Operations

1.      Following the Government's COVID-19 containment directives, on March 24, 2020, the Company announced that it will ramp down operations at the Bloom Lake Mine. The Government subsequently issued directives, effective April 15, 2020, which the Company complied with by gradually ramping up operations at Bloom Lake, as announced on April 23, 2020, as mining activities were categorized by the Government as a "priority service" and allowed to resume normal operations in the province of Québec;

2.      Quarterly production of 1,798,800 wmt of high-grade 66.5% Fe iron ore concentrate for the three-month period ended June 30, 2020, compared to 1,989,400 wmt of high-grade 66.2% Fe iron ore concentrate during the same prior year period;

3.      Recovery rate of 82.3% for the quarter ended June 30, 2020, compared to a recovery rate of 82.1% for the same quarter in 2019;

4.      Free On Board ("FOB") Total cash cost1 ("Total Cash Cost" or "Cash Cost") of $58.4/dmt (US$42.2/dmt) (C1) for the quarter ended June 30, 2020, compared to $54.3/dmt (US$40.6/dmt) for the same quarter in 2019; and

5.      Following the confirmation that its initial commercial production test qualified as Direct Reduction ("DR") pellet feed material, the Company produced an additional 207,900 wmt of DR quality iron ore concentrate at 67.8% Fe with a combined silica and alumina content of 2.68%.

Other Developments

In connection with Bloom Lake's Phase II expansion project, which proposes to double the mine's nameplate capacity to 15 Mtpa, the Company resumed some discretionary capital spending and increased the initial $68M Phase II-related budget announced on June 20, 2019 by $30M, in order to prudently advance the project and preserve key timelines ahead of the deferred final Board of Directors decision to be made at a later date;

Positioned the Company for additional growth opportunities by increasing its exploration mineral rights adjacent to the Bloom Lake mining lease by over 175%, following the acquisition of 152 claims (38 km2), and staking of 127 claims (31.75 km2), directly North of Bloom Lake's operations;

Entered into a freight contract for one vessel per month until December 2020 at an agreed upon price of US$15.46 per tonne plus freight commissions; and

Completed the Company's first Sustainability Report, highlighting an alignment with stakeholders regarding diligence on corporate and social governance responsibilities, and which is available on the Company's website at www.championiron.com.

"Today's results continue to highlight our team's agility in adapting operations while upholding our Company's core values. Despite temporarily ramping down operations early in the quarter, as per the Government's COVID-19 containment directives, our Company delivered record profitability while implementing strict measures to mitigate the risks of the COVID-19.  Additionally, the production and shipment of additional DR quality iron ore concentrate, coupled with the substantial increase in mineral rights ownership adjacent to our operations and our diligence in managing the pandemic further positions our Company as a leader in the industry. With Bloom Lake's operations returning to normal levels, our focus remains on the health and safety of our employees, partners and communities", commented David Cataford, Champion's CEO.

BLOOM LAKE MINE OPERATING ACTIVITIES

Operational Performance

On March 24, 2020, the Company announced the ramp down of its operations following directives from the Government in response to the COVID-19 pandemic, which required mining activities to be reduced to a minimum within the province. The operations progressively resumed as announced by the Company on April 23, 2020, following the announcement from the Government that mining activities were to be considered a "priority service". Although the Company was operating at a minimal capacity for a period of time and its activities at the mine were disrupted, early actions implemented by management in response to the COVID-19 pandemic have minimized its impacts on operations. This has allowed production to reach nearly 1.8 million wmt, which is in line with the plant nameplate capacity and represent only a 10% reduction, when compared to the same quarter of the previous fiscal year.

The quarterly production was also impacted by a scheduled semi-annual shutdown. As a result of the COVID-19 new measures and related inefficiencies, the shutdown scope was reduced and additional days were required. A small portion of the work initially planned for this scheduled shutdown was not completed, with the remainder of the required work postponed and expected to be completed later in the year. The second planned shutdown is scheduled for the third quarter of Champion's fiscal year ending March 31, 2021.

During the three-month period ended June 30, 2020, 7,295,400 tonnes of material were mined, compared to 8,686,000 tonnes in the same period of the prior year, representing a decrease of 16%. This reduction is attributable to the negative impact of the COVID-19 pandemic on several of the Company's activities including: a reduced mining activity level due to compliance with the public health directives issued by the Government; reduced equipment maintenance due to COVID-19-related resources limitations, which had adverse repercussions on equipment availability; and the arrival of the seasonal workforce, which required integration and training.

The plant processed 4,604,600 tonnes of ore during the first quarter of the fiscal year 2021, compared to 4,780,000 tonnes in the comparable prior year period, representing a decrease of 4%. The variation is a direct result of the COVID-19 imposed ramp-down, as only one of the Company's two production lines remained in operation for a period of time.

The Company achieved an average recovery rate of 82.3% during the first quarter of the fiscal year 2021, compared to a recovery rate of 82.1% in the same period of the prior year, which remained relatively stable. Several factors adversely impacted the recovery rate during the quarter, such as the ramp down of the Company's operations at the beginning of the quarter due to the COVID-19 pandemic, a lower head grade and a second shipment of low-silica concentrate. Following the successful commercial production test last quarter, DR pellet producers and direct reduced iron ("DRI") plant operators have accepted the Company's product specifications which confirms Bloom Lake's ability to produce DR quality iron ore concentrate. With this confirmed product specification, the Company produced an additional 207,900 wmt of DR quality iron ore concentrate at 67.8% Fe with a combined silica and alumina content of 2.68%, at the request of a customer in the Middle East. This specific production of low-silica concentrate reduced the quarterly recovery rate by 0.6%. This second shipment confirms the ability of the Company to sell its ore to producers of DR pellets, which can be converted by DRI producers and utilized in electric arc furnaces, which represent a growing subset of global steelmaking capacity. This positions the Company to potentially increase its customers' base and confirms that Bloom Lake is one of the few producing deposits globally that can transition its product offering in response to potential shifts in steelmaking methods in the coming years.

Based on the foregoing, Bloom Lake produced 1,798,800 wmt of 66.5% Fe high-grade iron ore concentrate during the three-month period ended June 30, 2020, a decrease of 10%, compared to 1,989,400 wmt in the same period of the prior year. The lower production is mainly a result of the Government mandated ramp down of operations due to the COVID-19 pandemic, but still in line with the plant's nameplate capacity.

The reduction of 8% in iron ore concentrate sold during the three-month period ended June 30, 2020, compared to the same period of the prior year, is a direct result of the lower production associated with the Government mandated ramp down of operations due to the COVID-19 pandemic, and this is partially offset by the sale of the elevated iron ore inventory on hand at the end of March 2020.

Related Link: Official Document