The Champion Iron Ltd (ASX: CIA) share price gained 5.6% today, outpacing the All Ordinaries Index (ASX: XAO) gains of 0.2%.
This follows the company’s quarterly activities report, released this morning.
Today’s gains see the Champion Iron share price well into the green for the year, up 15% since 2 January. That’s despite the shares falling more than 50% from late January through to 24 March. Since then shares are up 119%.
What does Champion Iron do?
Champion Iron is an iron ore exploration and development company. Through its subsidiary, Quebec Iron Ore, the company owns and operates the Bloom Lake Mining Complex. This is located in the southern Labrador Trough in Quebec, Canada’s largest source of iron ore.
Champion Iron also owns the Gullbridge-Powderhorn property in Northern Central Newfoundland. The company sells its iron ore concentrate around the world with customers in China, Japan, the Middle East, Europe, South Korea and India.
Why is the Champion Iron share price up today?
Champion Iron announced record production, net income and net cash flow from its operations in the second quarter of FY21.
Atop revealing that it had suffered no new confirmed cases of COVID-19, the company reported revenue of $311 million for the 3-month period ending 30 September. This is up from $164 million over the same quarter in 2019.
Net income was also up, coming in at $122 million compared to a net loss of $1.7 million for the second quarter in 2019.
This left Champion Iron with a strong balance sheet, reporting cash on hand of $426 million. That compares to cash on hand of $346 million on 30 June. The company said that comes despite a dividend payment of $17 million made during the second quarter, and $97 million in mining taxes and payments.
Cpommenting on the results, Champion Iron CEO David Cataford said:
Our team’s agility in adapting operations is unlocking the full potential of our flagship Bloom Lake Mine, resulting in record quarterly production and financial results for our company.
I am proud to be leading such a highly motivated workforce, dedicated to the success of our company, despite the challenging environment created by the COVID-19 pandemic… With our cash on hand rapidly growing, our company continues to diligently advance the Phase II expansion project, increasing the cumulative budget to $120 million, which is expected to further de-risk the project.
With the iron ore price strong at US$115 per tonne today, and Champion Iron reporting record production, I think the Champion Iron share price will be one to watch.
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Returns as of 6th October 2020
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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