Mr. David Cataford reports
CHAMPION IRON REPORTS FY2020 FOURTH QUARTER AND RECORD ANNUAL PRODUCTION IN YEAR-END RESULTS
Champion Iron Ltd. has released strong operational and financial results for the fourth quarter and fiscal year ended March 31, 2020.
For complete details of the annual audited consolidated financial statements and management's discussion and analysis, please refer to the company's filings on SEDAR or the company's website.
Conference call details
Champion will host a conference call and webcast at 8:30 a.m. EDT or 10:30 p.m. AEST on May 20, 2020, to discuss the fourth quarter results of the fiscal year ended March 31, 2020. Call details are outlined at the end of this news release.
Health and safety:
No known cases of COVID-19 have been confirmed in the company.
In close collaboration with its unionized work force, its contractors and local communities, the company has adopted or exceeded the government guidelines in response to the COVID-19 pandemic.
- The company rapidly and diligently implemented measures to mitigate the risks related to the COVID-19 pandemic, including amended work schedules to reduce travel volumes, increased transportation capacity to maintain adequate social distancing, isolation from nearby communities, and additional health monitoring and screening.
The company continued its focus on overall health and safety.
Quarterly production of 1,891,800 wet metric tonnes (wmt) of high-grade 66.5-per-cent-iron-ore concentrate, compared with 1,802,000 wmt during the same period last year, with an annual production record totalling 7,903,700 wmt, compared with 6,994,500 wmt in the prior year;
Quarterly recovery rate of 82.3 per cent, compared with a recovery rate of 80.4 per cent during the same period of the prior year, for an annual average recovery rate of 82.6 per cent, compared with a recovery rate of 79.5 per cent in the prior year;
Free on board (FOB) total cash cost (1) of $53.90 per dry metric tonne (dmt) (C1) for the quarter and of $52.70 per dmt ($39.60 (U.S.) per dmt) for the year compared with $48.40 per dmt and $49.40 per dmt ($37.70 (U.S.) per dmt), respectively, in the prior year, attributable to unscheduled downtimes and higher port charges.
Record annual financial results, including revenue, EBITDA (earnings before interest, taxes, depreciation and amortization) (1) and net cash flow from operations;
Revenues of $175.7-million for the quarter and $785.1-million for the year ended March 31, 2020, compared with $182.2-million and $655.1-million, respectively, for the comparative periods;
EBITDA (1) totalling $61.1-million for the quarter and $348.5-million for the year ended March 31, 2020, compared with a quarterly EBITDA (1) of $86.5-million and an annual EBITDA (1) of $278.2-million for the comparative periods;
Net income of $18.4-million for the quarter and $121.1-million in net income (earnings per share of 20 cents) and adjusted net income (1) of $172.7-million (adjusted earnings per share of 32 cents) for the year ended March 31, 2020, compared with a net income of $28.2-million and $147.6-million (earnings per share of 20 cents) for the comparative periods of the year ended March 31, 2019;
Net cash flow from operations totalling $84.6-million (18 cents per share (1)) and $309.6-million (70 cents per share (1)) for the quarter and fiscal year ended March 31, 2020, respectively, compared with $38.0-million (nine cents per share (1)) and $176.7-million (42 cents per share (1)), respectively, for the same periods last year;
Cash on hand (2) of $298.7-million as at March 31, 2020, compared with $187.6-million as at Dec. 31, 2019, and $153.3-million as at March 31, 2019.
Acquired the remaining 36.8-per-cent minority equity interest in the subsidiary operating the Bloom Lake mine, Quebec Iron Ore Inc. (QIO), for total cash consideration of $211-million;
Substantial balance sheet improvements resulting in reduction of cost of debt from a weighted-average cost ranging from 12.37 per cent to 14.75 per cent to an annualized interest rate of 4.8 per cent, following the refinancing of QIO's long-term debt with a $200-million (U.S.) loan facility;
Completed a QIO $185-million preferred share offering with Caisse de depot et placement du Quebec (CDPI);
Significantly derisked the construction timeline of the Bloom Lake phase 2 expansion project by deploying $58-million (as of March 31, 2020) of the budgeted $68-million work program detailed in the phase 2 feasibility study, the findings of which were released on June 20, 2019;
- Completed a 132,000 wmt production test of 67.98-per-cent-iron-ore concentrate with a combined silica and alumina content of 2.57 per cent; this custom production test was completed at the request of an important customer and could enable the company to procure more diverse customers globally if the product meets the specifications and qualifications as direct reduction (DR) pellet feed material;
Termination of the proposal to redomicile the company from Australia to Canada by way of a scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth), due to market volatility and global uncertainty associated with the COVID-19 pandemic.
Champion's chief executive officer, David Cataford, said: "I am grateful for the support received from our workers, partners and communities as our company implemented measures aligned with government directives to mitigate COVID-19-related risks, and I am pleased to report that we have no known cases confirmed in our organization. Our success is not only measured by our strong production and record financial results, but also by our people's agility to rapidly adapt to unprecedented working and market conditions created by COVID-19. While our commitment remains to safeguard the health and safety of our workers and nearby communities, our company's balance sheet continues to improve as we continue our evaluation for the Bloom Lake phase 2 expansion project."
2. Response to the COVID-19 pandemic
The COVID-19 pandemic has negatively impacted the global economy and created significant economic uncertainty and disruption of financial markets. In light of the COVID-19 pandemic, the health and safety of the company's employees, partners and communities are a priority for Champion, whereby the company rapidly aligned operations with the government guidelines and worked with local communities to implement measures in the collective effort to contain the COVID-19 pandemic.
On March 24, 2020, the company announced the ramp down of operations at Bloom Lake, following a directive from the government of Quebec, which required mining activities to be reduced to a minimum within the province. In line with government-issued directives, all discretionary work had been suspended, and operations were restricted to a single production line, tailings management, water treatment and overall maintenance. On April 23, 2020, the company announced it would gradually ramp up operations at Bloom Lake, following an announcement from the government that, effective April 15, 2020, mining activities were to be considered a priority service and allowed to resume normal operations, conditional on the implementation of guidelines aiming to contain the risks related to the COVID-19 pandemic.
In line with government guidelines, Champion has implemented several measures in its efforts to mitigate risks related to the COVID-19 pandemic. Implemented safety precautions include: additional monitoring of employees' health, temperature control prior to travelling and entering Bloom Lake, isolation measures from the nearby communities, additional transportation capacity to enable adequate social distancing, amended work schedules to reduce travel volumes, additional medical support, and new disinfection and distancing protocols at the mine site. The current measures in place are monitored and enhanced or revised when required by an executive committee assembled to adapt operations in response to the COVID-19 pandemic.
Despite the economic impact of the COVID-19 pandemic, iron ore prices remain robust, providing operations an attractive operating margin environment. The company will continue to monitor and adapt to the rapidly changing global economy impacted by the pandemic. Although it is managing its operations and liquidity to mitigate risks related to the COVID-19 pandemic, the extent to which the COVID-19 pandemic could impact operations and cash flows will depend on future developments, given the significant uncertainty regarding the ultimate impact that the COVID-19 pandemic will have on the overall economy.
3. Bloom Lake mine operating activities (3)
During the three-month period ended March 31, 2020, 8.6 million tonnes of material were mined, an improvement of 2 per cent over the same quarter of the prior year. The increase is mainly due to higher equipment availability, following investments made in the mining equipment rebuild program since the start of operations in February, 2018.
The plant processed 4.88 million tonnes of ore during the fourth quarter of 2020, compared with 4,754,200 tonnes in the comparable prior-year period. The increased production reflects improvements and operational innovations implemented during the first half of the fiscal year ended March 31, 2020, as well as a planned three-day shutdown to replace the inner discharge grates with new ones engineered to sustain a higher throughput. It is anticipated that future discharge grates replacement will occur at the same time as the scheduled biannual major shutdowns during the first and third quarters of Champion's fiscal year ending March 31, 2021.
The company improved its average recovery rate to 82.3 per cent during the fourth quarter of 2020, compared with a rate of 80.4 per cent in the same period of the prior year. The increase in recovery rate is attributable to better throughput stability, following the operational innovations implemented during the first half of the fiscal year ended March 31, 2020. The fourth quarter 2020 recovery rate was negatively affected by 0.3 per cent due to a successful production test of 132,000 wmt of 67.98 per cent high-grade iron ore (with a combined silica plus alumina content of 2.57 per cent), which impacted ore recovery. This commercial production test, assuming confirmed qualification as direct reduction (DR) concentrate feed, could position the company to qualify for sales to producers of DR pellets, which can be converted by direct reduced iron (DRI) producers and utilized in electric arc furnaces, representing a growing subset of global steelmaking capacity. This commercial production test positions the company to potentially procure new customers and confirm that Bloom Lake is one of the few producing deposits globally that could transition its product offering in response to potential shifts in steelmaking methods in the coming years.
Based on the foregoing, Bloom Lake produced 1,891,800 wmt of 66.5-per-cent-high-grade-iron-ore concentrate during the three-month period ended March 31, 2020, an increase of 5 per cent compared with 1,802,000 wmt in the same period of the prior year.
The company mined 34,559,800 tonnes of material during the year ended March 31, 2020, compared with 33,391,600 tonnes in the prior year. The increase is attributable to the improvement in mining equipment reliability and increased productivity, resulting from the mining equipment rebuild program, offset by the lower in-pit crusher availability during the year.
During the year, unscheduled downtimes affecting the in-pit crusher and the performance of the inner discharge grates negatively impacted production. However, the ingenuity deployed by the operational team to prevent these unscheduled downtimes from reoccurring and the decision to invest in operational improvements yielded positive results, as the plant was able to produce above its nameplate capacity. The plant processed 19,749,800 tonnes of ore during the year ended March 31, 2020, an increase of 7 per cent over the prior year, while the recovery rate improved from 79.5 per cent to 82.6 per cent, in line with the company's target. Based on the foregoing, Bloom Lake produced a total of 7,903,700 wmt of 66.4-per-cent-high-grade-iron-ore concentrate during the year ended March 31, 2020, setting a new historical annual record since Bloom Lake was first commissioned in 2010.
4. Financial performance
During the three-month period ended March 31, 2020, a total of 1,888,200 tonnes of high-grade iron ore concentrate were sold at a CFR China gross realized price of $96.90 (U.S.) per dmt before provisional sales adjustments and shipping costs. The gross sales price of $96.90 (U.S.) per dmt represents a premium of 9 per cent over the benchmark Platts IO Fines 62-per-cent-iron CFR China (P62) price, compared with a premium of 18 per cent for the comparative period. The gross sales price reflects the timing of the sales, as well as the forward price, at the expected settlement date for 654,000 tonnes shipped during the period. The premium variation reflects the shortage of high-grade material in the market in early 2019 as some major producers experienced operational challenges. Despite the variation in the premium, the gross realized price of $96.90 (U.S.) per dmt remains stable compared with $97.20 (U.S.) per dmt in the previous year as the world's largest steelmaking hub, China, retains a strong appetite for seaborne iron ore concentrate as its steel industry's profitability remained resilient during the three-month period ended March 31, 2020.
The variation in sea freight costs during the quarter compared with the same period last year reflects the impact of a major producer's challenges in early 2019 to global freight rates, which lowered the company's sea freight costs in the last quarter of the fiscal year ended March 31, 2019. The freight costs variation with the C3 index is mainly due to the timing of vessel bookings, as well as due to the premium paid during the winter season for vessels travelling to and from the port at Pointe-Noire, Que.
During the three months ended March 31, 2020, a final price was established for 533,000 tonnes, which were in transit at the end of the third quarter ended Dec. 31, 2019. In addition, 278,000 tonnes shipped prior to Dec. 31, 2019, still remained under pricing evaluation as of March 31, 2020. Accordingly, revenues associated with these 811,000 tonnes, which were accounted for in the third quarter, were reduced by $2,581,000 (U.S.). Based on the foregoing, the average net realized FOB price for the fourth quarter ended March 31, 2020, was negatively impacted by $1.40 (U.S.) per dmt.
Deducting sea freight costs of $25.80 (U.S.) per dmt, together with the provisional sales adjustment of $1.40 (U.S.), the company obtained an average net realized price of $69.70 (U.S.) per tonne ($93.10 (Canadian) per tonne) for its high-grade iron ore delivered to the end customer, benefiting from an average foreign exchange rate of $1.3449 (Canadian) to $1 (U.S.). As a result, revenues totalled $175,702,000 for the period compared with $182,164,000 in the same prior-year period.
For the year ended March 31, 2020, the company sold over 7,577,400 tonnes of iron ore concentrate shipped in 43 vessels to customers located in China, Europe, Japan, the Middle East, South Korea and India. While the Platts IO Fines 65-per-cent Fe CFR China (P65) indicative price of high-grade iron ore fluctuated between $88.40 (U.S.) per dmt and a high of $135.90 (U.S.) per dmt during the year ended March 31, 2020, the company sold its product at an average gross realized price of $107.20 (U.S.) per dmt, before shipping and adjustments related to provisional sales. The gross sales price of $107.20 (U.S.) per dmt represents a premium of 13 per cent over the benchmark P62 price. Deducting sea freight costs of $25.70 (U.S.) per dmt and the provisional sales adjustment of $3.50 (U.S.) per dmt, the company obtained an average realized price of $78 (U.S.) per tonne ($103.60 (Canadian) per tonne) for its high-grade iron ore delivered to the customer. As a result, revenues totalled $785,086,000 for the year ended March 31, 2020, compared with $655,129,000 for the prior year. Although the sales increase is mainly attributable to the selling price, the volume impact totalling $41-million illustrates the benefit the company yielded by investing in production reliability and having the ability to increase its throughput capacity when the price of high-grade iron ore is elevated.
B. Cost of sales
Cost of sales represents mining, processing and mine-site-related general and administrative expenses.
During the three-month period ended March 31, 2020, the total cash cost (1) or cash cost (1) per tonne totalled $53.90 per dmt, compared with $48.40 per dmt in the same period of the previous year. The cash cost (1) for the quarter was impacted by various factors, including scheduled downtimes and a lower recovery rate associated with the production test of 132,000 wmt of 67.98 per cent high-grade iron ore with a silica plus alumina content of 2.57 per cent. Higher costs from Societe ferroviaire et portuaire de Pointe-Noire (SFPPN) port operations continue to negatively impact the cash cost during the period. Since the beginning of the restart of SFPPN's operations in 2018, SFPPN costs have increased beyond the indexation rate and faster than the operational efficiency improvements. Further to the appointment of a new SFPPN chief executive officer, who has many years of experience managing railway and port facilities, the company's and SFPPN's board is confident that SFPPN's operational efficiency will improve. The company would benefit from corrective actions implemented by SFPPN that reduce port operations costs.
For the year ended March 31, 2020, the company produced high-grade iron ore at a total cash cost (1) of $52.70 per dmt compared with $49.40 per dmt for the previous year. The cash cost (1) for the year includes the negative impact of the unscheduled downtimes and costs incurred to prevent them from reoccurring. The production cost also encompasses expenditures to deploy initiatives aimed at improving plant reliability and throughput stability. These improvements enabled the company to surpass its nameplate capacity and maximize operating cash flows during periods of elevated prices as they led to a positive volume sales impact of $41-million, year over year.
C. Gross profit
The gross profit for the three-month period ended March 31, 2020, totalled $64,918,000 compared with $94,284,000 for the same period of the prior year. The variation is attributable to higher production costs and investments made to increase throughput and surpass nameplate capacity.
The gross profit for the year ended March 31, 2020, totalled $363,717,000, compared with $288,632,000 for the prior year. The increase is largely driven by the 13-per-cent increase in the realized price, together with the decision made by the company earlier in the year to invest in maintenance and plant reliability to maximize cash flows while the iron ore price is elevated. Accordingly, for the year ended March 31, 2020, the company is benefiting from a 39-per-cent cash profit margin (1) per tonne, which has remained unchanged from the prior-year cash profit margin (1) of 39 per cent.
D. Other expenses
Other expenses comprise share-based payments and corporate expenses (G&A (general and administrative) expenses), as well as sustainability and other community expenses. CSR expenses are mainly composed of community taxes, such as property and school taxes, and expenditures related to the impact and benefit agreement with the first nations (IBA).
The variation of the other expenses and income for the three-month period ended March 31, 2020, compared with the same period the previous year, is essentially due to the completion of the transition from a development company cost structure to an operating organization. In addition, expenses were incurred during the period to deploy the company's contingency plan with respect to the COVID-19 pandemic and to progress the company's redomiciliation process. Although the board of directors has decided to terminate the scheme of arrangement in connection with the redomiciliation due to market volatility and the global uncertainty associated with the COVID-19 pandemic, the board may consider redomiciliation from Australia to Canada at a later point. Should this decision be enacted, efforts previously deployed on the terminated transaction could represent future savings. Higher CSR expenses reflect the company's increased focus on sustainability. This amount also includes the full impact of the agreement with the first nations as these expenses were partially incurred in the prior year.
The variation of the other expenses and income for the year ended March 31, 2020, compared with the previous year, is essentially due to restart costs incurred in the first quarter of the prior year, as well as Champion's transition from a development-stage company to an iron ore producer. The increase in share-based payments reflects the higher stock price, period over period, combined with the issuance of annual equity awards, in relation to the performance achieved during the fiscal year ended March 31, 2019.
E. Net finance costs
Net finance costs totalled $5,148,000 for the three-month period ended March 31, 2020, compared with $19,386,000 for the same period in the prior year. The main components of the net finance costs include the interests on long-term debt, as well as the foreign exchange on accounts receivable and long-term debt. For the quarter, the decrease in net finance costs is mainly attributable to the positive impact of the refinancing, which closed on Aug. 16, 2019. The new credit facility bears an annualized interest rate at 4.8 per cent, compared with a rate of 10 per cent for the previous credit facilities. The previous credit facilities also included embedded derivative instruments, which had to be revalued on a quarterly basis. Following the refinancing, these derivatives were extinguished. The company benefits from a natural hedge between its revenues generated in U.S. dollars and its U.S.-dollar-denominated term facilities. Due to the fact that the Canadian dollar was significantly depreciated as of March 31, 2020, compared with the U.S. dollar, the company sustained an unrealized foreign exchange loss on its long-term debt, which could not be compensated by the gain on its accounts receivable and the U.S.-dollar cash on hand. Consequently, the company recorded a non-cash exchange loss of $3-million during the current quarter.
The increase in net finance costs for the year ended March 31, 2020, when compared with the prior year, is mainly due to the impact of the repayment of the previous credit facilities on Aug. 16, 2019, representing a loss of $57,274,000. Most of the $57,274,000 loss is non-cash items including the write-off of capitalized past transactions fees, the write-off of derivative financial instruments and the write-off of the unamortized book value of the previous credit facilities. Also, higher net finance costs are partially offset by the reduction in interest of $12,023,000, following the refinancing transaction, which reflects the lower cost of debt. Finally, it is also partially offset by a favourable non-cash change in fair value of derivative financial instruments of $8.7-million, which were all extinguished as a result of the refinancing.
F. Income taxes
The company's subsidiaries are subject to tax in Australia and Canada. As a result of accumulated losses before tax, there are no current or deferred income taxes related to the Australian activities. There is no deferred tax asset recognized in respect of the unused losses in Australia as the company believes it is not probable that there will be a taxable profit available for which the losses can be used against. QIO, Champion's operating subsidiary, is subject to Quebec mining tax at a progressive tax rate ranging from 16 per cent to 28 per cent, for which each rate is applied to a bracket of QIO's mining profit, depending on the mining profit margin for the year. The mining profit margin represents the mining profit, as defined by the Quebec Mining Tax Act, divided by revenues. The progressive tax rates based on the mining profit margin are as follows.
Mining profit between 0 per cent to 35 per cent: 16 per cent
Incremental mining profit over 35 per cent, up to 50 per cent: 22 per cent
Incremental mining profit over 50 per cent: 28 per cent
In addition, QIO is subject to income taxes in Canada, where the combined provincial and federal statutory rate was 26.58 per cent for the year ended March 31, 2020 (2019: 26.68 per cent).
During the fourth quarter of 2020, current income and mining taxes expenses totalled $19,027,000, compared with $8,286,000 for the same period of the comparative year. The deferred income tax expenses totalled $9.53-million and $27,224,000 for the respective periods. The higher current income and mining taxes expenses for the fourth quarter of 2020, compared with the same period last year, are mainly due to higher taxable profit as the company no longer has available tax losses.
The increase in the total income and mining taxes expenses for the fourth quarter of 2020, compared with the previous quarter ended Dec. 31, 2019, is attributable to a foreign exchange loss on long-term debt amounting to $21.6-million recorded in the fourth quarter of 2020, half of which is not tax deductible and the other half gives rise to an unrecognized tax benefit.
During the year ended March 31, 2020, current income tax and mining taxes expenses amounted to $89,657,000, compared with $34,017,000 for the prior year. The deferred income and mining taxes expenses amounted to $30,481,000 and $31,995,000 for the fiscal years 2020 and 2019, respectively. The effective tax rate (ETR) for 2020 was 50 per cent compared with 31 per cent in 2019. The 2020 ETR is higher than the 2019 ETR mainly due to the recognition, in 2019, of unrecognized tax benefits in QIO further to reaching commercial production. There was no recognition of previously unrecognized tax benefits in 2020. Part of the increase in the 2020 ETR, compared with 2019, is also attributable to higher mining tax arising from higher mining tax profits.
G. Net income and EBITDA (1)
For the three-month period ended March 31, 2020, the company generated net income of $18,351,000, entirely attributable to the company's shareholders. This net income correlates directly with the lower quarterly gross profit. In the comparative prior-year period, the company reported net income of $28,155,000.
During the fourth quarter ended March 31, 2020, the company generated an EBITDA (1) of $61,119,000, representing an EBITDA margin (1) of 35 per cent, compared with an EBITDA (1) of $86.5-million, representing an EBITDA margin (1) of 47 per cent in the same period of the prior year. The variation period over period is essentially due to the lower average realized selling price and the higher total cash cost per tonne.
For the year ended March 31, 2020, the company generated an EBITDA (1) of $348.54-million, representing an EBITDA margin (1) of 44 per cent, compared with an EBITDA (1) of $278,172,000, representing an EBITDA margin (1) of 42 per cent for the prior year. This increase in EBITDA (1) is mainly attributable to the increase in the average realized selling price.
For the year ended March 31, 2020, the company generated net income of $121.05-million (earnings per share of 20 cents), compared with net income of $147,599,000 (earnings per share of 20 cents) for the year ended March 31, 2019. The repayment of the previous credit facilities with Sprott and CDPI, concluded in the second quarter of the fiscal year ended March 31, 2020, resulted in non-cash financing costs associated with the write-off of capitalized past transactions fees, the write-off of derivative financial instruments and the write-off of the unamortized book value of the previous credit facilities. Mainly excluding this non-recurring non-cash transactions, the company would have generated an adjusted net income (1) of $172,691,000 and an adjusted EPS (earnings per share) (1) of 32 cents for the year ended March 31, 2020.
H. All-in sustaining cost (1) and cash operating margin (1)
The company believes that the all-in sustaining cost (AISC) (1) and cash operating margin (1) are measures reflecting the costs associated with producing iron ore and assessing the company's ability to operate without reliance on additional borrowing or usage of existing cash. The company defines AISC (1) as the total costs associated with producing iron ore concentrate. The company's AISC (1) represents the sum of cost of sales, corporate expenditures and sustaining capital expenditures, including stripping activities, all divided by the iron ore concentrate per dmt sold to arrive at a per-dry-metric-tonne figure.
During the three-month period ended March 31, 2020, the company realized an AISC (1) of $59.80 per dmt, compared with $55.40 per dmt in the same period last year. Deducting the AISC (1) of $59.80 per dmt from the average realized selling price (1) of $93.10 per dmt, the company generated a cash operating margin (1) of $33.30 per dmt for each tonne of high-grade iron ore concentrate sold during the fourth quarter ended March 31, 2020, compared with $49 per dmt in the same period of the previous year. The variation relates to higher cash cost per tonne sold resulting from scheduled downtime, which affected operations during the quarter.
For the year ended March 31, 2020, the company realized an AISC (1) of $62.70 per dmt compared with $55.80 per dmt for the previous year. In addition to the cash cost (1) increase, the company made the decision at the beginning of the fiscal year to accelerate tailings containment dam construction work to ensure safe tailings deposition. The conservative decision made by the company to bring forward the tailings investment did not modify the total amount that would have been invested on the tailings facility over the next few years, only its timing. Given the magnitude of the project, the construction period was extended until late fall to complete the required works. The accelerated tailings investment project is now complete, and it is anticipated that this will reduce the sustaining capital dedicated to tailings management over the next few years. Additionally, the company continued investing in its mining equipment rebuilding program, required to increase mining equipment fleet availability and maintain a higher strip ratio, in connection with the phase 2 expansion project. Despite a higher AISC (1), the cash operating margin (1) totalled $40.90 per dmt compared with $36.10 per dmt in the same prior-year period, reflecting the ability of the company's cost structure to take advantage of market fluctuations.
I. Non-controlling interest
Following Champion's acquisition of Ressources Quebec's 36.8-per-cent equity interest in QIO, the company's non-controlling interest (NCI) no longer exists. The net income attributable to the NCI was based on the financial results of QIO. The NCI attributed to the minority interest during the period was calculated up to the closing date of the acquisition on Aug. 16, 2019.
5. Conference call and webcast information
A webcast and conference call to discuss these results will be held on May 20, 2020, at 8:30 a.m. EDT or 10:30 p.m. AEST. Listeners may access a live webcast of the conference call from the investors section of the company's website or by dialling toll-free 1-888-390-0546 within North America or 1-888-076-068 from Australia.
An on-line archive of the webcast will be available by accessing the company's website. A telephone replay will be available for one week after the call by dialling 1-888-390-0541 within North America or 1-416-764-8677 overseas, and entering passcode 989322 followed by the number sign.
(1) EBITDA, EBITDA margin, average realized selling price, total cash cost or CI cash cost, AISC, cash operating margin, cash profit margin, adjusted net income, adjusted net income attributable to Champion shareholders, adjusted earnings per share, and operating cash flow per share are non-international financial reporting standard performance measures with no standard definition under IFRS. See the "Non-IFRS Financial Performance Measures" section of Champion Iron's management's discussion and analysis included in Note 19. Adjusted net income, adjusted net income attributable to Champion shareholders and adjusted earnings per share exclude the financial costs related to the refinancing, which closed on Aug. 16, 2019.
(2) Cash on hand includes cash and cash equivalents and short-term investments.
(3) The company considers that precommercial production operations at the Bloom Lake mine commenced on April 1, 2018, with the first shipment of high-grade iron ore concentrate, and commercial production was achieved on June 30, 2018.
About Champion Iron Ltd.
The company, through its subsidiary Quebec Iron Ore, owns and operates the Bloom Lake mining complex, located on the south end of the Labrador Trough, approximately 13 kilometres north of Fermont, Que., adjacent to established iron ore producers. Bloom Lake is an open-pit truck-and-shovel operation, with a concentrator, and it ships iron concentrate from the site by rail, initially on the Bloom Lake railway, to a shiploading port in Sept-Iles, Que.
The company acquired the Bloom Lake assets from bankruptcy protection in April, 2016, and following the release of a feasibility study on Feb. 16, 2017, the company recommissioned Bloom Lake in February, 2018, and completed its first shipment of iron ore on April 1, 2018. In June, 2019, the company released the findings of a feasibility study for the phase 2 expansion, which envisions doubling Bloom Lake's overall capacity from 7.4 million tonnes per annum to 15 million tonnes per annum.
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