- 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 /CNW/ - (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 webcast 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 advancing 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 the project timeline. Benefiting from our high-purity
resource, the DRPF Project 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 "Tshinanu", 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 recently 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;
- 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 achieve 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 cost1 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 increase
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, conducted 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
supply 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")
steelmaking 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 Company 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 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
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Three Months
Ended
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Year Ended
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|
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March 31,
|
|
March 31,
|
|
|
2023
|
2022
|
Variance
|
|
2023
|
2022
|
Variance
|
|
|
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
|
|
|
Waste mined and hauled
(wmt)
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|
5,023,900
|
5,071,700
|
(1 %)
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|
19,574,300
|
20,512,500
|
(5 %)
|
Ore mined and hauled
(wmt)
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|
9,193,800
|
5,388,200
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71 %
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|
32,442,000
|
22,263,200
|
46 %
|
Material mined and
hauled (wmt)
|
|
14,217,700
|
10,459,900
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36 %
|
|
52,016,300
|
42,775,700
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22 %
|
|
|
|
|
|
|
|
|
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Strip ratio
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|
0.55
|
0.94
|
(41 %)
|
|
0.60
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0.92
|
(35 %)
|
|
|
|
|
|
|
|
|
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Ore milled
(wmt)
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|
9,054,600
|
4,904,100
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85 %
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|
31,682,900
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20,972,100
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51 %
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Head grade Fe
(%)
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|
28.4
|
30.3
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(6 %)
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|
29.2
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29.9
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(2 %)
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Fe recovery
(%)
|
|
78.6
|
82.7
|
(5 %)
|
|
79.3
|
83.2
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(5 %)
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Product Fe
(%)
|
|
66.1
|
66.2
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— %
|
|
66.1
|
66.2
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— %
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Iron ore concentrate
produced (wmt)
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|
3,084,200
|
1,869,000
|
65 %
|
|
11,186,600
|
7,907,300
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41 %
|
Iron ore concentrate
sold (dmt)
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|
3,092,900
|
1,889,900
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64 %
|
|
10,594,400
|
7,650,600
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38 %
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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 reducing 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 shutdown of the Company's newly commissioned crusher
due to winter challenges, and 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 recent delivery and assembly
of mining equipment and current work to increase throughput and 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 advance during the quarter, further 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, 14.2
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 Company intends to gradually recover
accumulated waste backlog in future periods as additional mining
equipment becomes available.
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 impacted the tonnage processed during the
quarter. The plants' performance during the three-month period
ended March 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 feasibility study.
Bloom Lake achieved record production of 3.1 million wmt of
high-grade iron ore concentrate during the three-month period 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
deliveries, 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 cost1 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 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
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 cost1 in the three-month period ended
March 31, 2023, compared to the same period last year,
was also impacted by the higher cost of fuel and explosives used in
the Company's mining activities, higher workforce transportation
costs and global inflationary pressures that also affected
contractors, rail and port operations, and food services. 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 cost1 for
the three-month period ended March 31, 2023. Despite
factors contributing to higher cash cost1 per dmt sold
in the period, the economic benefits of the Phase II expansion
project will continue to accrue as throughput gradually 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 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
882582 #.
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 source
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 Trough, 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, 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.
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
forward-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 Bloom Lake's increased nameplate
capacity 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 shift in
steel industry production methods towards reducing emissions and
green steel production methods and the Company's participation
therein, 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 cause 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 prepare 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;
* delays in obtaining governmental approvals, necessary permitting
or in the completion of development or construction activities; 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 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.
ADDITIONAL UPDATES
All of Champion's forward-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.
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 to
Champion Iron Limited and/or one, or more, or all of its
subsidiaries, as applicable. "IFRS" refers to International
Financial Reporting Standards.
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 measures 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
operations. Available liquidity for the three-month period ended
March 31, 2023, is unaudited.
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SOURCE Champion Iron Limited