Record quarterly production of 2.3M wmt, Net income of $41.6M, EPS of $0.08 and EBITDA1 of $94.9M;
Bloom Lake Mine Phase II expansion ramping-up as scheduled
MONTRÉAL, July 27,
2022 /CNW/ - Champion Iron Limited (TSX: CIA) (ASX:
CIA) (OTCQX: CIAFF) ("Champion" or the "Company") is pleased to
announce the operational and financial results for the first
quarter ended June 30, 2022, of the financial year ending
March 31, 2023.
Conference Call Details
Champion will host a conference call and webcast on
July 28, 2022 at 8:30 AM
(Montréal time) / 10:30 PM (Sydney time) to discuss the results for the
first quarter ended June 30, 2022. Call details are outlined
at the end of this press release.
Champion's CEO, Mr. David
Cataford, said: "Due to the continuous dedication of our
workforce and partners, our Company reached another milestone by
completing Bloom Lake's Phase II expansion project and delivering
record quarterly production results, even with scheduled
semi-annual maintenance. With the progress achieved since
commissioning the Phase II expansion, we remain confident in
meeting our target to reach commercial production by the end of the
calendar year, which should positively impact operational costs per
tonne as we ramp up the project. In line with our vision to
capitalize on the rising demand for high-purity iron ore products,
we continue to evaluate several organic growth projects, which
would position our Company as a market leader in the green steel
supply chain."
1. Highlights
Health & Safety
- No serious injuries or major environmental issues reported
during the period;
- COVID-19 prevention measures reduced in line with the
Government of Québec's health directives, including ceasing to
operate the COVID-19 testing laboratory at the mine site, which
remains on standby should it be required in the future;
- In collaboration with First Nations communities and in
accordance with the framework of Towards Sustainable Mining ("TSM")
certification, initiated a conservation and biodiversity management
program aimed at preserving the local salmon population;
- Completed the Company's 2021 Sustainability Report, including
the Task Force on Climate-Related Financial Disclosure, available
on the Company's website at www.championiron.com; and
- Declared that National Indigenous Peoples Day will be treated
as an occasion for its employees to recognize and honour the
culture of First Nations communities.
Financial
- Financial results for the three-month period ended June 30, 2022 were negatively impacted by
decreasing iron ore index prices, transitional and expected upfront
start-up costs to support the Phase II commercial production, and
increased costs caused by global inflationary pressures. The
economic benefits of the upfront preparation costs should be
progressive as Phase II operations gradually ramp up to reach Bloom
Lake's revised nameplate capacity of 15 Mtpa;
- Revenues of $279.3M for the
three-month period ended June 30,
2022, compared to $545.4M for
the same period in 2021, were attributable to significantly lower
iron ore index prices;
- EBITDA1 of $94.9M for
the three-month period ended June 30,
2022, compared to $405.7M for
the same period in 2021;
- Net income of $41.6M for the
three-month period ended June 30,
2022 (EPS of $0.08), compared
to $224.3M for the same period in
2021 (EPS of $0.44);
- Cash flow from operating activities, before changes in working
capital items of $79.1M for the
three-month period ended June 30,
2022, mainly reflected the lower gross average realized
selling price, compared to $248.4M
for the same period in 2021. Net cash flow used in operating
activities totalled $32.2M for the
three-month period ended June 30,
2022, representing an operating cash outflow per
share1 of $0.06, compared
to a net cash flow used in operating activities of $12.6M or $0.02 per
share for the same period in 2021;
- Available liquidity1 of $571.0M as at June 30,
2022, including $187.1M of
cash and cash equivalents and short-term investments, compared to
$746.0M as at March 31, 2022, attributable to working capital
build-up in preparation of Phase II operations, mining and income
taxes paid which exceeded the actual expense and the dividend
payment on June 28, 2022;
- US$400.0M general purpose
revolving facility agreement signed on May
24, 2022 (the "Revolving Facility"), used to refinance the
previous Phase II credit facility (the "Credit Facility"),
providing increased financial flexibility, enabling the Company to
lift the restricted cash covenant of $43.7M as at March 31,
2022 and reducing its cost of capital; and
- Dividend of $0.10 per ordinary
share paid on June 28, 2022, in
connection with the results for the financial year 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 under the section
Investors – Dividend Information.
Operations
- Record production of 2,282,600 wmt of high-grade 66.1% Fe
concentrate for the three-month period ended June 30, 2022, despite the negative impact of
unplanned third-party shutdowns and planned maintenance, positively
impacted by Phase II's commissioning, compared to 1,936,000 wmt of
high-grade 66.3% Fe concentrate for the same period in 2021;
- Fe recovery rate of 80.2% for the three-month period ended
June 30, 2022, compared to 82.9% for
the same period in 2021, due to the commissioned Phase II
concentrator's anticipated lower recovery circuit rate before
commercial production; and
- Free on Board ("FOB") total cash cost1 of
$74.0/dmt (US$58.02/dmt) (C1) for the three-month
period ended June 30, 2022, compared
to $60.1/dmt (US$48.92/dmt) for the same period in
2021. Higher total cash cost1 was impacted by
transitional and expected upfront preparation expenditure in
anticipation of the Phase II commercial production; unplanned
third-party shutdowns and planned maintenance of additional
facilities reported over iron ore sales volumes below nameplate
capacity during ramp-up of Phase II; and global inflationary
pressures.
Growth and Development
- Nearing the completion of the feasibility study evaluating the
reprocessing and infrastructure required to commercially produce a
69% Fe Direct Reduction ("DR") pellet feed product, which is scaled
to convert approximately half of Bloom Lake's increased nameplate
capacity of 15 Mtpa;
- Advancing the Kamistiatusset iron ore project's (the "Kami
Project") feasibility study, expected to be completed in the first
half of calendar 2023, whereby the project is being evaluated for
its capability to produce DR grade pellet feed product;
- Entered into an acquisition agreement, upon satisfaction of
certain conditions, for the Pointe-Noire Iron Ore Pelletizing
Facility located in Sept-Îles, Québec (the "Pellet Plant") on
May 17, 2022, and announced that the
Company has entered into a memorandum of understanding with a major
international steelmaking partner to evaluate the Pellet Plant's
recommissioning and its ability to produce DR grade pellets;
and
- Appointment of Mr. Donald
Tremblay as the Company's Chief Financial Officer, effective
September 12, 2022.
Phase II Milestones
- The Phase II project's first production line was commissioned
ahead of schedule in late April 2022,
despite pandemic-related challenges, with the commissioning of the
second production line in June
2022;
- Completed the first rail shipments of iron ore concentrate from
Phase II on May 3, 2022, with
cumulative production to date comparing favorably to the scheduled
ramp-up of production; and
- Actively working to remove bottlenecks and optimize systems to
achieve commercial production as scheduled by the end of calendar
20223.
2. Bloom Lake Mine Operating Activities
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2022
|
|
2021
|
Variance
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
Waste mined and hauled
(wmt)
|
|
5,606,000
|
|
4,699,500
|
19 %
|
Ore mined and hauled
(wmt)
|
|
6,193,100
|
|
5,643,900
|
10 %
|
Material mined and
hauled (wmt)
|
|
11,799,100
|
|
10,343,400
|
14 %
|
|
|
|
|
|
|
Strip ratio
|
|
0.91
|
|
0.83
|
10 %
|
|
|
|
|
|
|
Ore milled
(wmt)
|
|
6,022,200
|
|
5,227,200
|
15 %
|
Head grade Fe
(%)
|
|
31.0
|
|
29.6
|
5 %
|
Fe recovery
(%)
|
|
80.2
|
|
82.9
|
(3 %)
|
Product Fe
(%)
|
|
66.1
|
|
66.3
|
— %
|
Iron ore concentrate
produced (wmt)
|
|
2,282,600
|
|
1,936,000
|
18 %
|
Iron ore concentrate
sold (dmt)
|
|
2,013,900
|
|
1,974,700
|
2 %
|
|
|
|
|
|
|
Financial Data
(in thousands of dollars)
|
|
|
|
|
|
Revenues
|
|
279,321
|
|
545,408
|
(49 %)
|
Cost of
sales
|
|
169,407
|
|
120,846
|
40 %
|
Other
expenses
|
|
15,605
|
|
14,560
|
7 %
|
Net finance
costs
|
|
4,190
|
|
4,387
|
(4 %)
|
Net income
|
|
41,554
|
|
224,339
|
(81 %)
|
EBITDA1
|
|
94,930
|
|
405,739
|
(77 %)
|
|
|
|
|
|
|
Statistics
(in dollars per dmt sold)
|
|
|
|
|
|
Gross average realized
selling price1
|
|
190.4
|
|
279.7
|
(32 %)
|
Net average realized
selling price1
|
|
138.7
|
|
276.2
|
(50 %)
|
Total cash cost (C1
cash cost)1
|
|
74.0
|
|
60.1
|
23 %
|
All-in sustaining
cost1
|
|
93.5
|
|
72.6
|
29 %
|
Cash operating
margin1
|
|
45.2
|
|
203.6
|
(78 %)
|
Phase II Commissioning
During the three-month period ended June 30, 2022, the
Company initiated and advanced the commissioning of Phase II. At
the end of April 2022, the Company commissioned the first of
two production lines of the Phase II plant and completed its first
rail shipments on May 3, 2022. In June 2022, the Company successfully started the
second line, reflecting the normal commissioning curve of a new
facility. As at June 30, 2022, both lines were in
service, positioning the Company to achieve commercial production
as scheduled by the end of calendar 20223.
Operational Performance
In the three-month period ended June 30, 2022,
11,799,100 tonnes of material were mined and hauled, compared to
10,343,400 tonnes during the same period in 2021, an increase of
14%. The increase in material movement was enabled through the
utilization of additional 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 current strip ratio is in line with the mine
plan.
The iron ore head grade for the three-month period ended
June 30, 2022, was 31.0%, compared to 29.6% for the same
period in 2021. The variation in head grade is attributable to the
presence of some higher-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.
The Company's average Fe recovery rate for the three-month
period ended June 30, 2022 was negatively impacted by the
anticipated lower recoveries during the commissioning of the Phase
II concentrator. The global Fe recovery rate is in line with
Management's expectations at this stage of the Phase II
commissioning. The Company expects to reach a stable Fe recovery
circuit when Phase II achieves commercial production, anticipated
to occur by the end of calendar 2022.
During the three-month periods ended June
30, 2022 and 2021, operational activities were impacted by a
scheduled semi-annual maintenance program. During the three-month
period ended June 30, 2022, Bloom Lake produced 2,282,600
wmt of 66.1% Fe high-grade iron ore concentrate, an increase of
18%, compared to 1,936,000 wmt of 66.3% Fe during the same period
in 2021. The Company achieved record production despite semi-annual
scheduled maintenance, in connection with the commissioning of the
second plant at the mine site. While the newly commissioned Phase
II project's production compares favourably to the scheduled
production volumes, production in the period was negatively
impacted by unplanned third-party shutdowns. Higher throughput and
head grade also contributed to higher production volumes, despite a
lower global recovery. The plants processed 6,022,200 tonnes of ore
during the three-month period ended June 30, 2022,
compared to 5,227,200 for the same prior-year period. The
throughput for the period was positively affected by the higher
mined ore availability and the commissioning of Phase II
operations.
3. Financial Performance
A. Revenues
During the three-month period ended June 30, 2022,
2,013,900 tonnes of high-grade iron ore concentrate were sold at
the CFR China gross average realized price1 of
US$149.6/dmt, before freight and
other costs and provisional pricing adjustments, compared to
US$228.3/dmt for the same prior-year
period. The decrease in gross average realized selling
price1 reflects lower index prices during the
three-month period ended June 30, 2022, compared to the
same prior-year period. Despite lower index prices, the gross
average realized selling price1 of US$149.6/dmt represents a premium of 8.5% over
the benchmark IODEX 62% Fe CFR China Index ("P62") price for the
period, compared to a premium of 14.2% for the same period in
2021.
The gross average realized selling price1 of
US$149.6/dmt was lower than the IODEX
65% Fe CFR China Index ("P65") average price of US$160.3/dmt for the period due to the negative
impact of sales at a determined price based on the average forward
price of US$138.4 at the expected
settlement date for 667,600 tonnes which were in transit at the end
of the period, and due to the negative impact of sales based on
backward-looking iron ore prices, when prices were slightly lower
than the P65 index average for the period.
The average C3 Baltic Capesize Index for the three-month period
ended June 30, 2022, was US$30.2/t compared to US$26.2/t for the same period in 2021,
representing an increase of 15%, which contributed to higher
freight costs in the three-month period ended
June 30, 2022, compared to the same prior-year period.
The elevated freight rates for the period can partially be
attributed to the rising fuel prices experienced since the
beginning of the conflict in Ukraine. Simultaneously, increased iron ore
exports from Brazil and port
congestions in China caused by
COVID-19 lockdowns further influenced rising freight rates.
Provisional pricing adjustments on previous sales, which were
directly correlated to the decrease in the P65 index during the
quarter contributed to decreasing the net average realized selling
price1. During the three-month period ended
June 30, 2022, the final price was established for the
691,100 tonnes of iron ore that were in transit as at
March 31, 2022. Accordingly, during the three-month
period ended June 30, 2022, net negative provisional
pricing adjustments were recorded as a decrease in revenues for the
691,100 tonnes, representing a negative impact of US$6.4/dmt for the period, compared to a positive
impact of US$25.3/dmt for the same
period in 2021.
After taking into account sea freight and other costs of
US$34.4/dmt and the negative
provisional pricing adjustment of US$6.4/dmt, the Company obtained a net average
realized selling price1 of US$108.8/dmt (CA$138.7/dmt) for its high-grade
iron ore delivered to the end customer. Revenues totalled
$279,321,000 for the three-month
period ended June 30, 2022, compared to $545,408,000 for the same period in 2021,
reflecting the lower net average realized selling price1
partially offset by the positive impact of foreign exchange rates
and slightly higher sales volume.
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 and, starting in April 2022,
it includes Bloom Lake Phase II start-up costs incurred after the
commissioning. These start-up costs include mainly abnormal
operational costs attributable to the facility not having reached
the normalized level of output. For the three-month period ended
June 30, 2022, the cost of sales totalled $169,407,000, compared to $120,846,000 for the same period in 2021.
During the three-month period ended June 30, 2022, the
total cash cost1 or C1 cash cost1 per tonne,
excluding specific and incremental costs related to COVID-19 and
Phase II start-up costs, totalled $74.0/dmt, compared to $60.1/dmt for the same period in 2021. The total
cash cost1 for the three-month period ended
June 30, 2022, was negatively impacted by global market
inflation. The higher cash cost1 for the period was
attributable to record prices for fuel and explosives, and cost
increases in key supplies and other consumables, air
transportation, food, as well as rail and port operations. Higher
labour costs and longer haul cycle times associated with the
current mine plan also contributed to a higher cash
cost1 during the period. Unplanned third-party
shutdowns, planned maintenance of additional facilities and
increased headcount and subcontractor usage in relation to the
commissioning of the Phase II project also contributed to a higher
cost of sales for the period.
C. Net Income & EBITDA1
For the three-month period ended June 30, 2022, the
Company generated net income of $41,554,000 (EPS of $0.08), compared to $224,339,000 (EPS of $0.44) for the same period in 2021. The net
income was mainly affected by lower gross profits associated with a
lower P65 index average price, higher sea freight and other costs
during the period, as well as higher cash cost1,
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 June 30, 2022, the
Company generated EBITDA1 of $94,930,000, representing an EBITDA
margin1 of 34%, compared to $405,739,000, representing an EBITDA
margin1 of 74% 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
and higher cash cost1.
D. AISC1 and Cash Operating
Margin1
During the three-month period ended June 30, 2022, the
Company realized an AISC1 of $93.5/dmt, compared to $72.6/dmt for the same period in 2021. The
variation relates to higher total cash costs1,
sustaining capital expenditures and additional G&A expenses,
partially offset by the slightly positive impact of higher volumes
of iron ore concentrate sold. The Company is actively working to
ensure everything is in place to support Phase II operations,
including hiring additional personnel and incurring the necessary
sustaining capital expenditures. This negatively impacted costs
during the three-month period ended June 30, 2022, as
sales related to Phase II operations gradually increased, while
upfront preparation-related costs aim to support Bloom Lake's
revised nameplate capacity.
Deducting the AISC1 of $93.5/dmt from the net average realized selling
price1 of $138.7/dmt, the
Company generated a cash operating margin1 of
$45.2/dmt for each tonne of
high-grade iron ore concentrate sold during the three-month period
ended June 30, 2022, compared to $203.6/dmt for the same prior-year period. The
variation is mainly due to a lower net average realized selling
price1 for the period.
4. Exploration Activities
During the three-month period ended June 30, 2022, the
Company maintained all of its properties in good standing and did
not enter into any farm-in/farm-out arrangements. During the
three-month period ended June 30, 2022, $2,132,000 in exploration and evaluation
expenditures were incurred, compared to $743,000 for the same period in 2021. During the
three-month period ended June 30, 2022, exploration and
evaluation expenditures mainly consisted of costs associated with
resource development and drilling, work related to updating the
Kami Project feasibility study and claim renewal fees. During the
three-month period ended June 30, 2022, 3,637 metres of
diamond drilling was completed on the Bloom Lake property. Drilling
at Bloom Lake was undertaken mainly for the conversion of
resources. In the comparative period, exploration and evaluation
expenditures mainly consisted of costs associated with minor
exploration work and preliminary work related to updating the Kami
Project feasibility study.
Details on exploration projects and maps are available on the
Company's website at www.championiron.com under the section
Operations & Projects.
5. Cash Flows — Purchase of Property, Plant and Equipment
During the three-month period ended June 30, 2022, the
Company invested $122,614,000 in
property, plant and equipment, compared to $109,939,000 for the same period in 2021. The
following table details these investments:
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
Tailings
lifts
|
|
8,985
|
|
6,338
|
Stripping and mining
activities
|
|
11,063
|
|
8,534
|
Mining equipment
rebuild
|
|
6,897
|
|
1,895
|
Sustaining capital
expenditures
|
|
26,945
|
|
16,767
|
|
|
|
|
|
Other capital
development expenditures at Bloom Lake
|
|
95,669
|
|
93,172
|
Purchase of property,
plant and equipment as per cash flows
|
|
122,614
|
|
109,939
|
Sustaining Capital Expenditures
The increase in tailings-related investments for the three-month
period ended June 30, 2022, compared to the same period
in 2021, is mainly due to the timing of expenditures incurred on
the dikes. During the three-month period ended
June 30, 2022, weather conditions were more favourable
than the same prior-year period, enabling the Company to advance
work performed on the dikes. As part of the Company's ongoing and
thorough tailings infrastructure monitoring and inspections, the
Company continues to invest in its safe tailings
strategy.
The increase in stripping and mining activities during the
three-month period ended June 30, 2022, compared to the
same period in 2021, is in line with the mine plan, inclusive of
Phase II operations. The variation in stripping activities is also
attributable to the revised stripping ratio used for cost
capitalization since the fourth quarter of the 2022 financial year,
following changes in the Company's mineral reserves as per the
execution of the Phase II mine plan.
The increase in the Company's mining equipment maintenance
program for the three-month period ended June 30, 2022,
is attributable to the additional mining operating equipment and a
high utilization rate of this equipment. Mining equipment rebuild
expenditures were also negatively affected by global inflation
during the three-month period ended June 30, 2022.
Other Capital Development Expenditures at Bloom Lake
During the three-month period ended June 30, 2022,
other capital development expenditures at Bloom Lake totalled
$95,669,000. The expenditures mainly
consisted of $67,842,000 in Phase II
capital expenditures, $14,781,000 in
deposits for production equipment to be commissioned and financed
in the future through the finance agreement with Caterpillar
Financial Services Limited, and $4,421,000 in borrowing costs which were
capitalized during the development of the Phase II project.
During the three-month period ended June 30, 2021,
other capital development expenditures at Bloom Lake totalled
$93,172,000 and were mainly comprised
of $77,925,000 spent in Phase II
capital expenditures. The investment for the three-month period
ended June 30, 2021, also consisted of lodging
infrastructure investments at the mine site required to accommodate
an increasing workforce, prepayments for production equipment and
increases in mill capacity and other infrastructure
improvements.
6. Conference Call and Webcast Information
A webcast and conference call to discuss the foregoing results
will be held on July 28, 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
385355 #.
About Champion Iron Limited
Champion Iron Limited, 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 a 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
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.
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; (ii) organic growth
projects and the intent of the Company to position itself as a
market leader in the green steel supply chain; (iii) the
conservation and biodiversity management program aimed at
preserving local the salmon population; (iv) increased financial
flexibility from the refinanced Credit Facility; (v) the
feasibility study to evaluate the reprocessing and infrastructure
required for the commercial production of a 69% Fe DR pellet feed
product and its completion timeline; (vi) the Kami Project's
feasibility study, its purpose and completion timeline; (vii) the
potential acquisition of the Pellet Plant and the memorandum of
understanding with a major international steelmaking partner to
evaluate the Pellet Plant's recommissioning and its ability to
produce DR grade pellets; (viii) the shift in the steel industry
production methods and expected rising demand for higher-grade iron
ore products, with a shift towards using reduction technologies to
produce liquid iron and the related R&D program of the Company
and its results and transition of its product offering; (ix) the
impact of iron ore prices fluctuations on net cash flow from
operating activities and the Company's development and the
occurrence of certain events and their impact on iron ore prices
and high-grade iron ore products demand; * the impact of exchange
rates on commodity prices and the Company's financial results; (xi)
benefits from low freight index; (xii) the future declaration and
payment of dividends and the timing thereof; (xiii) the mitigation
of risks related to COVID-19; and (xiv) legal actions, including
arbitrations and class actions, and their potential outcome on the
consolidated financial position of the Company are forward-looking
statements.
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; and 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 Information
Form and the Management's Discussion and Analysis ("MD&A") for
the financial 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.
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.
Readers 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). The utilization of "Champion" or the
"Company" refers to Champion Iron Limited and/or one, or more, or
all of its subsidiaries, as applicable. IFRS refers to
International Financial Reporting Standards.
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 unaudited Condensed Consolidated
Financial Statements and associated MD&A for the three-month
period ended June 30, 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).
__________________________
|
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 below - 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 18 of the
Company's MD&A for the three-month period ended
June 30, 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 5 - 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
of this press release.
|
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 with additional
information in order 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 Bloom Lake Phase II
start-up costs, less gain on disposal of non-current investments,
and the related tax effect of these items
|
Available
liquidity
|
Cash and cash
equivalents plus short-term investments plus undrawn amounts under
credit facilities
|
|
|
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 and Bloom Lake Phase II
start-up costs divided by iron ore concentrate sold in
dmt
|
AISC per dmt
sold
|
Cost of sales before
incremental costs related to COVID-19 and Bloom Lake Phase II
start-up costs 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
|
|
|
June 30,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
Income before income
and mining taxes
|
|
70,948
|
|
391,393
|
Net finance
costs
|
|
4,190
|
|
4,387
|
Depreciation
|
|
19,792
|
|
9,959
|
EBITDA
|
|
94,930
|
|
405,739
|
Revenues
|
|
279,321
|
|
545,408
|
EBITDA
margin
|
|
34 %
|
|
74 %
|
Adjusted Net Income and Adjusted EPS
|
|
Three Months
Ended
|
|
|
June 30,
2022
|
|
|
Net Income
|
|
EPS
|
|
|
|
|
|
Unadjusted
|
|
41,554
|
|
0.08
|
|
|
|
|
|
Cash items
|
|
|
|
|
Gain on disposal of
non-current investments
|
|
—
|
|
—
|
Incremental costs
related to COVID-19
|
|
840
|
|
—
|
Bloom Lake Phase II
start-up costs
|
|
19,476
|
|
0.04
|
|
|
20,316
|
|
0.04
|
|
|
|
|
|
Tax effect of
adjustments listed above1
|
|
(7,720)
|
|
(0.02)
|
|
|
|
|
|
Adjusted
|
|
54,150
|
|
0.10
|
|
|
Three Months
Ended
|
|
|
June 30,
2021
|
|
|
Net Income
|
|
EPS
|
|
|
|
|
|
Unadjusted
|
|
224,339
|
|
0.44
|
|
|
|
|
|
|
|
|
|
|
Cash items
|
|
|
|
|
Gain on disposal of
non-current investments
|
|
(408)
|
|
—
|
Incremental costs
related to COVID-19
|
|
2,068
|
|
—
|
|
|
1,660
|
|
—
|
|
|
|
|
|
Tax effect of
adjustments listed above1
|
|
(889)
|
|
—
|
|
|
|
|
|
Adjusted
|
|
225,110
|
|
0.44
|
1 The tax
effect of adjustments is calculated using the applicable tax
rate.
|
Available Liquidity
|
|
As at
June 30,
|
|
As at
March 31,
|
|
|
2022
|
|
2022
|
|
|
|
|
|
Cash and cash
equivalents
|
|
155,924
|
|
321,892
|
Short-term
investments
|
|
31,161
|
|
30,777
|
Undrawn amounts under
credit facilities
|
|
383,941
|
|
393,303
|
Available
liquidity
|
|
571,026
|
|
745,972
|
Total Cash Cost
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
2,013,900
|
|
1,974,700
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
Cost of
sales
|
|
169,407
|
|
120,846
|
Less: Incremental costs
related to COVID-19
|
|
(840)
|
|
(2,068)
|
Less: Bloom Lake Phase
II start-up costs
|
|
(19,476)
|
|
—
|
|
|
149,091
|
|
118,778
|
|
|
|
|
|
Total cash cost (per
dmt sold)
|
|
74.0
|
|
60.1
|
All-In Sustaining Cost
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
2,013,900
|
|
1,974,700
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
Cost of
sales
|
|
169,407
|
|
120,846
|
Less: Incremental costs
related to COVID-19
|
|
(840)
|
|
(2,068)
|
Less: Bloom Lake Phase
II start-up costs
|
|
(19,476)
|
|
—
|
Sustaining capital
expenditures
|
|
26,945
|
|
16,767
|
G&A
expenses
|
|
12,272
|
|
7,804
|
|
|
188,308
|
|
143,349
|
|
|
|
|
|
AISC (per dmt
sold)
|
|
93.5
|
|
72.6
|
Cash Operating Margin and Cash Profit Margin
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
2,013,900
|
|
1,974,700
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
Revenues
|
|
279,321
|
|
545,408
|
Net average realized
selling price (per dmt sold)
|
|
138.7
|
|
276.2
|
|
|
|
|
|
AISC (per dmt
sold)
|
|
93.5
|
|
72.6
|
Cash operating margin
(per dmt sold)
|
|
45.2
|
|
203.6
|
Cash profit
margin
|
|
33 %
|
|
74 %
|
Gross Average Realized Selling Price per dmt Sold
|
Three Months
Ended
|
|
June 30,
|
|
2022
|
|
2021
|
Per tonne
sold
|
|
|
|
Iron ore concentrate
sold (dmt)
|
2,013,900
|
|
1,974,700
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
Revenues
|
279,321
|
|
545,408
|
Provisional pricing
adjustments
|
15,668
|
|
(60,895)
|
Freight and other
costs
|
88,757
|
|
67,807
|
Gross
revenues
|
383,746
|
|
552,320
|
|
|
|
|
Gross average realized
selling price (per dmt sold)
|
190.5
|
|
279.7
|
SOURCE Champion Iron Limited