Champion Iron Limited

Good morning, ladies and gentlemen, and welcome to Champion's third quarter results of the financial year 2026 conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If anyone has any difficulties during the conference, please press star zero for operator assistance at any time. I would now like to turn the conference call over to Michael Marcotte. Please go ahead.

Thank you, operator, and thank you, everyone, for joining us here to discuss our third quarter results. Before we get going, I'd like to highlight we'll be using a presentation that's available on our website at championiron.com. I'd also like to highlight that throughout this call, we'll be making forward-looking statements. If you want to read more about forward-looking statements, risk, and assumptions, you can also visit our MDNA, which is also available on our website. Joining me here today includes many of our executives, including David Catterford, our CEO, who will be doing the formal portion of the presentation, and our COO, Alexandre. With that, I'll turn it over to David.

Thanks, Michael. Thanks, everyone, for being on the call today. I'm very happy to be able to present the fiscal year 2026 third quarter results. In terms of the highlights, so we managed to produce roughly about 3.7 million tons during the quarter. and sold just shy of 3.9 million tons also during the quarter. One of the big highlights as well is we've continued to improve on our cash costs. So our cash costs delivered in the vessel in Setil was just below $74 per ton, which translated in the quarter, when you look at the realized price of an EBITDA of $150 million, a little bit less than the previous quarter, but the main difference was essentially the provisional price adjustment, so we managed to have a pretty flat quarter-on-quarter. In terms of community governance and sustainability, continued working with local communities and also with our First Nations partners of Waishat Manitenam. One of the big highlights is we managed to send roughly about 160 people to the community to do a full immersion to be able to work alongside with the community. Again, strengthening our partnership and allowing us to view potentials for growth in the future alongside our partners in Waishat and Aitanam. In terms of operational results, one of the highlights for the quarter is definitely the amount of tons that we were able to bring down from the stockpiles at Bloom Lake. A lot of those tons are now sitting at the port, but we much prefer having them closer to the vessels at the port than on stockpiles at the Bloom Lake site. So we managed to decrease our stockpile by about 1.1 million tonnes quarter over quarter, reducing the stockpile to about 600,000 tonnes at the mine. Our inventories increased at the port to roughly about 900,000 tonnes, and we'll be able to destock that over the next few quarters to be able to fill the vessels in this system. In terms of our operations, Again, as we mentioned, quarterly concentrate production of about 3.7 million tonnes. What's important to note as well is that we continue to operate in a way that keeps the mine very healthy. So when you look at our strip ratio, the amount of tonnes of weight that we've moved during the quarter, again, making sure that ore is available and that we can continue working on our blending strategy. to make sure that we can dilute down a portion of the harder iron ore that we've had in one of the small zones that we discovered that we disclosed to the market a few quarters ago. In terms of the industry overview, so a pretty flat quarter when you look at the P65, the freight, and the premium for the P65 over the P62. So during the quarter, P65 averaged about $118 per ton, a slight increase of about 1%. There was a very slight decrease in terms of the premium for the P65 over the P62 and a slight increase in C3 freight cost of about 2% during the quarter. But again, pretty flat in terms of quarter on quarter. What does that do on our provisional price adjustment? So when you look at this quarter, very uneventful provisional price adjustment, about $3.3 million U.S. over the quarter. When we account this over 3.9 million tons that were produced, it has an impact of about 80 cents per ton in terms of the tons sold. When we look at the tons that are still on the water now at the end of the 31st of December, we had about 2.5 million tons in transit, and we've expected a price of around 117 US dollars per ton. If you look at our average realized selling price, Pretty close to the P65 index. As you know, we have some tons that are still subject to slight discounts due to the fact that we're selling more on spot and not on long-term contracts. This is the year that we'll be able to start shifting that portion because as we deliver our new plant, and were able to sell 69% iron ore, will now enter into longer term contracts. When you look at this quarter, when we account for the conversion of US to CAD and discount the freight cost, we had a net realized price of about 121 Canadian dollars per ton. In terms of our cash costs, so we've continued working on our cost at site, reducing again our cash costs during the quarter. to just below $74 per ton delivered in the vessel. Pretty big decrease and we're continuing to work on our costs. So as you know, the main factors for us is definitely when we have a good iron ore recovery and we have good production, that definitely reduces the cost per ton at our site. Mind you, this quarter was a quarter that did not have a major shutdown, but still continuing our downward trend in terms of operating costs. What does that translate in terms of financial highlights? So as we mentioned, revenues of about $470 million, EVDA of 150, and a net income of $65 million for the quarter. In terms of our cash, so cash sits at roughly about 245 million on the 31st of December this year. Main impacts were obviously the cash flows from operations. Where we invested, we invested mostly on the sustaining capex and also the DRPF capex. And we also paid out our semiannual dividend during the quarter. There was also a change of working capital, mainly due to receivables that have increased. So that should unwind in the next quarter. In terms of our balance sheet, very well positioned to be able to continue our growth initiatives. About $1.1 billion of capital cash, cash equivalents, and working capital, and also including the available liquidities that we have on our various facilities. So very well positioned to be able to finalize our growth initiatives. Talking about our growth initiatives, so if we look at our main project, the DRPF project, so we're coming close to completing the project now and being able to commission the first tons. Still on target to reach our $500 million investment for the full project. Right now, all the equipment's installed, so it's just finalizing some tie-ins with the equipment, and we're now also starting the commissioning of certain equipments as we speak. So pretty excited about the next steps for this project. We're still on target to be able to deliver our first tons of DRPF and our first vessel in the first half of this year. When we look at the impacts of starting the plant, we just need to remind everyone that there are some impacts that will come with the interactions with the phase two project. So there will be some interruptions in the plant as we commission the various equipment. We had forecasted in our feasibility study roughly about 20 days for the phase two. We'll try to make up a portion of that for in the phase one plants, but there will be some interactions in the coming quarter to be able to fully commission this plant. But once that's done, we do expect a ramp up of roughly about 12 months to be able to get the plant fully running and minimal impacts on the actual phase two production once the tie-ins are completed. So very exciting because we're now finalizing all of the potential contracts with various clients. We do expect to sell most of those tons in markets that we had announced. So either Europe, North Africa or Middle East. So working with our partners to be able to finalize those contracts and we'll be ready for when these tons come into the market in the first half of this year. One of the other highlights that we discussed also just a few days before Christmas was the potential acquisition of Rana Gruber. So we entered into a transaction agreement with Rana Gruber to acquire the company. the transaction is fully financed. So a portion of cash, roughly about $39 million US. We have one of our longstanding partners that is also supporting us for $100 million US. And we also have fully underwritten term loan with Scotiabank of 150 million US that will start syndicating down to our bank syndicates. So as my understanding, all of our partners are very happy to support us with this transaction. Again, just to remind everyone why we're doing this transaction. Well, one, Renner Gruber is a robust operation that's operated for over 60 years uninterrupted in all of the various cycles. They benefit from pretty interesting margins in terms of the material that they produce. And they're also on track to start producing higher grade material which is fully aligning with what we do at Bloom Lake. They're also very well positioned versus European clients. This is a client base that we want to increase in the future. And there are just a few days of sailing time from their various clients, making it a producer of choice for a lot of steel mills in Europe. We do think there are opportunities in the future with the asset to be able to potentially increase on the volume side, and we also benefit from an extraordinary team over there, fully aligned in terms of values and operation style. So we do think that this is very positive to be able to combine the two assets. In terms of our other projects, so as you know, we're also working on the feasibility study and the permitting of the CAMI project. So that's all going according to plan. We should be in a position by the end of this year to finalize the feasibility study and potentially obtain our construction permit for the project and also fully aligned with our partners, Nippon Steel and Sojitz to be able to continue on the next step. So we'll see once we finalize the feasibility study and the permitting process where the market for DR grade type material and will then be able to look at the next steps for the project going forward. We also, just to remind everyone, have over 5 billion tons of resources just south of Bloom Lake, so we are doing a little bit of drilling just to make sure that we can refine our estimates in terms of the actual tons over there, but all very high-grade material that is I think will position us very well in the future, short-term maybe no impact, but in the medium-long term could definitely be very beneficial for our company. So with that being said, I'd like to thank all of our staff and everyone for making these results possible. I think, again, a very good quarter. We had a few hiccups last year and definitely had some quarters that were impacted by either forest fires or a bit of breakage on certain equipments at our site. but I think that's behind us and we're now back in a very good operational position. And I think when you look at the results and the cash costs that are continuing to come down, it's a proven element that we're back on track in terms of operations. So with that being said, I'll turn it over for the Q&A portion of the call.