Champion Iron Limited

Ladies and gentlemen, good morning. My name is Mel, and I will be your moderator for today. At this time, I would like to welcome everyone to the Champions Quarter 1 results of the financial year 2027. At this time, all lines are in a listen-only mode. After the speaker's presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press Par 0 for the operator. and please be advised that this call is being recorded today, Thursday, July 30, 2026. I will now turn the call over to our first speaker today, Michael Marcotte, CFO. Please go ahead.

Thank you, operator, and thank you, everyone, for joining us on this call today. Before I'll turn it over to our CEO, David Cataford, I'd just like to remind people that throughout this call we'll be making forward-looking statements. If you want to read more about these and our risk and assumptions, you can visit our MD&A at our website on championiron.com. We'll also be using a presentation throughout this webcast, which is also available on our website under the events and presentation section. In addition to our CEO, many other executives are attending here for this call, including our COO, Alexandre Belleau. With that, I'll pass it over to David for the presentation.

Thanks, Michael. Thanks, everyone, for being on the call. So, if we run through the results for the first quarter of fiscal year 2027, we produced roughly about 4 million tons during the quarter, combining Bloom Lake and Renegroober, and sold roughly about 3.3 million tons. Revenues of about $356 million during the quarter, and an EVDA of about $32 million during the quarter. If you removed A little bit of noise and single time elements on the EBITDA, we would have been closer to 60 million. If we remove also the volume effect, and we'll be able to run through this in terms of the sales, we would have been closer to about 70 million, which would have been in line with the expectation. If we look in terms of the industry, and more specifically the iron ore industry, P65 index averaged about US$122 per ton, so pretty much flat quarter on quarter. Same with the premium of the P65 or the P61, close to US$17 per ton. Where there was a pretty significant increase was on the C3 freight index. This rose by about 37% quarter over quarter and reached about 34 US dollars per ton. So obviously this has had some impacts for us and this is mainly due to the shipping disruptions that we've seen in the Middle East and also higher fuel costs again resulting from the conflict in the Middle East. If we look at operational and sales highlights, So, as we mentioned, produced about 3.9 million tonnes of high-grade iron ore during the quarter. Sales of about 3.3, of which 3.1 million tonnes of Bloom Lake and 200,000 tonnes at Rana Gruber. and one of the, I think the most positive highlights during the quarter is working in the ramp up of the DRPF project. So we finalized the flotation plant and we're now working to be able to produce 69% material to get a significant premium for our material. If we turn to community governance and sustainability, a few highlights during the quarter. So one, this is the quarter that we closed the transaction with Granite Gruber, so we went down met with all the employees to be able to start the integration process and also met with quite a lot of politicians in Norway and also in the town of Moerane to be able to start explaining our vision and the next steps of the combination of this company. We also had quite a lot of traction here in Quebec where we had Federal Minister Joly and also Deputy Cote-Gay that were at our offices alongside the Minister of Economy and Minister of Natural Resources of Quebec to be able to announce the flotation plant finalization and the first contracts of our new product. So very happy of the support that we've been getting from the federal and provincial governments and the partnership that we've developed with these various groups. In terms of results, so if we dive into each operation, if I look at Bloom Lake, as we mentioned, produced about 3.5 million tons at Bloom Lake, but only sold about 3.1 million tons. This is mainly due to the fact that one, there was some maintenance on the rail and port operations. And also we produced roughly about 600,000 tons out of our flotation plant. Thank you very much. Loading in the next few weeks. So sales were a little bit under what you've seen in the past, but we do see that reversing quite quickly to be able to start selling our two products, the 69% material and also our typical concentrate. One of the highlights when you look at the commissioning of the plant is if you look at our iron recovery, we average about 79% during the quarter. So very small impact. with the commissioning of the flotation plant. So I think it's very positive news and telling of the type of circuit that we've implemented and very reassuring for the future as well. We were in ramp up period and we're still at 79% iron recovery. In terms of our financial results, so if you look at the actual mining and processing costs at site, pretty much flat year over year. So I think what we control, we've done a fantastic job in being able to navigate through the current situation. Where we were impacted, well obviously when you look at the sales that were 3.1 million tonnes, most of our port costs are fixed. so that has had an impact during the quarter but that should reverse as we're able to sell more tons through the next quarters. In terms of the sustaining capex also seems a little bit high but this is also due to the fact that we only divided that by 3.1 million tons during the quarter and also due to the fact that we've got seasonal tailings work that is being completed at Bloom Lake. So when you combine both, obviously our all-in sustainment looks a little bit higher, but that should reverse in the coming quarters. In terms of Rana Gruber, they got a little bit of a similar impact, but for different reasons. Produced about 400,000 tons during the quarter, only sold about 200,000 tons. It's mainly due to the fact that they had vessels that were supposed to go to the Middle East, and due to the conflict, we're not able to ship them out. So we reallocated those tons, but timing, we were not able to sell them in this quarter. It will be sold in the next quarter. So that's why you've seen such a small sales portion at the Rana Gruber site. It's also, if you look at Rana Gruber, it's a site that has one major shutdown per year instead of two major shutdowns like we have at Bloom Lake. So they got one major and one minor shutdown. and the shutdown was also during this quarter. So when you combine all of those elements and also due to the fact that we only closed the transaction on the 10th of April, so we lost 10 days of essential production and sales at the asset. So when you combine all those different elements, that's why we've seen such small sales. That also has a big impact in terms of the all in sustaining costs because you're dividing all these costs on only 200,000 tons, but again, that should be able to reverse in the coming quarter and corpus. In terms of consolidated results, if we look at the average realized selling price, we realized around 115 US dollars per ton below the 121 US average for the quarter. That's mainly due to the fact that we had about 2 million tons that were on the water and that an expected price of about 110 US dollars per ton. So that lowered are gross realized price for the quarter. We'll see what the price is when the material reaches the clients during this quarter. We also had a pretty big impact in terms of freight, where the cost increased to about 36 US dollars per ton in this quarter. In terms of the consolidated financial highlights, as we mentioned, quarterly revenues are about 360 million and NBDA just over 30 million. which was under the expectation but mainly due to the one-time elements during the quarter and also the volume impact of selling only 3.1 million tons of Blue Lake material and 200,000 tons at Rannig Ruber. But the impact on our cash, so that has reduced our cash during the quarter from 300 million to 200 million but we did finalize the DRPF CapEx and also closed the transaction for Rana Gruber. So when you look at those two elements, they explain the most of the cash position during the quarter. In terms of the financial health of the company in our balance sheet, we still have close to a billion dollars of available liquidity. So the company is still in very good shape to be able to go through this current conflict. And as we talk about our growth initiatives, to be how we're able to get back into cash positive territory. If we look at our DRPF project, I think this is the main highlight during the quarter. So we managed to finalize the project on time and on budget, so within the $500 million envelope. Very happy with the way that things are progressing. All major equipment has delivered as per plan, so we don't see any major hiccups on the commissioning part. We still have some ramp-up elements, so some small, minor elements to fix. One of which being our screens. The screens work well, but it's the screen panels that were installed that were currently in the process of changing. We had that same issue when we started Bloom Phase 1 and Bloom Phase 2. So that's one element that until we dial in the right type of material that we need for the screens, we do have some bypass material in terms of the flotation plan. That being said, we still managed to hit a 69% material. So we know that the plant is able to deliver in terms of the specs. We also have been able to push the plants to its full capacity. So we know that the plant can deliver on the volume side. Now it's just to remove all those small startup and ramp up elements to make sure that we can do that consistently. In terms of sales, so we're happy to say that we've signed our first contracts and the first one or the first vessel is going to be loaded in the next few weeks. So a vessel of about 160,000 tons of DR quality material that will leave our in our that will leave our port in the next few weeks. So very happy with the way that this is progressing. We still feel that we'll be able to materialize significant premiums for this material. The first contract that we've signed do have premiums over and above the P65 index. But as we had mentioned in the past, these are test cargoes, so we're not getting the full benefit of our material, but still, I think that's going to reposition our costs in the future as we ramp this up and we're able to deliver to markets that are closer to home. If we look at our potential clients, we're still in the same territory as we mentioned before with North Africa, Europe, and Middle East as potential first targets. We've included also the Americas, so we are in discussion with some clients also in the Americas, so that's another positive. If you look at the Middle East situation, so obviously there's a conflict that restricts a portion of our clients. but not all of our clients. We can still deliver to a portion to the Middle East. So that market has not been closed. It's still open in various areas. So we'll still be able to sell some tons into that region even with the current conflict. So I think a very positive transition for us. I mean, obviously a lot of noise during the quarter, not fantastic when you're closing a transaction, starting to integrate a project, delivering a major flotation project like we're doing at the same time as the conflict started in the Middle East impacting our freight costs, impacting fuel. But all that being said, I think we've positioned the company very well to be able to benefit from better premiums in the future and be able to generate significant returns for our shareholders. I'd like to thank all of our employees that have made this possible. I mean, obviously in this challenging time to be able to keep the focus to continue working on our costs, to continue working on our projects and making sure that we can deliver that safely and with no environmental issues. I think it's something that we can be very proud of our teams and we'll continue to work very in the right direction to be able to make sure that we deliver on what we've mentioned in the past in terms of our growth initiatives, including the flotation plan. So with that being said, I'll turn it over to the Q&A portion of the call.