Operations

1. Operations at Bloom Lake resumed full operational capacity in the recently completed quarter, following the Government's announcement to categorize mining activities as a “priority service” and the lifting of specific COVID-19 containment directives issued in the first quarter of the Company's fiscal year ending March 31, 2021;

2. Production of 2,268,800 wet metric tonnes (“wmt”) of high-grade 66.1% Iron ore (“Fe”) concentrate for the three-month period ended September 30, 2020, compared to 2,189,700 wmt of high-grade 66.3% Fe concentrate for the same period in 2019. Production of 4,067,600 wmt of high-grade 66.3% Fe concentrate for the six-month period ended September 30, 2020, compared to 4,179,100 wmt for the same period in 2019;

3. Recovery rate of 85.2% and 83.8% for the three and six-month periods ended September 30, 2020, respectively, compared to a recovery rate of 83.9% and 83.1%, respectively, for the same periods in 2019; and

4. Free On Board (“FOB”) total cash cost1 of $48.5/dry metric tonne (“dmt”) (US$36.4/dmt) (“Total Cash Cost” or “Cash Cost”) and $53.1/dmt (US$39.1/dmt) for the three and six-month periods ended September 30, 2020, respectively, compared to $48.3/dmt (US$36.6/dmt) and $51.4/dmt (US$38.7/dmt), respectively, for the same periods in 2019.

Other Developments

1. In connection with Bloom Lake's Phase II expansion project, which proposes to double Bloom Lake's nameplate capacity to 15 Mtpa, the Company increased the Phase II cumulative budget by an additional $22M, for a total budget of $120M, in order to prudently advance the project and preserve key timelines ahead of the deferred final Board of Directors (the “Board”) decision on the Phase II expansion. The Company will communicate its development plans with regards to the Phase II expansion project by the end of the current calendar year;

2. Appointment of Alexandre Belleau as Chief Operating Officer on July 22, 2020;

3. Appointment of Louise Grondin to the Board at the Annual General Meeting of the Company's shareholders on August 27, 2020; and

4. Completed a virtual platform presenting a 360 degree view of the Company’s mining operations and related infrastructure, currently available on the Company’s website at www.championiron.com.

“Our team’s agility in adapting operations is unlocking the full potential of our flagship Bloom Lake Mine, resulting in record quarterly production and financial results for our Company. I am proud to be leading such a highly motivated workforce, dedicated to the success of our Company, despite the challenging environment created by the COVID-19 pandemic. As our focus remains the safety and well-being of our employees, partners and communities, we continue to enforce strict COVID-19 related measures and look forward to deploying our recently delivered rapid testing solution in our continuous effort to mitigate the pandemic related risks. With our cash on hand rapidly growing, our Company continues to diligently advance the Phase II expansion project, increasing the cumulative budget to $120M, which is expected to further de-risk the project”, 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 of Québec. As announced by the Company on April 23, 2020, operations gradually ramped up, following the Government's announcement that mining activities were to be considered a “priority service” in Québec. 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 minimized its impacts on operations. Despite disruptions to operations, the Company produced nearly 4.1 million wmt of high-grade iron ore concentrate during the six-month period ended September 30, 2020, which is approximately 8% above Bloom Lake's current nameplate capacity.

i. Second Quarter of Fiscal Year 2021 vs Second Quarter of Fiscal Year 2020

During the three-month period ended September 30, 2020, 10,184,400 tonnes of material were mined, compared to 8,966,100 tonnes for the same period in 2019, representing an increase of 14%. This increase in material mined is the result of higher equipment availability and utilization rate, additional equipment and better ore accessibility. The Company benefited from its previous and continuous investments in the mining equipment rebuild program, enabling it to maximize productivity when operational flexibility is required due to ongoing pandemic-related conditions.

The plant processed 5,562,600 tonnes of ore during the three-month period ended September 30, 2020, compared to 5,450,800 tonnes for the same period in 2019, representing an increase of 2%. The higher throughput resulted from higher mined ore availability and higher mill utilization rate. During the quarter, the Company fully used its two production lines, compared to only one production line for the previous quarter, further to the Government's COVID-19 imposed ramp-down. The improvements and operational innovations implemented during the fiscal year ended March 31, 2020 allowed the Company to increase throughput stability and reach a higher level of mill productivity, despite the inefficiencies created by COVID-19, which allowed the Company to take advantage of the elevated iron ore price.

The iron ore head grade in the three-month period ended September 30, 2020 reached 30.9%, compared to 32.3% for the same period in 2019. The decrease in head grade is attributable to the presence of some lower grade ore being sourced and blended from different pits, when compared to the prior year. This is in line with the mining plan and the life of mine head grade average.

The Company achieved an average recovery rate of 85.2% during the three-month period ended September 30, 2020, compared to a recovery rate of 83.9% for the same period in 2019, which is attributable to higher recovery circuit stability.

Based on the foregoing, Bloom Lake achieved a new quarterly production record with 2,268,800 wmt of 66.1% Fe high-grade iron ore concentrate produced during the three-month period ended September 30, 2020, an increase of 4%, compared to the previous quarterly production record of 2,189,700 wmt for the same period in 2019. The higher production, surpassing nameplate capacity, is mainly a result of higher ore mined and higher throughput, combined with a higher average recovery rate, despite being partially offset by a lower head grade. The variation between iron ore concentrate produced and sold during the quarter is due to the timing of shipments.

ii.    First Six Months of Fiscal Year 2021 vs First Six Months of Fiscal Year 2020

The Company mined 17,479,800 tonnes of material during the six-month period ended September 30, 2020, compared to 17,652,100 tonnes for the same period in 2019. The plant processed 10,167,200 tonnes of ore during the six-month period ended September 30, 2020, a decrease of 1% over the same period in 2019, while the recovery rate improved from 83.1% to 83.8%, in line with the Company’s target. Based on the foregoing, Bloom Lake produced a total of 4,067,600 wmt of Fe 66.3% high-grade iron ore concentrate during the six-month period ended September 30, 2020, compared to 4,179,100 wmt for the same period in 2019.

During the first quarter of the 2021 fiscal year, the COVID-19 pandemic had a negative impact on several of the Company's activities, including: reduced mining activities due to the compliance with the public health directives issued by the Government; reduced equipment maintenance due to COVID-19-related resource limitations, which had adverse repercussions on equipment availability; the arrival of the seasonal workforce, which required integration and training; and the operation of only one of the Company's two production lines for a period of time stemming from the Government's COVID-19-related directives. Once the governmental restrictions were lifted, the Company accelerated its mining activities and surpassed its plant nameplate capacity for the six-month period ended September 30, 2020. The capital expenditures made in the mining equipment rebuild program along with the improvements and operational innovations accomplished at the plant in the past have maximized current productivity.

During the six-month period ended September 30, 2020, the Company received a confirmation that its initial commercial production test last year qualified as Direct Reduction (“DR”) from DR pellet producers and direct reduced iron (“DRI”) plant operators. 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 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 customer 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.

More Info: Champion Iron’s 3Q2020 Report