Champion Iron Looks to Tap into Growing Demand for High-Grade Iron Ore

• Champion Iron operates a high-grade iron ore mine in Quebec, a top mining jurisdiction with growth opportunities to support the green steel transition.
• Demand for high purity iron ore is increasing as more steel mills transition to electric arc furnaces, which require purer inputs than blast furnaces.
• Champion can produce an ultra pure 69% iron ore product to fetch premium pricing, with a $350M project underway to upgrade half its capacity.
• Further growth is possible by debottlenecking the existing mine and partnering to develop a second deposit nearby, which could boost capacity by 8M tons/year.
• Champion has strong government and community support, including agreements with First Nations, as well as unique access to port and rail infrastructure to enable growth.

About Champion Iron

Champion Iron is a Canadian iron ore producer and developer operating in the Labrador Trough in Quebec, one of the premier iron ore producing regions in the world. The company owns and operates the Bloom Lake iron ore mine, which has a nameplate capacity of 15 million tonnes per year of high-grade iron ore concentrate. Champion also has other growth opportunities in the region, including the nearby Kamistiatusset iron ore project which could add up to 8 million tonnes per year of additional capacity.

Champion Iron has positioned itself to benefit from the growing global demand for high-grade iron ore, which is crucial for producing green steel. The company can produce an iron ore concentrate product that is up to 69% iron content, making it one of the highest-grade iron ore products globally. This positions the company strongly as steelmakers look to reduce emissions intensity.

Interview with David Cataford, CEO of Champion Iron Ltd

Tailwinds Supporting Demand for High-Grade Iron Ore

The transition to green steel is a major tailwind supporting demand growth for high-grade iron ore like Champion's. Steel manufacturing accounts for around 8% of global carbon emissions, so there is a major push to decarbonize the industry.

Producing steel with electric arc furnaces powered by renewable electricity can cut emissions approximately in half compared to traditional blast furnace methods. However, electric arc furnaces require high-grade iron ore as an input, both to improve productivity and handle increased levels of impurities in scrap steel.

Governments globally are also pushing infrastructure builds using green steel, setting minimum standards on the emissions intensity. This further supports demand for iron ore producers like Champion which can supply a green, high-grade product.

Well-Positioned with Advantaged Iron Ore Deposits

Champion Iron is well-positioned to benefit from this demand growth due to its high-quality iron ore deposits. The company can upgrade its iron ore to 69% Fe content, making it one of the world's purest iron products. This allows steelmakers to improve productivity and handle increased impurities when using scrap inputs.

Champion's deposits also benefit from proximity to demand markets like Europe and North America. Most major iron ore production comes from Australia and Brazil, which gives Champion a transportation cost advantage when selling into Northern Hemisphere markets.

This positions the company strongly to service high-value steel applications where customers are willing to pay a premium for green inputs. Early movers like BMW are already demonstrating a willingness to pay more for green steel to align with ESG initiatives.

Near-Term Growth Plans Advancing

Champion Iron has near-term growth plans well underway to expand production of its high-grade iron ore products.

The company is advancing a $350 million project to upgrade half of its current volumes to 69% Fe content. This would boost realizations by around $20/tonne at current prices, with attractive returns given the capital cost.

Looking further out, Champion is also progressing development of the nearby Kamistiatusset project. This could ultimately add up to 8 million tonnes per year of additional high-grade iron ore capacity. The company is looking at potential partners for this large capital project while maintaining a conservative balance sheet approach.

Conclusion

With Champion Iron trading around 3x EBITDA, the company appears to offer an attractive value proposition leveraged to decarbonization of the steel industry. Near-term growth projects advancing could significantly boost margins and cash flows.

The company is an ESG-friendly way to invest in demand growth for green steel, while taking advantage of Champion's low-cost production base feeding into Northern Hemisphere markets. Conservative financial management also reduces risks during potential market downturns.

For investors looking to tap into the green steel megatrend, Champion Iron presents a compelling risk-reward balance with near-term catalysts on the horizon.