- FY2023 revenue of $1,395M,
EBITDA1 of $493M and EPS
of $0.39
- Declares a dividend of $0.10 per
ordinary share
- Advances the DRPF project while the Bloom Lake Phase II ramp-up
continues
MONTRÉAL, May 30, 2023
/CNW/ - (Sydney, May 31, 2023) - Champion Iron Limited (TSX: CIA)
(ASX: CIA) (OTCQX: CIAFF) ("Champion" or the "Company") is pleased
to report its operational and financial results for the fourth
quarter and financial year ended March 31, 2023.
Conference Call Details
Champion will host a conference call and webcast on May 31,
2023, at 8:30 AM (Montréal time) /
10:30 PM (Sydney time) to
discuss the fourth quarter and annual results for the financial
year ended March 31, 2023. Call details are outlined at the
end of this press release.
Champion's CEO, Mr. David
Cataford, said: "Thanks to our team's perseverance and
efforts, we delivered another robust financial year as we complete
the ramp-up of our Phase II project, enabling us to continue to
actively pursue our organic growth projects. The positive impacts
that can be measured locally, including through our partnerships
with First Nations and our 1000 quality jobs, are extending
globally through our products that serve as a leading solution to
decarbonize the steelmaking process. Our dedicated team, who
successfully recommissioned Bloom Lake and completed the Phase II
expansion project, are actively participating in a rare global
opportunity to produce direct reduction quality iron ore, enabling
steelmaking without the use of coal. In tandem with the benefits
from our local investments, including a recent increase to the
initial budget to advance our DRPF project, we are proud to declare
another dividend for our shareholders."
1. Highlights
Sustainability and Health & Safety
- No serious injuries during the quarter and no major
environmental issues reported in the period, or since the
recommissioning of Bloom Lake in 2018;
- Fully compliant result following a site inspection by the
Québec Ministry of Environment, Fight Against Climate Change,
Wildlife and Parks;
- Employee recordable injury frequency rate of 1.53 for the year,
down significantly from 2.98 last year and better than Québec's
open pit industry performance; and
- Optimized the Company's 2022 Sustainability Report,
incorporating industry best practice disclosure frameworks,
specifically, the Global Reporting Initiative ("GRI"),
Sustainability Accounting Standard Board ("SASB") and Task Force on
Climate-Related Financial Disclosure ("TCFD"). The Sustainability
Report is available on the Company's website at
www.championiron.com.
Operations and Finance
- Record quarterly production of 3.1 million wmt of high-grade
66.1% Fe concentrate for the three-month period ended March 31, 2023, an increase of 4% and 65%
compared to the previous quarter and the same period of the
previous financial year, respectively. Annual production of 11.2
million wmt of high-grade 66.1% Fe concentrate, up 41% from the
previous financial year. This was attributable to the strong
performance following Phase II achieving commercial production in
December 2022;
- Quarterly record iron ore concentrate sales of 3.1 million dmt
for the three-month period ended March 31,
2023, up 15% and 64% from the previous quarter and the same
period of the previous financial year, respectively. For the year,
a record 10.6 million dmt were sold by the Company, up from 7.7
million dmt in the previous financial year;
- While the Company's facilities reached their designed nameplate
capacity on several operating days during the quarter, results were
impacted by previously disclosed delays in the delivery and
commissioning of mining equipment and locomotives required to
service third-party rail capacity in Sept-Îles, limiting mining and
haulage capacity. Quarterly production results were also impacted
by a longer than expected planned maintenance shutdown of one of
Bloom Lake's two crushers. A four-day power outage which impacted
third-party infrastructure at the port facility in Sept-Îles
impacted the Company's shipments. With the recent delivery and
assembly of mining equipment, the progress on third-party
infrastructure work programs and near-term anticipated locomotives
delivery, the path towards reaching Bloom Lake's expanded nameplate
capacity of 15 Mtpa in the near term has significantly
improved;
- Revenues of $463.9 million for
the three-month period ended March 31,
2023 ($331.4 million for the
same period in 2022), net cash flow from operating activities of
$167.7 million ($4.3 million for the same period in 2022),
EBITDA1 of $195.7 million
($197.9 million for the same period
in 2022) and net income of $88.2
million with EPS of $0.17
($115.7 million with EPS of
$0.23 for the same period in
2022);
- For the year ended March 31,
2023, revenues totalled $1,395.1
million ($1,460.8 million for
the same period in 2022), with net cash flow from operating
activities of $236.0 million
($470.4 million for the same period
in 2022), EBITDA1 of $493.2
million ($925.8 million for
the same period in 2022) and net income of $200.7 million ($522.6
million for the same period in 2022). Revenues,
EBITDA1, net cash flow from operating activities and net
income were all impacted by lower cash operating
margins1, driven by lower realized selling prices
compared to the previous year, as well as higher operating costs
attributable to start-up costs and cost inflation;
- For the three-month period ended March
31, 2023, C1 cash cost1 was $79.0/dmt (US$58.4/dmt)2, compared to
$60.0/dmt (US$47.4/dmt)2 for the same period in
2022, due to higher fixed costs required to support nameplate
capacity. Cash cost1 for the fourth quarter was slightly
higher than cash cost1 for the previous quarter of
$76.0/dmt (US$56.0/dmt)2, mainly due
to the impact of the change in concentrate inventory
valuation;
- C1 cash cost1 of $73.9/dmt (US$55.9/dmt)2 for the year ended
March 31, 2023, compared to
$58.9/dmt (US$47.0/dmt)2 for the same period in
2022, was negatively impacted by fixed costs incurred to support
the infrastructure required to achieve the higher anticipated
production prior to achieving nameplate capacity. The Company
expects those costs to decrease and to normalize as production
gradually ramps up towards Bloom Lake's expanded production
nameplate capacity of 15 Mtpa. Cash cost1 during the
year was also impacted by inflationary pressures on fuel,
explosives and site-related G&A expenses, additional
maintenance costs and a higher reliance on contractors at the mine
due to delays in mining equipment deliveries;
- $327.1 million of cash and cash
equivalents and short-term investments as at March 31, 2023, compared to $352.7 million at the same time last year.
Available liquidity1, including amounts available on the
Company's credit facilities, totalled $673.7
million at year-end, compared to $476.0 million at the end of the previous
quarter, an increase of $197.7
million, mostly driven by the level of net free cash flow;
and
- Dividend of $0.10 per ordinary
share declared on May 30, 2023
(Montréal time) / May 31, 2023
(Sydney time), in connection with
the semi-annual results for the period ended March 31, 2023.
Direct Reduction Pellet Feed Project ("DRPF Project") Update
- In connection with the recently announced positive findings of
the DRPF Project feasibility study, the Board of Directors approved
an increase of $52 million to the
initial budget of $10 million
announced on January 26, 2023, in
order to maintain the DRPF Project's estimated 30-month
construction period and a potential commissioning of the project in
the second half of the calendar year 2025; and
- The DRPF Project remains on schedule with detailed engineering
work advancing as planned.
Other Growth and Development
- The Company continues to evaluate organic growth opportunities,
including the Kamistiatusset iron ore project's (the "Kami
Project") feasibility study which is evaluating the project's
capability to produce a Direct Reduction ("DR") grade pellet feed
product, and a feasibility study evaluating the re-commissioning of
the Pointe-Noire Iron Ore Pelletizing Facility and its ability to
produce DR grade pellets, in collaboration with a major
international steelmaking partner. Both feasibility studies are
expected to be completed in the second half of calendar year
2023.
2. Bloom Lake Mine Operating Activities
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2023
|
2022
|
Variance
|
|
2023
|
2022
|
Variance
|
|
|
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
|
|
|
Waste mined and hauled
(wmt)
|
|
5,023,900
|
5,071,700
|
(1 %)
|
|
19,574,300
|
20,512,500
|
(5 %)
|
Ore mined and hauled
(wmt)
|
|
9,193,800
|
5,388,200
|
71 %
|
|
32,442,000
|
22,263,200
|
46 %
|
Material mined and
hauled (wmt)
|
|
14,217,700
|
10,459,900
|
36 %
|
|
52,016,300
|
42,775,700
|
22 %
|
|
|
|
|
|
|
|
|
|
Stripping
ratio
|
|
0.55
|
0.94
|
(41 %)
|
|
0.60
|
0.92
|
(35 %)
|
|
|
|
|
|
|
|
|
|
Ore milled
(wmt)
|
|
9,054,600
|
4,904,100
|
85 %
|
|
31,682,900
|
20,972,100
|
51 %
|
Head grade Fe
(%)
|
|
28.4
|
30.3
|
(6 %)
|
|
29.2
|
29.9
|
(2 %)
|
Fe recovery
(%)
|
|
78.6
|
82.7
|
(5 %)
|
|
79.3
|
83.2
|
(5 %)
|
Product Fe
(%)
|
|
66.1
|
66.2
|
— %
|
|
66.1
|
66.2
|
— %
|
Iron ore concentrate
produced (wmt)
|
|
3,084,200
|
1,869,000
|
65 %
|
|
11,186,600
|
7,907,300
|
41 %
|
Iron ore concentrate
sold (dmt)
|
|
3,092,900
|
1,889,900
|
64 %
|
|
10,594,400
|
7,650,600
|
38 %
|
Phase II Commercial Production
During the first quarter of the 2023 financial year, the Company
successfully commissioned its second ore processing plant with its
first shipment of concentrate railed in May
2022. In the second quarter of the 2023 financial year, the
last major on-site Phase II infrastructure work programs were
completed, enabling the Company's two crushers to feed both
processing facilities and reducing bottlenecks during maintenance
periods. With major on-site work programs completed ahead of
schedule, Phase II reached commercial production in
December 2022 and the Company continued to make improvements
to stabilize and optimize operations.
While Phase II demonstrated its ability to reach the designed
nameplate capacity on several operating days since reaching
commercial production, production during the fourth quarter of the
2023 financial year was negatively impacted by the longer than
expected maintenance shutdown of the Company's newly commissioned
crusher due to winter challenges, as well as previously
disclosed mining equipment delivery and commissioning delays, which
limited mining capacity. This short-term limitation in mining and
crushing capacity created some inefficiencies across the site,
restricting the ongoing ramp-up during the quarter. With the recent
delivery and assembly of mining equipment and current work to
increase throughput and the recovery ratio, the path towards Bloom
Lake reaching its expanded nameplate capacity of 15 Mtpa in
the near term has significantly improved.
Off-site work programs, including third-party infrastructure,
continued to advance during the quarter, further positioning the
Company to benefit from additional flexibility and capacity in
Sept-Îles to handle the Company's full nameplate capacity.
During the three-month period ended March 31, 2023,
downstream limitations, including locomotive delivery delays and a
four-day power outage at the port, negatively impacted the
Company's shipments.
While the Company is experiencing a short-term disconnect in
upstream and downstream capacity, compared to the completed
infrastructure at Bloom Lake, Management is confident that a stable
and operational balance state will be reached in the near term.
Teams at Bloom Lake are currently working at optimizing and
synchronizing the operations and adapting the maintenance practices
to achieve the expected reliability, an important step towards
achieving nameplate capacity on a consistent basis. Due to
third-party delays to increase infrastructure capacity, including
locomotive deliveries, the Company anticipates potential sales
limitations, compared to its production capacity in the near
term.
Operational Performance
Fourth Quarter of the 2023 Financial Year vs Fourth Quarter
of the 2022 Financial Year
In the three-month period ended March 31, 2023, 14.2
million tonnes of material were mined and hauled, compared to 10.5
million tonnes during the same period in 2022, an increase of 36%.
The increase in material movement was enabled through the
utilization of additional equipment. Tonnage mined and hauled for
the fourth quarter of the 2023 financial year was lower than
anticipated, compared to the initial Phase II ramp-up schedule, due
to previously disclosed delivery delays of required mining
equipment. With the recent delivery and assembly of equipment
required to increase mining capacity towards Phase II's expected
nameplate capacity, Management is confident its operations can
deliver a stronger performance in the upcoming months.
The stripping ratio for the three-month period ended
March 31, 2023, was affected by delivery delays that
impacted the number of drills and haul trucks available during the
quarter. In order to optimize plant operations in connection with
transitional incremental feed requirements during the Phase II
ramp-up period, the Company chose to reduce mined waste. The
Company intends to gradually recover accumulated waste backlog in
future periods as additional mining equipment becomes
available.
The plants processed 9.1 million tonnes of ore during the
three-month period ended March 31, 2023, compared to 4.9
million tonnes for the same prior-year period. The mining capacity
limitations resulting from previously disclosed equipment delivery
delays negatively impacted the tonnage processed during the
quarter. The plants' performance during the three-month period
ended March 31, 2023, was also impacted by a longer than
expected maintenance shutdown of one of the Company's two
crushers.
The iron ore head grade for the three-month period ended
March 31, 2023, was 28.4%, compared to 30.3% for the same
period in 2022. The variation in head grade is attributable to the
presence of some lower-grade ore being sourced and blended from
different pits, which was anticipated and is in line with the mine
plan and the LoM head grade average.
The Company's average Fe recovery rate of 78.6% for the
three-month period ended March 31, 2023, was negatively
impacted by the unstable recoveries of the Phase II concentrator,
which were to be expected at this stage of the Phase II
commissioning, the limited mining capacity reflecting the
unavailability of mining equipment as well as the short-term
instability of the crushing systems. The Company remains confident
in its ability to reach the average LoM expected Fe recovery rate
target of 82.4% in the near term at Bloom Lake, as detailed in the
Phase II feasibility study.
Bloom Lake achieved record production of 3.1 million wmt of
high-grade iron ore concentrate during the three-month period ended
March 31, 2023, an increase of 65%, compared to 1.9
million wmt during the same period in 2022, positively impacted by
the ongoing commissioning of the Phase II plant. Management expects
to benefit from optimization work programs and recent equipment
deliveries, which should result in improved combined production of
Bloom Lake's plants in the near term.
2023 Financial Year vs 2022 Financial Year
The Company mined and hauled 52.0 million tonnes of material
during the year ended March 31, 2023, compared to 42.8 million
tonnes for the same period in 2022. The increase in volume of
material moved at the mine was driven by additional mining
equipment in operation. However, total volume moved during the year
was negatively impacted by mining equipment delivery delays.
The stripping ratio was 0.60 for the year ended March 31,
2023, compared to 0.92 for the same period in 2022, and was lower
than the LoM stripping plan as the Company strategically focused on
mining ore due to the restricted availability of mining equipment
caused by equipment delivery delays, as previously detailed. The
iron ore head grade of 29.2% for the year ended March 31,
2023, was comparable to last year, and is consistent with the LoM
head grade average. The lower average Fe recovery rate for the year
ended March 31, 2023, was attributable to the commissioning of
the Phase II concentrator during the year. The Company is confident
to reach LoM recovery rate in the near term.
The two plants processed 31.7 million tonnes of ore during the
year ended March 31, 2023, an increase of 51% over the same
period in 2022, and produced a record of 11.2 million wmt of
high-grade iron ore concentrate, compared to 7.9 million wmt for
the same period in 2022, benefiting from the commissioning of the
Phase II project during the first quarter of the 2023 financial
year.
3. Financial Performance
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2023
|
2022
|
Variance
|
|
2023
|
2022
|
Variance
|
|
|
|
|
|
|
|
|
|
Financial Data
(in thousands of dollars)
|
|
|
|
|
|
|
|
|
Revenues
|
|
463,913
|
331,376
|
40 %
|
|
1,395,088
|
1,460,806
|
(4 %)
|
Cost of
sales
|
|
244,444
|
116,658
|
110 %
|
|
822,762
|
458,678
|
79 %
|
Other
expenses
|
|
23,748
|
26,648
|
(11 %)
|
|
79,972
|
84,871
|
(6 %)
|
Net finance
costs
|
|
8,774
|
2,269
|
287 %
|
|
25,587
|
11,045
|
132 %
|
Net income
|
|
88,217
|
115,653
|
(24 %)
|
|
200,707
|
522,585
|
(62 %)
|
EBITDA1
|
|
195,709
|
197,938
|
(1 %)
|
|
493,176
|
925,817
|
(47 %)
|
|
|
|
|
|
|
|
|
|
Statistics
(in dollars per dmt sold)
|
|
|
|
|
|
|
|
|
Gross average realized
selling price1
|
|
183.2
|
207.1
|
(12 %)
|
|
174.7
|
225.9
|
(23 %)
|
Net average realized
selling price1
|
|
150.0
|
175.3
|
(14 %)
|
|
131.7
|
190.9
|
(31 %)
|
C1 cash
cost1
|
|
79.0
|
60.0
|
32 %
|
|
73.9
|
58.9
|
25 %
|
AISC1
|
|
85.7
|
70.5
|
22 %
|
|
86.5
|
73.1
|
18 %
|
Cash operating
margin1
|
|
64.3
|
104.8
|
(39 %)
|
|
45.2
|
117.8
|
(62 %)
|
A. Revenues
Fourth Quarter of the 2023 Financial Year vs Fourth Quarter
of the 2022 Financial Year
Revenues totalled $463.9 million
for the three-month period ended March 31, 2023, compared
to $331.4 million for the same period
in 2022, as significantly higher sales volume over the same
prior-year period was offset by the lower IODEX 65% Fe CFR China
Index ("P65"). Lower index price was mitigated by lower freight and
other costs and a weaker Canadian dollar compared to the same
period last year.
During the three-month period ended March 31, 2023,
the P65 index for high-grade iron ore fluctuated from a low of
US$130.0/dmt to a high of
US$148.6/dmt. The P65 index average
price for the period was US$140.1/dmt, a decrease of 17% from the same
quarter last year, and a premium of 11.6% over the IODEX 62% Fe CFR
China Index average price of US$125.5/dmt. The gross average realized selling
price1 of US$135.5/dmt was
lower than the P65 index average price of US$140.1/dmt for the period due to certain sales
contracts using backward-looking iron ore index prices, when prices
were significantly lower than the P65 index average for the
three-month period ended March 31, 2023. This was
partially offset by the 2.0 million tonnes in transit as at
March 31, 2023, which were provisionally priced using an
average forward price of US$141.1/dmt, which was slightly higher than the
P65 index average price for the period.
During the three-month period ended March 31, 2023,
3.1 million tonnes of high-grade iron ore concentrate were sold at
a gross average realized price1 of US$135.5/dmt, before freight and other costs and
provisional pricing adjustments, compared to 1.9 million tonnes
sold at a gross average realized price1 of US$164.1/dmt for the same period in 2022. Volume
of sales was up 64% over the prior-year period due to incremental
production driven by Phase II achieving commercial production in
December 2022. Lower gross average
realized selling price1 reflects the lower index prices
during the three-month period ended March 31, 2023,
compared to the same prior-year period.
The average C3 Baltic Capesize Index ("C3") for the three-month
period ended March 31, 2023, was US$18.1/t compared to US$22.9/t for the same period in 2022,
representing a decrease of 21%, which contributed to lower freight
costs in the three-month period ended March 31, 2023.
When contracting vessels on the spot market, Champion typically
books vessels three to five weeks prior to the desired laycan
period due to its distance from main shipping hubs. Although this
creates a delay between the freight paid and the C3 index, the
effect of this delay is eventually reconciled since Champion ships
its high-grade iron ore concentrate uniformly throughout the
year.
Provisional pricing adjustments on previous quarterly sales,
which were impacted by the increase in the P65 index in the
quarter, positively impacted the net average realized selling
price1. During the three-month period ended
March 31, 2023, a final price of US$135.6/dmt was established for the 1.7 million
tonnes of iron ore that were in transit as at December 31,
2022, and which were previously evaluated using an average expected
price of US$129.5/dmt. Accordingly,
during the three-month period ended March 31, 2023, net
positive provisional pricing adjustments of $14.3 million (US$10.5
million) were recorded, representing a positive impact of
US$3.4/dmt over the total volume of
3.1 million dmt sold during the period.
After taking into account sea freight and other costs of
US$28.0/dmt and the positive
provisional pricing adjustment of US$3.4/dmt, the Company obtained a net average
realized selling price1 of US$110.9/dmt (C$150.0/dmt) for its high-grade iron ore
delivered or in transit at the end of the period.
2023 Financial Year vs 2022 Financial Year
For the year ended March 31, 2023, the Company sold 10.6
million tonnes of iron ore concentrate, mainly to customers in
China, Japan, South
Korea and Europe, compared
to 7.7 million tonnes for the same prior-year period. This
represents an increase of 38% year-over-year attributable to Phase
II achieving commercial production in December 2022. Revenues totalled $1,395.1 million for the year ended
March 31, 2023, compared to $1,460.8 million for the same period in
2022, as higher sales volumes were offset by lower net average
realized selling price1.
While the high-grade iron ore P65 index price fluctuated between
a low of US$91/dmt and a high of
US$185/dmt during the year ended
March 31, 2023, it averaged US$131.4/dmt, representing a decrease of 27% from
last year. The Company sold its product at a gross average realized
selling price1 of US$132.0/dmt. Benefiting from a premium product
at 66.2% Fe, the Company expects its iron ore concentrate pricing
to continue tracking the P65 index in the long term. Deducting sea
freight and other costs of US$30.6/dmt and the negative provisional
pricing adjustments of US$2.0/dmt,
the Company obtained a net average realized selling
price1 of US$99.4/dmt
(C$131.7/dmt) for its high-grade iron
ore concentrate.
B. Cost of Sales and C1 Cash Cost1
Fourth Quarter of the 2023 Financial Year vs Fourth Quarter
of the 2022 Financial Year
For the three-month period ended March 31, 2023, the
cost of sales totalled $244.4 million, compared to $116.7 million for the same period in 2022
for a C1 cash cost1 per tonne of $79.0/dmt during the period, compared to
$60.0/dmt for the same period in
2022.
The C1 cash cost1 per dmt sold for the three-month
period ended March 31, 2023, was negatively impacted by
the fixed costs incurred to support the infrastructure required to
achieve the higher anticipated production prior to achieving
nameplate capacity. The Company expects those costs to decrease and
to normalize as production gradually ramps up towards Bloom Lake's
expanded nameplate capacity of 15 Mtpa. Cash cost1
during the quarter was also affected by higher than expected
utilization of contractors at the mine due to the previously
disclosed delivery delays in required mining equipment. The C1 cash
cost1 in the three-month period ended
March 31, 2023, compared to the same period last year,
was also impacted by the higher cost of fuel and explosives used in
the Company's mining activities, higher workforce transportation
costs and global inflationary pressures that also affected
contractors, rail and port operations, and food services. In
addition, the longer than expected planned maintenance shutdown of
one crusher and longer haul cycle times associated with the current
mine plan also contributed to a higher cash cost1 for
the three-month period ended March 31, 2023. Despite
factors contributing to higher cash cost1 per dmt sold
in the period, the economic benefits of the Phase II expansion
project will continue to accrue as throughput gradually increases
and reaches the expected expanded nameplate capacity of 15
Mtpa.
The life of mine stripping ratio used for cost capitalization
was revised upward in December 2021
from 0.5 to 0.99, concurrently with the commencement of Phase II
operations. During the three-month period ended
March 31, 2023, the actual stripping ratio of 0.55 was
lower than the life of mine stripping ratio used for cost
capitalization; therefore, no mining costs were capitalized during
the period. During the prior-year period, the Company capitalized
mining costs, contributing to lower cash cost1 for the
three-month period ended March 31,
2022.
2023 Financial Year vs 2022 Financial Year
For the year ended March 31, 2023, the Company produced
high-grade iron ore at a C1 cash cost1 of $73.9/dmt, compared to $58.9/dmt for the year ended March 31, 2022.
The increase in annual C1 cash cost1 is due to
additional fixed costs incurred to support infrastructure required
to achieve the higher anticipated production prior to reaching
nameplate capacity with the Phase II project, increased
contractors' costs attributable to mining equipment delivery
delays, inflationary pressure on the cost of fuel, explosive and
workforce transportation costs. Cost of sales was also impacted by
longer than expected and unplanned maintenance activities.
C. Net Income & EBITDA1
For the three-month period ended March 31, 2023, the
Company generated an EBITDA1 of $195.7 million, representing an EBITDA
margin1 of 42%, compared to $197.9 million, representing an EBITDA
margin1 of 60%, for the same period in 2022. Comparable
EBITDA1 is mainly due to higher sales volume driven by
the commissioning of Phase II during the year, offset by a higher
cost of sales and lower net average realized selling
prices1.
For the three-month period ended March 31, 2023, the
Company generated net income of $88.2 million (EPS of $0.17), compared to $115.7 million (EPS of $0.23) for the same period last year. The
year-over-year decrease in net income was mainly affected by lower
gross profit as described above.
For the year ended March 31, 2023, the Company
generated an EBITDA1 of $493.2 million, representing an EBITDA
margin1 of 35%, compared to $925.8 million, representing an EBITDA
margin1 of 63%, for the same prior-year period. This
year-over-year decrease in EBITDA1 is mainly
attributable to the decrease in the net average realized selling
price1 and higher production costs, partially offset by
a higher sales volume following the commissioning of Phase II.
For the year ended March 31, 2023, the Company
generated net income of $200.7 million (EPS of $0.39), compared to $522.6 million (EPS of $1.03) for the same prior-year period. The
year-over-year decrease in net income is mainly due to lower
EBITDA1 and higher depreciation, partially offset by
lower income and mining taxes.
D. All In Sustaining Cost ("AISC")1 and Cash
Operating Margin1
During the three-month period ended March 31, 2023,
the Company realized an AISC1 of $85.7/dmt, compared to $70.5/dmt for the same period in 2022. The
increase relates to higher C1 cash costs1, partially
offset by lower sustaining capital expenditures and lower G&A
expenses per dmt.
The Company generated a cash operating margin1 of
$64.3/dmt for each tonne of
high-grade iron ore concentrate sold during the three-month period
ended March 31, 2023, compared to $104.8/dmt for the same prior-year period. The
variation is mainly due to a combination of higher AISC1
and a lower net average realized selling price1 for the
period.
During the year ended March 31, 2023, the Company
recorded an AISC1 of $86.5/dmt, compared to $73.1/dmt for the same period in 2022. The
variation is mainly due to higher C1 cash costs1,
partially offset by lower sustaining capital expenditures per dmt
as well as lower G&A expenses per dmt.
The cash operating margin1 totalled $45.2/dmt for the year ended
March 31, 2023, compared to $117.8/dmt for the same prior-year period. The
variation is mainly due to a lower net average realized selling
price1 and higher AISC1.
4. Conference Call and Webcast Information
A webcast and conference call to discuss the foregoing results
will be held on May 31, 2023, at 8:30
AM (Montréal time) / 10:30 PM (Sydney time). Listeners may access a live
webcast of the conference call from the Investors section of the
Company's website at
www.championiron.com/investors/events-presentations or by dialing
toll free +1-888-390-0546 within North
America or +1-800-076-068 from Australia.
An online archive of the webcast will be available by accessing
the Company's website at
www.championiron.com/investors/events-presentations. A telephone
replay will be available for one week after the call by dialing
+1-888-390-0541 within North
America or +1-416-764-8677 overseas, and entering passcode
882582 #.
About Champion Iron Limited
Champion, through its wholly-owned subsidiary Quebec Iron Ore
Inc., owns and operates the Bloom Lake Mining Complex, located on
the south end of the Labrador Trough, approximately 13 km north of
Fermont, Québec. Bloom Lake is an
open-pit operation with two concentrators that primarily source
energy from renewable hydroelectric power. The two concentrators
have a combined nameplate capacity of 15 Mtpa and produce a low
contaminant high-grade 66.2% Fe iron ore concentrate with a proven
ability to produce a 67.5% Fe direct reduction quality concentrate.
In January 2023, the Company
announced the positive findings of a feasibility study evaluating
upgrading half of the Bloom Lake mine capacity to a direct
reduction quality pellet feed iron ore and approved an initial
budget to advance the project. Bloom Lake's high-grade and low
contaminant iron ore products have attracted a premium to the
Platts IODEX 62% Fe iron ore benchmark. The Company ships iron ore
concentrate from Bloom Lake by rail, to a ship loading port in
Sept-Îles, Québec, and has sold its iron ore concentrate to
customers globally, including in China, Japan,
the Middle East, Europe, South
Korea, India and
Canada. In addition to Bloom Lake,
Champion owns a portfolio of exploration and development projects
in the Labrador Trough, including the Kamistiatusset Project,
located a few kilometres south-east of Bloom Lake, and the
Consolidated Fire Lake North iron ore project, located
approximately 40 km south of Bloom Lake.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain information and statements
that may constitute "forward-looking information" under applicable
Canadian securities laws. Forward-looking statements are statements
that are not historical facts and are generally, but not always,
identified by the use of words such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "continues",
"forecasts", "projects", "predicts", "intends", "anticipates",
"aims" "targets", or "believes", or variations of, or the negatives
of, such words and phrases or state that certain actions, events or
results "may", "could", "would", "should", "might" or "will" be
taken, occur or be achieved. Inherent in forward-looking statements
are risks, uncertainties and other factors beyond the Company's
ability to predict or control.
Specific Forward-Looking Statements
All statements other than statements of historical facts
included in this press release that address future events,
developments or performance that Champion expects to occur are
forward-looking statements. Forward-looking statements include,
among other things, Management's expectations regarding: (i) the
Company's Phase II expansion project, its expected achievement of
nameplate capacity, throughput, recovery rates, economic and other
benefits, impact on nameplate capacity, milestones and associated
costs, and related port capacity; (ii) the project to upgrade the
Bloom Lake iron ore concentrate to a higher grade with lower
contaminants and to convert approximately half of Bloom Lake's
increased nameplate capacity of 15 Mtpa to commercially produce a
DR quality pellet feed iron ore, expected project timeline, capital
expenditure, budget and financing; (iii) the feasibility study
evaluating the re-commissioning of the Pointe-Noire Iron Ore
Pelletizing Facility to produce DR grade pellets and its
anticipated completion timeline; (iv) the Kami Project's
feasibility study, its purpose, including evaluating the potential
to produce a DR grade product, and anticipated completion timeline;
(v) the shift in steel industry production methods towards reducing
emissions and green steel production methods and the Company's
participation therein, contribution thereto and positioning in
connection therewith; (vi) optimization work programs and their
expected results and impact on production; (vii) expected
locomotives delivery and potential sales limitations; (viii)
production and recovery rate targets and Company's performance; and
(ix) the Company's growth and opportunities generally.
Risks
Although Champion believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such forward-looking statements involve known and unknown risks,
uncertainties and other factors, most of which are beyond the
control of the Company, which may cause the Company's actual
results, performance or achievements to differ materially from
those expressed or implied by such forward-looking statements.
Factors that could cause the actual results to differ materially
from those expressed in forward-looking statements include, without
limitation: (i) the results of feasibility studies; (ii) changes in
the assumptions used to prepare feasibility studies; (iii) project
delays; (iv) timing and uncertainty of industry shift to green
steel and EAF; (v) continued availability of capital and financing
and general economic, market or business conditions; (vi) general
economic, competitive, political and social uncertainties; (vii)
future prices of iron ore; (viii) future transportation costs; (ix)
failure of plant, equipment or processes to operate as anticipated;
* delays in obtaining governmental approvals, necessary permitting
or in the completion of development or construction activities; and
(xi) the effects of catastrophes and public health crises,
including the impact of COVID-19 on the global economy, the iron
ore market and Champion's operations, as well as those factors
discussed in the section entitled "Risk Factors" of the Company's
2023 Annual Report, Annual Information Form and MD&A for the
financial year ended March 31, 2023,
which are available on SEDAR at www.sedar.com, the ASX at
www.asx.com.au and the Company's website at www.championiron.com.
There can be no assurance that such information will prove to be
accurate as actual results and future events could differ
materially from those anticipated in such forward-looking
information. Accordingly, readers should not place undue reliance
on forward-looking information.
Additional Updates
All of Champion's forward-looking information contained in this
press release is given as of the date hereof or such other date or
dates specified in forward-looking statements and is based upon the
opinions and estimates of Champion's Management and information
available to Management as at the date hereof. Champion disclaims
any intention or obligation to update or revise any of the
forward-looking information, whether as a result of new
information, future events or otherwise, except as required by law.
If the Company does update one or more forward-looking statements,
no inference should be drawn that it will make additional updates
with respect to those or other forward-looking statements. Champion
cautions that the foregoing list of risks and uncertainties is not
exhaustive. Readers should carefully consider the above factors as
well as the uncertainties they represent and the risks they
entail.
Abbreviations
Unless otherwise specified, all dollar figures stated herein are
expressed in millions of Canadian dollars, except for: (i) tabular
amounts which are in thousands of Canadian dollars; and (ii) per
share or per tonne amounts. The following abbreviations and
definitions are used throughout this press release: US$
(United States dollar), C$
(Canadian dollar), Fe (iron ore), wmt (wet metric tonnes), dmt (dry
metric tonnes), Mtpa (million tonnes per annum), M (million), km
(kilometers), LoM (life of mine), G&A (general and
administrative), EBITDA (earnings before interest, tax,
depreciation and amortization), AISC (all-in sustaining cost), EPS
(earnings per share), Management (Champion's management team),
Bloom Lake or Bloom Lake Mine (Bloom Lake Mining Complex) and Phase
II (Phase II expansion project). The utilization of "Champion" or
the "Company" refers to Champion Iron Limited and/or one, or more,
or all of its subsidiaries, as applicable. "IFRS" refers to
International Financial Reporting Standards.
For additional information on Champion Iron Limited, please
visit our website at: www.championiron.com.
This document has been authorized for release to the market by
the CEO of Champion Iron Limited, David
Cataford.
Copies of the Company's audited Consolidated Financial
Statements and associated Management's Discussion and Analysis
("MD&A") for the year ended March 31, 2023 are
available under the Company's profile on SEDAR (www.sedar.com), on
the ASX (www.asx.com.au) and the Company's website
(www.championiron.com).
____________________________________
|
1 This is a
non-IFRS financial measure, ratio or other financial measure. The
measure is not a standardized financial measure under the financial
reporting framework used to prepare the financial statements and
might not be comparable to similar financial measures used by other
issuers. Refer to the section below - Non-IFRS and Other Financial
Measures for definitions of these metrics and reconciliations to
the most comparable IFRS measure when applicable. Additional
details for these non-IFRS and other financial measures, have been
incorporated by reference and can be found in section 22 of the
Company's MD&A for the year ended March 31, 2023,
available on SEDAR at www.sedar.com, the ASX at www.asx.com.au and
on the Company's website under the Investors section at
www.championiron.com.
|
2 See the
"Currency" section of the MD&A for the year ended
March 31, 2023, included in note 7 - Key Drivers,
available on SEDAR at www.sedar.com, the ASX at www.asx.com.au and
on the Company's website under the Investors section at
www.championiron.com.
|
3 See
the "Cautionary Note Regarding Forward-Looking Statements" section
of this press release.
|
Non-IFRS and Other Financial Measures
The Company has included certain non-IFRS financial measures,
ratios and supplementary financial measures in this press release,
as listed in the table below, to provide investors with additional
information in order to help them evaluate the underlying
performance of the Company. These measures are mainly derived from
the financial statements but do not have any standardized meaning
prescribed by IFRS and, therefore, may not be comparable to similar
measures presented by other companies. Management believes that
these measures, in addition to conventional measures prepared in
accordance with IFRS, provide investors with an improved ability to
understand the results of the Company's operations. Non-IFRS and
other financial measures should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS. The exclusion of certain items from non-IFRS financial
measures does not imply that these items are necessarily
non-recurring.
EBITDA and EBITDA Margin
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
Income before income
and mining taxes
|
|
144,457
|
|
181,312
|
|
346,545
|
|
870,843
|
Net finance
costs
|
|
8,774
|
|
2,269
|
|
25,587
|
|
11,045
|
Depreciation
|
|
42,478
|
|
14,357
|
|
121,044
|
|
43,929
|
EBITDA
|
|
195,709
|
|
197,938
|
|
493,176
|
|
925,817
|
Revenues
|
|
463,913
|
|
331,376
|
|
1,395,088
|
|
1,460,806
|
EBITDA
margin
|
|
42 %
|
|
60 %
|
|
35 %
|
|
63 %
|
Adjusted Net Income and Adjusted EPS
|
Three Months
Ended
|
Year Ended
|
|
March 31,
|
March 31,
|
|
2023
|
|
2022
|
2023
|
|
2022
|
|
|
|
|
|
|
|
(in thousands of
dollars except per share)
|
|
|
|
|
|
|
Net Income
|
88,217
|
|
115,653
|
200,707
|
|
522,585
|
|
|
|
|
|
|
|
Cash items
|
|
|
|
|
|
|
Loss (gain) on
disposal of non-current investments
|
—
|
|
—
|
—
|
|
(176)
|
Incremental costs
related to COVID-19
|
—
|
|
3,310
|
1,145
|
|
7,843
|
Bloom Lake Phase II
start-up costs
|
—
|
|
5,965
|
39,159
|
|
17,752
|
|
—
|
|
9,275
|
40,304
|
|
25,419
|
|
|
|
|
|
|
|
Tax effect of
adjustments listed above1
|
—
|
|
(3,617)
|
(15,315)
|
|
(10,236)
|
|
|
|
|
|
|
|
Adjusted net
income
|
88,217
|
|
121,311
|
225,696
|
|
537,768
|
|
|
|
|
|
|
|
Weighted average number
of ordinary shares
outstanding - Basic
|
517,193,000
|
|
511,237,000
|
517,046,000
|
|
507,591,000
|
|
|
|
|
|
|
|
Adjusted EPS
|
0.17
|
|
0.24
|
0.44
|
|
1.06
|
1 The tax
effect of adjustments is calculated using the applicable tax
rate.
|
Available Liquidity
|
|
As at
March 31,
|
|
As at December
31,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Cash and cash
equivalents
|
|
326,806
|
|
165,986
|
Short-term
investments
|
|
312
|
|
312
|
Undrawn amounts under
credit facilities
|
|
346,596
|
|
309,736
|
Available
liquidity
|
|
673,714
|
|
476,034
|
C1 cash Cost
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
3,092,900
|
|
1,889,900
|
|
10,594,400
|
|
7,650,600
|
|
|
|
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
244,444
|
|
116,658
|
|
822,762
|
|
458,678
|
Less: Incremental costs
related to COVID-19
|
|
—
|
|
(3,310)
|
|
(1,145)
|
|
(7,843)
|
Less: Bloom Lake Phase
II start-up costs
|
|
—
|
|
—
|
|
(39,159)
|
|
—
|
|
|
244,444
|
|
113,348
|
|
782,458
|
|
450,835
|
|
|
|
|
|
|
|
|
|
C1 cash cost (per dmt
sold)
|
|
79.0
|
|
60.0
|
|
73.9
|
|
58.9
|
All-In Sustaining Cost
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
3,092,900
|
|
1,889,900
|
|
10,594,400
|
|
7,650,600
|
|
|
|
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
244,444
|
|
116,658
|
|
822,762
|
|
458,678
|
Less: Incremental costs
related to COVID-19
|
|
—
|
|
(3,310)
|
|
(1,145)
|
|
(7,843)
|
Less: Bloom Lake Phase
II start-up costs
|
|
—
|
|
—
|
|
(39,159)
|
|
—
|
Sustaining capital
expenditures
|
|
9,303
|
|
11,743
|
|
91,924
|
|
76,956
|
G&A
expenses
|
|
11,466
|
|
8,094
|
|
41,514
|
|
31,769
|
|
|
265,213
|
|
133,185
|
|
915,896
|
|
559,560
|
|
|
|
|
|
|
|
|
|
AISC (per dmt
sold)
|
|
85.7
|
|
70.5
|
|
86.5
|
|
73.1
|
Cash Operating Margin and Cash Profit Margin
|
|
Three Months
Ended
|
Year Ended
|
|
|
March 31,
|
March 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
3,092,900
|
|
1,889,900
|
|
10,594,400
|
|
7,650,600
|
|
|
|
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
|
|
|
|
Revenues
|
|
463,913
|
|
331,376
|
|
1,395,088
|
|
1,460,806
|
Net average realized
selling price (per dmt sold)
|
|
150.0
|
|
175.3
|
|
131.7
|
|
190.9
|
|
|
|
|
|
|
|
|
|
AISC (per dmt
sold)
|
|
85.7
|
|
70.5
|
|
86.5
|
|
73.1
|
Cash operating margin
(per dmt sold)
|
|
64.3
|
|
104.8
|
|
45.2
|
|
117.8
|
Cash profit
margin
|
|
43 %
|
|
60 %
|
|
34 %
|
|
62 %
|
Gross Average Realized Selling Price per dmt Sold
|
Three Months
Ended
|
|
Year Ended
|
|
March 31,
|
|
March 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Per tonne
sold
|
|
|
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
3,092,900
|
|
1,889,900
|
|
10,594,400
|
|
7,650,600
|
|
|
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
|
|
|
Revenues
|
463,913
|
|
331,376
|
|
1,395,088
|
|
1,460,806
|
Provisional pricing
adjustments
|
(14,325)
|
|
(28,769)
|
|
27,479
|
|
(70,969)
|
Freight and other
costs
|
117,137
|
|
88,757
|
|
428,616
|
|
338,632
|
Gross
revenues
|
566,725
|
|
391,364
|
|
1,851,183
|
|
1,728,469
|
|
|
|
|
|
|
|
|
Gross average realized
selling price (per dmt sold)
|
183.2
|
|
207.1
|
|
174.7
|
|
225.9
|
SOURCE Champion Iron Limited