• Quarterly production of 3.3M wmt, sales of 3.0M dmt and cash cost of approximately $77/dmt¹
• Solidifying operations at Bloom Lake following a strategy to identify bottlenecks and required investments to expand nameplate capacity beyond 15 Mtpa
• Ratified a new 5-year collective bargaining agreement with Bloom Lake’s unionized employees

Champion Iron Limited (TSX: CIA) (ASX: CIA) (OTCQX: CIAFF) reports production results and mining operation expenditures for its financial fourth quarter ended March 31, 2024. Detailed operational and audited financial results are to be released prior to the Company’s conference call and webcast scheduled for May 31, 2024.

Champion’s CEO, Mr. David Cataford, said, “The new collective bargaining agreement signed during the quarter is mutually beneficial for all stakeholders. Its 5-year term will also provide long-term stability for our employees, our organization and the community. From an operational standpoint, we followed our strategy to push Bloom Lake beyond its nameplate capacity in the previous quarter, resulting in short-term production volatility, but enabling us to identify and confirm bottlenecks within our facilities. Our technical team is now analyzing the investments required to structurally increase production at Bloom Lake beyond 15 Mtpa over time. As we solidify operations, we continue to seek improvements from the rail operator to ensure that haulage services keep pace with our production rate as we continue to exercise our leadership in the green steel supply chain.”

1. Quarterly Highlights

Operations and Sustainability

• No serious injuries or major environmental incidents reported in the quarter;
• Ratified a new 5-year collective bargaining agreement with Bloom Lake’s unionized employees, providing long-term stability for the employees, the Company and the community;
• Appointed Mr. Ronnie Beevor to the Board of Directors in March 2024, who brings decades of valuable experience, as a director and Chairman of various successful mining companies;
• Quarterly production of 3.3 million wmt (3.2 million dmt) of high-grade 66.1% Fe concentrate for the three-month period ended March 31, 2024, down 19% from the previous quarter, and up 6% over the same period last year;
• Quarterly iron ore concentrate sales of 3.0 million dmt for the three-month period ended March 31, 2024, down 8% and 4%, from the previous quarter and the prior-year period, respectively; and
• The Company continues to seek improvements from the rail operator to receive contracted haulage services to ensure that Bloom Lake’s production, as well as iron ore concentrate currently stockpiled at Bloom Lake, is hauled over future periods. Iron ore concentrate stockpiled at Bloom Lake reached 2.7 million wmt as at March 31, 2024.

Financial Results

• C1 cash cost of approximately $77/dmt¹ (US$57/dmt), an increase of 5% quarter-on-quarter, and a decrease of 3% year-over-year;
• Strong cash position at quarter-end with $400.1 million in cash and cash equivalents as at March 31, 2024, an increase of $12.7 million since December 31, 2023; and
• Available liquidity to support growth initiatives, including amounts available from the Company’s credit facilities, totalled $942.1 million¹ at quarter-end, compared to $937.6 million¹ as at December 31, 2023.

Growth and Development

• Filed the previously reported Kami Project study, completed pursuant to National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and Chapter 5 of the ASX Listing Rules entitled “Pre-Feasibility Study for the Kamistiatusset Iron Ore Property”, which evaluated the construction of mining and processing facilities to produce Direct Reduction (“DR”) grade pellet feed iron ore from the properties of the proposed Kami mine. The Company continues to evaluate opportunities to improve the project economics and engage in strategic partnership discussions prior to considering a final investment decision;
• DR pellet feed project, upgrading half of Bloom Lake’s capacity to DR quality pellet feed iron ore up to 69% Fe, remains on schedule and on budget with detailed engineering works and procurement progressing as planned. The project commissioning is scheduled for the second half of calendar year 2025, a timeline which is subject to completing key construction milestones by mid-2024;
• Continued to evaluate DR pelletizing projects to further participate in the green steel supply chain and align with the accelerating industry transition to direct reduced iron and electric arc furnaces steelmaking; and
• Following the Company’s strategy to push Bloom Lake beyond its nameplate capacity in the previous quarter, in order to identify and confirm bottlenecks, the team is now analyzing the investments required to structurally increase Bloom Lake’s nameplate capacity beyond 15 Mtpa over time.

2. Bloom Lake Mine Operating Activities 

Bloom Lake’s Phase II reached commercial production in December 2022 and produced at nameplate capacity for thirty consecutive days for the first time during the first quarter of the 2024 financial year. During the third quarter, further to various operating improvements, the Company deployed a strategy to identify operational bottlenecks at Bloom Lake by pushing facilities beyond their nameplate capacity. This initiative confirmed Bloom Lake’s capacity to produce above its expanded 15 Mtpa nameplate capacity, but it reduced the availability of the Company’s equipment in the fourth quarter due mainly to unplanned maintenance activities caused by premature wear and tear on the equipment and earlier than expected major maintenance of the plants. As the Company solidifies operations, a team was mobilized to identify and analyze work programs and investments required to structurally increase Bloom Lake’s nameplate capacity beyond 15 Mtpa over time.

Shipments were negatively impacted during the three-month period ended March 31, 2024, as a result of continued lagging railway services as well as planned and unplanned maintenance activities at the port facilities and on the railroad. Due to the ongoing disconnect in railway services and Bloom Lake’s increasing production capacity, the iron ore concentrate stockpiled at Bloom Lake increased significantly since June 2023. As at March 31, 2024, the iron ore concentrate stockpiled at the site totalled 2.7 million wmt, an increase of 0.2 million wmt since December 2023.

The Company continues to seek improvements from the rail operator to receive contracted haulage services to ensure that Bloom Lake’s production, as well as iron ore concentrate currently stockpiled at Bloom Lake, is hauled over future periods.

During the three-month period ended March 31, 2024, 16.0 million tonnes of material were mined and hauled, compared to 14.2 million tonnes during the same period in 2023, an increase of 12%. This increase is attributable to the contribution of additional equipment, a higher utilization and availability of mining equipment, and reduced trucking cycle time associated with the construction of additional ramp accesses. Material mined and hauled during the previous quarter was 18.2 million tonnes, representing a quarter-on-quarter decrease of 12%, mainly attributable to the lower availability of loading equipment and winter conditions.

The stripping ratio of 0.69 for the three-month period ended March 31, 2024, was expected and higher than the same prior-year period, compared to 0.62 in the previous quarter. As the Company deployed its strategy to push Bloom Lake beyond its nameplate capacity in the previous quarter to identify bottlenecks, this caused production volatility during the current quarter, and additional resources were allocated to waste removal. The Company plans to maintain higher stripping activities in accordance with the LoM plan over the next quarters.

During the three-month period ended March 31, 2024, the two plants at Bloom Lake processed 9.3 million tonnes of ore, compared to 9.1 million tonnes for the same prior-year period and 11.1 million tonnes in the previous quarter, an increase of 3% and a decrease of 16%, respectively. Ore processed during the three-month period ended March 31, 2024, was negatively impacted by longer than planned maintenance activities, unplanned outages as well as by advancing the schedule of an expected major maintenance of the second plant driven by additional production in the previous quarter. During the third quarter, the Company operated its plants above their expanded nominal capacity to confirm their full potential and also to identity and confirm bottlenecks, resulting in higher unscheduled maintenance activities during the three-month period ended March 31, 2024.

The iron ore head grade for the three-month period ended March 31, 2024, was 28.7%, compared to 28.4% for the same period in 2023, and 29.4% during the previous quarter. The variation in head grade was within expected normal variations in the mine plan.

The Company’s average Fe recovery rate was 80.2% for the three-month period ended March 31, 2024, compared to 78.6% for the same period in 2023, and 81.4% during the previous quarter. The year-over-year increase in Fe recovery is attributable to work programs that aimed to increase throughput and ore recoveries. With continuous efforts made to optimize its recovery circuits, the Company expects to reach the LoM Fe recovery rate target of 82.0% in the near term.

With higher Fe recovery and comparable head grade, Bloom Lake produced 3.3 million wmt (3.2 million dmt) of high-grade iron ore concentrate during the three-month period ended March 31, 2024, an increase of 6% compared to 3.1 million wmt (3.0 million dmt) during the same period in 2023, and a decrease of 19% compared to the previous quarter.

3. Mining and Processing Operating Expenditures

For the three-month period ended March 31, 2024, the cost of sales totalled approximately $227 million with a C1 cash cost of $77/dmt¹, compared to $244.4 million with a C1 cash cost of $79.0/dmt¹ for the same period in 2023, and $235.5 million with a C1 cash cost of $73.0/dmt¹ in the previous quarter.

The year-over-year improvement in cash cost was mostly driven by lower fuel and explosives prices, and higher production, partially offset by higher than planned utilization of contractors to fill vacant positions as well as higher levels of planned and unplanned maintenance activities. Cash cost for the three-month period ended March 31, 2024, continued to be negatively impacted by lower than expected run rate shipment levels to amortize mostly fixed handling costs at the port facilities in Sept-Îles.

4. Exploration Activities 

During the three-month period ended March 31, 2024,

• ▪ the Company maintained all of its properties in good standing and did not enter into any farm-in/farm-out arrangements;
• ▪ approximately $2 million in exploration and evaluation expenditures were incurred, compared to $2.5 million for the same prior-year period; and
• ▪ exploration and evaluation expenditures mainly consisted of costs associated with updating the Kami Project study, and exploration drilling of 1,100 m on the Bloom East properties located in the Labrador Trough.

Details on exploration projects and maps are available on the Company’s website at www.championiron.com under the Operations & Projects section.

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 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 Cluster II portfolio of properties, located within 60 km south of Bloom Lake.