Champion Iron signs US $180M agreements with CDPQ and Sprott

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By Ted Liu

Champion Iron Limited (ASX/TSX:CIA) through its subsidiary Québec Iron Ore Inc. (QIO) has entered into definitive agreements in connection with its previously announced US $180 million debt financing by way of secured loans with Sprott Private Resource Lending (Collector), LP and CDP Investissements Inc., a wholly-owned subsidiary of Caisse de dépôt et placement du Québec (CDPQ).

The closing of the transactions are conditional upon the satisfaction of certain closing conditions, including,

  • the funding of the initial advance under the Caisse Debt Financing condition
  • the contribution by Fonds Capital Mines Hydrocarbures (CMH), managed by Ressources Québec Inc., of its CA$26.2 million equity contribution to QIO
  • the non-brokered sale to Glencore International AG for the previously announced US$25 million subordinated unsecured mandatory convertible debenture
  • the release and further contribution to QIO, of the net proceeds of the subscription receipts public offering which was completed on September 29, 2017.

Champion Iron said is now working to expeditiously satisfy such conditions in order to use the proceeds of these financing arrangements as previously disclosed, including, principally, for the restart of the operations of the Bloom Lake iron ore mine located near Fermont, Québec.

The CDPQ and Sprott financings are comprised of (i) a 5-year senior secured loan in the aggregate amount of US $80 million provided by Sprott and carrying interest at a rate of 7.5% plus the greater of US dollars 3 month LIBOR and 1% per annum; and (ii) a 7-year subordinated loan in the aggregate amount of US $100 million provided by Caisse and carrying interest at a rate of 12% for the first year and thereafter at an interest rate linked to the price of iron ore for subsequent years.

Sprott will be issued a total of 3,000,000 ordinary share purchase warrants of Champion and Caisse will be issued a total of 21,000,000 ordinary share purchase warrants of Champion, each of which will entitle its holder to purchase one ordinary share of Champion at a price of CA$1.125, as approved by the shareholders of Champion on August 18, 2017.

Champion is an 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’s main focus is to implement upgrades to the mine and processing infrastructure it now owns while also advancing projects associated with improving access to global iron markets, including rail and port infrastructure initiatives with government and other key industry and community stakeholders.