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Interview with Jeff Hussey, Executive Vice President of Business Development, Champion Iron Mines Ltd.
Champion Iron Mines Limited is a Canadian-based iron ore exploration and development company with properties located in the heart of Canada’s premier iron ore mining district, the Labrador Trough. Champion Iron Mines is one of the largest landholders of highly prospective iron ore claims, with holdings located southwest of Fermont and northeast of Schefferville, Quebec. The company’s portfolio includes the Consolidated Fire Lake North, Harvey-Tuttle, Moire Lake and O'Keefe-Purdy projects. Champion Iron Mines’ shares are traded on the Toronto Stock Exchange under the symbol CHM.
Jeff Hussey: Developing the Consolidated Fire Lake North Project
----Interview with Jeff Hussey, Executive Vice President of Business Development, Champion Iron Mines Ltd.
Asian Metal: Hello Jeff, and thank you for agreeing to do this interview with Asian Metal. I would like to start by getting an update on the company’s projects. What are some of the defining aspects of Champion’s projects and what is the recent progress on them?
Jeff: Champion’s flagship project is Consolidated Fire Lake North; it is a recent amalgamation of four adjacent projects and now hosts a total of 3.2Bmt of NI 43-101 compliant iron ore resources. A feasibility study is scheduled for release by the end of November which further de-risks the project and will contain details that will be of interest to potential strategic partners.
Asian Metal: What are some of the challenges that Champion has faced or expects to face going forward?
Jeff: Market volatility and ongoing uncertainty regarding the global economy. November will be an interesting month with both the US election and the announcement of the new Chinese Politburo. A popular opinion is that the market will gain positive momentum once these milestones have passed.
Asian Metal: The role of iron ore in North America has been marginalized over the past year as global demand for iron ore, in conjunction with steel manufacturing, has declined due to the global financial crisis. In your opinion, what is the future of Canadian iron ore?
Jeff: Excellent! The fundamentals of iron ore remain the same, China and other emerging markets are in their respective industrialization phases. With respect to China it is not considered a choice but rather a plan in order to house the middle class in appropriate housing, and with sufficient funds available they should continue to execute their plan over the next 10-15 years.
Asian Metal: Many Canadian corporations have been supported by a surge in foreign agreements and buyouts over the past years as both a source of capital as well as secure, long-term demand for various resources. Does Champion have any plans for an agreement with domestic or international companies in the future?
Jeff: We have been discussing with interested parties over the last few years, and several of whom wanted the project to progress to feasibility as is typically the case for investors. This is why we are looking forward to the upcoming release of our feasibility study on Consolidated Fire Lake North in November.
Asian Metal: What makes Champion unique compared to other companies in the area working on similar projects?
Jeff: Consolidated Fire Lake North is located in the southern end of the Labrador Through. It hosts relatively coarse iron ore that is easier to liberate and requires significantly less energy than its peers. This is the main reason why there are five existing iron mines located in the southern part of the Labrador Trough.
The plan is to build a concentrator at Fire Lake North that would be the closest to the Port of Sept-Iles. Highway 389 and a power line runs through the project as well as ArcelorMittal’s private railway. Since this railway is not an available option, a new railway option is under study led by CN Railway and the Caisse de Dépot et de Placements du Québec along with six end-users. This would create a direct link and the shortest route to the Port, which will be reflected in lower operating costs.
Champion has also signed a long term agreement with the Port of Sept-Iles for 10.0Mt/y ship loading capacity with the possibility to increase this annual tonnage.
In summary the infrastructure challenges are being de-risked as the company moves the project forward to production.
Asian Metal: What challenges is the Canadian iron ore industry likely to face over the next decade?
Jeff: As the demand and price have increased to unprecedented levels over the last 10 years, the global market place has responded. Numerous large projects in Africa and Brazil are being studied and with that potential supply coming on line the challenge is to build, commission, and operate during the window of opportunity prior to a significant increase in global supply. This will help to pay back project capital expenditures more quickly.
Asian Metal: As more Canadian mining companies move to production, will the role of large-scale providers, such as BHP Billiton and Vale, be marginalized?
Jeff: Canada currently produces 44.0Mt/y or 3% of the 1.45Bt/y global supply. This could potentially increase up to 10-15% if all Canadian development projects reach production. This would have an impact on the global market but it is difficult to say if it would have an impact on the three major iron ore producers.
Asian Metal: How will the global market change as the growth rate in China declines and as the global industry evolves?
Jeff: The growth rate in China is still very impressive, and the iron ore market has undergone significant change since 2008, when the annual iron ore price contract system that was in place for decades evolved into a more open pricing system based on the previous monthly average. This has led to a higher price range due to the unprecedented demand from China and also led to more volatility in the last few years with the global financial crisis context.
Asian Metal: Jeff, thank you for taking the time to participate in this interview and we look forward to future updates on the Consolidated Fire Lake North deposit.
Jeff: Thank you!
Jeff: Champion’s flagship project is Consolidated Fire Lake North; it is a recent amalgamation of four adjacent projects and now hosts a total of 3.2Bmt of NI 43-101 compliant iron ore resources. A feasibility study is scheduled for release by the end of November which further de-risks the project and will contain details that will be of interest to potential strategic partners.
Asian Metal: What are some of the challenges that Champion has faced or expects to face going forward?
Jeff: Market volatility and ongoing uncertainty regarding the global economy. November will be an interesting month with both the US election and the announcement of the new Chinese Politburo. A popular opinion is that the market will gain positive momentum once these milestones have passed.
Asian Metal: The role of iron ore in North America has been marginalized over the past year as global demand for iron ore, in conjunction with steel manufacturing, has declined due to the global financial crisis. In your opinion, what is the future of Canadian iron ore?
Jeff: Excellent! The fundamentals of iron ore remain the same, China and other emerging markets are in their respective industrialization phases. With respect to China it is not considered a choice but rather a plan in order to house the middle class in appropriate housing, and with sufficient funds available they should continue to execute their plan over the next 10-15 years.
Asian Metal: Many Canadian corporations have been supported by a surge in foreign agreements and buyouts over the past years as both a source of capital as well as secure, long-term demand for various resources. Does Champion have any plans for an agreement with domestic or international companies in the future?
Jeff: We have been discussing with interested parties over the last few years, and several of whom wanted the project to progress to feasibility as is typically the case for investors. This is why we are looking forward to the upcoming release of our feasibility study on Consolidated Fire Lake North in November.
Asian Metal: What makes Champion unique compared to other companies in the area working on similar projects?
Jeff: Consolidated Fire Lake North is located in the southern end of the Labrador Through. It hosts relatively coarse iron ore that is easier to liberate and requires significantly less energy than its peers. This is the main reason why there are five existing iron mines located in the southern part of the Labrador Trough.
The plan is to build a concentrator at Fire Lake North that would be the closest to the Port of Sept-Iles. Highway 389 and a power line runs through the project as well as ArcelorMittal’s private railway. Since this railway is not an available option, a new railway option is under study led by CN Railway and the Caisse de Dépot et de Placements du Québec along with six end-users. This would create a direct link and the shortest route to the Port, which will be reflected in lower operating costs.
Champion has also signed a long term agreement with the Port of Sept-Iles for 10.0Mt/y ship loading capacity with the possibility to increase this annual tonnage.
In summary the infrastructure challenges are being de-risked as the company moves the project forward to production.
Asian Metal: What challenges is the Canadian iron ore industry likely to face over the next decade?
Jeff: As the demand and price have increased to unprecedented levels over the last 10 years, the global market place has responded. Numerous large projects in Africa and Brazil are being studied and with that potential supply coming on line the challenge is to build, commission, and operate during the window of opportunity prior to a significant increase in global supply. This will help to pay back project capital expenditures more quickly.
Asian Metal: As more Canadian mining companies move to production, will the role of large-scale providers, such as BHP Billiton and Vale, be marginalized?
Jeff: Canada currently produces 44.0Mt/y or 3% of the 1.45Bt/y global supply. This could potentially increase up to 10-15% if all Canadian development projects reach production. This would have an impact on the global market but it is difficult to say if it would have an impact on the three major iron ore producers.
Asian Metal: How will the global market change as the growth rate in China declines and as the global industry evolves?
Jeff: The growth rate in China is still very impressive, and the iron ore market has undergone significant change since 2008, when the annual iron ore price contract system that was in place for decades evolved into a more open pricing system based on the previous monthly average. This has led to a higher price range due to the unprecedented demand from China and also led to more volatility in the last few years with the global financial crisis context.
Asian Metal: Jeff, thank you for taking the time to participate in this interview and we look forward to future updates on the Consolidated Fire Lake North deposit.
Jeff: Thank you!