Champion Iron (TSE:CIA) reported fiscal 2026 third-quarter results highlighted by steady production, improving unit costs, and progress on its direct reduction pellet feed (DRPF) project, while also outlining the rationale and financing for its proposed acquisition of Norway-based Rana Gruber.
Quarterly production, sales, and inventory movements
Chief Executive Officer David Cataford said the company produced about 3.7 million tonnes of concentrate during the quarter and sold just under 3.9 million tonnes. Operationally, management emphasized progress in moving material through the logistics chain, noting a significant reduction in mine-site stockpiles.
During the Q&A, management also addressed a ship loader issue at the Port of Sept-Îles that lasted about four to five days. Cataford said it was “annoying” and likely prevented an additional vessel sale during the quarter, but indicated operations restarted about five days after the breakage and did not characterize it as a recurring issue.
Pricing environment and provisional pricing impact
On market conditions, Cataford described the quarter as “pretty flat” for key benchmarks and logistics. The P65 index averaged about $118 per tonne, a slight increase of roughly 1%, while the premium for P65 over P62 decreased slightly and C3 freight rose about 2%.
The company’s provisional price adjustment was “very uneventful,” totaling about $3.3 million in the quarter, or roughly $0.80 per tonne on tonnes sold. At quarter-end (December 31), management said Champion had about 2.5 million tonnes in transit with an expected price of around $117 per tonne.
Champion’s average realized selling price was described as close to the P65 index, though management noted some shipments were still subject to slight discounts because a larger share of sales were spot rather than under long-term contracts. Cataford said the company expects to shift toward longer-term contracts as it begins selling 69% iron ore from the new DRPF plant. For the quarter, after converting from U.S. dollars to Canadian dollars and netting freight, Champion reported a net realized price of about C$121 per tonne.
Costs, earnings, and balance sheet position
Champion highlighted continued improvement in cash costs, with cash cost delivered in the vessel at Sept-Îles coming in just below C$74 per tonne. Cataford said lower costs were supported by the absence of a major shutdown in the quarter, higher production (which helps dilute fixed costs), and ongoing progress in moving out of what he called the “stockpile history portion.”
In response to an analyst question about sustainability of cost reductions, management reiterated its focus on mining efficiency and more efficient shutdowns, emphasizing that keeping the plant running more consistently supports higher output and lower unit costs.
Financially, Champion reported:
- Revenue: about C$470 million
- EBITDA: about C$150 million
- Net income: about C$65 million
Cash totaled roughly C$245 million as of December 31. Management said changes in working capital were driven mainly by increased receivables, which it expects to unwind in the next quarter. Cataford also pointed to about $1.1 billion of cash, cash equivalents, working capital, and available liquidity across facilities, describing the balance sheet as well positioned to complete growth initiatives. The quarter included sustaining capital spending, DRPF capital spending, and a semiannual dividend payment.
DRPF project nearing completion and ramp-up expectations
Champion said its DRPF project is nearing completion and remains on track for a total investment of about $500 million. Management reported that all equipment is installed, with remaining work focused on final tie-ins and commissioning activities that have begun on certain equipment.
Cataford said the company is still targeting first DRPF tonnes in a first vessel in the first half of the year, but cautioned that commissioning will involve interactions with the Phase 2 project. Management referenced a forecast of roughly 20 days of interruptions related to tie-ins, expected in fiscal 2027 Q1 (calendar Q2).
On ramp-up, management said it expects about 12 months to reach full nameplate capacity after start-up. Regarding premiums, Cataford said initial cargoes typically carry trial discounts until the product’s quality is consistently demonstrated with customers. He added that DR premiums have increased slightly compared with last year, and said the company also expects freight advantages from selling to closer markets.
Management said it expects most DRPF tonnes to be sold into markets it has previously discussed, including Europe, North Africa, and the Middle East, and noted it is finalizing potential contracts with various clients.
Rana Gruber acquisition and other development initiatives
Champion also discussed its announced transaction agreement to acquire Rana Gruber, which management described as fully financed. Cataford said funding includes about $39 million of cash, $100 million of support from La Caisse de dépôt, and a $150 million fully underwritten term loan with Scotiabank that will be syndicated to the bank group.
Cataford described Rana Gruber as a robust operation with more than 60 years of operation across cycles, attractive margins, and a path toward producing higher-grade material aligned with Champion’s strategy. He also emphasized Rana Gruber’s proximity to European customers—about three days sailing time—as a strategic benefit for a client base Champion wants to expand. In response to analyst questions, management said it sees potential synergies, including possible blending strategies, but indicated its immediate focus is closing the transaction before assessing the most accretive path forward.
Elsewhere, Champion said work continues on the feasibility study and permitting for the Kami project, with management expecting to be in a position by the end of the year to finalize the feasibility study and potentially obtain a construction permit. Cataford also noted the company’s large resource base south of Bloom Lake and ongoing drilling to refine estimates, characterizing it as high-grade material that could be beneficial over the medium to long term.
In closing remarks, Cataford said the company is coming out of a seven-year capital spending cycle totaling roughly $2.5 billion, which he said was invested on time and on budget, and expressed confidence that high-grade premiums and capital return opportunities could become increasingly important in the coming years.
About Champion Iron (TSE:CIA)
Champion Iron Ltd is engaged in the exploration and development of iron ore properties in Quebec, Canada. The company’s operating segment include Mine Site, Exploration and Evaluation, and Corporate. It generates maximum revenue from Mine Site segment. The company projects include Fire Lake North, Powderhorn/Gullbridge, Moire, Quinto Claims, Harvey Tuttle, O’keefe-Purdy, and others.
