Champion Iron announces refinancing to optimize capital structure and transaction to acquire 100% of Bloom Lake


Champion Iron Limited (TSX: CIA) (ASX: CIA) (“Champion” or the “Company”) is pleased to announce that its subsidiary Québec Iron Ore Inc. (“QIO”), operator of the Bloom Lake Mining Complex, has concluded an agreement in principal with la Caisse de dépôt et placement du Québec (“CDPQ”) for a preferred share offering of C$185 million plus a commitment for a fully underwritten US$200 million credit facility with The Bank of Nova Scotia (“Scotiabank”) and Societe Generale (“SocGen”). The proceeds of such financings will be used to fund strategic initiatives and to refinance QIO’s current outstanding credit facilities, thereby significantly reducing their carrying costs. In addition, Champion is pleased to report that its subsidiary QIO has concluded an agreement with the government of Québec, through its agent Ressources Québec Inc. (“RQ”), to acquire RQ’s 36.8% equity interest in QIO for a total cash consideration of C$211 million (the “Transaction”). The Transaction would increase Champion’s stake in QIO to 100%.

Commenting on the Transaction and capital restructuring, David Cataford, CEO of Champion, said, “Modifying the capital structure of Champion will provide substantial cost savings to our company. We are thrilled to see CDPQ continue to support our growth initiatives and count on new financial partners like Scotiabank and Societe Generale. Their confidence in our company is extremely motivating. Increasing our ownership of Bloom Lake to 100% is a prudent use of our capital, given the proven production and cash flow generation this project has delivered. Champion is very fortunate to be operating in a jurisdiction which has provided us with timely support. We thank the government of Québec for believing in the project when capital was scarce, and we are proud to be able to deliver them excellent returns for their initial investment. Finally, we are pleased to continue our partnership with the government of Québec through its mandatary, Ressources Québec, as a key shareholder of our publicly listed entity, Champion Iron.”

Transaction Highlights

The Transaction is expected to be immediately accretive on key operating and financial metrics, including earnings, EBITDA and operating cash flow per share. The Transaction utilizes Champion’s balance sheet strength while maintaining low financial leverage. The Transaction is expected to allow the increase of allocated production to Champion by approximately 2.75 Mtpa of high-grade iron ore. The closing of the Transaction is anticipated to occur in the summer of 2019 and is subject to customary conditions as well as to the procurement by QIO of the necessary financing as described herein. The Transaction will be funded from proceeds of newly refinanced facilities in addition to cash on hand.

Capital Restructuring Highlights

  • Significantly reduces cost of debt – At current effective rates, the new debt facility weighted average cost of debt ranges between 6.88% and 7.67% depending on the Company’s EBITDA compared to a weighted average cost of debt between 12.37% and 14.75% for the current credit facilities put in place to finance the Bloom Lake restart in October 2017.
  • Fully underwritten by sophisticated global financiers – Scotiabank and SocGen have partnered as Joint Lead Arrangers, Joint Bookrunners and Co-Underwriters.
  • Maintains CDPQ as strategic partner – CDPQ’s total commitment to our Company increases by approximately C$57 million, from US$100 million of long-term debt to C$185 million as preferred shares.
  • Improves balance sheet flexibility – Compared to QIO’s current long-term debt facilities, this loan facility bears less covenants, further enabling the Company to contemplate organic growth opportunities and greater flexibility.

QIO has entered into an agreement in principal for the issuance of perpetual preferred shares with CDPQ for total proceeds of C$185 million (the “Investment”). Proceeds from the Investment will be used to fund current and future strategic initiatives and repay CDPQ’s existing subordinated credit facility held by QIO of C$128 million (US$100 million). The dividend rate associated with the preferred shares will be based on the gross realized iron price and will fluctuate from 9.25% when the gross realized iron price for Bloom Lake 66.2% iron ore is greater than US$85/t to 13.25% should the gross realized iron ore price decrease below US$65/t. CDPQ’s investment is subject to customary conditions as well as the repayment of the current CDPQ subordinated credit facility granted to QIO, receipt of all required regulatory approval and the issuance of 15 million warrants of Champion to CDPQ with an exercise price of C$2.45 and a 7-year term.

In addition, QIO has signed a commitment letter with Scotiabank and SocGen for a fully underwritten US$200 million credit facility (the “Loan Facility”). Upon completion and execution of the final loan documentation, the Loan Facility will be available by way of a US$180 million senior secured fully amortizing non-revolving credit facility (the “Term Facility”) in addition to a US$20 million senior secured revolving credit facility (the “Revolving Facility”). The Loan Facility will bear interest between LIBOR plus 2.85% if the net debt to EBITDA ratio is lower or equal to 1.00x to LIBOR plus 3.75% if the net debt to EBITDA ratio is greater than 2.50x. The Term Facility will mature five years from the closing date while the Revolving Facility will mature three years from the closing date. The Loan Facility funds will be used to repay outstanding long-term debt instruments in the aggregate amount of US$103 million previously made available by Glencore International AG and Sprott Private Resource Lending (Collector) LP and to fund current and future strategic initiatives. The Term Facility shall be repaid in equal quarterly installments of principal and accrued interest starting on the second full year following the closing date and is not subject to prepayment penalties. The Loan Facility includes standard and customary finance terms and conditions including with respect to fees, representations, warranties, covenants and conditions precedent prior to closing. Closing of the Loan Facility, which is not subject to further technical due diligence, is anticipated to occur in the summer of 2019.


Champion is a producing iron development and exploration company, focused on developing its significant iron resources in the south end of the Labrador Trough in the province of Québec. Following the acquisition of its flagship asset, the Bloom Lake iron ore property, the Company implemented upgrades to the mine and processing infrastructure and has partnered in projects associated with improving access to global iron markets, including rail and port infrastructure initiatives with government and other key industry and community stakeholders. Champion’s management team includes professionals with mine development and operations expertise, who also have vast experience from geotechnical work to green field development, brown field management including logistics development and financing of all stages in the mining industry.

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State’s mining industry holdings transferred to Finnish Minerals Group



The Committee on Economic Policy of Finnish Government decided in May 2018 to endorse the reorganising of the State’s mining industry holdings into Finnish Minerals Group with the aim to advance the development of Finland’s battery and mining cluster. Pursuant to this decision the shares in Sotkamo Silver AB and Keliber Oy as well as a convertible loan and related option rights entitling to shares in Ferrovan Oy have been transferred from Finnish Industry Investment Oy (Tesi) to Finnish Minerals Group.

Ferrovan Oy is targeting to construct a metal production plant for extraction of vanadium from LD-slag, a by-product of steel production. Finnish Minerals Group has previously announced its participation in a EUR 7.5 million financing round of Ferrovan Oy together with Ferrovan’s biggest shareholders and financiers. Finnish Minerals Group holds a 14% stake at Ferrovan Oy via convertible loans.

Keliber Oy is a Finnish mining company with an objective of producing high-purity lithium chemicals especially for the needs of the international lithium battery market. Finnish Minerals Group holds a 17.6% stake in Keliber.

Sotkamo Silver AB is the parent company of the Sotkamo Silver group, which consists of the parent and its wholly-owned subsidiary in Finland, Sotkamo Silver Oy. Sotkamo Silver develops silver, gold and zinc deposits in the Nordic region and its main development project is Silver Mine project in the municipality of Sotkamo. Sotkamo Silver is currently constructing a Silver Mine, which mine is planned to be in production during early 2019. Finnish Minerals Group holds a ~2.05% stake in Sotkamo Silver.

Matti Hietanen, CEO, Finnish Minerals Group +358 40 8238806,

Finnish Minerals Group is a special-purpose company developing the Finnish battery and mining ecosystem. We operate as a long-term strategic owner of Terrafame Oy and other battery and mining cluster holdings, manage the mining and battery investment programme, develop battery value chain initiatives, and coordinate R&D projects.


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