Champion Iron (ASX:CIA) share price jumps on quarterly results

Shares in the exploration company have been enjoying a strong day on the ASX.

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Key points

  • The Champion Iron share price soared 6% in early trading today
  • The move coincides with the miner’s latest quarterly announcements
  • The company has declared an inaugural dividend of 11 cents per ordinary share

The Champion Iron Ltd (ASX: CIA) share price is up today after the company released a landslide of announcements to investors.

Among them was its latest quarterly activities report, and a declared dividend for shareholders.

And it appears the news has been well received by investors, with Champion Iron shares jumping as high as $6.03 apiece after market open, a rise of almost 6% on their previous close.

However, at the time of writing, the Champion Iron share price has settled back down to $5.76, an increase of 1.23%.

So what did the iron ore exploration and development company announce today? Let’s take a deeper look into Champion Iron’s quarterly operations and results…

What did Champion Iron report?

The key points in Champion Iron’s quarterly report for the period ended December 31 2021 included (all figures in Canadian dollars unless stated):

  • Net income of C$68 million (AU$75.6 million) compared to C$120.8m for the prior corresponding period (pcp) in 2020
  • Gross profit of C$132,550, down 38% on the pcp
  • Earnings before interest, taxes, depreciation and amortisation (EBITDA) of C$122,127, down 43% on the pcp
  • Revenues of C$253,016, down 23% on the pcp
  • C$543.4 million in total cash on hand and restricted cash
  • Total assets at C$1.92 million, up 52% on the pcp
  • Total liabilities at C$827,728, up 2% on the pcp

The miner has also declared an inaugural dividend of 10 Canadian cents (approximately 11 Australian cents) per ordinary share to be paid 1 March 2022.

Overall, Champion Iron is confident its balance sheet shows potential for growth, being positive at C$11.07 million.

Since 31 December, the Champion Iron share price has increased by 5.5%.

What happened in the first half?

All in all, Champion Iron’s revenues for the three and nine-month periods ending 31 December 2021 were C$253 million and C$1.12 billion, respectively.

This compares to the prior corresponding periods of C$329.5 million and C$885.1 million respectively.

The company reported an increase in freight costs for the three-month period, compared to the year before (which were mainly put down to the booking time of transport).

According to Champion Iron, these freight prices “reached levels not seen since 2009, partially due to port congestion across Asia, with prices recently reverting to their historical relationship with iron ore prices”.

In fact, freight (and other costs) amounted to 27% of the gross average realised selling price, compared to 15% in the prior corresponding period.

However, costs have also been put towards phase II preparations at its Bloom Lake site in Québec, Canada.

Development at the Bloom Lake project

Champion Iron is looking ahead to its Bloom Lake phase II expansion project, in which a number of essential requirements have been ticked off the list.

Among the appeal of the site is a railway that can effectively transport produced iron concentrate into a loading port in Sept-ÎIes in Québec.

During the quarter, the company has injected an additional C$93.7 million of capital expenditure and start-up costs into the project, alongside C$2.4 million in advanced payments.

The project is expected to be commissioned by April, and be ready for commercial production by the end of the year. Some 400 people are working on the site to meet these milestones despite coronavirus challenges.

Champion Iron share price snapshot

In the last 12 months, the Champion Iron share price has increased by around 3%. However, it is up 6% this year to date.

It hit its 52-week-high of $7.60 in late July and its 52-week-low of $4.05 in early November.

The miner has a market capitalisation of $2.88 billion.

Motley Fool contributor Alice de Bruin has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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