Exploring for Iron

Champion Iron Mines

Champion has been exploring and developing the Fermont Holdings over the last five years, and has one of the largest portfolios of highly prospective iron ore claims in Quebec. This includes the Consolidated Fire Lake North (“CFLN”), Harvey-Tuttle, Moire Lake and O’Keefe-Purdy projects. The Fermont area itself is readily accessible to hydro-electric power, roads, railways and waterways, and connects to three ports on the north shore of the Gulf of St. Lawrence. Champion was able to outline 5 billion tonnes of NI43-101 compliant mineral resources and complete a feasibility study on the CFLN project, where there are 1.2 billion tonnes under study. Other nearby projects host another 3.8 billion tonnes.

According to Jeff Hussey, Vice President of Corporate Communications at Champion Iron Mines, “We have also looked into reducing the cost of rail transportation and we have various options that we have been working on over the last few years. A feasibility study was completed on a new rail option that would directly connect CFLN to the Port of Sept Isles to the south.

This would be developed as the first phase of a multi-user railway concept, that other stakeholders and mining companies would also use with the objective of this multi user railway being a low cost producer to encourage further development projects in the Labrador Trough; it wouldn’t be just for use on the Fire Lake North Project, but as an initial part of a much larger vision to continue to develop a railway solution further to the north. “It would be a third party common carrier railway company that would be cost competitive,” he explains.

“In the Iron Ore industry, the focus is on costs that are in your control; this rail system would be a good way of reducing and controlling the second largest cost center in the project’s economic model and it would be similar for other users.

“The feasibility study was released in early February, now we are in the process of financing the project,” says Jeff. “We’re ready to build a new major iron mining company starting with an annual production of over 9 million tonnes per year from our first concentrator production line. We have sufficient resources outlined to potentially quadruple production in the long term. First we have to start with this initial production line and build from there. ”

On Fire Lake North, the company is looking at initially doubling annual production with a second concentrator production line that would increase output to 16 million tonnes, and just 6 kilometres north there is another project that has sufficient resources estimated that could potentially generate more than 18 million tonnes of annual production as well.

In the feasibility study, the mine consumes 23 million tonnes of iron ore per year for 20 years which is 460 million tonnes. Approximately “500 million tonnes of iron ore is what you need to generate the robust economics we reported in February; the study is based on an initial 20 year mine life and produced a Net Present Value (“NPV”) of $3.295 billion using an 8 percent discount rate. The financial model shows an Internal Rate of Return (“IRR”) of 30.9 percent and a capital payback period of 3.4 years,” says Jeff.

“We have 1.2 billion tonnes under study, and of course this includes all of the resource estimation classifications including Inferred, Indicated and Measured, but it’s sufficient to say that with the 1.2 billion outlined to date and the resource potential of adjacent projects such as Oil Can the recommendation from our engineering firm to double production on Fire Lake North is well founded.”

The Oil Can project is located 6 kilometres north of Fire Lake North and last year Champion drilled nearly two billion tonnes of inferred resources, which gives the company an approximation of the resource that could be developed in the mid to long term. These resources along with other projects would be the source of iron ore for two additional concentrator production lines potentially. At the moment, the company is focused on the initial mine and concentrator production line, and trying to get it going as soon as possible.

Champion’s mid-term growth profile is second to none, and the company could very well end up becoming a mid-tier producer in the long term.

The current challenge is developing a cost effective rail solution, which Jeff considers a key component of the operation. It is very important in enabling Champion to become a low cost producer, which would enable stability in the long term. Because of the current market volatility, a lower a cost of production is more sustainable over the longer term.

As well as developing the CFLN project, Champion will also be supplying jobs to the local communities including the Innu Takuaikan Uashat mak Mani-utenam First Nation in Sept Isles. These jobs will also help other businesses in the area grow, bringing a positive multiplier effect to local communities. Looking at the potential end users for its concentrate product, Champion is examining the ever growing Asian marketplace, as well as the European market.

“With the recent changes that the government has proposed regarding mining taxation and royalties over the last six months, the capital markets have stalled due to the uncertainty. Investors are waiting for the government to finalize the proposed bill,” explains Jeff. “This hiatus in the capital markets for mining projects is temporary, and we are looking forward to the government clarifying the situation which will help us to get financed and back on schedule in order to deliver key milestones as we move forward with the project.”

As far as the product quality is concerned, Champion will produce a concentrate that is easier to liberate and a coarser final product than the taconite iron ores from the Schefferville mining camp. In the Fermont Holdings, Champion is developing what is also known as meta-taconites, a coarser grained ore which is advantageous when producing concentrate as it facilitates the separation of the iron from the gangue minerals using only 15 percent of the energy per tonne of iron ore compared to the finer grain sized (approximately 45 microns) taconite. The ore is concentrated at a coarser grain size (approximately 850 microns) which is much more efficient.

“Concentrate quality is measured by the coarseness,” explains Jeff. “It is what we call a sinter market product which is where the lion’s share of the demand exists.”

Another metric of quality is an iron concentrate that is clean of all the deleterious elements that a steel plant would typically have to remove. These include Aluminum and Titanium as well as other elements. The cleanliness of this ore creates a higher demand, which is important going forward.

Champion is focused on developing the CFLN project located within the 755 square kilometres of its Fermont Holdings, southwest of Fermont, Quebec. Now that the feasibility study is completed, the company is on its way to building a new major iron ore mining company.

December 17, 2017, 6:16 PM EST

Critical Thinking

It’s something all of us could do without in our lives. Unfortunately, this crippling beast decides to rear its ugly head when and how it chooses. There is no individual, society, or country immune to its devastating presence. Neither are organizations, most of which have or most likely will have, to stare this beast in the face. Its name is ‘Crisis’ from the Greek word ‘Krisis’, meaning ‘decisive moment.’