Champion Iron Q4 Earnings Call Highlights

Champion Iron (TSE:CIA) reported higher year-over-year production in its fiscal fourth quarter, while management said winter weather, a third-party train derailment, planned shutdowns and higher fuel-related costs weighed on sales logistics and operating costs.

On the company’s fourth-quarter fiscal 2026 earnings call, CEO David Cataford said Champion produced just over 3.4 million tonnes during the quarter, up 8% from the prior year, and sold just over 3.45 million tonnes. Iron recovery improved to 80.6%. The company reported quarterly revenue of CAD 414 million, EBITDA of just over CAD 114 million, net income of CAD 23.2 million and earnings per share of CAD 0.04.

Cataford said Champion’s cash balance rose from about CAD 245 million to nearly CAD 300 million during the quarter, even as the company invested roughly CAD 40 million in its flotation plant and just over CAD 50 million in sustaining capital expenditures.

Weather, derailment and shutdowns affect costs

Champion’s fourth-quarter operations were affected by two planned semi-annual shutdowns, which Cataford said typically contribute to higher operating costs. Sales were also affected by a third-party train derailment and harsh winter conditions that caused “carryback” in ore cars, reducing logistics productivity.

Despite those issues, Cataford said the company reduced its stockpile by about 200,000 tonnes and moved about 21 million tonnes at the mine, a 3% year-over-year increase. He said management was “very happy” with the health of the Bloom Lake pit.

Operating costs trended above prior quarters. Cataford cited roughly CAD 3 per tonne of cost impact from winter conditions and the train derailment, about CAD 1 per tonne from higher fuel costs and roughly CAD 1 per tonne from destocking inventory, for a total impact of about CAD 5 per tonne. Excluding those items, he said costs were generally in line with the prior quarter that included two semi-annual shutdowns.

Asked about fuel sensitivity, Cataford said Bloom Lake benefits from hydroelectric power, with about 65% of power from hydroelectric sources. He said the site consumes roughly 40 million liters of fuel per year. He also noted that fuel has an indirect effect on logistics, including rail and freight costs, and said Champion’s rail contract includes a fuel-price adjustment mechanism every six months.

Iron ore market and freight pressures

Cataford said the P65 iron ore index was relatively flat quarter over quarter, increasing 1.7%, while the spread between the P61 and P65 indexes widened from about $13 per tonne to $17 per tonne. The C3 freight index rose about 4% quarter over quarter to approximately $25 per tonne, which he attributed mainly to the conflict in the Middle East.

The company recorded a small provisional pricing adjustment. Cataford said Champion expected to sell at about $117.4 per tonne, while tonnes on the water settled at about $117.2 per tonne, producing a negative impact of roughly CAD 300,000. At quarter-end, Champion had 2.3 million tonnes on the water with an expected settlement price of $120.2 per tonne.

Cataford also pointed to a sharp increase in the 90th percentile of the iron ore cost curve, which he said moved from $65 per tonne to $83 per tonne since the start of the conflict. He said historical relationships would imply either a decline in the cost curve or higher iron ore prices if past patterns were to reassert themselves.

Dividend policy revised

Champion announced a revised dynamic dividend policy intended to provide semi-annual dividends equivalent to 30% to 40% of trailing six-month free cash flow, subject to board discretion. Cataford said the board may also declare special dividends.

For the current period, the board declared a dividend of CAD 0.02 per share. Cataford said the board remained focused on preserving liquidity given volatile macroeconomic conditions, including the effect of Middle East conflict on oil and freight prices. The new dividend policy is expected to take effect with the next semi-annual dividend.

Cataford said Champion is emerging from an eight-year period of significant capital spending, including about CAD 1.4 billion of growth capital at Bloom Lake to double capacity and upgrade one facility to produce 69% material.

DRPF plant ramp-up continues

Champion has invested roughly CAD 480 million of the CAD 500 million budget for its flotation plant, which is designed to produce direct reduction pellet feed, or DRPF, material. Cataford said the plant has started up, has produced sellable quality material and is now in the process of resolving typical start-up issues.

“We have had multi-day runs with the plant, producing sellable quality,” Cataford said during the question-and-answer session. He said the flow sheet is working well and that he was not concerned about the equipment selection or installation.

Cataford said Champion still expects roughly a 12-month ramp-up period, though he noted the company would announce any acceleration if achieved. The company expects to sell its first cargoes of DRPF material in the coming weeks and months.

Asked about expected premiums, Cataford said the first cargoes will be trial cargoes for customers to test the material. He said the company expects “significant premiums” over its current material over time, including benefits from selling closer to home and product premiums, but declined to provide specific figures because negotiations are ongoing. He confirmed that the feasibility study contemplated an ultimate premium in the order of CAD 26 per tonne, including freight advantages.

Cataford said the Middle East conflict has created shifting dynamics in the high-grade market, with some tonnes that would typically go to the Middle East moving into China. However, he said demand for DR-grade material remains healthy and that Champion is targeting customers in Europe, North Africa, the Middle East and other markets.

Rana Gruber acquisition completed

Champion completed its acquisition of Rana Gruber in Norway during the quarter and now owns 100% of the site. Cataford said he, COO Alexandre Belleau and the company’s head of human resources planned to travel to Norway to continue integration efforts.

In response to an analyst question, Cataford said Rana Gruber’s cash costs had historically trended below Bloom Lake’s, though the site has also been affected by fuel prices. He said Champion sees opportunities to improve iron recovery and tonnage as Rana Gruber continues moving into 65% grade production.

Chairman Michael O’Keeffe closed the call by emphasizing cash preservation amid global fuel and freight uncertainty. He said Champion’s balance sheet remains healthy and pointed to the company’s completion of major capital programs, while also highlighting management’s focus on safety, environmental performance and employee care.

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.

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