Champion Iron Limited press release

CHAMPION IRON REPORTS ITS FY2027 FIRST QUARTER RESULTS

2026-07-29

TSX - Toronto Stock Exchange · Iron · Aluminium · Manganese · Copper · Zinc · Australia · Production & Operations

Canada NewsWire

Quarterly production of 3.9M wmt, sales of 3.3M dmt, revenues of $357M and EBITDA of $33M1 Initial production of DR quality iron ore from the DRPF project with initial shipment expected in Q2 FY27 Completion of the acquisition of Rana Gruber, a proven high-purity iron ore producer in Norway

MONTRÉAL, July 29, 2026/CNW/ -- SYDNEY, July 30, 2026 - Champion Iron Limited (ASX: CIA) (TSX: CIA) (OTCQX: CIAFF) ("Champion" or the "Company") reports its operational and financial results for its financial first quarter ended June 30, 2026.

Champion's CEO, Mr. David Cataford, said, "In an environment marked by economic uncertainty and market volatility, our dedicated team remains focused on executing our strategic priorities and optimizing operations to enhance our competitive positioning and financial resilience. The completion of the DRPF project once again demonstrates our ability to successfully deliver large-scale projects, enabling us to engage with new customers, further participate in decarbonizing the steel industry and improve our realized prices. As we complete the integration of Rana Gruber, our focus shifts towards unlocking opportunities across our businesses, including cost management initiatives, while continuing to implement our long-term vision and strengthen Champion's position as a leading global supplier of high-purity iron ore."

Conference Call Details

Champion will host a conference call and webcast on July 30, 2026, at 9:00 AM (Montréal time) / 11:00 PM (Sydney time) to discuss the results of its financial first quarter ended June 30, 2026. The conference call details are set out at the end of this press release.

Note to Readers

Following the acquisition of Rana Gruber AS ("Rana Gruber") on April 10, 2026, to maximize transparency for stakeholders regarding the performance of Bloom Lake and Rana Gruber, operational metrics and selected financial metrics are presented separately for Bloom Lake and Rana Gruber in Section 2 of this press release. It is also important to note that, following the acquisition, Champion aligned Rana Gruber's financial information with its reporting practices. Accordingly, caution should be exercised when comparing current-period results with Rana Gruber's historical results reported prior to the completion of the acquisition, as well as with Champion's previous results. Additional details about the Rana Gruber acquisition are provided in the unaudited condensed consolidated financial statements for the three-month period ended June 30, 2026 (the "Financial Statements") and associated management's discussion and analysis (the "MD&A") of the Company, available on the ASX at www.asx.com.au, SEDAR+ at www.sedarplus.caand on the Company's website at www.championiron.com.

1. Quarterly Highlights

Operations and Sustainability

No serious workplace injuries and no major environmental incidents were reported during the three-month period ended June 30, 2026; Quarterly production of 3.9 million wmt of high-purity iron ore concentrates for the three-month period ended June 30, 2026, a 12% increase over the same prior-year period, primarily attributable to the acquisition of Rana Gruber (0.4 million wmt),while Bloom Lake continued to deliver operational performance (3.5 million wmt); and Quarterly sales totalled 3.3 million dmt of high-purity iron ore concentrates (3.1 million dmt and 0.2 million dmt from Bloom Lake and Rana Gruber, respectively) for the three-month period ended June 30, 2026, a decrease of 13% from the same prior-year period, primarily reflecting the planned transition and shipment sequencing associated with the DRPF ramp-up at Bloom Lake, partially offset by sales from Rana Gruber's operations.

Financial Results

Financial results for the quarter were impacted by the timing of iron ore shipments associated with DRPF commissioning activities, which deferred a portion of revenues and related net income, EBITDA and cash flows from operating activities to future periods, as well as by higher freight and fuel and lower fixed cost absorption; Gross average realized selling price of US$115.2/dmt1, compared to the P65 index average price of US$121.9/dmt in the period; Net average realized selling price of US$77.5/dmt1, a decrease of 11% quarter-over-quarter and an increase of 6% year-over-year; C1 cash cost for the iron ore concentrates loaded onto vessels totalled $83.7/dmt1(US$60.5/dmt)2, up from $81.9/dmt1(US$59.2/dmt)2for the same period in 2025. C1 cash cost for the period was negatively impacted by the absorption of fixed costs over lower iron ore sales volumes, together with a significant rise in fuel prices attributable to the conflict in the Middle East; Net loss of $41.5 million, representing a loss per share of $0.07, compared to net income of $23.2 million with EPS of $0.04 in the previous quarter, and net income of $23.8 million with EPS of $0.05 in the same prior-year period. The net loss was primarily driven by an unrealized foreign exchange loss of $17.2 million on net monetary liabilities denominated in foreign currencies, as well as unfavourable fair value adjustments of $17.6 million on derivative instruments; EBITDA of $32.8 million1, compared to $114.3 million1in the previous quarter and $57.8 million1in the same prior-year period, negatively impacted by several factors, including the timing of sales, unfavourable changes in fair value of derivative instruments of $17.6 million which also impacted net loss, DRPF start-up costs of $6.6 million and inventory valuation adjustments in relation to the acquisition of Rana Gruber of $2.9 million; Cash balance, excluding the unused portion of the initial cash contributions from Nippon Steel Corporation ("Nippon Steel") and Sojitz Corporation ("Sojitz", and collectively with Nippon Steel, the "Partners") held in a restricted cash account by Kami Iron Mine Partnership (the "Kami Partnership"), totalled $198.6 million as at June 30, 2026, a decrease of $98.2 million since March 31, 2026, primarily reflecting lower net cash flows from operating activities and the use of cash on hand to finance the acquisition of Rana Gruber; and Available liquidity remained robust at $653.1 million1as at June 30, 2026, compared with $812.4 million1as at March 31, 2026.

DRPF Project Update

Completed the DRPF project within its recently estimated $500 million budget with cumulative investments totalling $493.7 million as at June 30, 2026; Secured a commercial agreement for a portion of near-term production capacity, while advancing discussions with additional prospective customers; and Successfully produced the first DR quality iron ore, with an inaugural commercial shipment expected in the third calendar quarter of 2026.

Development and Other Growth Initiatives

Completed the acquisition of Rana Gruber on April 10, 2026; and Entered into a new term loan under the Company's syndicated senior credit facilities to finance the acquisition of Rana Gruber and extended the maturity of the existing US$400 million senior revolving credit facility to April 2030.

2. Financial and Operating Performance

| | | Q1 FY27 | Q4 FY26 | Q/Q Change | | Q1 FY26 | Y/Y Change | | | | | | | | | | | Consolidated Operation Data | | | | | | | | | Iron ore concentrates produced (wmt) | | 3,939,400 | 3,435,100 | 15 % | | 3,520,600 | 12 % | | Iron ore concentrates sold (dmt) | | 3,339,000 | 3,455,400 | (3) % | | 3,831,800 | (13) % | | | | | | | | | | | Consolidated Financial Data (in thousands of dollars) | | | | | | | | | Revenues | | 356,876 | 414,505 | (14) % | | 390,027 | (8) % | | Cost of sales | | 288,751 | 285,785 | 1 % | | 313,928 | (8) % | | Net income (loss) | | (41,528) | 23,186 | (279) % | | 23,784 | (275) % | | Adjusted net income (loss)1 | | (35,229) | 23,186 | (252) % | | 23,784 | (248) % | | EBITDA1 | | 32,790 | 114,340 | (71) % | | 57,753 | (43) % | | | | | | | | | | | Consolidated Statistics (in dollars per dmt sold) | | | | | | | | | Gross average realized selling price1 | | 158.7 | 165.1 | (4) % | | 146.0 | 9 % | | Net average realized selling price1 | | 106.9 | 120.0 | (11) % | | 101.8 | 5 % | | C1 cash cost1 | | 83.7 | 82.7 | 1 % | | 81.9 | 2 % | | AISC1 | | 111.3 | 96.9 | 15 % | | 96.2 | 16 % | | Cash operating margin1 | | (4.4) | 23.1 | (119) % | | 5.6 | (179) % |

A. Consolidated Revenues

Revenues totalled $356.9 million for the three-month period ended June 30, 2026, a decrease of $33.2 million from $390.0 million in the same prior-year period, despite the inclusion of $23.9 million of revenues from Rana Gruber following the acquisition completed on April 10, 2026. Excluding the acquisition of Rana Gruber, lower revenues were mainly attributable to Bloom Lake's lower sales volumes during the three-month period ended June 30, 2026, compared to the same period in 2025. Bloom Lake's sales volumes were affected by the timing of vessel shipments, as vessel bookings reflected lower anticipated volumes transported to the Port of Sept-Îles during the DRPF project ramp-up period. The increase in the gross average realized selling price offset the rise in freight costs during the period when compared with the previous period.

For the three-month period ended June 30, 2026, the gross average realized selling price of US$115.2/dmt1was below the P65 index average price of US$121.9/dmt. The 2.1 million dmt of iron ore sold that remained subject to pricing adjustments as at June 30, 2026, were evaluated using an average forward selling price of US$110.4/dmt, which is lower than the P65 index average price for the period. In addition, index prices on Bloom Lake's concentrate sales based on backward-looking pricing were also below the P65 index average price of the period. During the quarter, the Company continued to prepare for Bloom Lake's transition to higher-purity DR quality iron ore and intentionally allocated a lower proportion of sales volumes to long-term contracts. This approach allowed the Company to retain a greater proportion of its available iron ore products for the short-term and spot markets, which have recently experienced greater pricing volatility and discounts relative to the iron ore indexes.

During the three-month period ended June 30, 2026, an average final price of US$118.3/dmt was established for the 2.3 million dmt of iron ore concentrates sold that were subject to provisional pricing adjustments as at March 31, 2026, which were previously evaluated using an average estimated price of US$120.2/dmt. Accordingly, negative provisional pricing adjustments of $6.2 million were recorded for tonnes subject to provisional pricing as at March 31, 2026, representing a negative impact of US$1.3/dmt for the 3.3 million dmt sold during the quarter.

Freight and other costs totalled US$36.4/dmt during the three-month period ended June 30, 2026, representing a 35% increase compared to US$26.9/dmt in the same prior-year period, mainly reflecting a 63% increase in the average C3 index. While the C3 index increased significantly during the quarter, the Company's freight and other costs increased at a slower pace, reflecting the Company's agile vessel booking strategies, favourable freight rates secured under fixed-price contracts below prevailing market levels for a portion of the sales volumes, and the positive impact of backward-looking pricing mechanisms. The rise in the C3 index, driven by the ongoing conflict in the Middle East, is expected to continue impacting Champion's net revenues in the quarter ending September 30, 2026, as most vessels are booked three to five weeks prior to the desired laycan period.

After taking into account sea freight and other costs of US$36.4/dmt and the negative provisional pricing adjustments of US$1.3/dmt, the Company obtained a net average realized selling price of US$77.5/dmt2(C$106.9/dmt1) for its high-purity iron ore concentrates shipped during the three-month period ended June 30, 2026.

B. Bloom Lake Mine Results

Bloom Lake conducts scheduled maintenance on both plants in the second and fourth financial quarters, which may create significant quarter-over-quarter variances in production output and mining and processing costs.

| | | Q1 FY27 | Q4 FY26 | Q/Q Change | | Q1 FY26 | Y/Y Change | | | | | | | | | | | Mine Operating Data | | | | | | | | | Iron ore concentrates produced (wmt) | | 3,547,200 | 3,435,100 | 3 % | | 3,520,600 | 1 % | | Iron ore concentrates sold (dmt) | | 3,128,800 | 3,455,400 | (9) % | | 3,831,800 | (18) % | | Stripping ratio | | 1.04 | 1.11 | (6) % | | 1.09 | (5) % | | Head grade Fe (%) | | 29.5 | 28.8 | 2 % | | 28.2 | 5 % | | Fe recovery (%) | | 79.0 | 80.6 | (2) % | | 78.2 | 1 % | | Weighted average products Fe (%) | | 66.5 | 66.2 | — % | | 66.3 | — % | | | | | | | | | | | Mine Selected Financial Data (in thousands of dollars) | | | | | | | | | Revenues | | 332,980 | 414,505 | (20) % | | 390,027 | (15) % | | Cost of sales | | 267,504 | 285,785 | (6) % | | 313,928 | (15) % | | Gross profit | | 27,408 | 85,191 | (68) % | | 29,894 | (8) % | | | | | | | | | | | Mine Selected Statistics (in dollars per dmt sold) | | | | | | | | | Net average realized selling price1 | | 106.4 | 120.0 | (11) % | | 101.8 | 5 % | | C1 cash cost1 | | 83.4 | 82.7 | 1 % | | 81.9 | 2 % | | AISC1 | | 104.4 | 96.9 | 8 % | | 93.0 | 12 % |

i. Operating Performance

Bloom Lake produced 3.5 million wmt of high-purity iron ore concentrates during the three-month period ended June 30, 2026, comparable to the same period in 2025, benefiting from higher ore grade and Fe recovery. The quarterly production level was impacted by the DRPF facilities progressing through commissioning. The production included 0.6 million wmt of concentrate produced through the DRPF infrastructure, with product quality progressively improving toward targeted purity specifications in accordance with the commissioning process. As a result, the weighted average product grade increased to 66.5% Fe. During the three-month period ended June 30, 2026, the Fe recovery rate increased to 79.0% from 78.2% for the same period in 2025, benefiting from improved performance of the gravimetric systems, following work programs and operational optimizations.

Sales volumes of iron ore concentrates during the three-month period ended June 30, 2026, were 18% lower than in the same prior-year period, as the prior-year period benefited from strong sales volumes due to stockpiled inventory. Current period sales were impacted by scheduled third-party port and rail maintenance shutdowns, as well as the timing of sales primarily related to the DRPF project's commissioning. Inventories of iron ore concentrates at Bloom Lake and at the port totalled 1.7 million wmt as at June 30, 2026, compared to 1.3 million wmt as at March 31, 2026. Inventory levels increased during the quarter as production exceeded sales volumes, reflecting the timing of shipments and the commissioning activities associated with the DRPF project. These inventories are expected to provide operational flexibility and support future sales activities. As the Company advances the commissioning of the DRPF project, it continues to optimize its inventory management strategies to maintain adequate saleable inventories, manage different iron ore qualities and enhance production and sales logistics.

During the three-month period ended June 30, 2026, the Company mined and hauled 19.8 million wmt of waste and ore, compared to 21.0 million wmt in the same prior-year period. The stripping ratio for the three-month period ended June 30, 2026, was 1.04, compared to a 1.09 ratio recorded in the same prior-year period. Champion anticipates maintaining this stripping cadence in upcoming periods, consistent with its LoM plan.

ii. Financial Performance

The cost of sales associated with Bloom Lake operations totalled $267.5 million, compared to $313.9 million for the same period in 2025. For the three-month period ended June 30, 2026, mining and processing costs totalled $54.5/dmt produced1, representing a 1% increase, compared to $53.7/dmt produced1in the same prior-year period, primarily attributable to higher fuel prices due to the conflict in the Middle East, and higher explosives prices, partially offset by cost optimization efforts. Land transportation and port handling costs include both fixed and variable components and are significantly influenced by the volume hauled from Fermont to the Port of Sept-Îles. Land transportation and port handling costs for the three-month period ended June 30, 2026, were $30.6/dmt sold1, a 26% increase, compared to the prior-year period, mainly reflecting lower sales volumes. In addition, cost of sales was impacted by changes in iron ore concentrates inventory valuation, which incorporate mining and processing costs from the previous quarter, along with variations in production and sales volumes. Consequently, Bloom Lake C1 cash cost totalled $83.4/dmt1, compared to $81.9/dmt1for the same period in 2025. C1 cash cost excludes DRPF start-up costs, which mainly include abnormal operational costs incurred as the facility progresses toward commercial production.

Despite lower shipment volumes, gross profit remained relatively stable at $27.4 million during the three-month period ended June 30, 2026, compared to $29.9 million for the same period in 2025. This is primarily reflecting higher realized selling prices and the impact of inventory valuation movements, which partially offset the effect of lower sales volumes.

AISC totalled $104.4/dmt1for the three-month period ended June 30, 2026, compared to $93.0/dmt1for the same prior-year period. The increase in AISC mostly reflected lower shipment volumes and higher sustaining capital expenditures, primarily attributable to the expansion of tailings storage capacity in line with the Company's long-term investment plan at Bloom Lake, overhaul expenditures on mining equipment, and ongoing mine development initiatives, including topographic and pre-cut drilling work. The timing of planned sustaining activities for the current financial year also resulted in a higher proportion of expenditures being incurred during the first quarter.

C. Rana Gruber Mine Results

Comparisons of unit costs between Champion's operating segments should be interpreted with consideration given to the differences in production methods, processing operations and logistics infrastructure specific to each operation. Considering its significantly shorter rail haulage distance, compared to Bloom Lake, the cost structure at Rana Gruber has a lower share attributable to land transportation and port handling, with a higher proportion of costs incurred at the mining and processing stages.

The following Rana Gruber results have been consolidated since the acquisition date of April 10, 2026, and accordingly represent less than a full quarter of operations.

| | | Q1 FY27 | | | | | | Mine Operating Data | | | | Iron ore concentrates produced (wmt) | | 392,200 | | Iron ore concentrates sold (dmt) | | 210,200 | | Open-pit stripping ratio | | 2.00 | | Head grade Fe (%) | | 31.7 | | Fe recovery (%) | | 75.3 | | Weighted average products Fe (%) | | 65.2 | | | | | | Mine Selected Financial Data (in thousands of dollars) | | | | Revenues | | 23,896 | | Cost of sales | | 21,247 | | Gross loss | | (5,989) | | | | | | Mine Selected Statistics (in dollars per dmt sold) | | | | Net average realized selling price1 | | 113.7 | | C1 cash cost1 | | 87.5 | | AISC1 | | 147.0 |

i. Operating Performance

Rana Gruber produced 0.4 million wmt of high-purity iron ore concentrates at a weighted average grade of 65.2% Fe since the acquisition date of April 10, 2026. When adjusted to reflect a full quarter of operations, production was in line with Rana Gruber's nameplate capacity after taking into account the annual maintenance shutdown usually conducted in June. Production benefited from stable mill throughput of 1.0 million wmt at a weighted average head grade of 31.7% Fe and Fe recovery of 75.3%.

Iron ore concentrates sold totalled 0.2 million dmt since the acquisition date and remained significantly below production levels, including on a full-quarter equivalent basis, primarily reflecting the timing of shipments. As a result, inventories of iron ore concentrates increased to 0.4 million wmt during the quarter and remained at elevated levels as at June 30, 2026. Management continues to focus on reducing inventory levels over time by optimizing sales opportunities.