The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from Marketwire

Champion Minerals Releases Positive Preliminary Economic Assessment Study on the Fire Lake North Project

Wednesday, November 03, 2010

Champion Minerals Releases Positive Preliminary Economic Assessment Study on the Fire Lake North Project10:30 EDT Wednesday, November 03, 2010TORONTO, ONTARIO--(Marketwire - Nov. 3, 2010) - Champion Minerals Inc. ("Champion" or the "Company") (TSX:CHM)(FRANKFURT:P02) is pleased to announce the positive results of the Preliminary Economic Assessment ("PEA") study on the Fire Lake North Project performed by BBA Inc. ("BBA"). The PEA was completed by Andre Allaire, Ph.D., Eng., and Mr. Patrice Live, Eng., from BBA, an international multi-disciplinary engineering firm with expertise in mining and metallurgy based in Montreal (Quebec). BBA's National Instrument ("NI") 43-101 Technical Report on the PEA will be posted under Champion's filings on SEDAR at within 45 days. The PEA study shows a Net Present Value (NPV) of US$ 1.637 billion at a cash flow discount rate of 5% based on an Iron concentrate production rate of 7 million tonnes per year at a grade of 65% Iron. The internal rate of return ("IRR") for the project is 24.8%. Based on these positive results a Feasibility study is being planned for 2011. Fire Lake North is considered to be a viable project with the current Mineral Resource estimates of 388 million tonnes grading 29% Total Iron as calculated and reported in August 2010 by Eugene Puritch, P. Eng., of P&E Mining Consultants Inc. ("P&E") of Brampton (Ontario). The ongoing 15,000m drilling campaign has the potential to enhance the project's economics if it increases the compliant Mineral Resources and production profile that could result in higher Net Present Value and extend the mine life. This PEA has an accuracy of +/- 30%, which is considered industry standard for preliminary capital and operating cost estimates. The table below lists the key metrics:FIRE LAKE NORTH – PRELIMINARY ECONOMIC ASSESSMENT RESULTS (PRE-TAX)INTERNAL RATE OF RETURN (IRR)24.8%Un-discounted cash flow2,821US$ millionsNet Present Value @ 5% discounted cash flow1,637US$ millionsNet Present Value @ 10% discounted cash flow938US$ millionsPAYBACK PERIOD2.8YearsNotes:Based on the 3 year moving average price of Iron set at US$ 1.25/dry metric tonne unit ("dmtu") of Iron equivalent to US $81.38/tonne of concentrate FOB Pointe Noire (Quebec) and a US$ Exchange Rate of 1.1. The cut-off grade is 10% Iron. The weight recovery is 38.4% or 83% Iron unit recovery. The pre production period is 1 year. The in-pit resources are 250.5 million tonnes at 30.4% Total iron. The strip ratio is 3.04 in the open pit envelope. There are no deleterious elements above the lower specification limits. The liberation size of the Iron is -20 mesh or 850 microns which is similar to the other operations in the area.Tom Larsen, Champion's President and CEO states, "I'm very pleased with the rapid progress at our Fire Lake North Project. In less than 2.5 years, during a period that included the global financial crisis, our team has cost effectively advanced the Fire Lake North Project and delivered this positive study. We look forward to the results of the current 15,000m drill program which could potentially enhance this project towards a feasibility study. It is significant to remember that when Champion acquired Fire Lake North, the claim block contained historical Mineral Resources of 25 million tonnes and we now have the potential for a viable project with significant upside potential. This illustrates that in today's context our portfolio of properties has excellent short and long term growth potential for development of high quality iron ore."Mick McMullen, principal of Switzerland-based MRI Advisory AG and a member of Champion's newly created Advisory Board adds "The results of the PEA on just one of Champion's three main exploration projects (Fire Lake North, Bellechasse and Harvey-Tuttle) of the Fermont Iron Property confirm our view that Champion holds the potential to be a significant long life iron ore producer in a politically stable region of the world with existing infrastructure and a rapidly expanding production profile. We see the asset portfolio held by Champion as being of strategic importance within the context of an increasing demand for high ore, and that this is likely to be reflected in the Company's value over the near term." The PEA study is based on a stand-alone operation at Fire Lake North and does not consider the Bellechasse NI 43-101 Inferred Resource Estimates of 215.1 million tonnes grading 28.7% Total Iron (refer to the Champion news release dated November 18, 2010). Bellechasse is located 12km to the northwest of Fire Lake North. There are synergies anticipated from the significant exploration potential within Bellechasse and Champion's other adjacent claim blocks in the area (refer to the appended Figure 1 map). An increased exploration program will be considered in response to these favorable results so that they can be incorporated in the Feasibility study. The combined Fire Lake North and Bellechasse Inferred Mineral Resources estimates total 603 million tonnes grading 29% Total Iron. A 20% contingency of US$ 137 million was included in the capital costs (refer to the table below). These costs include building ship loading facilities and a port berth at Pointe Noire, Quebec. In the event that a multi-user port facility is constructed at Pointe Noire, the capital cost for development of Fire Lake North would be reduced. CAPITAL COSTS (US$ MILLIONS)PARAMETERSAMOUNTSPre-stripping of open pit68.90Concentrator and infrastructure429.20Rail, Train loading silo and conveyor103.60Rail car dumper, stock yard and ship loading facilities152.20Sub-total753.90Contingency (20% of sub-total less pre-stripping)137.00Total890.90The mine life in the PEA is 14 years and the payback period is 2.8 years for the US$ 890.90 million of capital expenditures. A pipeline scenario is also being included in the PEA as a possible option for concentrate transport which would result in projected higher capital costs but lower operating costs. Operating costs are outlined in the table below. Mineral Resources following the current exploration drill program could help justify this additional capital expenditure over a longer mine life. Champion's objective is to increase the mine life from 14 to 25 plus years and to demonstrate the potential for a higher concentrate production rate at Fire Lake North, Bellechasse and/or from the Company's other claim blocks in the area.OPERATING COSTS (US$/TONNE OF CONCENTRATE)PARAMETERSAMOUNTSMining costs17.53Crushing and processing costs5.99Transport, port berth and ship loading facilities16.22G&A1.95Total41.69The Fire Lake North Claim BlockFire Lake North is located adjacent (to the north) of the operating Fire Lake Mine owned by ArcelorMittal and is 60 km to the south of Consolidated Thompson Iron Mines Ltd.'s Bloom Lake Mine. It is situated within the Labrador Trough of northeastern Quebec and western Labrador, widely recognized as a world class Iron ore mining camp, the Fermont-Wabush-Labrador City Iron Ore District (the "District"). The four producers in the vicinity comprise Canada's Iron ore production estimated at more than 40 million tonnes of Iron ore concentrate per year including the new production from Consolidated Thompson's Bloom Lake mine which was commissioned earlier this year. Indications are that the District will be producing more than 60 million tonnes of concentrate per year in the future based on disclosed expansion plans. Fire Lake North, Bellechasse and fourteen other claim blocks are 82.5% owned by Champion, with its joint venture partner Fancamp Exploration Ltd. (TSX VENTURE:FNC) owning the remaining 17.5% interest.The 15,000m Fire Lake North drilling program is progressing on schedule with 3 drill rigs on site with the aim of increasing the quantity and quality of compliant Mineral Resources. Champion previously announced on October 18, 2010, that drill hole FL10-21 extended to known Iron mineralization to 361.5m from the original 171.0m core length grading 36.2% Total Iron. This significant 190m extension to the mineralization is not included in the PEA study but is projected to help reduce the strip ratio. Champion also announced on May 18, 2010, that drill hole FL10-24 intersected 197.8m grading 38.3% Total Iron. The drill hole was collared and ended in Iron mineralization and will be extended and undercut with the potential of increasing the mineralized width that could also help reduce the strip ratio. About Champion Minerals Inc. Champion is an exploration Company focused on discovering and developing significant metal resources in eastern Canada, particularly in the provinces of Quebec and Newfoundland & Labrador. The Company's projects include the Attikamagen Iron Property in northeastern Quebec and western Labrador, the Fermont Iron Property in northeastern Quebec, and the Powderhorn/Gullbridge Base Metal Projects in central Newfoundland. Champion has an 82.5% direct interest, with Fancamp Exploration Ltd. (TSX VENTURE:FNC) holding 17.5%, in the 642 km2 Fermont Iron Property consisting of 16 strategic claim blocks grouped into three clusters, termed Clusters 1, 2 and 3. The Fire Lake North Claim Block and the Fire Lake North Project belong to Cluster 2.Fully funded, having raised over $C23 million since November 2009, Champion is aggressively exploring the Fermont Iron Property with the objective of outlining several 200 million to 500 or more million tonnes iron mineralized zones. The Fermont Iron Property hosts more than 200km of iron formation with large untested potential to host additional Mineral Resources. Please visit Champion's website at The technical information in this news release was prepared, revised and approved by Mr. André Allaire, Ph.D., Eng., and Mr. Patrice Live, Eng., from BBA Inc., Mr. Jeff Hussey P. Geo., VP Exploration and Mr. Jean Lafleur, P. Geo., Director and Technical Advisor to the President and CEO of Champion. Eugene Puritch, P. Eng., of P&E Mining Consultants Inc., has reviewed the contents of this news release. All individuals are Qualified Persons under NI 43-101 standards. Mr. Allaire, Mr. Live and Mr. Puritch, are all independent of the issuer. The quoted Mineral Resources estimates were calculated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council December 11, 2005. Statements made in this news release that are not historical facts are "forward-looking statements" and readers are cautioned that any such statements are not guarantees of future performance, and that actual developments or results, may vary materially from those in these "forward-looking" statements.To view Figure 1, please visit the following link: FURTHER INFORMATION PLEASE CONTACT: Thomas G. LarsenChampion Minerals Inc.President and CEO(416) 866-2200ORJorge EstepaChampion Minerals Inc.Vice-President(416)