with the teams at both Caisse and Sprott and look forward to bringing Bloom Lake back into
production, which would benefit not just Champion, QIO and its shareholder and investor
base, but also the many local and re gional interests as we establish ourselves as a
significant player in the Labrador Trough.”
Dušan Petković, Principal of Sprott, commented, "As one of the largest investors dedicated
to the natural resource sector, Sprott is excited to partner with Champion and la Caisse on
the restart of Bloom Lake. Our partnership with the Champion team is consistent with our
strategy of providing innovative and flexible capital to maximize the value of exceptional
projects.”
“The innovative restart strategy put forward by the management team, Sprott’s vast mining
expertise, the quality of the assets and the current market conditions have all come together
to bring this mining project to a new level,” says Christian Dubé, Executive Vice -President,
Québec, at Caisse de dé pôt et placement du Québec. “This transaction is aligned with our
mining strategy in Québec, which aims to support businesses in this sector at all stages of
development, from mineral exploration to the start of operations.”
Bloom Lake USD180 million debt financing conditional commitments
The QIO USD180 million total debt financing conditional commitments are comprised of two
tranches:
(1) Senior secured financing
A USD80 million 5-year senior secured loan is to be provided by Sprott Private
Resource Lending (Collector) LP (“Sprott”), carrying interest at a rate of 7.5% plus
the greater of USD 3 month LIBOR and 1% per annum. The terms of this loan will
provide for the issuance by Champion to Sprott of 3 million common share purchase
warrants, at an exercise price to be determined when the Champion equity raising
referred to below is undertaken and in compliance with the requirements of the ASX
and TSX and subject to the approval of Champion’s shareholders.
(2) Subordinated financing
A USD100 million 7-year su bordinated loan to be provided by Caisse de dépôt et
placement du Québec or one of its subsidiaries (“Caisse”), carrying interest at a rate
of 12% for the first year thereafter at an interest rate linked to the price of iron ore for
subsequent years. Caisse will be issued 21 million common share purchase warrants
by Champion, at an exercise price to be determined when the Champion equity
raising referred to below is undertaken and in compliance with the requirements of
the ASX and TSX and subject to the approval of Champion’s shareholders.
Each of these debt financing s is conditional upon the execution of the definitive
documentation and the satisfaction of other customary closing conditions.
As Champion will be responsible for issuing common share purchase warrants to Sprott and
Caisse, it will be compensated by Ressources Québec Inc. (“RQ”), a wholly owned
subsidiary of Investissement Québec, commensurate with their 36.8% interest in QIO.
One of the conditions of the debt financings requires QIO shareholders, Champion and RQ,
to contribute financially to support the resumption of operations at Bloom Lake , which
amounts to approximately CAD72 million. The fonds Capital Mines Hydrocarbures (CMH) ,
managed by Ressources Québec , has issued a L etter of Intent to provide for its 36.8%
contribution representing approximately CAD27 million, subject to final approval . Champion
intends to conduct other equity offerings to raise approximately CAD45 million to fund its
contribution.
Shareholders’ Approval
Champion intends to obtain shareholders’ approval for the issuance of common share
purchase warrants as described above at its forthcoming Annual General Shareholders
Meeting scheduled to take place in Montreal on August 18, 2017.
Champion and QIO Chairman and CEO Michael O’Keeffe said that securing conditional
commitments for the debt financings and the recent Framework Off-Take Agreement signed
with Sojitz Corporation were major achievements for t he Company and QIO, providing
significant support for the re-commencement of commercial operations at Bloom Lake,
potentially as early as Q1 2018.
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
Media & Investor Communications
Bill Kemmery, FUNDEXA at Tel. +61 400 122 449
About Bloom Lake
On April 11, 2016, the Company, through its subsidiary QIO, acquired the Bloom Lake assets from
affiliates of Cliffs Natural Resources Inc. that were subject to restructuring proceedi ngs 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 propert y is located on the south end of the Labrador Trough, approximately 13 km
north of Fermont, Quebec, and 10 km north of the Mount -Wright iron ore mining operation of
ArcelorMittal Mines Canada. The Bloom Lake Mine is an open pit truck and shovel operation, with a
concentrator. From the site, iron concentrate can be transported by rail, initially on the Bloom Lake
Railway, to a ship loading port in Sept-Iles, Québec.
The Bloom Lake Mine has already been authorized for operation under the federal and provinci al
environmental authorities. The project was subject to an environmental impact assessment 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 activitie s at the Bloom Lake site. An updated positive
Feasibility Study on Bloom Lake has being 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 dev eloping its significant iron
resources in the south end of the Labrador Trough in the province of Québec. Following the
acquisition of its flagship asset, the Bloom Lake iron ore property, the Company’s main focus is to
implement upgrades to the mine and p rocessing infrastructure it now owns while also advancing
projects associated with improving access to global iron markets, including rail and port infrastructure
initiatives with government and other key industry and community stakeholders.
Champion’s man agement 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 mi ning industry.
For additional information on Champion Iron Limited, please visit our website at
www.championiron.com
About Sprott
Sprott is an alternative asset manager and a global leader in precious metal and real asset
investments. Through its subsidi aries in Canada, the US and Asia, the company is dedicated to
providing investors with best -in-class investment strategies that include Exchange Listed Products,
Alternative Asset Management and Private Resource Investments. The company also operates
Merchant Banking and Brokerage businesses in both Canada and the US. Sprott is based in Toronto
with offices in New York, Carlsbad and Vancouver and its common shares are listed on the Toronto
Stock Exchange under the symbol (TSX:SII). For more information, ple ase visit www.sprottinc.com.
Sprott Resource Lending is a globally recognized leader in natural resource financing and specializes
in providing flexible debt solutions to mining companies. Since joining Sprott, the team has financed
more than $1.0 billion in bespoke private debt investments. For more information, please visit
www.sprottlending.com.
About Caisse de dépôt et placement du Québec
Caisse de dépôt et placement d u Québec (CDPQ) is a long -term institutional investor that manages
funds primarily for public and parapublic pension and insurance plans. As at December 31, 2016, it
held $270.7 billion in net assets. As one of Canada's leading institutional fund managers, CDPQ
invests globally in major financial markets, private equity, infrastructure, real estate and private debt.
For more information, visit cdpq.com, follow us on Twitter @LaCDPQ or consult our Facebook or
LinkedIn pages.
This news release includes certain information that may constitute “forwa rd-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 forw ard-looking information. The use of any of the words “will”, “expect”,
“anticipate”, “intend”, “believe”, “plan”, “potential”, “outlook”, “forecast”, “estimate” and similar
expressions are intended to identify forward -looking information. Forward -looking i nformation 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 other securities regulatory filings made by Champion on SEDAR
(including under the heading “Risk Factors” therein). There can be no assurance that such information
will prove to be accurate, as actual results and future events could differ materially from those
anticipated in such forward -looking information. Accordingly, readers should not place undue reliance
on forward-looking information. All of Champion’s forward -looking information contained in this press
release is given as of the date hereof and is based upon the opinions and estimates of Champion’s
management and informat ion 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.