Mr. David Cataford reports

CHAMPION IRON REPORTS ITS FY2024 SECOND QUARTER RESULTS, DECLARES DIVIDEND AND ADVANCES THE DRPF PROJECT

Champion Iron Ltd. has released its operational and financial results for the 2024 financial year second quarter ended Sept. 30, 2023.

Conference call details

Champion Iron will host a conference call and webcast on Oct. 26, 2023, at 9 a.m. Montreal time/Oct. 27, 2023, at 12 a.m. Sydney time, to discuss the results for the financial second quarter ended Sept. 30, 2023. Call details are outlined at the end of this press release.

Champion Iron's chief executive officer, David Cataford, said: "Thanks to its agility, our team achieved a new quarterly production record of 3.45 million [wet metric tonnes]. Following the quarter-end, our team realized the full potential of Bloom Lake with production levels now reaching its expanded nameplate capacity of 15 [million tonnes per annum] in the most recent 30 days. Our operating costs per tonne are also on track to continue improving as we benefit from continuous optimization work programs. Additionally, we remain confident in our ability to advance the direct reduction pellet feed project to potential completion by the second half of calendar 2025. This project will not only continue to benefit the Quebec Cote-Nord region, but it is also essential for supplying a critical raw material required for the accelerating shift towards green steelmaking."

1. Highlights

Sustainability and health and safety:

• No serious injuries and no major environmental incidents reported in the quarter;
• Appointed Jessica McDonald to the board at the company's annual general shareholders meeting held in August, 2023; Ms. McDonald brings extensive leadership and directorship experience to the company, and this appointment enabled Champion Iron to exceed the 30-per-cent-female board representation threshold that the company committed to in its 2022 sustainability report;
• Recognized National Day for Truth and Reconciliation on Sept. 30 for the second year in a row, by organizing full-day workshops and commemoration activities aimed at familiarizing Champion Iron's employees with the Innu culture;
• Concluded a 10-year financial partnership with the Innu Nikamu Festival, one of the most important events celebrating first nations music and art in North America, to help promote and increase awareness of the Innu culture and language;
• Participated in several community engagements, including fundraising events, to support local residents fighting cancer and struggling local families, sponsorship of the annual first nations and Quebec Regional Economic Circle, contributions to local facilities to promote first nations employment, and several 2023 scholarships offered in sports, arts and recreation to encourage young people from the Innu community to pursue their studies.

Operations and finance:

• Achieved a record quarterly production of 3.45 million wmt of high-grade 66.1-per-cent-iron concentrate for the three-month period ended Sept. 30, 2023, an increase of 21 per cent, compared with the same period last year due to the continued solid performance of phase 2 since achieving commercial production in December, 2022: record production was realized despite several days of unscheduled outage related to a major crusher ore belt failure in one of the company's conveyor systems, affecting the availability of the phase 2 concentrator;
• Realized a record quarterly material mined and hauled nearly 17 million wmt for the three-month period ended Sept. 30, 2023, up 14 per cent from the previous quarter, enabled by the contribution of additional mining equipment commissioned during the financial year; ore milled by both plants reached a new high at 10 million wmt for the three-month period ended Sept. 30, 2023, up 4 per cent from the previous quarter, enabled by continuing infrastructure optimization; with the solid performance of the mine and the processing plants, the company continues its progress toward reaching its expanded 15-million-tonne-per-year production nameplate capacity;
• Quarterly iron ore concentrate sales of 2.9 million dmt for the three-month period ended Sept. 30, 2023, comparable with the same period in 2022, and up 12 per cent from the previous quarter, as railway capacity gradually resumed after the June, 2023, forest fires; shipments during the period were also impacted by the railway service provider's annual planned maintenance lasting several days, together with a few days outage caused by a train derailment in the northern switching yard, which fortunately caused no injuries or negative environmental impact; as a result, the company had 1.6 million wmt of iron ore concentrate stockpiled at Bloom Lake as at Sept. 30, 2023; with additional locomotives in service and rail operations resuming at full capacity after the scheduled maintenance in September, 2023, the company expects its tonnage sold to meet and possibly exceed tonnage produced as it clears iron ore concentrate inventories at the mine site in coming periods;
• Cost of sales was $73.70 per dry metric tonne ($55 (U.S.) per dmt), a decrease of 9 per cent for the three-month period ended Sept. 30, 2023, compared with $81.30 per dmt ($60.50 (U.S.) per dmt) in the previous quarter, positively impacted by semi-annual railway services trailing fuel price adjustments and by higher shipment volumes amortizing fixed handling costs at the port; the cost of sales per dmt sold slightly increased, compared with $71.50 per dmt ($54.80 (U.S.) per dmt) for the same period in 2022, and continued to be negatively impacted by the utilization of contractors to fill vacant positions, higher maintenance costs driven by planned and unplanned maintenance activities, and below-normal run rate shipment levels to amortize mostly fixed costs at the port facilities in Sept-Iles;
• Revenues of $387.6-million for the three-month period ended Sept. 30, 2023 ($300.6-million for the same period in 2022), net cash flow from operating activities of $162.2-million ($87.1-million for the same period in 2022), earnings before interest, taxes, depreciation and amortization of $155.0-million ($84.3-million for the same period in 2022), and net income of $65.3-million with earnings per share of 13 cents ($19.5-million with EPS of four cents for the same period in 2022);
• Strong cash position and liquidity at quarter-end with $316.5-million in cash and cash equivalents and short-term investments as at Sept. 30, 2023 ($277.4-million as at Sept. 30, 2022), an increase of $66.2-million since June 30, 2023, and available liquidity, including amounts available from the company's credit facilities, totalling $645.9-million at quarter-end, compared with $579.2-million as at June 30, 2023;
• Fifth consecutive semi-annual dividend of 10 cents per ordinary share declared on Oct. 25, 2023, Montreal time/Oct. 26, 2023, Sydney time, in connection with the semi-annual results for the period ended Sept. 30, 2023.

Direct reduction pellet feed project update:

• Cumulative investments totalled $28.9-million, as at Sept. 30, 2023, from previously approved initial budgets, including continuing detailed engineering work and on-site activities, in preparation for coming civil work programs;
• Work programs completed to date secured the project completion timeline, scheduled for the second half of calendar year 2025 pending a final investment decision, which is expected in the near term.

Other growth and development:

• The company continues to pursue organic growth opportunities, with the Kamistiatusset iron ore project's feasibility study, evaluating the viability to produce a direct reduction grade pellet feed product, and an additional study, in collaboration with a major international steelmaking partner, to recommission the Pointe-Noire iron ore pelletizing facility to produce DR grade pellets. Both studies are expected to be completed in the near term.
• The company issued a technical report in respect of Bloom Lake prepared pursuant to National Instrument 43-101 (Standards of Disclosure for Mineral Projects) and Chapter 5 of the Australian Securities Exchange listing rules entitled "Mineral Resources and Mineral Reserves for the Bloom Lake Mine, Fermont, Quebec, Canada," prepared by BBA Inc., SRK Consulting (U.S.) Inc., Soutex and Quebec Iron Ore Inc. and dated Sept. 28, 2023, confirming the 18-year life of mine, based on the mineral reserves, with an opportunity to extend operations beyond the LoM plan, with a 40-per-cent increase to the measured and indicated resources and a 360-per-cent increase to inferred resources.

2. Bloom Lake mine operating activities

Impact of forest fires

Forest fires emerged on May 28, 2023, north of Sept-Iles, Que., resulting in railway service interruptions between Bloom Lake and the port of Sept-Iles between May 30 and June 10, 2023. There was no damage to Champion Iron's facilities, and no significant damage was identified to the railway following inspections by its operator besides the destruction of the power and communication line on the affected rail sections. As forest fires subsided in the region, railway services resumed at partial capacity on June 10, 2023, until they returned to normal levels during the quarter ended Sept. 30, 2023, after repairs to the damaged electrical poles and wires over several kilometres were completed. As a result, shipments and sales were impacted in the first half of the 2024 financial year.

Despite supply chain challenges caused by multiple highway closures impacting operations, Bloom Lake operated continuously throughout the railway interruptions and stockpiled iron ore concentrate at the mining complex. The company responded to the situation by triggering its emergency response plan and managed supply chain risks by focusing mine operations on critical activities required to feed the two plants. This impacted the company's ability to move waste and generate blasted ore inventory in the first quarter of the 2024 financial year. The company also used its crusher's stockpiles to supply the two plants during that period. It suffered from a short power outage, which impacted operations for a full day.

As at Sept. 30, 2023, the company had 1.6 million wmt of iron ore concentrate in inventory at the Bloom Lake site. Although the recent commissioning of three additional locomotives received in June, 2023, had a positive impact on the volume of concentrate transported to Sept-Iles, it was offset by an annual planned maintenance shutdown of the railway facilities lasting several days and its reduced capacity in the first half of the quarter, as well as a few days outage caused by a train derailment. The company and its rail service provider are working diligently to maximize the transportation of tonnes from Bloom Lake to Sept-Iles. The company expects its stockpiled iron ore concentrate at Bloom Lake to be shipped and sold over several coming quarters. The company also expects to incur additional rehandling costs in future periods to reclaim the iron ore concentrate from the stockpile.

Phase 2 update

Phase 2 reached commercial production in December, 2022, and the company continued to make improvements to stabilize and optimize operations. As expected when delivering a project of this scale, the company faced challenges, including delays in deliveries and commissioning of mining equipment, creating inefficiencies across the site, which negatively impacted the company's ability to reach its full expanded nameplate capacity. Phase 2 produced at nameplate capacity for 30 consecutive days for the first time during the first quarter of the 2024 financial year. Considering its success in increasing its production at the mine and ore material milled quarter after quarter, and continuing work programs, the company continues its progress toward reaching its expanded 15-million-tonne-per-year production nameplate capacity on a consistent basis. Those programs aim to increase throughput and ore recoveries, optimize and synchronize operations, and adapt maintenance practices.

The main phase 2 work on third party infrastructure was completed in the three-month period ended Sept. 30, 2023, further positioning the company to benefit from additional flexibility and capacity to handle the company's expanded nameplate capacity at the port facilities in Sept-Iles. The recent commissioning of the stacker reclaimer and associated conveyors and three additional locomotives required to support the expanded production capacity should positively impact the company's shipment capacity and vessel loading time.

Operational performance

Second quarter of the 2024 financial year versus second quarter of the 2023 financial year

In the three-month period ended Sept. 30, 2023, 16.9 million tonnes of material were mined and hauled, compared with 12.8 million tonnes during the same period in 2022, an increase of 32 per cent, attributable to the contribution of additional equipment commissioned during the financial year. This also represents a 14-per-cent improvement over the volume mined and hauled in the previous quarter due to a higher utilization of mining equipment associated with an increase in the number of operators and better equipment availability. The stripping ratio of 0.59 for the three-month period ended Sept. 30, 2023, is comparable with the same period in 2022, and increased as planned, compared with 0.54 in the previous quarter.

During the three-month period ended Sept. 30, 2023, an unscheduled outage related to a major crusher ore belt failure in one of the company's conveyor systems negatively impacted the availability of the phase 2 concentrator for several days. Despite this situation, the two plants processed 10.3 million tonnes of ore during the three-month period ended Sept. 30, 2023, compared with 8.1 million tonnes for the same prior-year period, an increase of 28 per cent, driven by the progress of the phase 2 ramp-up to reach Bloom Lake's expanded production nameplate capacity of 15 million tonnes per annum. Material processed by the two plants also increased by 4 per cent, compared with 9.9 million tonnes in the previous quarter, and reached the two-mill-feed nameplate capacity during the three-month period ended Sept. 30, 2023.

The iron ore head grade for the three-month period ended Sept. 30, 2023, was 28.2 per cent, compared with 29.5 per cent for the same period in 2022, and 28.8 per cent during the previous quarter. The variation in head grade was within expected normal variations in the mine plan.

The company's average Fe recovery rate was 77.8 per cent for the three-month period ended Sept. 30, 2023, compared with 78.6 per cent for the same period in 2022, and 78.2 per cent during the previous quarter. In the context of constrained rail capacity, the company adjusted the mine plan to process more challenging ore from some areas, which negatively impacted recovery rates during the period. The company remains confident in its ability to reach the average LoM expected Fe recovery rate target of 82.0 per cent in coming quarters at Bloom Lake, as detailed in the 2023 technical report.

Despite the impact of an unscheduled outage lasting several days to repair a conveyor system and lower head grade and recovery, the two processing plants delivered a record production of 3.45 million wmt of high-grade iron ore concentrate during the three-month period ended Sept. 30, 2023, an increase of 21 per cent compared with 2.9 million wmt during the same period in 2022 and an increase of 1.5 per cent compared with the previous quarter.

First six months of the 2024 financial year versus first six months of the 2023 financial year

The company mined and hauled 31.7 million tonnes of material during the six-month period ended Sept. 30, 2023, compared with 24.6 million tonnes for the same period in 2022, an increase of 29 per cent driven by additional mining equipment in operation.

The stripping ratio was 0.57 for the six-month period ended Sept. 30, 2023, compared with 0.71 for the same period in 2022, slightly lower than the company's plan for the 2024 financial year. The company strategically focused on mining ore in the first months of the 2024 financial year with a reduced mining equipment capacity and limited fuel reserves caused by supply challenges related to the June, 2023, forest fires, as fuel inventories were prioritized for critical activities.

The two plants processed 20.2 million tonnes of ore during the six-month period ended Sept. 30, 2023, an increase of 43 per cent over the same period in 2022, and produced a record of 6.8 million wmt of high-grade iron ore concentrate, compared with 5.1 million wmt for the same period in 2022, benefiting from the phase 2 ramp-up.

The iron ore head grade of 28.5 per cent for the six-month period ended Sept. 30, 2023, is consistent with the LoM head grade average. The lower average Fe recovery rate for the six-month period ended Sept. 30, 2023, was mainly attributable to the processing of more challenging ore from some areas in the pits and to a slight backlog in the recovery circuit maintenance due to significant efforts deployed on solving conveying challenges in the past months. Significant improvements were made to increase the reliability and productivity of the company's crushed ore conveying systems, which should allow the company to resume its proven ability to stabilize and optimize its recovery circuits.

4. Exploration activities

Bloom Lake mineral resource and reserve update

The 2023 technical report, which was filed on Oct. 3, 2023, confirmed the 18-year LoM based on the mineral reserves with an average LoM yearly production of 15.2 million wmt of high-purity iron ore concentrate at 66.2 per cent Fe, an average iron metallurgical recovery of 82.0 per cent and plant feed grade of 28.6 per cent Fe. The 2023 technical report also confirmed an expansion opportunity considering a 40-per-cent increase to the measured and indicated resources and a 360-per-cent increase to the inferred resources.

The company is not aware of any new information or data that materially affect the information included in the 2023 technical report and confirms that all material and technical assumptions underpinning the estimates in the 2023 technical report continue to apply and have not materially changed.

The 2023 technical report can be found under the company's profile on SEDAR+.

Exploration and evaluation activities

During the three- and six-month periods ended Sept. 30, 2023, the company maintained all of its properties in good standing and did not enter into any farm-in/farmout arrangements. During the three- and six-month periods ended Sept. 30, 2023, $4.6-million and $7.3-million in exploration and evaluation expenditures were incurred, respectively, compared with $900,000 and $3.1-million, respectively, for the same prior-year periods. During the three- and six-month periods ended Sept. 30, 2023, exploration and evaluation expenditures mainly consisted of costs associated with work related to updating the Kami project feasibility study, claim renewal fees and claim staking around the Kami property. In addition, the company started a 2,000-metre diamond drill campaign for hydrogeological characterization in September, 2023, expected to be completed by the end of 2023.

5. Cash flows -- purchase of property, plant and equipment

Sustaining capital expenditures

The increases in tailings-related investments for the three- and six-month periods ended Sept. 30, 2023, are part of the company's long-term plan to prepare the site for a higher level of operations with the commissioning of phase 2. As part of the company's continuing and thorough tailings infrastructure monitoring and inspections, the company continues to invest in its safe tailings strategy and is implementing its long-term tailings investment plan.

The increase in stripping and mining activities during the three-month period ended Sept. 30, 2023, compared with the same period in the previous financial year, is mainly attributable to investments made for the continuing construction of additional access ramps for $1.8-million. No stripping cost was capitalized during the three-month period ended Sept. 30, 2023. The decrease in stripping and mining activities during the six-month period ended Sept. 30, 2023, is due to the low level of waste moved at the mine due to limited mining equipment availability early in the period, until all equipment was fully commissioned. The stripping and mining activities for the six-month period ended Sept. 30, 2023, were slightly lower than the company's plan for the 2024 financial year, due to the prioritization of critical activities to mitigate the impacts of the forest fires in the first quarter.

The increase in the company's mining equipment rebuild program for the three- and six-month periods ended Sept. 30, 2023, is attributable to the major overhaul of its growing mining fleet over the last two years to prepare for additional mining activities driven by the company's expansion. The mining equipment rebuild program is in line with the company's fleet management program for the 2024 financial year.

DRPF project

During the three- and six-month periods ended Sept. 30, 2023, $16.9-million and $28.0-million, respectively, were spent in capital expenditures related to the DRPF project. Investments mainly consisted of on-site preparation activities, engineering work and long-lead-time equipment purchasing. Cumulative investments of $28.9-million were deployed on the DRPF project as at Sept. 30, 2023.

Other capital development expenditures at Bloom Lake

During the three-month period ended Sept. 30, 2023, other capital development expenditures at Bloom Lake totalled $13.0-million, compared with $42.4-million in the same 2022 period. During the three-month period ended Sept. 30, 2023, the expenditures mainly consisted of $5.6-million in infrastructure improvements and conformity ($7.1-million for the same period last year), $6.8-million for the garage expansion to support the expanded fleet, and $5.1-million in deposits for mining equipment ($4.5-million for the same period last year). The expenditures for the same period last year also included $26.2-million related to phase 2 and $5.1-million in capitalized borrowing costs. During the three-month periods ended Sept. 30, 2023, and 2022, other capital development expenditures were partially offset by the receipt of a government grant of $5.2-million related to the company's greenhouse gas emission and energy consumption reduction initiatives.

During the six-month period ended Sept. 30, 2023, other capital development expenditures at Bloom Lake totalled $37.8-million, compared with $138.1-million in the same prior-year period. During the six-month period ended Sept. 30, 2023, the expenditures mainly consisted of $14.6-million in infrastructure improvements and conformity ($9.9-million for the same period last year), including the construction of two pads to expand the mine's capacity to stockpile concentrate near the loadout, $15.2-million for the expansion of the garage, and $11.7-million in deposits for mining equipment ($19.2-million for the same period last year). The expenditures for the first six-month period of last year also included $94.0-million related to phase 2 and $9.6-million in capitalized borrowing costs.

6. Qualified person and data verification

Vincent Blanchet, PEng, engineer at Quebec Iron Ore Inc., the company's subsidiary and operator of Bloom Lake, is a qualified person as defined by NI 43-101, and has reviewed and approved, or has prepared, as applicable, the disclosure of the scientific and technical information contained in this press release, and has confirmed that the relevant information is an accurate representation of the available data and studies for the relevant projects. Mr. Blanchet's review and approval do not include statements as to the company's knowledge or awareness of new information or data, or any material changes to the material and technical assumptions underpinning the 2023 technical report. Mr. Blanchet is a member of the Ordre des ingenieurs du Quebec.

7. Conference call and webcast information

A webcast and conference call to discuss the foregoing results will be held on Oct. 26, 2023, at 9 a.m. Montreal time/Oct. 27, 2023, at 12 a.m. Sydney time. Listeners may listen to a live webcast of the conference call from the investors section of the company's website or by dialling toll-free 1-888-390-0546 within North America or 1-800-076-068 from Australia.

An on-line archive of the webcast will be available by viewing the company's website. A telephone replay will be available for one week after the call by dialling 1-888-390-0541 within North America or 1-416-764-8677 overseas, and entering passcode 509012 followed by the number sign.

About Champion Iron Ltd.

Champion Iron, through its wholly owned subsidiary Quebec Iron Ore, owns and operates the Bloom Lake mining complex, located on the south end of the Labrador Trough, approximately 13 kilometres north of Fermont, Que. 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 million tonnes per annum and produce low-contaminant high-grade 66.2-per-cent-iron iron ore concentrate with a proven ability to produce a 67.5-per-cent-iron direct reduction quality iron ore concentrate. In January, 2023, the company announced the positive findings of a study evaluating the upgrade of half of the Bloom Lake mine's capacity to a direct reduction quality pellet feed iron ore and approved an initial budget to advance the project. Bloom Lake's high-grade and low-contaminant iron ore products have attracted a premium to the Platts Iodex 62-per-cent-iron iron ore benchmark. The company ships iron ore concentrate from Bloom Lake by rail, to a shiploading port in Sept-Iles, Que., and has sold its iron ore concentrate to customers globally, including in China, Japan, the Middle East, Europe, South Korea, India and Canada. In addition to Bloom Lake, Champion Iron owns a portfolio of exploration and development projects in the Labrador Trough, including the Kamistiatusset project, located a few kilometres southeast of Bloom Lake, and the Consolidated Fire Lake North iron ore project, located approximately 40 kilometres south of Bloom Lake.

We seek Safe Harbor.