Champion Iron Reports Record Quarter in FY2020 First Quarter Results

Press Release

Montreal, July 31, 2019 – Champion Iron Limited (TSX: CIA) (ASX: CIA) (“Champion” or the “Company”) is pleased to announce strong operational and financial results for the first quarter ended June 30, 2019 of the fiscal year ending March 31, 2020.

For complete details of the unaudited Condensed Consolidated Financial Statements and associated Management’s Discussion and Analysis, please refer to the Company’s filings on SEDAR (www.sedar.com) or the Company’s website (www.championiron.com). All amounts are in Canadian dollars unless otherwise indicated.

Conference Call Details

Champion will host a conference call and webcast at 8:30 AM EDT (Montreal Time), on Wednesday July 31, 2019 to discuss the first quarter results of the fiscal year ending March 31, 2020. Call details are outlined at the end of this quarterly production report.

1. HIGHLIGHTS

Operations

• Record quarterly production of 1,989,400 wmt of high-grade 66.2% Fe iron ore concentrate compared to 1,542,900 wmt in the same period of the prior year;
• Focus to improve short-term mine and plant capacity and reliability to maximize operating cash flows during periods of elevated iron ore prices;
• Record quarterly recovery of 82.1%, setting a new historical record since Bloom Lake was first commissioned in 2010; and
• Total cash cost¹ of $54.3/dmt sold (C1) and an all-in sustaining cost¹ (“AISC”) of $62.8/dmt sold during the first quarter compared to $55.0/dmt and $59.9/dmt, respectively, in the same period of the prior year.

Financial

• Net income of $74.2 million for the quarter ended June 30, 2019 compared to $20.7 million in the same period of the prior year;
• Attributable earnings per share (“EPS”) of $0.09 for the quarter ended June 30, 2019 compared to $0.03 in the same period of the prior year. EPS was affected by non-cash derivative financial instruments revaluation. By excluding this item, EPS would have been $0.14.
• Revenues of $277.9 million for the quarter ended June 30, 2019 compared to $150.7 million during the same period of the prior year;
• Cash flow from operations after working capital totalling $91.9 million for the quarter ended June 30, 2019, compared to $46.7 million for the same period of the prior year;
• EBITDA¹ totalling $166.9 million representing an EBITDA¹ margin of 60% for the quarter ended June 30, 2019, compared to an EBITDA¹ of $44.9 million representing an EBITDA¹ margin of 30% in the same period of the prior year; and
• Cash on hand² of $210.7 million on June 30, 2019, compared to $153.3 million on March 31, 2019.

Growth

• Signed a binding letter of intent to acquire RQ’s 36.8% equity interest in QIO to increase the Company’s stake in QIO to 100% for a total cash consideration of $211 million. As a result of this transaction, the entire net income of QIO will be allocated to Champion shareholders and there will no longer be a non-controlling interest (“NCI”). The transaction is expected to be closed during Q2 2020 without subsequent adjustment to working capital;
• Entered into an agreement with Caisse de dépôt et placement du Québec for a preferred share offering with proceeds of $185 million;
• Signed a firm fully underwritten commitment for a US$200 million credit facility with The Bank of Nova Scotia and Societe Generale;
• Released positive results of the Phase II Feasibility Study (the “Feasibility Study”) with an after-tax IRR of 33.4% and after-tax NPV of $956 million which envisions doubling the Bloom Lake overall capacity from 7.4 Mtpa to 15 Mtpa of 66.2% Fe iron ore concentrate; and
• Approval of an initial $68 million budget to advance the project during the remainder of 2019 and secure the timetable detailed in the Feasibility Study.

“We are extremely pleased with the strong performance delivered by the operations team again this quarter and proud to set another new quarterly production record for Bloom Lake, especially in a period impacted by the second major planned shutdown”, commented David Cataford, Champion’s CEO. “In order to benefit from a favourable pricing environment for our product while our company remains unhedged, we have optimized operations aiming to increase short-term mine and plant reliability and thus maximize cash flow from operations. This initiative also allowed our team to push the boundaries of Bloom Lake and further identify bottlenecks which could eventually provide further organic growth to the Company.”

Read More: https://www.championiron.com/champion-iron/champion-iron-reports-record-quarter-in-fy2020-first-quarter-results-2/

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