Upload
shosein2011
View
393
Download
3
Tags:
Embed Size (px)
Citation preview
Building the Next Major Iron Ore
Mine in the Labrador Trough Corporate Presentation
December 2011
FSE: P02
2
FORWARD-LOOKING STATEMENTS
Certain information contained herein regarding Champion Minerals Inc., including
management’s assessment of future plans and operations, may constitute forward-looking
statements under applicable securities law and necessarily involve risks, including but not
limited to risks associated with mining exploration, operating costs, production costs, volatility
of share prices, currency fluctuations, imprecision of resource and reserve estimates,
environmental risks and ability to access sufficient capital from internal and external sources.
As a consequence, actual results may differ materially from those anticipated in any forward
looking statements. Plans, intentions or expectations disclosed in any forward-looking
statements or information should not be read as guarantees of future results or events, and will
not necessarily be accurate indications of whether or when or by which such results or events
will be achieved.
Except as required by law, Champion Minerals Inc., expressly disclaims any intention and
undertakes no obligation to update any forward looking statements or information as conditions
change.
The historical mineral resources mentioned are strictly historical in nature and are non-
compliant to National Instrument 43-101 mineral resources and mineral reserves standards,
and should therefore not be relied upon. A qualified person has not done sufficient work to
upgrade or classify the historical mineral resources as current National Instrument NI-43-101
compliant.
3
Fermont Projects
The flagship project is Fire Lake North, which is currently in the
development stage
Over 2.2 billion tonnes of NI 43-101 compliant
iron ore resources
Champion Minerals holds an 82.5% direct interest, 3% NSR (C$3
million to buyback 1% of NSR)*
Attikamagen Property
Champion Minerals holds a
100% interest
Century Iron Mines Corp. has
option to earn up to a 60% interest
in the property by spending
C$13 million by May 2014**
Advanced iron ore exploration and development projects located in
Canada’s principal iron ore district, the Labrador Trough
About Champion Minerals
* Fancamp Exploration Ltd. holds remaining 17.5% interest.
** Announced investment by WISCO of 25% ($60M) and Minmetals of 5% ($12M)
Canada’s Next Iron Ore Mine
Fire Lake North (FLN) Development Project
PEA indicates ability to produce 8.7 million tonnes of concentrate per
annum for the first 25 years of a 40-year mine life the first five years will
average approximately 10 million tonnes of concentrate per annum
Net Present Value of $4 billion at a discounted cash flow rate of 8% with
an Internal Rate of Return of 41.5% and a payback period of 2.3 years
Updated FLN Mineral Resource Estimate in October 2011 for a total of 1.06
billion tonnes
− Measured and Indicated Resources of 400.1 million tonnes grading
30.6% total iron
− Inferred Resources of 661.2 million tonnes grading 27.7% total iron
Established Iron Ore District
Canada’s premier iron ore district Currently produces 44 mtpy of iron ore
concentrate, which is expected to grow to 200 mtpy of iron ore concentrate over
the next 10 years
Established rail, power and port infrastructure
- Commitment by Quebec’s Plan Nord to invest $80 billion over the next 25
years in northern Quebec infrastructure projects
- Competitive power rates (~ $0.04 - $0.045 negotiated price)
- Initiative for world-class port facilities underway
Proven Team
Strengthened the advisory board and the board of directors to include former
Consolidated Thompson Iron Mines management and officers
4
Capital Structure
Share Data and Cash Position as of November 30, 2011.
Shares Outstanding 88.0 million
Warrants 6.9 million @ C$1.50
(450,000 @ C$1.15 expiring 04/2012
2.7 million @ C$1.50 expiring 04/2012
2.9 million @ C$1.50 expiring 10/2012, of which 75%
are owned by insiders and advisors.)
Options 11.0 million @ C$1.00
Fully Diluted Shares Outstanding 106.1 million
Market Capitalization
(based on $1.30 share price)
C$114.4 million
Cash Position C$19.5 million
Fully Diluted Cash Position C$41.0 million
Debt (Purchase of 17.5% Fermont Interest from
Sheridan Platinum Group)
C$0.5 million
Management Ownership ~ 8%
Analyst Coverage Canaccord Genuity
Fraser Mackenzie
Haywood Securities
Jennings Capital
Macquarie Capital Markets
Paradigm Capital
RBC Capital Markets
Salman Partners 5
Experienced Management Team
Board of Directors Management Team
Tom Larsen
Chairman
Tom Larsen
President and CEO
Alexander Horvath, P.Eng.
Director
Alexander Horvath, P.Eng.
Executive Vice President, Exploration
Jean Depatie
Director
Martin Bourgoin, P. Geo.
Executive Vice President, Operations
Ashwath Mehra
Director
Jeff Hussey, P.Geo.
Executive Vice President, Development
Donald A. Sheldon, LLB., P.Eng.
Director
Bruce Mitton, P.Geo.
Vice President, Exploration
Paul Ankcorn
Director
Jean-Luc Chouinard, P.Eng.
Director of Projects
Francis Sauve
Director
Miles Nagamatsu, CA
Chief Financial Officer
Joseph S. C. Chan
Director
Jorge Estepa
Vice President, Secretary-Treasurer
Advisory Board: Richard Quesnel, Mick McMullen and Doug Bache
Project Finance Advisor: Marc Duchesne
6
Over 200 years of combined exploration and mine operations experience
7
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1980 1985 1990 1995 2000 2005 2010
China
Japan
Rest of theWorld
Global Steel Production Shows
Continued Demand for Iron Ore
China’s CAGR* is 9.88% over
the last 30 years vs. 2.30% for
total global steel production
over the same period.
Source: World Steel Association website
* Compound annual growth rate
Why Champion Minerals?
8
Favourable Operating
Environment
• Established iron ore
mining district the
Labrador Trough
• Favourable tax
environment
(40% tax rebate on
exploration
expenditures)
• Access to low-cost
power and close to
rail and port
infrastructure
• Government
investment in
northern Quebec
$80 billion over the
next 25 years
Champion Minerals’
Competitive Advantage
• Portfolio of 17 iron
ore properties
(brownfields to
development)
• Development-stage
Fire Lake North
Project contains
coarse grained
specular hematite
easy to liberate
− Close to surface
− Deleterious
elements are
below industry
specifications
• Team of experienced
project developers
and mine builders
9 9 9
Three Ports/
Stockpile
Locations
Cartier
Private
Rail
QNS&L
Rail
Common
Carrier
Cluster 3
Cluster 2
High
Voltage
Power
Lines
St Lawrence Seaway
Rail Infrastructure
Quebec North Shore & Labrador Railway (“QNS&L”)
QNS&L links to Sept-Iles and Pointe Noire
Bloom Lake and QNS&L railways are considered common carriers
Common carriers allocate capacity on a first-come, first-serve basis
Fire Lake North connection to Bloom Lake rail will require 62 km of new rail (November
2010 Preliminary Economic Assessment)
Alternative transportation/haulage options are under consideration eg. Fractional ownership of a made in Quebec rail solution through private-public partnership (PPP) being examined
Cartier Railway: Linked to Port-Cartier
Privately owned by ArcelorMittal
Adjacent to west of Fire Lake North
Cluster 1
10 10
Multi-User Port Infrastructure Expanding to Meet Demand
Port of Sept-Iles
RTZ-IOC shipping facility
Pointe Noire
Cliffs Natural Resources shipping facilities
New multi-user port to be expanded in two phases: phase one expansion of 40-50 Mtpy and phase two expansion of 100 Mtpy
Port-Cartier
ArcelorMittal shipping facility
$2.1B expansion is underway and will include concentrator expansion with port and rail infrastructure upgrades
Located 62 km west of Sept-Iles
Pointe Noire
Sept-Iles
Courtesy of the Port de Sept Isles
China Max ship capacity 300kt
500
meters
Moire Lake Project Exploration Upside
12
Arc
elo
r Mitta
l Pro
pe
rty B
ou
ndary
• Recent drill results included 503
metres grading 31% total iron
(LM11-12 news release date)
• Potential to significantly increase
historical resources estimated at
101 million tonnes grading 31%
iron
• Hematite and magnetite
outcrops at surface
• Completing a 10,400 metre
program
• Mineral resource estimate due
Q4 2011
13
Oil Can Project Exploration Upside
First three drill holes of 8,000 metres planned program intersected magnetite-
hematite iron formation from 191 metres to 402 metres in length
Drill hole OC11-02 intersected 401.5 metres grading 30.7% Total Iron including
a 213.5 metres interval grading 33.1% Total Iron
TABLE 1 - SELECTED* COMPOSITE ASSAY RESULTS (HOLES OC11-01 to OC11-03)
HOLE-ID HOLE LENGTH AZIMUTH DIP FROM TO INTERVAL** GRADE***
metres degrees degrees metres metres metres Total Fe%
OC11-01 396 260 -45 185.42 376.31 190.89 30.6
OC11-02 594 310 -45 188.53 590.03 401.50 30.7
including 246.86 460.40 213.54 33.1
OC11-03 372 250 -45 40.58 264.60 224.02 28.1
including 76.58 216.58 140.00 30.0
215
661
947
0
100
200
300
400
500
600
700
800
900
1000
MeasuredandIndicated(M&I)
Fermont Project Resource Base Current NI 43-101 Compliant Resources
14
Over 2.2 billion tonnes of
NI 43-101 compliant iron ore resources
Project Bellechasse Fire Lake North Harvey Tuttle
Location Quebec, Canada Quebec, Canada Quebec, Canada
Grade 28.7% 30.6% (M&I)
27.7% (Inferred)
23.2%
Mineralization Magnetite Specular Hematite Magnetite
Historical
Resources
91 Mt @ 30.0% Iron 41 Mt @ 31.0% iron n/a
* 15 % cut-off grade
400
Fire Lake North Project
Development
Activities
PEA indicates ability to produce 8.7 million tonnes of concentrate per annum for the first 25 years of a 40-year mine life the first five years will average almost 10 million tonnes of concentrate per annum
− Net Present Value of $4 billion at a discounted cash flow rate of 8% with an Internal Rate of Return of 41.5% and a capital payback period of 2.3 years.
Recent mineral resource update announced (October 6, 2011)
− Measured and Indicated Resources of 400.1 million tonnes grading 30.6% total iron
− Inferred Resources of 661.2 million tonnes grading 27.7% total iron
Metallurgy indicates coarse-grained ore with liberation grind size similar to RTZ/IOC and ArcelorMittal operations
Fire Lake North Project Growth through Development
16
17
Above: High Grade - Coarse Specular
Hematite Above: Typical Quartz-Specular
Hematite-Magnetite Mineralization
Fire Lake North - Metallurgy
High grade and coarse grained deposits with higher grade zones (See Below Left)
Gravity separation is the typical beneficiation technique in the Fermont
mining camp; magnetic separation is not included in the current mill design
Deposits of quartz specularite iron ore are typical of the Fermont area
− Coarser grind (-850 microns / -20 mesh) (0.85mm) means that this product will
be sold as sinter feed that comprises 80% of the global iron ore market.
− The low deleterious element levels should command a premium price.
Fire Lake North Development Project
18
Looking North
East Pit area: Section 2600 N
100 m
Hornblende
Iron Fm.
Lean Iron Fm.
Marble
Basement
New geological interpretation
from 2011 drilling for PEA update
November 2010 PEA
Sub-Vertical Zones were
interpolated
November 2010
PEA
Open Pit Outline
The new interpretation versus the initial PEA block model and open-pit outline
19
Based upon the following assumptions:
Key Results Pre-Tax Basis
Internal Rate of Return (IRR) (8% Discount Rate) 41.5%
Undiscounted Cash Flow US$10.9B
Net Present Value @ 5% Discounted Cash Flow US$5.6B
Net Present Value @ 8% Discounted Cash Flow US$4.0B
Net Present Value @ 10% Discounted Cash Flow US$3.2B
Payback Period (8% Discount Rate) 2.3 Years
Capital Costs:
Operating Costs:
Price assumptions:
Mine-Life:
Exchange rate:
Total Resources(1):
In Pit Resources
US$1,368 million (includes rail and port infrastructure)
US$51.01 per tonne (average 25 years);
US$39.46 per tonne (average years 1 to 5)
US$115 per tonne of concentrate at 65% Fe
40 years (average of 8.7 million tonnes/year for the first 25 years)
$1.00 USD to $1.00 CDN
400 million tonnes grading 30.6% Fe (NI43-101 Measured and Indicated Resources)
661 million tonnes grading 27.7% Fe (NI43-101 Inferred Resources)
921.8 million tonnes grading 28.8% Fe at an 8% cut-off grade
Fire Lake North Development Project November 2011 Preliminary Economic Assessment Update – Highlights
20
OPERATING EXPENDITURES (US$/TONNE OF CONCENTRATE)
COST PARAMETERS AVERAGE 25 YEARS AVERAGE YEARS 1 TO 5
Mining 22.56 12.13
Concentrating, crushing and processing 4.52 3.97
Site infrastructure, sales and general administration 4.40 3.39
Environmental tailings and management 0.29 0.26
Rail transport 15.52 16.14
Port facilities 3.72 3.57
Total 51.01 39.46
Equipment Lease Cost (not included in above total) 1.67 5.17
Fire Lake North Project Preliminary Economic Assessment Study
CAPITAL EXPENDITURES (US$ MILLIONS)
COST CENTRES $ MILLIONS
Pre-stripping of open pit areas 97.5
Concentrator and site infrastructure including loadout facilities 682.3
Railway (62km distance and 94km total including turnaround loop and sidings) 228.8
Port Facilities: Railcar unloading, stacker/reclaimer, conveyors 96.8
Environmental and Tailings Management 27.9
Other Pre Production Costs 34.0
Sub-total 1,167
Contingency 201
Total 1,368
21
Fire Lake North Timeline Development to Production Project Schedule
Diamond Drilling
Scoping Study
Feasibility Study
Environmental / Social Studies
Community Consultation
Permitting
Construction
Production
Q1
2011 2012
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q2 Q3 Q4
2014 2015
Q1 Q2 Q3 Q4
2013
Q1 Q2 Q3 Q4
22
Exploration Activities and
Development Milestones
Updated PEA on Fire Lake North Completed
Initial NI 43-101 Mineral Resource
Estimate for Moire Lake Q4 2011
Drilling at O’Keefe Purdy Project
(hematite target) Completed
Drilling at Oil Can Project (adjacent to
Fire Lake North) Ongoing
Metallurgical testing at Fire Lake North,
Bellechasse, Harvey Tuttle, Moire Lake,
O’Keefe Purdy and Oil Can Lake projects
Ongoing
Feasibility study on Fire Lake North Q2 2012
Why Invest in
Champion Minerals?
Quebec Government investment of $80 billion over
25 years (“Plan Nord”)
Fire Lake North is at development project
positive economics
17 highly prospective iron ore properties in Canada’s
established iron ore mining district
Experienced management team of project developers
and mine builders
Good cash position fully funded into 2012
Favourable tax environment
Access to low-cost power and close to rail and port
23
Thank You
24
24
APPENDIX:
Exploration
Activities
2011 Exploration Program
26
Project 2011 Exploration Drilling
Program (metres) 2011 Development Plan 2011 Joint Venture Budget ($)
Fire Lake North 21,000 PEA +1,500 F/S MRE, PEA/FS 13,200,000
Moire Lake 9,300 MRE, PEA 5,500,000
Bellechasse 900 MRE 550,000
Harvey-Tuttle Deferred to 2012 -- --
O’Keefe -Purdy 5,900 MRE 3,500,000
Oil Can Lake 8,000 MRE, PEA 4,700,000
Midway 1,100 MRE 650,000
Hope Lake Deferred to 2012 -- --
Claire Lake Deferred to 2012 -- --
47,700 28,100,000
2011 Exploration Program Focused on resource definition and expansion at Fire Lake North
Drilling from the 2011 drilling programs will be used to conduct Mineral
Resource Estimates (MRE), to update the Preliminary Economic
Assessments (PEA) on Fire Lake North and to define the scope for a
Feasibility Study (FS)
Harvey Tuttle Project NI 43-101 Inferred Resource Estimate:
717Mt @ 25% iron; magnetite rich
Intersected multiple significant iron
formation intervals in 2010 drill program
Total of 13,165m of drilling completed
Less than 50% of the kilometric scale
magnetic anomalies have been tested
Metallurgical tests underway
Located 25 km NW of Fire Lake North
Within conveying distance from Fire Lake
North planned concentrator (20-30km)
27
Advanced Exploration
Bellechasse Project
NI 43-101 Inferred Resource Estimate: 215Mt
@ 29% Iron; Magnetite Rich iron formation
Historical Resources increased from 91Mt
remaining upside potential.
5,000-metre drill program underway
O’Keefe Purdy Project: Drilling Underway Exploration Upside
28
• Historical Resources of 51 Mt @ 37% Iron
• Potential to double resources minimally with deposits listed above and
obvious untested iron formation strike length
• 2011 exploration program (3 drill rigs):10,000 metres of drilling planned
Labrador Trough Annual Production Iron Ore Production Upside
Company Current Annual
Production
Projected
Annual Forecast
IOC/RTZ 17 mtpy 26 mtpy1
ArcelorMittal 13 mtpy 24 mtpy2
Cliffs Natural Resources
(Wuhan)
12 mtpy 28 mtpy
Labrador Iron Mines 2 mtpy 5 mtpy
Adrianna Resources (Wuhan) 0 50 mtpy
New Millennium (Tata) 0 27 mtpy
Century Iron Mines (Wuhan) 0 ~20 mtpy
Champion Minerals 0 ~8.7 mtpy
Alderon Iron Ore Corp. 0 ~16 mtpy
Total current and forecasted
production
44 ~ 200 mtpy
1. Possibility of expanding production up to 50 mtpy
2. Possibility of expanding production to 50 mtpy 29