This report is an updated version of the report published on 23 July 2025 at 12:13 PM AEST.

Champion Iron Limited (ASX: CIA) 

Champion Iron Ltd is an iron ore exploration and mining company focused on the production of high-grade iron ore concentrate. Through its wholly owned subsidiary, Quebec Iron Ore Inc., CIA operates the Bloom Lake Mining Complex located in Québec's Labrador Trough. The company is advancing the DRPF Project and the Kami Project. 

Recommendation Rationale – SELL at AUD 5.270

• Technical Momentum Losing Steam: CIA’s share price has surpassed the R2 level recommended on 10 July 2025, capitalising on a 20.87% gain since the previous recommendation. Also, the momentum oscillatory (14-day RSI is around 75.74 level), indicating overbought territory. This suggests the recent price recovery may be overextended, increasing the likelihood of near-term consolidation or a technical pullback.
• Sharp Earnings Contraction: Net income for FY25 declined 39% year-on-year to CAD 142.0 million (FY24: CAD 234.2 million), despite higher shipment volumes. The fall reflects margin pressure from rising costs and weaker operating leverage.

• Cost Inflation Impacting Margins: In Q4 FY25, the C1 cash cost rose to CAD 80/dmt, up from CAD 78.7/dmt in Q3 FY25 and CAD 76.6/dmt in Q4 FY24. The increase was driven by shutdown-related maintenance, higher stripping activities, and ore hardness issues that led to additional crusher and grinding circuit maintenance.
• Operational Softness: In Q4 FY25, iron ore concentrate production fell 13% quarter-on-quarter to 3.17 million wmt, while ore milled dropped 11% quarter-on-quarter to 9.16 million wmt. Recovery rates also weakened from 79.1% in Q3 FY25 to 78.3% in Q4 FY25, indicating strain on processing efficiency.

CIA Daily Chart

 (Source: REFINITIV; Analysis by Kalkine Group)

Valuation Methodology: Price/Cash Flow Approach (FY March'26E) (Illustrative)

The stock might trade at a slight premium to its peers considering revenue growth and record iron ore concentrate sales in FY25, the company’s investment in the DRPF project (expected to position Champion to supply ultra-high-grade 69% Fe iron ore), alignment with the global green steel transition, recent definitive agreement with Nippon Steel Corporation and Sojitz Corporation for the Kami Project, and other favourable factors. For conducting the valuation, following peer companies have been considered: Fenix Resources Ltd (ASX: FEX), BlueScope Steel Ltd (ASX: BSL), and Mount Gibson Iron Ltd (ASX: MGX).

Considering that the stock has crossed its R2 level, macroeconomic uncertainty, rally in share price movement, current trading level, and risks associated, the share price can face consolidation at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 5.270, as of 23 July 2025, at 11:20 AM AEST).

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 23 July 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.