Bloom Lake Iron Ore Mine, Quebec, Canada


Bloom Lake

Through its subsidiary Québec Iron Ore, Champion Iron proposes to restart the Bloom Lake iron ore mine in Fermont, north-east Quebec, Canada. The restart project includes the refurbishment of the existing concentrator plant, and an updated study of the mineral reserve and mining scenario.

Québec Iron Ore holds a 63.2% stake in the project, while the remaining 36.8% equity interest is owned by Ressources Québec, as authorised by the Government of Quebec.

The project was approved by the Quebec government in 2008, and the feasibility study for the mine restart was completed in February 2017.

The re-start programme is expected to involve capital costs of C$326.8m ($246m), including mine upgrade capital cost of C$157.2m ($118m), and is forecasted to generate more than C$15bn ($11.29bn) in revenue. The mine is expected to produce an average of 7.4 million tonnes per annum (Mtpa) of iron ore concentrate over its mine life of 21 years.

Pre-production from the mine is expected to start in July 2017 and commercial operations are expected to start in the second quarter of 2018. An estimated 12.1Mt of ore will be mined over a period of nine months during pre-production. The peak mining rate of 34.2Mtpa is expected to be reached in 2025.

Bloom Lake mine history and geology, mineralisation and reserves

Consolidated Thompson Iron Mines began mining at the Bloom Lake iron ore project in 2008 and continued mining before selling it to Cliffs Natural Resources in 2011. Cliffs continued mining at Bloom Lake before suspending operations in December 2014.

Champion Iron purchased the Bloom Lake assets and the Quinto Claims under an asset purchase agreement with Cliffs Natural Resources in April 2016. The agreement was made through its subsidiary Québec Iron Ore for a cash consideration of C$10.5m ($7.9m), along with certain liabilities.

The mine is located approximately 13km north of Fermont, within the Fermont Iron Ore District (FIOD), a world-renowned iron-mining camp to the south of the Labrador Trough within the geological Grenville Province.

"The project was approved by the Quebec government in 2008, and the feasibility study for the mine restart was completed in February 2017."

The proven and probable reserves of the mine are estimated to be 411.7Mt of iron ore grading 30.0% Fe.

Mining and processing of ore from Bloom Lake

Conventional open-pit mining method, using drilling and blasting along with electric hydraulic shovels and transportation by trucks, will be used at the Bloom Lake mine.

Mining of the iron ore project is planned in four phases with a starter phase and a final pushback in both the main mining zones - the East and West pits. Waste rock will be disposed of in two distinct waste dumps.

The mine plan includes the use of existing crushing and storage facilities of the phase two operation, and the mill and the rail load-out facilities from the Phase I operation to produce 7.4Mtpa of concentrate from the ore mined from the main pit.

The proposed phase one upgrade is anticipated to increase the overall iron recovery from the existing concentrator, along with recovery of both the coarser and fine iron minerals without affecting the recovery of other sized fractions.

The phase one iron recovery circuit will use a mid-scavenger spiral stage to treat the rougher middlings, and an additional magnetic separation stage to recover fine iron from the gravity circuit tailings.

In the second phase, ore will pass through the rougher spirals followed by a cleaning stage by using up-current classifiers (UCCs) and resulting in the production of final concentrate. A spiral separator will be used to recover fine iron from the UCC overflow stream.

Transportation of iron ore from the Bloom Lake mine

Champion Iron acquired 735 iron ore railcars from Canadian Iron Ore Railcar Leasing for C$30.1m ($22.67m) for transporting the iron ore from Bloom Lake to the port. The transaction was made through the company's wholly-owned subsidiary, Société de voitures de chemin de fer du Lac Bloom.

Iron ore concentrate from the mine will be transported to the port through an existing rail access, which includes three segments. The first segment comprises a 31.9km rail spur from the mine to the Quebec North Shore & Labrador (QNS&L) railway in Labrador, while the second segment runs from QNS&L railway to the Arnaud junction in Sept-Îles.

The third segment includes the route between Arnaud junction and the Pointe-Noire port in Sept-Iles, where the concentrate will be unloaded and stockpiled before loading onto the vessels for export.

The Bloom Lake mine has the permits to store up to 670,000t of concentrate at Pointe Noire port stockpile yard. The Pointe Noire port is owned by SFP Pointe-Noire (SFPPN) and controlled by the Government of Quebec.

Off-take agreement

Sojitz Corporation, a company based in Japan, will purchase up to three million dry metric tonnes (DMT) of iron ore a year from the Bloom Lake mine under an off-take agreement with Champion Iron that was signed in May 2017.

The agreement is for an initial period of five years from the start of commercial operations at the Bloom Lake iron mine, with an option to extend for an additional five years.

Financing of the Bloom Lake iron ore mine

Champion Iron has arranged a C$40m ($30.12m) bridge financing, including C$26m ($19.6m) in debt and C$14m ($10.5m) in equity, to restart operations at Bloom Lake. The debt component includes a C$20m ($15.06m) loan from Sojitz and a C$6m ($4.5m) loan from Ressources Québec, an equity shareholder of QIO.

The C$14m ($10.5m) equity investment includes a proportionate contribution from two shareholders - Champion Iron and the Government of Québec. Champion Iron issued a C$10m ($7.53m) convertible debenture to Altius Minerals Corporation to provide the equity funding.

Contractors

Ausenco, G Mining Services (GMS), Mineral Technologies, and WSP Canada participated in preparing the feasibility study of the iron ore mine. Ausenco subcontracted Metalytics for conducting an iron ore market study as part of the feasibility study.

Champion Iron engaged Ashurst as advisor for the C$40m ($30.12m) bridge financing transaction of the Bloom Lake mine.