Champion Minerals shares jump on ArcelorMittal rumour

As rumours swirl that Champion Minerals (CHM-T) might become a takeover target for ArcelorMittal (MT-N), the junior has adopted a shareholder rights plan. The news sent the company’s shares up 20%, or 30¢ apiece, on July 4 to close at $1.80. 

Champion can be forgiven for feeling a little nervous these days. It is one of the largest landholders in the Fermont iron ore district of the Labrador Trough in western Labrador and eastern Quebec, and its Fire Lake property is adjacent to the north of ArcelorMittal’s operating Fire Lake mine. 

Fire Lake is one of Champion’s 17 properties in the district, where four producers account for 40 million tonnes of iron-ore concentrate a year. The Fermont area is attractive with its water, power, roads and railways, and its connection to three ports on the north shore of the St. Lawrence Seaway.

Champion owns 82.5% of the 17 properties. Its joint-venture partner, Fancamp Exploration (fnc-v), owns the remainder.

The Bellechasse property, 6 km northwest of Champion’s Fire Lake North project, would also be attractive to a company like
ArcelorMittal. 

Bellechasse hosts a 10-km curvilinear syncline cored by magnetite-rich iron formation. Champion notes on its website that the synformal geometry of the deposit is amenable to open-pit mining methods, as the waste-to-ore strip ratio would be low.

In 2009, P&E Mining Consultants published a National Instrument 43-101 inferred resource estimate of 215 million tonnes grading 29% total iron – double the historical estimate – based on diamond drilling results along 8 km of the 10-km indicated strike length of iron formation on the property. Champion believes that additional drilling will boost the current resource.

Champion is conducting further drilling, and will study the economics of making the Bellechasse project a satellite deposit in the upcoming Fire Lake North preliminary economic assessment update.

So far, the adjacent Bellechasse and Fire Lake North properties have outlined a combined inferred resource estimate of 603 million tonnes grading 29% iron.

Champion released a resource estimate for its Harvey-Tuttle project in February, which outlined inferred resources of 717 million tonnes grading 25% total iron at a 20% cut-off, or 947 million tonnes grading 23.2% total iron at a 15% cut-off.

Champion completed an initial drill program at Harvey-Tuttle in 2010. Significant assay results included 168 metres at 30.3% total iron, and three intervals more than 92 metres in length containing over 32% total iron.

Among 26 drill holes, there were ten, 35-metre intervals, with over 30% total iron.

At presstime, Champion Minerals traded at $1.75 per share within a 52-week range of 70¢ (July 20, 2010) and $3.30 (Feb. 4, 2011). It has 84.3 million shares outstanding.