Champion Iron (ASX:CIA) has entered a transaction agreement to acquire Norwegian iron ore producer Rana Gruber.
The company will acquire remaining shares of Rana Gruber at NOK79 per share for a total of NOK2.93 billion ($437.06 million).
Champion Iron will fund the acquisition through equity, debt, and cash on hand, which includes a US$100 million equity private placement with La Caisse, and a term loan from the Bank of Nova Scotia for US$150 million.
Champion Iron CEO David Cataford says the proposed acquisition of Rana Gruber aligns with the company’s vision to decarbonise the steel industry due to its resources and 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,” Cataford says.
“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.
“The larger entity created by this transaction will enable Champion to continue considering organic growth projects and optimizing 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.”
La Caisse Managing Director Jacques Marchand says its investment reaffirms the company’s “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,” Marchand says.
“It’s also aligned with our strategy to foster the sustainable growth and global reach of companies firmly rooted in Québec.”
Write to Maddison Elliott at Mining.com.au
Images: Champion Iron
