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Champion Iron announces strong FY2019 Q3 results

Mining News - Published on Mon, 18 Feb 2019

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Champion Iron Limited announced operational and financial results for the third quarter ended December 31, 2018. For complete details of the unaudited Condensed Consolidated Financial Statements and associated Management's Discussion and Analysis please refer to the Company's filings on SEDAR. All amounts are in Canadian dollars unless otherwise indicated.

Production of 1,791,300 wmt of high-grade 66.4% iron ore concentrate and 5,815,800 wmt since the mine commenced operations in February 2018;
Total cash cost1 of $49.4/dmt (C1) and an all-in sustaining cost1 of $55.5/dmt.

Net income of $31.2 million for the quarter and $119.4 million for the nine-month period ended December 31, 2018;
Revenues of $147.5 million for the third quarter and $473.0 million for the nine-month period ended December 31, 2018;
Operating cash flow2 totalling $89.1 million for the quarter and $138.7 million for the nine-month period ended December 31, 2018;
Cash on hand3 of $185 million as of December 31, 2018, an increase of $160 million compared to cash on hand of $25 million as of April 1, 2018.
"We are extremely pleased with the strong performance delivered by the operations team again this quarter which included a record monthly production in October 2018 of 697,700 wmt of high-grade iron ore," commented Chairman and CEO Michael O'Keeffe. "Our company remains unhedged and looking ahead, the iron ore market looks favourable, which positions us well to take advantage of servicing the high-grade iron ore market." continued Mr. O'Keeffe.

Operational Performance
During the quarter, 8.7 million tonnes of material were mined, representing an increase of 7% over the previous quarter. The increase reflects the focus on waste removal during the planned major shutdown of the plant which contributed to a higher strip ratio and higher pre-stripping capital expenditures quarter over quarter.

The plant processed 4,531,400 tonnes of ore during the third quarter, achieving a monthly production record of 697,700 wmt in October. The production for the period was impacted by the planned semi-annual shutdown of 8 days and by an additional 12 days to redesign and modify the crushed ore warehouse chute located between the inland conveyor and the mill. These factors contributed to the variation of 8.7% when compared to the previous quarter. The scheduled major shutdown was the first completed since Bloom Lake achieved commercial production.

The recovery circuit continues to be optimized resulting in an average recovery rate above 80% for the quarter. As the recovery rate continues to improve every quarter reaching recovery rates as high as 86%, the Company is confident that it will achieve the target recovery rate of 83% once the whole circuit has been adjusted.

Based on the foregoing, the Company produced 1,791,300 wmt of high-grade 66.4% iron concentrate during the third quarter ended December 31, 2018 for a total of 5,192,500 wmt of 66.5% iron concentrate for the nine-month period ended December 31, 2018.

A. Revenues
During the three-month period ended December 31, 2018, a total of 1,711,500 tonnes of high-grade iron ore concentrate were sold at a CFR China gross realized price of US$91.6/dmt before shipping. The gross sales price of US$91.6/dmt represents a premium of 27.9% over the benchmark P62 price compared to a premium of 38% in the previous quarter as the price of the P62 strengthened by 7% during the quarter. Deducting sea freight cost of US$26.1/dmt, the Company obtained an average realized price of US$65.5 per tonne (CA$86.2 per tonne) for its high-grade iron ore delivered to the end customer. As a result, revenues totaled $147,546,000 for the period. The sales variation compared to the prior quarter relates to the lower production resulting from the planned major shutdown and the unplanned downtime as well as higher ocean freight costs associated with the winter season.

For the nine-month period ended December 31, 2018, the Company sold 5.4 million tonnes of iron ore concentrate shipped to end customers located in China, Europe, Japan and the Middle East in 31 ChinaMax and Capesize vessels. The Company realized revenues of $472,965,000 during its first nine months of operations for a CFR China gross realized price of US$91.2 per tonne before shipping or US$67.4 per tonne (CA$ 87.9 per tonne) net of sea freight. There are no revenues for the comparative periods as the Company shipped its first vessel of iron ore concentrate on April 1, 2018.

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Posted By : Rabi Wangkhem on Mon, 18 Feb 2019
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