Champion Iron (TSE:CIA) executives outlined plans to launch an all-cash tender offer to acquire Norway-based iron ore producer Rana Gruber, positioning the deal as a step toward expanding Champion’s footprint in high-grade iron ore and increasing exposure to European steel customers.
Transaction terms and timeline
Chief Executive Officer David Cataford said Champion intends to acquire 100% of Rana Gruber’s shares for NOK 79 per share, implying an equity value of about NOK 2.9 billion, which management described as just under US$290 million. The company described the transaction as an all-cash offer and said it has already secured support from shareholders representing more than 51% of Rana Gruber through separate pre-acceptance undertakings.
Funding plan
Management detailed a three-part funding plan combining existing liquidity, new equity, and new debt:
- Use of Champion’s cash position, which was reported at about CAD 325 million in cash and cash equivalents as of September 30, 2025, with approximately US$39 million expected to come from Champion’s own cash for the transaction.
- A US$100 million private placement with Caisse de dépôt et placement du Québec (CDPQ), which management said would make CDPQ Champion’s largest shareholder at roughly 8.5%.
- A US$150 million fully underwritten term loan commitment from Scotiabank.
On the call, Champion executives characterized CDPQ as a long-term partner that has supported the company since 2017. When asked about potential selling overhang and lock-up restrictions, Cataford said there are “small lock-ups” and emphasized his expectation that CDPQ will remain a long-term shareholder, while noting the decision ultimately rests with CDPQ.
Strategic rationale: high-grade focus and Europe
Cataford said Champion has spent roughly seven years investing capital to build a foundation at Bloom Lake and recently completed work that enables production of a new product at 69% Fe. He said the Rana Gruber transaction fits Champion’s ongoing focus on high-grade iron ore and comes as Champion approaches completion of its DRPF project.
Rana Gruber Chief Executive Officer Gunnar Moe described Rana Gruber as a supplier of “high-quality iron ore” to the European steel industry for more than 60 years and said the company reached a milestone this year by producing concentrate with 65% iron content. Moe highlighted the company’s location near European customers and said the partnership aligns with Champion’s emphasis on high-grade products and steel decarbonization.
Champion’s management highlighted the expected benefit of greater European market exposure and cited upcoming policy changes, including the Carbon Border Adjustment Mechanism (CBAM), which the company said is expected to come into effect next year with impacts ramping over time. Executives said Bloom Lake and Rana Gruber are both low CO2-intensity producers in the high-grade iron ore space and could benefit as the European regulatory regime develops, though management said it is too early to quantify a per-ton premium from CBAM.
Asset profile, products, and operational considerations
Champion said Rana Gruber produces roughly 1.8 million tonnes per year of high-grade products, including two hematite blends and a specialty magnetite product. Cataford said the operation’s logistics are comparatively straightforward, with mining operations about 35 kilometers from the processing plant and port, and noted that the port is adjacent to the plant. He also said the asset is about three to four days sailing time from many European customers.
In response to questions on product quality, Cataford said Rana Gruber’s hematite concentrate has slightly lower silica than Champion’s 66% material. He also highlighted the magnetite product as a differentiator because it is sold into the chemical market rather than the steel market, which he said can offer higher premiums and diversification. He added that Rana Gruber’s mine plan shows magnetite volumes increasing somewhat over the next year, which Champion views as a revenue opportunity.
Management said Rana Gruber’s historical EBITDA ranged from approximately US$50 million to US$110 million per year, noting that this history predates the recent move to 65% Fe. Executives said the company sees potential to improve recovery and potentially raise product grade further. Cataford referenced a publicly discussed project at Rana Gruber to move toward 67% Fe, which he said would be re-evaluated with the Rana Gruber team following the combination.
On costs, Cataford said Rana Gruber is positioned better on the cost curve than Bloom Lake based on all-in sustaining metrics, and he also pointed to Norway’s corporate tax rate as “almost half” of what Champion faces in Quebec.
Shareholder returns and leverage comments
When asked about potential impacts to shareholder returns, management said it was not looking to reduce its shareholder return strategy and argued that the combined business would have a larger cash flow base.
Chief Financial Officer Michael Marcotte said Rana Gruber’s last 12 months of EBITDA was roughly about 20% of Champion’s, and that Rana Gruber contributed a higher proportion of free cash flow relative to EBITDA due to strong free cash flow conversion characteristics. Marcotte said the private placement would dilute investors by about 5%.
Marcotte also said leverage would increase modestly on a trailing basis from about 1.3x to 1.6x following the transaction, and management said it does not expect the deal to materially change Champion’s overall leverage profile.
Looking ahead, Marcotte said the company continues to advance its Kami project feasibility study, which Champion expects to complete by late next year, and referenced additional longer-term resource opportunities around Bloom Lake, including what it calls “Cluster 2.”
About Champion Iron (TSE:CIA)
Champion Iron Ltd is engaged in the exploration and development of iron ore properties in Quebec, Canada. The company’s operating segment include Mine Site, Exploration and Evaluation, and Corporate. It generates maximum revenue from Mine Site segment. The company projects include Fire Lake North, Powderhorn/Gullbridge, Moire, Quinto Claims, Harvey Tuttle, O’keefe-Purdy, and others.
