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