Champion Iron (ASX:CIA) has entered into a definitive framework agreement with Nippon Steel Corporation (TYO:5401) and Sojitz Corporation (TYO:2768) to sell a combined 49% stake in the Kami Iron Ore Mine Partnership for C$245 million ($274.51 million).
Nippon Steel and Sojitz will make an initial cash contribution of C$68.6 million to secure their stake in the partnership under the first stage of establishing the new entity.
Champion will hold a 51% stake in the partnership, while Nippon Steel and Sojitz will hold 30% and 19%, respectively.
Nippon Steel and Sojitz are expected to make further contributions on a pro-rata basis for expenses necessary to advance Kami towards a potential interim investment decision and a potential final investment decision (FID).
Champion Iron, which has a market capitalisation of $2.57 billion, says such expenses will go towards advancing permitting, community engagement, and completing a Definitive Feasibility Study. The DFS is expected to be completed by the end of 2026.
As part of the second stage of the transactions, Nippon Steel and Sojitz will make subsequent contributions in the aggregate amount of C$176.4 million to finalise securing their stakes in the partnership.
During the second stage, the companies will make necessary contributions to advance Kami towards a FID. Based on the outcome of a FID, the Kami Project’s potential construction period is estimated to be 48 months.
Champion CEO David Cataford says the framework agreement marks a milestone for Kami, establishing a clear structure to advance its evaluation.
“Supported by anticipated proceeds and the partners’ pro-rata contributions of future expenditures, the partnership will enable us to advance the project without impacting our financial liquidity in the foreseeable future,” Cataford says.
“As we move forward, our focus will shift to identifying opportunities to enhance the project’s economics while remaining committed to our disciplined capital allocation strategy.”
Champion plans to continue to engage with local stakeholders to foster collaborative development.
In conjunction, the company will pursue discussions with governments at various levels, including seeking potential support stemming from the recent addition of high-purity iron ore to Canada’s official critical minerals list. Champion will also evaluate opportunities to improve Kami’s economics.
Kami is an iron formation of the Lake Superior-type, located in a highly metamorphosed and deformed metasedimentary sequence of the Greenville Province of the Labrador Trough.
Champion Iron is a dual-listed iron ore-focused mining company that operates and explores in Canada.
Write to Aaliyah Rogan at Mining.com.au
Images: Champion Iron
