Champion Iron Limited (CIA) Earnings Call Transcript & Summary

Hello, ladies and gentlemen. My name is Michael O’Keeffe, and I'm Executive Chair of Champion Iron Limited, and I'll be serving as Chair of today's meeting. It's now 8:00 a.m. in Sydney and 6:00 p.m. in Montreal, and I welcome you to the 2021 Annual General Meeting of the company. I am advised that we have a quorum being 2 registered shareholders, and as such, I now declare the Annual General Meeting open. Joining me today via the Lumi webcast are other directors, including Mr. David Cataford, our Chief Executive Officer; Mr. Andrew Love, our Lead Director; Mr. Gary Lawler; Mr. Wayne Wouters; Ms. Michelle Cormier; and Ms. Louise Grondin. Other members of management team also joining us today are Steve Boucratie, Vice President, General Counsel and Corporate Secretary; Michael Marcotte, Vice President, Investor Relations; Ms. Natacha Garoute, Chief Financial Officer; Mr. Pradip Devalia, Company Secretary, Australia; Mr. Alexandre Belleau, Chief Operating Officer; Ms. [ Angela Coracides ], Senior Vice President, Human Resources; and Mr. Jorge Estepa, Assistant Corporate Secretary. Mr. Zahid Fazal, a partner of Ernst & Young, the company's auditor, is also present at the meeting to take questions you may have in relation to the conduct of the audit, the preparation and the content of the audit report, the accounting policies adopted by the company for the preparation of the financial statements and auditor's independence in relation to the conduct of the audit. It is my pleasure to welcome everyone to the Annual General Meeting which is held exclusively online. Considering concerns regarding the ongoing COVID-19 pandemic, Champion has again adopted for a virtual-only Annual General Meeting in order to reduce the risk of infection. This virtual-only format also permits us to comply with public health authorities to directors and restrictions regarding physical gatherings. It's personally good for me to be back in Montreal after 18 months away. I did go to Australia for what was going to be 1 month in March 2020, which turned out to be 18 months. I arrived back in Montreal on the 1st of July, served out a 14-day quarantine. But in my absence, David and his team have just done an outstanding job. And for me to arrive back and to be with them and see what they've been able to achieve during this period has been -- has met all the expectations. I can't tell you how proud I am of everyone and elated I am with what's been done during this very, very difficult period and a time of separation. We are focusing heavily on managing costs, and David will go through the day-to-day operation with you. We'll also talk about Phase 2, which is very exciting that what we're seeing in the world is what's happening in the market, and you're going to be asking questions of us, I'm sure today, about that. And hopefully, we can answer you -- some of those questions ahead of the -- ahead with Michael Marcotte's going to do a presentation quickly on the markets and what's happening in the steel market and also where we fit in the iron ore. One of the important initiatives was our ESG Committee that we formed, which Louise is heading up and her team. And it's going to be so important for us as a company and you as shareholders when we're investing that we meet all that criteria. It's not even been set today, but it's going to be. And I'm sure if we're ahead of the game, it's going to be much better for us. But we're already green, using a lot of the hydropower that we do, and also the quality of the product that we deliver makes us very good when it comes to emissions. But we're working on how we can further do that. And we're working with the Québec government and also First Nations on initiatives that we could look at, which David will talk about, which has to do with the quality of the product. And he and I are talking personally with what we're going to do with your company going forward. And there is opportunities to improve and also grow. So I'm looking forward to hearing that as well. So in making the decision to hold a virtual meeting again, it was paramount to ensure that shareholders' rights were protected. To this end, we have ensured that this meeting, like our last special AGM, offers registered shareholders the duly appointed and registered proxyholders the same opportunities to participate as in in-person meetings as we held previously. I'll now ask Mr. Steve Boucratie, our Vice President, General Counsel, Corporate Secretary, to briefly explain certain formalities regarding the conduct of this meeting. Mr. Boucratie will then deal with the formal business of the meeting as outlined in the meeting materials that all of you have received, including voting on resolutions on my behalf.

Thank you, Mr. Chair. Hello, ladies and gentlemen. My name is Steve Boucratie, and I am the Vice President, General Counsel and Corporate Secretary of Champion Iron Limited. Instructions on how to ask questions and how to vote using the Lumi platform appear on your screen. As with any technology, unexpected glitches may occur. But our service providers for this platform at Lumi are very experienced at running this type of meeting and will help us out. Last year's AGM, which was also run by Lumi platform, thankfully did not experience any glitches. We will conduct the votes on all resolutions before the meeting by ballot. On a ballot, every registered shareholder or duly appointed and registered proxyholder entitled to vote has 1 vote in respect of each ordinary shares -- share entitled to be voted on the matter and held or represented by that registered shareholder or duly appointed and registered proxyholder. Since voting on each resolution is by ballot, the Chair will be voting all undirected proxies that he is permitted to vote in favor of all resolutions before the meeting. Voting is now open, and all registered shareholders and duly appointed and registered proxyholders should have the functionality and ability to cast votes at any time during the meeting until we declare voting closed. Thank you to those of you who have already voted. If you have already voted in advance of the meeting and do not wish to change your vote, then you do not need to do anything further at the meeting. For those who have not yet voted, we encourage you to vote now. If you choose to vote during this meeting, it only can be done through the virtual voting platform on the webcast. To vote, select the polling icon that will appear on the navigation bar at the top of the screen and tap the desired voting option. Your vote will be automatically submitted to Automic and TSX Trust Company, our scrutineers, after you click your choice and will be evidenced by a vote received message. Both may be changed at any time up to the time voting is closed. Once voting is declared closed, your votes will automatically be submitted. If you do not press either for, against or abstain as applicable when voting is open, your vote will not be recorded, and you will be regarded as having abstained from voting. These instructions on how to vote at the meeting also appear on the landing screen in the Lumi webcast. Also, registered shareholders and duly appointed and registered proxyholders can submit questions at any time during the meeting through the virtual platform of our webcast. We will address questions at a general Q&A session at the end of the formal part of the meeting, provided that only questions regarding procedural matters or questions directly related to the resolutions before the meeting may be addressed during the meeting. We will receive the questions and at the appropriate time, we'll read them and the names of the submitting shareholders or proxyholders allowed, so that everyone may be aware of the question being considered. In the interest of efficiency, if we have a number of questions that are similar in topic, we will paraphrase, group the questions and mention that we have received similar questions. However, please note that due to time constraints, we may be unable to address all questions. This meeting has also been made accessible to and we also wish to welcome all guests who are not registered shareholders or holding proxies of registered shareholders. As a reminder, as with any in-person meeting, only registered shareholders and duly appointed and registered proxyholders are permitted to vote or ask questions at this meeting. I now would like to outline the format of today's meeting. First, I will deal with the formal business of the meeting as outlined in the meeting materials that all of you received, including voting on resolution. After we conclude the formal portion of the meeting, we will be pleased to answer questions you may have or respond to your comments regarding the matters addressed during the formal part of the meeting. Second, after the Q&A period has concluded, Mr. David Cataford, our CEO, will provide a brief corporate overview of activities in our recently completed fiscal year 2021 and fiscal Q1 2022. Upon the request of the Chair, I will also act as secretary of the meeting, and [ Kirin Stefano ] of Automic and Oliver Keung of TSX Trust Company will act as the scrutineers. The notice of meeting and the management information circular were dispatched to shareholders filed electronically with ASX and SEDAR and placed on our website. The financial statements for the year ended March 31, 2021, and the annual report for the year ended March 31, 2021, which include the remuneration report at pages 67 through 98, have also been filed with the ASX and on SEDAR and placed on our website. If there is no objection, I will propose that these materials be taken as read. The formal business of the meeting consists of: receiving and considering the company's financial report, together with the directors' report and auditor's report for the fiscal year ended March 31, 2021; adopting the remuneration report as set out in the annual report of the company for the financial year ended March 31, 2021; electing 8 directors under 8 separate resolutions; approving an increase to the maximum aggregate amount of remuneration of the nonexecutive directors; reapproving the company's omnibus incentive plan; and approving amendments to options held by Mr. David Cataford. To expedite the formal part of the meeting, I will briefly describe or discuss each resolution in the sequential order in which they appear in the notice of meeting. I do not propose to read aloud the text of each resolution. These are contained in the notice of meeting, which has been taken as read. While this procedure will facilitate the handling of the formal resolutions, registered shareholders or duly appointed and registered proxyholders may raise comments or questions on any resolution before the meeting by typing in your comment or question in the message section of the webcast. We will read the questions allowed together with the name of the person who asked the question during the Q&A session at the end of the meeting. Before we proceed with the formal resolutions of the meeting, it is appropriate for me to advise that under the Australian Corporations Act, the company will -- the company is obliged to lay before this meeting the last audited financial statements and reports for the financial year ended March 31, 2021. The tabled copy of the audited financial statements and reports, including the directors' report and the auditor's report, are available for inspection at the hyperlink provided on the Lumi meeting platform. The reports are tabled but are not the subject of a resolution. However, we will be pleased to receive any comments or questions concerning the financial statements or the reports, which we will address at the general Q&A session at the end of the formal part of the meeting. Questions may also be asked of the auditors in relation to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company for the preparation of the financial statements and the auditor's independence in relation to the conduct of the audit. The second item of business is a Corporation's Act requirement to consider a nonbinding advisory vote on Champion's remuneration report as set out in the annual report for the financial year ended March 31, 2021. The tabled copy of the annual report is available for inspection at the hyperlink provided on the meeting platform and on the company's website. The remuneration report can be found at pages 67 through 98 of the annual report. With the consent of the meeting, the reading of such report will be dispensed with. I would like to remind shareholders that the vote on this resolution is advisory only and does not bind the company or its directors. Acknowledging that each director has a personal interest in his or her own remuneration from the company, as described in the remuneration report, the directors unanimously recommend the adoption of the remuneration report. The third item of business as contained in resolutions 2 through 9 in the notice of meeting is the election of directors for the current year. Under the company's constitution, for such time as the company's shares are listed for trading on the TSX, all directors must retire annually and may offer themselves for reelection at the Annual General Meeting. Each of the directors was appointed at the last Annual General Meeting. The notice of meeting and related materials contain the names and details of the proposed nominees to the Board of Directors who are Mr. Michael O'Keeffe; Mr. Gary Lawler, Mr. Andrew Love, Ms. Michelle Cormier, Mr. Wayne Wouters, Mr. Jyontish George, Mr. David Cataford and Ms. Louise Grondin. The directors recommend that shareholders vote in favor of resolutions 2 through 9 to appoint the respective nominees as directors of the company except that each director does not make any recommendation as to how shareholders should vote on the resolution relating to his or her appointment. The fourth item of business is the approval of an increase to the maximum aggregate amount of remuneration of the nonexecutive directors. Some explanatory material in relation to this resolution is set out in the explanatory statement, which forms part of the notice of meeting. In brief, pursuant to the company's constitution and the ASX listing rules, the maximum aggregate annual remuneration payable by the company to its nonexecutive directors is determined by shareholders in a general meeting and may not be increased without the prior approval of shareholders. The current maximum aggregate annual remuneration payable to Champion's nonexecutive directors is CAD 1 million, which was the amount approved by shareholders at the Annual General Meeting held on August 28, 2020. It is proposed to increase this cap from CAD 1 million to CAD 1,750,000 per annum. The amount of the increase is approximately AUD 805,000. The CAD 1,750,000 cap on aggregate nonexecutive director remuneration will provide the company with the ability to retain and appropriately compensate nonexecutive directors over the coming years and to ensure directors' remuneration is at market competitive level. It will also allow the company to attract and appoint additional nonexecutive directors, which could be required as part of the Board's renewal process over time. As each of the nonexecutive directors has a personal interest in resolution 10, it is not appropriate for them to make any recommendation as to how shareholders should vote on this resolution. The fifth item of business is the reapproval of the company's omnibus incentive plan. Some explanatory material in relation to this resolution, including a summary of the terms of the company's omnibus incentive plan, is set out in the explanatory statement, which forms part of the notice of the meeting. In brief, the company adopted the 2018 omnibus incentive plan following shareholder approval at the Annual General Meeting held on August 17, 2018. Thus, this is the second shareholder approval sought under ASX Listing Rule 7.2 Exception 13(b) with respect to the issue of securities under the omnibus incentive plan. Additionally, in accordance with the requirements of the TSX every 3 years after institution, all unallocated stock options, rights and other entitlements under a security-based compensation arrangement, which does not have a fixed maximum number of securities commonly referred to as rolling plan, must be approved by a majority of the issuers, directors and the issuer security holders. As each of the directors have a personal interest in resolution 11, it is not appropriate for them to make any recommendation as to how shareholders should vote on this resolution. The sixth item of business is the approval of amendments to the options held by Mr. David Cataford. Some explanatory material in relation to this resolution is set out in the explanatory statement, which forms part of the notice of meeting. In brief, Mr. Cataford, the Chief Executive Officer of the company, is the holder of 300,000 options, which were issued pursuant to the omnibus incentive plan. In accordance with the terms of the omnibus incentive plan, share-based awards granted to a related party of the company must be settled with shares acquired on market on the TSX or ASX for the amount of the participant unless the shareholders of the company approve otherwise. This resolution is intended to allow the company to settle Mr. Cataford's options by issuing new shares to him. The directors, excluding Mr. Cataford, recommend that shareholders vote in favor of resolution 12 to amend the terms of the options issued to Mr. Cataford. As previously mentioned, voting today will be conducted by ballot. The ballot has been opened since the beginning of the meeting. And at this point, all registered shareholders and duly appointed and registered proxyholders who are properly logged in with their control numbers and wish to vote should make their way to the vote tab on the webcast platform. They will be able to see on screen all resolutions before the meeting. Once the ballot closes, the voting page will disappear, and your votes will automatically be submitted. We will now pause for 1 minute to give time to shareholders that haven't yet voted to vote. [Voting]

Now before announcing the voting results, is there any other business that any shareholders or proxyholders present wishes to bring to the attention of the meeting? There is no proposal for other business. I now declare the ballots closed. We will proceed to the Q&A session while the scrutineers tally the results of the ballot on each resolution. There is no questions at this time. As there are no questions, I will now hand over to Mr. Jorge Estepa, our Assistant Corporate Secretary, to provide the voting results on each resolution that was before this meeting.

Thank you, Steve, Mr. Secretary. Hello, ladies and gentlemen. My name is Jorge Estepa. I am the Assistant Corporate Secretary of Champion Iron Limited. The scrutineers, Automic and TSX Trust Company, provided me with the preliminary results of their tabulation of votes with respect to each of the resolutions considered at today's meeting. I will now wish to advise that the voting resolutions are as follows: With respect to resolution 1, for, we have 242,653,843; against, 68,871,659; and abstaining, 48,106,489. This represents an approval of 77.892%. With respect to resolution 2, we have, for, 353,412,944 shares; against, we have 10,567,504; abstaining 524,800. And this represents an approval rate of 96.957%. With respect to resolution 3, in the for column, we have 356,573,171; voting against, we have 7,304,277; abstaining, 627,800. And this for resolution 3 represents an approval rate of 97.993%. Resolution 4, voting in favor, we have 360,304,106; against, 3,572,342; abstaining, 627,800. And this represents an approval rate of 99.018%. For resolution 5, we have 348,329,329 voting for; against, we have 15,651,217; abstaining, 524,702 shares. And this for resolution 5 is an approval rate of 95.7%. For resolution 6, we have 363,364,700 shares voting for; against, 512,748; abstaining on resolution 6, 627,800. And this represents an approval for resolution 6 of 99.859%. For resolution 7, voting in favor, we have 362,404,412; voting against, 1,570,136; abstaining, 530,700. And for resolution 7, this represents an approval rate of 99.569%. For resolution 8, voting in favor, we have 362,028,134 shares for; we have 1,946,414 shares against; abstaining, we have 530,700. And for resolution 8, this represents a for approval rate of 99.465%. With respect to Resolution 9, voting for, we have 362,391,754; voting against, we have 1,573,606; abstaining, 539,888. And for resolution 9, voting in favor represents a rate of 99.568%. Resolution 10, votes for, we have 313,235,110; voting against, 2,403,602; abstaining, 45,687,578. So for resolution 10, the approval is 99.238% for. For resolution 11, voting for, we have 226,139,368; voting against, 86,564,094; abstaining, we have 46,023,529. So for resolution 11, we have votes in for of 72.318%. For resolution 12, voting for, we have 308,233,401; voting against, we have 959,633; abstaining, we have 45,767,729. So for resolution 12, the votes for represent a rate of 99.690%.

Thank you, Jorge. I declare each of the resolutions considered at today's meeting in respect of those matters as carried. The exact number of votes cast in respect of each matter will be publicly disseminated and announced, including on the ASX, filed on SEDAR and made available on our website as soon as possible after the conclusion of the meeting. As there's no further business, that ends the meeting, which I now declare closed. I would like to take this opportunity to thank our shareholders for their continued support over the past year as well as our employees for their commitment and their diligence. And we look forward to reporting our ongoing progress during the upcoming year. As we wrap up this formal portion of the meeting, once again, I wish to thank everyone for their attendance today. Also, I would like to remind everyone that we have planned to provide a corporate overview of activities in our recently completed 2021 fiscal year and fiscal Q1 2022 following the formal part of the meeting. And our Chief Executive Officer, Mr. David Cataford, will now begin the presentation.

Hi, everyone. I'm David Cataford, CEO of Champion Iron, and very happy to be able to give you a quick presentation on the overview of your company. We all know that the past year has been pretty challenging with the whole pandemic, everything that we had to personally live. But your company has been very well -- performing very well in the past year. I think when we look at the main highlights, apart from the iron ore pricing in the market that we'll go through a little bit later, but on all the elements that we directly control, we had one of our record production years. We managed to produce 600,000 tonnes over our nameplate capacity in a very challenging year. And this is thanks to the dedication and the work of all of our different workers at site, the local communities and all our partners as well, either at the port, on the rail and on the different infrastructure that we have over in the North. So very happy with the amount of tonnes that were produced. And even if there were quite a lot of inefficiencies due to the COVID pandemic, we still managed to control our costs, and this allowed us to fully benefit from the higher iron ore prices that we had last year. This resulted in EBITDA levels over $800 million for the year and a net income of over $460 million for the past year. If we look at health and safety, I'm very proud of what we've managed to achieve this year. Again, it was an unprecedented year with a lot of challenges. But even with all that, our team managed to continue reducing our statistics in terms of health and safety. So we managed to keep everybody safe at site and managed to operate in a very safe way. If we turn over to the COVID situation, one of the main highlights that we had this year was that we were able, very shortly after the pandemic started, to demonstrate to the local communities, the First Nations and the Québec government that we were able to operate because of all the different measures that we had put in place. And the government trusted us because there were only 3 mines out of the 26 mines in Québec that were granted permission to continue operating, and we were one of these. And we're very proud also to say that we managed to keep everybody safe on the COVID side. And the main element that allowed us to continue being safe through the whole pandemic was to build our own testing lab directly at site to make sure that we could test everybody before they come to site. And the main highlight of this lab was not only that we were able to keep everybody safe during the operation, but it also allowed us to be one of the only companies to be granted permission to start a construction project at site that we'll be able to discuss a little bit later, again, keeping everybody safe. Our focus on sustainability in the past year, there's many different initiatives that we were able to complete. One of the highlights of the year has been to create our ESG Committee at the Board that is chaired by Louise Grondin. We also delivered our first sustainability report in the past year. And I'm very happy also to announce that we've just completed our 2020 sustainability report that is now available on the company's website. One of the main highlights for the year as well has been to initiate some voluntary projects to be able to protect the regional biodiversity. We did that working with the First Nations and also the local communities to make sure that we can protect the biodiversity in the region. If we look at the positive impact that our company had here in Québec, well, one, we're now just over 550 employees, of which 37 local and indigenous jobs. We hired quite a lot more First Nations because most of the partnerships that we have we do with partnerships that we have with Uashat Mani-utenam, the First Nation community with which we work with. So very proud of all the different initiatives that we were able to do and all the different contracts that we were able to put in place to make sure that we maximize the workforce in the First Nations community. We also were 100% compliant with our tailings management and also on the -- on our water treatment plant, allowing us to have a very good fiscal year 2021 in terms of our environmental performance. If we look at the different milestones for the past year, it's been a pretty incredible year when you add all of these up. First of all, as we mentioned, we were able to continue operating through the whole lockdowns here in Québec during the pandemic and ramp up our operations very quickly when the lockdowns finalized to allow us to have a record production year. We also appointed Alexandre Belleau, our Chief Operating Officer; and Louise Grondin to our Board, who now chairs our ESG Committee. We also did a few acquisitions, one being the Kami Project just a few kilometers away from Bloom Lake and also the Lac Lamêlée acquisition that we managed to complete this year. We started trading also on the OTCQX to allow some U.S. investors to be able to invest in Champion. And if we look at our current expansion, I think the main highlight of the past year, apart from our great operational performance, has really been to sanction the Phase 2 project, start the construction work and be able to be today on time and on budget to be able to deliver this project by mid-2022. One of the last milestones as well that happened subsequent to this year but just in the past few weeks was to be able to redeem all of the preferred shares with Caisse de dépôt, starting our plan to return capital to our shareholders. If we look at the markets -- well, industry overview, the average for the year for the P65 index was about $144 per tonne. That's an increase of about 35% compared to the previous year. And we fully benefited from this increased price. I think one thing that was different this year compared to the previous years is that we've always said that we had a natural hedge because we deliver some high-grade material. And as iron ore price softened, typically, the premium for this high-grade material would increase. But when this price -- when the iron ore price would increase, we sometimes saw that premium compress. What's changed is that the high-grade material is not only used to be able to increase productivity with the steel mills today. It's also used to lower CO2 emissions for the steel companies. And we saw this year -- or the past year, even if the iron ore price has increased, that premium was essentially unaffected. So the percentage of premiums stayed the same. And we saw premiums for our material go up to USD 35, USD 36 per tonne this year because this material is in so much demand. What we've been hearing from our clients as well and from prospective clients is that there is no new supply of this material, and it is one of the only solutions that steel mills have to be able to reduce their CO2 emissions in the steelmaking process in the short and medium term. And we're very fortunate to have exclusive production of this high-grade-type material. So even if lately, we saw prices soften slightly, we still see that there's a good outlook for the high-grade market in the coming years. Because again, no new supply coming on or at least has been sanctioned. We all know that to be able to get a new project up and running, especially in high grade, we're looking between 7 and 14 years. So for the short and medium term, we don't see any new supply coming on to the market, and we see the demand for this type of material increasing significantly in the coming years. In terms of operational results, well, as we mentioned in the highlight, a record production year, we managed to produce 600,000 tonnes over our nameplate capacity and at the same time, keeping our costs in line. Slight increase due to inefficiencies related to COVID, but pretty much in line with fiscal year 2020. What we focus on at the site as well is really to increase our iron recovery. Every iron unit that we can recover is very accretive for our shareholders, so the team is dedicated to be able to continue working on increasing our iron recovery. We've demonstrated now that we can recover over our feasibility study numbers, and the team is continuing to work on improving this in the coming years. In terms of financial results, the pricing that we got for our material, very happy to say that we managed to get over the P65 index average over the year. And this is despite the fact that in the first month of COVID, because a lot of pellets that typically see their way into Europe, Middle East and Japan had to shift from those markets into China as the steel production decreased in Europe, Middle East and Japan, we had to compete with this type of material with our Chinese customers, which we typically don't do. And we had to give slight discounts in the months of May towards -- until about September, October to be able to compete with these pellets seeing their way into China. But that reversed very quickly as soon as the European, Japanese market and the Middle East steel production increased, which allowed us to get premiums over the P65, allowing us for the full year to have a price of USD 148 per tonne versus the P65 index average of $144. As we mentioned earlier, producing record tonnes and managing our costs allowed us to fully benefit from the high iron ore price environment, and this allowed us to have an increase in EBITDA of about 136% in the year and an adjusted EPS increase of about 200%, allowing us to have an adjusted EPS close to $1 per share. One big highlight for the year has been the cash on hand. We have managed to increase our cash position from roughly about $300 million at the end of fiscal year 2020 to just shy of $700 million in -- at the end of March 2021. At the same time, investing in the Phase 2, so allowing us to start working on a construction project and investing in our project and also repaying USD 20 million of the revolving facility that we had drawn down when the COVID pandemic first started. That cash position allows us to have a very robust balance sheet to be able to finalize our Phase 2 project. And we're very happy to still have all the strong partners that we have for the remaining debt, the USD 180 million that we have with Societe Generale, Scotiabank, many different Canadian banks invest in Québec, but we've also added the export credit agency of Canada and Caterpillar Finance. And we're also very proud to start working with the union fund, the Fonds FTQ, which we announced recently, to be able to continue our growth initiatives. Having that diligent balance sheet, the first goal for us once we've secured enough capital to be able to finalize the Phase 2 project was to be able to start returning capital to shareholders. And the first steps in returning capital to shareholders was to buy back all of the preferred shares from Caisse de dépôt. We had recently announced that we had bought back $60 million of those preferred shares, but very happy to announce today that we have redeemed all of these preferred shares. Only 2 years ago, we had put that structure in place at a time where we were refinancing the original debt that we had to start up the operations and at the same time, to buy back the 36.8% ownership in the Bloom Lake Mine of the Québec government. So we managed to put these preferred shares in place and restructure our debt to allow us to lower our cost of capital and be 100% owners of the Bloom Lake Mine. And today, I'm very proud to announce that we've fully redeemed the shares with our good partner, Caisse de dépôt. If we look at the high-grade premium, what's interesting and one big shift that happened as well is that we've reduced or we've lowered our position on the cash cost curve. If you put everyone, all the different iron ore producers, at the same level on the 62% index and all delivered to China, we used to sit roughly around the 60th to 65th percentile of that cost curve. And now you can see on this chart here that we've repositioned ourselves due to this higher premium and the way that we're managing our costs into one of the lowest cost producers in the world. We also have a very diverse customer base, which was very important last year when the COVID pandemic hit. We've worked significantly in the past years to engage with various customers around the world and in different markets as well to make sure that we're protected when there's adverse elements that happened in the different steel markets. We have customers in China, Middle East, Japan, Korea, Europe, a little bit in Canada as well, which allows us to be less exposed to only the Chinese market. This has been very fortunate for us in the first phase of the Bloom Lake operation but also key for us in our expansion to be able to place the further tonnes that we're going to produce come mid next year. During the past year, there's 2 different projects that we also worked on that were very important for us, and this is key because we want to be ready for the transition that's coming in the steel-producing companies to lower their CO2 emissions. If you look at the different steel companies targets, for 2030 in terms of CO2 reduction, they all have targets between 20% to 40% reduction come 2030. And as we mentioned, one of the only known solutions to be able to achieve those results is to be able to use higher-grade iron ore. So there's 2 projects that we worked on in the past year. One, to be able to continue increasing the quality of our material. As you know, we produce 66% Fe material. We've demonstrated in 2020 that we're able produce 68% material, but we've also demonstrated in lab testing that we can produce 69% Fe material using a technology of flotation, a well-known technology in iron ore and base metals. So we've demonstrated this, and this is key for us to be ready to transition to more DR-grade-type material as the market starts requiring more of this type of material. Secondly, we've also started producing cold pellets in a laboratory. So we've associated ourselves with a company to be able to produce cold pellets. The main advantage is, one, it's a simpler process, which allows us to have potentially lower CapEx to be able to produce these cold pellets if the market requires them in the future. We've also started working with different customers around the world that want to start testing these cold pellets at their facilities. And the big highlight of this technology is it allows us to reduce by more than 95% the CO2 emissions to the -- compared to the traditional fired pellets. So 2 projects that we started working on last year and that we're continuing to advance. The main focus, obviously, for us, apart from operations, even if we're working on product diversification, is to advance our Phase 2 project, which will allow us to double our production to around 15 million tonnes per year. Very happy to announce again today that we're still on target and on budget to deliver the project by mid-2022. And a few highlights as well that we managed to achieve during the year. One, we managed to secure all the logistics contracts to be able to deliver the material from Bloom Lake to the port. We've also almost finalized all the installation of our recovery circuit, working on the mill, on all the different conveyors around the facility to make sure that we can get the material to our load-out facility and started installing all the piping and electric work inside of the plant. So we've mobilized a very good construction team at site. And again, benefiting from our COVID testing lab are able to continue operating and continue construction at our Phase 2 project on time and on budget. One major acquisition that we did during the year was the Kami acquisition, which allowed us to secure about 1.7 billion tonnes of resources just a few kilometers away from our project. And now that we've closed that transaction, we are now working to update the feasibility study and be able to bring it to a Champion standard being that once this feasibility study is complete, we'll have a clearer view on what is the real cost and the real potential with Kami. We'll be able to update the market next year on this project as the team advances the feasibility study. We also positioned our company for the future when you look at all the claims that we have about 60 kilometers south of Bloom Lake. We've now done the acquisition of Lac Lamêlée, which sat pretty much in the middle of all of our other resources, allowing us to have a district now that is complete. And we're currently working on these new claims to make sure that we can integrate them into our high-grade cluster that you see on this picture here. At the same time of being able to buy the Lac Lamêlée property, we managed also to buy back a 1.5% net smelter royalty on most of the previous Champion claims, again, positioning ourselves very well for the future with these resources. One good news as well is that Caterpillar and Toromont actually chose Bloom Lake site to be able to test and implement advanced technologies on their drilling and to be able to use artificial intelligence and analytics to improve the drilling at Bloom Lake. So this will allow us to eventually lower the amount of explosives that we require and also, at the same time, improve the quality of the rock that's been blasted to be able to feed the mine. And to have a company like Caterpillar had to choose Bloom Lake to be able to implement this is a testament of the quality of the workforce that we have at Bloom Lake because they trust us to be able to work with them to advance this project and at the same time, the credibility of our company to be able to work with such a great player. Focus for 2022, always a priority being the health and safety of our employees, partners, local communities and First Nation communities. Main focus for this year is to keep the operations going at the same rate as they were while managing our costs and getting Phase 2 up and running by mid of next year. We want to continue the construction and the operations during this fourth wave of the COVID situation, again, fully benefiting from that lab that we've installed at site and that is still being used every time people come to Bloom Lake. We want to finalize and advance the work on the Kami Project to finish the revised scope in the feasibility study. And also, as we've started working on our capital management strategy with the redemption of the Québec iron ore preferred shares, keep working on the next steps of capital return for our shareholders. One final note as well with the -- again, we spoke a few times of the quality of our workforce. But even in these high commodity prices, you've probably seen around the world quite a lot of issues at different projects with strikes or issues with the workforce. We managed to renew our collective agreement with all of our workers on the 23rd of June 2021, with a very good acceptance rate. And I believe we did a fantastic job to be able to renew that at this time. And it's also a testament of the way that we're working with all of our workers to make sure that we can continue delivering these results for our shareholders. So thank you very much, everyone. And I'll now pass it on for closing remarks to Michael O'Keeffe, our Chairman.

Thanks, David. And sorry for the short delay. We just had to look at what questions are coming in, and I'll address that as I go through the wrap-up. But normally, at this stage, I'd like to fill in all the gaps after Dave has done the presentation. And -- but there aren't too many gaps when you look at what Dave has presented. And I don't intend he's covered every issue that's there, and he and his team are growing. And I think that's a very good indication of how he's taking control of the company at the top end and developing with the new employees and what he's been able to do with all of the people that are involved with, not only the staff, but his work and the time he takes with First Nations and the visits he has with the government has put us in a very good position in operating in Québec. So the thing for me is that we've been tempted with a lot of opportunities outside of Québec, but I find it very, very difficult for us to be able to go away from Québec when you think about the support we've had from the government and how we've also delivered for the government. It's -- if you look at their investments, they've been paid back handsomely for that. They still hold equity in the company, and we do often have discussions on how the ESG and how our company and Québec can better behave and better adapt to the changes that are coming. So for me, that's very exciting. And what's also very exciting is that David's articulated is, if you look at the Kami Project, the resources we have at Bloom Lake, but also nearby in the -- he often terms it is a province, why would you be going to Africa or anywhere else in the world and putting massive capital into these places when we've got the support of the government, we have the infrastructure and we have one of the best things, which is hydropower. And it's how we're going to work over the next 12 months in -- you'll see a few things happen. One is Phase 2 comes on, and I'm very confident about that because I've been up to the site since I've been back. And also, the new developments on product and the resources that we have in the ground and the support that we get from the government and First Nations. So very exciting time ahead for shareholders. And look, I know at this point, we can't all be together face-to-face, but I'm really looking forward to that time. There was one question on dividends, the D word. And I'd like to go back to David's comment on capital management. And the fact that we haven't been able to draw down -- we haven't drawn down on the additional debt that we put in place. We've been able to pay back the $20 million revolver. We've been able to pay back the $185 million of money, which is the pref shares that we used to acquire the government's equity in QIO. And you might remember, we did that for about $211 million. I think David was arguing whether it should be $210 million, $211 million. But I'm happy he settled where he did because that's been very, very accretive for shareholders. And we consider that as part of our management. Now also, we do have an obligation to banks. And as we go forward, they like to see the cash we have. They also like to be able to understand that we are advancing Phase 2 and that there's going to be no fatal flaws in the process. So for us to deliver -- for us to be able to deliver dividends, there's certain criteria that we have to tick off, too. But let me assure you that as a major shareholder in the company that I'm looking forward to that day, and I feel that it's not that far off. And the closer we get to Phase 2 and also if there's any uncertainties in the market, with pricing, we'll be closer to that date. So the Board will get together between now and the end of the year to look at that. And I'm personally hoping for a positive outcome, and I'm sure you are all, too. So again, while we're disappointed we can't see each of you because it's such a great vibe when we're in a room and we're having the discussions, it's very difficult to look at things popping up on a screen and not seeing the faces behind it. But I can assure you, I know most of the faces that are there, and I know that people who've supported us. So our thoughts with you and your families and the communities you serve. We want to thank you for your patience. We continue to navigate through this difficult situation of COVID. But again, thank you all, and we wish you a good evening for those attending from Canada, and a good day for those attending from Australia, and a wonderful year ahead. Thank you very much.