MONTRÉAL, Dec. 18,
2024 /CNW/ - (Sydney, December
19, 2024) - Champion Iron Limited (TSX: CIA) (ASX: CIA)
(OTCQX: CIAFF) ("Champion" or the "Company") announces that Nippon
Steel Corporation ("Nippon") and Sojitz Corporation ("Sojitz", and
collectively with Nippon the "Partners"), entered into a binding
agreement with Champion to form a partnership (the "Partnership")
for the joint ownership and development of the Kamistiatusset
Project ("Kami" or the "Project"). The Partners will initially
contribute $245 million for 49% of
the interest in the Partnership and Champion may receive future
payments based on the Project's financial performance, if and when
in operation (the "Transaction"). Should the Company and the
Partners make a positive final investment decision ("FID") election
following the completion of a definitive feasibility study for the
Project (the "DFS"), they will share development and construction
costs of the Project in accordance with their respective ownership
interests. Through the Transaction and future pro-rata
contributions from the Partners, the Project will benefit from up
to $490 million in contributions
prior to Champion requiring additional capital funding for its
pro-rata share of the Project.
Champion's CEO, Mr. David Cataford, said, "We are
excited to partner with global industry leaders, who share our
long-term vision for Kami to produce high-purity iron ore, which
was recently recognized as a critical mineral by the Newfoundland and Labrador, Québec and Canadian federal
governments. Attracting such industry leaders highlights the rare
quality of the Labrador Trough's resources and the region's proven
ability in constructing and sustainably operating sizeable
high-purity iron ore projects. The financial support and
collaboration provided by the Partners mark an important milestone
as we work on elements required to optimize the Project towards a
potential FID. With the Partners' successful history in the steel
industry and Champion's stewardship in operating projects in the
region, Kami could stimulate significant economic growth in
Labrador West and is an opportunity to contribute in the
decarbonization of steelmaking globally. Additionally, a recent
announcement detailing collaboration between local provinces to
make significant investments in projects to provide renewable power
access for decades in the region, highlights Kami's potential as a
sustainable project."
Nippon's Managing Executive Officer, Mr. Ryuichi Nagai, said, "Securing the
supply of direct reduction quality iron ore is a critical strategic
advantage for Nippon as we pursue our transition to reduce
emissions in steelmaking. Kami benefits from one of the best
resources and is one of the most advanced direct reduction quality
iron ore projects globally. Accordingly, the Project offers a rare
opportunity for our company to optimize its supply chain from a
sustainable Project with a long mine life. Our long-term
relationship with Sojitz and Champion's proven technical expertise
in the Labrador Trough provides a robust foundation to advance the
Project as we evaluate its potential development."
Sojitz's COO, Metals, Mineral Resources & Recycling Division
and Executive Officer, Mr. Osamu
Matsuura, said, "Through this Partnership, our
company is further aligning itself with the steel industry's
accelerating transition to reduce emissions. Sojitz's investment
creates an opportunity to procure a critical material for its
customers' evolving procurement needs. Through our years of
marketing partnership with Champion, since the recommissioning of
their Bloom Lake mine, their team demonstrated remarkable
reliability in building and operating sustainable projects while
supplying stable high-quality products for our clients. Our company
is excited to partner with such credible groups to potentially
develop this Project, which is required to respond to our clients
current and future needs."
Closing of the Transaction is subject to the Company and the
Partners entering into a framework agreement (the "Framework
Agreement") to advance the Project towards a potential interim
investment decision ("IID") and, ultimately, a FID, including
Project permitting and the completion of a DFS. All Project costs
are to be shared by the Partners on pro-rata basis. The DFS is
expected to be completed in calendar mid-2026 and the project
construction period is estimated at 48-months following FID.
Upon closing, the Transaction will see Champion hold a 51%
equity interest in Kami with Nippon and Sojitz holding minority
positions of 30% and 19%, respectively. Nippon and Sojitz will be
entitled to a production allocation of the iron ore volumes
produced from Kami in accordance with their proportional ownership
in the Project. The $245 million
contribution from the Partners will be structured as an initial
payment from the Partners of $68.6
million upon closing, followed by a subsequent payment of
$176.4 million upon completion of the
DFS, subject to Champion and the Partners making a positive IID
election to pursue work towards a FID. Additionally, the
Transaction includes potential future payments to Champion
based on the Project's financial performance if and when it
operates. Champion will retain operatorship of the Project,
overseeing the potential development and future operations of the
Project. The Transaction is expected to close in the first half of
the 2025 calendar year and remains subject to negotiation and
entering into definitive agreements, including the Framework
Agreement and a partnership agreement which will include dilution,
exit rights and other rights and obligations customary for a
transaction of such nature (the "Partnership Agreement").
In the near-term, the Partnership expects to advance the
recently initiated Environmental Impact Statement, as required by
the Government of Newfoundland and
Labrador. The Company and the
Partners will also continue to engage with local stakeholders,
including First Nations groups, to foster collaborative development
and to ensure the Project has a positive impact for the region.
Additionally, the Company will pursue discussions with governments
at various levels, including seeking potential support stemming
from the recent addition of high-purity iron ore to critical
minerals lists by local provinces' and Canada's governments, and evaluate
opportunities to improve the Project's economics. Concurrently, the
Partnership will work towards completing the DFS, leveraging the
previously completed Pre-Feasibility Study issued in March 2024, prior to considering an IID and,
ultimately, a FID. To support these initiatives, the Partnership
recently made key hires, including Mr. Kevin Foley as general manager of Kami. Mr.
Foley brings extensive experience in developing and managing large
projects, including his recent tenure as general manager in oil
sands projects in Canada and
senior roles at Iron Ore Company of Canada located a few kilometres from the Kami
Project.
About the Kami Project
On April 1, 2021, the Company
acquired the Kami mining properties located in the Labrador Trough
geological belt in southwestern Newfoundland, near Québec's eastern border.
Kami is a Direct Reduction ("DR") grade quality iron ore project
situated near available infrastructure, only a few kilometres
south-east of the Company's operating Bloom Lake mine. On
March 14, 2024, the Company filed the
2024 Pre-Feasibility Study (the "Study"), which evaluated the
construction of mining and processing facilities to produce DR
grade pellet feed iron ore from the Kami Project. The Study details
a 25-year life of mine with average annual DR quality iron ore
concentrate production of approximately 9.0 million wet metric
tonnes per annum grading above 67.5% Fe. Kami benefits from the
permitting work completed by its previous owner and has an
estimated construction period of approximately 48 months following
a FID. As detailed in the Study, the capital expenditures were
estimated at $3,864 million,
resulting in a Net Present Value ("NPV") of $541 million and an Internal Rate of Return
("IRR") of 9.8% after tax, as per the first scenario based on
conservative pricing dynamics compared to prevailing iron ore
prices, or an NPV of $2,195 million
and IRR of 14.8% after tax, as per the second scenario based on the
previous three calendar years' average of the P65 index price.
The Company is not aware of any new information or data that
materially affects the information included in the Study and
confirms that all material assumptions and technical parameters
underpinning the estimates in the Study continue to apply and have
not materially changed. The Study is available under the Company's
profile on SEDAR+ at www.sedarplus.ca, the ASX at
www.asx.com.au and on the Company's website at
www.championiron.com.
About Nippon Steel Corporation
Nippon is Japan's largest
steelmaker and one of the world's leading steel manufacturers.
Nippon has a global crude steel production capacity of
approximately 66 million tonnes and employs approximately 110,000
people in the world. Nippon's manufacturing base is in Japan and the company has presence in 15
countries or more worldwide including the
United States, India,
Thailand, Indonesia, Vietnam, Brazil, Mexico, Sweden, China
and others. As the 'Best Steelmaker with World-Leading
Capabilities,' Nippon pursues world-leading technologies and
manufacturing capabilities and contributes to society by providing
excellent products and services. Nippon has been an active customer
of Champion since the recommissioning of the Bloom Lake mine in
2018.
About Sojitz Corporation
Sojitz was formed out the union of Nichimen Corporation and
Nissho Iwai Corporation, both companies that boast incredibly long
histories. For more than 160 years, our business has helped support
the development of countless countries. Today, the Sojitz group
consists of approximately 400 subsidiaries and affiliates located
in Japan and throughout the world,
developing wide-ranging general trading company operations
globally. Sojitz has acted as a marketing partner for Champion
since the recommissioning of the Bloom Lake mine in 2018.
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 low
contaminant high-grade 66.2% Fe iron ore concentrate with a proven
ability to produce a 67.5% Fe direct reduction quality iron ore
concentrate. Benefiting from one of the highest purity resources
globally, the Company is investing to upgrade half of the Bloom
Lake mine capacity to a direct reduction quality pellet feed iron
ore with up to 69% Fe. 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 delivered its iron ore concentrate 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 Kami Project, located a few
kilometres south-east of Bloom Lake, and the Cluster II portfolio
of properties, located within 60 km south of Bloom Lake.
Forward-Looking Statements
This press release contains certain information and statements
which constitute "forward-looking information" within the meaning
of applicable securities laws (collectively referred to herein as
"forward-looking statements"). 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 in this press release, other than statements of
historical facts, that address future events, developments or
performance that Champion expects to occur are forward-looking
statements. These statements may include, but are not limited to,
management's expectations regarding: the negotiation and entering
into of the Framework Agreement, the Partnership Agreement, other
Transaction documents as well as the terms thereof; the completion
of the transactions contemplated by the Framework Agreement and its
timing; the Partnership and Project structure and financing, IID
and FID; the completion of the DFS and its timing; the timing and
ability of the Partnership to obtain permits and authorizations
needed to begin the construction and operations at the Project; the
timing and ability to reach a construction decision; the timing and
duration of the construction period; the ability of Champion to
realize on the benefit of the Transaction; the ability and timing
for the parties to fund cash calls to advance the development of
the Project and pursue its development; the Study, the Project's
potential to produce a DR grade product, expected project timeline,
economics, capital expenditures, budget and financing, production
and financial metrics, technical parameters, permitting and
approvals, available and planned infrastructure, expected
environmental footprint, efficiencies and economic and other
benefits such as stimulating growth in Labrador West and related
evaluation of project economics; the shift in steel industry
production methods and expected rising demand for higher-grade iron
ore products and related market deficit and higher premiums,
including using reduction technologies and the Company's
participation therein, contribution thereto and vision and
positioning in connection therewith and expected benefits thereof;
green steel, emission reduction, sustainability and other
Environmental, Social and Governance related initiatives,
objectives, targets and expectations, expected implications thereof
and the Company's positioning in connection therewith; and 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 in or implied by such forward-looking statements.
Factors that could cause the actual results to differ materially
from those expressed in or implied by forward-looking statements
include, without limitation: the results of feasibility and other
studies; changes in the assumptions used to prepare feasibility and
other studies; project delays; timing and uncertainty of industry
shift to green steel and electric arc furnaces, impacting demand
for high-grade feed; continued availability of capital and
financing and general economic, market or business conditions;
fluctuations in foreign currency exchange rates; general economic,
competitive, political and social uncertainties; market
disruptions, including pandemics or significant health hazards,
severe weather conditions, natural disasters, terrorist activities,
financial crises, political crises, wars and other military
conflicts (including the ongoing military conflict between
Russia and Ukraine and in the Middle East), or other major events, or the
prospect of these events; future prices of iron ore; future
transportation costs; increased public concern about the
environmental impact of the Company's products or their perceived
safety; decreased social acceptance and increased social action to
reduce the use of fossil fuels, which may negatively impact
consumer perception; cyber events or attacks (including ransomware,
state sponsored and other cyberattacks); 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; the effects
of catastrophes and public health crises 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
2024 Annual Report and Annual Information Form, the risks and
uncertainties discussed in the Company's management's discussion
and analysis for the financial year ended March 31, 2024 and the risks discussed in other
reports Champion files with the Canadian Securities Administrators
and the Australian Securities and Investments Commission, all of
which are available on SEDAR+ at www.sedarplus.ca, the ASX at
www.asx.com.au and on 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 statements. Accordingly, readers should not place
undue reliance on forward-looking statements.
Additional Updates
The forward-looking statements in this press release are based
on assumptions management believes to be reasonable and speak only
as of the date of this press release or as of the date or dates
specified in such statements. Champion undertakes no obligation to
update publicly or otherwise revise any forward-looking statements
contained herein, whether as a result of new information or future
events or otherwise, except as may be 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. Investors and others should carefully consider the
above factors as well as the uncertainties they represent and the
risks they entail.
Qualified Person
Mr. Vincent Blanchet, P. Eng.,
Engineer at Quebec Iron Ore Inc., the Company's subsidiary, is a
"qualified person" as defined by NI 43-101 and has reviewed and
approved, or has prepared, as applicable, the disclosure of the
scientific and technical information contained in this press
release and has confirmed that the relevant information is an
accurate representation of the available data and studies for the
relevant projects. Mr. Blanchet's review and approval does not
include statements as to the Company's knowledge or awareness of
new information or data or any material changes to the material
assumptions and technical parameters underpinning the Study. Mr.
Blanchet is a member of the Ordre des ingénieurs du Québec.
For further information, please contact:
Champion Iron Limited
Michael
Marcotte, CFA
Senior Vice-President, Corporate Development and Capital
Markets
514-316-4858, Ext. 1128
Info@championiron.com
For additional information on Champion Iron Limited, please
visit our website at: www.championiron.com.
All references to dollars expressed in Canadian currency.
This press release has been authorized for release to the market
by the Board of Directors of Champion Iron Limited.
SOURCE Champion Iron Limited