DGAP-News: Champion Minerals Releases Updated Preliminary Economic Assessment Study for Fire Lake North Project and Initiates Feasibility Study
ID: 89576
(firmenpresse) - DGAP-News: Champion Minerals Inc. / Key word(s): Study
Champion Minerals Releases Updated Preliminary Economic Assessment
Study for Fire Lake North Project and Initiates Feasibility Study
21.11.2011 / 13:30
---------------------------------------------------------------------
NEWS RELEASE
Champion Minerals Releases
Updated Preliminary Economic Assessment Study for
Fire Lake North Project and Initiates Feasibility Study
- Based on a 25 year financial analysis, Fire Lake North Base Case has a
Net Present Value of $4 billion at a discounted cash flow rate of 8%
- The Internal Rate of Return for the project is 41.5% and the payback
period is 2.3 years
- Annual production rate of 10 million tonnes of concentrate for the
first 5 years
- Average annual production of 8.7 million tonnes of iron concentrate
grading 65% total iron
- In Pit resources are sufficient for a 40 year mine life
- Study recommends investigating the option to double the production rate
based on the 922 million Tonne 'In Pit' resources
Toronto (Canada), November 21, 2011 - Champion Minerals Inc. ('Champion' or
the 'Company') (TSX: CHM; FSE: P02) is pleased to announce the results of
its updated Preliminary Economic Assessment ('PEA') study on the Fire Lake
North Project that was performed by BBA Inc. ('BBA'). Concentrator
production would average 8.7 million tonnes of concentrate per year
('Mtpa') grading 65% iron for the first 25 of the 40 year mine life;
however, the first five years of the financial model will average nearly 10
Mtpa of concentrate production.
The 2011 PEA study produced a Net Present Value of $4 billion at a
discounted cash flow rate of 8% with an Internal Rate of Return ('IRR') of
41.5% and a capital payback period of 2.3 years. The US$ exchange rate is
assumed to be at par value with the Canadian dollar. Table 1 provides the
Net Present Values calculated at various discounted cash flow rates for the
Base Case production scenario.
The financial analysis in the PEA study used a price of $115 per tonne of
iron concentrate ($/tonne is FOB Sept-Iles), the mine life in the study is
40 years and the capital payback period is 2.3 years.
Table 1: Fire Lake North - Preliminary Economic Assessment Results
(Pre-Tax)
Internal Rate of Return (IRR) (8% Discount Rate) 41.5 %The PEA was completed by Dr. AndréAllaire, Eng., M.Eng., Ph.D., and Mr.
Undiscounted Cash Flow 10.9 $ billion
Net Present Value (at) 5% Discounted Cash Flow 5.6 $ billion
Net Present Value (at) 8% Discounted Cash Flow 4.0 $ billion
Net Present Value (at) 10% Discounted Cash Flow 3.2 $ billion
Payback Period (8% Discount Rate) 2.3 Years
Stéphane Normandin 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 will be posted by Champion on SEDAR at www.sedar.com within 45 days
of the date of this press release. The PEA study has an accuracy of +/-30%,
which is considered industry standard for preliminary capital and operating
cost estimates.
The PEA has been developed with a higher degree of detail than normally
required, which will facilitate the transition directly into the
Feasibility Study phase. In the Feasibility Study, both the Base Case
option, as well as the option of adding a second production line, will be
studied.
Excluding the contingency, the cost of rail and port infrastructure totals
$325.6 million, as itemized in Table 2. The cost to develop the mine and
concentrator complex totals $841.7 million, which equates to $97 per tonne
of the 8.7 million tonnes of annualized production of iron concentrate, a
typical rate for mines in the Fermont Iron Ore District.
Capital expenditures total $1,368 million for 100% of the Project with the
cost of rail and port infrastructure included. This PEA study assumes the
usage of the Sept-Iles multi user Port facility project that is planned for
completion in Q1/Q2 2014.
Table 2: Capital Expenditures ($ millions)
Cost Centers $As Champion holds an 82.5% interest in the Fire Lake North Project, it is
millions
Pre-stripping of open pit areas 97.5
Concentrator and site infrastructure including loadout 682.3
facilities
Railway (62km distance and 94km total including turnaround loop 228.8
and sidings)
Port Facilities: Railcar unloading, stacker/reclaimer, conveyors 96.8
Environmental and Tailings Management 27.9
Other Pre Production Costs 34.0
Sub Total 1,167
Contingency 201
Grand Total (100% of the project) 1,368
responsible for this proportional share of the capital expenditures.
Fancamp Exploration Ltd. is responsible for the remaining 17.5% of the
capital expenditures.
Operating costs are outlined in Table 3.
Table 3: Operating Expenditures ($/Tonne of ($/Tonne ofThe production scenario maintains a strip ratio of 2:1 for the first three
Concentrate) Concentrate)
Cost Parameters Average 25 years Average years 1
to 5
Mining 22.56 12.13
Concentrator crushing and processing 4.52 3.97
Site Infrastructure, Sales,&General 4.40 3.39
Administration
Environmental Tailings and Management 0.29 0.26
Rail Transport 15.52 16.14
Port facilities 3.72 3.57
Total 51.01 39.46
Equipment Lease Cost (not included in 1.67 5.17
above total)
years of operation during the payback period, whereas the 25 year mine life
is 3.7:1.
In this Project Base Case production scenario, the size of the autogenous
grinding mill ('AG Mill') and associated horsepower was increased in order
to optimize the production rate and enhance the economic metrics compared
to the initial PEA completed in 2010.
The designed 'In Pit' resources at an 8% Total Iron cut-off are 921.8
million tonnes grading 28.8% Total Iron. At a 15% cut-off grade, these
resources decrease slightly to 908.5 million tonnes, grading 29.1% Total
Iron whereas they amount to 833 million tonnes grading 30.1% Total Iron at
a 20% cut off. This demonstrates the quality of the 'In Pit' resources. The
current global NI 43-101 Mineral Resource Estimate was announced on October
3, 2011 (See Champion's press release dated October 3, 2011)1. As the
designed 'In Pit' resources of the Fire Lake North Project are now 921.8
million tonnes, the recommendation in the PEA is to evaluate the option of
increasing the production rate by adding a second productionline in the
concentrator. This will be included in the scope of the 2012 Feasibility
Study.
The PEA study is based on a stand-alone operation at Fire Lake North and
does not consider any other adjacent projects in the area (refer to the
appended Figure 1 map). The resource definition drilling program has been
initiated and is designed to convert the majority of the current resources
to the Measured and Indicated categories for the 2012 Feasibility Study for
both production rate scenarios, i.e., associated to one or two concentrator
production lines.
Results from the PEA indicate Fire Lake North to be a viable and
economically robust project for the Base Case production scenario. Further
evaluation of options to reduce costs and increase concentrate production
could significantly enhance the project economics. The additional capital
required to increase production with the addition of a second production
line would be significantly less than the capital expenditures for this
first production line. Other options will be evaluated during the course of
the Feasibility Study with a focus on cost reduction. Ongoing discussions
with strategic partners and stakeholders to evaluate various rail
transportation options are being studied.
Tom Larsen, Champion's President and CEO states, 'The excellent 2011
exploration results have translated into a more than threefold increase in
the Net Present Value for Fire Lake North. We currently have sufficient
resources to support two concentrator production lines of high quality iron
concentrate. Fire Lake North will be Champion's initial mine operation due
to the higher quality iron ore present that is coarser grained and clean of
deleterious elements. With the PEA study in hand, we will continue our
discussions with potential strategic partners as we move to complete the
feasibility study in 2012. '
There is potential for Fire Lake North to become a significant low cost
iron ore producer with a new concentrator equipped with today's advanced
mineral processing technologies. The Company will further analyze lower
cost opportunities during the Feasibility Study.
The Fire Lake North Project
Fire Lake North is located adjacent (to the north) of ArcelorMittal's
operating Fire Lake Mine and is 60 km to the south of Cliffs Natural
Resources Inc.'s ('Cliffs') Bloom Lake Mine in northeastern Quebec. Fire
Lake North is situated at the southern end of the Labrador Trough, known to
be coarser grained due to higher grade metamorphism within the Grenville
geological Province. The Fermont-Wabush-Labrador City Iron Ore District is
world renowned Iron ore mining camp, and is considered to be an optimal
location to develop Iron ore resource projects.
The four Iron ore producers in the vicinity comprise Canada's Iron ore
production currently estimated at more than 40 million tonnes of Iron
concentrate per year, including production from Cliffs' Bloom Lake Mine
which was commissioned last year by Consolidated Thompson Iron Mines
Limited. It was the first mine to be built in this district since the
1970's.
About Champion Minerals Inc.
Champion Minerals Inc. is an Iron ore exploration and development company
with offices in Montreal and Toronto, focused on developing its significant
Iron ore resources in the provinces of Quebec and Newfoundland&Labrador.
The Company's Iron projects include: the Fermont Holdings (714 km2) in
Quebec, jointly held by Champion (82.5% interest) and Fancamp Exploration
Ltd. (TSX-V: FNC), (17.5% interest); and the Attikamagen Iron Property (310
km2) in Quebec and Labrador.
Champion's Fermont Holdings, including the flagship Fire Lake North
Project, are located in Canada's only Iron ore producing district, in close
proximity to four producing mine and concentrator complexes. Champion's
management team and advisory board includes international mining and
exploration professionals with operational expertise to effectively advance
the Fire Lake North Project into feasibility, construction, commissioning,
and production.
Additional resources hosted in Champion's adjacentprojects (See Figure 1)
could contribute further to the resource base for the Fire Lake North
operation and possibly lead to additional production lines. Recent
intersections announced at the Oil Can Project adjacent to the north of the
Fire Lake North Project continue to define resources with potentially low
strip ratios.
1 The quoted Mineral Resource 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
June 30th, 2011.
1 Mineral resources, which are not mineral reserves, do not have
demonstrated economic viability. The mineral resource estimate may be
materially affected by environmental, permitting, legal, title, taxation,
socio-political, marketing, or other relevant issues.
The technical information in this news release was prepared, revised and
approved by Dr. AndréAllaire, Eng., M.Eng., Ph.D., Mr. Stéphane Normandin
Eng., from BBA Inc., and Mr. Jean Luc Chouinard Director of Projects for
Champion Minerals. All individuals are Qualified Persons under NI 43-101
standards. Mr. Allaire and Mr. Normandin, are both independent of the
issuer.
For further information please contact Thomas G. Larsen, President and CEO,
Jorge Estepa, Vice-President, and Salisha Hosein, Director, Investor
Relations at (416) 866-2200.
Please visit Champion's website at www.championminerals.com
Statements made in this news release that are 'forward-looking statements'
are not historical facts. Readers are cautioned that any such statements
are not guarantees of future performance, and that actual developments or
results may vary materially from those stated herein.
End of Corporate News
---------------------------------------------------------------------
21.11.2011 Dissemination of a Corporate News, transmitted by DGAP - a
company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
---------------------------------------------------------------------
147169 21.11.2011
Themen in dieser Pressemitteilung:
Unternehmensinformation / Kurzprofil:
Datum: 21.11.2011 - 13:30 Uhr
Sprache: Deutsch
News-ID 89576
Anzahl Zeichen: 17072
contact information:
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 298 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"DGAP-News: Champion Minerals Releases Updated Preliminary Economic Assessment Study for Fire Lake North Project and Initiates Feasibility Study"
steht unter der journalistisch-redaktionellen Verantwortung von
Champion Minerals Inc. (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
