Champion Iron Limited

Good morning. Ladies and gentlemen, welcome to the Champion Q4 results of the Financial Year 2026 conference call. At this time, all lines 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 immediate assistance, please press star 0 for the operator. This call is being recorded on Thursday, May 28, 2026. We would now like to turn the conference over to Michael Markoff, Senior Vice President, Corporate Development and Capital Markets. Please, go ahead.

Thank you, Operator, and thank you, everyone, for joining us to discuss our fourth quarter results of the 2026 financial year. Before we get going, I'd like to highlight that throughout this call, we'll be making forward-looking statements. If you would like to read more about forward-looking statement risk and assumptions, you can go and visit our MD&A, which is available on our website. We will also be using a presentation throughout this call that's also available on our website under the Presentation tab. Joining me here on this call include our CEO, David Catterford, our Chairman, Michael O'Keefe, and our COO, Alexandre Bello. And with that, I'll turn it over to David for the formal portion of the presentation.

Thanks, Michael. Thanks, everyone, for being on the call. So if we go through the highlights for the fourth quarter of fiscal 2026, we managed to produce just over 3.4 million tons during the quarter and sold just over 3.45 million tons. Our iron recovery trended up to 80.6%, revenues of $414 million, and an EBITDA of just over $114 million for the quarter. If we look at community governance and sustainability, we were very happy to receive the Minister of Natural Resources and Forests at our site, being able to continue working with our partners, the government of Quebec, on looking at opportunities to be able to invest in infrastructure in the Labrador Trough. We've also had quite a lot of discussions with other officials, either on the federal side or with the various communities, to be able to start looking at opportunities to invest in infrastructure in the region. In terms of ESG disclosure and performance, happy to mention that we successfully met or exceeded all 14 of our sustainability targets that we set in the previous year. Also, very proud that we've managed to have yet another quarter with no major environmental issues at Bloom Lake, so we've been flawless since 2018 in terms of major environmental issues. Also happy to say that we're still a leading position in recycled water at site. About 99.1% of the water at Bloom Lake is recycled. And also that we've managed to reduce our GHG emissions by 2.6% year over year. If we turn to operational results, as we mentioned, the high level 3.4 million tons produced during the quarter, an 8% increase year over year. We were impacted during the quarter with our two semi-annual shutdowns that were planned shutdowns. We had a little bit more challenge in terms of the sales, 3.5 million tonnes during the quarter, comparable year over year, but we were impacted by third-party train derailment, which happened between the two quarters, but that mainly impacted us during this quarter, and also had quite a harsh winter that created quite a lot of carryback in our cars, our ore cars, which reduced our productivity in terms of logistics. So it was a tough winter, and we still had a decent quarter, but under what we had initially planned. We managed to bring down the stockpile by about 200,000 tons. One of the main highlights, despite this challenging weather period, we did manage to move about 21 million tons at the mine, 3% year-over-year increase. So very happy with the way that the pit health is at Bloom Lake. In terms of the industry overview, in terms of the P65 iron ore index, pretty flat quarter over quarter, slight increase of 1.7%. We did see a larger spread between the P61 index and the P65, so going from about $13 per ton to $17 per ton. Where we saw a negative impact was mainly on the C3 freight. that started increasing by about 4% quarter over quarter to about 25 US dollars per ton, mainly due to the impact of the conflict in the Middle East. If we look at provisional price adjustment, it's a pretty uneventful quarter. We expected to sell at around 117.4 US dollars per ton. The tons on the water were sold at about 117.2. So a negative impact of about $300,000 US. Going forward, at the end of last quarter, we had 2.3 million tons on the water and expected a settlement of 120.2 US dollars per ton. In terms of our average realized selling price, we got pretty much the P65 index during the quarter. If we reduce our freight costs and convert also into Canadian dollars, we had a net realized price of about $120 Canadian dollars. In terms of our operating costs, trending a little bit higher than the previous quarters, so main impacts during the quarter for us, while obviously it was our two semiannual shutdowns, so that typically are the quarters that we have a slightly higher operating cost, but we were negatively impacted by three various elements. One being, as we mentioned, the winter conditions and the train derailment that impacted us by roughly about $3 per ton during the quarter. We started to see fuel increase impacts of roughly about $1 per ton. And as we mentioned, we destocked a portion of our stockpile, which carried a negative impact of about $1 per ton. So all in all, roughly about $5 per ton accounting for those three elements that I've just mentioned. And if you look at the results, minus that $5, trending similar to the previous quarter with two semi-annual shutdowns. Still working on various ways that we can continue reducing the costs on the elements that we control at site. In terms of the financial highlights, so quarterly revenues of $414 million, EBDA of 114, net income of 23.2 million, and an EPS of 4 cents per share. In terms of cash change during the quarter, so our cash went from about 245 million to close to 300 million during the quarter, all at the same time of investing roughly about 40 million in our flotation plant and just over 50 million on sustaining CapEx. In terms of our balance sheet, still very strong balance sheet with significant liquidities to be able to allow us to continue finalizing our growth initiatives. And we've also implemented our debt financing, the new term loan of 150 million with our syndicate of banks to be able to allow us to complete the Rana Gruber acquisition during the quarter. In terms of dividend, we've implemented a revised or implementing a revised dynamic dividend policy. So as we mentioned in the past, we're coming out of an eight year, pretty large capex cycle. and we wanted to make sure that we've got a framework that allows better visibility for our shareholders in terms of the redistribution of capital. So the new dividend policy aims to provide semi-annual dividends equivalent to 30% to 40% of the company's trailing six-month free cash flows, and the board also has, at its discretion, the potential to deliver a special dividend. When we look at these results today to be able to maintain a focus on preserving the company's liquidities with the current volatile macroeconomic conditions. So when we look at the conflict mainly in the Middle East impacting oil prices and freight prices, well, the board has announced to declare a two cents dividend per share. The new dividend policy will come into effect in the next semi-annual dividend. As mentioned in terms of CapEx over the past years, we've reinvested about $1.4 billion in growth CapEx at Bloom Lake to double our capacity and to also upgrade one of our facilities to 69%. So quite a lot of CapEx was invested to build the foundation that we have today, and we do expect in the future that we'll be able – to generate significant liquidities due to these investments. And we wanted to make sure that we have a dividend policy that is predictable in terms of how much to redistribute to shareholders. If we look at the cost curve, one of the elements that's interesting is the fact that the 90th percentile on the cost curve has increased significantly over the past few weeks and months. So since the start of the conflict, we've seen the 90th percentile increase from 65 US dollars per ton to 83 US dollars per ton, an $18 increase. And if we look at today's premium, so the price of iron ore over and above the 90th percentile, we're pretty similar to moments like in 2015 and 2016, where we saw that premium being the lowest pretty much since the indexes were created. If you look at historical results, it typically trends closer to, or the level that we've had would be, if you look at the iron ore price versus the 90th percentile, iron ore price, if you look at historical data, should be closer to about 140 US dollars per ton. So what does that tell us? Either two things, either potentially the cost curve goes back down, or potentially the iron ore price goes back up if we are to look at historical data. So pretty interesting to see that, yes, during the quarter our cash costs increased slightly, but the 90th percentile increased significantly. In terms of growth and development, when you look at what we've delivered and where we're at now with our flotation plant, we've invested roughly about $480 million of the $500 million project. So we're pretty close to the finish. We're currently ramping up the plant. So we have started the plant. We have delivered sellable quality. We are in the process now of removing all the various bugs that you see during a startup. We still feel confident that next year will be fully ramped up, and we do expect over the coming weeks and months to be able to – sell our first cargoes of DRPF material. So I'd say the ramp up is going very well as expected, and we still feel confident that we'll be able to finish the project within the budget of $500 million. Finally, just a note on the Rannegruber acquisition. So we've managed to complete the acquisition a few weeks ago. So we're now 100% owners of the Rannegruber site in Norway. We're continuing our integration now. I'm actually going to Norway next week with our COO and our head of HR to be able to continue on the integration and make sure that we can benefit from the synergies that we previously mentioned and look at opportunities to be able to improve and work with the Rana Gruber team to increase the profitability of the site over there. So very happy of having concluded this acquisition session. Roughly about, I think it was actually day per day, 10 years following the acquisition of Bloom Lake. So very happy with this next step of our journey within Champion. With that being said, I'd like to thank, first of all, all of our employees and also all of our shareholders. Thanks for your support. And we'll turn it over now to the Q&A portion of the call.