Miner Champion Iron wins approval to buy Canada's Kami iron ore project

London — Canadian miner Champion Iron has won approval to acquire the Kami iron ore project close to its Bloom Lake high-grade concentrate mine, which may allow for an expansion with increased port capacity at Sept Iles.

In relation to the acquisition expected to close before year-end, Champion Iron said in a statement that it expects to secure 8 million mt/year in additional port capacity at the multiuser berth in Sept-Iles, currently used to export iron ore concentrate from Bloom Lake.

The mining properties of the Kamistiatusset (Kami) project are located close to the Labrador Trough in southwestern Newfoundland, near the Quebec border. An updated feasibility study was completed in September 2018, it said.

"The Kami Project is a high-grade iron ore project near available infrastructure, situated only a few kilometers southeast of the company's operating Bloom Lake mine," it said.

Champion intends to revise Kami's scope and update its feasibility study "in the near term as it diligently considers growth alternatives within its portfolio," it said.

Champion Iron's Bloom Lake operation has expansion plans under a second phase, to take total output up from existing capacity of 7.4 million mt/year. Bloom Lake produces high-grade sinter feed and has started suppling direct reduction-grade pelletizing concentrate ore, with shipments of products current into Asia, the Middle East and Europe. Global traders Glencore and Sojitz have offtakes to sell Champion Iron's products.

Champion Iron said it will pay C$15 million ($11.5 million) in cash to receiver Deloitte Restructuring to acquire interests in the Kami project, on top of an option to purchase a $19.4 million debt facility taken out by former developer Alderon Iron Ore Corp. and affiliates held by Sprott Private Resource Lending.

As consideration for the secured debt, Champion will issue 4.2 million ordinary shares to Sprott and Altius Resources Inc, it said.

Champion also agreed to make a finite production payment to the receiver on a fixed amount of future iron ore concentrate production from Kami, in the transaction approved by the Supreme Court of Newfoundland and Labrador. Closing of the acquisition is subject to the consent of the Ministry of Industry, Energy and Technology of Newfoundland and Labrador.