Here’s why the Champion Iron (ASX:CIA) share price is sliding 6% today

Weak iron ore prices and shipping costs might be dragging on Champion Iron shares

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A group of disappointed board members.

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The Champion Iron Ltd (ASX: CIA) share price is falling on Thursday after the company released its second-quarter results for FY22.

At the time of writing, the Champion Iron share price is down 6.32% to $4.22.

Second-quarter highlights

Champion Iron achieved revenues of $331.0 million and $876.4 million for the three and six-month periods ended 30 September. By comparison, it achieved $311.0 million and $555.6 million for the same periods in 2020.

The company achieved a marginally higher earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $200 million for the three-month period compared to $199 million a year ago.

Similarly, net income came in at $114.6 million compared to $112.2 million in 2Q21.

During the quarter, the company produced 2.089 million wet metric tonnes (wmt) of high-grade 66.3% iron ore concentrate compared to 2.269 million wmt for the same period in 2020.

Champion Iron achieved an average gross realised price of US$174.6 per tonne, up 42.8% year-on-year.

Growth projects making significant progress

Champion Iron completed several critical construction items during the quarter, enabling the company to evaluate a potential accelerated completion schedule for its Bloom Lake Phase II expansion project, currently expected by mid-2022.

The Phase II project aims to double Bloom Lake’s nameplate capacity to 15 million tonnes per annum of 66.2% Fe iron ore concentrate.

Why is the Champion Iron share price plunging?

At its peak year-to-date return, the Champion Iron share price was up almost 65% to $7.86 thanks to surging iron ore prices.

The opposite is now taking place with iron ore prices tanking from May’s all-time highs of approximately US$230 a tonne to US$120 a tonne.

The quarterly update flagged the weak pricing environment, saying its realised selling price was “impacted by sales provisionally priced using forward prices at quarter end, which were at a significant discount compared to the P65 index average for the period”.

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