Fire Lake North — 2012 Updated Preliminary Economic Assessment

This updated preliminary economic assessment for the Fire Lake North project reports conceptual study outcomes based on 2011 mineral resource estimates and metallurgical testwork.

Report context

Champion Minerals Inc. commissioned BBA Inc. to prepare a second technical report on its wholly owned Fire Lake North project in the Fermont region of Quebec, Canada. The report incorporates a mineral resource estimate completed by P&E Mining Consultants Inc. and uploaded to SEDAR on November 17, 2011, and provides information on an updated preliminary economic assessment (PEA update) based on those mineral resources. The effective date of the mineral resource estimate is September 30, 2011, and the report signing date is January 4, 2012.

Processing route

Process design basis

The process design for the PEA update assumed a single line concentrator with an annual feed rate of 23 Mtpa, based on an estimated maximum autogenous grinding (AG) mill throughput. The design was developed from general process design criteria including concentrate production and nominal and design production rates. The process flowsheet and mass and water balance were prepared as part of the study.

Crushing, conveying and storage

The process plant description includes a crushing, conveying and storage section. Run-of-mine ore is delivered to primary crushing and a crushed ROM stockpile area before being fed to the concentrator.

Grinding and screening

Grinding and screening operations were designed following the process design criteria. Primary grinding mill sizing was determined based on throughput and tonnage, with mill pinion power draw calculated accordingly. Grinding testwork completed at SGS-Lakefield provided SPI and Ci crushing and grinding results used to support mill sizing.

Gravity spiral circuit

The flowsheet incorporates a gravity spiral circuit for iron recovery. The spiral circuit receives feed from the grinding and screening section and produces concentrate and tailings streams. Particle size distributions for spiral feed, concentrate and tailings streams were determined during testwork.

Concentrate conveying and loadout

Concentrate is conveyed from the spiral circuit to a concentrate loadout area. The site plan includes a concentrate loadout area as part of the overall site infrastructure.

Tailings dewatering and pumping

Tailings from the gravity spiral circuit are dewatered and pumped to a tailings pond. Tailings disposal infrastructure was included in the project design.

Concentrate and tailings production

Simplified production rates of concentrate and tailings were estimated based on the assumed iron recovery of 82% and the weight recovery assumptions for the first five years (43.2%) and first 25 years (38%) of operation. An average production rate of 8.7 Mtpa of concentrate over the first 25 years was estimated, with an average production rate of 10 Mtpa of concentrate over the first five years.

General concentrator plant services

The concentrator plant design includes compressed air, fresh water, process water, fire protection, and steam services. A major process equipment list was compiled for the PEA update.

Historical testwork

Historical testwork on Fire Lake North material included Wilfley table tests completed in 2010 on 20 mesh material, optical microscopy of various size fractions (-28+35 mesh, -35+48 mesh, and -65+100 mesh at 10X magnification), and heavy liquid separation tests completed in 2010 on 20 mesh material.

Updated PEA testwork (2011)

Updated testwork for the PEA was conducted in two phases. An initial series of heavy liquid separation tests at 20 mesh was performed at COREM in January 2011. Further heavy liquid separation testing at various mesh sizes was completed at SGS-Lakefield. Head assays were completed for Fire Lake North samples. Liberation size determination was carried out to establish the grind size required for adequate liberation of specular hematite. Concentrate quality was assessed and expected concentrate quality was reported. Particle size distributions were determined for spiral feed, concentrate and tailings streams. Grinding testwork provided SPI and Ci results for mill sizing.

The heavy liquid separation testing indicated that a grind size of 100% passing 28 mesh (600 µm) was required in some cases to realize an acceptable iron grade greater than 65% Fe in the final concentrate. Composite samples requiring this finer grind tended to have finer-grained specularite (hematite) mineralization. The PEA update assumed a 28 mesh grind size would be required; previously, a 20 mesh grind size had been determined based on a limited number of samples. The report notes that it is still premature to provide a definitive grind size for the project, as the deposits are comprised of both coarse-grained and finer-grained specularite and their relative proportions are not yet fully understood.

Key reported parameters

Technical qualifications

The report states that a preliminary economic assessment is a conceptual study in nature as it uses inferred mineral resources that are not considered to be sufficiently defined to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the conclusions reached in the report will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Metallurgical testwork reliance is noted in Section 3.2 of the report. The report notes that it is still premature to provide a definitive grind size for the project, as the deposits are comprised of both coarse-grained and finer-grained specularite and their relative proportions in the deposits are not yet fully understood.

Source: Update of the Preliminary Economic Assessment On the Fire Lake North Project, Fermont Area, Quebec, Canada, NI 43-101 Technical Report, effective date November 21, 2011, signing date January 4, 2012.