Champion Iron Limited

Good morning, ladies and gentlemen, and welcome to the Champion Iron Limited's fourth quarter results of the financial year 2025 conference call. At this time, all nights are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require any needed assistance, please press star zero for the operator. This call is being recorded on Thursday, May 29, 2025. I would now like to turn the conference over to Mr. Michael Marcotte. Please go ahead.

Thank you, Operator, and thank you, everybody, for joining our call today to discuss the fourth quarter results of our 2025 financial year. Before I get going, I'll just remind people that we'll be using a presentation which is available on our webcast at championiron.com under the tab Events and Presentation. I'd also like to remind people that throughout this call, we'll be making forward looking statements. If you'd like to read more about these four ligand statements, risk and assumptions, please go and visit our MDNA, which is also available on our website. Joining me here today to do the presentation includes our CEO, David Catterford, who will be doing the formal presentation and Q&A. And also we have our COO, Alexandre Bello, and our CFO, Donald Tremblay. With that, I'll pass it over to David to do the formal presentation.

Thanks Michael, thanks everyone for being here. Very happy to be able to present the fourth quarter highlights for fiscal year 2025. So during the quarter we produced about 3.2 million tonnes and the big highlight for the quarter is we managed to set a record of 3.5 million tonnes of concentrate sold, even in a more challenging winter environment where logistics are typically a little bit more complex. Turning over to community governance and sustainability, one important highlight is that we've continued to work closely with our First Nations partner, not only on operations and on mining side, but also on the culture side, where we participated in various events during the quarter to be able to continue strengthening our relationship with the First Nation community. In terms of our ESG disclosure and performance, so one big highlight, is that during the fiscal year 2025, we successfully met or exceeded 13 out of the 14 sustainability targets for the 2025 year. Again, one of the elements to highlight is that we continue to be an industry leader by recycling about 99% of the water at Bloom Lake. In terms of operational and financial results, so as we mentioned, produced about 3.2 million tons during the quarter, There were some issues during this quarter, one that was forecasted, so we did have our semiannual shutdowns for plant number one and plant number two, but we did have some grinding difficulties with some harder ore in one of the east pits at the Bloom Lake site. In the past, what we have done is increased the blending ratio to be able to mitigate that, but now due to the fact that we've got a significant stockpile at site, decided to be able to hit that material more head-on. and be able to continue destocking the stockpile at Bloom Lake. If we look at our stockpile, we managed to decrease it by about 300,000 tons. So we're down to about 2.6 million tons on the site at the end of the last quarter. In terms of our operations, if we dig a little bit deeper, we can see that all the new equipment and the mining fleet that we have in place allows us to move more material and we've managed to move quite a lot of waste during the quarter, increasing our strip ratio to about 1.15, allowing us to maintain the mine in a healthy position, open up new faces and make sure we've got some decent blending capacity for the future. If we look at the industry in terms of the P65 index was fairly flat during the quarter, about a 1% decrease. where we did see some movement was on the C3 freight index, where it decreased by about 10% quarter over quarter. And that's even despite what's going on in the Middle East and the fact that certain routes had to be, or have to be changed with the current conflict that we see in the Middle East. In terms of our provisional price adjustment, so during the quarter, at the end of last quarter, we had forecasted selling the tons that were on the water at about $110. We managed to sell them at about 112, so had a positive provisional price adjustment of about $3.7 million during the quarter. If we look at what's for the next quarter, so we had about 2.7 million tons that were on the water. And we expect to have a settlement price or we expect it to have a settlement price of about $111 at the end of last quarter. Turning over to our average realized selling price. So obviously having 2.7 million tons set at 111 at the end of the quarter has impacted our gross realized price during the quarter. So you can see that if you look at the average P65 during the quarter, our gross realized price was slightly lower. Two main reasons. One, well, as we mentioned, those tons on the water at the end of the quarter, but also when we look at the current situation in China, so high-grade material like what we produce at Bloom Lake, we had told the market last quarter that we were having slight discounts in China to be able to sell our material. Again, we do not have long-term contracts for about half of our tons. as we're transitioning towards DRPF material or higher grade type material. So which meant that we had slight discounts during the quarter, but I just wanna tell the market that we did not have any quality issues. So we're not getting any discounts because we've got increased contaminants or decreased quality. We still managed to deliver every single vessel on spec and we do not have any significant contaminants in our material. In terms of our operating costs, slightly higher at about $80 Canadian per ton. Two main reasons. Well, one, obviously the two semi-annual shutdowns during the quarter did impact our costs. And at the same time, having lower production of 3.2 million tons has also increased our cost. The best way for us to be able to reduce our costs is to increase productivity and to increase the amount of tons that we produce at Bloom Lake. So that's definitely going to be the priority for this year. In terms of our financial highlights, about $425 million of revenues, $130 million of EBITDA, and earnings per share of about 8 cents per share. That allowed us to have a positive increase in terms of our cash position of about $24 million, even while we've invested about $50 million on our DRPF project, so to finalize the flotation plant. and also reinvesting about $50 million in sustaining CapEx to maintain our assets in great condition. We look at our balance sheet, still very healthy balance sheet with about a billion dollars of available liquidities. And when we look at the results, allowed us to be able to declare our eighth semi-annual dividend of 10 cents per share. It's interesting when we take a little step back and we look at what's happened over the past years. So since 2017, we've generated quite a lot of cash from our operations, over $2.6 billion of cash generated from our operations in the past years, which allowed us, one, to return directly about $400 million to our shareholders, but also invest about $2 billion in our growth capex and self-fund all of this without issuing any equities. This allows us to have a very strong foundation and come next year while we get out of a seven-year CapEx run to grow organically our business. So we're finally going to be able to start benefiting from all of those investments and being able to benefit from lower CapEx for the next few years as all we will have is sustaining CapEx in the next few years. So very well positioned to increase the cash flow generation in the coming years. Turning over to our projects. So we have two major projects that we're working on right now. One where we're investing and one where we will have minimal shareholder money that will be invested in the next years. The CAMI project, which we're now doing the permitting and doing the feasibility study alongside with our partners of So when we look at the CAMI project, we have about just shy of two years to be able to finalize the permitting and the feasibility study. At the end of those two years, we'll be in a position to see where's the market, what's the demand for DR type material, and what's the right potential timing for this project. So we still have about two years where very minimal cash from Champion will be invested. Most of the cash will be invested by our partners. And as we go forward, we'll be able to update the market on the next steps for the CAMI project. But the most interesting project right now, shorter term for us, is the investment that we're making to transition our material to DR grade. We've already invested about 72% of the capex to be able to deliver the flotation plant. We have about 28% remaining capex to invest in the coming months. and we still feel confident we'll be able to deliver the plant by the end of this calendar year. I don't think it's possible to do a call without addressing the tariffs. One interesting highlight for us is, as you know, we do not sell our tons into the US market. So we don't have direct sales impact in terms of our sales. in terms of our sales due to tariffs. Short term, you've probably seen a global economy uncertainty and a potential slight reduction in steel output. But realistically, we haven't seen a significant impact right now in the world in terms of steel demand and steel production. Longer term, we do see some potential benefit for us as the US potentially increases the amount of steel that they produce. Today, the U.S. is a net exporter of scrap, and as potentially more tons get produced in the U.S., well, those scrap exports might be reduced in the future, which means the clients for that scrap will then search for other types of metallics, including DRI-type material. So again, when we look at our longer-term strategy of producing a material, even if we see that today the premiums for higher grade might be a little bit pressured, we do still think that the strategy longer term is to go towards higher grade, go towards DR grade, and be able to produce this type of material. In terms of green steel transition, so when we're in North America, it seems that decarbonization has been put on pause, but when we look at the rest of the world, that's not necessarily what's happening. Again, when we look to Japan, recently what was announced to be able to have subsidies of about 350 US dollars per vehicle that uses lower emission steel, we do see that there are paths right now that are continuing to be able to reduce the CO2 emissions in the steel production. If we turn to China, we also see China included the steel industry in its emission trading scheme. So we do see that even if today the higher grade type material is maybe not the most favored material. I do still believe that that will be back more in vogue and we'll be able to continue benefiting from a higher premiums in the future for higher grade type material. So all in all, I'd like to thank our team to having allowed us to reach those results. and being able to deliver yet another quarter and another year where we generated significant cash flows for our shareholders and be able to return another dividend of 10 cents per share. With that being said, I'll turn it over to the Q&A part of the call.