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Building the Next Major Iron Ore Mine in the Labrador Trough Corporate Presentation September 2012
www.championironmines.com FSE: P02; OTCQX: CPMNF
FORWARD-LOOKING STATEMENTS
Certain information contained herein regarding Champion Iron Mines Ltd., 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 Iron Mines Ltd., 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.
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About Champion Iron Mines
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Fermont Projects (747 km2)
14 projects in the Fermont Iron Ore District Flagship Consolidated Fire Lake North Project
with the feasibility study due in early Q4 2012 4.7 billion tonnes of NI 43-101 compliant estimates of
iron mineral resources on 3 projects 100% direct interest, 3% NSR (C$1.5 million buyback
for an additional 0.5% NSR)
Attikamagen Project (310 km2)
Champion Iron Mines holds a 44% interest Century Iron Mines Corp. subsidiary has a 56% interest
and can earn up to a 60% interest by spending further $3 million on exploration expenditures by May 2014*.
Advanced iron ore exploration and development projects located in Canada’s principal iron ore district, the Labrador Trough
* Investment by WISCO of 25% ($60M) and Minmetals of 5% ($12M)
Quebec’s Next Major Iron Ore Mine
Consolidated Fire Lake North (CFLN) Development Project Nov. 21 2011 PEA indicated an ability to produce 8.7 million tonnes of
concentrate per year for the first 25 years of a 40-year mine life the first 5 years will average approximately 10 million tonnes of concentrate annually
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
Established Iron Ore District Canada produces 44 Mtpy of iron ore concentrate in the southern end of the
Labrador Trough and this is expected to grow to 200 Mtpy over the next 10 years if all proposed development projects are realized
Established rail, power and port infrastructure - Quebec’s Plan Nord: $80 billion investment over the next 25 years in
northern Quebec for various projects including infrastructure projects - Competitive power rates: ~ $0.04 - $0.045; price to be negotiated in 2012 - World-class multi-user port project (50 Mtpy) underway
Proven Team Strengthened advisory board and board of directors includes former
Consolidated Thompson Iron Mines management and officers
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Capital Structure Share Data and Cash Position as of July 31, 2012.
Shares Outstanding 119.3 million
Warrants 10.0 million @ C$2.59 (avg. strike price) (7.0 million @ C$3.00 not exerciseable until Nov. 2014 0.8 million @ C$2.84 expiring Feb. 2013 2.22 million @ C$1.50 expiring Oct. 2013, which are owned by insiders and advisors.)
Options 11.6 million @ C$1.03 (avg. exercise price)
Fully Diluted Shares Outstanding 141.1 million
Market Capitalization (based on $0.94 share price)
C$112.2 million
Cash Position C$21.9 million
Fully Diluted Cash Position C$59.7 million
Management /Insiders Ownership ~ 17%
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Analyst Coverage
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, P.Geo. Director
Martin Bourgoin, P.Geo. Executive Vice President, Operations
Ashwath Mehra Director
Jeff Hussey, P.Geo. Executive Vice President, Business Development
Donald A. Sheldon, LLB., P.Eng. Director
Bruce Mitton, P.Geo. Vice President, Exploration
Jean Lafleur P.Geo. Director
Jean-Luc Chouinard, P Eng. Vice President, Project Development
Francis Sauvé Director
Miles Nagamatsu, CA Chief Financial Officer
Joseph S. C. Chan Director
Jorge Estepa Vice President, Secretary-Treasurer
Richard Quesnel: Senior Technical Advisor and Head of the Advisory Board Advisory Board: Richard Quesnel, Paul Ankcorn, Doug Bache, and William Harding
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Over 200 years of combined exploration and mine operations experience
Why invest in Champion Iron Mines?
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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
Quebec’s Plan Nord $80 billion over 25 years
Quebec is a world class area to develop mines
Unprecedented Iron Ore price range and forecast
Skilled labor work force
Environmental: Iron ore process is grinding to liberate iron and using gravity and magnetics for separation from gangue minerals
Champion Iron Mines’ Competitive Advantage
Fermont holdings: 14 iron ore Brownfield projects (747 km2)
Consolidated Fire Lake North Project: Feasibility Study of surface deposits of coarse grained specular Hematite:
Easier to liberate
Deleterious elements in concentrate are well below industry specifications limits
Experienced team of project
developers and mine builders
Upside potential for growth is high with 4.7 Billion tonnes
Several de-risking initiatives underway including rail, port, agreements and environmental studies and permit applications
Existing Rail Infrastructure
Quebec North Shore & Labrador Railway (“QNS&L”) Consolidated Fire Lake North PEA Base
Case connection to Bloom Lake railway requires 94 km of rail – includes turnaround loop and sidings
QNS&L links to Sept-Îles and Pointe Noire Bloom Lake and QNS&L railways are
considered common carriers Common carriers allocate capacity on a
first-come, first-serve basis
Cartier Railway: Linked to Port-Cartier Privately owned by ArcelorMittal Within Consolidated Fire Lake North
Project boundary
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World Class Port of Sept-Îles Infrastructure Expanding to Meet Demand Pointe Noire Multi User Wharf Announced long term agreement between
CHM & Port of Sept-Îles (20-40 years) on July 18th, 2012
10 Mt ship loading capacity reserved with the possibility to increase tonnage
Completion March 31st, 2014; 18 months prior to “CFLN" startup
Phase 1: 50 Mtpy $220 million Federal Government announced $55
million funding or 25% of project Phase 2: Planning for 100 Mtpy
Port of Sept-Îles RTZ-IOC shipping facility
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-Îles
Pointe Noire
Sept-Iles
Courtesy of the Port de Sept Isles
China Max ship capacity 300kt
Champion Iron Mines participating in a feasibility study with CN Rail and Caisse
de Dépot et Placement du Quebec
See August 29th 2012 press release
Reduction in OPEX compared to PEA study
Objective to reduce rail CAPEX component
CHM still focused on the feasibility study
CN focused on environmental permitting
CHM will continue to develop independent options for port handling for concentrate stockpiling and reclaiming
Development: Consolidated Fire Lake North Project
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Based upon the following assumptions:
Key Results Pre-Tax Basis
Internal Rate of Return (IRR) (8% Discount Rate) 41.5%
Undiscounted Cash Flow $10.9B
Net Present Value @ 5% Discounted Cash Flow $5.6B
Net Present Value @ 8% Discounted Cash Flow $4.0B
Net Present Value @ 10% Discounted Cash Flow $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$52.68 per tonne (average 25 years); US$44.63 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 $1.00 CDN
400 million tonnes grading 30.6% Fe (NI43-101 Measured and Indicated Resources) 661 million tonnes grading 27.7% Fe (NI43-101 Inferred Resources)
921.8 million tonnes grading 28.8% Fe at an 8% cut-off grade
Consolidated Fire Lake North Development Project November 2011 Preliminary Economic Assessment Update – Highlights
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OPERATING EXPENDITURES (US$/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 Equipment Lease Cost 1.67 5.17
Total 52.68 44.63
Consolidated Fire Lake North Project Preliminary Economic Assessment Study
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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
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Consolidated Fire Lake North Project Schedule Development, Construction, and Production
Diamond Drilling
Scoping Study
Feasibility Study
Environmental / Social Studies
Community Consultation
Permitting
Construction
Production
Q12011 2012
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q2 Q3 Q42014 2015
Q1 Q2 Q3 Q42013
Q1 Q2 Q3 Q4
Feasibility Study: Early Q4 2012
Press Release June 21, 2012: Over 20,000 m feasibility definition drilling is completed for feasibility study
Strike length of both the West Pit (3500m) and the East Pit (2400m) synformal fold closures are open at depth
Resources are increasing outside the Nov. 2011 PEA ultimate pit limits
Several de-risking initiatives are underway
Consolidated Fire Lake North Project Growth through Development
See www.championiromines.com for reports maps and assays 16
17 High Grade – Coarse Specular Hematite Quartz Specular Hematite Mineralization
Consolidated Fire Lake North Metallurgy Press Release, August 1st, 2012
High quality sinter concentrate with very low deleterious elemental content
Liberates at 850 micron (-20 mesh) and produces a 65-66% iron concentrate
Assuming a concentrate with 66% Fe ; No magnetic separation circuit required Alumina is 0.52% International Standard < 2% Silica content is 5% Al2O3 : SiO2 ratio of 0.14 versus the upper industry specification limit of 1
This very low alumina to silica ratio is an ideal blending product for steel mills
Fire Lake North Development Project
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Fire Lake North Development Project
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500 meters
Moiré Lake Project Initial Mineral Resource Estimate: March 29, 2012
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Arcelor M
ittal Property B
oundary
Mineral Resource Estimate:
Indicated Resources: 164 million tonnes grading 30.5% Total Iron
Inferred Resources: 417 million tonnes grading 29.4% Total Iron
DDH LM11-12: 503 m @ 31% total iron
Kilometric synform with hematite and magnetite outcrops at surface
Adjacent to ArcelorMittal Mont-Wright mine
A
A’
500 meters
Moiré Lake Project Infrastructure: Adjacent to Bloom Lake Railway (8km), road, & power
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22 To view a larger more detailed version of this map please visit:
http://www.championironmines.com/vns-site/page-oil_can.html
Oil Can Project Initial Mineral Resource Estimate
Potential for low strip ratio < 1 : 1
Potential Bench width ∼ 150- 350m
972 Mt of iron oxide grading 33.2% at a 15% iron cut-off
924 Mt of mixed iron oxide mineralization with a silicate component
This deposit is open at depth
Orientation metallurgical tests indicate a relatively coarse liberation grind size
Commercial grade magnetite sinter feed concentrate can be produced
The 2011 drill program returned long magnetite-hematite iron formation intersections up to 545 metres in length.
The 400 metre spaced drill program is completed.
South & East Zones Section 9800N (Facing North)
200 metres
OC11-02
IF IF
Ovb OC11-19 OC11-01 OC11-08
OC11-07 OC11-05 East Zone
South Zone
190.0m @ 30.6%
Assay Pending
401.5m @ 30.7% incl. 213.5 @
33.1%
545.7m @ 33.7% incl. 442.3 @
36.4%
197.2m @ 26.8% incl. 145.5 @
28.1%
303.4m @ 34.7% incl. 130.8m @
36.5%
Oil Can Project Exploration Upside
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Central Zone (Facing Northwest)
200 metres
OC11-10 OC11-03 OC11-16 OC11-14
191.7m @ 28.2%
472.2m @ 28.0% incl. 119.6m @
35.2%
224.0m @ 28.1% incl. 140.0m @
30.0%
311.4m @ 27.6% incl. 269.0m @
29.2%
IF
Ovb
Oil Can Project Exploration Upside
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200 metres
North Zone Section 5800E (Facing East)
OC11-04
472.2m @ 28.0% incl. 119.6m @
35.2%
IF
Ovb OC11-09
OC11-12 OC11-13 OC11-15
221.2m @ 25.0% incl. 128.9m @
28.7%
Assays Pending
414.1m @ 25.1% incl. 139.0m @
29.5%
141.5m @ 29.2%
179.5m @ 32.8%
Oil Can Project Exploration Upside
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Milestones
Consolidated Fire Lake North Definition Drilling Completed
Updated PEA on Consolidated Fire Lake North Completed
Initial NI 43-101 Mineral Resource Estimate for Oil Can Project (adjacent to Fire Lake North Project) Completed
Metallurgical results – Consolidated Fire Lake North, Moire Lake, Oil Can Projects Completed
Consolidated Fire Lake North Feasibility Study Q4 2012
Consolidated Fire Lake North Construction Start Q4 2013
Consolidated Fire Lake North Production 2015
Why Invest in Champion Iron Mines? Fire Lake North NPV: $4 Billion @ 8% DCF.
Oil Can Deposit: Initial Resource Estimate 1,896Mt @ 28.7%.
14 Brownfield projects (747 km2) near 5 operating mines.
Experienced team: Exploration; development; construction; commissioning & operations management.
Financed through to feasibility; Favourable tax environment.
Quebec`s Plan Nord: Object to attract $80B in investment.
Access to power and close to rail and port.
Multi-user port in construction; Trans-shipping is an option.
Iron price range and forecasts is unprecedented.
Several de-risking initiatives associated to mine start-up underway.
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Thank You
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FSE: P02; OTCQX: CPMNF
www.championironmines.com
Fire Lake North Exploration Camp
Coarse Grained Specular Hematite
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Coarse Specular Hematite in Drill Core
O’Keefe Purdy Project Exploration Upside
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Harvey Tuttle Project NI 43-101 Inferred Resource Estimate:
717Mt @ 25% iron; magnetite rich iron formation
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
25 km W-NW of Consolidated Fire Lake North
Within conveying distance from Consolidated Fire Lake North planned concentrator (20-30km)
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Advanced Exploration Bellechasse Deposit Deposit located within Consolidated Fire Lake
North
NI 43-101 Resource Estimate:
Inferred Resources; 215Mt @ 29% Iron
Magnetite rich iron formation
Adjacent to Hwy 389
Synform geometry is favorable for open pit mining
Labrador Trough Annual Production Iron Ore Production Upside
Company Current Annual Production
Future 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
Adriana Resources (Wuhan) 0 50 mtpy
New Millennium (Tata) 0 27 mtpy
Century Iron Mines (Wuhan) 0 ~22 mtpy
Champion Iron Mines 0 ~18 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
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-
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
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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 * CAGR: Compound annual growth rate
Kilo
tons
Iron Ore Types
Coarse Grained Specular Hematite
Direct Shipping Ore
Magnetite Rich Taconite & DSO
Coarse Grained Specular Hematite
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Fermont Iron Ore District (“FIOD”)
Historically the Fermont and Labrador mining
camps have produced 33 Mtpa.
RTZ/IOC = 17 Mtpa ArcelorMittal = 13 Mtpa
Wabush = 3 Mtpa
“ Marginal Era”: For 30-40 years pre-2003
the price per tonne of concentrate was $25- $30/tonne,
costs per tonne were similar.
Current 3 years moving average is $115-120/tonne
2011 spot price averaged ~$150-170/tonne
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