Mr. David Cataford reports

CHAMPION IRON REPORTS RECORD PRODUCTION IN ITS FY2024 THIRD QUARTER, APPROVES THE DRPF PROJECT AND ANNOUNCES THE RESULTS OF THE KAMI PROJECT STUDY

Champion Iron Ltd. has released its operational and financial results for the 2024 financial year third quarter ended Dec. 31, 2023.

Champion's chief executive officer, David Cataford, said: "We are excited to implement key elements of our expansion strategy, with the receipt of an allocation of additional hydroelectric power from Hydro-Quebec and our recently secured additional financing. Central to this, our board provided a final investment decision for the DRPF project. This carbon neutral project, which remains on schedule to be completed in calendar H2 2025, positions the company and the region to contribute to the accelerating green steel transition, particularly considering the recent decisions by the governments of Quebec and Newfoundland and Labrador to include high-purity iron ore on their critical mineral lists. Bloom Lake demonstrated its ability to produce at or above its recently expanded nameplate capacity, resulting in a quarterly production record and robust financial results. Our team also achieved another important milestone by announcing the details of the Kami project study, which evaluated the construction of a 9.0 million wmt per year DR-quality iron ore operation. The study enables the company to consider strategic partnerships prior to advancing the project, providing an opportunity to capitalize on the growing demand for green steel."

Conference call details

Champion will host a conference call and webcast on Jan. 31, 2024, at 9 a.m. Montreal time (Feb. 1, 2024, at 1 a.m. Sydney time), to discuss the results for the financial third quarter ended Dec. 31, 2023. Call details are outlined at the end of this news release.

Quarterly highlights

Operations and sustainability:

• No serious injuries and no major environmental incidents reported in the quarter;
• Published Champion's 2023 annual modern slavery statement, highlighting the company's commitment to upholding human rights;
• Production exceeded Bloom Lake's recently expanded nameplate capacity, resulting in a record quarterly production of 4.0 million wet metric tonnes (wmt) (3.9 million dry metric tonnes (dmt)) of high-grade 66.3 per cent iron (Fe) concentrate for the three-month period ended Dec. 31, 2023, up 17 per cent from the previous quarter and 36 per cent over the same period last year;
• Record quarterly iron ore concentrate sales of 3.2 million dmt for the three-month period ended Dec. 31, 2023, up 12 per cent and 20 per cent from the previous quarter and the prior-year period, respectively;
• While Bloom Lake's production capacity increased during the period, exceeding its expanded nameplate capacity, the rail operator did not haul at contracted levels. This haulage shortfall resulted in the inability to ship all of the iron ore concentrate produced during the period. Additionally, rail service was interrupted for several days after heavy rains in late December. Accordingly, iron ore concentrate stockpiled at Bloom Lake increased by 800,000 wmt to 2.4 million wmt during the three-month period ended Dec. 31, 2023. The company is engaging with the rail operator to receive contracted haulage services to ensure that Bloom Lake's increased production, as well as iron ore concentrate currently stockpiled at Bloom Lake, is hauled over future periods.

Financial results:

• Gross realized selling price of $144.0 (U.S.) per dmt (1), compared with the P65 index average of $138.7 (U.S.) per dmt in the period;
• Net realized selling price of $115.6 (U.S.) per dmt (1), representing a 15-per-cent increase quarter on quarter and a 20-per-cent increase year on year;
• C1 cash cost of $73.0 (U.S.) per dmt (1) ($53.6 (U.S.) per dmt) (2), a decrease of 1 per cent quarter on quarter and 4 per cent year on year, respectively;
• EBITDA (earnings before interest, taxes, depreciation and amortization) of $246.6-million (1), an increase of 59 per cent quarter on quarter and 109 per cent year on year, respectively;
• Net income of $126.5-million, an increase of 94 per cent quarter on quarter and 146 per cent year on year, respectively;
• EPS (earnings per share) of 24 cents, an increase of 85 per cent quarter on quarter and 140 per cent year on year, respectively;
• Strong cash position at quarter-end with $387.4-million in cash and cash equivalents as at Dec. 31, 2023, an increase of $70.8-million since Sept. 30, 2023;
• Procured a new $230-million (U.S.) term loan, maturing in November, 2028, with no principal repayment before June, 2026 (the financing), repaid the $180-million (U.S.) outstanding balance from the company's existing $400-million (U.S.) revolving facility, with the proceeds of the financing, and extended its maturity from May, 2026, to November, 2027;
• Available liquidity, including amounts available from the company's credit facilities, totalling $937.6-million (1) at quarter-end, compared with $645.9-million (1) as at Sept. 30, 2023, to support growth initiatives;
• Paid the fifth semi-annual dividend of 10 cents per ordinary share on Nov. 28, 2023, totalling $51.8-million.

Kamistiatusset project (the Kami project) study highlights:

• The Kami project study evaluated the construction of mining and processing facilities to produce DR-grade (direct reduction) pellet feed iron ore from the mining properties of the Kami mine, located in the Labrador trough in southwestern Labrador and Newfoundland. The study details a 25-year life of mine (LOM) with average annual DR-quality iron ore concentrate production of approximately 9.0 million wmt per annum at above 67.5 per cent Fe;
• Project construction period is estimated at 48 months, following a final investment decision, and it benefits from permitting work completed by the previous owner of the project;
• Total capital expenditures of $3,864-million, resulting in a net present value (NPV) of $541-million and internal rate of return (IRR) of 9.8 per cent after tax, based on conservative pricing dynamics compared with prevailing iron ore prices; NPV of $2,195-million and IRR of 14.8 per cent after tax, based on the previous three calendar year average of the P65 index price;
• Benefiting from expected access to hydroelectric power and significant investments to reduce its GHG (greenhouse gas) emissions, including a near-pit crushing facility and conveyor circuit for ore and waste, the project is expected to have an emission intensity of approximately 6.7 kilograms of CO2 per tonne of DR-grade pellet feed iron ore produced, positioning the project as potentially one of the lowest-emitting producers of DR-grade pellet feed iron ore locally and globally;
• Completion of the study enables the company to evaluate the project in relation to its portfolio of other organic growth opportunities, while aiming to maintain a prudent balance sheet and avoid equity dilution. The company expects to continue optimizing the project, engage with stakeholders, evaluate opportunities to improve its economics, advance permitting and work on strategic partnership opportunities prior to considering a final investment decision.

Direct reduction pellet feed project update:

• With significant available liquidity and allocation of additional hydroelectric power from Hydro-Quebec, securing access to renewable power required for the DRPF project, the board provided a final investment decision to proceed with the DRPF project on Jan. 30, 2024 (Montreal time);
• The DRPF project final investment decision secures the expected commissioning of the project in the second half of calendar year 2025, a timeline that is subject to completing key construction milestones in mid-2024 calendar year;
• Project remains on budget, with quarterly investments of $31.0-million and a cumulative investment of $59.9-million, as at Dec. 31, 2023, from the total capital expenditures of $470.7-million as estimated in the results of the study released in January, 2023.

Other growth and development:

• Recognizing its positive impact in reducing GHG emissions in steelmaking and its importance in the green steel supply chain, high-purity iron ore was listed on Quebec's and Newfoundland and Labrador's critical minerals lists, joining other minerals such as nickel, copper and cobalt;
• Advanced a study, which is expected to be completed in the near term, in collaboration with a major international steelmaking partner, to recommission the Pointe-Noire iron ore pelletizing facility (the pellet plant) to produce DR-grade pellets.

Kami project study

Project description

The Kami project is a DR-grade-quality iron ore project near available infrastructure, situated only a few kilometres southeast of the company's operating Bloom Lake mine, in the Labrador trough geological belt in southwestern Labrador and Newfoundland, near the Quebec eastern border. The study evaluated the construction of mining and processing facilities, including a concentrator, tailings facilities and related infrastructure to produce DRPF iron ore from the mining properties of the Kami mine.

The project is expected to benefit from several competitive advantages, including:

• A sizable high-purity iron resource, significantly derisked by the project's previous owners;
• Location near available infrastructure and Bloom Lake, enabling potential synergies;
• Potential project ranking as one of the lowest-emitting high-purity iron ore projects, both locally and globally, by leveraging expected access to hydroelectric power;
• A supportive Newfoundland and Labrador government, which identified high-purity iron ore within its critical minerals plan;
• Advanced permitting work completed by the previous owner.

The study did not incorporate prospects for potential economic support from governments to encourage development of critical minerals, preferential funding opportunities or other economic incentives, which could improve economics and influence a final investment decision.

Mine

The Kami project is planned as a conventional open-pit mine combined with an in-pit crushing system (IPCS) for waste rock. Mining operations will utilize drills, haul trucks coupled with hydraulic shovels and a semi-mobile waste IPCS, with the ore crusher located at the pit exit on the east side. The project contains the Rose pit, which is to be split into three phases. The peak mining rate is expected to be 81.0 million tonnes per annum (tpa) over a life of mine of 25 years. A total of 643 million tonnes (t) of ore will be mined at an average total iron ore grade of 29.2 per cent with a total of 1,019.5 million t of combined waste and overburden, resulting in a stripping ratio of 1.6 tonnes of waste per tonne of ore mined.

Concentrator plant

The proposed Kami concentrator plant is based on the flowsheet developed and contained in previous studies completed by the former owner of the project, the 2023 testwork, and input from the company and its advisers' engineering teams and manufacturers. The proposed concentrator is designed to process ore grading at 29.2 per cent total Fe over a 25-year mine life. The testwork conducted during 2023 resulted in the redesign of a revised process flowsheet that will enable the production of a DR-quality iron ore concentrate at or above 67.5 per cent Fe and below 2.5 per cent SiO2 plus Al2O3, with an iron recovery of 76.4 per cent, allowing an average life-of-mine production of 9.0 million wmt per year.

The flowsheet includes proven and modern technologies for processing iron ore, including a gyratory crusher, autogenous mill, gravity separation circuit consisting of spirals and Reflux classifiers, currently operating in the Bloom Lake phase II concentrator, a magnetic separation circuit consisting of a ball mill, and low intensity magnetic separators. The flowsheet will also include regrind mills and a reverse flotation circuit that will enable the production of DR-quality iron ore concentrate.

Infrastructure and regional advantages

The Kami project is expected to benefit from access to renewable hydroelectric power, water, roads, existing rail and port facilities in a proven regional labour market in a mining-friendly jurisdiction with a long history of supporting iron ore operations.

The Kami project is located directly south of Bloom Lake's existing and operational rail loop infrastructure, with access to end-markets via port and rail. Rail access for the Kami project is expected to consist of three separate segments. The first segment, a new rail spur, will be required to connect the mine site to the Quebec North Shore and Labrador (QNS&L) railway line north of the Wabush-Labrador airport. The second segment would utilize the existing QNS&L railway, connecting Wabush to the Arnaud junction in Sept-Iles, Que. The third and last segment, the existing Arnaud railroad, connects the Arnaud junction to the Societe Ferroviaire et Porturaire of Pointe-Noire (SFPPN) port facilities in Sept-Iles, currently utilized by Bloom Lake, where unloading facilities will be upgraded. Once unloaded, the DR-quality iron ore will be stockpiled then loaded onto vessels to supply the company's global customers. Modifications are expected to be required to the existing railway segments and port infrastructure to accommodate the increased capacity from the Kami project.

Tailings management

The tailings management facility (TMF) will consist of a total of five centerline construction method dams built in nine total embankment stages over the life of the facility. Tailings slurry will be pumped from the plant in two streams, coarse and fines. In addition, the TMF will enable the storage of solid waste tailings from the processing plant, as well as operational, storm and snow water management. Contact water, consisting of runoff and embankment seepage, will be collected with collection ditches.

DRPF-quality iron ore and pricing

The project is expected to produce a DR-quality iron ore. With an increased focus on reducing GHG emissions in the steelmaking processes, the steel industry is experiencing a structural shift in its production methods. This dynamic is expected to create additional demand for higher-purity iron ore products, as the industry transitions toward using alternative technologies to produce liquid iron, such as the use of direct reduced iron in electric arc furnaces instead of blast furnaces and basic oxygen furnaces.

As DR-grade-quality iron ore is a niche product in the iron ore industry, representing approximately 5 per cent of the global seaborne iron ore production, pricing tends to be directly negotiated between producers and buyers without an available global pricing index. Due to its higher Fe content and lower impurities, pricing for DR-grade iron ore product, used as a raw material input to make DR-grade pellets, is expected to attract a significant premium over the traditional high-grade iron ore P65 index and correlates with the DR-grade pellet indices. The company believes, in tandem with several market experts, that the accelerating transition to reduce emissions in the steelmaking process will result in rising demand for DRPF products. As a result of this expected rising demand and product scarcity, the company believes that its industry-leading DRPF-quality product will attract increasing premiums over time. In addition to Bloom Lake's expected production of DRPF-quality iron ore, the potential production of Kami project DRPF-quality iron ore would further enable the company to diversify its customer mix, including steelmakers in closer proximity to the port of Sept-Iles, which could result in freight advantages for the company.

The base case economic assumption of the study utilizes a conservative blended net realized price based on a P65 index price of $120.0 (U.S.) per t for the life of mine, a C3 index price of $22.0 (U.S.) per t and a conservative premium for DR-quality iron ore. The P65 index price of $120.0 (U.S.) per t utilized in the study compares with the trailing-three-calendar-year average price of $152.2 (U.S.) per t and the trailing-five-calendar-year average price of $136.5 (U.S.) per t.

Project timeline

The project benefits from the permitting work completed by its previous owner and has an estimated construction period of approximately 48 months following a final investment decision. The Kami project is one of several organic growth opportunities currently being considered by the company. The company will continue to optimize the project, engage with stakeholders, evaluate opportunities to upgrade its economics, advance permitting and consider strategic partnerships prior to considering a final investment decision.

Study and qualified persons

The study will be filed under the company's profile on SEDAR+, the Australian Securities Exchange website and the company's website within 45 days of the date of this news release. The following qualified persons participated in the preparation of the study:

• Andre Allaire, PEng, BBA Inc.;
• Christian Beaulieu, PGeo, consultant for G Mining Services Inc.;
• Alexandre Dorval, PEng, G Mining Services;
• Mathieu Girard, PEng, Soutex;
• Siavash Farhangi, PEng, WSP Canada Inc.;
• Marie-Helene Paquette, PEng, AtkinsRealis Inc.;
• Emmanuelle Millet, PGeo, AtkinsRealis Inc.;
• Tarek Khoury, PEng, Systra Canada Inc.

Each of these qualified persons has reviewed and approved, or has prepared, as applicable, the disclosure of the scientific and technical information contained in this news release that is relevant to their area of responsibility and verified the data underlying such technical information. Reference is made to the study that will be filed under the company's profile on SEDAR+, the ASX website and the company's website.

Mineral resource and mineral reserve estimates

An attached table presents the mineral resource estimate for the Kami project, estimated at a cut-off grade of 15 per cent Fe, inside an optimized open-pit shell based on a long-term reference P62 index iron price of $95 (U.S.) per dmt ($124 (Canadian per dmt) and P65 index iron ore price of $115 (U.S.) per dmt ($150 (Canadian) per dmt). An exchange rate of $1.30 (Canadian) to $1 (U.S.) was used. The open-pit measured and indicated mineral resources for the Kami project, including the Rose and Mills Lake pits, are estimated at 975.5 million t with an average grade of 29.6 per cent Fe and the open-pit inferred mineral resources at 163.0 million t with an average grade of 29.2 per cent Fe. Mineral resources that are not mineral reserves have not demonstrated economic viability.

The proven and probable mineral reserves for the Kami project are estimated at 643.0 million t at an average grade of 29.2 per cent Fe based on a cut-off grade of 15 per cent Fe. The mineral reserves were estimated using a long-term P62 index iron ore price of $80 (U.S.) per dmt, a long-term P65 index iron ore price of $100 (U.S.) per dmt and an exchange rate of $1.30 (Canadian) to $1 (U.S.). The mineral reserves include mining dilution and ore loss calculated on a block-by-block basis, based on the neighbouring blocks lithology and grade. The average stripping ratio of the open pit is 1.6.

Bloom Lake mine operating activities

Phase II and rail capacity update

While the phase II project was completed as planned and ahead of schedule, the company faced challenges regarding delays in deliveries and commissioning of additional required mining equipment, creating inefficiencies across the site, which negatively impacted the company's ability to reach its expanded nameplate capacity. Despite such challenges, phase II reached commercial production in December, 2022, and produced at nameplate capacity for 30 consecutive days for the first time during the first quarter of the 2024 financial year. Further to the improvements to stabilize and optimize operations, Bloom Lake demonstrated additional stability during the three-month period ended Dec. 31, 2023, to produce above its recently expanded nameplate capacity over a significant period.

Phase II work on third party infrastructure was completed in the second quarter of the 2024 financial year, 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 commissioning of three additional locomotives, an additional stacker reclaimer and associated conveyors, positively impacted the company's shipment capacity and vessel loading time, required to support the expanded production capacity at Bloom Lake.

Although the commissioning in August, 2023, of three additional locomotives, received earlier in June, positively impacted the volume of concentrate transported to Sept-Iles, it was offset by reduced railway services, as well as planned and unplanned maintenance activities at the port facilities in Sept-Iles. As a result of the disconnect in railway services and Bloom Lake's increasing production capacity, the iron ore concentrate stockpiled at Bloom Lake increased from 1.6 million wmt at the prior quarter-end to 2.4 million wmt as at Dec. 31, 2023.

The company is engaging with the rail operator to receive contracted haulage services to ensure that Bloom Lake's increased production, as well as iron ore concentrate currently stockpiled at Bloom Lake, is hauled over future periods. The company expects to incur additional rehandling costs in future periods to reclaim the iron ore concentrate from the stockpile.

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 from May 30 to June 10, 2023. As forest fires subsided in the region, railway services resumed at partial capacity on June 10, 2023, until they returned to preforest fire levels during the three-month period ended Sept. 30, 2023. 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 during the quarter ended Sept. 30, 2023, Bloom Lake operated continuously throughout the railway interruptions and iron ore concentrate was stockpiled 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.

During the three-month period ended Dec. 31, 2023, 18.2 million tonnes of material were mined and hauled, compared with 13.2 million tonnes during the same period in 2022, an increase of 38 per cent, and 16.9 million tonnes during the previous quarter, a quarter-over-quarter increase of 8 per cent. Additional material mined and hauled is attributable to the contribution of additional equipment commissioned during the 2024 financial year, a higher utilization and availability of mining equipment, and reduced trucking cycle time associated with the construction of additional ramp accesses. The stripping ratio of 0.62 for the three-month period ended Dec. 31, 2023, was higher than in the same prior-year period and increased as planned, compared with 0.59 in the previous quarter. The company plans to gradually increase stripping activities in accordance with the LOM plan.

During the three-month period ended Dec. 31, 2023, the two plants processed 11.1 million tonnes of ore, compared with 8.5 million tonnes for the same prior-year period and 10.3 million tonnes in the previous quarter, an increase of 31 per cent and 8 per cent, respectively, as the company surpassed Bloom Lake's expanded nameplate capacity of 15 million tpa during the three-month period ended Dec. 31, 2023.

The iron ore head grade for the three-month period ended Dec. 31, 2023, was 29.4 per cent, compared with 28.5 per cent for the same period in 2022 and 28.2 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 81.4 per cent for the three-month period ended Dec. 31, 2023, compared with 80.1 per cent for the same period in 2022 and 77.8 per cent during the previous quarter. The increase in Fe recovery is attributable to work programs that aimed to increase throughput and ore recoveries and optimize operations. Significant improvements were also made to increase the reliability and productivity of the company's crushed ore conveying systems, which allowed the company to optimize its recovery circuits level in line with its expected Fe recovery rate target of 82.0 per cent in upcoming quarters, as detailed in the technical report, in respect of Bloom Lake, prepared pursuant to NI 43-101 and Chapter 5 of the ASX 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.

With higher head grade and Fe recovery, Bloom Lake delivered record production of 4.0 million wmt (3.9 million dmt) of high-grade iron ore concentrate during the three-month period ended Dec. 31, 2023, an increase of 36 per cent compared with 3.0 million wmt (2.9 million dmt) during the same period in 2022 and an increase of 17 per cent compared with the previous quarter.

Revenues

Revenues totalled $506.9-million for the three-month period ended Dec. 31, 2023, compared with $351.2-million for the same period in 2022, mainly due to sales volume increasing to 3.2 million tonnes of high-grade iron ore concentrate from 2.7 million tonnes for the same period in 2022 and a higher P65 index price. Sales volume during the quarter was impacted by lower rail services, unplanned maintenance at the port facilities and several days of rail service outages after heavy rains in December, 2023.

The gross average realized selling price was $144.0 (U.S.) per dmt (1) during the third quarter of the 2024 financial year, up from $126.5 (U.S.) per dmt (1) for the same period last year, benefiting from higher P65 index prices. During the three-month period ended Dec. 31, 2023, the P65 index averaged $138.7 (U.S.) per dmt, an increase of 25 per cent from the same quarter last year. The P65 index premium was only 8.1 per cent over the P62 index average price of $128.3 (U.S.) per dmt during the quarter, down from a premium of 9.6 per cent in the previous quarter. The high-grade P65 index premium over the P62 index averaged 12.0 per cent during the three-month period ended Dec. 31, 2022. The depressed premiums for high-grade iron ore, compared with recent periods, are mainly attributable to lower European steel output, a key consuming region for high-grade iron ore, struggling profitability at global steel mills, together with the lack of environmental control for the steel industry in China.

The gross average realized selling price of $144.0 (U.S.) per dmt (1) for the three-month period ended Dec. 31, 2023, was higher than the P65 index average price of $138.7 (U.S.) per dmt for the period due to the 1.8 million tonnes in transit as at Dec. 31, 2023, provisionally priced using an average forward price of $149.6 (U.S.) per dmt, which is higher than the P65 index average price for the period. This was partially offset by sales contracts using backward-looking iron ore index prices, when prices were lower than the P65 index average price for the period.

The average C3 Baltic Capesize Index (C3 index) for the three-month period ended Dec. 31, 2023, was $24.9 (U.S.) per t, compared with $20.6 (U.S.) per t for the same period in 2022, representing an increase of 21 per cent, which is higher than the increase in freight and other costs of 11 per cent. Champion typically books vessels three to five weeks prior to the desired laycan period when contracting vessels on the spot market, which creates a delay between the freight paid and the C3 index. The effect of this delay is eventually reconciled since Champion ships its high-grade iron ore concentrate uniformly throughout the year. Freight and other costs during the three-month period ended Dec. 31, 2023, were also impacted by higher demurrage expenses resulting from a combination of higher demurrage rates, compared with the same period last year, and lower than expected shipment.

Provisional pricing adjustments on prior quarter sales of $16.0-million were recorded during the three-month period ended Dec. 31, 2023, representing a positive impact of $3.8 (U.S.) per dmt over the total volume of 3.2 million dmt sold during the period, due to an increase in the P65 index average in the period. During the three-month period ended Dec. 31, 2023, a final average price of $135.4 (U.S.) per dmt was established for the 1.3 million tonnes of iron ore that were in transit as at Sept. 30, 2023, and which were previously evaluated using an average expected price of $125.9 (U.S.) per dmt.

After taking into account sea freight and other costs of $32.2 (U.S.) per dmt and the positive provisional pricing adjustment of $3.8 (U.S.) per dmt, the company obtained a net average realized selling price of $115.6 (U.S.) per dmt ($157.1 (Canadian) per dmt) (1) for its high-grade iron ore shipped during the period.

Cost of sales and C1 cash cost

For the three-month period ended Dec. 31, 2023, the cost of sales totalled $235.5-million with a C1 cash cost of $73.0 per dmt (1), compared with $209.1-million with a C1 cash cost of $76.0 per dmt (1) for the same period in 2022 and $212.6-million with a C1 cash cost of $73.7 per dmt (1) in the previous quarter. These improvements were mostly driven by production achieving nameplate capacity during the quarter and to increased shipments amortizing fixed production and handling costs.

The cost of sales and C1 cash cost for the three-month period ended Dec. 31, 2023, continued to be negatively impacted by higher-than-planned utilization of contractors to fill vacant positions and below expected run rate shipment levels during the quarter to amortize mostly fixed costs at the port facilities in Sept-Iles. The cost of sales and C1 cash cost for the three-month period ended Dec. 31, 2023, benefited from lower fuel and explosives prices, much higher production levels and lower rail service costs due to semi-annual fuel price adjustments based on trailing prices, compared with the same prior-year period.

Mining and processing costs for the 3.9 million dmt produced in the three-month period ended Dec. 31, 2023, totalled $45.3 per dmt produced, a decrease of 4 per cent compared with $47.3 per dmt produced in the previous quarter, reflecting a stronger mining performance, lower quarter-over-quarter planned maintenance activities and production exceeding nameplate capacity.

Net income and EBITDA

For the three-month period ended Dec. 31, 2023, the company generated EBITDA of $246.6-million (1), representing an EBITDA margin of 49 per cent (1), compared with $118.2-million (1), representing an EBITDA margin of 34 per cent (1), for the same period in 2022. Higher EBITDA was mainly due to higher sales volume and net average realized selling price and lower cash cost, as described above.

For the three-month period ended Dec. 31, 2023, the company generated net income of $126.5-million (EPS of 24 cents), compared with $51.4-million (EPS of 10 cents) for the same prior-year period. The year-over-year increase in net income is attributable to higher gross profits, partially offset by higher current income and mining taxes.

All-in sustaining cost (AISC) and cash operating margin

During the three-month period ended Dec. 31, 2023, the company realized an AISC of $83.9 per dmt (1), compared with $86.7 per dmt (1) for the same period in 2022. The decrease was attributable to lower C1 cash costs, which benefited from Bloom Lake achieving nameplate capacity, partially offset by slightly higher sustaining capital expenditures. Refer to the section on cash flows for details on sustaining capital expenditures.

The company generated a cash operating margin of $73.2 per dmt (1) for each tonne of high-grade iron ore concentrate sold during the three-month period ended Dec. 31, 2023, compared with $43.7 per dmt (1) for the same prior-year period. The variation is due to a higher net average realized selling price for the period and lower AISC.

Exploration activities

During the three- and nine-month periods ended Dec. 31, 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 nine-month periods ended Dec. 31, 2023, $5.8-million and $13.1-million in exploration and evaluation expenditures were incurred, respectively, compared with $3.8-million and $6.8-million, respectively, for the same prior-year periods. During the three- and nine-month periods ended Dec. 31, 2023, exploration and evaluation expenditures mainly consisted of costs associated with work related to updating the Kami project feasibility study (refer to the section on the Kami project study), claim renewal fees and claim staking around the Kami property. In addition, the company completed a 1,400-metre diamond drill campaign for hydrogeological characterization. Details on exploration projects and maps are available on the company's website under the section on operations and projects.

Sustaining capital expenditures

The increases in tailings related investments for the three- and nine-month periods ended Dec. 31, 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 II. 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 company's tailings work programs are typically completed in the first half of the financial year due to more favourable weather conditions.

Stripping and mining activities for the three-month period ended Dec. 31, 2023, included $1.6-million of capitalized stripping costs (nil for the same prior-year period) and $5.7-million of other mine development costs, including access ramps, topographic and precut drilling ($3.2-million for the same prior-year period). For the nine-month period ended Dec. 31, 2023, capitalized stripping costs totalled $1.8-million ($6.1-million for the same prior-year period) and other mining development costs totalled $15.2-million ($11.9-million for the same prior-year period). The stripping and mining activities for the nine-month period ended Dec. 31, 2023, were slightly lower than planned 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 nine-month period ended Dec. 31, 2023, is attributable to the major overhaul of its growing mining fleet over the last two years, used 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 nine-month periods ended Dec. 31, 2023, $31.0-million and $59.0-million, respectively, were spent in capital expenditures related to the DRPF project. Investments mainly consisted of on-site preparation activities, engineering work, long-lead-time equipment purchasing and the construction of a lodging complex. Cumulative investments of $59.9-million were deployed on the DRPF project as at Dec. 31, 2023, with an estimated capital expenditure of $470.7-million, as per the study released in January, 2023.

Other capital development expenditures at Bloom Lake

During the three-month period ended Dec. 31, 2023, other capital development expenditures at Bloom Lake totalled $41.7-million ($36.8-million for the same period in 2022), including $17.9-million for third party facilities in Sept-Iles to handle additional production from phase II ($5.3-million for the same period last year), $9.3-million in infrastructure improvements and conformity ($9.9-million for the same prior-year period), $5.4-million for the garage expansion to support the expanded truck fleet, and $7.7-million in deposits for a shovel and a loader at the mine ($15.8-million for the same prior-year period).

During the nine-month period ended Dec. 31, 2023, other capital development expenditures at Bloom Lake totalled $79.4-million ($174.9-million for the same period in 2022), and comprised $23.3-million in infrastructure improvements and conformity, including the construction of two pads to expand the mine's capacity to stockpile concentrate near the loadout ($19.7-million for the same prior-year period), $20.5-million for the garage expansion, $17.7-million for third party facilities in Sept-Iles to handle additional production from phase II ($99.3-million for the same prior-year period), and $19.4-million for mining equipment deposit, including a drill, a haul truck, two loaders as well as a shovel ($35.0-million for the same prior-year period). The addition of this mining equipment made a significant contribution to the company's recent performance. The expenditures for the nine-month period ended Dec. 31, 2023, also included $1.3-million in capitalized borrowing costs ($14.4-million for the same prior-year period). During the nine-month periods ended Dec. 31, 2023, and Dec. 31, 2022, other capital development expenditures were partially offset by the receipt of a $5.2-million government grant related to the company's GHG emissions and energy consumption reduction initiatives.

Qualified person and data verification

Vincent Blanchet, PEng, engineer at Quebec Iron Ore, 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 document, 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 assumptions and technical parameters underpinning the 2023 technical report. Mr. Blanchet is a member of the Ordre des ingenieurs du Quebec.

The mineral resource qualified person, Christian Beaulieu, PGeo, undertook data verification and validation of information included in the section on the Kami project study, including, but not limited to, drill core inspection of sampling, logging and mineralization style, outcrop inspection, drill hole collar location, quality assurance and quality control results review, independent sampling, and database verification against laboratory certificates. The qualified person is of the opinion that the drilling database and supporting information can be used for a mineral resource estimate. No major issues were found during data validation, both digitally and on the field.

Conference call and webcast information

A webcast and conference call to discuss the foregoing results will be held on Jan. 31, 2024, at 9 a.m. Montreal time (Feb. 1, 2024, at 1 a.m. Sydney time). Listeners may access 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 accessing 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 228228 followed by the pound key.

About Champion Iron Ltd.

Champion, 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 tpa and produce low contaminant high-grade 66.2 per cent Fe iron ore concentrate with a proven ability to produce a 67.5 per cent 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 DR-quality pellet feed iron ore with up to 69 per cent Fe. Bloom Lake's high-grade and low-contaminant iron ore products have attracted a premium to the Platts Iodex 62 per cent Fe iron ore benchmark. The company ships iron ore concentrate from Bloom Lake by rail, to a ship loading 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 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 Cluster II portfolio of properties, located within 60 kilometres south of Bloom Lake.

(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 with similar financial measures used by other issuers.

(2) See the currency section of the management's discussion and analysis (MD&A) for the three- and nine-month periods ended Dec. 31, 2023, included in note 7 -- key drivers -- available on SEDAR+, the ASX website and on the company's website under the investors section.

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