FY2022 EPS of $1.03, EBITDA of $926M; Declares a dividend of $0.10 per ordinary share; Ramping up the Bloom
Lake Mine Phase II expansion project and evaluating growth
opportunities
MONTRÉAL, May 25, 2022
/CNW/ - Champion Iron Limited (TSX: CIA) (ASX: CIA) (OTCQX: CIAFF)
("Champion" or the "Company") is pleased to announce operational
and financial results for the fourth quarter and fiscal year ended
March 31, 2022.
Conference Call Details
Champion will host a conference call and webcast on May 26,
2022 at 8:30 AM (Montréal time) /
10:30 PM (Sydney time) to
discuss the fourth quarter and annual results for the fiscal year
ended March 31, 2022. Call details are outlined at the end of
this press release.
1. Highlights
Health & Safety
- No serious injuries or major environmental issues reported
during the period;
- An employee recordable injury frequency rate of 2.98 for the
2022 fiscal year, which is in line with Québec's open pit industry
performance;
- COVID-19 testing laboratory and prevention measures maintained
in line with the Government of Québec's (the "Government")
directives to mitigate risks related to COVID-19 and limit the
spread of variants;
- Completed the Company's 2021 Sustainability Report, including
Task Force on Climate-Related Financial Disclosure, available on
the Company's website at www.championiron.com; and
- Committing to greenhouse gas ("GHG") emissions reduction of 40%
by 2030, based on 2014 emission intensity with additional
consideration for the targeted nameplate capacity of 15 Mtpa. The
Company is also committed to be carbon neutral by 2050.
Financial
- Inaugural dividend of $0.10 per
ordinary share paid on March 1, 2022,
in connection with the semi-annual results for the period ended
September 30, 2021, and an additional
dividend of $0.10 per ordinary share
declared by the Board of Directors in connection with the annual
results for the period ended March 31,
2022. Additional details on the dividends and related tax
information can be found on the Company's website at
www.championiron.com;
- Revenues of $331.4M and
$1,460.8M for the three-month period
and year ended March 31, 2022,
respectively, compared to $396.7M and
$1,281.8M for the same periods in
2021;
- EBITDA1 of $197.9M for
the three-month period ended March 31,
2022, compared to $275.8M for
the same period in 2021. EBITDA1 of $925.8M for the year ended March 31, 2022, compared to $819.5M for the same period in 2021;
- Net income of $115.7M for the
three-month period ended March 31,
2022 (EPS of $0.23), compared
to $155.9M for the same period in
2021 (EPS of $0.32). Net income of
$522.6M for the year ended
March 31, 2022 (EPS of $1.03), compared to $464.4M for the same period in 2021 (EPS of
$0.97);
- Net cash flow from operating activities of $4.3M for the three-month period ended
March 31, 2022, representing an
operating cash flow per share1 of $0.01, compared to $228.6M or $0.46
for the same period in 2021. Net cash flow from operating
activities of $470.4M for the year
ended March 31, 2022, representing an
operating cash flow per share1 of $0.93, compared to $624.4M or $1.30
for the same period in 2021;
- Cash on hand1 and restricted cash of $396.4M as at March 31,
2022, compared to $543.4M as
at December 31, 2021 and $680.5M as at March 31,
2021, reflecting the ongoing construction of the Phase II
expansion project, working capital changes and the semi-annual
dividend payment on March 1, 2022;
and
- US$400.0M general purpose
revolving facility agreement signed on May
24, 2022 (the "Revolving Facility"), which refinanced the
previous Phase II credit facility (the "Credit Facility"),
providing increased financial flexibility and enabling the Company
to lift the restricted cash covenant of $43.7M, and reduce its cost of capital. The
Revolving Facility was underwritten by sophisticated global
financiers, including Societe Generale, The Bank of Nova Scotia, The Toronto-Dominion Bank and The
Royal Bank of Canada acting as
mandated lead arrangers. The Company drew US$180M on the Revolving Facility, equivalent to
the Credit Facility balance as at March 31,
2022.
Operations
- Production of 1,869,000 wmt of high-grade 66.2% Fe concentrate
for the three-month period ended March 31,
2022, compared to 2,011,400 wmt of high-grade 66.5% Fe
concentrate for the same period in 2021. Production of 7,907,300
wmt of high-grade 66.2% Fe concentrate for the year ended
March 31, 2022, compared to 8,001,200
wmt of high-grade 66.4% Fe for the same period in 2021;
- Fe recovery rate of 82.7% and 83.2% for the three-month period
and year ended March 31, 2022,
respectively, compared to a Fe recovery rate of 82.6% and 83.5%,
respectively, for the same periods in 2021; and
- Free on Board ("FOB") total cash cost1 of
$60.0/dmt (US$47.42/dmt) (C1) and $58.9/dmt (US$47.02/dmt) for the three-month
period and year ended March 31, 2022,
respectively, compared to $54.4/dmt
(US$43.02/dmt) and
$54.2/dmt (US$41.02/dmt), respectively, for the
same periods in 2021.
Growth and Development
- Ongoing feasibility study evaluating the reprocessing and
infrastructure required to commercially produce a 69% Fe Direct
Reduction ("DR") pellet feed product. The study of this proposed
project, scaled to convert approximately half of Bloom Lake's
increased nameplate capacity, is expected to be completed in
mid-2022;
- Announcement of the entering into an acquisition agreement for
the Pointe-Noire Iron Ore Pelletizing Facility located in
Sept-Îles, Québec (the "Pellet Plant") on May 17, 2022, and announcement that the Company
had entered into a memorandum of understanding with a major
international steelmaking partner to evaluate the recommissioning
of the Pellet Plant to produce DR grade pellets; and
- Advancing the Kamistiatusset iron ore project's (the "Kami
Project") feasibility study, expected to be completed in the second
half of calendar 2022, whereby the project is being evaluated for
its capability to produce DR grade pellet feed product.
Phase II Milestones
- Phase II commissioning achieved ahead of schedule in late
April 2022, despite pandemic-related
challenges, positioning the Company to ramp up towards commercial
production by the end of calendar 2022;
- Completion of the first rail shipments containing 24,304 wmt of
high-grade 66.2% Fe iron ore concentrate from the Phase II project
on May 3, 2022; and
- Cumulative investments of $625.2M, including deposits, deployed on the
project as at March 31, 2022.
Champion's CEO, Mr. David
Cataford, said: "Delivering robust operational and financial
results for our 2022 fiscal year, while completing our Phase II
expansion project is a significant achievement highlighting our
team's professionalism and perseverance. This year we will work to
double Bloom Lake's nameplate capacity and further position our
Company's contributions towards green steelmaking solutions. In
addition to ongoing feasibility studies for our DR pellet feed
project and the Kami Project, we also partnered with a global
leader in the steel industry, in order to evaluate the opportunity
to re-commission our recently acquired Pellet Plant in Pointe-Noire
and produce DR pellets."
2. Bloom Lake Phase II Commissioning
During the three-month period ended March 31, 2022,
the Company advanced the work required to commission its Phase II
project. As such, the Company completed its first rail shipments
containing 24,304 wmt of high-grade 66.2% Fe iron ore concentrate
from the Phase II project on May 3, 2022. The Company's
first saleable Phase II high-grade iron ore concentrate is expected
to be shipped from the port of Sept-Îles in the first quarter of
the 2023 fiscal year. This significant milestone represents a
tangible step towards realizing Bloom Lake's potential to become
one of the largest global suppliers of high-purity iron ore.
As the Company anticipates reaching commercial production at
Phase II by the end of calendar 20223, project
milestones achieved and related works undertaken during the
three-month period ended March 31, 2022 included:
- Water-based commissioning of multiple process systems and all
ancillary services at the plant;
- Obtained provincial government approval for future expansion of
the tailings facilities to accommodate the full life of mine plan,
while awaiting final federal government authorization;
- Continuation of construction works; and
- Commissioning of the plant at the end of April 2022, with first rail shipments completed
on May 3, 2022.
3. Decarbonization Initiatives
As part of its ongoing efforts to minimize the environmental
impact of its operations, the Company committed to GHG emissions
reduction of 40% by 2030, based on 2014 emissions intensity with
additional consideration for the targeted nameplate capacity of 15
Mtpa. The Company further committed to be carbon neutral by 2050.
This GHG target is in line with the Paris Agreement 2 degrees
Celsius scenarios, the Canadian government GHG reduction and the
Science Based Targets initiative ("SBTi") frameworks. Towards this
effort, the Company implemented a working group mandated to
identify emissions reduction initiatives and evaluate resources
required to deploy a program to reach its GHG emissions reduction
objectives.
Recent initiatives include a partnership with Tugliq Energy Co.
to initiate testing of electric pickup trucks designed for mining
operations in Northern climates, which are expected to reduce
emissions.
4. Bloom Lake Mine Operating Activities
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2022
|
2021
|
Variance
|
|
2022
|
2021
|
Variance
|
|
|
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
|
|
|
Waste mined and hauled
(wmt)
|
|
5,071,700
|
3,796,300
|
34%
|
|
20,512,500
|
15,481,100
|
33%
|
Ore mined and hauled
(wmt)
|
|
5,388,200
|
5,636,100
|
(4%)
|
|
22,263,200
|
21,571,700
|
3%
|
Material mined and
hauled (wmt)
|
|
10,459,900
|
9,432,400
|
11%
|
|
42,775,700
|
37,052,800
|
15%
|
|
|
|
|
|
|
|
|
|
Strip ratio
|
|
0.94
|
0.67
|
40%
|
|
0.92
|
0.72
|
28%
|
|
|
|
|
|
|
|
|
|
Ore milled
(wmt)
|
|
4,904,100
|
5,237,800
|
(6%)
|
|
20,972,100
|
20,598,700
|
2%
|
Head grade Fe
(%)
|
|
30.3
|
30.7
|
(1%)
|
|
29.9
|
30.7
|
(3%)
|
Fe recovery
(%)
|
|
82.7
|
82.6
|
—%
|
|
83.2
|
83.5
|
—%
|
Product Fe
(%)
|
|
66.2
|
66.5
|
—%
|
|
66.2
|
66.4
|
—%
|
Iron ore concentrate
produced (wmt)
|
|
1,869,000
|
2,011,400
|
(7%)
|
|
7,907,300
|
8,001,200
|
(1%)
|
Iron ore concentrate
sold (dmt)
|
|
1,889,900
|
1,971,100
|
(4%)
|
|
7,650,600
|
7,684,500
|
—%
|
|
|
|
|
|
|
|
|
|
Financial Data
(in thousands of dollars)
|
|
|
|
|
|
|
|
|
Revenues
|
|
331,376
|
396,702
|
(16%)
|
|
1,460,806
|
1,281,815
|
14%
|
Cost of
sales
|
|
116,658
|
110,299
|
6%
|
|
458,678
|
428,882
|
7%
|
Other
expenses
|
|
26,648
|
14,591
|
83%
|
|
84,871
|
43,693
|
94%
|
Net finance
costs
|
|
2,269
|
5,430
|
(58%)
|
|
11,045
|
22,428
|
(51%)
|
Net income
|
|
115,653
|
155,934
|
(26%)
|
|
522,585
|
464,425
|
13%
|
EBITDA1
|
|
197,938
|
275,764
|
(28%)
|
|
925,817
|
819,477
|
13%
|
|
|
|
|
|
|
|
|
|
Statistics
(in dollars per dmt sold)
|
|
|
|
|
|
|
|
|
Gross average realized
selling price1
|
|
207.1
|
220.0
|
(6%)
|
|
225.9
|
182.3
|
24%
|
Net average realized
selling price1
|
|
175.3
|
201.3
|
(13%)
|
|
190.9
|
166.8
|
14%
|
Total cash cost (C1
cash cost)1
|
|
60.0
|
54.4
|
10%
|
|
58.9
|
54.2
|
9%
|
All-in sustaining
cost1
|
|
70.5
|
65.1
|
8%
|
|
73.1
|
62.8
|
16%
|
Cash operating
margin1
|
|
104.8
|
136.2
|
(23%)
|
|
117.8
|
104.0
|
13%
|
Operational Performance
Fourth Quarter of the 2022 Fiscal Year vs Fourth Quarter of the
2021 Fiscal Year
In the three-month period ended March 31, 2022,
10,459,900 tonnes of material were mined and hauled, compared to
9,432,400 tonnes during the same period in 2021, an increase of
11%. The current strip ratio is in line with the revised mine plan,
which includes preparation for Phase II operations. The increase in
material movement was enabled through the utilization of additional
operational equipment compared to the same prior-year period,
offset by a longer haul cycle as material sourced from different
pits, including those that deepened with mining activities over
time, contributed to a longer haul cycle year-over-year.
The iron ore head grade for the three-month period ended
March 31, 2022 was 30.3%, compared to 30.7% for the same
period in 2021. 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
mining plan and the LoM head grade average.
Additionally, the Company's average Fe recovery rate remained
stable quarter-over-quarter as a result of a constant recovery
circuit.
Bloom Lake produced 1,869,000 wmt of 66.2% Fe high-grade iron
ore concentrate during the three-month period ended
March 31, 2022, a decrease of 7%, compared to 2,011,400
wmt of 66.5% Fe during the same period in 2021. The slightly lower
production is attributable to a lower head grade and lower
throughput. The plant processed 4,904,100 tonnes of ore during the
three-month period ended March 31, 2022, compared to
5,237,800 for the same prior-year period. The throughput for the
period was negatively affected by the operational inefficiencies
caused by the COVID-19 Omicron variant, together with minor
unplanned maintenances.
2022 Fiscal Year vs 2021 Fiscal Year
On March 24, 2020, the Company
announced the ramp-down of its operations following Government
directives in response to the COVID-19 pandemic. Operations
gradually ramped up following the Government's announcement in
April 2020 that mining activities
were to be considered a "priority service" in Québec. Early actions
implemented by the Company in response to the COVID-19 pandemic
minimized its impact on the Company and its operations. Once
Government restrictions were lifted, the Company accelerated its
mining activities and fully resumed its production capacity.
The Company mined and hauled 42,775,700 tonnes of material
during the year ended March 31, 2022, compared to 37,052,800
tonnes for the same period in 2021. This increase in material mined
and hauled is attributable to the utilization of additional
operational equipment compared to the same prior-year period and
the negative impact of the COVID-19 pandemic on several of the
Company's other activities early in the comparative period. The
strip ratio increased to 0.92 for the year ended March 31,
2022, compared to 0.72 for the same period in 2021. The strip ratio
is consistent with the revised mine plan which includes preparation
for Phase II operations.
The iron ore head grade of 29.9% for the year ended
March 31, 2022 was attributable to different sourcing pits,
compared to 30.7% for the same period in 2021 and is consistent
with the LoM head grade average.
The plant processed 20,972,100 tonnes of ore during the year
ended March 31, 2022, an increase of 2% over the same period
in 2021. The iron ore concentrate produced remained stable during
the year ended March 31, 2022 despite a lower head grade,
compared to the same period in 2021, as a result of continuous
improvements and operational innovations allowing the Company to
increase throughput stability and reach a higher level of mill
productivity.
5. Financial Performance
A. Revenues
Fourth Quarter of the 2022 Fiscal Year vs Fourth Quarter of the
2021 Fiscal Year
During the three-month period ended March 31, 2022,
1,889,900 tonnes of high-grade iron ore concentrate were sold at
the CFR China gross average realized price1 of
US$164.1/dmt, before freight and
other costs and provisional pricing adjustments, compared to
US$173.9/dmt for the same prior-year
period. The decrease in gross average realized selling
price1 mainly reflects lower index prices during the
three-month period ended March 31, 2022, compared to the
same prior-year period. Despite lower index prices, the gross
average realized selling price1 of US$164.1/dmt represents a premium of 15.9% over
the benchmark IODEX 62% Fe CFR China Index ("P62") price for the
period, compared to a premium of 4.2% for the same period in
2021.
The gross average realized selling price1 of
US$164.1/dmt was slightly lower than
the IODEX 65% Fe CFR China Index ("P65") average price of
US$169.7/dmt for the period due to
the negative impact of sales based on backward-looking iron ore
prices, when prices were substantially lower than the P65 index
average for the period. The gross average realized selling
price1 also reflects the positive impact of sales at a
determined price based on the average forward price of US$185.7 at the expected settlement date for
691,100 tonnes which were in transit at the end of the period.
The average C3 Baltic Capesize Index ("C3") for the three-month
period ended March 31, 2022 was US$22.9/t compared to US$18.0/t for the same period in 2021,
representing an increase of 27%, which contributed to higher
freight costs in the three-month period ended
March 31, 2022, compared to the same prior-year period.
The freight costs variation relative to the C3 index during the
period was mainly due to the timing of the vessels' booking. A
dynamic also arose where the lower C3 index during the period,
likely due to lower Brazilian shipments, had somewhat disconnected
with other bulk freight indices. As a result, vessel operators were
not willing to book vessels using the C3 index when prices were
low. The Company expects to benefit from the quarter's low freight
index in the upcoming period for sales contracts based on fixed
backward-looking indexes.
The net average realized selling price1 of
US$139.1 for the three-month period
ended March 31, 2022 was negatively impacted by a higher
C3 index. Freight and other costs represented 23% of the gross
average realized selling price for the period, compared to 13% for
the same period in 2021, which represents a variation of
US$14.2/dmt. Provisional pricing
adjustments on previous sales, which were directly correlated to
the increase in the P65 index early in the quarter contributed to
increasing the net average realized selling price1.
During the three-month period ended March 31, 2022, the
final price was established for the 856,200 tonnes of iron ore that
were in transit as at December 31, 2021. Accordingly, during
the three-month period ended March 31, 2022, net positive
provisional pricing adjustments were recorded as an increase in
revenues for the 856,200 tonnes, representing a positive impact of
US$12.2/dmt for the period, compared
to US$8.4/dmt for the same period in
2021.
After taking into account sea freight and other costs of
US$37.2/dmt and the positive
provisional pricing adjustment of US$12.2/dmt, the Company obtained a net average
realized selling price1 of US$139.1/dmt (CA$175.3/dmt) for its high-grade
iron ore delivered to the end customer. Revenues totalled
$331,376,000 for the three-month
period ended March 31, 2022 compared to $396,702,000 for the same period in 2021,
reflecting the lower net average realized selling price1
as well as the negative volume impact attributable to the COVID-19
pandemic.
2022 Fiscal Year vs 2021 Fiscal Year
For the year ended March 31, 2022, the Company sold
7,650,600 tonnes of iron ore concentrate, mainly to customers in
China, Japan, South
Korea and Europe. While the
high-grade iron ore P65 index price fluctuated between a low of
US$101.8/dmt and a high of
US$264.2/dmt during the year ended
March 31, 2022, the Company sold its product at a gross
average realized selling price1 of US$181.1/dmt. The gross average realized selling
price is comparable to the average P65 high-grade index of
US$179.9/dmt for the period. The
Company expects its iron ore concentrate pricing to continue
tracking the P65 index in the long term.
Combining the gross average realized selling price1
with the positive provisional pricing adjustment of US$7.5/dmt, the Company sold its high-grade iron
ore at a price of US$188.6/dmt during
the year ended March 31, 2022, compared to the P65 high-grade
index average of US$179.9/dmt.
Deducting sea freight and other costs of US$35.3/dmt, the Company obtained a net average
realized selling price1 of US$153.3/dmt (CA$190.9/dmt) for its high-grade
iron ore. The increase in freight and other costs in the year ended
March 31, 2022, compared to the same period in 2021,
negatively impacted the net average realized selling
price1 for the period by US$14.8/dmt. As such, revenues totalled
$1,460,806,000 for the year ended
March 31, 2022, compared to $1,281,815,000 for the same period in 2021,
mainly as a result of a higher gross average realized selling
price1, partially offset by higher freight and other
costs and the negative impact of foreign exchange rates.
B. Cost of Sales
Cost of sales represents mining, processing, and mine
site-related G&A expenses as well as rail and port operation
costs. It also includes specific and incremental costs related to
COVID-19.
For the three-month period ended March 31, 2022, the
cost of sales totalled $116,658,000,
compared to $110,299,000 for the same
period in 2021. During the three-month period ended
March 31, 2022, the total cash cost1 or C1
cash cost1 per tonne, excluding specific and incremental
costs related to COVID-19, totalled $60.0/dmt, compared to $54.4/dmt for the same period in 2021. The total
cash cost1 for the three-month period ended
March 31, 2022 was negatively impacted by fuel price
increases, longer haul cycle times associated with the current mine
plan, and the utilization of additional operational mining
equipment in order to prepare for Phase II. Increased explosives
costs also contributed to higher cash costs1 for the
period.
For the year ended March 31, 2022, the Company produced
high-grade iron ore at a total cash cost1 amounting to
$58.9/dmt, compared to $54.2/dmt for the year ended March 31, 2021. The variation is attributable to
the same factors that affected the total cash cost1 for
the three-month period ended March 31, 2022. In addition,
minor unplanned maintenances contributed to the higher cash
cost1 for the year ended March 31, 2022.
C. Net Income & EBITDA1
Fourth Quarter of the 2022 Fiscal Year vs Fourth Quarter of the
2021 Fiscal Year
For the three-month period ended March 31, 2022, the
Company generated net income of $115,653,000 (EPS of $0.23), compared to $155,934,000 (EPS of $0.32) for the same period in 2021. The net
income was mainly affected by lower gross profits associated with a
lower P65 index average price and higher sea freight and other
costs during the period, as well as by lower volumes of iron ore
concentrate sold, compared to the same prior-year period. The
decrease in net income is partially offset by lower current income
and mining taxes as a result of lower operating earnings.
For the three-month period ended March 31, 2022, the
Company generated an EBITDA1 of $197,938,000, including non-cash share-based
compensation and pre-commercial start-up costs for Phase II
totalling $12,654,000, representing
an EBITDA margin1 of 60%, compared to $275,764,000, representing an EBITDA
margin1 of 70% for the same period in 2021. The decrease
in EBITDA1 period-over-period is primarily due to lower
revenue from lower net average realized selling
prices1.
2022 Fiscal Year vs 2021 Fiscal Year
For the year ended March 31, 2022, the Company
generated net income of $522,585,000
(EPS of $1.03), compared to
$464,425,000 (EPS of $0.97) for the same period in 2021. The increase
in net income is mainly due to higher gross profits and lower net
finance costs mainly attributable to a lower foreign exchange loss
for the period. The increase is partially offset by Bloom Lake
Phase II start-up costs, higher G&A expenses and higher current
income and mining taxes as a result of higher operating
earnings.
For the year ended March 31, 2022, the Company
generated an EBITDA1 of $925,817,000, representing an EBITDA
margin1 of 63%, compared to $819,477,000, representing an EBITDA
margin1 of 64% for the same period in 2021. This
increase in EBITDA1 is mainly attributable to the
increase in the net average realized selling price1,
partially offset by higher production costs and pre-commercial
start-up costs for Phase II.
D. AISC1 and Cash Operating Margin1
During the three-month period ended March 31, 2022,
the Company realized an AISC1 of $70.5/dmt, compared to $65.1/dmt for the same period in 2021. The
variation relates to higher total cash costs1 and the
negative impact of lower volumes of iron ore concentrate sold.
Deducting the AISC1 of $70.5/dmt from the net average realized selling
price1 of $175.3/dmt, the
Company generated a cash operating margin1 of
$104.8/dmt for each tonne of
high-grade iron ore concentrate sold during the three-month period
ended March 31, 2022, compared to $136.2/dmt for the same prior-year period. The
variation is mainly due to a lower net average realized selling
price1 for the period.
During the year ended March 31, 2022, the Company
recorded an AISC1 of $73.1/dmt, compared to $62.8/dmt for the same period in 2021. The
variation is due to higher total cash
costs1, higher sustaining capital expenditures
related to higher stripping and mining activities and higher
investments made in tailings lifts associated with preventive and
corrective interventions on two specific dikes. The cash operating
margin1 totalled $117.8/dmt for the year ended
March 31, 2022, compared to $104.0/dmt for the same period in 2021. The
variation is mainly due to a higher net average realized selling
price1.
6. Reserves and Resources – As at March 31, 2022
During the 2022 fiscal year, stripping activities commenced, as
detailed in the National Instrument 43-101 – Standards of
Disclosure for Mineral Projects ("NI 43-101") and the Joint Ore
Reserves Committee ("JORC") Code (2012 edition) compliant technical
report titled "Bloom Lake Mine – Feasibility Study Phase II" (the
"Phase II Feasibility Study"), authored by BBA, Soutex and WSP
Canada Inc., and dated June 20, 2019.
As such, it is no longer relevant to report reserves and resources
separately as Phase I and Phase II.
The Bloom Lake reserves and resources were subject to
adjustments for new drilling, operational experience and depletion,
due to iron ore being mined as of March 31, 2022. The Phase II
Feasibility Study is available under the Company's filings at
www.sedar.com and on the ASX at www.asx.com.au.
The changes in resources and reserves between March 31,
2021 and March 31, 2022 are mostly due to the following:
- Change in the pit design in relation to the Phase II expansion
detailed in the Phase II Feasibility Study;
- Adjustment of the geological domains due to the addition of new
drill holes to the database;
- Adjustment of the estimation parameters used in modelling
through calibration with results from operations; and
- Yearly depletion.
Table 1: Bloom Lake
Mineral Resources (million dmt)
|
Property
|
|
Group
|
Measured
|
Indicated
|
Total Measured
&
Indicated
|
Inferred
|
Bloom Lake*
|
|
Bloom Lake
|
219
|
626
|
846
|
129
|
Table 2: Bloom Lake Mineral Reserves (million dmt)
|
Property /
Group
|
|
Proven
|
Fe (%)
|
Probable
|
Fe (%)
|
Reserves Proven
& Probable
|
Fe (%)
|
Bloom Lake**
|
|
214
|
30.1
|
531
|
28.3
|
745
|
28.8
|
* Bloom Lake
mineral resources include Bloom Lake mineral reserves.
|
** Proven tonnage
of 214 Mt includes 1 Mt of stockpiles.
|
Additional details on other properties mineral resources and
reserves can be found in section 11 – Reserves and Resources of the
Company's Management's Discussion and Analysis ("MD&A") for the
year ended March 31, 2022, available under the Company's
profile on SEDAR at www.sedar.com, on the ASX at www.asx.com.au and
the Company's website at www.championiron.com.
7. Qualified Person and Data Verification
Mr. Vincent Blanchet, P. Eng.,
Engineer at Quebec Iron Ore Inc., the Company's subsidiary and
operator of Bloom Lake, 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 Phase II Feasibility Study. Mr.
Blanchet is a member of the Ordre des ingénieurs du
Québec.
8. Conference Call and Webcast Information
A webcast and conference call to discuss the foregoing results
will be held on May 26, 2022 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
919862 #.
About Champion Iron Limited
Champion, through its 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 Bloom Lake Phase I and Phase II
plants have a combined nameplate capacity of 15 Mtpa and
produce a low contaminant high-grade 66.2% Fe iron ore concentrate
with the 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 sells its iron ore concentrate to customers globally, including
in China, Japan, the Middle
East, Europe, South Korea, India and Canada. In addition to the Bloom Lake Mining
Complex, 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
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, including Management's
expectations regarding:
(i) the Company's Phase II expansion project and its milestones,
commissioning and impact on commercial production and on nameplate
capacity, mining rate and shipping of iron ore concentrate and
production volume; (ii) the development of green steelmaking
solutions; (iii) the opportunity to re-commission the Pellet Plant
in Pointe-Noire and produce DR pellets; (iv) GHG and CO2
emission reduction initiatives, objectives, targets and
expectations; (v) the mitigation of risks related to COVID-19 and
the limitation of the spread of variants; (vi) iron ore prices
fluctuations and the correlation of the Company's iron ore
concentrate pricing and the P65 index; (vii) the impact of exchange
rates on commodity prices and the Company's financial results;
(viii) benefits from low freight index; (ix) the future declaration
and payment of dividends and the timing thereof; * the feasibility
study to evaluate the reprocessing and infrastructure required for
the commercial production of a 69% Fe DR pellet feed product,
including the timing thereof; (xi) the acquisition of the
Pointe-Noire Pellet Plant, its completion, expected benefits and
opportunities for commercial production; (xii) the Company's
strategy to evaluate its growth alternatives within its property
portfolio; (xiii) the revision of the Kami Project scope and
related feasibility study, including the timing thereof and
potential production capabilities; and (xiv) the Company's growth,
potential and opportunities generally are forward-looking
statements.
DEEMED FORWARD-LOOKING STATEMENTS
Statements relating to "reserves" or "resources" are deemed to
be forward-looking statements as they involve the implied
assessment, based on certain estimates and assumptions, that the
reserves and resources described exist in the quantities predicted
or estimated and that the reserves can be profitably mined in the
future. Actual reserves and resources may be greater or less than
the estimates provided herein.
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:
– the results of feasibility
studies;
– changes in the assumptions used to prepare
feasibility studies;
– project delays;
– continued availability of capital and financing and
general economic, market or business conditions;
– general economic, competitive, political and social
uncertainties;
– future prices of iron ore;
– future transportation costs, 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,
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, Annual Information
Form and MD&A for the fiscal year ended March 31, 2022, all of 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 such 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.
Investors and others 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, except for: (i) tabular amounts
which are in thousands of Canadian dollars; and (ii) per share or
per tonne amounts. The following abbreviations and definitions are
used throughout this press release: US$ (United States dollar), CA$ (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), G&A (general and administrative), EBITDA
(earnings before interest, tax, depreciation and amortization),
AISC (all-in sustaining cost), EPS (earnings per share), Bloom
Lake or Bloom Lake Mine (Bloom Lake Mining Complex) and Phase II
(Phase II expansion project). IFRS refers to International
Financial Reporting Standards. The utilization of "Champion" or the
"Company" refers to Champion Iron Limited and/or one, or more, or
all of its subsidiaries, as applicable.
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 MD&A for the year ended
March 31, 2022 are 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).
Non-IFRS and Other Financial Measures
The Company has included certain non-IFRS financial measures,
ratios and supplementary financial measures in this press release,
as listed in the table below, to provide investors additional
information to help them evaluate the underlying performance of the
Company. These measures are mainly derived from the Financial
Statements but do not have any standardized meaning prescribed by
IFRS and, therefore, may not be comparable to similar measures
presented by other companies. Management believes that these
measures, in addition to conventional measures prepared in
accordance with IFRS, provide investors with an improved ability to
understand the results of the Company's operations. Non-IFRS and
other financial measures should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS. The exclusion of certain items from non-IFRS financial
measures does not imply that these items are necessarily
non-recurring.
Non-IFRS and Other
Financial Measures
|
|
|
Non-IFRS Financial
Measures
|
EBITDA
|
Earnings before income
and mining taxes, net finance costs and depreciation
|
Adjusted net
income
|
Net income plus
incremental costs related to COVID-19 and Phase II start-up costs,
less gain on disposal of non-current investments, and the related
tax effect of these items
|
Cash on hand
|
Cash and cash
equivalents plus short-term investments
|
Non-IFRS
Ratios
|
EBITDA
margin
|
EBITDA as a percentage
of revenues
|
Adjusted EPS
|
Adjusted net income per
basic weighted average number of ordinary shares
outstanding
|
Total cash cost or C1
cash cost per dmt sold
|
Cost of sales before
incremental costs related to COVID-19 divided by iron ore
concentrate sold in dmt
|
AISC per dmt
sold
|
Cost of sales before
incremental costs related to COVID-19 plus sustaining capital
expenditures and G&A expenses divided by iron ore concentrate
sold in dmt
|
Cash operating
margin
|
Net average realized
selling price less AISC
|
Gross average realized
selling price or gross average realized FOB selling price per dmt
sold
|
Revenues before
provisional pricing adjustments and freight and other costs divided
by iron ore concentrate sold in dmt
|
Cash profit
margin
|
Cash operating margin
as a percentage of net average realized selling price
|
Other Financial
Measures
|
Net average realized
selling price or net average realized FOB selling price per dmt
sold
|
Revenues divided by
iron ore concentrate sold in dmt
|
Operating cash flow per
share
|
Net cash flow from
(used in) operating activities per basic weighted average number of
ordinary shares outstanding
|
EBITDA and EBITDA Margin
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
Income before income
and mining taxes
|
|
181,312
|
|
261,047
|
|
870,843
|
|
761,872
|
Net finance
costs
|
|
2,269
|
|
5,430
|
|
11,045
|
|
22,428
|
Depreciation
|
|
14,357
|
|
9,287
|
|
43,929
|
|
35,177
|
EBITDA
|
|
197,938
|
|
275,764
|
|
925,817
|
|
819,477
|
Revenues
|
|
331,376
|
|
396,702
|
|
1,460,806
|
|
1,281,815
|
EBITDA
margin
|
|
60 %
|
|
70 %
|
|
63%
|
|
64%
|
Adjusted Net Income and Adjusted EPS
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
March 31,
2022
|
|
March 31,
2022
|
|
|
Net Income
|
|
EPS
|
|
Net Income
|
|
EPS
|
(in thousands of
dollars, except per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unadjusted
|
|
115,653
|
|
0.23
|
|
522,585
|
|
1.03
|
|
|
|
|
|
|
|
|
|
Cash items
|
|
|
|
|
|
|
|
|
Gain on disposal of non-current investments
|
|
—
|
|
—
|
|
(176)
|
|
—
|
Incremental costs related to COVID-19
|
|
3,310
|
|
0.01
|
|
7,843
|
|
0.02
|
Bloom Lake Phase II start-up costs
|
|
5,965
|
|
0.01
|
|
17,752
|
|
0.03
|
|
|
9,275
|
|
0.02
|
|
25,419
|
|
0.05
|
|
|
|
|
|
|
|
|
|
Tax effect of
adjustments listed above1
|
|
(3,617)
|
|
(0.01)
|
|
(10,236)
|
|
(0.02)
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
121,311
|
|
0.24
|
|
537,768
|
|
1.06
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
March 31,
2021
|
|
March 31,
2021
|
|
|
Net Income
|
|
EPS
|
|
Net Income
|
|
EPS
|
|
|
|
|
|
|
|
|
|
(in thousands of
dollars, except per share)
|
|
|
|
|
|
|
|
|
Unadjusted
|
|
155,934
|
|
0.32
|
|
464,425
|
|
0.97
|
|
|
|
|
|
|
|
|
|
Non-cash
item
|
|
|
|
|
|
|
|
|
Loss on debt refinancing
|
|
—
|
|
—
|
|
1,863
|
|
—
|
|
|
|
|
|
|
|
|
|
Cash items
|
|
|
|
|
|
|
|
|
Gain on disposal of non-current investments
|
|
(2,332)
|
|
(0.01)
|
|
(2,332)
|
|
(0.01)
|
Incremental costs related to COVID-19
|
|
3,162
|
|
0.01
|
|
12,610
|
|
0.03
|
|
|
830
|
|
—
|
|
10,278
|
|
0.02
|
|
|
|
|
|
|
|
|
|
Tax effect of
adjustments listed above1
|
|
(1,265)
|
|
(0.01)
|
|
(5,885)
|
|
(0.01)
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
155,499
|
|
0.31
|
|
470,681
|
|
0.98
|
1 The tax
effect of adjustments is calculated using the applicable tax
rate.
|
Cash on Hand
|
|
As at
March 31,
|
|
As at
March 31,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
Cash and cash
equivalents
|
|
321,892
|
|
609,316
|
Short-term
investments
|
|
30,777
|
|
27,200
|
Cash on hand
|
|
352,669
|
|
636,516
|
Total Cash Cost
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
|
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
|
|
1,889,900
|
|
1,971,100
|
|
7,650,600
|
|
7,684,500
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
|
116,658
|
|
110,299
|
|
458,678
|
|
428,882
|
Less: Incremental costs
related to COVID-19
|
|
|
|
(3,310)
|
|
(3,162)
|
|
(7,843)
|
|
(12,610)
|
|
|
|
|
113,348
|
|
107,137
|
|
450,835
|
|
416,272
|
|
|
|
|
|
|
|
|
|
|
|
Total cash cost (per
dmt sold)
|
|
|
|
60.0
|
|
54.4
|
|
58.9
|
|
54.2
|
All-In Sustaining Cost
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
1,889,900
|
|
1,971,100
|
|
7,650,600
|
|
7,684,500
|
|
|
|
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
116,658
|
|
110,299
|
|
458,678
|
|
428,882
|
Less: Incremental costs
related to COVID-19
|
|
(3,310)
|
|
(3,162)
|
|
(7,843)
|
|
(12,610)
|
Sustaining capital
expenditures
|
|
11,743
|
|
13,193
|
|
76,956
|
|
42,758
|
G&A
expenses
|
|
8,094
|
|
7,905
|
|
31,769
|
|
23,594
|
|
|
133,185
|
|
128,235
|
|
559,560
|
|
482,624
|
|
|
|
|
|
|
|
|
|
AISC (per dmt
sold)
|
|
70.5
|
|
65.1
|
|
73.1
|
|
62.8
|
Cash Operating Margin and Cash Profit Margin
|
|
Three Months
Ended
|
Year Ended
|
|
|
March 31,
|
March 31,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
1,889,900
|
|
1,971,100
|
|
7,650,600
|
|
7,684,500
|
|
|
|
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
|
|
|
|
Revenues
|
|
331,376
|
|
396,702
|
|
1,460,806
|
|
1,281,815
|
Net average realized
selling price (per dmt sold)
|
|
175.3
|
|
201.3
|
|
190.9
|
|
166.8
|
|
|
|
|
|
|
|
|
|
AISC (per dmt
sold)
|
|
70.5
|
|
65.1
|
|
73.1
|
|
62.8
|
Cash operating margin
(per dmt sold)
|
|
104.8
|
|
136.2
|
|
117.8
|
|
104.0
|
Cash profit
margin
|
|
60 %
|
|
68 %
|
|
62 %
|
|
62 %
|
Gross Average Realized Selling Price per dmt Sold
|
|
Three Months
Ended
|
Year Ended
|
|
|
March 31,
|
March 31,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
1,889,900
|
|
1,971,100
|
|
7,650,600
|
|
7,684,500
|
|
|
|
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
|
|
|
|
Revenues
|
|
331,376
|
|
396,702
|
|
1,460,806
|
|
1,281,815
|
Provisional pricing
adjustments
|
|
(28,769)
|
|
(20,449)
|
|
(70,969)
|
|
(87,940)
|
Freight and other
costs
|
|
88,753
|
|
57,456
|
|
338,632
|
|
206,816
|
Gross
revenues
|
|
391,360
|
|
433,709
|
|
1,728,469
|
|
1,400,691
|
|
|
|
|
|
|
|
|
|
Gross average realized
selling price (per dmt sold)
|
|
207.1
|
|
220.0
|
|
225.9
|
|
182.3
|
|
______________________________
|
1 This is a
non-IFRS financial measure, ratio or other financial measure. The
measure is not a standardized financial measure under the financial
reporting framework used to prepare the financial statements and
might not be comparable to similar financial measures used by other
issuers. Refer to the section above - Non-IFRS and Other Financial
Measures for definitions of these metrics and reconciliations to
the most comparable IFRS measures when applicable. Additional
details for these non-IFRS and other financial measures, have been
incorporated by reference and can be found in section 22 of the
Company's MD&A for the three-month period and year ended
March 31, 2022, available on SEDAR at www.sedar.com, the
ASX at www.asx.com.au and on the Company's website under the
Investors section at www.championiron.com.
|
2 See the
"Currency" section of the MD&A included in note 8 - Key
Drivers, available on SEDAR at www.sedar.com, the ASX at
www.asx.com.au and on the Company's website under the Investors
section at www.championiron.com.
|
3 See the
"Cautionary Note Regarding Forward-Looking Statements"
section.
|
SOURCE Champion Iron Limited