Champion Iron Limited (CIA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Champion Iron Limited Third (sic) [ Fourth ] Quarter Results of the Fiscal Year 2022 Conference Call. [Operator Instructions] This call is being recorded on Thursday, May 26, 2022. I would now like to turn the conference over to Mr. Michael Marcotte. Please go ahead, sir.

Thank you, operator, and thank you everybody for joining our call. We're going to be discussing our fourth quarter and fiscal 2022 results. Before we get going, I'll point you to the presentation, which is posted on our website, which will be used for this webcast at championiron.com under the Events and Presentations section. Also, I'd like to point you to our disclaimer in the presentation. And for additional statements regarding forward-looking statements and risks, please visit our latest MD&A, also available on our website. Also, as usual, all our figures in this presentation is in Canadian dollars, unless otherwise stated. Also joining us on the call today, in addition to other executives of the team, we have our Executive Chairman, Michael O'Keeffe; David Cataford and Alexandre Belleau, Chief Operating Officer. I will be turning the call over to David to do the formal presentation and open it up for Q&A on the back end. David?

Hi. Thanks, Michael, and thanks for everyone for being on the call. Very exciting results that we can share with you today. I think the first thing to highlight is really the fact that we've been able to produce over 500,000 tons over our nameplate capacity during a very challenging COVID year at the same time as we were delivering our Phase 2 expansion at Bloom Lake. So even with the significant tie-ins, the operational challenges, we managed to hit 500,000 tons over our nameplate capacity. That's allowed us to have very good financial results and also allowed us to declare our second dividend, our semi-annual dividend of $0.10 per share. If we turn to health and safety, the team has done a fantastic job, as you've seen in the past quarters, to manage the COVID situation. The past quarter was a little bit more challenging with the Omicron variant. There was a bit more of issues at the site. We had to evacuate quite a lot of employees, especially during January and February. But even with those elements, we still managed to hit very robust results, allowing us to finish the year very strong with 7.9 million tons, and also happy to declare that no serious injuries were reported during the period. And we've also managed to finalize the Phase 2 construction project with an extremely good safety record, with no significant health and safety issues with the construction team at site. Turning over to the environment, very proud also to announce our official CO2 reduction or GHG emissions reduction targets for 2030 and 2050. For 2030, we've committed to a 40% reduction compared to our nameplate capacity of 15 million tons per year, comparing to the 2014 baseline, and also committed to net-zero by 2050. So very happy to be able to declare our official results. As you know, we've always been working significantly at site to be able to align ourselves with the GHG reduction, but now we came out with our official targets. Also happy to announce that the sustainability report for the previous year has been posted on our website as well. In terms of sustainability and community, the team even during the COVID situation has done quite a lot for the local communities of Uashat mak Mani-utenam with our First Nations partner. We're also proud to be one of the first mines in the north of Canada to be able to test out a new electric vehicle to be used on the mining site. So the company we're working with, Tugliq, we created a partnership with them to be able to test out a specifically designed vehicle to be able to operate in northern climates, also allowing us to continue our target to reduce CO2 emissions. If we look at the industry, well, the iron ore price increased significantly in the past quarter compared to the previous quarter, roughly about 32% increase. So there has been a lot of various elements in the market. There is obviously the conflict between Russia and Ukraine that has created instability on the supply side. There's also been significant stimulus put in place in China to be able to help construction and to be able to stimulate the economy, while at the same time, there has been COVID lockdowns out of China. So a bit mixed message. But when we look at the sort of shorter-term and medium-term trends, as the lockdowns resolve themselves out of China, we do feel that there are significant upside scenarios for iron ore price as the construction restarts in the Chinese market. Ex-China, we've seen also the production pretty robust and we've also seen a continued trend in the announcement -- the transition from blast furnaces to electric arc furnaces. So we could see that our strategy to be able to produce some of the highest grade materials in the world is paying out when we look at the global trend to reduce CO2 emissions in the steel business. If we turn to our actual operations results for the quarter and for the full year, very proud of the team was able, again, during a difficult challenging year to reach a strip ratio close to the Phase 2 strip ratio. So the team has done a fantastic job to ramp up the mine, to make sure that we are ready to be able to operate the Phase 2 project. We've also had very good iron ore recovery in line with our targets that we had set out in our feasibility study, also showing that we have a very stable ore and a very stable plant to be able to recover the iron ore. We've also had a slightly lower iron ore feed for the year, closer to our life of mine plan. But even with that reduction in the head grade, we managed to produce over 500,000 tons over our nameplate capacity. So you can appreciate that the investments that were made on the CapEx side in the past years to be able to improve the plant are paying off significantly, because we can maintain high productivity and high throughput throughout the years, even when there is a small instability. Turning to our financials. Well, we've created significant value for our shareholders. Again, in the past quarter an EPS of $0.23, EBITDA margin of close to 60%. So you can see that we're still benefiting from very healthy margins, controlling our costs even in these challenging times. You can see what has been happening on fuel prices, explosive prices, also on the spare parts. But even with those difficulties, the team has done a fantastic job, maintaining its cash cost to make sure that we can benefit from very high margins and create value for our shareholders. If we look at the provisional price adjustment along the previous quarter is about close to 0.9 million tons that were subject to provisional pricing. This year settled at a price that was higher than what was anticipated, allowing us to have a provisional price impact of roughly about $23 million. This equates to roughly about $12.2 per ton, allowing us to have a very healthy margin in the quarter. And when you look at the tons that are still on the water for this quarter, we have 0.7 million tons that are subject to provisional price. The settlement price at the end of the quarter was roughly $185 per ton. If we look at the average realized selling price, again, you can see that we're benefiting from prices that are very close to the P65 index. The slight variation that you see in this quarter is that we had sold, as you know, a portion of our tons into the Japanese market, and with the Japanese market, well, we have prices that are subject to previous quarters, or the previous few months of spot prices on the Platts Index. So -- but all in all, when you look at the full year, again, we benefit from the full P65 Index and our material is not discounted as we do not have any contaminants in the Bloom Lake material. In terms of results, well, a record EBITDA for the year, record adjusted EPS. So we've had very good results, benefiting from these high prices and again from the operational results that we have at Bloom Lake. If we look at the cash position. So the cash position has decreased to roughly about $400 million at the end of the quarter. This is mostly reflected by 2 main themes. One, the significant ramp-up in the spend of Phase 2, which allowed us to deliver the project roughly about 3 months ahead of schedule in a -- during a pandemic. So very positive results and also the fact that we had to settle some sales with Glencore, our partner that were, I won't say wrongly evaluated, but when the tons had left the port, the price reduced significantly by the time the tons landed at the clients. So that resulted in roughly about a $60 million adjustment in the working capital, the rest being mostly associated to the Phase 2 project, but this has been reflected when we look at our realized price, so it's just a change in our working capital. But you can see that our balance sheet is very healthy. We did not draw on any debt apart from the IQ loan for the port infrastructure for our Phase 2 project. So we managed to fully fund the project out of our own cash flow and even now delivering Phase 2 with one dividend that was fully paid, announcing our second dividend and still have a very healthy cash position in the bank. What we've done also in the quarter is to refinance our loan facility. We managed to keep most of our partners that were in the previous syndicate, the only one that exited was Investment Quebec, not because they don't believe in us, they still hold over 8% of the company and they align themselves with the port loan, but just simply the fact that they do not do revolving credit facilities, but still a very good partner of ours. And that allowed for new partners to enter the syndicate as BMO National Bank and Bank of America. So very happy to have new partners in our syndicate. The refinancing allowed us to reduce our cost of capital roughly by about 2% as well. So another very positive element of the refinancing. And finally, the other element that's interesting about the refinancing is it allowed us to gain access to the restricted cash that we had during the construction phase with our bank covenants. So that has been removed. So we now have access to all of our cash, and at the same time have reduced our cost of capital. So very positive for us and all of our shareholders. If we look at the Phase 2, you probably saw the announcement recently where we've announced that our Phase 2 project has been delivered ahead of schedule. So very proud that the team has managed to do that. We had our first full train production by May 3 of this year and we managed to produce a sellable quality at 66.2% Fe material. Even the recovery at the plant has been pretty good. What we're doing now is ramping up the Phase 2 project. We've managed to test most of the equipment at the limit of what it had been designed and very happy with the results. We can happily announce that there is no design flaws in the build of Phase 2, and now the next steps is to make most of these systems robust, transfer the final projects from construction to operation and ramp up towards our nameplate capacity. When we look at the Phase 2, so since we've delivered that project, as you know, our company is also focused on growth. We have a great opportunity that we just announced last week. So we have mentioned in the previous quarters that there has been significant interest in our material in the world by large steel producers to be able to help them increase their productivity, but at the same time lower their CO2 emission, and we had proof again of this last week when we announced our acquisition of the pelletizing facility in Pointe-Noire, and also us entering into an MoU with an international steelmaker to be able to deliver the feasibility study for the restart of that pellet plant. So there has been significant demand in the world right now for DR grade pellets. And we also see that there is a lot of new projects -- electric arc furnaces that are being sanctioned, and there's no new feed of DR material coming into the world. As we all know, there is a limited amount of scrap that can be used to be able to produce steel and even with the scrap available, we need the ultra-pure material to be able to dilute down the contaminants. So for us, this was a very strategic purchase to be able to enter potentially the pelletizing market in the future. This is a plant that is very well situated. It could not be closer to our stockpile, where we have our ore, it's right next to the berth. It's an area that has previous access to most of the infrastructure required for pelletizing, be it hydroelectric power, be it water, and very well situated again in the Pointe-Noire facility. So we managed to secure this pellet plant for $2.5 million and we're now starting the feasibility study jointly with an international steelmaker to be able to determine what is the right time line and the right cost to be able to bring this back into production in the coming years. The intent for us is not to restart an operation that would have high operating costs. What we wanted to potentially do is similar to Bloom Lake, evaluate what needs to be done to have an operation that can operate robustly, that can operate at the right operating cost and be able to weather down any cycle in the market. But the interesting thing is that today, the current premium for DR pellets in the market is roughly close to $70 per ton over the P65 index. So there are significant margins in the current market today for this type of material, but we do feel that this will be increased in the future as the demand increases. One positive thing to note as well is that this might not be known to everyone but Quebec and Canada are actually one of the largest producers of pellets in the world. So we do have the skill set in the province and in the country to be able to build, operate and optimize these facilities. So great place to be with one of the best ores, the best people, and also the best infrastructure to be able to create value for our shareholders. If we look at our growth pipeline. So we had mentioned in the previous quarters that one -- well, our main focus was to deliver Phase 2, which we're proud to say that we've done now. The next steps for us is to deliver the feasibility study this summer for the 69% material, to allow us to make DR grade pellet feed. So this will be completed by the end of the summer and then we'll be able to come back to the market with the official numbers and potentially decision on this project. We also have the Kami feasibility study that's ongoing. The intent is to have Kami produce DR grade material as well. This will be delivered by the end of this year. And since we've purchased a pelletizing plant, we're now starting to work also on a feasibility study to be able to see what is required to restart the pelletizing facility at Pointe-Noire. When we look at other potential value creation in our company, one interesting thing to note is that, yes, we're one of the lowest CO2 intensity producers of high-grade iron ore in the world, but we also help our clients to decarbonize. An interesting stat is the fact that clients buying our material just in blast furnaces, when we account for 15 million tons per year, we help our clients decarbonize by roughly about 2 million tons of CO2 equivalent per year. Depending what carbon price that you put, well, you could see that there is a potential of cost savings for our clients once these carbon taxes come into place of roughly about $170 million per year. Going to the DR grade material, with producers that have electric arc furnaces, well, this increases to roughly about 10 million tons per year of CO2 equivalent or roughly $880 million of cost saving per year. We believe we'll be able to benefit from a portion of these savings and align ourselves with the best partners going forward. So you can see that even just by entering this high-grade type material, because we help steel companies decarbonize, well, this allows us to potentially create significant value in the future with our current material. As we mentioned just a bit earlier, Canada is very well positioned not just on the Scope 3, because we produce some of the highest grade materials in the world, but we also have some of the lowest CO2 intensity iron ores in the world as well, positioning us very well to align ourselves with the different steelmakers and steel users in the future. Lastly, I'd like to thank all of our team at the head office, at the site, the construction team, for everything they've done, especially in the past year. The results are fantastic and we're now focused on the next steps of growth to be able to create more value for our shareholders. So thanks everyone for tuning in. We'll now turn it over to Marcotte to align for the questions.

Thank you, operator. We can turn it up for the Q&A at this point.

[Operator Instructions] The first question comes from Orest Wowkodaw with Scotiabank.

Congratulations on completing Phase 2, it's nice to see in this day and age a mining company can actually finish something early and on budget and that's no small feat. Moving -- thinking ahead now in terms of your other growth options, it seems to me you now have 3 potential projects, one being the Kami, one being the 69% upgrading and now this pelletization option. Can you maybe speak to how we should think about sequencing of these projects and whether you see yourself doing more than one at a time, or -- just trying to get a sense, you've got a lot of growth in front of you potentially, how we should think about capital allocation in all this optionality.

Yes, thanks for the question. So when you look at sequencing projects, I think the one project that is the closest towards us is really the flotation plant. So the flotation plant is the one that we'll be able to deliver this summer and the feasibility study, and then you got to take a decision on this project. The next one will be the Kami results. So Kami we'll get by the end of this year and then able to see the next steps once we have the full CapEx and the time line in place. And then the following one will be the feasibility study for the pellet plant. So this is going to be a priority for us. Priority also for our partner that has entered into the MOU with us and splitting the cost of that feasibility study. And the next steps will be potentially what development can we do at Bloom Lake as well. So these are all in the projects sort of sequence in time. Would we be able to build more than one at a time? Again, it will depend on the market and our capabilities as well. As you've seen in the past, we've always allocated capital in a very diligent way. I think it helps shareholders to know that management and directors own close to 11% of the company. So we're fully aligned with our shareholders because we are a major shareholder. So we'll continue our strategy of allocating capital in a conservative yet accretive way and be able to get back to you on the next steps of growth once we have those feasibility studies in line.

Okay. Now fair enough. On the upgrading -- the flotation plant upgrading, the 69%, you're obviously getting close to completing that study. Can you give us a bit of a preview in terms of sort of what the scale of that could be and is that intended to be for 100% of the concentrate at Bloom Lake, or -- I'm just trying to get a sense of the magnitude of what this project could be.

Yes. So the way that we've designed the feasibility study is to allow us to upgrade 8 million tons of the Bloom Lake material to 69%. So it will be taking roughly about half of our production and upgrading it to 69%. What we've seen up to now when we did the pre-feasibility study is -- and what we've sort of disclosed in previous discussions is that order of magnitude of CapEx would be roughly about $300 million, but that's still being finalized now with the various costs. Be able to give you a better estimate as soon as we finish the feasibility study. But that's the sort of order of magnitude of that project. But when you look at the current premium of roughly about $20 per ton, per -- over the 65 Index, you can see that it's a project that creates potentially a lot of value for our shareholders.

And is that -- just finally, is that something that we should think about to take sort of 12 to 24 months to build if you decide to do it?

Yes. I don't think 12 months would be possible. I think I'll give a heart attack to my COO and the construction team. It's something that would be more in the order magnitude of 24 months once we've had the engineering more advanced.

Your next question comes from Craig Hutchison with TD Bank.

With respect to the power plants, I know the original nameplate capacity was around 6 million tons per annum. Would you guys be looking to take that to 8 million tons to match the potential DR feed from Bloom Lake?

Yes, the intent would be to go closer to 6 million tons per year. As you know, we're also working on the coal pelletizing technology, which is very promising. So there is opportunities for us to be able to increase the pelletizing capacity, but going towards coal bonded pallets. So the intent of the pellet plant is 6, and then the rest we'll see the various options. But even in the market today, just selling DR grade pellet feed is very accretive for a lot of our potential actual clients and prospective clients as well. So we've had a lot of people knock on the door to be able to have access to that 69% pellet feed there.

Okay. And maybe in terms of the joint venture, I realize it's early, but can you give us maybe some kind of sense in terms of what that split may be, are you looking to be the majority owner, or is it more like a 50-50 joint venture as you kind of look long term in terms of the upgrade?

There's a few possibilities for us. What's important, we want to be the operators, so -- because it makes a lot of sense on the synergies being already implemented in Quebec and in the region. Now we restructure the actual partnership, this is early days. What's important for us is to deliver the most robust feasibility study and advance the discussions with our partners to make sure that we can deliver that project in the best way possible, but it's pretty early stage, Craig, to be able to give you a sense on the partnership structure that could come from that.

Okay. You guys were very helpful and gave us an order of magnitude for the flotation upgrade. In terms of the pellet plant, I know it's early, but any sense order of magnitude, the capital intensity, or what the upgrade could cost?

Yes. It's pretty tough on that one, Craig. We did the purchase last week -- last Monday. So the teams are working on that right now. We had initial visits with the partner to be able to make sure that the plant and the structure wasn't the condition that we wanted. But there's a few alternatives on how we would want to go about the pellet plant. So it's a bit early for me to give you even an order of magnitude. Probably in the coming months it will be easier to give you a bit more color on that.

Okay. And then just in terms of the kinds of energy source, is there a lot of available hydropower in the region if you guys were to consider some alternatives, maybe plasma torches and the like?

Yes. Plasma torches require significant amount of power. It's not impossible but it's something that would be more difficult to implement. Right now, natural gas and liquefied natural gas are probably the 2 best alternatives to be able to power up the pellet plant, at least to start up, and then we would evaluate the other alternatives. But plasma torches for a magnitude of our pellet plant would be a significant chunk of the spare capacity in Quebec right now. So to be evaluated but the intent is probably to go more towards natural gas.

Your next question comes from Gordon Lawson with Paradigm.

Congratulations on another great quarter. Sticking with the pellet plant, I know it's early, but given your due diligence and with nearly a decade on care and maintenance, could you comment on the state of the pellet plant and perhaps some of the more obvious components that require attention?

I'd say most equipment requires attention. Realistically, what we're looking to do is to be able -- the one area that's still in good shape that we could potentially benefit from is the grinding facility. This will be evaluated in the feasibility study. But when you look at the actual [ injurators ] and the balling drums, this is equipment that -- the cost to operate them and to maintain them would be so high that it doesn't make sense for us long term. So we want to make sure that if we bring this pellet plant back to life, the fact that it's in the right location, that it's very well situated, makes it one of the earliest pellet plant that could come to market for DR grade type material, but there is a lot of work to do inside to make sure that it's an efficient plant that can operate at the right operating costs.

Okay. Excellent. Switching over to Kami, with iron ore prices holding up where they are, is there a level of cash balance where you feel you would build the project with or without a JV partner?

It's something that we are evaluating. But as you know, we're also contemplating a potential to bring Bloom Lake with a Phase 3. So if you go back to Cliffs' original plan, Bloom Lake was going to operate between 25 million and 30 million tons per year. So right now, the team is also evaluating the different steps that could be taken at Bloom Lake to be able to increase the production directly there. That's a project that we would do 100% at Champion. When we look at Kami, it makes sense to do that project with a partner. There's a lot of demand. It de-risks the project for us. And even if the iron ore prices hold up, as you know, we've got about 10 billion tons of resources in our portfolio, a large portion in Quebec. So we need to find that right balance of partnerships to bring greenfield assets online and also our brownfield expansion directly at Bloom Lake or periphery areas there.

Your next question comes from Alexander Jackson with RBC Capital.

Just thinking about the ramp-up of Phase 2, can you remind us what the kind of definition of commercial production is and if you expect to sort of be hitting that right in December or in that final calendar quarter -- earlier in the quarter?

Yes, thanks for the question, Alex. So our -- we've disclosed anyways -- has been that -- we intend to reach nameplate capacity by the end of this calendar year. So the definition of commercial production for us is close to the nameplate capacity. The official definition is about 80% of production on a 60-day run. But realistically, I think the team is working very hard to be able to achieve nameplate by the end of the year.

Your next question comes from Stefan Ioannou with Cormark Securities.

Yes, most of my questions have been answered with regards to the whole pellet plant, just expansion ideas, but just wondering, I mean, in terms of just kind of how this all dovetails together. Does your thought process on Kami and the potential Phase 3 expansion change the scope of your DR, sort of, strategy going forward, or like will you build in sort of flexibility to expand those as well in the future?

Yes, thanks for the questions, Stefan. When we look at the flotation plant, the way that we're looking at it, it's basically a box that has a mill, flotation cells and filtering capacity. So once we have the number to build one, it's going to be pretty close to having the number of building a second one. So could we eventually go towards 100% of the Bloom Lake material at DR grade? The answer is yes. Our intent in the future is to be able to help steel mill decarbonize and allowing us to benefit from the full premiums of the highest-grade material in the world. So there is opportunities for us to have Phase 1 and 2 converted to DR. For our feasibility study for Kami, we're right now evaluating the possibility to go directly to DR grade. So I think that's the main differentiator that we have in our company, and because we have not seen any projects around the world being sanctioned to produce this and there's very little areas in the world that can produce it, I think that's really what sets us apart to be able to create value in the future.

There are no further questions at this time. Mr. Marcotte, you may proceed.

All right. Well, thanks everyone for the various questions, comments, the support mainly. It's always a pleasure to announce record productions -- oh, we've just got a question that…

Operator, I think there's one Q&A that came in, if I am not mistaken.

Brian just tried to sneak one at the end there.

Brian MacArthur -- you're next on the line -- with Raymond James.

Sorry, I just have to follow-up on the last question. Is there anything to prevent -- if you go to Phase 3, is there anything to prevent that from being 100% DRI too long term? You mentioned you could do Phase 1 and Phase 2. I assume you could just build another module or whatever, I want to think of it that way, or is there anything different going forward if Bloom Lake 3 works that you can't do that all the way, too?

Yes, we definitely could have Phase 3 DR grade as well. The only difference is probably that we might not build a separate plant beside the Phase 3 to go to DR. It might be integrated in that final plan. But realistically, when you look at the ore, nothing is different and nothing would hinder us from going 100% even with Phase 3 to DR grade material.

I think, operator, if I'm not mistaken, questions keep coming in, so we'll keep the mic open.

We have a follow-on question from Orest Wowkodaw.

Just on your dividend, you've announced another semiannual dividend here of $0.10, which follows the first one from -- announced last quarter. Is that -- should we read that as this is your new policy going forward, basically a $0.20 per annum dividend or is it not that simple in terms of how to interpret this?

I mean, the way that we have announced our first dividend was to make sure that we can have a number that fits in various price scenarios. So we wanted to have a stable dividend put in place to allow us to evaluate it correctly every 6 months. Realistically, I think we want to have the right balance between creating value through growth and through the capital return strategy. Right now what we've announced is $0.10. It's a number that we feel we can -- that is palatable for a company in various scenarios. So I don't know if that sort of answers your question, we're not giving guidance on the next steps. But realistically, we came out with a number that made sense in various price scenarios.

So -- but just to be clear, is the $0.10 semi-annual, is that now a go-forward commitment or is this just going to be evaluated each quarter -- each, I guess, 6 months?

It's not a go-forward commitment. We haven't signed this with our blood. But realistically, it's something that we'll evaluate every 6 months.

Your next question comes from Lucas Pipes with Riley Financial.

I wanted to ask about Global Markets. Obviously, geopolitical tension in Europe, but then also India announced over the weekend a number of export tariffs. So wondered how you take this into account and what impact this might have, first, on -- of course, here in the short term, the iron ore market, but longer-term, pellets, for example, and metallics more broadly?

Yes, thanks for the question. Realistically, the news from India didn't really shift our views. India, we had always position as becoming a net importer of iron ore. They already had a tax to export high-grade iron ore, now they've apply that tax for all iron ore. So I think the goal is just to make sure that they don't sell cheaper iron ore outside and then have to purchase higher cost iron ore in India. But realistically, I don't see that as having a material impact for our production. When we look at the instability in Europe and the conflict between Russia and Ukraine, I think it's going to set long-term shift in views of where supply has to come from. We saw that shift when there was dam issue in Brazil, when they had their 2 dam bursts back-to-back after a few years, that allowed us to enter the European market and other potential markets also in the world. And now, what we're seeing with Russia and Ukraine, I think it's going to create longer-term issues than the actual conflict. So that positions a jurisdiction like Canada very well to be able to produce the type of material we are and to align ourselves long term with various producers. But there is instability on the supply side. And again just to reiterate, we have not seen any projects of scale getting sanctioned in the past years. There is always the Simandou project floating around. But as we met a gentleman that was in late '70s recently, he mentioned to us that Simandou was going to be the next project to come online when he was at school. So it's a project that's been there for a while and again, it's a potentially 64%, 65% Fe material and that's why we're working to differentiate ourselves with DR grade 69% material going forward there.

Your next question comes from Jacques Wortman with Laurentian Bank Securities.

Great quarter. Could you remind me of the current total rail capacity to Sept-Iles and what proportion is currently being utilized?

Yes, thanks for the question, Jacques. So when we look at that rail, it's got a sort of nominal rate capacity if they double-track most of the rail, except for the tunnels and the bridges of roughly about 80 million tons per year. Once we get Phase 2 up and running that rail is going to be utilized at roughly about 40 million tons per year.

There are no further questions at this time, you may proceed.

Super. So maybe a question will come during my closing comments once again, but more than happy to answer any questions that come on. But again, thanks for your support. Thanks for all the work that you've done to be able to cover our company. I think one of the differentiators in our company is really the fact that we're very transparent in the way that we present the results, present our targets, the next steps, and very happy to continue on our journey of delivering on what we say. I think that's again one of the major differentiators of our company. Delivering the Phase 2 project with such a good health and safety record, ahead of schedule during a pandemic is again one of the main highlights for us in the past year. Probably have to write a book on the ups and downs of building that, but realistically, very proud of the results. Thanks again for your support and looking forward to speak to you in few months once we present our Q1 results for fiscal year 2023.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and ask that you please disconnect your lines. Have a great day.