Swiss and Chinese companies make strategic investment in Champion Minerals

Switzerland-based MRI Advisory is investing $2 million and Hong Kong-based private equity firm Winner Max Investment another $1 million in Champion Minerals (CHM-T) and its prospective iron properties in Eastern Canada.

Under the terms of the offering, Champion will issue 2.22 million units to MRI and 1.11 million units to Winner Max at 90¢ apiece. Each unit is made up of one common share and one warrant, and each warrant entitles the holder to buy one common share at a price of $1.20 for the first 24 months and $1.50 thereafter until 36 months after the closing date, when the warrants are set to expire.

In addition to the private placement, Champion Minerals has appointed MRI’s chief executive, Ashwath Mehra, to its board of directors. Mehra, an economist who has worked in the minerals industry for more than 25 years, spent a decade at Glencore International where he ran the nickel and cobalt divisions. He also co-founded Northern Iron (NFE-A).

Champion’s new strategic investors bring with them a deep pool of  financial and technical resources as well as key contacts in the industry. MRI is active in financing, mine development, iron ore production, strategic global partnerships and shipping. Winner Max Investment, whose investment focus is on overseas resource opportunities, has extensive relationships with resource-hungry and cash-rich Chinese state-owned enterprises.

Mehra said in a statement that the Swiss company believes Champion is an “excellent” strategic investment because of its position in the iron-rich Labrador Trough, explaining that the company has the potential “to become the area’s next producer of iron ore from its inferred and historical iron resources, which are estimated at more than 1 billion tonnes.”

Mehra maintained that the management at MRI believes Champion is undervalued — a situation that he thinks will be reversed once technical milestones are met. Mick McMullen, a geologist and principal at MRI, will join Champion’s newly created advisory board and provide technical assistance and strategic advice.

MRI Advisory is a member of the MRI Group of Companies, an investment and trading group in commodities. MRI Trading, another member of the group, trades concentrates and other non-ferrous raw materials. The group has more than US$3 billion in annual sales and available credit lines in excess of US$800 million.

Both MRI and Winner Max will help Champion as it advances its Fermont property in northeastern Quebec and move towards a preliminary economic assessment study on its Fire Lake North claim block there. Champion also owns the Attikamagen iron property in western Labrador and northeastern Quebec, 15 km northeast of Schefferville, the hub of a major iron-ore mining camp from 1953 to 1983, and the Powderhorn and Gullbridge base metal projects in central Newfoundland.

The Fermont property consists of 16 iron-rich mineral concessions in the Fermont iron ore district about 250 km north of the St. Lawrence River port town of Port-Cartier and 60 km southwest of Fermont. The Fermont property’s claim blocks are adjacent to Consolidated Thompson Iron Mines‘s (CLM-T) properties and ArcelorMittal‘s (MT-N) properties. They are all close to power, roads and rail connecting to ports on Quebec’s northern shore of the St. Lawrence Seaway.

News of the strategic investment sent Champion’s shares up as high as $1.06 in morning trading before settling at 99¢ after mid-day. The company has traded in a 52-week range of 30¢-$1.45 and has 60.5 million shares outstanding. Champion moved from the TSX Venture Exchange to the TSX on Sept. 27.