Can Champion Iron Sustain Growth Amid Rising Costs and Market Volatility?
Champion Iron Limited reported record quarterly iron ore concentrate sales of 3.8 million dmt and $390 million in revenue, while progressing its DRPF and Kami projects on schedule. The company also enhanced financial flexibility through a $500 million Senior Unsecured Notes refinancing.
- Record quarterly iron ore concentrate sales of 3.8 million dmt
- Revenue of $390 million with EBITDA of $58 million and EPS of $0.05
- DRPF project on track for commissioning in December 2025
- Framework agreement signed with Nippon Steel and Sojitz for Kami Project partnership
- Refinanced debt with US$500 million Senior Unsecured Notes to strengthen liquidity
Operational Highlights Amid Challenging Conditions
Champion Iron Limited delivered its financial first quarter results for FY2026, showcasing a record 3.8 million dry metric tonnes (dmt) of iron ore concentrate sales, up 11% year-over-year despite a 9% decline in production to 3.5 million wet metric tonnes (wmt). The production dip was attributed to harder ore characteristics and reduced availability of concentration plants, factors that also impacted iron recovery rates.
Mining and hauling activities at the Bloom Lake mine reached unprecedented levels, with 21 million tonnes moved during the quarter, a 20% increase from the prior year. This operational strength helped reduce stockpiled iron ore concentrate by 440,000 wmt to 2.1 million wmt, even as scheduled rail infrastructure maintenance imposed logistical constraints.
Financial Performance Reflects Market and Operational Dynamics
Champion reported revenue of $390 million, down from $467 million in the same quarter last year, reflecting lower iron ore prices and negative provisional pricing adjustments. EBITDA declined to $58 million with a margin of 15%, and earnings per share fell to $0.05. The net average realised selling price was US$73.4/dmt, impacted by market volatility and the company’s strategic shift toward higher-grade direct reduction pellet feed (DRPF) products.
Costs rose modestly, with the C1 cash cost increasing 7% year-over-year to US$59.2/dmt, driven by higher stripping ratios and maintenance expenses related to processing harder ore. Despite these pressures, Champion maintained disciplined capital management, investing $47.5 million in the DRPF project and $15.7 million in other capital development at Bloom Lake during the quarter.
Strategic Project Advancements and Partnerships
The DRPF project, aimed at upgrading half of Bloom Lake’s capacity to produce premium 69% Fe pellet feed, remains on schedule for commissioning in December 2025, with commercial shipments expected in the first half of 2026. Cumulative investment in the project now totals $387 million of an estimated $471 million budget.
Significantly, Champion entered a definitive framework agreement with Nippon Steel Corporation and Sojitz Corporation to form a partnership for the Kami Project, which targets 9 million wmt per year of direct reduction quality iron ore. The partners will initially contribute $245 million for a 49% stake, enabling advancement of the project without compromising Champion’s financial liquidity.
Balance Sheet Strengthened Through Refinancing
In July, Champion successfully issued US$500 million in 7-year Senior Unsecured Notes at a 7.875% interest rate, refinancing existing credit facilities. This transaction bolstered the company’s liquidity to $537 million as of June 30, 2025, providing enhanced financial flexibility to support ongoing operations and growth initiatives.
Champion’s CEO, David Cataford, highlighted the company’s focus on optimising operations and positioning for anticipated growth in demand for high-purity iron ore. The combination of record sales, strategic partnerships, and strengthened balance sheet underscores Champion’s commitment to delivering shareholder value amid evolving market conditions.
Bottom Line?
Champion Iron’s robust sales and strategic partnerships set the stage for growth, but market volatility and operational challenges warrant close investor attention.
Questions in the middle?
- How will the transition to higher-grade DRPF products impact future pricing and margins?
- What are the key milestones and risks in advancing the Kami Project with new partners?
- How will scheduled rail maintenance and ore hardness affect production and logistics in upcoming quarters?