Quebec’s Champion Iron Ltd has entered into a transaction agreement to acquire all of the issued and outstanding shares of Rana Gruber ASA, a leading Norwegian producer of high-grade iron ore, for approximately NOK 2,930 million (US$289 million).
The company expects to fund the transaction through a combination of equity, debt, and cash on hand, including a US$100 million equity private placement with Caisse de depot et placement du Quebec, a global investment group and long-standing financial partner of the Company, and a fully committed term loan in the amount of US$150 million solely underwritten by The Bank of Nova Scotia.
In connection with the offer, Mirabella Financial Services LLP, on behalf of Svelland Global Trading Master Fund and certain other accounts, multiple large shareholders and all members of the board of directors and the executive management of Rana Gruber, who own approximately 51% of the issued and outstanding shares of Rana Gruber as at the date of the announcement, have entered into separate pre-acceptance undertakings, whereby they have agreed subject to the terms and conditions thereof to tender their shares into the offer. The Board of Directors of Rana Gruber has also unanimously resolved to recommend the Rana Gruber shareholders to accept the offer.
It says the transaction positions Champion to capitalise on a number of strategic benefits, including a long life of mine asset in a stable jurisdiction with access to renewable power; and a proven iron ore producer with continuous production dating back to the 1960s, recently producing at over 1.8 Mt/y of high-grade iron ore, including a project to upgrade production to 65% Fe iron ore concentrate. Rana Gruber also has robust cash flow margins, supported by competitive all-in sustaining costs and proximity to customers; plus a history of generating robust cash flows.
It would also represent an expansion of Champion’s product portfolio, including different blends of high-grade iron ore concentrate and magnetite iron ore used in the chemical industry. Plus the combination would create a larger and more diversified high-grade iron ore producer with opportunities to collaborate on sales logistics, including an established customer focus in Europe, further diversifying Champion’s sales mix. The two companies have an aligned vision to service the green steel supply chain with Rana Gruber’s recent upgrade to 65% Fe iron ore concentrate and potential opportunities for additional grade improvements.
Champion’s CEO, David Cataford said: “The proposed acquisition of Rana Gruber supports our vision to collaborate in decarbonising the steel industry by leveraging Rana Gruber’s quality resources and proven iron ore operations. The transaction offers an attractive value proposition for our shareholders, including an expected positive impact on our financial results, and strengthens Champion’s leadership in the global high-quality iron ore industry by diversifying our asset base and product portfolio. In our review of this opportunity and dialogue with Rana Gruber, we have identified several opportunities, including technical cooperation, customer engagement, and asset improvement potential.”
He adds: “The larger entity created by this transaction will enable Champion to continue considering organic growth projects and optimising its capital return strategies. Through our collaboration with Rana Gruber’s management team, we intend to uphold our commitment to creating a positive impact for the local communities where we operate. We also thank our financial partners, including La Caisse and Scotiabank, for their continued support as we enter new markets, creating a global operating model to service the green steel supply chain.”
La Caisse’s Managing Director, Large Capitalisations, Quebec, Jacques Marchand, said: “With this investment, La Caisse reaffirms its long-standing commitment to Champion, a recognised leader in high-quality iron ore mining operations and development. This acquisition strengthens the company’s position as a key player in the high-grade iron ore market – a critical mineral in steel decarbonisation – while supporting its long-term growth ambitions. It’s also aligned with our strategy to foster the sustainable growth and global reach of companies firmly rooted in Quebec.”
Rana Gruber is a Norwegian iron ore producer based in Mo i Rana, Nordland, with the owned properties benefiting from an heritage tracing back over 200 years of mining expertise. Rana Gruber was established in 1964 and listed on the Oslo stock exchange in 2021. Rana Gruber’s current mining operations draw from an underground operation and nearby open pits, and benefits from an extensive resource base to potentially maintain current production levels for decades.
The mining area is connected by a common carrier railway approximately 35 kilometres from its coastal processing plant, which has direct access to its dedicated port facility. Rana Gruber extracts and processes natural mineral resources to produce different types of iron ore concentrate.
Accordingly, the company produces two different haematite iron ore concentrates, including a recent upgrade to 65% Fe quality, intended primarily for steel production with customers focused in Europe. Additionally, Rana Gruber produces a magnetite iron ore concentrate, a high purity iron-oxide product that finds use in sectors outside traditional metallurgy, such as water purification and industrial chemical applications focused in Europe, and has attracted a premium to the P65 index through time. With its access to renewable power, the company benefits from one of the lowest carbon emissions per tonne of iron ore concentrate in the global industry.