Champion Iron Limited press release

CHAMPION IRON REPORTS ITS FY2027 SECOND QUARTER RESULTS

2026-10-28

TSX - Toronto Stock Exchange · Iron · Aluminium · Manganese · Copper · Zinc · Australia · Corporate Finance

Canada NewsWire

Quarterly production of 3.9M wmt, record consolidated sales of 4.5M dmt, revenues of $404M and adjusted EBITDA of $23M1 Inaugural commercial shipment of DR quality iron ore from the DRPF project completed Secured additional DRPF test-cargoes and commercial agreements for shipments scheduled for Q3 FY27

MONTRÉAL, Oct. 28, 2026/CNW/ -- SYDNEY, October 29, 2026 - Champion Iron Limited (ASX: CIA) (TSX: CIA) (OTCQX: CIAFF) ("Champion" or the "Company") reports its operational and financial results for its financial second quarter ended September 30, 2026.

Champion's CEO, Mr. David Cataford, said, "As we operate in challenging conditions and heightened volatility, we remain privileged to benefit from our teams' commitment, the support of our host communities, and a strong network of financial partners who recognize the quality of our assets and the long-term value of our strategy. The completion of an initial sale of DRPF material marks an important milestone for us, with additional commercial shipments scheduled for the coming quarter reflecting growing market interest in this product and the potential to expand our reach to customers across shorter freight routes. Having completed a significant multi-year investment cycle at Bloom Lake, our priority is now to optimize our assets, strengthen our balance sheet and pursue cost-reduction initiatives."

Conference Call Details

Champion will host a conference call and webcast on October 29, 2026, at 9:00 AM (Montréal time) / October 30, 2026 at 12:00 AM (Sydney time) to discuss the results of its financial second quarter ended September 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 (the "Rana Gruber Acquisition"), 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 and six-month periods ended September 30, 2026 (the "Financial Statements") and associated management's discussion and analysis of the Company (the "MD&A"), 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 significant environmental incidents were reported during the three-month period ended September 30, 2026; Quarterly production totalled 3.9 million wmt of high-purity iron ore concentrates for the three-month period ended September 30, 2026, up 9% over the same prior-year period, attributable to the contribution from Rana Gruber (0.5 million wmt), partially offset by the lower production volumes at Bloom Lake (3.3 million wmt) which were impacted by inefficiencies created by the DRPF commissioning activities, consistent with management's expectations for the commissioning period; Record consolidated quarterly sales of 4.5 million dmt of high-purity iron ore concentrates for the three-month period ended September 30, 2026, an increase of 17% over the same prior-year period, driven by strong sales volumes at Bloom Lake (3.9 million dmt) and Rana Gruber (0.6 million dmt), resulting in lower inventory levels across both operations; and Completed the inaugural commercial shipment of DRPF product during the quarter, secured additional test-cargoes and commercial agreements for shipments scheduled for the third quarter of the 2027 financial year and continued to advance discussions with prospective customers. While DRPF production volumes remained comparable quarter-over-quarter, average product quality continued to improve towards the project's target specifications.

Financial Results

Financial results for the quarter continued to be impacted by lower iron ore indexes, higher ocean freight rates and elevated fuel prices, partly resulting from the conflict in the Middle East, as well as DRPF start-up costs; Gross average realized selling price of US$105.5/dmt1(C$147.8/dmt1), compared to the P65 index average price of US$112.8/dmt in the period; Net average realized selling price of $89.9/dmt1, a decrease of 16% quarter-over-quarter and 30% year-over-year; C1 cash cost for the iron ore concentrates loaded onto vessels totalled $82.9/dmt1(US$59.2/dmt)2, up from $76.2/dmt1(US$55.3/dmt)2for the same period in 2025. C1 cash cost for the period continued to be affected by elevated fuel prices impacting mining operations, the transition toward DRPF production and its higher processing costs, and lower production volumes at Bloom Lake over which to amortize fixed costs; Net loss of $48.4 million (adjusted net loss of $34.3 million1), representing a $0.09 loss per share (adjusted loss per share of $0.061), compared to a net loss of $41.5 million (adjusted net loss of $6.0 million1) with a $0.07 loss per share (adjusted loss per share of $0.011) in the previous quarter, and net income of $56.8 million (adjusted net income of $56.8 million1) with EPS of $0.11 (adjusted EPS of $0.111) in the same prior-year period. Net loss includes several items that are excluded from adjusted net loss, including DRPF start-up costs of $6.9 million, inventory valuation adjustments of $4.8 million related to the acquisition of Rana Gruber and $7.9 million unrealized fair value losses on derivative instruments; EBITDA of $3.7 million1(adjusted EBITDA of $23.3 million1) for the three-month period ended September 30, 2026, down from $174.8 million1(adjusted EBITDA of $174.8 million1) for the same period in 2025; 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") that are held by the Kami Iron Mine Partnership (the "Kami Partnership"), totalled $214.4 million as at September 30, 2026, an increase of $15.7 million since June 30, 2026. This primarily reflects robust sales volumes, including the destocking of iron ore inventories, and strong cash collections, partially offset by sustaining capital expenditures; and Available liquidity of $618.4 million1as at September 30, 2026, compared to $653.1 million1as at June 30, 2026.

2. Financial and Operating Performance

| | | Q2 FY27 | Q1 FY27 | Q/Q Change | | Q2 FY26 | Y/Y Change | | | | | | | | | | | Consolidated Operation Data | | | | | | | | | Iron ore concentrates produced (wmt) | | 3,872,500 | 3,939,400 | (2) % | | 3,551,600 | 9 % | | Iron ore concentrates sold (dmt) | | 4,494,100 | 3,339,000 | 35 % | | 3,850,900 | 17 % | | | | | | | | | | | Consolidated Financial Data (in thousands of dollars) | | | | | | | | | Revenues | | 403,932 | 356,876 | 13 % | | 492,890 | (18) % | | Cost of sales | | 384,118 | 288,751 | 33 % | | 293,398 | 31 % | | Net income (loss) | | (48,355) | (41,528) | 16 % | | 56,794 | (185) % | | Adjusted net income (loss)1 | | (34,264) | (5,961) | 475 % | | 56,807 | (160) % | | EBITDA1 | | 3,656 | 32,790 | (89) % | | 174,823 | (98) % | | Adjusted EBITDA1 | | 23,265 | 78,341 | (70) % | | 174,836 | (87) % | | | | | | | | | | | Consolidated Statistics (in dollars per dmt sold) | | | | | | | | | Gross average realized selling price1 | | 147.8 | 158.7 | (7) % | | 157.5 | (6) % | | Net average realized selling price1 | | 89.9 | 106.9 | (16) % | | 128.0 | (30) % | | C1 cash cost1 | | 82.9 | 83.7 | (1) % | | 76.2 | 9 % | | AISC1 | | 97.9 | 111.3 | (12) % | | 96.9 | 1 % | | Cash operating margin1 | | (8.0) | (4.4) | 82 % | | 31.1 | (126) % |

A. Consolidated Revenues

Revenues totalled $403.9 million for the three-month period ended September 30, 2026, down $89.0 million from $492.9 million in the same prior-year period, despite the contribution of $54.3 million from Rana Gruber's operations. The decrease in Bloom Lake revenues was attributable to lower net realized selling prices, reflecting elevated C3 index and lower iron ore indexes, as well as less favourable provisional pricing adjustments, compared to the same period in 2025.

For the three-month period ended September 30, 2026, the gross average realized selling price of US$105.5/dmt1was below the P65 index average price of US$112.8/dmt. The 3.4 million dmt of iron ore sold that remained subject to pricing adjustments as at September 30, 2026, were evaluated using a weighted average forward selling price of US$103.4/dmt, which was lower than the P65 index average price for the period. The discount to the P65 index also reflected continued exposure to short-term and spot market sales at discounted pricing during Bloom Lake's transition to higher-purity DR quality iron ore products. This was partially offset by Bloom Lake's concentrate sales priced using backward-looking mechanisms, where applicable index prices were above the P65 index average price of the period.

Freight and other costs totalled US$40.4/dmt during the three-month period ended September 30, 2026, representing a 39% increase compared to US$29.1/dmt in the same prior-year period. While the C3 index increased significantly during the quarter, the Company's freight and other costs rose at a slower pace, reflecting its vessel booking strategy and the benefit of favourable freight rates secured under fixed-price contracts for a portion of the sales volumes, at below prevailing market levels. The rise in the C3 index, driven in part by the ongoing conflict in the Middle East, is expected to continue impacting Champion's net revenues in future months, as most vessels are booked three to five weeks prior to the desired laycan period.

During the three-month period ended September 30, 2026, an average final price of US$108.1/dmt was established for the 2.1 million dmt of iron ore concentrates sold that were subject to provisional pricing adjustments as at June 30, 2026, which were previously evaluated using an average estimated price of US$110.4/dmt. Accordingly, negative provisional pricing adjustments of $6.5 million (US$4.8 million) were recorded on tonnes subject to provisional pricing as at June 30, 2026, representing a negative impact of US$1.1/dmt for the 4.5 million dmt sold during the quarter.

After taking into account sea freight and other costs of US$40.4/dmt and the negative provisional pricing adjustments of US$1.1/dmt, the Company obtained a net average realized selling price of US$64.0/dmt2(C$89.9/dmt1) for its high-purity iron ore concentrates shipped during the three-month period ended September 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.

| | | Q2 FY27 | Q1 FY27 | Q/Q Change | | Q2 FY26 | Y/Y Change | | | | | | | | | | | Mine Operating Data | | | | | | | | | Iron ore concentrates produced (wmt) | | 3,323,700 | 3,547,200 | (6) % | | 3,551,600 | (6) % | | Iron ore concentrates sold (dmt) | | 3,907,100 | 3,128,800 | 25 % | | 3,850,900 | 1 % | | Stripping ratio | | 1.21 | 1.04 | 16 % | | 1.29 | (6) % | | Head grade Fe (%) | | 30.3 | 29.5 | 3 % | | 29.6 | 2 % | | Fe recovery (%) | | 78.2 | 79.0 | (1) % | | 79.6 | (2) % | | Weighted average products Fe (%) | | 66.7 | 66.5 | — % | | 66.5 | — % | | | | | | | | | | | Mine Selected Financial Data (in thousands of dollars) | | | | | | | | | Revenues | | 349,624 | 332,980 | 5 % | | 492,890 | (29) % | | Cost of sales | | 329,231 | 267,504 | 23 % | | 293,398 | 12 % | | Gross profit (loss) | | (27,300) | 27,408 | (200) % | | 155,012 | (118) % | | | | | | | | | | | Mine Selected Statistics (in dollars per dmt sold) | | | | | | | | | Net average realized selling price1 | | 89.5 | 106.4 | (16) % | | 128.0 | (30) % | | C1 cash cost1 | | 82.5 | 83.4 | (1) % | | 76.2 | 8 % | | AISC1 | | 94.4 | 104.4 | (10) % | | 94.3 | — % |

i. Operating Performance

Bloom Lake produced 3.3 million wmt of high-purity iron ore concentrates during the three-month period ended September 30, 2026, a decrease of 6% compared to 3.6 million wmt produced during the same period in 2025, reflecting inefficiencies from the ongoing commissioning of the DRPF project. Quarterly production included 0.6 million wmt of concentrate produced through the DRPF project, comparable quarter-over-quarter, with average product quality progressively improving towards targeted purity specifications in accordance with the commissioning process. As a result, the weighted average product grade increased to 66.7% Fe from 66.5% Fe year-over-year. During the three-month period ended September 30, 2026, the Fe recovery rate decreased to 78.2% from 79.6% for the same period in 2025, primarily attributable to higher iron ore losses to tailings associated with DRPF operations.

Iron ore concentrate sales volumes exceeded production, with 3.9 million dmt sold during the three-month period ended September 30, 2026, as Bloom Lake recovered from shipment delays experienced in the previous quarter caused by the DRPF project commissioning activities. As a result, inventories of iron ore concentrates at Bloom Lake and at the Port of Sept-Îles decreased to 1.0 million wmt as at September 30, 2026, compared to 1.7 million wmt as at June 30, 2026. As Bloom Lake advances the commissioning of the DRPF project, it continues to optimize its inventory management strategies to manage different iron ore concentrate qualities and enhance production and sales logistics.

During the three-month period ended September 30, 2026, Bloom Lake mined and hauled 21.7 million wmt of waste and ore, compared to 22.9 million wmt in the same prior-year period. The stripping ratio for the three-month period ended September 30, 2026, was 1.21, consistent with its LoM plan, compared to a 1.29 ratio recorded in the same prior-year period.

ii. Financial Performance

The cost of sales associated with Bloom Lake operations totalled $329.2 million, compared to $293.4 million for the same period in 2025. For the three-month period ended September 30, 2026, mining and processing costs totalled $60.5/dmt produced1, representing a 14% increase, compared to $52.9/dmt produced1in the same prior-year period, primarily attributable to higher fuel prices arising from the conflict in the Middle East, the transition toward DRPF production and its higher processing costs, and lower production volumes over which to amortize fixed costs. 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. For the three-month period ended September 30, 2026, these costs totalled $24.1/dmt sold1, consistent with the prior-year period, due to similar 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 $82.5/dmt1, compared to $76.2/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.

Gross loss totalled $27.3 million during the three-month period ended September 30, 2026, compared to gross profit of $155.0 million for the same period in 2025. This gross loss was mainly attributable to lower net realized selling prices combined with higher cost of sales, resulting in lower gross margins on each tonne sold.

AISC totalled $94.4/dmt1for the three-month period ended September 30, 2026, in line with the same prior-year period as higher cash costs were offset by lower sustaining capital expenditures, reflecting the phasing of infrastructure-related investments and the optimization of capital allocation in response to current market conditions.

C. Rana Gruber Mine Results

Comparisons of unit costs across Champion's operating segments should be interpreted in the context of distinct production methods, processing operations and logistics infrastructure associated with each site. Rana Gruber's Q1 FY27 results reflect the period from the acquisition date of April 10, 2026 to June 30, 2026, and therefore represent less than a full quarter of operations; quarter-over-quarter comparisons should be read in that context.

At Bloom Lake, the distance between the mine site and the Port of Sept-Îles results in transportation and handling costs being incurred primarily during the haulage of iron ore concentrates and are therefore categorized as land transportation and port handling costs.

At Rana Gruber, the proximity of the processing facility to the port means that a greater proportion of handling costs are incurred prior to the production of iron ore concentrates and are included in mining and processing costs, while land transportation costs are limited due to the significantly shorter rail haulage distance, compared to Bloom Lake.

| | | Q2 FY27 | Q1 FY27 | Q/Q Change | | | | | | | | Mine Operating Data | | | | | | Iron ore concentrate produced (wmt) | | 548,800 | 392,200 | 40 % | | Iron ore concentrate sold (dmt) | | 587,000 | 210,200 | 179 % | | Open-pit stripping ratio | | 1.59 | 2.00 | (21) % | | Head grade Fe (%) | | 32.8 | 31.7 | 3 % | | Fe recovery (%) | | 76.3 | 75.3 | 1 % | | Weighted average products Fe (%) | | 65.0 | 65.2 | — % | | | | | | | | Mine Selected Financial Data (in thousands of dollars) | | | | | | Revenues | | 54,308 | 23,896 | 127 % | | Cost of sales | | 54,887 | 21,247 | 158 % | | Gross loss | | (11,502) | (5,989) | 92 % | | | | | | | | Mine Selected Statistics (in dollars per dmt sold) | | | | | | Net average realized selling price1 | | 92.5 | 113.7 | (19) % | | C1 cash cost1 | | 85.3 | 87.5 | (3) % | | AISC1 | | 97.1 | 147.0 | (34) % |

i. Operating Performance

Rana Gruber produced 0.5 million wmt of high-purity iron ore concentrates at a weighted average grade of 65.0% Fe during the three-month period ended September 30, 2026. Production during the quarter benefited from higher mill throughput of 1.3 million wmt following the annual maintenance shutdown completed in June 2026, together with a higher head grade of 32.8% Fe and Fe recovery of 76.3%.

Iron ore concentrates sales totalled 0.6 million dmt during the quarter, exceeding production levels primarily due to the timing of shipments and the reduction of magnetite inventories. As a result, inventories of iron ore concentrates decreased to 0.3 million wmt as at September 30, 2026, from 0.4 million wmt as at June 30, 2026.

ii. Financial Performance

During the three-month period ended September 30, 2026, cost of sales totalled $54.9 million, while C1 cash cost amounted to $85.3/dmt sold1, lower than the previous quarter. Cost of sales for the period included mining and processing costs of $34.5 million, land transportation and port handling costs of $0.9 million, a $14.6 million change in iron ore concentrates inventories and a purchase price allocation inventory adjustment of $4.8 million. Mining and processing costs totalled $67.9/dmt produced¹ and benefited from higher production levels, improved control over consumable usage and ongoing cost optimization efforts. These favourable impacts were partially offset by persistently higher diesel and explosives prices during the quarter. Land transportation and port handling costs totalled $1.6/dmt sold1and benefited from a one-time reimbursement resulting from the resolution of historical public railway fee claims. C1 cash cost excludes inventory adjustments made as part of the purchase price allocation, as it reflects the fair value step-up of inventories recognized as part of the Rana Gruber Acquisition and is not representative of the underlying operating cost of producing and selling iron ore concentrates.