Citizens, Inc.
Annual Report 2015

Plain-text annual report

ANNUAL REPORT 31 March 2015 REVIEW OF OPERATIONS Champion Iron Limited (the “Company”) is pleased to provide its review of operations for the financial year ending March 31, 2015. Arrangement between Mamba Minerals Limited and Champion Iron Mines Limited On March 31, 2014, pursuant to an Arrangement Agreement (“Arrangement”), Mamba Minerals Limited (“Mamba”): (a) acquired all of the issued and outstanding common shares of Champion Iron Mines Limited (“Champion”) on the basis of an exchange ratio of 0.7333333 Mamba share and/or Exchangeable share (or combination thereof) for each outstanding Champion common share and (b) replaced each outstanding Champion warrant and Champion stock option on the basis that the holder will be entitled to acquire 0.7333333 Mamba share on the same terms and conditions. Upon completion of the Arrangement, under Corporations Law, Mamba is the acquirer and Champion is the acquiree; however, for accounting purposes, Champion is deemed to be the acquirer and Mamba is deemed to be the acquiree. The consolidated financial statements represent a continuation of the financial statements of Champion. Following the closing of the Arrangement, Mamba changed its name to Champion Iron Limited. The Company’s shares are now quoted on the Australian Stock Exchange and the Toronto Stock Exchange under the symbol CIA. Consolidated Fire Lake North Project The Company holds 100% of Consolidated Fire Lake North, which is located in Canada’s major iron ore producing district in the Labrador Trough in the province of Quebec. Consolidated Fire Lake North is located immediately north of Arcelor Mittal’s operating Fire Lake Mine and 60km south of Cliffs Natural Resources Inc.’s Bloom Lake Mine in northeastern Quebec. The Company completed a Prefeasibility Study (PFS) on Fire Lake in February 2013 which indicates iron ore production of 9.3Mtpa, with a Net Present Value of C$3.3b with operating costs of C$44/t.The optimized engineered pits used in the PFS yield reserves of 464.6 million tonnes grading 32.37% total iron (FeT) at a 15% FeT cut-off grade with a weight recovery of 39.9%. The ore is metallurgical course-grained hematite which beneficiates easily with an 83% recovery achieved in the PFS to produce a 66% Fe grade. On October 27, 2014, the Company announced that P&E Mining Consultants completed an independent audit of the CFLN project database and produced an updated Mineral Resource Estimate of over 1.2 billion tonnes, including 755 million tonnes of Measured and Indicated metallurgical coarse grained hematite mineralization for CFLN in compliance with JORC and National Instrument 43-101 (NI 43-101), the Canadian equivalent to JORC for the public reporting of geological information. The Company is not aware of any new information or data that materially affects the information included in the JORC report and confirms that all material assumptions and technical parameters underpinning the estimates in the JORC Resource & Reserve statement continue to apply and have not materially changed. Snelgrove Lake Project The Company has an option to acquire a 100% interest in 4 licenses covering 106 square kilometres located approximately 55 kilometres southeast of Schefferville, Newfoundland. Snelgrove Lake is encumbered with a 3% gross sales royalty. In order to earn its interest, the Company must issue Performance Shares, grant options, make option payments and incur exploration expenditures, as follows: Issue Performance shares Grant options Option payments A$ Option payments $ Exploration expenditures $ October 2012 (issued and paid) March 11, 2014 (incurred) August 1, 2018 32,000,000 – – 32,000,000 17,000,000 – – 17,000,000 425,000 – – 425,000 410,000 – 5,750,000 6,160,000 – 3,250,000 3,250,000 6,500,000 Up to March 31, 2015, the Company has incurred exploration expenditures of approximately $6,400,000. 1 An independent exploration report detailing all material work carried out on the Snelgrove Lake Project was commissioned by the Company. This report, which presents Snelgrove Lake in accordance with NI 43-101, was released on ASX by the Company on February 13, 2014. All drilling data and technical reports from Snelgrove Lake were exported to an independent contractor in preparation for integration with the Company data post-merger. The drill data was subject to an audit with no material issues identified. The decision to exercise the option will depend on the economic viability of Snelgrove Lake and the capacity to finance its development. Given the advanced stage of Consolidated Fire Lake North and the significant funds that will be required for its development, there is no certainty that the option for Snelgrove Lake Project will be exercised. Accordingly, prior to the completion of the Arrangement, Mamba recorded an impairment loss of $10,038,754 to write off the balance of Snelgrove Lake. Powderhorn and Gullbridge The Company owns a 100% interest in: (a) Powderhorn, which consists of 148 claims covering an area of 37 square kilometres situated in the Buchans-Robert's Arm Belt in Central Newfoundland. Powderhorn is encumbered with a 2.85% net smelter royalty (“NSR”), of which, 1.85% can be purchased by the participants for $2,300,000 to reduce the NSR to 1%. (b) Gullbridge, which consists of 179 claims covering 45 square kilometres situated in the Buchans-Robert's Arm Belt in Central Newfoundland. The Company has not budgeted nor planned any substantive expenditure on further exploration for and evaluation of mineral resources for Powderhorn and Gullbridge. Accordingly, the Company recorded impairment losses of $1,645,065 and $1,286,599 to write off Powderhorn and Gullbridge, respectively. Due from Cartier Iron Corporation As at March 31, 2014, the amount due from Cartier Iron Corporation (“Cartier”) was $2,100,000, of which, $100,000 was unsecured, earned interest at the rate of LIBOR plus 2% and was due on September 13, 2014. On October 17, 2014, Cartier completed a private placement of $500,000, and as agreed, the Company converted $1,050,000 of the amount due from Cartier into 6,176,470 units of Cartier, with each unit consisting of one common share and one warrant entitling the Company to purchase one common share of Cartier for $0.22 until April 17, 2016 (“Conversion”). If the average closing price of Cartier’s common shares is greater than $0.40 for 20 consecutive business days, the warrants must be exercised within 10 calendar days of Cartier providing written notice (or such longer period as Cartier may provide), or they will be cancelled. The remaining $1,050,000 due from Cartier was converted to a demand loan, which is unsecured, bears interest at the rate of LIBOR plus 2% and is due 6 months after the Company demands repayment (the “Demand Loan”). The Company has the right to convert the Demand Loan, plus accrued but unpaid interest, into Cartier common shares at a conversion price equal to the lowest subscription price per Cartier common share paid for the most recent capital raising undertaken by Cartier at the time of the conversion, subject to the minimum pricing rules and stock exchange approval. At March 31, 2015, the Company holds 11,019,970 common shares of Cartier, representing 33% of the issued and outstanding common shares of Cartier and 6,176,470 warrants entitling the Company to purchase one common share of Cartier for $0.22 until April 17, 2016. If the average closing price of common shares of Cartier is greater than $0.40 for 20 consecutive business days, the warrants must be exercised within 10 calendar days of Cartier providing written notice (or such longer period as Cartier may provide), or they will be cancelled. The holdings of the Company in Cartier are subject to the terms of a pre-emptive rights agreement and an agreement respecting board representation rights and standstill obligations entered into on December 10, 2012. Until December 31, 2017, the Company shall not sell common shares of Cartier without the prior written consent of Cartier, and thereafter, the Company shall not sell more than 2,000,000 common shares during any 30-day period. Until December 31, 2017, provided that the Company owns at least 10% of the outstanding common shares of Cartier: a) Cartier shall take all commercially reasonable steps to have a nominee of the Company elected as a director (“Nominee”) the board of directors of the Company (“Board”). 2 b) The Company shall not vote against any shareholder resolution recommended by the Board, except in the event that the Nominee dissented when the Board approved a shareholder resolution that proposes to: (i) reduce the voting or dividend rights of the common shares; (ii) issue shares which carry a number of votes proportionately greater than the capital to be represented thereby or which carry dividend rights at a rate which would substantially impair the dividends ordinarily payable on the common shares; and (iii) approve a transaction with an arm’s length third party, which must be passed by at least two-thirds of the votes cast and in respect of which a shareholder has dissent rights. c) The Company shall not vote in favour of the election of nominees to the Board who are not proposed by the then Board. d) The Company shall not (i) participate in a take-over bid for any securities of Cartier; (ii) solicit proxies from any shareholder or attempt to influence the voting by any shareholders other than in support of initiatives recommended by the Board or (iii) seek to influence or control the management, Board or the policies or affairs of Cartier; or (iv) make any public or private announcement or disclosure with respect to the foregoing. 3 Your directors present their report on Champion Iron Limited and its controlled entities (collectively, the “Company”) for the financial year ended March 31, 2015. DIRECTOR’S REPORT DIRECTORS The Directors of the Company at any time during or since the end of the year are: Director Position Note Michael O’Keeffe Gary Lawler Andrew Love Paul Ankcorn Executive Chairman and Chief Executive Officer Non-executive Director Non-executive Director Non-executive Director Appointed as Chief Executive Officer on October 3, 2014 Appointed on April 9, 2014 Appointed on April 9, 2014 Richard Wright Niall Lenahan Non-executive Director Director and Company Secretary Left on April 5, 2014 Resigned as director on April 9, 2014; resigned as Company Secretary on June 16, 2014 Thomas Larsen Director and Chief Executive Officer Term as director ended on August 29, 2014; resigned as James Wang Donald Sheldon Non-executive Director Non-executive Director Chief Executive Officer on August 29, 2014 Term ended on August 29, 2014 Term ended on August 29, 2014 Qualifications and experience of Directors’ are disclosed on page 11. PRINCIPAL ACTIVITY The Company’s principal activity is the exploration and development of iron ore properties in Quebec, Canada. REVIEW OF OPERATIONS AND RESULTS For the year ended March 31, 2015, the Company recorded a consolidated loss and comprehensive loss of $12,269,209 (2014: $48,592,898). Details of the operations of the Company are set out in the review of operations on page 1. FINANCIAL POSITION At March 31, 2015, the Company had net assets totaling $91,342,524 (2014: $102,896,980) and cash and cash equivalents and short-term investments $2,646,685 (2014: $16,287,821). DIVIDENDS No dividends were paid or recommended for the year ended March 31, 2015 (2014: Nil). SIGNIFICANT CHANGES IN STATE OF AFFAIRS Investment in in La Société ferroviaire du Nord québécois, société en commandite The Company is a founding partner in La Société ferroviaire du Nord québécois, société en commandite (“SFNQ”). The other partners in SFNQ are the Government of Québec and Lac Otelnuk Mining Ltd., a joint arrangement between Adriana Resources Inc. and WISCO International Resources Development & Investment Limited. SFNQ was formed as a partnership of government and industry to complete a feasibility study for the construction of a new multi-user rail link giving mining projects in the Labrador Trough access to the port at Sept-Ȋles at the lowest possible cost. The Government of Québec has set aside a maximum of $20,000,000 from its Plan Nord Fund to contribute to SFNQ, while the Company’s contribution will consist of previously incurred costs of a minimum of $5,000,000 and a maximum of $6,000,000, with the final amount to be determined by an audit of the previously incurred costs. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR Other than those noted below, no matter or circumstance has arisen since March 31, 2015 that has significantly affected, or may significantly affect:    The Company’s operations in the future financial years, or The results of those operations in future financial years, or The Company’s state of affairs in future financial years. 4 Receivables On April 6, 2015, the Company received $1,135,539 in respect of its claim for Credit on Duties related to the year ended March 31, 2013. On May 27, 2015, the Company received an interim payment of $2,996,932 in respect of its claim for Refundable Tax Credit related to the year ended March 31, 2013. Investments 10,000,000 warrants entitling the Company to purchase one common share of Fancamp for $0.60 expired on May 17, 2015. As at March 31, 2015, the warrants had a nil fair value and the expiry had no financial impact to the Company. Royalty On June 25, 2015, the Company completed an agreement to reduce the net smelter royalty on Fermont from 3% to 1.5% by paying $50,000 on closing and $250,000 on October 25, 2015. Warrants 5,133,333 warrants entitling the holder to purchase one common share of the Company for $4.0909 expired on May 17, 2015. The expiry had no financial impact on the Company. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS Likely developments in the operations of the Company have been set out in the Review of Operations. Further information on the likely developments and expected results of operations of the Company has not been included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the Company. MEETINGS OF DIRECTORS The number of meetings of directors of the Company (including meetings of committees of directors) held during the year and the number of meetings attended by each director was as follows: Note Meetings Attended Meetings Attended Directors Audit Committee Remuneration and Nomination Committee Meetings Attended Michael O’Keeffe Gary Lawler Andrew Love Paul Ankcorn Richard Wright Niall Lenahan Thomas Larsen Donald Sheldon James Wang (a) (a) (b) (c) (d) (d) (d) Notes: (a) Appointed on April 9, 2014 (b) Left on April 5, 2014. (c) Resigned on April 9, 2014. (d) Term ended on August 29, 2014. 11 10 10 11 – – 6 6 6 11 10 9 11 – – 6 6 4 – 6 6 6 – – – – – – 6 5 6 – – – – – 1 1 1 – – – – – – 1 1 1 – – – – – – AUDIT COMMITTEE The Company has established an Audit Committee that comprises Andrew Love (Chair), Gary Lawler and Paul Ankcorn. REMUNERATION AND NOMINATION COMMITTEE The Company has established a Remuneration and Nomination Committee that comprises Gary Lawler (Chair), Michael O’Keeffe and Andrew Love. ENVIRONMENTAL ISSUES The Company’s policy is to comply with all relevant legislation and the best practice conventions in respect of its exploration and mining activities on the tenements it holds. There have been no significant known breaches of the Company’s licence conditions or any environmental regulations to which it is subject. 5 OPTIONS The unissued shares of the Company under option at March 31, 2015 are disclosed in note 14 of the consolidated financial statements. REMUNERATION REPORT – AUDITED This report outlines the remuneration arrangements in place for Key Management Personnel (“KMP”) of the Company. Directors’ Remuneration Policy (a) The policy of the Company is to pay remuneration of KMP in cash and in amounts in line with employment market conditions relevant in the mining industry. (b) The Company’s performance, and hence that of its KMP, is measured in terms of a combination of Company share price growth, cash raised, exploration carried out and farm in expenditure attracted. Remuneration Report The directors of the Company present the Remuneration Report prepared in Accordance with Section 300A of the Corporations Act for the Company for the year ended March 31, 2015. The following persons had authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, during the financial year: Person Michael O’Keeffe Position Executive Chairman and Chief Executive Officer Non-executive Director Gary Lawler Non-executive Director Andrew Love Paul Ankcorn Non-executive Director Alexander Horvath Chief Operating Officer David Cataford Miles Nagamatsu Jorge Estepa Vice President, Engineering Chief Financial Officer Vice President, Corporate Secretary Canada Company Secretary Head of Finance Pradip Devalia Beat Frei Note Appointed as Chief Executive Officer on October 3, 2014 Appointed on April 9, 2014 Appointed on April 9, 2014 Appointed on October 16, 2014 Appointed on June 18, 2014. Richard Wright Niall Lenahan Non-executive Director Director and Company Secretary Left on April 9, 2014 Resigned as director on April 9, 2014; resigned as Company Secretary on June 18, 2014 Thomas Larsen Director and Chief Executive Officer Term as director ended on August 29, 2014; resigned as Donald Sheldon James Wang Non-executive Director Non-executive Director Chief Executive Officer on August 29, 2014 Term ended on August 29, 2014 Term ended on August 29, 2014 6 Remuneration of key management personnel Year ended March 31, 2015 Short term $ Termination payments $ Post employment $ Salary Consulting fees Bonus Non- monetary Equity settled share based $ Total $ Performance related Consisting of shares and options Michael O’Keeffe Gary Lawler (a) Andrew Love (a) Paul Ankcorn Alexander Horvath (b) David Cataford (c) Miles Nagamatsu (d) Jorge Estepa (e) Pradip Devalia (f) Beat Frei (g) Richard Wright (h) Niall Lenahan (i) Thomas Larsen (j) Donald Sheldon (k) James Wang (l) 142,657 75,000 75,000 48,000 – 110,000 – – 57,500 – – 15,000 – – – 523,157 – – – – 240,000 – 157,500 153,000 – 240,000 – – 125,000 – – 915,500 – – – – – – – – – – – – – – – – – – – – – – 10,659 10,659 – – – – 6,978 – – 28,296 – – – – – – 90,000 150,000 – – – – 300,000 – – 540,000 (l) 14,293 (l) 7,671 (l) 7,671 (m) 2,376 – (m) 2,691 – – (l) 6,735 – – (l) 1,387 – – – 42,824 96,250 130,000 130,000 – 5,972 – – – 25,500 5,972 – 1,356 120,000 – – 515,050 253.200 212,671 212,671 50,376 245,972 112,691 258,159 313,659 89,735 245,972 – 17,743 551,978 – – 2,564,827 – – – – – – – – – – – – – – – 38.0% 61.0% 61.1% – 2.4% – – – 28.4% 2.4% – 7.6% 21.7% – – Notes: (a) Appointed as director on April 9, 2014. (b) Paid to A.S. Horvath Engineering Inc., a company controlled by Alexander Horvath (c) Appointed as Vice President, Engineering on October 16, 2014. (d) Paid to Marlborough Management Limited, a company controlled by Miles Nagamatsu (e) Paid to J. Estepa Consulting Inc., a company controlled by Jorge Estepa. (f) Appointed as Corporate Secretary on June 18, 2014. (g) Paid to Comforta GmbH, a company controlled by Beat Frei. (h) Left as director on April 9, 2014. (i) Resigned as director on April 9, 2014; resigned as Company Secretary on June 18, 2014 (j) Paid to Gambier Holdings Corp., a company controlled by Thomas Larsen. Term as director ended on August 29, 2014; resigned as Chief Executive Officer on August 29, 2014. (k) Term as director ended on August 29, 2014. (l) Amount relates to superannuation (m) Amount relates to employer portion of contributions to the Canada Pension Plan. Year ended March 31, 2014 Champion Thomas Larsen (a) Paul Ankcorn Harry Burgess William Harding (b) Alexander Horvath Francis Sauve Donald Sheldon (c)(d) James Wang Miles Nagamatsu (e) Jorge Estepa (f) Mamba Michael O’Keeffe (g) Richard Wright (g) Niall Lenahan (g) Short term $ Consulting fees Bonus Non- monetary 465,891 – – 188,391 180,000 – 69,939 – 207,648 207,648 1,319,517 60,000 – – – – – – – – – 60,000 13,956 – – – – – – – 13,956 13,956 41,868 Salary – 32,000 46,645 78,000 – 12,000 – – – – 168,645 65,400 39,240 39,240 312,525 – – – 1,319,517 – – – 60,000 38,633 – – 80,501 Termination payments $ Post employment $ Equity settled share based $ Total $ Performance related Consisting of shares and options – – – – – – – – – – – – – – – – (h) 1,496 – (h) 3,352 – (h) 558 – – – – 5,406 600,000 14,667 44,000 44,000 180,000 14,667 – 44,000 360,000 360,000 1,661,334 1,139,847 48,163 90,645 313,743 360,000 27,225 69,939 44,000 581,604 581,604 3,256,770 (i) 6,049 (i) 3,630 (i) 3,630 18,715 56,146 28,073 56,146 1,801,699 166,228 70,943 99,016 3,592,597 19.8% – – 52.9% – – – – 4.8% 4.8% 37.8% 39.6% 56.7% 52.6% 31.4% 48.5% 14.0% – 55.0% – 100.0% 61.9% 61.9% 37.8% 39.6% 56.7% 7 Notes: (a) Paid to Gambier Holdings Corp., a company controlled by Thomas Larsen. (b) Paid to William Harding or Vanctor Investments Limited, a company controlled by William Harding. (c) Paid to Sheldon Executive Services Inc., a company controlled by Donald Sheldon. (d) In addition to the remuneration, legal fees of $499,212 were paid to Sheldon Huxtable Professional Corporation, a corporation controlled by Donald Sheldon. (e) Paid to Marlborough Management Limited, a company controlled by Miles Nagamatsu. (f) Paid to J. Estepa Consulting Inc., a company controlled by Jorge Estepa. (g) Appointed as a director August 13, 2013. (h) Amount relates to employer portion of contributions to the Canada Pension Plan. (i) Amount relates to superannuation. Service agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements. Each of these agreements has the provision for performance-related cash bonuses, other benefits and participation in Company’s long term incentive plans. Major provisions of the service agreements relating to remuneration as at March 31, 2015 are set out below. Michael O’Keeffe – Director and Executive Chairman  Base salary and superannuation of A$109,250 per year up to June 30, 2014, and thereafter, A$171,780 to be reviewed annually, with a 2 year term of agreement.  Payment of termination benefit equal to salary for 3 months annual package or salary for 1 year on a change of control event. Gary Lawler – Non-executive Director  Fees of A$75,000 per year until termination. Andrew Love – Non-executive Director  Fees of A$75,000 per year until termination. Paul Ankcorn- Non-Executive Director  Fees of $48,000 per year until termination. Alexander Horvath – Chief Operating Officer  Fees of $180,000 up to March 31, 2014, and thereafter, $240,000 per year payable to A.S. Horvath Engineering Inc. until December 31, 2016 pursuant to a professional services agreement.  Payment of termination benefit equal to fees for 1 year. David Cataford – Vice President, Engineering  Salary of $240,000 per year pursuant to an employment agreement which continues for an indefinite period subject to termination for cause or without cause.  Payment of termination benefit equal to salary for 6 months or salary for 1 year on a change of control event. Miles Nagamatsu – Chief Financial Officer  Up to December 31, 2014, fees of $180,000 per year payable to Marlborough Management Limited, a company controlled by Miles Nagamatsu, pursuant to a professional services agreement which, unless terminated, renews automatically on November 30.  Effective January 1, 2015, a one-time fee of $90,000 was paid to reduce fees to $90,000 per year payable to Marlborough Management Limited, pursuant to an amended professional services agreement, which unless terminated, renews automatically on November 30.  Payment of termination benefit equal to fees for 6 months. Jorge Estepa – Vice President and Corporate Secretary, Canada  Up to December 31, 2014, fees of $180,000 per year payable to J. Estepa Consulting Inc., a company controlled by Jorge Estepa, pursuant to a professional services agreement, which unless terminated, renews automatically on November 30.  Effective January 1, 2015, a one-time fee of $150,000 was paid to terminate the professional services agreement and reduce fees to $72,000 per year payable to J. Estepa Consulting Inc., pursuant to an engagement letter, which may be terminated by either party on 30 days advance notice. 8 Pradip Devalia – Corporate Secretary, Australia  Up to November 30, 2014, salary of A$50,000 per year pursuant to an employment agreement until termination on 3 months written notice.  Effective December 1, 2014, salary of A$80,000 per year pursuant to an employment agreement until termination on 3 months written notice.  Payment of termination benefit equal to salary for 6 months on a change of control event. Beat Frei – Head of Finance  Fees of $240,000 per year payable to Comforta GmbH, a company controlled by Beat Frei, pursuant to a professional services agreement, which, unless terminated, renews automatically on September 30.  Payment of termination benefit equal to fees for 12 months. Movement in key management personnel equity holdings Ordinary shares Michael O’Keeffe Gary Lawler Andrew Love Paul Ankcorn Alexander Horvath David Cataford Miles Nagamatsu Jorge Estepa Pradip Devalia Beat Frei Richard Wright (a) Niall Lenahan (b) Thomas Larsen (c) Donald Sheldon (d) James Wang (d) Holding at March 31, 2014 Acquired Sold Other changes Holding at March 31, 2015 6,330,279 800,000 520,000 163,533 559,208 – 1,211,916 1,133,083 – 868,500 631,923 1,000,000 3,446,118 544,500 – 5,071,651 33,889 200,000 – – 625,698 – – – 276,708 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – (631,923) (1,000,000) (3,446,118) (544,500) – 11,401,930 833,889 720,000 163,533 559,208 625,698 1,211,916 1,133,083 – 1,145,208 – – – – – (a) Left as director on April 9, 2014. (b) Resigned as director on April 9, 2014; resigned as Company Secretary on June 18, 2014 (c) Term as director ended on August 29, 2014; resigned as Chief Executive Officer on August 29, 2014 (d) Term as director ended on August 29, 2014. Stock options Michael O’Keeffe Gary Lawler Andrew Love Paul Ankcorn Alexander Horvath David Cataford Miles Nagamatsu Jorge Estepa Pradip Devalia Beat Frei Richard Wright (a) Niall Lenahan (b) Thomas Larsen (c) Donald Sheldon (d) James Wang (d) Holding at March 31, 2014 1,000,000 – – 220,000 385,000 – 348,334 458,334 – 366,667 500,000 1,000,000 1,173,333 256,666 220,000 Granted Forfeited Expired Other changes Holding at March 31, 2014 Exercisable at March 31, 2015 – 500,000 500,000 – 500,000 – – – 150,000 500,000 – – – – – – – – – – – – – (110,000) (183,333) – (183,334) (275,001) – – – – – – – – – – – – 1,000,000 500,000 500,000 110,000 701,667 – 165,000 183,333 150,000 866,667 – – 1,000,000 – – (500,000) (500,000) – – – – – – – – – (500,000) (2,173,333) (256,666) (220,000) – – – – – 500,000 500,000 500,000 110,000 201,667 – 165,000 183,333 150,000 366,667 – – – – – 9 (a) Left as director on April 5, 2014. (b) Resigned as director on April 9, 2014; resigned as Company Secretary on June 18, 2014 (c) Term as director ended on August 29, 2014; resigned as Chief Executive Officer on August 29, 2014 (d) Term as director ended on August 29, 2014. Each option entitles the holder to acquire 1 ordinary share and have been issued for no consideration. Option compensation granted and vested during the year Year ended March 31, 2015 Exercise price Number granted Grant date Fair value per option at grant date $ Value of options granted $ Vested in period % Expiry & last exercise date Gary Lawler Andrew Love Pradip Devalia Thomas Larsen Alexander Horvath Beat Frei A$0.50 A$0.50 A$0.50 $0.45 A$0.30 A$0.30 500,000 April 9, 2014 500,000 April 9, 2014 150,000 June 18, 2014 1,000,000 September 1, 2014 500,000 October 30, 2014 500,000 October 30, 2014 100 100 100 100 – – 0.26 0.26 0.17 0.12 0.10 0.10 130,000 130,000 25,500 April 9, 2017 April 9, 2017 June 18, 2017 120,000 September 1, 2018 October 30, 2017 October 30, 2017 50,000 50,000 On October 3, 2014, subject to shareholder approval, the Company agreed to grant 1,000,000 stock options to Michael O’Keeffe, entitling him to purchase one ordinary share for A$0.30 for 3 years from the date of shareholder approval. These options will vest in annual instalments over 3 years from the date of shareholder approval, subject to holder’s continued service with the Company, the satisfactory progression towards the completion of a bankable feasibility study for Consolidated Fire Lake North during the term of the stock options, and the satisfactory completion of a bankable feasibility study by the expiry date of the stock options. There were 1,000,000 options forfeited during the year ended March 31, 2015 (2014: Nil). INDEMNIFICATION There are indemnities in place for directors and officers insurance policies in regard to their positions. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. NON-AUDIT SERVICES Ernst & Young performed other services in addition to their statutory duties. The details and remuneration for these services is disclosed in Note 22 of the consolidated financial statements. AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration for the year ended March 31, 2015 has been received and has been included in this report. Signed in accordance with a resolution of the Directors Michael O’Keeffe, Executive Chairman Andrew Love, Non-Executive Director Sydney, New South Wales June 29, 2015 10 BOARD OF DIRECTORS IN OFFICE AT THE DATE OF THIS REPORT Executive Chairman and Chief Executive Officer Michael O’Keeffe B.App.Sc (Metallurgy) Mr O’Keeffe was appointed executive Chairman of Champion Iron Limited on August 13, 2013. Mr O’Keeffe commenced work with MIM Holdings in 1975. He held a series of senior operating positions, rising to Executive Management level in commercial activities. In 1995 he became Managing Director of Glencore Australia (Pty) Limited and held the position until July 2004. Mr O’Keeffe was the founder and Executive Chairman of Riversdale Mining Limited. He has previously held directorships in Anaconda Nickel Limited, Mt Lyell Mining Co Limited and BMA Gold Limited. Mr O’Keeffe is currently the chairman of Riversdale Resources Limited. Non-Executive Director Gary Lawler BA, LLB, LLM (Hons), ASIA, Master of Laws (Applied Laws)(Wills and Estates) Mr. Lawler was appointed as a Non-Executive Director on April 9, 2014. He is a leading Australian mergers and acquisitions lawyer who has been involved in some of Australia's most notable merger and acquisition transactions. Mr Lawler has over 30 years’ experience as a practising corporate lawyer and has been a partner in a number of leading Australian law firms. He is currently a consultant of the legal firm Ashurst Australia. Mr Lawler was also previously a director of Riversdale Mining Limited and Dominion Mining Limited. Mr Lawler is currently a director of Riversdale Resources Limited. Non-Executive Director Andrew J. Love, FCA. Mr. Love was appointed as a Non-Executive Director on April 9, 2014. He is a Chartered Accountant with more than 30 years of experience in corporate recovery and reconstruction in Australia. He was a senior partner of Australian accounting firm Ferrier Hodgson from 1976 to 2013 and is now a consultant. In that time he advised major local and overseas companies and financial institutions in a broad variety of restructuring and formal insolvency assignments. During this time Mr. Love specialized in the Resources Industry. Mr. Love has been an independent company director of a number of companies over a 25-year period in the Resources, Financial Services and Property Industries. This has involved corporate experience in Asia, Africa, Canada, United Kingdom and United States. Mr. Love’s previous recent Board positions have included Chairman of ROC Oil Ltd., Deputy Chairman of Riversdale Mining Ltd., Director of Charter Hall Office Trust and Chairman of Museum of Contemporary Art. Mr. Love is currently a director of Gateway Lifestyle Operations Ltd. Non-Executive Director Paul Ankcorn Mr. Ankcorn is an Executive Officer in the mining business. He was the President and director of the Cartier Iron Corporation from 2012 to 2013, the Chief Financial Officer of Tartisan Resources Corp. since 2008, and President of Remington Resources Inc. from 2005 to 2010 (all resource exploration corporations). He is a director of ACME Resources Corp., Tartisan Resources Corp. and Fancamp Exploration Ltd. 11 1) In the opinion of the Directors: DIRECTORS' DECLARATION (a) The accompanying financial statements and notes are in accordance with the Corporations Act 2001, including:  giving a true and fair view of the Group's financial position as at March 31, 2015 and of its performance for the year ended on that date; and  complying with Australian Accounting Standards and the Corporations Act 2001. (b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable. (c) the audited remuneration disclosure set out in the Remuneration Report of the Director's Report for the year ended March 31, 2015 complies with section 300A of the Corporations Act 2001. 2) The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 for the financial year ended March 31, 2015. 3) The Group has included in the notes to the financial statements a statement of compliance with International Financial Reporting Standards. Signed in accordance with a resolution of the Directors Michael O’Keeffe, Executive Chairman Andrew Love, Non-executive Director Sydney, New South Wales June 29, 2015 12 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au Auditor’s Independence Declaration to the Directors of Champion Iron Limited In relation to our audit of the financial report of Champion Iron Limited for the financial year ended 31 March 2015, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young Ryan Fisk Partner Sydney 29 June 2015 A member firm of Ernst & Young Global Limited 13 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au Independent auditor's report to the members of Champion Iron Limited Report on the financial report We have audited the accompanying financial report of Champion Iron Limited, which comprises the consolidated statement of financial position as at 31 March 2015, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year. Directors' responsibility for the financial report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor's responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report. A member firm of Ernst & Young Global Limited 14 Page 2 Opinion In our opinion: a. the financial report of Champion Iron Limited is in accordance with the Corporations Act 2001, including: i ii giving a true and fair view of the consolidated entity's financial position as at 31 March 2015 and of its performance for the year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001; and b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Report on the remuneration report We have audited the Remuneration Report included in pages 6 to 10 of the directors' report for the year ended 31 March 2015. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion, the Remuneration Report of Champion Iron Limited for the year ended 31 March 2015, complies with section 300A of the Corporations Act 2001. Ernst & Young Ryan Fisk Partner Sydney 29 June 2015 A member firm of Ernst & Young Global Limited 15 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au To the Shareholders of Champion Iron Limited We have audited the accompanying consolidated financial statements of Champion Iron Limited, which comprise the consolidated statement of financial position as at March 31, 2015, and the consolidated statement of operations, comprehensive income (loss), changes in equity and cash flows for the year ended March 31, 2015, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Champion Iron Limited as at March 31, 2015, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Chartered accountants Sydney, Australia June 29, 2015 A member firm of Ernst & Young Global Limited 16 [This page has been intentionally left blank] 17 Champion Iron Limited (ACN: 119 770 142) Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) 18 Champion Iron Limited Consolidated Statements of Financial Position (expressed in Canadian dollars) Assets Current Cash and cash equivalents Short-term investments Receivables Due from joint venture Prepaid expenses Deposit Non-current Receivables Due from Cartier Iron Corporation Investments Investment in associate Investment in SFNQ Long-term advance Property and equipment Exploration and evaluation Liabilities Current Accounts payable and accrued liabilities Non-current Royalty payable Shareholders’ equity Capital stock Warrants Contributed surplus Foreign currency translation reserve Deficit On behalf of the Board: Notes As at March 31, 2014 $ 2015 $ 5 6 10 6 7 8 9 10 11 12 1,346,685 1,300,000 5,303,658 124,533 188,034 1,000,000 9,262,910 4,355,082 1,063,036 1,628,300 1,162,903 100 6,000,000 46,665 69,845,118 93,364,114 16,221,821 66,000 10,183,531 - 151,259 - 26,622,611 - 2,086,049 4,975,865 - - 6,000,000 85,555 88,049,839 127,819,920 1,421,590 5,922,939 13 and 20 600,000 2,021,590 19,000,000 24,922,939 14 14 171,420,382 3,089,520 15,996,920 (429,098) (98,735,201) 91,342,524 171,420,382 3,089,520 15,282,169 - (86,895,091) 102,896,980 93,364,114 127,819,920 Director Director See accompanying notes to the consolidated financial statements 19 Champion Iron Limited Consolidated Statements of Loss and Comprehensive Loss (expressed in Canadian dollars) Other income Interest Gain on sale of exploration and evaluation Gain on waiver of right of first refusal Other Expenses Professional fees Salaries Consulting fees Share-based compensation General and administrative Investor relations Travel Exploration Foreign exchange gain Unrealized loss (gain) on investments Impairment of investment in associate Impairment of exploration and evaluation Impairment of goodwill Transaction costs Interest Loss before share of net loss of an Share of net loss of associate accounted for using the equity method Loss Item that may be reclassified in to the statement of loss Net movement in foreign currency Total comprehensive loss Loss per share - basic and diluted Weighted average number of shares outstanding - basic and diluted Years ended March 31, 2014 $ 2015 $ Notes 75,751 - - 240,953 316,704 236,425 553,398 440,000 - 1,229,823 560,986 987,870 1,499,282 714,751 1,467,375 448,775 568,983 23,988 (443,523) 2,521,212 794,000 2,933,664 - - - 12,077,364 687,749 - 1,689,025 239,000 804,792 1,595,602 544,633 - - (739,524) - - 41,177,744 3,811,438 12,263 49,822,721 10 14 9 12 4 4 (11,760,660) (79,450) (48,592,898) - 9 (11,840,110) (48,592,898) (429,098) (12,269,209) - (48,592,898) (0.06) (0.50) 196,599,004 96,562,150 See accompanying notes to the consolidated financial statements 20 Champion Iron Limited Consolidated Statements of Changes in Equity (expressed in Canadian dollars) Capital stock $ Warrants $ Contributed surplus $ Foreign currency translation reserve $ Deficit $ Total $ Balance, March 31, 2014 171,420,382 3,089,520 15,282,169 - (86,895,091) 102,896,980 Loss Other comprehensive loss Total comprehensive loss - - - - - - - - - - (429,098) (429,098) (11,840,110) - (11,840,110) (11,840,110) (429,098) (12,269,209) Share-based compensation Balance, March 31, 2015 - 171,420,382 - 3,089,520 714,751 15,996,920 - (429,098) - (98,735,201) 714,751 91,342,524 Balance, March 31, 2013 Total comprehensive loss Issued for exploration and evaluation Conversion of convertible debt Conversion of debt Private placement Fair value of warrants issued Fair value of expired warrants Share-based compensation Share issue costs Acquisition of Mamba Balance, March 31, 2014 122,982,950 - 190,000 373,175 157,500 3,000,000 (1,277,000) 1,214,667 - (337,446) 45,116,536 171,420,382 3,027,187 - - - - 1,277,000 (1,214,667) - - - 3,089,520 8,746,169 - - - - - - 239,000 - 6,297,000 15,282,169 - - - - - - - - - - - (38,302,192) (48,592,898) - - - - - - - - (86,895,090) 96,454,114 (48,592,898) 190,000 373,175 157,500 3,000,000 - - 239,000 (337,446) 51,413,536 102,896,980 See accompanying notes to the consolidated financial statements 21 Champion Iron Limited Consolidated Statements of Cash Flows (expressed in Canadian dollars) Cash provided by (used in) Operating activities Loss before tax Items not affecting cash Share-based compensation Depreciation Gain on sale of exploration and evaluation Gain on waiver of right of first refusal Unrealized loss (gain) on investments Impairment of goodwill Impairment of investment in associate Impariment of exploration and evaluation Share of net loss of SFNQ Changes in non-cash operating Receivables Due from joint venture Prepaid expenses Accounts payable and accrued liabilities Financing activities Repayment of convertible note Issue of common shares Share issue costs Investing activities Receipt of refundable tax credit on exploration Receipt of credit on duties refundable Investment in short-term investment Deposit Advances to Cartier Iron Corporation Investment in Cartier Iron Corporation Investment in Lamêlée Investment in joint venture Purchase of property and equipment Option payment from Cartier Cash acquired on acquisition of Exploration and evaluation Arrangement costs Net decrease in cash and cash Cash and cash equivalents, Effects of exchange rate changes Cash and cash equivalents, end of Years ended March 31, 2014 $ 2015 $ Notes 14 4 9 12 14 (11,840,110) (48,592,898) 714,751 40,754 - - 2,521,212 - 794,000 2,933,664 79,450 (4,756,279) (389,534) (124,533) (36,775) (128,531) (5,435,652) 239,000 - (553,398) (440,000) (739,524) 41,177,744 - - - (8,909,076) 945,467 - 127,970 2,616,512 (5,219,127) - - - - (345,000) 3,000,000 (337,446) 2,317,554 1,649,157 1,325,433 (1,234,000) (1,000,000) (26,987) - - (100) (1,864) 150,000 - (5,499,206) (4,372,818) (9,010,385) 11,000,000 404,424 - - (2,011,049) (27,811) (200,000) - - - 12,018,150 (6,595,409) - 14,588,305 (14,446,038) 16,221,821 (429,098) 1,346,685 11,686,732 4,535,089 - 16,221,821 See accompanying notes to the consolidated financial statements 22 Champion Iron Limited Consolidated Statements of Cash Flows (expressed in Canadian dollars) Non-cash transactions Receipt of Cartier common shares Conversion of due from Cartier Option payment from Cartier Received on sale of exploration and evaluation Century common shares Century warrants Received for waiver of right of first refusal Fancamp common shares Lamêlée common shares Issue of convertible notes to settle accounts payable Issue of common shares Exploration and evaluation Conversion of convertible debt To settle accounts payable Reversal of mining tax credit Years ended March 31, 2014 $ 2015 $ Notes 7 12 1,050,000 160,000 - - - - - - - - 400,708 - - 930,000 193,440 200,000 240,000 718,525 190,000 373,175 157,500 - See accompanying notes to the consolidated financial statements 23 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) 1. Basis of preparation The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except for cash and cash equivalent, short-term investments, investments, investment in associate and royalty payable which have been measured at fair value. On March 31, 2014, pursuant to an Arrangement Agreement (“Arrangement”), Mamba Minerals Limited (“Mamba”): (a) acquired all of the issued and outstanding common shares of Champion Iron Mines Limited (“Champion”) on the basis of an exchange ratio of 0.7333333 Mamba share and/or Exchangeable share (or combination thereof) for each outstanding Champion common share and (b) replaced each outstanding Champion warrant and Champion stock option on the basis that the holder will be entitled to acquire 0.7333333 Mamba share on the same terms and conditions. Under corporations law, Mamba is the parent and Champion is the subsidiary. However, the former shareholders of Champion received 51% of the voting rights in the combined entity and Champion had the ability to appoint a majority of the members of the board of directors of the combined entity. Under the requirements of AASB 3 (IFRS 3) Business Combinations, for accounting purposes, Champion was deemed to be the acquirer, Mamba was deemed to be the acquiree and the consideration transferred by Champion was measured at fair value. The consolidated financial statements represent a continuation of the financial statements of Champion. The consolidated financial statements for the year ended March 31, 2015 include the financial results of Champion and Mamba from March 31, 2014. The comparative consolidated financial statements are those of Champion. Following the closing of the Arrangement, Mamba changed its name to Champion Iron Limited (the “Company”). The consolidated financial statements of Champion Iron Limited and its subsidiaries (collectively the “Company”) for the year ended March 31, 2015 were approved and authorized for issue by the Board of Directors on June 25, 2015. The nature of the operations and principal activities of the Company are described in the Directors’ Report. Statement of compliance with IFRS The financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Presentation currency These consolidated financial statements are presented in Canadian dollars. 2. Significant accounting policies and future accounting changes The accounting policies set out below have been applied consistently to all years presented in these financial statements. Basis of consolidation and functional currency The consolidated financial statements include the accounts of the Company and its subsidiaries: Subsidiary Champion Iron Mines Limited Champion Exchange Limited Mambas Minerais Limitada CIP Magnetite Pty Limited CIP Magnetite Limited Ownership percentage 100.0% 100.0% 97.5% 100.0% 100.0% Country of incorporation Canada Canada Mozambique Australia Canada Functional currency Canadian dollars Canadian dollars Australian dollars Australian dollars Canadian dollars During the year ended March 31, 2014, Mambas Minerais Limitada was placed into liquidation. 24 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Intercompany balances and any unrealized gains and losses or income and expenses arising from intercompany transactions are eliminated on consolidation. Financial instruments Non-derivative financial assets The Company initially recognizes loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognized initially on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. The Company classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets. Financial assets at fair value through profit or loss A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition. Financial assets are designated at fair value through profit or loss if the Company manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Company’s documented risk management or investment strategy. Attributable transaction costs are recognized in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value (i.e. quoted close price) and changes therein are recognized in profit or loss. The Company has classified cash and cash equivalents, short-term investments and investments as financial assets at fair value through profit or loss. Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. The Company has classified receivables, due from joint venture and due from Cartier Iron Corporation as loans and receivables. Non-derivative financial liabilities The Company initially recognizes debt securities issued and subordinated liabilities on the date that they are originated. All other liabilities (including liabilities designated at fair value through profit or loss) are recognized initially on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire. The Company classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. The Company has classified accounts payable and accrued liabilities as other financial liabilities. 25 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Impairment of non-derivative financial assets A financial asset is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Business combinations Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value. Acquisition-related costs are expensed as incurred and included in administrative expenses. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration over the net identifiable assets acquired and liabilities assumed. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Cash and cash equivalents Cash and cash equivalents consists of cash in bank, cash held in trust and short-term deposits with a maturity of less than three months. Property and equipment Property and equipment is recorded at cost less accumulated amortization and provisions for impairment. Cost consists of expenditures directly attributable to the acquisition of the asset. Amortization is provided for on a straight-line basis over the estimated useful lives of the assets at the rate of 20% to 40%. Residual values, useful lives and methods of amortization are reviewed at each year end and adjusted prospectively. Exploration and evaluation Recognition and measurement Exploration and evaluation, including the costs of acquiring licenses and directly attributable general and administrative costs, initially are capitalized as exploration and evaluation. The costs are accumulated by property pending the determination of technical feasibility and commercial viability. Pre-license costs are expensed when incurred. Pre- exploration costs are expensed unless it is considered probable that they will generate future economic benefits. Mining tax credits earned in respect to costs incurred in Quebec are recorded as a reduction to exploration and evaluation assets when there is reasonable assurance that the Company has complied with, and will continue to comply with, all conditions needed to obtain the credits. The recoverability of amounts shown for exploration and evaluation is dependent upon the ability of the Company to obtain financing to complete the exploration and development of its mineral resource properties, the existence of economically recoverable reserves and future profitable production, or alternatively, upon the Company’s ability to recover its costs through a disposition of its mineral resource properties. The amounts shown for exploration and evaluation do not necessarily represent present or future value. Changes in future conditions could require a material change in the amount recorded for exploration and evaluation. The technical feasibility and commercial viability of extracting a mineral resource from a property is considered to be determinable when proved and/or probable reserves are determined to exist and the necessary permits have been received to commence production. A review of each property is carried out at least annually. Upon determination of technical feasibility and commercial viability, exploration and evaluation is first tested for impairment and then reclassified to property, plant and equipment and/or intangibles or expensed to the statement of loss and comprehensive loss to the extent of any impairment. 26 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Impairment Exploration and evaluation is assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount. An impairment loss is recognized in the statement of loss and comprehensive loss if the carrying amount of a property exceeds its estimated recoverable amount. The recoverable amount of property used in the assessment of impairment of exploration and evaluation is the greater of its value in use (“VIU”) and its fair value less costs of disposal (“FVLCTS”). VIU is determined by estimating the present value of the future net cash flows at a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the property. FVLCTS refers to the price that would be received to sell the property in an orderly transaction between market participants. For a property that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the property belongs. Impairment losses previously recognized are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount only to the extent that the property's carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognized. Royalties payable Upon completion of a pre-feasibility study, royalties are recorded at estimated fair value as an acquisition cost of exploration and evaluation and an offsetting royalty payable. Future adjustments of royalties payable will be reflected as an adjustment to exploration and evaluation and an offsetting royalty payable. Share capital Share capital is classified as equity. Incremental costs directly attributable to the issue of common shares are recognized as a deduction from equity, net of any tax effects. Share-based payments The Company offers a stock option plan for its officers, directors, employees and consultants. The fair value of stock options for each vesting period is determined using the Black-Scholes option pricing model and is recorded over the vesting period as an increase to stock-based compensation and contributed surplus. A forfeiture rate is estimated on the grant date and is adjusted to reflect the actual number of options that vest. Upon the exercise of stock options, the proceeds received by the Company and the related contributed surplus are recorded as an increase to share capital. In the event that vested stock options expire, previously recognized share-based compensation is not reversed. In the event that stock options are forfeited, previously recognized share-based compensation associated with the unvested portion of the stock options forfeited is reversed. The fair value of share-based payment transactions to non-employees and other share-based payments including shares issued to acquire exploration and evaluation are based on the fair value of the goods and services received. If the fair value cannot be estimated reliably, the share-based payment transaction is measured at the fair value of the equity instruments granted at the date the Company receives the goods or services. Provisions A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. Income tax Income tax expense comprises current and deferred taxes. Current tax and deferred tax is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. 27 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:    temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Loss per share The Company presents basic and diluted loss per share data for its ordinary shares. Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for any of its own shares held. Diluted loss per share is determined by adjusting the loss attributable to shareholders and the weighted average number of ordinary shares outstanding, adjusted for any of its own shares held, for the effects of all dilutive potential ordinary shares, which comprise outstanding warrants and stock options. As at March 31, 2015 and March 31, 2014, outstanding stock options and warrants are anti-dilutive. Changes in accounting standards On April 1, 2014, the Company adopted all of the mandatorily applicable new Australian Accounting Standards and International Financial Reporting Standards, amendments to standards and interpretations. The adoption of these accounting standards had no impact on these financial statements. New standards and interpretations not yet adopted Australian Accounting Standards and International Financial Reporting Standards that have been issued but are not yet effective have not been adopted by the Company for the year ended March 31, 2015. The Company has not determined the extent of the impact of these standards and does not plan to early adopt these new standards. 3. Significant accounting judgments, estimates and assumptions The preparation of financial statements in conformity with IFRS requires the Company's management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised and in any future years affected. Estimates Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are as follows: 28 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Estimates of mining tax credit receivables The Company estimates amounts to be received for unassessed claims for Refundable Tax Credits and Credits on Duties as a receivable and a reduction to exploration and evaluation assets when there is reasonable assurance that the Company has complied with all conditions needed to obtain the credits. See note 6. Fair value of investment in options and warrants The Company uses the Black-Scholes option pricing model in determining the fair value of its investment in options and warrants, which requires a number of assumptions to be made, including the risk-free interest rate, expected life, forfeiture rate and expected share price volatility. Consequently, actual fair value of its investments in options and warrants may vary from the amounts estimated. See notes 8 and 14. Estimates of mineral resources The amounts used in impairment calculations are based on estimates of mineral resources. Resource estimates are based on engineering data, estimated future prices, expected future rates of production and the timing of future capital expenditures, all of which are subject to many uncertainties and interpretations. The Company expects that, over time, its resource estimates will be revised upward or downward based on updated information such as the results of future drilling, testing and production levels, and may be affected by changes in iron ore prices. See note 12. Impairment of exploration and evaluation Exploration and evaluation assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable through future exploitation or sale. Such circumstances include the period for which the Company has the right to explore in a specific area, actual and planned expenditures, results of exploration, whether an economically-viable operation can be established and significant negative industry or economic trends. Management judgment is also applied in determining cash generating units, the lowest levels of exploration and evaluation assets grouping, for which there are separately identifiable cash flows, generally on the basis of areas of geological interest. As at March 31, 2015, the Company determined that indicators of impairment existed on its Powderhorn and Gullbridge properties based on the fact that, in both cases, no exploration or evaluation expenditures are planned in the near future. As such, the Company performed impairment assessments on both mining properties and in each case estimated the recoverable amount of the exploration and evaluation assets at nil due to the fact that no commercially viable deposits have been discovered. As such, for the year ended March 31, 2015, the Company recorded impairment losses in respect of Powderhorn and Gullbridge amounting to $1,645,065 and $1,286,599 respectively. See note 12. Estimate of royalty payable The Company used inputs that are not based on observable market data in determining the fair value of the royalty payable. The Company expects that, over time, royalty payable will be revised upward or downward based on updated information on production levels and changes in iron ore prices. See notes 13 and 20. Share-based payments The Company uses the Black-Scholes option pricing model in determining share-based payments, which requires a number of assumptions to be made, including the risk-free interest rate, expected life, forfeiture rate and expected share price volatility. Consequently, actual share-based compensation may vary from the amounts estimated. See note 14. 4. Acquisition of Mamba Minerals Limited Pursuant to the Arrangement which was completed on March 31, 2014 (see note 1), for accounting purposes, Champion is deemed to have (a) acquired all of the issued and outstanding ordinary shares of Mamba on the basis of an exchange ratio of 1.3636 Champion common shares for each Mamba share issued and outstanding and (b) replaced each outstanding Mamba stock option on the basis that the holder will be entitled to acquire, on the same terms and conditions, 1.3636 Mamba shares. The allocation of the purchase price is summarized as follows: 29 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Deemed consideration Fair value of 132,695,695 Champion common shares Fair value of 28,362,880 Replacement Stock Options Fair value of assets acquired and liabilities assumed Cash and cash equivalents Receivables Property, plant and equipment Accounts payable and accrued liabilities Net assets acquired Goodwill $ 45,116,536 6,297,000 51,413,536 12,018,150 57,126 85,555 (1,925,039) 10,235,792 41,177,744 51,413,536 The fair value of the Champion common shares is based on (a) the number of common shares that Champion would have issued to give Mamba the same percentage in the combined entity that results from the reverse acquisition and (b) the closing market value of $0.34 per Champion common share on March 31, 2014. The fair value of the Replacement Stock Options of $6,297,000 was calculated using the Black-Scholes option pricing model with the following weighted-average assumptions: Exercise price Share price Risk-free interest rate Expected volatility based on historical volatility Expected life of stock options Expected dividend yield Forfeiture rate $0.2957 $0.5600 2.5% 80% 1.94 years 0% 0% Goodwill recognized upon acquisition was tested for impairment and determined to be fully impaired as its fair value less costs to sell was estimated to be nil. Accordingly, the Company recorded an impairment of goodwill of $41,177,744 in the consolidated statement of loss and comprehensive loss for the year ended March 31, 2014. 5. Cash and cash equivalents As at March 31, 2014, cash included the proceeds of a private placement of A$10,000,000 which was held in trust and received by the Company on April 2, 2014. 6. Receivables The Company files a Québec Corporation Income Tax Return claiming a refundable tax credit on eligible exploration expenditures incurred in Québec (“Refundable Tax Credits”) and a Québec Mining Duties Return claiming a credit on duties refundable for losses (“Credit on Duties”). 30 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Claims for years ended March 31, Receivable as at March 31, 2014 2013 2015 2014 2015 Refundable Tax Credits As filed (2015 - to be filed) Receivable at March 31, 2015 Current Non-current Credit on Duties As filed (2015 - to be filed) Receivable at March 31, 2015 Current Harmonized and Quebec sales taxes Receivable at March 31, 2015 Current Total Allocation Current Non-current 1,275,091 1,410,115 7,555,705 – 1,020,073 1,020,073 901,483 226,609 1,128,092 2,936,222 3,108,400 6,044,622 3,837,705 4,355,082 8,192,787 9,222,521 – 9,222,521 281,802 209,515 1,122,562 – – 1,135,539 1,135,539 – 330,414 961,010 9,658,740 10,183,531 5,303,658 4,355,082 9,658,740 10,183,531 – 10,183,531 It is the Company’s policy to record an estimate of amounts to be received for unassessed claims for Refundable Tax Credits and Credits on Duties as a receivable and a reduction to exploration and evaluation assets when there is reasonable assurance that the Company has complied with all conditions needed to obtain the credits. Due to the assessment process and the length of time involved, the Company estimates the amount of the receivables that it does not expect to receive in the next 12 months and classifies the amount as a non-current receivable. During the year ended March 31, 2014, the Company recorded Refundable Tax Credits of $11,000,000 that were received and $9,222,521 that were estimated to be received as a reduction to exploration and evaluation. The amount of the unassessed and uncollected claims are subject to audit by Revenu Québec and Ressources naturelles et Faune Québec. See note 20 for subsequent events. 7. Due from Cartier Iron Corporation As at March 31, 2014, the amount due from Cartier Iron Corporation (“Cartier”) was $2,100,000, of which, $100,000 was unsecured, earned interest at the rate of LIBOR plus 2% and was due on September 13, 2014. On October 17, 2014, Cartier completed a private placement of $500,000, and as agreed, the Company converted $1,050,000 of the amount due from Cartier into 6,176,470 units of Cartier, with each unit consisting of one common share and one warrant entitling the Company to purchase one common share of Cartier for $0.22 until April 17, 2016 (“Conversion”). If the average closing price of Cartier’s common shares is greater than $0.40 for 20 consecutive business days, the warrants must be exercised within 10 calendar days of Cartier providing written notice (or such longer period as Cartier may provide), or they will be cancelled. 31 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) The remaining $1,050,000 due from Cartier was converted to a demand loan, which is unsecured, bears interest at the rate of LIBOR plus 2% and is due 6 months after the Company demands repayment (the “Demand Loan”). The Company has the right to convert the Demand Loan, plus accrued but unpaid interest, into Cartier common shares at a conversion price equal to the lowest subscription price per Cartier common share paid for the most recent capital raising undertaken by Cartier at the time of the conversion, subject to the minimum pricing rules and stock exchange approval. One director of the Company is a director of Cartier. Investments 8. The fair values of the Company’s investments are as follows: Fancamp Exploration Ltd. (“Fancamp”) Common shares Warrants Cartier Iron Corporation (note 9) Common shares Century Iron Mines Corporation (“Century”) Common shares Warrants Lamêlée Iron Ore Ltd. (“Lamêlée”) Common shares Warrants 2015 $ 880,000 – As at March 31, 2014 $ 2,200,000 74,000 – 730,265 567,300 18,000 160,000 3,000 1,628,300 1,041,600 161,000 680,000 89,000 4,975,865 Investments in common shares are classified as financial assets at fair value through profit or loss and investment in warrants are classified as derivative financial assets at fair value through profit or loss. For the year ended March 31, 2015, the decrease in the fair value of investments of $2,521,212, comprised of $2,218,212 for investment in common shares and $303,000 for investments in warrants, has been recorded as an unrealized loss on investments in the consolidated statement of loss and comprehensive loss. Fancamp The Company and Fancamp have entered into a reciprocal rights agreement governing certain investor rights and obligations as between them. The Company and Fancamp will each be restricted from transferring securities of the other until May 17, 2018, after which time, transfers will be permitted subject to certain restrictions. As at March 31, 2015, the Company held 10,000,000 warrants entitling the Company to purchase one common share of Fancamp for $0.60 between November 17, 2014 and May 17, 2015 (“Fancamp Warrants”). The Fancamp Warrants expired on May 17, 2015 and there was no financial impact on the Company. Century The Century common shares are subject to a hold period ending on November 29, 2015, after which, in the event that the Company seeks to sell Century common shares, Century will have a right of first refusal to arrange sales. The Company holds 930,000 warrants entitling it to purchase one common share of Century for: 32 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Exercise price $0.75 $1.00 $1.50 $2.00 $2.50 Exercise period November 29, 2013 to November 29, 2014 November 30, 2014 to November 29, 2015 November 30, 2015 to November 29, 2016 November 30, 2016 to November 29, 2017 November 30, 2017 to November 29, 2018 Lamêlée The Company holds 930,000 warrants entitling it to purchase one common share of Lamêlée for $0.15 until December 20, 2015. Investment in associate 9. As at June 30, 2014, the Company held a 19.9% interest in the outstanding common shares of Cartier (March 31, 2014 - 19.9%). A director of the Company was appointed to the board of directors of Cartier on June 30, 2014 and the Company determined that it obtained significant influence over Cartier as of July 1, 2014. Accordingly, from that date onward, the investment in Cartier has been accounted for as an associate using the equity method of accounting. Fair value as at July 1, 2014 Fair value of Cartier common shares received Conversion of receivable due from Cartier (note 7) Option payments (note 12) Share of net loss Impairment Balance at March 31, 2015 $ 826,353 1,050,000 160,000 (79,450) (794,000) 1,162,903 At March 31, 2015, the Company compared the carrying value of investment in Cartier to the fair value less costs to sell of the common shares of Cartier as indicated by the trading price on the Canadian Securities Exchange. As the carrying value exceeded the fair value, the Company recorded an impairment loss of $794,000. At March 31, 2015, the Company holds 11,019,970 common shares of Cartier, representing 33% of the issued and outstanding common shares of Cartier and 6,176,470 warrants entitling the Company to purchase one common share of Cartier for $0.22 until April 17, 2016. If the average closing price of common shares of Cartier is greater than $0.40 for 20 consecutive business days, the warrants must be exercised within 10 calendar days of Cartier providing written notice (or such longer period as Cartier may provide), or they will be cancelled. The holdings of the Company in Cartier are subject to the terms of a pre-emptive rights agreement and an agreement respecting board representation rights and standstill obligations entered into on December 10, 2012. Until December 31, 2017, the Company shall not sell common shares of Cartier without the prior written consent of Cartier, and thereafter, the Company shall not sell more than 2,000,000 common shares during any 30-day period. Until December 31, 2017, provided that the Company owns at least 10% of the outstanding common shares of Cartier: a) Cartier shall take all commercially reasonable steps to have a nominee of the Company elected as a director (“Nominee”) the board of directors of the Company (“Board”). b) The Company shall not vote against any shareholder resolution recommended by the Board, except in the event that the Nominee dissented when the Board approved a shareholder resolution that proposes to: (i) reduce the voting or dividend rights of the common shares; (ii) issue shares which carry a number of votes proportionately greater than the capital to be represented thereby or which carry dividend rights at a rate which would substantially impair the dividends ordinarily payable on the common shares; and (iii) approve a transaction with an arm’s length third party, which must be passed by at least two-thirds of the votes cast and in respect of which a shareholder has dissent rights. 33 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) c) The Company shall not vote in favour of the election of nominees to the Board who are not proposed by the then Board. d) The Company shall not (i) participate in a take-over bid for any securities of Cartier; (ii) solicit proxies from any shareholder or attempt to influence the voting by any shareholders other than in support of initiatives recommended by the Board or (iii) seek to influence or control the management, Board or the policies or affairs of Cartier; or (iv) make any public or private announcement or disclosure with respect to the foregoing. 10. Investment in SFNQ The Company is the general partner and a limited partner in La Société ferroviaire du Nord québécois, société en commandite (“SFNQ”). The other limited partners in SFNQ are the Government of Québec and Lac Otelnuk Mining Ltd., a joint arrangement between Adriana Resources Inc. and WISCO International Resources Development & Investment Limited. SFNQ was formed as a partnership of government and industry to complete a feasibility study for the construction of a new multi-user rail link giving mining projects in the Labrador Trough access to the port at Sept-Ȋles at the lowest possible cost. The Government of Québec has set aside a maximum of $20,000,000 from its Plan Nord Fund to contribute to SFNQ, while the Company’s contribution will consist of previously incurred costs of a minimum of $5,000,000 and a maximum of $6,000,000, with the final amount to be determined by an audit of the previously incurred costs. The Company has determined that it has significant influence over SFNQ, and accordingly, the Company will account for its investment in SFNQ using the equity method. Other income includes $264,953 for management services provided the Company in its capacity of general partner of SFNQ, of which, $124,533 was due as at March 31, 2015. 11. Long-term advance to Sept-Îles Port Authority (“Port”) On July 13, 2012, the Company signed an agreement (“Agreement”) with the Sept-Îles Port Authority (“Port”) to reserve annual loading capacity of 10 million metric tons of iron ore for an initial term of 20 years with options to renew for 4 additional 5-year terms. Pursuant to the Agreement, the Company was to pay $25,581,000 and take-or-pay payments as an advance on the Company’s future shipping, wharfage and equipment fees. The Company provided the Port with irrevocable guarantees in the form of a deed of hypothec regarding its mining rights, title and interest over Moire Lake and Don Lake (“Mining Rights”) to secure its obligations under the Agreement. On June 28, 2013, the Company sent to the Port a notice of termination of the Agreement and requested the repayment of the $6,000,000 that had already been advanced (“Advances”). The Port registered a notice of hypothecary recourse dated August 22, 2013 (“Notice”) that requested the Company to surrender the Mining Rights and advised of its intention to have the Mining Rights sold under judicial authority. The Notice alleges that the Company is in default of a payment of $19,581,000, accrued interest of $4,522,182 up to August 22, 2013, and thereafter, per diem interest of $10,729. Since then, the Port has taken no further legal action. Based on the advice of its legal counsel, the Company believes that it was entitled to terminate the Agreement, the Company would be entitled to the repayment of the Advances and the Port would not be entitled to any payment under the Agreement or recover the loss of profits. Accordingly, no amount has been recorded as a liability in these consolidated financial statements. 34 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) 12. Exploration and evaluation assets Fermont Consolidated Fire Lake North Harvey-Tuttle Moire Lake O’Keefe Purdy Other Powderhorn Gullbridge Fermont Consolidated Fire Lake North Harvey-Tuttle Moire Lake O’Keefe Purdy Other Attikamagen Powderhorn Gullbridge March 31, 2014 $ 68,438,585 6,573,514 3,045,597 3,319,458 3,755,817 85,132,971 1,630,771 1,286,098 88,049,840 Acquisition costs (other) $ (18,400,000) – – – (560,000) (18,960,000) – – (18,960,000) Exploration $ Mining tax credits $ Impairment $ March 31, 2015 $ 6,677,607 12,297 1,710 4,349 56,522 6,752,485 14,294 500 6,767,279 (2,811,284) (11,625) (117,035) (118,885) (21,508) (3,080,337) – – – – – – – – (1,645,065) (1,286,599) (3,080,337) (2,931,664) 53,904,908 6,574,186 2,930,272 3,204,922 3,230,831 69,845,118 – – 69,845,118 March 31, 2013 $ Acquisition costs (disposition) $ Exploration $ 60,921,905 8,050,375 4,070,050 4,151,873 3,863,839 81,058,042 503,948 1,494,505 1,069,336 84,125,831 19,000,000 – – – 32,382 19,032,382 (505,191) 111,402 78,598 18,717,191 5,553,225 12,056 14,147 24,837 65,226 5,669,491 1,243 24,864 138,164 5,833,762 Mining tax credits $ (note 6) (17,036,545) (1,488,917) (1,038,600) (857,253) (205,630) (20,626,945) – – – (20,626,945) Write-off $ March 31, 2014 $ – – – – – – – – – – 68,438,585 6,573,514 3,045,597 3,319,458 3,755,817 85,132,971 – 1,630,771 1,286,098 88,049,840 Exploration and evaluation is reported net of option payments and mining tax credits received. Fermont The Company owns a 100% interest in Fermont consisting of 12 mineral concessions covering an area of 848 square kilometres situated in northeastern Quebec (“Fermont”). For reporting purposes, Fire Lake North, Oil Can, Bellechasse and Midway properties were consolidated into one property known as Consolidated Fire Lake North. Other properties include the Hope Lake, Casse Lake, Claire Lake, Audrey-Ernie, Three Big Lakes, Aubertin-Tougard Lakes, Jeannine Lake, Silicate-Brutus Lakes, Penguin and Black Dan properties. See note 13 for details of agreement to reduce net smelter royalty from 3% to 1.5 % and revision in measurement of the acquisition cost of the asset. Grant of option for Cluster 3 Properties to Cartier Iron Corporation On September 28, 2012, the Company granted an option to Cartier Iron Corporation (“Cartier”) to acquire a 65% interest in Aubertin-Tougard, Audrey-Ernie, Black Dan, Jeannine Lake, Penguin Lake, Silicate-Brutus and Three Big Lakes (“Cluster 3 Properties”). In order to earn its interest, Cartier must make option payments, issue common shares and incur exploration expenditures, as follows: 35 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Upon execution of agreement (received) Upon conditional approval from a stock exchange for the listing of the common shares of Cartier (received) December 10, 2013 (paid, issued and incurred) December 10, 2014 (issued and incurred) Extended from December 10, 2014 to the date that Cartier received its refundable tax credit on eligible expenditures incurred in Québec for the year ended December 31, 2013 (paid) December 10, 2015 December 10, 2016 Option payments $ – 100,000 150,000 – 250,000 Common shares Number Exploration Fair value expenditures $ $ 1,000,000 – 500,000 500,000 – 250,000 – 80,000 80,000 – – – 500,000 750,000 – 250,000 250,000 1,000,000 500,000 – 2,500,000 – – 410,000 – 4,750,000 6,000,000 Upon Cartier earning its 65% interest, a joint venture will be formed to incur additional exploration expenditures. If the Company does not fund its proportionate interest in the joint venture, its interest will be diluted and, when its interest is reduced below 10%, its interest would be reduced solely to a 1% royalty. Cartier will have the option to reduce the royalty from 1% to 0.5% by making a payment of $3,000,000. In the event that the Company or Cartier proposes to acquire any property within 10 kilometres of the Cluster 3 Properties, the acquirer must offer the property at cost to the other party for inclusion in the Cluster 3 Properties. Waiver of right of first refusal on the Lac Lamêlée Property On December 20, 2013, the Company waived its right of first refusal to allow Fancamp to sell its interest in the Lac Lamêlée Property, consisting of 29 mining claims contiguous with the Company’s Consolidated Fire Lake North property, to Lamêlée Iron Ore Ltd. (“Lamêlée”). In consideration for the waiver, the Company received 2,000,000 common shares of Lamêlée with a fair value of $240,000 and 4,000,000 common shares of Fancamp with a fair value of $200,000. In addition, the Company subscribed to 2,000,000 units of Lamêlée at a price of $0.10 per unit. Each unit consisted of one common share and one-half of one common share purchase warrant, with each whole warrant entitling the holder to purchase one common share for $0.15 until December 20, 2015. Attikamagen The Company owned a 100% interest in 946 claims covering 310 square kilometres in Labrador and Quebec. The Company originally acquired 4 licences covering 52 claims (“Original Claims”) and acquired an additional 894 claims primarily by staking. The Original Claims are encumbered with an aggregate royalty of $1.50 per tonne of iron content in any and all iron ore, pellets or other products produced from those claims, which royalty may be purchased for $2,500,000. On May 12, 2008, the Company granted an option to Labec Century Iron Ore Inc. (“Labec”) to earn up to a 60% interest in Attikamagen. On or about May 15, 2012, Labec earned an increase in its interest in Attikamagen from 51% to 56%, and subsequently, gave notice that it had incurred sufficient exploration expenditures to earn an increase in its interest in Attikamagen from 56% to 60% and to further increase its interest and dilute the Company’s interest for exploration expenditures that it had incurred without contribution from the Company. Effective November 29, 2013, the Company sold its remaining interest in Attikamagen to Labec, a subsidiary of Century Iron Mines Corporation (“Century”), for 2,000,000 Century common shares with a fair value of $1,000,000 and 1,000,000 Century warrants (see note 8 for a description of the warrants). The fair value of the Century warrants was calculated using the Black-Scholes option pricing model with the following assumptions: 36 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Number of warrants Share price Risk-free interest rate Expected volatility based on historical volatility Expected life of warrants Expected dividend yield Fair value Fair value per warrant November 29, 2013 1,000,000 $0.50 1.73% 88% 5 years 0% $208,000 $0.21 Century assumed the existing royalty on Attikamagen and granted the Company a 1% royalty on the sale of minerals mined from Attikamagen until $2,500,000 has been paid, and thereafter, a 2% royalty on the sale of minerals mined from Attikamagen. In connection with the sale, the Company paid a 7% finder’s fee consisting of 140,000 Century common shares and 70,000 Century warrants. On the date of the sale, the carrying value of Attikamagen was $505,191 and the Company recorded a gain of $553,398. Powderhorn and Gullbridge As at March 31, 2015, the Company owned a 100% interest in: (a) Powderhorn Lake Project (“Powderhorn”), which consists of 148 claims covering an area of 37 square kilometres situated in the Buchans-Robert's Arm Belt in Central Newfoundland. Powderhorn is encumbered with a 2.85% net smelter royalty (“NSR”), of which, 1.85% can be purchased by the participants for $2,300,000 to reduce the NSR to 1%. (b) Gullbridge Property, which consists of 179 claims covering 45 square kilometres situated in the Buchans Robert's Arm Belt in Central Newfoundland. On July 26, 2013, the Company increased its interest in Powderhorn and Gullbridge to 100% by acquiring the remaining 30% interest in Powderhorn and 49% interest in Gullbridge for 1,000,000 common shares with a fair value of $190,000 and a 1% royalty on Gullbridge, which the Company has the option to acquire for $1,000,000 or 1,000,000 common shares. The Company also has the right of first refusal on any sale, transfer, mortgage or grant of security interest or any other disposition or encumbrance in the royalty. The Company has not budgeted nor planned any substantive expenditure on further exploration for and evaluation of mineral resources for Powderhorn and Gullbridge. Accordingly, the Company recorded impairment losses of $1,645,065 and $1,286,599 to write off Powderhorn and Gullbridge, respectively. Snelgrove Lake The Company has an option to acquire a 100% interest in 5 licenses covering 106 square kilometres located approximately 55 kilometres southeast of Schefferville, Newfoundland. Snelgrove Lake is encumbered with a 3% gross sales royalty. In order to earn its interest, the Company must issue Performance Shares, grant options, make option payments and incur exploration expenditures, as follows: 37 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Issue Performance shares Grant options Option payments A$ Option payments $ Exploration expenditures $ October 2012 (issued and paid) March 11, 2014 (incurred) August 1, 2018 32,000,000 – – 32,000,000 17,000,000 – – 17,000,000 425,000 – – 425,000 410,000 – 5,750,000 6,160,000 – 3,250,000 3,250,000 6,500,000 Up to March 31, 2015, the Company has incurred exploration expenditures of approximately $6,400,000. The decision to exercise the option will depend on the economic viability of Snelgrove Lake and the capacity to finance its development. Given the advanced stage of Consolidated Fire Lake North and the significant funds that will be required for its development, there is no certainty that the option for Snelgrove Lake Project will be exercised. Accordingly, prior to the completion of the Arrangement, Mamba recorded an impairment loss of $10,038,754 to write off the balance of Snelgrove Lake. 13. Royalty payable With the completion of the pre-feasibility study for Consolidated Fire Lake North, the Company recorded an estimate of the present value for the 3% net smelter royalty on Fermont (“NSR”) as an acquisition cost of exploration and evaluation and an offsetting royalty payable. As the Company granted a waiver to Fancamp of the Company’s right to reduce the NSR by 0.5% for $2,000,000 and the Company retained an option to reduce the net smelter royalty by 0.5% by making a payment of $1,500,000, the fair value of the NSR was estimated to be $19,000,000 as at March 31, 2014. With the completion of an agreement on June 25, 2015 to reduce the NSR from 3% to 1.5% by paying $50,000 on closing and $250,000 on October 25, 2015, effective March 31, 2015, the Company recorded a reduction of $18,400,000 to the estimate of the fair value for the NSR as a reduction of the acquisition cost of exploration and evaluation and the offsetting royalty payable. As the Company reduced the NSR by 1.5% for total consideration of $300,000, the fair value of the NSR has been estimated to be $600,000. On completion of the agreement, Fermont is encumbered by a 1.5% net smelter royalty with no option to reduce the royalty. 14. Capital stock The Company is authorized to issue ordinary shares, performance shares, exchangeable shares and special voting shares. Each Exchangeable Share will be exchangeable into an ordinary share at no cost to the holder from January 1, 2015 or earlier on the occurrence of certain specified events. Upon conversion, application for the quotation of these ordinary shares will be made. All exchangeable shares in existence on March 31, 2017 will be automatically converted into ordinary shares on that date. The Company has issued 1 special voting share (SVS) to a trustee which will hold the SVS on behalf of all holders of exchangeable shares in order that holders of exchangeable shares will be able to vote at the Company’s shareholder meetings. The SVS will carry as many votes at shareholder meetings of the Company as there are exchangeable shares on issue at the voting eligibility cut-off time of the meeting. The SVS is not transferable, will not be listed and will cease to have any voting rights at meetings of the Company’s shareholders once all exchangeable shares have been converted to ordinary shares 38 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Issued Pre-Arrangement Common shares of Champion Balance, March 31, 2013 Private placement Fair value of warrants issued Fair value of expired warrants Acquisition of exploration and evaluation (note 10) Issued to settle accounts payable Conversion of convertible debt Share issue costs Adjustment for exchange ratio of 0.7333333 Mamba ordinary share for each outstanding Champion common share Exchanged for exchangeable shares Balance, March 31, 2014 Ordinary shares of Mamba Balance, March 31, 2014 Post-Arrangement Ordinary shares of the Company Balance, March 31, 2014 Cancelled Conversion of exchangeable shares Balance, March 31, 2015 Exchangeable shares of the Company Balance, March 31, 2014 Conversion to ordinary shares Balance, March 31, 2015 Number of shares $ 119,901,465 15,000,000 – – 1,000,000 500,000 1,494,144 – 137,895,609 (36,771,791) 122,982,950 3,000,000 (1,277,000) 1,214,667 190,000 157,500 373,175 (337,446) 126,303,846 – (1,941,199) 99,182,619 – 126,303,846 97,310,534 45,116,536 196,493,153 (13) 164,849 196,657,989 171,420,382 – – 171,420,382 1,941,199 (164,849) 1,776,350 Champion private placement On July 31, 2013, Champion completed a private placement of 15,000,000 units at a price of $0.20 per unit for proceeds of $3,000,000. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase one common share for $0.25 until July 31, 2015. In connection with the private placement, Champion paid an 8% cash commission. The fair value of the 15,000,000 common share purchase warrants was calculated using the Black-Scholes option pricing model with the following assumptions: Share price Risk-free interest rate Expected volatility based on historical volatility Expected life of warrants Expected dividend yield Fair value Fair value per warrant $0.21 1.15% 84% 2 years Nil $1,277,000 $0.0852 39 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Issue of Champion common shares to settle accounts payable On January 6, 2014, Champion issued 500,000 common shares with a fair value of $157,500 to settle accounts payable for legal fees owed to a company controlled by a director. Warrants A summary of the Company's warrants is presented below: Balance, March 31, 2013 Issued Expired Adjustment to reflect replacement of outstanding Champion warrants with Replacement Warrants (note 1) Balance, March 31, 2014 and 2015 Number of warrants 9,222,222 15,000,000 (2,222,222) (5,866,667) 16,133,333 Weighted- average exercise price $ 2.59 0.25 1.30 – 1.53 A summary of the Company’s warrants outstanding at March 31, 2015 is presented below: Common share warrant exercise price $4.0909 exercisable between November 17, 2014 and May 17, 2015 $0.3409 Expiry date May 17, 2015 July 31, 2015 See note 20 for subsequent event. Amount $ 3,027,187 1,277,000 (1,214,667) – 3,089,520 Number of warrants 5,133,333 11,000,000 16,133,333 40 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Stock options Pre-Arrangement Champion Balance, March 31, 2013 Granted Expired Cancelled Adjustment to reflect replacement of outstanding Champion stock options with Replacement Stock Options (note 4) Mamba Balance, March 31, 2014 Post-Arrangement Balance, March 31, 2014 Granted Expired Cancelled Balance, March 31, 2015 Number of stock options Weighted- average exercise price $ 9,750,000 1,600,000 (280,000) (1,600,000) (2,525,333) 6,944,667 20,800,000 27,744,667 5,150,000 (2,289,834) (1,381,334) 29,223,499 1.03 0.40 0.81 1.29 – 0.89 0.30 0.53 0.37 0.83 0.92 0.46 A summary of the stock options granted and the assumptions for the calculation of the fair value of those stock options using the Black-Scholes option pricing model is presented below: Date of grant Expiry date Options granted Exercise price Share price Risk-free interest rate Expected volatility based on historical volatility Expected life of stock options Expected dividend yield Forfeiture rate Vesting Fair value Fair value per stock option December 23, 2013 December 23, 2016 1,600,000 $0.40 $0.31 1.84% 83% April 8, 2014 April 8, 2017 1,000,000 A$0.50 A$0.50 2.5% 80% June 18, 2014 June 18, 2017 150,000 A$0.50 A$0.37 2.5% 80% September 25, 2014 September 1, 2018 1,000,000 $0.45 $0.46 2.5% 80% October 30, 2014 October 30, 2017 1,000,000 A$0.30 A$0.20 2.5% 80% December 11, 2014 December 11, 2017 2,000,000 A$0.30 A$0.14 2.5% 80% 3 years 3 years 3 years 4 years 3 years 3 years 0% 0% On date of grant $239,000 $0.15 0% 0% On date of grant $260,000 $0.26 0% 0% On date of grant $25,500 $0.17 0% 0% On date of grant $120,000 $0.12 0% 0% 3 years $100,000 $0.10 0% 0% On date of grant $100,000 $0.05 A summary of the Company’s outstanding and exercisable stock options at March 31, 2015 is presented below: 41 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Exercise price Expiry date A$0.25 $1.3637 $1.3637 A$0.50 $2.9591 $2.0455 $0.5455 $1.7728 A$0.50 A$0.50 A$0.30 A$0.30 $0.45 A$0.50 August 8, 2015 October 3, 2015 October 4, 2015 December 15, 2015 January 10, 2016 September 9, 2016 December 20, 2016 December 23, 2016 April 8, 2017 June 18, 2017 October 31, 2017 December 11, 2017 September 1, 2018 November 29, 2018 Number of stock options Outstanding Exercisable 17,000,000 1,466,667 183,333 500,000 73,333 715,000 1,173,333 661,833 1,000,000 150,000 1,000,000 2,000,000 1,000,000 2,300,000 29,223,499 17,000,000 1,466,667 183,333 500,000 73,333 715,000 1,173,333 661,833 1,000,000 150,000 – 2,000,000 1,000,000 800,000 26,723,499 On October 3, 2014, subject to shareholder approval, the Company agreed to grant 1,000,000 stock options entitling the holder to purchase one ordinary share for A$0.30 for 3 years from the date of shareholder approval. These options will vest in annual instalments over 3 years from the date of shareholder approval, subject to holder’s continued service with the Company, the satisfactory progression towards the completion of a bankable feasibility study for Consolidated Fire Lake North during the term of the stock options, and the satisfactory completion of a bankable feasibility study by the expiry date of the stock options. Share-based compensation In the absence of a reliable measurement of the services provided by consultants, the services have been measured at the fair value of the stock options granted. 15. Income taxes The Company’s effective income tax rate differs from the amount that would be computed by applying the federal and provincial statutory rate of 26.5% (2014 – 26.5%) to the loss for the year. The reasons for the difference are as follows: Income tax recovery based on combined statutory rate Share-based compensation and other non-deductible items Share issue costs Effect of changes in rate on temporary items Tax losses not recognized Deferred income tax assets and liabilities The Company’s deferred income tax assets and liabilities are as follows: 2015 $ 2014 $ (3,116,575) 189,409 – – 2,927,166 – (954,985) 63,335 (343,965) (216,154) 1,451,770 – 42 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Deferred tax asset Non-capital loss carry-forward and share issue costs Investments Deferred income taxes not recognized Liability Exploration and evaluation assets As at March 31, 2014 2015 8,030,812 (1,234,531) (5,514,615) 1,281,666 7,277,503 655,596 (3,955,786) 3,977,313 (1,281,666) – (3,977,313) – Losses carried forward At March 31, 2015, the Company had non-capital loss carryforwards which expire as follows: 2027 2028 2029 2030 2031 2032 2033 2034 2035 $ 153,000 406,000 1,089,000 1,812,000 4,291,000 5,789,000 5,644,000 6,424,000 4,700,000 30,308,000 Resource deductions At March 31, 2015, the Company has cumulative Canadian exploration expenses of $28,062,209 (2014 - $25,387,123) and cumulative Canadian development expenses of $8,588,438 (2014 - $9,148,130) which may be carried forward indefinitely to reduce taxable income in future years. 16. Determination of fair values A number of the Company's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. Cash and cash equivalents, short-term investments, receivables, due from Cartier and accounts payable and accrued liabilities The fair values of cash and cash equivalents, short-term investments, receivables, due from Cartier and accounts payable and accrued liabilities approximate their carrying value due to their short term to maturity. Investments The fair values of the investment in common shares of Fancamp, Cartier, Century and Lamêlée are measured at the bid market price on the measurement date. The fair value of the investment in warrants of Fancamp, Century and Lamêlée is measured using a Black-Scholes option pricing model. Measurement inputs include share price on the measurement date, exercise price, expected volatility (based on historical volatility), expected life, expected dividends and the risk-free interest rate (based on government bonds). 43 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Stock options The fair value of stock options is measured using a Black-Scholes option pricing model. Measurement inputs include share price on grant date, exercise price, expected volatility (based on historical volatility or historical volatility of securities of comparable companies), weighted average expected life and forfeiture rate (both based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Classification of fair value of financial instruments The Company classified the fair value of its financial instruments measured at fair value according to the following hierarchy based on the amount of observable inputs used to value the instrument:  Level 1 - quoted prices in active markets for identical assets and liabilities;  Level 2 - inputs, other than the quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly;  Level 3 - inputs for the asset or liability that are not based on observable market data. As at March 31, 2015 Financial asset at fair value through profit and loss Cash and cash equivalents and short-term investments Investments Common shares Warrants As at March 31, 2014 Financial asset at fair value through profit and loss Cash and cash equivalents and short-term investments Investments Common shares Warrants Level 1 $ 2,651,832 1,607,300 – Level 1 $ 16,287,821 4,651,865 – Level 2 Level 3 $$ – – 21,000 – – – Level 2 Level 3 Total $ 2,651,832 1,607,300 21,000 Total $ $$ – – 324,000 – – – 16,287,821 4,651,865 324,000 17. Financial risk management The Company's activities expose it to a variety of financial risks that arise as a result of its exploration, development and financing activities, including credit risk, liquidity risk and market risk. This note presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes for measuring and managing risk, and the Company's management of capital. Further quantitative disclosures are included throughout these financial statements. The Board of Directors oversees management's establishment and execution of the Company's risk management framework. Management has implemented and monitors compliance with risk management policies. The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company's activities. Credit risk Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises principally from the Company’s cash and cash equivalents, short-term investments and amount due from Cartier. The Company limits its exposure to credit risk on its cash and cash equivalents by holding its cash and cash equivalents and short-term investments in deposits with high credit quality Australian and Canadian chartered banks. The Company is able to limit the credit risk on the amount due from Cartier by settling the amount in common shares of Cartier. 44 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting its financial liabilities that are settled in cash or other financial assets. The Company’s approach to managing liquidity risk is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities as they come due. The amounts for accounts payable and accrued liabilities are subject to normal trade terms. Market risk Market risk is the risk that changes in market prices, such as equity prices, foreign exchange rates and interest rates will affect the Company’s income or the value of its financial instruments. The Company is exposed to equity price risk with respect to investments. The Company estimates that if the fair value of its investment as at March 31, 2014 had changed by 10%, with all other variables held constant, the loss would have decreased or increased by approximately $497,000. Capital management Capital of the Company consists of capital stock, options, warrants, contributed surplus and deficit. The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern so that it can acquire, explore and develop mineral resource properties for the benefit of its shareholders. The Company manages its capital structure and makes adjustments based on the funds available to the Company in light of changes in economic conditions. The Board of Directors has not established quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain the future development of the Company. In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that consider various factors, including successful capital deployment and general industry conditions. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company’s principal source of capital is from the issue of ordinary shares. In order to achieve its objectives, the Company intends to raise additional funds as required. The Company is not subject to externally imposed capital requirements and there were no changes to the Company’s approach to capital management during the year. 45 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) 18. Related party transactions Years ended March 31, 2014 $ 2015 $ Outstanding at March 31, 20134 $ 2015 $ Exploration and evaluation Paid to a company controlled by a former director Paid or payable to 2 companies controlled by former officers Transaction costs on Arrangement Director’s fees paid to a company controlled by a former director Common shares Share issue costs for legal fees paid to a company controlled by a former director Finder’s fee paid to a company controlled by a former director Professional fees Paid for legal fees to a company controlled by a former director Paid for legal fees to a firm, of which, a director was a partner General and administrative Paid for rent to a company controlled by a director – 381,930 187,500 1,845,758 – – – – 22,700 54,540 69,939 25,020 60,000 474,192 – – – – – – – – – – – 276,660 79,031 – – 51,372 – – See notes 7 and 12 for related party transactions with Cartier and note 10 for related party transactions with SFNQ. Compensation of key management personnel The Company considers its directors and officers to be key management personnel. Transactions with key management personnel are set out as follows: Salaries Consulting fees Bonus Non-monetary benefits Post-employment benefits Termination benefits Share-based payments, representing share-based compensation (2014 - share-based compensation and change of control payments paid in shares) Years ended March 31, 2014 $ 2015 $ 523,157 915,500 – 28,296 42,824 540,000 515,050 168,645 1,319,517 60,000 41,868 5,406 – 1,661,334 2,564,827 3,256,770 46 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) 19. Commitments and contingencies Commitments for annual basic premises rent are as follows: Less than 1 year 1-5 years More than 5 years As at March 31, 2014 $ 2015 $ 190,642 – – 190,642 182,185 17,087 – 199,272 See note 11 for information regarding the Company’s contingent liabilities. 20. Subsequent events Other than those noted below, no matter or circumstance has arisen since March 31, 2015 that has significantly affected, or may significantly affect:    The Company’s operations in the future financial years, or The results of those operations in future financial years, or The Company’s state of affairs in future financial years. Receivables On April 6, 2015, the Company received $1,135,539 in respect of its claim for Credit on Duties related to the year ended March 31, 2103. On May 27, 2015, the Company received an interim payment of $2,996,932 in respect of its claim for Refundable Tax Credit related to the year ended March 31, 2013. Investments The Fancamp Warrants expired on May 17, 2015 (see note 8). Warrants 5,133,333 warrants entitling the holder to purchase one common share for $4.0909 expired on May 17, 2015 (see note 14). 47 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) 21. Parent entity information Information relating to Champion Iron Limited: Current assets Non-current assets Total assets Current liabilities Total liabilities Net assets Issued capital Reserves Accumulated losses Total equity Loss of parent entity Total comprehensive loss of the parent entity 22. Auditors remuneration Total of all remuneration received or due and receivable by the auditors in connection with: Ernst & Young Australian firm Audit of the financial report Review of interim financial statements Investigating accountant’s report Collins Barrow Canadian firm Audit and review of the financial report Review of interim financial statements Review of pro-forma consolidated financial statements Taxation services As at March 31, 2014 $ 2015 $ 730,139 17,932,402 18,662,541 11,323,162 77,545 11,400,707 87,882 87,882 1,920,859 1,920,859 18,574,659 9,479,848 28,259,111 2,689,210 (12,373,662) 18,574,659 28,259,111 2,766,642 (21,545,904) 9,479,848 Year ended March 31, 2015 $ 9 months ended March 31, 2014 $ 1,734,804 1,734,804 (14,117,395) (14,117,395) 2015 $ 2014 $ 67,500 42,000 – – – – – 109,500 61,000 – 55,300 27,500 22,000 12,300 13,500 191,600 48 Champion Iron Limited Notes to Consolidated Financial Statements March 31, 2015 and 2014 (expressed in Canadian dollars) 23. Segment information The Company operates in one business segment being mineral exploration in Canada. As the Company is focused on exploration, the Board monitors the Company based on actual versus budgeted exploration expenditure incurred by project. The internal reporting framework is the most relevant to assist the Board with making decisions regarding this Company and its ongoing exploration activities, while also taking into consideration the results of exploration work that has been performed to date. 49 STOCK EXCHANGE INFORMATION The additional information set out below relates to shares and options as at June 15, 2015 DISTRIBUTION OF EQUITY SECURITY HOLDERS Size of Holding 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,000 and over Number of ordinary shares 20,517 461,144 617,767 7,732,207 187,840,800 196,672,435 243 shareholders held less than a marketable parcel of ordinary shares at June 15, 2015 ORDINARY SHARES SUBSTANTIAL SHAREHOLDERS Name of shareholder Gavin John Argyle William Michael O’Keeffe Fancamp Exploration Limited Baotou Chen Hua Investments Limited Number of ordinary shares 14,847,227 11,401,930 11,018,333 11,000,000 % of issued capital 7.55 5.80 5.60 5.59 VOTING RIGHTS All ordinary shares issued by the Company carry one vote per share without restriction. TWENTY LARGEST SHAREHOLDERS Name of shareholder UBS Wealth Management Aust Nominee 1 JP Morgan Nom Aust Ltd 2 Fancamp Exploration Ltd 3 Baotou Chen Hua Investments Ltd 4 5 Zero Nom P/L 6 Gavin John Argyle Eastbourne DP P/L 7 Charles Bass B + SC 8 9 Citicorp Nom P/L 10 GAB Super Fund P/L 11 Nathanson Hilton Darren 12 Angela Maree Rowe 13 David Gilad Hayeem 14 National Nom Ltd 15 GAB Super Fund P/L 16 Far East Entps P/L 17 Flue Holdings P/L 18 Prospect AG Trading P/L 19 Pershing Aust Nom P/L 20 Blue Crystal P/L Number of ordinary shares 12,749,974 11,249,559 11,018,333 11,000,000 7,598,771 4,012,364 3,500,000 3,400,000 2,820,921 2,443,334 2,288,890 1,700,000 1,555,554 1,500,000 1,417,823 1,410,001 1,331,375 1,280,000 1,100,000 1,055,200 % of issued capital 6.48 5.72 5.60 5.59 3.86 2.04 1.78 1.73 1.43 1.24 1.16 0.86 0.79 0.76 0.72 0.72 0.68 0.65 0.56 0.54 50 The Company owns a 100% interest in the following properties: SCHEDULE OF TENEMENTS Property-Québec Consolidated Fire Lake North Harvey-Tuttle Moire Lake O'Keefe-Purdy Cassé Lake Claire Lake Hope Lake Aubertin Tougard (Note 1) Jeannine Lake (Note 1) Round Lake (Notes 1 & 2) Silicate-Brutus (Note 1) Three Big Lakes (Note 1) Property-Newfoundland Powderhorn Gullbridge SNRC 23B06; 23B11; 23B12 23B12; 23B05 23B14 23B11; 23B12 23B05; 23C08 23B06 23B06 22O13; 23B04 22N16 23B04; 23C01; 23N16 22O13 23C01 Licences 11346M, 11367M, 15136M, 15137M, 18969M, 19227M 11956M, 11960M, 16260M, 16261M Claims 544 186 36 215 100 33 40 48 21 352 54 9 148 179 Hectares 27,462.19 9,748.46 1,665.56 11,120.56 5,261.4 1,739.67 2,108.24 2,546.37 1,117.40 18,625.88 2868.4 476.86 3,700 4,475 Note 1 – Currently under option to Cartier Iron Corporation  Note 2 – Round Lake property includes Aubrey‐Ernie, Black Dan, Penguin Lake and Round Lake project claims  The Company has an option to purchase the following property: Property-Labrador Snelgrove Lake Leases 017901M, 018333M, 018334M, 022461M Holder CIP Magnetite Limited Claims 424 Hectares 10,600 51   Fermont Holdings MINERAL RESOURCE AND ORE RESERVES STATEMENT The Company owns a 100% interest in 12 properties covering 847.5 square kilometres (collectively, the “Fermont Holdings”) located in the Fermont Iron Ore District of northeastern Quebec, some 250 km north of the St. Lawrence River port town of Port-Cartier, and ranging from 6 to 80 kilometres southwest of Fermont. The Consolidated Fire Lake North Property (“CFLN”) is the Company’s flagship project. The Fermont Holdings are subject to a 1.5% royalty. The Fermont Holdings are grouped into three clusters from north to south, termed Clusters 1, 2 and 3. The Fermont Holdings are located in proximity to and locally contiguous to an operating iron mine and a number of former operating iron mines and projects currently being developed for iron mining. Following completion of a prefeasibility study in February 2013 in respect of CLFN, work commenced to complete a full feasibility study on the project. During the year, the Company completed a Joint Ore Reserves Committee (JORC) Resource and Reserve Statement which was announced on 27 October 2014. A JORC compliant resource of over 1.2 billion tonnes (Bt), including 755 million tonnes (Mt) of Measured and Indicated metallurgically coarse grained hematite mineralisation for CLFN has been estimated. The successful spring 2014 drilling campaign data has been combined with data from the previous resource estimate reported under the Canadian National Instrument 43-101 (“NI 43-101”) to produce the JORC estimate. Table 1: October 2014 Fire Lake North Deposit Mineral Resource Estimate at Cut-off 15% Fe Category Tonnage (Mt) Fe (%) SiO2 (%) Al2O3 (%) Measured Indicated M+I Total Inferred 40.3 715.0 755.3 461.0 34.19 31.42 31.57 31.83 48.31 51.38 51.22 49.64 1.28 1.56 1.55 2.22 P (%) 0.015 0.020 0.019 0.032 LOI (%) 0.21 0.31 0.30 0.37 Further to the Resource Statement, the Company also announced the first Reserve Statement for the Consolidated Fire Lake North Project to comply with JORC. The JORC Reserve estimate totals approximately 464Mt of reserves with an estimated 23Mt, in the Proved category. Table 2: 2013 Fire Lake North Deposit Mineral Reserve Estimate at Cut-off 15% Fe (These Ore Reserves were estimated from the Mineral Resources as reported in the January 25, 2013 PFS. New Ore Reserves will be estimated during the Feasibility Study, based on the October 2014 Mineral Resource Estimate as presented above) Category Proved Probable Total Tonnage (Mt) 23.7 440.9 464.6 Fe (%) 35.96 32.17 32.37 Weight Recovery (%) 45.00 39.58 39.86 The Company is not aware of any new information or data that materially affects the information included in the JORC report and confirms that all material assumptions and technical parameters underpinning the estimates in the JORC Resource & Reserve statement continue to apply and have not materially changed. 52 The current Mineral Resource Estimate was calculated by P&E Mining Consultants Ltd. (“P&E”) of Brampton, Ontario using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Reserves and Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions. Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The mineral resource estimate may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. In addition, the quantity and grade of estimated Inferred Resources reported herein are uncertain and there has been insufficient exploration to categorize them as an Indicated or Measured Resource. Furthermore, it is uncertain whether further exploration will result in reclassification of Inferred Mineral Resources to the Indicated or Measured resource categories. The tonnage numbers are rounded according to NI 43-101 standards. The Snelgrove Lake Project The Snelgrove Lake Project is located in western Labrador and is approximately 55 kilometres south east of the community of Schefferville, Quebec and approximately 200 kilometres north of Labrador City, Labrador. The project consists of four contiguous map-staked licences totaling 424 mineral claims of 10,600 hectares. All the claims are located on NTS map sheets 23J08, 23J09, 23I05 and 23I/12 and overlap UTM zones 19 and 20. The claims are in good standing to January 2018 with the majority valid up to 2023-2024 where more assessment work needs to be filed. Three licences require payment of Renewal Fees January 2016. The Company’s wholly-owned Canadian subsidiary, CIP Magnetite Ltd., has an option with Altius Minerals Inc. to acquire 100% of the Snelgrove Project for expenditures of $6.5 million within three years after the initiation of the Option Agreement on May 2012 with a 3% gross revenue royalty afterwards. In July 2013, the Issuer and Altius agreed to a modification of the Option Agreement that extends the final date two years to May 2017. As at March 31, 2015, the Company has incurred expenditure of $6.4 million. The Snelgrove Project does not have any mineral resource or ore reserves and is at an early stage of exploration and development. Hence, no material work was conducted on the project during the year as company efforts were directed towards the development of the more advanced flagship Fire Lake North Project. . 53 CORPORATE GOVERNANCE STATEMENT In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Champion have adhered to the principles of corporate governance. A description of the main corporate governance practices is set out below. Unless otherwise stated, the practices were in place for the entire year. Board of Directors The Board of Directors of the Company is responsible for the corporate governance of the Company. The Board guides and monitors the business and affairs of the Company on behalf of shareholders by whom they are elected and to whom they are accountable. As the Board acts on behalf of shareholders, it seeks to identify the expectations of shareholders, as well as other ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks. formulation and approval of strategic direction, objectives and goals of the Company; The primary responsibilities of the Board include:   monitoring the financial performance of the Company, including approval of the Company’s financial statements;  ensuring that adequate internal control systems and procedures exist and that compliance with these systems and procedures is maintained; the identification of significant business risk and ensuring that such risks are adequately managed; the review of performance and remuneration of Executive Directors; and the establishment and maintenance of appropriate ethical standards.     Following the completion of the merger with Champion Iron Mines Limited (CIML), Mr Tom Larsen was appointed as Chief Executive Officer and Mr Michael O’Keeffe continued in the role of Executive Chairman. The Board of the Company was also expanded to increase the number of non-executive Directors. On 31 March 2014, Mr Paul Ankcorn, Mr Donald Sheldon, and Mr James Wang were appointed as non-executive Directors and on 8 April 2014, Mr Gary Lawler and Mr Andrew Love were also appointed as non-executive Directors. At the Company’s Annual General Meeting on 29 August 2014, Mr Thomas Larsen, Mr James Wang and Mr Donald Sheldon did not stand for re-election. The Board currently comprises of Mr Michael O’Keeffe, Mr Andrew Love, Mr Gary Lawler and Mr Paul Ankcorn. The Company’s operational performance is assessed on an ongoing basis by the Board, to ensure that the operation and administration of the Company are being performed in alignment with expectations and risks identified by the Board. Independent Directors In accordance to ASX Guidelines it is considered that all of the non-executive Directors of the Company during the year ended 31 March 2015 meet the criteria of an Independent Director. All appointments of non-executive Directors are considered to be Independent Directors. Communication to Market & Shareholders The Board aims to ensure that shareholders, on behalf of whom they act, are informed of all information necessary to assess the performance of the Directors and the Company. Information is communicated to shareholders and the market through:      the Annual Report which is distributed to all shareholders; the periodic reports which are lodged with ASX and TSX are available for shareholder scrutiny; other announcements made in accordance with ASX and TSX Listing Rules; special purpose information memoranda issued to shareholders as appropriate; and the Annual General Meeting (“AGM”) and other meetings called to obtain approval for Board action as appropriate. Board Composition When the need for a new Director is identified, selection is based on the skills and experience of prospective Directors, having regard to the present and future needs of the Company. Any Director so appointed must then stand for election at the next Annual General Meeting of the Company. 54 Terms of Appointment as a Director The constitution of the Company provides that a Director must retire each year and is eligible for re-election. All the Directors retire at each Annual General Meeting. Workplace Diversity Policy Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The Company is committed to diversity and recognises the benefits arising from employee and board diversity and the importance of benefiting from all available talent. Accordingly, the Company has established a diversity policy which is available on the Company’s website. The Board has a commitment to promoting a corporate culture that is supportive of diversity and encourages the transparency of Board processes, review and appointment of Directors. The Board is responsible for developing policies in relation to the achievement of measurable diversity objectives and the extent to which they will be linked to the Key Performance Indicators for the Board and senior executives. The Company’s strategies may include:      recruiting from a diverse range of candidates for all positions, including senior executive roles and Board positions; reviewing pre-existing succession plans to ensure that there is a focus on diversity; encourage female participation across a range of roles across the Company; review and report on the relative proportion of women and men in the workforce at all levels of the Company; articulate a corporate culture which supports workplace diversity and in particular, recognizes that employees at all levels of the Company may have domestic responsibilities; develop programs to encourage a broader pool of skilled and experienced senior management and Board candidates, training and development; and any other strategies that the Board or the Nomination Committee develops from time to time. including, workplace development programs, mentoring programs and targeted   Board Committee During the period, in view of the size of the Company and the nature of its activities, the audit, nomination and remuneration committees comprised all members of the Board as constituted during the period. The Company has formed an Audit Committee which comprises of Mr Andrew Love (Chairman), Mr Paul Ankcorn and Mr Gary Lawler all of who are non-executive Directors. The Company has also formed a Remuneration & Nomination Committee which comprises of Mr Gary Lawler (Chairman), Mr Michael O’Keefe and Mr Andrew Love. With the appointment of the Committees, all audit matters, the nomination of new Directors and the setting, or review, of remuneration levels of Directors and senior executives are reviewed by the relevant Committee and approved by resolution of the Board (with abstentions for relevant Directors where there is a conflict of interest). Where the Board considers that particular expertise or information is required, which is not available from within the Board, appropriate external advice may be taken and received prior to a final decision being made by the Board. Remuneration The Constitution of the Company provides that the non-executive Directors may collectively be paid as remuneration for their services a fixed sum not exceeding the aggregate maximum sum per annum from time to time determined by the Company in general meeting. The current aggregate maximum is $500,000. A Director may be paid fees or other amounts as the Directors may determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a director. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties. Independent Professional Advice Directors have the right, in connection with their duties and responsibilities as Directors, to seek independent professional advice at the Company’s expense. Prior approval of the Chairman is required, which will not be unreasonably withheld. Share Trading The Board has adopted a Securities Trading Policy, which complies with the requirements of Listing Rule 12.12, which regulates dealings by Directors, officers and employees in securities issued by the Company. 55 The policy, which is available on the Company’s website, includes the Company’s closed periods, restrictions on trading that apply to the Company’s key management personal, trading that is not subject to the policy, exceptional circumstances in which key management personnel may be permitted to trade during a prohibited period with prior written clearance and the procedure for obtaining written clearance. The policy provides that employees, directors and officers must not enter into transactions or arrangements, which operate to limit the economic risk of their security holding in the Company without first seeking and obtaining written acknowledgement from the Board. Code of Conduct The Board has adopted a Code of Conduct policy to guide executives, management and employees in carrying out their duties and responsibilities. The policy is available on the Company’s website. 56   CORPORATE GOVERNANCE STATEMENT In fulfilling its obligations and responsibilities to its various stakeholders, the Board of Champion Iron Limited (“Company”) is a strong advocate of corporate governance. The Board has adopted corporate governance policies and practices consistent with the ASX Corporate Governance Council’s “Corporate Governance Principles and Recommendations 2nd edition” (Recommendations) where considered appropriate for a company of the Company’s size and nature. Recommendation Compliance Reason for Non-compliance Establish the functions reserved to the Board and those delegated to senior executives and disclose those functions. The Board has adopted a formal the board charter setting out responsibilities of the Board. This charter can be accessed at the Company’s website. Not applicable Principle No. 1.1 1.2 1.3 2.1 Disclose the process for evaluating the senior executives. performance of Provide the information indicated in the Guide to reporting on Principle 1. A majority of the Board should be independent Directors. Not applicable the performance The Board will meet annually to review of executives. The senior executives’ performance is assessed against the performance of the Company as a whole. The information will be disclosed in the Annual Report. Not applicable The Board has considered the guidance to Principle 2: Structure the Board to Add Value and in particular, Box 2.1, which contains a list of “relationships affecting independent status”. With effect from 9 April 2014, the Board comprised of 7 Directors, 5 of who are considered to be Independent in accordance to the relevant ASX Guidelines. the Following 2014 Annual General Meeting o n 2 9 A u g u s t 2 0 1 4 , the Board comprises of 4 Directors, 3 of who are considered to be Independent in accordance to the relevant ASX Guidelines. The Company’s current Chairman is not Mr. Michael O’Keeffe considered to be an Independent Director. Not applicable has significant Mr. O’Keeffe experience and knowledge of the industry, corporate and mining operating the matters Company and the Board therefore is an appropriate believes he the size and Chairman given development of the Company at the present time. of 2.2 The chair should be an independent Director. 57 Recommendation Compliance Reason for Non-compliance Following the retirement of Mr. Tom Larsen as Director of the Company at the conclusion of the 2014 Annual General meeting on 29 August 2014, the r o l e s o f Company Chairman and Chief Executive Officer have been exercised by Mr. Michael O’Keeffe. The Company has a Remuneration and Nomination Committee. This charter can be accessed at the Company’s website. Given the size and development of the Company at the present time, the Board believes it is acceptable to have Mr. O’Keeffe filling the dual roles. Not applicable The Board has adopted a board performance evaluation policy which can be accessed at the Company’s website Not applicable Not applicable skills, experience the expense of The and expertise relevant to the position held by each Director will be disclosed in the Directors’ Report which forms part of the Annual Report. The Directors are entitled to take independent professional advice at the Company. The period of office held by each Director will be disclosed in the Directors’ Report which forms part of the Annual Report. A statement will be included in the Annual Report as to the mix of skills and diversity for which the Board is looking to achieve in membership of the Board. The Company has adopted a Code of Conduct, which can be the Company’s accessed website. at Not applicable Principle No. 2.3 The roles of Chair and Chief Executive Officer should not be exercised by the same individual. 2.4 The Board should establish a nomination committee. 2.5 2.6 of evaluating the board, Companies should disclose the the process its performance of individual committees directors. Provide the information indicated in to reporting on Principle 2. the Guide and 3.1 Establish a code of conduct and disclose the code for a summary of the code as to:    to the the practice necessary maintain confidence in Company’s integrity; the practices necessary to take into account their legal obligations and the reasonable their expectations stakeholders; the and responsibility accountability of individuals for investigating and reporting reports of unethical practices. of 58 Principle No. 3.2 3.3 3.4 3.5 4.1 4.2 4.3 4.4 Recommendation Compliance Reason for Non-compliance Establish a policy concerning diversity and disclose the policy or a summary of that policy. objectives Disclose in each annual report the measurable for achieving gender diversity set by the Board in accordance with the diversity policy and progress towards achieving them. The Company has adopted a Diversity Policy, which can be accessed at the Company’s website. The information will be disclosed in the Annual Report. in Companies should disclose each annual report the proportion the of women employees whole organization, women in senior executive positions and women on the Board. in The information will be disclosed in the Annual Report. Not applicable Due to the current size, nature and scale of the Company’s activities the Board has not yet developed objectives regarding gender diversity. As the size and scale of the company grows the Board will set and aim to achieve gender diversity objectives as director and senior executive positions become vacant and appropriately qualified candidates become available. At the date of this report the Company has 7 male executives, 12% of employees are women and no women are currently in senior executive positions or on the Board. The information will be disclosed in the Annual Report. Not applicable The Board has established an audit committee. The audit committee fulfils these criteria. Not applicable Not applicable. Provide the information indicated in the Guide to reporting on P i The Board should establish an audit committee. i l The audit committee should be structured so that it:  consists only of Non-Executive Directors;  consists of a majority of  independent Directors; is chaired by an independent chair, who is not chair of the Board;  has at least three members. The audit committee should have a formal charter. The formal charter can be accessed at the Company’s Provide the information in the Guide to reporting on Principle 4. b i four times The audit committee will meet at least in each year, before sign off of the annual, half year financial statements and interim financial statements. Not applicable Not applicable 59 Principle No. 5.1 5.2 6.1 6.2 7.1 7.2 Recommendation Compliance Reason for Non-compliance The Company has adopted a Continuous Disclosure Policy which can be accessed at the Company’s website. Not applicable The information will be disclosed in the Annual Report. Not applicable The Company has adopted a Shareholder Communications Policy which can be accessed at the Company’s website. Not applicable The information will be disclosed in the Annual Report. Not applicable Not applicable Not applicable The Company has adopted a Risk Management Policy which can be the Company’s accessed at website. This policy identifies the key material risks faced by the Company as the Board. identified by for, The technical director reports to the board regularly on the areas including he is responsible and business material provides an annual written report to the Board summarising the effectiveness of the Company’s management of material business risks. risks requirements and Establish written policies and to ensure procedures designed compliance with ASX Listing Rule disclosure to ensure accountability at a senior that executive for level compliance and disclose those policies or a summary of those policies. Provide the information indicated in the Guide to reporting on Principle 5. promoting Design a communications policy for effective communication with shareholders and encouraging their participation at general meetings and disclose that policy or a summary of that policy. Provide the information indicated in the Guide to reporting on Principle 6. should establish Companies policies the oversight and for management of material business risks and disclose a summary of those policies to should design the and to manage require The Board and management risk implement internal m a n a g e m e n t control system the Company’s material business risks and report to it on whether those being managed risks should effectively. The Board that management has disclose the reported as it to to the Company’s effectiveness of its material management business risks. are of 60 Principle No. 7.3 7.4 8.1 8.2 8.3 8.4 Recommendation Compliance Reason for Non-compliance that The Board should disclose whether it has received assurance from the Chief Executive Officer (or equivalent) and the Chief Financial the Officer (or equivalent) declaration provided in accordance with the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. section 295A of Companies should provide the information indicated in the Guide to reporting on Principle 7. The Board should establish a remuneration committee. The Remuneration Committee should be structured so that it:  consists of a majority of independent directors; is chaired by an independent director; and   has at least three members. should Companies clearly distinguish the structure of Non- Executive Directors’ remuneration from that of Executive Directors and senior executives. has Board received The appropriate declarations from the Executive Chairman and the Chief Financial Officer. Not applicable The information will be disclosed in the Annual Report. Not applicable The Company has established a remuneration nomination committee. and Not applicable. The remuneration and nomination committee fulfils these criteria. Not applicable. Not applicable The structure of non-executive Directors’ remuneration is clearly distinguished of Executive Directors and senior executives, as described in the Directors’ Report which forms part of the Company’s Annual Report. from that Companies should provide the information indicated in the Guide to reporting on Principle 8. The information will be disclosed in the Annual Report. Not applicable 61 DIRECTORS COMPANY SECRETARIES REGISTERED & PRINCIPAL OFFICE COMPANY DIRECTORY Michael O’Keeffe (Executive Chairman and Chief Executive Officer) Gary Lawler (Non-Executive Director) Andrew Love (Non-Executive Director) Paul Ankcorn (Non-Executive Director) Jorge Estepa and Pradip Devalia Level 1, 91 Evans Street Rozelle NSW 2039 Telephone: Facsimile: Website: ACN 119 770 142 +61 2 9810 7816 +61 2 8065 5017 http://www.championiron.com AUDITORS Ernst & Young 680 George Street Sydney 2000 NSW SHARE REGISTRIES Security Transfer Registrars Pty Ltd Suite 1, Alexandria House 770 Canning Highway Applecross WA 6153 Telephone: Facsimile: +61 8 9315 2333 +61 8 9315 2233 TMX Equity Transfer Services 200 University Avenue, Suite 300 Toronto, ON, Canada M5H 4H1 (416) 361-0930 Telephone: (416) 361-0470 Facsimile: STOCK EXCHANGES The Company’s shares are listed on the Australian Stock Exchange (ASX) and Toronto Stock Exchange (TSX) ASX CODE AMD TSX SYMBOL CIA (Fully Paid Ordinary Shares) 62 

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