Mr. Michael O'Keeffe reports

CHAMPION IRON COMPLETES C$30 MILLION FINANCING AND CLOSES ACQUISITION OF THE BLOOM LAKE MINE AND RELATED ASSETS

Champion Iron Ltd. has closed its previously announced $30-million private placement financing and through its subsidiary, Quebec Iron Ore Inc., has closed QIO's acquisition of the Bloom Lake mine and related rail assets and the Quinto Mining Corp. mineral claims in Quebec from Cliffs Quebec Iron Mining ULC, Bloom Lake Mine Iron Ore Limited Partnership, Bloom Lake Railway Company Ltd. and Quinto Mining. As a result of the acquisition, Champion has acquired neighbouring iron ore deposits, including a former producing mine, and significantly increased its mineral resources and growth potential. This acquisition establishes Champion as a significant player in the Labrador Trough iron ore camp.

Highlights of the acquisition

On Dec. 11, 2015, the company announced that QIO had entered into an asset purchase agreement in respect of the acquisition, and on Jan. 28, 2016, Champion reported that the transaction was approved by the Quebec Superior Court under the Companies' Creditors Arrangement Act (Canada).

Pursuant to the asset purchase agreement, the Bloom Lake assets and the Quinto claims were acquired by QIO for cash consideration of $10.5-million and the assumption of certain liabilities. Under the asset purchase agreement, QIO is responsible for environmental obligations, which include environmental reclamation liabilities currently assessed at approximately $41.7-million by the government of Quebec, as well as the replacement of certain bonds securing certain obligations of Bloom Lake totalling approximately $1.1-million.

Government of Quebec's investment in QIO

As previously announced on Feb. 19, 2016, Champion is pleased to announce that Ressources Quebec Inc., acting as a mandatary of the government of Quebec, has invested $14-million in the form of voting and participating shares in the share capital of QIO, in addition to participating in the financing (described further below), in which it subscribed for $6-million in the share capital of the company. As a result of its $14-million investment, Ressources Quebec holds a 36.8-per-cent equity interest in QIO, with Champion owning the rest.

In connection with and as consideration for the equity investment in QIO, Ressources Quebec has been granted six million compensation options of Champion with each option entitling its holder to subscribe for an ordinary share of the company until Feb. 1, 2020, exercisable at a price of 25 cents per ordinary share.

Moreover, as announced on Feb. 19, 2016, Ressources Quebec and Champion are still discussing the possibility that Ressources Quebec could provide, on its own behalf, financing in the form of a term loan of a maximum amount of $6-million.

Details of the financing

The company closed a private placement financing of an aggregate 187.5 million ordinary shares at a price of 16 cents per share for proceeds of $30-million, which was utilized to finance the acquisition purchase price with the balance to provide the company with working capital and to assist in meeting care and upgrade costs in respect of the Bloom Lake mine. The ordinary shares were issued pursuant to exemptions from the prospectus requirements of applicable securities laws and are subject to a four-month statutory hold period from the date of closing of the offering.

Subscribers to the offering included:

• WC Strategic Opportunity LP (a Wynnchurch Capital LLC portfolio company), which invested $10-million by subscribing for 62.5 million shares at 16 cents per share, representing approximately 16.20 per cent of the current issued and outstanding ordinary shares and 14.73 per cent of the issued and outstanding ordinary shares on a fully diluted basis; Wynnchurch is a leading middle-market private equity investment firm headquartered in the Chicago suburb of Rosemont, Ill., with offices in California, Michigan, Ohio and Canada;
• Resource Capital Fund VI LP (RCF VI), which invested $6,453,000 by subscribing for 40,331,250 shares at 16 cents per share, representing approximately 10.45 per cent of the current issued and outstanding ordinary shares and 9.50 per cent of the issued and outstanding ordinary shares on a fully diluted basis; Resource Capital Fund is a mining-focused private equity firm headquartered in Denver, Colo.;
• A company controlled by a non-arm's-length party, namely Champion's chairman and chief executive officer, Michael O'Keeffe, who invested $3.5-million by subscribing for 21,875,000 shares at 16 cents per share; together with other direct and indirect holdings, Mr. O'Keeffe holds 33,276,930 shares, representing approximately 8.62 per cent of the current issued and outstanding ordinary shares and 10.79 per cent of the issued and outstanding ordinary shares on a fully diluted basis.

In connection with the offering, and as previously announced on Dec. 11, 2015, the company had received commitments from two parties to backstop up to $15-million of the financing. One of the initial subscribers is arm's length while the other is a company controlled by Champion's chairman and chief executive officer, Mr. O'Keeffe. The initial subscribers had each agreed to purchase up to 46,875,000 ordinary shares under the offering, subject to their right to engage dealers to find substituted purchasers to purchase all or a portion of the committed shares. In connection with its commitment to subscribe for the committed shares, each of the initial subscribers has been granted 7.5 million compensation options of Champion with each option entitling its holder to subscribe for an ordinary share of the company until Feb. 1, 2020, exercisable at a price of 25 cents per ordinary share.

In connection with the offering, Wynnchurch and RCF have each been granted the following rights as part of the placement for as long as they hold more than 10 per cent of the issued and outstanding shares of Champion, subject to certain terms and conditions described in more detail in the respective subscription agreements that will be available under the company's filings on SEDAR:

1. The right to nominate a director for election by the shareholders of Champion;
2. Subject to Australian Securities Exchange approval, a pre-emptive right to participate in any subsequent equity financing;
3. Subject to ASX approval, a consent right for any subsequent equity financing, such consent not to be unreasonably delayed or withheld.

Champion is pleased to announce that Michelle Cormier, a representative of Wynnchurch, has joined its board of directors, effective today.

Potentially one of the lowest-capital-cost iron ore mines in the world

Champion's chairman and CEO, Mr. O'Keeffe, said: "We are very pleased to have completed this acquisition and financing. We believe that Bloom Lake represents strong upside potential for our shareholders to leverage the significant level of investment in Bloom Lake made by previous owners, and which we have acquired at very favourable terms, especially when considering the original cost.

"Champion recognizes and appreciates the confidence and support shown by Ressources Quebec, Wynnchurch, RCF and all of our other investors," Mr. O'Keeffe said.

"Champion believes that the mine also has important potential to add to economic growth for the Cote-Nord region, and Champion is optimistic about participating significantly to the implementation of the Quebec government Plan Nord, including generating employment and positive economic impact across all communities in the region.

"With sufficient financing to maintain Bloom Lake on an extended care-and-maintenance schedule for approximately 24 months, and as part of the ongoing maintenance and upgrade, Champion is initiating a dialogue with the local authorities and partners to share our work plan, and when it is time to start hiring, we will look to the local and first nations community, as well as the mine's former employees. In addition, we intend to obtain supplies from local entrepreneurs to maximize the economic flow-on for the local business communities in the regions in which we operate," Mr. O'Keeffe said.

Champion considers that significant cost reductions are possible at Bloom Lake, with the potential to bring operational FOB (free on board) costs per ton down substantially from previous levels.

Champion has already identified the potential to improve mine capacity at Bloom Lake. Previous operations historically produced a yearly maximum of six million tons of iron fines at 66 per cent iron. Champion will be looking to increase this to over seven million tons per year at a similar grade, chiefly through the implementation of a new mine plan, as well as improved recoveries.

In support of this strategy, in addition to the acquisition of Bloom Lake, Champion expects to achieve a number of additional strategic milestones, including projects related to rail and port access. The company expects to provide continuing updates to shareholders on individual initiatives.

We seek Safe Harbor.