Hello, and welcome to the annual meeting of shareholders of Labrador Iron Ore Royalty Corporation. Please note that today's meeting is being recorded. During the meeting, we'll have a question and answer session. You can submit questions or comments at any time by clicking on the message icon. It is now my pleasure to turn today's meeting over to John F. Tuer, President and Chief Executive of Labrador Iron Ore Royalty Corp. Mr. Tuer, the floor is yours.
Thank you very much. Good morning, ladies and gentlemen, and welcome to the annual meeting of the shareholders of Labrador Iron Ore Royalty Corporation. My name is John Tuer, and I am the President and Chief Executive Officer of the corporation. As we did last year, we are holding this year's meeting virtually to mitigate risks associated with the COVID-19 pandemic. We sincerely hope to see you all in person again at next year's annual meeting. I now call the meeting to order. As this is an annual meeting, there are certain formal matters which must be dealt with, specifically the shareholder votes on the resolutions presented in the management information circular. For those purposes, we have asked certain persons to move and second motions relating to those matters to be passed at today's meeting.
Following completion of the formal part of this meeting, I will make a few remarks regarding the events of 2021 and the outlook for 2022. During and after my remarks, we will be pleased to receive any questions from the floor. As this meeting is held virtually via live webcast, we think it is necessary to set out a couple of rules for the orderly conduct of the meeting. First, questions can be submitted during the formal part of the meeting using the instant message service of the virtual interface. I will address questions during the question period at the end of the meeting. However, questions submitted by registered shareholders or duly appointed proxy holders regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting.
Second, for the purposes of the meeting today, voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each item of business after the presentation of all items. If you are a beneficial owner of common shares and have not appointed yourself as a proxy holder and are therefore attending this meeting as a guest, you will not be entitled to vote. We will now proceed with the formal portion of today's meeting. I will act as chair of the meeting, and Robert O. Hansen, our corporate secretary, will act as secretary of the meeting. For the purposes of this meeting, I appoint Computershare Investor Services Inc. through its representatives as scrutineer to compute the votes of any polls taken at this meeting and to report thereon to me as chair.
I have been advised by the scrutineer that there are at least two holders of common shares holding or representing at least 25% of the number of common shares outstanding. This constitutes a quorum for a meeting with shareholders under the bylaws of the corporation. I direct that the formal report of the scrutineer be annexed to the minutes of this meeting as a schedule. I now table a declaration made by a transfer officer of Computershare to the effect that the notice of the meeting, management information circular, and form of proxy were mailed on April 14th, 2022 to all shareholders of record at the close of business on March 31st, 2022. I direct that a copy of such declaration be annexed to the minutes of this meeting as a schedule.
With the consent of the meeting, the reading of the notice of meeting will be dispensed with. I therefore declare the meeting to be regularly called and properly constituted for the transaction of business. The first item of business is to receive the financial statements of the corporation for the year ended December 31st, 2021, together with the report of the auditors thereon. I now table a copy of the annual report of the corporation for 2021, which includes the corporation's financial statements and the auditor's report. Copies of these documents have been mailed to shareholders who requested them, and it is not proposed to read them to the meeting. The next item of business is to elect the directors of the corporation. Seven directors are to be elected at the meeting today.
I now declare the meeting open for nominations for the election of directors to serve until the next annual meeting or until their successors are elected or appointed.
Mr. Chair, I nominate Mark J. Fuller, Douglas F. McCutcheon, William H. McNeil, Dorothea E. Mell, Sandra L. Rosch, John F. Tuer, and Patricia M. Volker.
Thank you, Ms. Sandra. I would like to advise the meeting that the corporation did not receive any further nominations in accordance with its bylaws. I am advised that each of the nominees is either present or has consented in writing to act as a director of the corporation. I declare the nominations closed, and it is now in order for someone to move and someone to second resolutions electing those nominees as directors of the corporation.
Mr. Chair, I move that each of the persons so nominated be elected as directors of the corporation to serve until the next annual meeting or until their successors are appointed.
Thank you, Ms. Sandra. Is there a seconder?
Mr. Chair, I second the motion.
Thank you, Mr. Pearce. Unless there are any questions, I will move to the next item of business. The next item of business is the appointment of auditors of the corporation and the authorization of the directors to fix their remuneration. May I have a motion, please?
Mr. Chair, I move that PricewaterhouseCoopers LLP be reappointed auditors of the corporation to hold office until the next annual meeting, and that the directors be authorized to fix their remuneration.
Thank you, Mr. Pearce. Is there a seconder?
Mr. Chair, I second the motion.
Thank you, Ms. Sandra. Unless there are any questions, I will ask that we open the polls. As I mentioned earlier, voting today will be conducted by electronic ballot. I will now take a moment to ask that the balloting be opened to registered holders and appointed proxy holders. I should advise the meeting that by virtue of votes already received by proxy, it is clear that each of the nominee director will receive the necessary votes to be elected today, and that the resolutions of reappointing PricewaterhouseCoopers LLP as auditors will pass. Before we open the polls, I would ask Sandra Rosch to advise whether there are any questions regarding procedural matters or directly related to motions before the meeting.
There are no questions.
Thank you, Sandra. The polls are now open, and at this point, all registered holders and proxy holders who have properly logged in with their control numbers and wish to vote will be able to see on the screen all motions being brought forth at this meeting. Please register your vote by accessing the voting page and selecting the For or Withhold buttons next to the name of each proposed director. Next to the resolution with respect to the appointment of PricewaterhouseCoopers LLP as the corporation's auditors. We will provide registered shareholders and duly appointed proxy holders approximately one minute to complete the electronic ballots. Once the electronic balloting closes, the voting page will disappear, and your votes will automatically be submitted. I should note that the line will be silent for the next minute while the voting takes place. Okay.
I would ask that the scrutineer compile the report regarding the results of voting on all business matters. I have been advised by the scrutineer that the ballots and proxies deposited for the meeting have now been voted, and that each of the resolutions has been carried. We will file a report setting out the voting results on the SEDAR website. Each of the seven nominees has been elected as a director of the corporation to serve until the next annual meeting of shareholders or until their successors are elected or appointed. The appointment of PricewaterhouseCoopers LLP as the auditors of the corporation has been approved, and the board of directors of the corporation has been authorized to fix their remuneration. I direct that the results of the poll be included with the minutes of this meeting.
The results of the voting will be announced in a press release in accordance with the policies of the TSX and filed on SEDAR. The formal items of business set out in the notice of meeting have now been dealt with. As there are no further business to come before the meeting, I declare the formal part of the meeting to be concluded. I will now make a few remarks regarding the events of 2021 and the outlook for 2022. I ask that all attendees who would like to ask a question use the instant messaging feature of the virtual interface to do so. After my presentation, I will answer as many questions as time permits. You should see a slide deck on your screen that you can view in conjunction with my remarks.
I will first turn your attention to the disclaimer regarding forward-looking information on page two of the accompanying presentation and suggest that people take the time to read the disclosure on their own time. Moving to page three, we have briefly outlined the financial highlights for both 2021 as well as the first quarter of 2022. 2021 was a record year for the company. Despite some production issues that limited iron ore sales, very strong iron ore pricing resulted in record cash flow from both our royalty and our 15% equity interest in IOC. In 2021, revenue was up 38% over the prior year, and net income and net income per share were higher by 67%.
Adjusted cash flow per share, which we will talk about further in a couple of slides, was CAD 5.98 per share, or 94% higher than in 2020. So far in 2022, LIORC is shaping up to be a solid year from a financial perspective, albeit not the record start that we saw last year. In the first quarter of 2022, revenue was down 18% from the first quarter of 2021, and net income and net income per share were down 27%. Adjusted cash flow per share was CAD 0.47 per share, or 46% lower than the same period of 2020, as IOC elected to not pay a dividend in the first quarter of this year.
I should add, however, that while revenue, net income and adjusted cash flow in the first quarter of 2022 did not match the record results of 2021, it did substantially outperform the first quarters of both 2020 and 2019. On the next page, you can see IOC's annual sales tonnages of pellets and concentrate for sale. Over the past several years, other than 2018, when IOC experienced a work stoppage, annual sales tonnage has been between 17 and just over 19 million tons per year. In 2021, IOC sold 16.8 million tons of concentrate for sale and pellets. This was down 8% from 2020 and well below nameplate capacity. Sales tonnage was lower due to concentrate production issues throughout the year.
In particular, higher cycle times, haul truck availability and availability of operators, in part due to COVID-19, all impacted production. Pellet sales tonnage of 10 million tons in 2021 was consistent with prior years. In the first quarter of 2022, sales tonnages was 3.6 million tons. This was down 13% from the first quarter of 2021. Production was consistent with the prior quarter, but sales were lower due to equipment failures and inventory availability at the port. The very favorable 2021 financial results that we saw on page three were the result of strong iron ore prices, predominantly driven by increased steel production from China in the first half of 2021. On page five, we have charted iron ore prices up to and including the first quarter of 2022.
In 2021, the Platts 65% Fe index, which is representative of IOC's higher quality concentrate for sale, was highly volatile. In the first half of the year, prices reached a high of $264 per ton as supply failed to keep up with the strong demand from China. Prices were much more muted in the second half of the year and reached a low of $102 per ton in November as China curbed steel production in order to reduce emissions and lower input prices, including iron ore. During 2021, the Platts 65% Fe index averaged $185 per ton, a 52% increase over 2020.
In the first quarter of 2022, the index averaged $170 per ton, down 11% from the first quarter of 2021, but up 32% from the fourth quarter. In addition to the increase in prices for underlying concentrate, pellet premiums in 2021 also recovered from the lows experienced in 2020 as a result of weaker demand from European and North American steel producers in 2020, who have been the traditional consumers of IOC's pellets. In 2021, the pellet premium for Atlantic Basin blast furnace pellets averaged $60 per ton. This was down from the 2020 annual average of only $29 per ton. In the first quarter of 2022, the pellet premium further increased to an average of $67 per ton. Turning now to page six.
LIORC generates the cash available to distribute to shareholders mainly from two sources. First, from its royalty equal to 7% of all revenue generated by IOC from iron ore sales. Second, from the dividend it receives from IOC in connection with its 15% equity interest in IOC. While the returns from the royalty are correlated to the price of iron ore, the royalty tends to provide positive cash flow throughout the commodity cycle, whereas the equity interest is much more levered to the underlying commodity price and provides much stronger returns when the price of iron ore is higher, as it has been recently. In 2021, the corporation generated adjusted cash flow of CAD 5.98 per share.
Higher iron ore prices resulted in record cash flow from the royalty of CAD 2.43 per share, and cash flow from IOC dividends of CAD 3.56 cents per share was also a record as IOC generated significant free cash even after spending CAD 498 million on capital expenditures, which was a significant increase over prior year's capital expenditures. In the first quarter of 2022, adjusted cash flow was CAD 0.47 per share, comprised entirely of cash generated from the royalty, as IOC elected to not pay a dividend in the first quarter. Finally, if we turn to page seven, I would like to make a few brief comments about the outlook for 2022 and beyond. First, let me comment on expectations for production and sales by IOC for 2022.
Rio Tinto, as operator of IOC, is maintaining its production guidance of 17-18.7 million tons of pellets and concentrate for sale. This is despite what I would characterize as the disappointing slow start we saw in the first quarter. While IOC's production and sales tonnages have been below expectation in recent years, IOC has ambitious capital expenditure plans to continue renewing the asset infrastructure and to improve the production results at IOC. The capital expenditures for 2022 at IOC are forecasted by IOC to be approximately CAD 606 million as compared to CAD 498 million in 2021 and CAD 288 million in 2020.
While in the immediate term, these increased levels of capital expenditures may reduce somewhat the level of dividends that IOC would otherwise declare, the improvement to IOC's operations will be a long-term benefit to both LIORC's royalty and equity interest in IOC. With respect to iron ore prices, there are a number of issues affecting the outlook for seaborne iron ore. Demand from China is being affected by the current COVID-19 crisis in that country, the economic health of its property markets, and China's recent decision to limit 2022 crude steel production to 2021 levels. In addition, the war in Ukraine has resulted in the disruption of some traditional sources of iron ore supply. On top of that, we are currently seeing a significant amount of volatility in the global capital markets as businesses and investors grapple with inflationary and recessionary concerns.
It is unclear as to the long-term effects that all of these issues will have on global steel demand and iron ore pricing. Despite these uncertainties, iron ore prices have so far remained relatively attractive from a historical perspective. The 65% index averaged $170 in the first quarter of 2022, down 8% from 2021, but up 39% and 63% from 2020 and 2019, respectively. Currently, the index has further dropped to $152 per ton on expectations of weaker demand. The pellet premium has remained strong and is currently at $82 per ton, up from $67 in the first quarter of 2022, and up from $60 and $29 in 2021 and 2020, respectively.
Finally, I would like to close by reminding shareholders that longer term, IOC and the company are very well positioned to benefit from the growing global environmental concerns about carbon emissions and the steelmaking processes. IOC's high-quality concentrate for sale and pellets are expected to be in greater demand by steel producers looking to increase efficiencies and reduce environmental impacts. In addition, IOC also produces direct reduction pellets that are used by electric arc furnaces. Electric arc furnace use is expected to increase as China transitions from blast furnaces to electric arc furnaces in an effort to reduce emissions. To provide some context, currently, China's electric arc furnace steelmaking capacity accounts for less than 15% of China's total crude steel capacity as compared to the United States, where electric arc furnace capacity accounts for about two-thirds of total crude steel capacity.
All of this to say that both in the short term as well as the longer term, the outlook for the corporation remains positive. I would now ask Sandra Rosch to advise if there are any questions.
Yes. We have a question related to dividends. In late 2020, the corporation changed its approach regarding the declaration of dividends to move away from the practice of having a regular dividend supplemented by special dividends from time to time. At the same time, over the last year, other commodity companies have made increasing use of special dividends. Considering the volatility in the share price before and after the recent dividend declaration, does the corporation consider it advisable to stay with its current approach, or will it consider a return to the practice of using special dividends?
Thank you very much for that question. We did spend a fair amount of time looking at this issue. Just so that everyone is aware, our practice used to be to have a regular common dividend of CAD 0.25 per quarter and have a special dividend on top of that, when cash flow per share in the quarter exceeded CAD 0.25.
What tended to happen is that most quarters the cash flow per share exceeded CAD 0.25, and so every single quarter we were paying a regular dividend as well as a topped up special dividend. I think certainly when we canvassed shareholders and when we did our own analysis of the issue, we realized that our shareholders and the market generally tended to focus on the total amount of dividends that we paid out each quarter as opposed to focusing on what was described as a regular dividend, what was described as a special dividend.
The problem with dividing the dividend into a regular and a special dividend was that a number of the services online and other services that track what our yield was would underreport our yield because they would only include the regular dividend when calculating our yield. On an annual basis, our dividend was always recorded as CAD 1 when calculating the yield, and therefore we were viewed as a lower yielding stock than if they actually calculated all of the dividends that we distributed every year. From that basis, we felt that we were being underrepresented as a high yielding stock and therefore made the change that we did.
We do have a fair amount of volatility in the cash flow that we generate from quarter to quarter, predominantly based on the price of the underlying commodity price as well as whether or not IOC pays a dividend in the quarter. In the first quarter of 2022, when we did see some, you know, lower payout than in prior quarters, it was predominantly because IOC decided in that quarter not to pay out a dividend. The decision to pay out a dividend by IOC is made by Rio Tinto as operator and controlling shareholder of IOC, and is beyond our control.
That said, if we had kept with the old process of having a regular dividend and a special dividend, we do not believe there would have been any less volatility in our share price than the fact that we declared a single dividend for the total amount. I guess to answer your question, we've spent a lot of time thinking about this. We think this is the better approach, and we don't have any current plans to revert back to separating out the dividend to a special and a regular dividend. Sandra, are there other questions?
I see no further questions.
Okay. Thank you. As it appears that there are no further questions, I want to thank everyone for their attendance at today's meeting. This concludes the 2021 annual shareholder meeting of Labrador Iron Ore Royalty Corporation. Thank you.
This concludes the meeting. You may now disconnect.