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1. Company Snapshot

1.a. Company Description

Champion Iron Limited engages in the acquisition, exploration, development, and production of iron ore deposits in Canada.Its flagship projects include the Bloom Lake Mine located in south end of the Labrador; the Consolidated Fire Lake North project that includes the Fire Lake North, Don Lake, Bellechasse, and Oil Can deposits situated in Quebec; and the Kamistiatusset project located in the Labrador.The company sells its iron ore concentrate in China, Japan, the Middle East, Europe, South Korea, India, and internationally.


Champion Iron Limited is headquartered in Montreal, Canada.

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1.b. Last Insights on CIA

Champion Iron Limited's recent performance was driven by its solid Q2 FY2026 results, which included a notable increase in revenue and net income growth. The company's declaration of a dividend and advancement of the DRPF project as scheduled also contributed to positive sentiment. Additionally, Champion Iron formed a partnership with Nippon Steel and Sojitz for the Kami project, further strengthening its position. RBC Capital Markets expects a stronger second half for the company, citing a positive outlook for North American base metals.

1.c. Company Highlights

2. Champion Iron's Q2 FY2026 Results: A Strong Beat on Revenue and EPS

Champion Iron reported a robust financial performance in Q2 FY2026, with revenue coming in at just shy of $500 million, EBITDA of $175 million, and EPS of $0.11 per share. The actual EPS was $0.1105, significantly beating estimates of $0.06414. The company's cash cost was around $76 per tonne, a notable improvement driven by the team's efforts to maximize recovery from harder ore. The financial highlights were further bolstered by a significant improvement in cash position, from $176 million to $325 million, partly due to the closing of senior secured notes.

Publication Date: Nov -04

📋 Highlights
  • Record Financial Performance:: Achieved $175 million EBITDA, $56 million net income, and $0.11 EPS, driven by $500 million in quarterly revenue.
  • Cash Flow Surge:: Cash reserves grew to $325 million from $176 million, bolstered by operational success and $175 million from senior secured notes issuance.
  • Operational Efficiency:: Maintained $76/tonne cash costs despite 12-day rail maintenance shutdown, reflecting fixed cost leverage at Bloom Lake.
  • Strategic Projects:: DRPF project spending aligned with payment schedules, with commercial production expected by late 2027 and potential DRI market tailwinds in Europe.

Operational Highlights and Outlook

Despite a 12-day shutdown on the rail, the company achieved a record concentrate sold, demonstrating effective teamwork and collaboration with the IOC. The DRPF project's spending was lighter than expected due to payment schedules, and the final investment is likely to be seen a few quarters after completion. The company plans to start shipping commercial volumes in the second half of next year, initially blending the material to prove its quality.

Valuation and Growth Prospects

With a P/E Ratio of 31.91 and an EV/EBITDA of 9.66, the market seems to be pricing in a certain level of growth. Analysts estimate revenue growth at 10.3% for next year. The company's ROE is 5.91%, and ROIC is 3.8%, indicating a decent return on equity. The dividend yield stands at 4.02%, providing a relatively attractive return for income investors. Given the company's strong foundation and plans for future growth, particularly with the DRPF project, it seems poised for an inflection point next year.

Market and Industry Trends

The company is hearing positive news about the DRI market, particularly in Europe, where tariffs are being implemented to protect against Asian tonnes. This could lead to increased steel production and a positive impact on premiums. As the company starts to benefit from its investments and delivers one of the best products in the world, it is likely to capitalize on increased premiums, potentially driving further growth.

3. NewsRoom

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Champion Iron Limited's (ASX:CIA) top owners are retail investors with 33% stake, while 33% is held by institutions

Nov -10

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CHAMPION IRON REPORTS ITS FY2026 SECOND QUARTER RESULTS, DECLARES DIVIDEND AND ADVANCES THE DRPF PROJECT AS SCHEDULED

Oct -29

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3 Promising ASX Penny Stocks With Market Caps Below A$3B

Oct -23

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CHAMPION IRON PROVIDES NOTICE OF SECOND QUARTER RESULTS FOR FY2026 WITH CONFERENCE CALL WEBCAST DETAILS

Oct -15

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Champion Iron (ASX:CIA) Valuation in Focus as Recent Growth Renews Investor Interest

Oct -04

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Nippon Steel signs agreement to acquire stake in Canada’s Kami iron ore project

Oct -01

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Nippon Steel buys 30% stake of Canada's Kami iron ore project

Sep -30

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MT Newswires Canada Overnight Stocks To Watch: CN Rail; Champion Iron; Imperial Oil; NGex Minerals

Sep -30

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.00%)

6. Segments

Iron Ore Concentrate

Expected Growth: 6%

Champion Iron Limited's 6% growth in Iron Ore Concentrate is driven by increasing global steel demand, particularly from China, and limited supply growth. Strong iron ore prices, improved operational efficiency, and strategic investments in infrastructure also contribute to the growth. Furthermore, the company's focus on high-grade iron ore and its proximity to key markets support its expansion.

7. Detailed Products

Iron Ore Concentrate

High-grade iron ore concentrate used as a raw material in steel production

Pellets

Iron ore pellets used as a raw material in steel production

DR-grade Pellets

Direct Reduction-grade pellets used as a raw material in steel production

8. Champion Iron Limited's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Champion Iron Limited is moderate, as there are alternative sources of iron ore available in the market, but the company's high-quality products and strong relationships with customers reduce the likelihood of substitution.

Bargaining Power Of Customers

The bargaining power of customers is low, as Champion Iron Limited has a diverse customer base and long-term contracts, reducing the dependence on individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate, as Champion Iron Limited relies on a few key suppliers for critical inputs, but the company's strong relationships and diversified supply chain mitigate the risk.

Threat Of New Entrants

The threat of new entrants is low, as the iron ore mining industry has high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high, as the iron ore mining industry is highly competitive, with several major players competing for market share and customers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 30.80%
Debt Cost 4.33%
Equity Weight 69.20%
Equity Cost 10.11%
WACC 8.33%
Leverage 44.52%

11. Quality Control: Champion Iron Limited passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Reliance Steel & Aluminum

A-Score: 5.3/10

Value: 4.6

Growth: 6.1

Quality: 5.6

Yield: 3.0

Momentum: 4.0

Volatility: 8.7

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Boise Cascade

A-Score: 5.1/10

Value: 6.8

Growth: 5.8

Quality: 5.6

Yield: 6.0

Momentum: 0.5

Volatility: 6.0

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Steel Dynamics

A-Score: 4.9/10

Value: 3.4

Growth: 7.1

Quality: 5.1

Yield: 2.0

Momentum: 6.0

Volatility: 6.0

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Champion Iron

A-Score: 4.6/10

Value: 6.0

Growth: 6.0

Quality: 4.5

Yield: 5.0

Momentum: 1.0

Volatility: 5.0

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CMC

A-Score: 4.4/10

Value: 3.9

Growth: 3.8

Quality: 4.5

Yield: 2.0

Momentum: 6.0

Volatility: 6.3

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Cleveland-Cliffs

A-Score: 3.6/10

Value: 9.2

Growth: 3.1

Quality: 3.5

Yield: 0.0

Momentum: 4.0

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

5.49$

Current Price

5.49$

Potential

-0.00%

Expected Cash-Flows