Champion Iron announces a Partnership with Nippon Steel and Sojitz to Advance the Feasibility Assessment and Potential Development of the Kami Project

Press Release

MONTRÉAL, Dec. 18, 2024 – (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.

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.

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