Weak iron ore prices and shipping costs might be dragging on Champion Iron shares
The post Here’s why the Champion Iron (ASX:CIA) share price is sliding 6% today appeared first on The Motley Fool Australia. –
At the time of writing, the Champion Iron share price is down 6.32% to $4.22.
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”.
The post Here’s why the Champion Iron (ASX:CIA) share price is sliding 6% today appeared first on The Motley Fool Australia.
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Motley Fool contributor Kerry Sun 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.