Champion Iron Ltd. · ASX:CIA
Champion Iron — Investor Presentation (August 2017)
36 slides from Champion Iron's investor presentation, Aug 1, 2017
Slide 1: Restart of the Bloom Lake Mine
Restart of the Bloom Lake Mine AUGUST 1, 2017 A preliminary short form prospectus containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in each of the provinces of Canada. A copy of the preliminary short form
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Champion Iron Limited (“Champion”) and should be read in conjunction with the Canadian preliminary short form prospectus of Champion dated August 1, 2017 and available on SEDAR at www.sedar.com, including the documents incorporated by reference there
Slide 3: A Mine is Blooming
A Mine is Blooming Management Established, Past- Expects Mine Producing Mine with High-Grade, Low- Enhancements will Almost US$3.0 Impurity, Desirable Lower Costs, Billion Previously Product Delivering After-Tax Invested Project IRR of 33.3% 3
Slide 4: Summary Offering Terms
Summary Offering Terms Issuer: Champion Iron Limited (“Champion” or the “Corporation”). ● subscription receipts of the Corporation (the “Subscription Receipts”), with each Subscription Receipt entitling the holder thereof, without payment of any additional Offering: consideration or further action o
Slide 5: Introduction to Champion
Introduction to Champion Champion Iron Limited Acquired Past-Producing Bloom Lake Mine • TSX:CIA / ASX:CIA in April 2016 • Market Cap: C$383 million (July 28, 2017) • Acquired for C$9.75M in cash and assumed liabilities • Iron development and exploration company focused of C$42.8M on developing its
Slide 6: Corporate Snapshot
Corporate Snapshot Market Statistics (C$M) Historical Share Price (TSX:CIA) Capitalization Summary $1.60 18-May-2017: Announces off- take agreement with Sojitz 8.0 (C$ millions, unless otherwise noted) Corporation and C$40M bridge financing in connection with Share Price as at Jul. 28, 2017 $0.99 Bl
Slide 7: History of Bloom Lake
History of Bloom Lake A series of unique events allowed Champion, with the support of the Quebec Government, to acquire the Bloom Lake mine and associated infrastructure from Cliffs Natural Resources (“Cliffs”) under the Companies' Creditors Arrangement Act (“CCAA”) • Consolidated Thompson (“CLM”),
Slide 8: Investment Highlights
Investment Highlights 1 Past Producing Mine with Significant Infrastructure 2 Enhancements to Reduce Costs 3 Favourable Feasibility Results 4 Funding Sources and Uses 5 Track-Record of Success 6 Supportive Stakeholders 8
Slide 9: Past Producing Mine with Significant Infrastructure
1 Investment Highlights Past Producing Mine with Significant Infrastructure Canada’s Premier Iron Ore District Significant Investments in the Mine and Infrastructure • Established mining district with two adjacent • Fully-developed iron ore mine in premier district mines operating since the 1950s −
Slide 10: Enhancements to Reduce Operating Costs
2 Investment Highlights Enhancements to Reduce Operating Costs Champion plans to reduce operating costs to C$42.93/t (or ~US$34/t based on a 0.80 C$/US$ FX rate) Key Item Then…. …Now Impact Status Canadian Dollar • ~0.80 C$/US$ Depreciation • C$/US$ at parity • Virtually all operating costs in C$
Slide 11: Bloom Lake Illustrative LOM Break-Even Analysis
2 Investment Highlights Bloom Lake Illustrative LOM Break-Even Analysis Champion plans to take advantage of infrastructure improvements completed by Cliffs to reduce operating costs while minimizing start-up risks Illustrative Bloom Lake LOM Average Break-Even Analysis Freight Rates from Brazil to C
Slide 12: Updated Feasibility Supports Robust Economics
3 Investment Highlights Updated Feasibility Supports Robust Economics Summary of Economic Parameters and Feasibility Results Reserve (Mt) 411.7 Processed tonnage (Mtpa) 20.0 Average stripping ratio (waste:ore) 0.48 Mining Parameters Average Fe processing recovery (%) 83.3% Average mining dilution (%
Slide 13: Strong Funding Position
4 Investment Highlights Strong Funding Position Raising the Last Piece of Funding Package to Restart Mining by Q1 2018 • May 2017 – Announced C$40M bridge financing • July 2017 – Announced US$180M debt financing conditional commitments in comprised of two tranches: 1. Sprott Senior Secured Financing
Slide 14: Track-Record of Success
5 Investment Highlights Track-Record of Success Michael O’Keeffe has a track-record of successful turn-arounds on out-of-consensus calls Glencore Australia (’95-’04) Riversdale Mining (’04-’11) Champion Sold to Rio Tinto Group Sales $20 Share price: A$16.20 $2.00 Current (July 28, 2017) Coal: $315 p
Slide 15: Supportive Stakeholders
6 Investment Highlights Supportive Stakeholders Supportive equity shareholders at the Champion level, government support at the project and corporate level and leading global institutions providing requisite debt contributions • Fully-permitted, and First Nations support with signed Impact and Benef
Slide 16: Bloom Lake Overview
BLOOM LAKE OVERVIEW
Slide 17: Bloom Lake Asset Overview
Bloom Lake Asset Overview Asset Overview • High quality and large resource base • Intact plan to improve recovery Asset Highlights • Multi-user infrastructure with Government to minimize stockyard and port cost • Owner: 100% QIO (63.2% Champion and 36.8% Ressources Quebec) • Location: Fermont, in no
Slide 18: Infrastructure and Logistics
Infrastructure and Logistics 4 Mining Fleet Acquired entire mining fleet with capacity to mine 30Mtpa of Regional Location and Infrastructure Map ore/waste Conveyor New fully operational 3.45km conveyor system delivers crushed ore System from the mine site to the processing facility Processing
Slide 19: Production Overview
Production Overview Overview Process Description Typical blast and shovel mining 1 Mining Trucked to near-pit crusher 2 Crushing Crushed in near-pit crusher and conveyed 3.45km to the processing facility Upgrading the ~30% Fe to 66% Fe 3 Concentrating Grinding, screening, gravity circuit a
Slide 20: Bloom Lake – Timeline to Production
Bloom Lake – Timeline to Production 2016 2017 2018 Jun Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar • Decision for FS • Selection of ore for pilot • Finalisation of FS • Develop mining • Preliminary off-take plan discussion • Logistics negotiations • Secure off-tak
Slide 21: Valuable and Sought-After Product
Valuable and Sought-After Product High-grade, low-impurity product permits steel mills to optimize blends, balancing lower-quality ores, reducing costs, increasing efficiency and reduce C02 emissions Bloom Lake’s concentrate product expected to be very attractive in the global high-grade fines mar
Slide 22: Bloom Lake Realized Pricing Build-Up (2020)
Bloom Lake Realized Pricing Build-Up (2020) Ilustrative Base Case Bloom Lake 66.2% Concentrate Pricing Build-Up (US$/t dry concentrate; 2020E) Bloom Lake pricing forecast provided by Metalytics, a specialist economics consultant in the metals and mineral resources sector Study considered Bloom L
Slide 23: Bloom Lake Cost Build-Up (LOM)
Bloom Lake Cost Build-Up (LOM) Bloom Lake Cost Profile (US$/t dry concentrate; LOM) LOM FOB Operating Cost of US$34.34/t and FOB Operating Cost (incl. Sustaining Capex) of US$36.04/t (based on CAD/USD of 0.80) - C$42.93/t and C$45.05/t, respectively Comfortably below current spot prices, even af
Slide 24: Bloom Lake Cash Flow Summary
Bloom Lake Cash Flow Summary Cash Flow Summary (C$ millions) $400 $300 $200 $100 $- ($100) Pre-tax Payback Period: 2.5 years After-tax Payback Period: 3.1 years ($200) ($300) ($400) 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 After-Tax Cash Flow Corporate & Mining Taxes Cumulative After-T
Slide 25: Public Trading Comparables Analysis
Public Trading Comparables Analysis In accordance with Section 13.7(4) of National Instrument 41-101 – General Prospectus Requirements, all the information relating to the Corporation’s comparables and any disclosre relating to the comparables, which is contained in the version of this presentation
Slide 26: Iron Ore Pricing Outlook
Iron Ore Pricing Outlook Management believes in long term iron ore fundamentals: a) Prices below US$50/t CFR China 62% are not sustainable over long periods even for majors b) Iron ore prices will adjust to an economic equilibrium around US$55-65/t CFR China 62%, i.e. US$60-70 /t for a 66% product w
Slide 27: Supply / Demand Fundamentals
Supply / Demand Fundamentals • In the short term, supply has overtaken demand, Iron Ore Supply / Demand Balance (Mt) leading to a structural surplus 2,800 Global Supply / Demand (Mt) Supply (Mt) Demand (Mt) − However, producers are now focused on cost control, 2,400 sustaining production and quality
Slide 28: Contact Person
Contact Person Michael O’Keeffe michael.okeeffe@championiron.com Mailing Address 1100 René-Lévesque Blvd. West Suite 610 Montreal QC H3B 4N4 Tel: +1 514 316 4858 Fax: +1 514 819 8100 http://www.championiron.com/ TSX: CIA / ASX:CIA
Slide 29: Appendix
APPENDIX
Slide 30: Experienced Management Team
Experienced Management Team Individual Experience Management Team • Former Executive Chairman of Riversdale Mining Limited (2004-2011) where Mr. O’Keeffe led the development of Riversdale Michael O’Keeffe Mining from a junior until it was acquired by Rio Tinto for A$4 billion Executive Chairman • Pr
Slide 31: Bloom Lake – Reserves & Resources
Bloom Lake – Reserves & Resources Mineral Reserve Estimate Diluted Ore Fe CaO SAT MgO Al2O3 Classification Tonnage (dry) Kt % % % % % Proven 264,160 30.73 0.48 2.98 0.56 0.32 Probable 147,554 28.71 2.84 6.68 2.72 0.40 Total P&P 411,713 30.01 1.33 4.30 1.33 0.35 Mineral Resource Estimate Diluted Ore
Slide 32: Bloom Lake – Updated Recovery Flowsheet
Bloom Lake – Updated Recovery Flowsheet Simplified Recovery Circuit Flowsheet Upgraded Recovery Circuit Flowsheet 32
Slide 33: Champion Iron – Other Projects
Champion Iron – Other Projects 33
Slide 34: Bloom Lake Mine
Bloom Lake Mine 34
Slide 35: Multi-User Port
Multi-User Port 35
Slide 36: Multi-User Port
Multi-User Port Cliffs old port facility New Multi-User Port 36