Hello, and welcome to the annual and special meeting of the shareholders of Labrador Iron Ore Royalty Corporation. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer, and use of same. If you disclose personal information of another person in today's meeting, you will be deemed to represent and warrant to Computershare and the corporation that you first obtain all required consents for the disclosure, recording, transfer, and use of such personal information from all appropriate persons before your disclosure. During the meeting, we'll have a question and answer session. You can submit questions or comments at any time by clicking on the Q&A tab. It is now my pleasure to turn today's meeting over to John Tuer, President and Chief Executive Officer of the Corporation. Mr.
Tuer, the floor is yours.
Good morning, ladies and gentlemen, and welcome to the annual and special 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. We are very pleased to hold the shareholder meeting in a hybrid format, which provides shareholders the option to participate in the meeting either in person or virtually. Our main objective, in hosting a hybrid meeting, is to ensure that all shareholders have the same opportunities to participate and vote at this meeting, regardless of their geographic location. I now call the meeting to order. As this is an annual and special meeting, there are certain formal matters which must be dealt with, specifically the shareholders' 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 the meeting, I will make a few remarks regarding the events of 2023 and the outlook for 2024. During and after my remarks, we will be pleased to receive any questions from the floor. As this meeting is a hybrid meeting, held in person and virtually, we think it is necessary to set out a couple of rules for the orderly conduct of the meeting. First, for those attending online, questions can be submitted during the formal part of the meeting using the instant messaging service of the virtual interface. There will also be opportunities for shareholders or proxy holders to present with us in person to address the meeting.
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, voting today will be conducted both in person and online. Voting on all resolutions will be by way of ballot, physical for those attending in person, and electronic for those attending virtually. 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 stock and have not appointed yourself as a proxy holder and are therefore attending the 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 the chair of the meeting, and Robert 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 of 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 Meeting, Management Information Circular, and form of proxy were mailed on April 23, 2024, to all shareholders of record at the closing of business on April 4, 2024. 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 31, 2023, together with the report of the auditors thereon.
I now table a copy of the annual report of the corporation for 2023, which includes the corporation's financial statements and the auditor's report. Copies of these documents have been mailed to shareholders who requested, 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 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. Stenzel. 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 nominated 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. Stenzel. 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 for the corporation and the authorization of the directors to fix their remuneration. May I have a motion, please?
Mr. Chair, I move that KPMG 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. Stenzel. Unless there are any questions, I will move to the next item of business. The next item of business is the consideration of a special resolution renewing the corporation's shareholder rights plan. The rights plan must be reconfirmed every three years, and shareholders are being asked today to approve, ratify, and reconfirm the rights plan. The board believes that the rights plan continues to be necessary to protect the corporation and its shareholders from certain actions that could result in unequal treatment of shareholders, including the acquisition of effective control of the corporation in reliance on takeover bid exemptions that would not result in a control premium being payable to all shareholders. The plan is not intended to prevent any takeover bids in which shareholders are treated equally.
You should note that the Rights Plan is not intended as a means to prevent a takeover of the corporation, to secure the continuance of management of the corporation or the board in their respective offices, or to deter fair offers for the common shares. The Management Information Circular that accompanied the notice of meeting sent to shareholders includes more detailed information about the Rights Plan. The full text of the proposed resolution, which I will refer to as the Rights Plan resolution, is set out in Appendix B to the Management Information Circular. In order to be approved, the Rights Plan resolution must be passed by a majority of the votes cast by independent shareholders present or represented by proxy at this meeting. May I have a motion, please?
Mr. Chairman, I move that the special resolution of holders of common shares in the form set out in Appendix B, the Management Information Circular, be approved.
Thank you, Mr. Pearce. Is there a seconder?
Mr. Chair, I second the motion.
Thank you, Ms. Stenzel. Unless there are any questions, I will move to the next item of business. The next item of business is to consider an advisory resolution approving the corporation's approach to executive compensation, as disclosed in the Management Information Circular. Under the heading, Say on Pay Advisory Resolution. As this is an advisory vote, the board will not be bound by the results of the vote. However, the board will take the results of the vote into account, together with feedback received from shareholders, when considering its approach to executive compensation in the future. May I have a motion, please?
Mr. Chair, I move that the Say on Pay advisory resolution set out in the Management Information Circular be approved.
Thank you, Mr. Pearce. Is there a seconder?
Mr. Chair, I second the motion.
Thank you, Ms. Stenzel. Unless there are any questions, I will ask that we open the polls. As I mentioned earlier, voting today will be conducted both in person and online. Voting on all resolutions will be by way of ballot, physical for those attending in person, and electronic for those attending virtually. Registered shareholders or their proxies attending in person who wish to cast their votes may complete a ballot and submit it to the scrutineer. A copy of the ballot should have been provided upon registering with Computershare when entering the meeting. For those attending online, please register your vote by accessing the voting page.
I should advise the meeting that by virtue of votes already received by proxy, it is clear that each nominee director will receive the necessary votes to be elected today, that the resolution reappointing KPMG LLP as auditors, the special resolution in respect of the rights plan, and the Say on Pay advisory resolutions will pass. Before we open the polls, I would ask Sandra Rosch to advise whether there are any questions submitted online and also invite any questions from the floor from those attending in person. I will now take a moment to ask that the balloting be opened to registered holders and appointed proxy holders. The polls are now open.
At this point, all registered holders and proxy holders who are voting online and 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 votes by completing the ballot in person or online, by accessing the voting page and selecting the for, against, or withhold button ... as applicable, next to the name of each proposed director, next to the resolution with respect to the appointment of KPMG LLP as the corporation's auditors, next to the special resolution in respect to the rights plan, and next to the Say on Pay advisory resolution. We will provide registered shareholders and duly appointed proxy holders approximately one minute to complete the 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 before 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 KPMG 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.
The special resolution in respect to the rights plan has been approved by the requisite majority, and I therefore declare the rights plan resolution to be carried. The Say on Pay advisory resolution has been approved. 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 as set out in the notice of meeting have now been dealt with. As there is 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 2023 and the outlook for 2024.
I ask that all online 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. Okay, so let me just walk you through the short presentation I have here, and it's titled Annual General Meeting, May 16, 2024. So on page two, we just have an outline of the caution on forward-looking information. I don't plan to read it now, but advise shareholders to review it on their own time. The corporation's financial highlights. On an annual basis, 2023 revenue was down 14%. Net income was 30% lower. Most importantly for shareholders, adjusted cash flow from operations.
This is the amount of money available for distribution to shareholders was down to CAD 2.52 a share from CAD 3.039 a share the prior year. In the following slides, I will discuss the reasons for the decrease. In the last quarter, Q1 of 2024, we did see some improvements. Q1 revenue was up 20%, and Q1 net income was up 36%, and adjusted cash flow from operations per share was up 20% from the prior quarter, from the same quarter in the prior year. Our cash flow at LIORC is generated from our royalty that we had top line royalty on Iron Ore Company of Canada, and from our 15% equity interest in Iron Ore Company of Canada.
So production numbers for IOC are very important for our cash flow generation. You can see in 2023, IOC production was somewhat disappointing at 16.5 million tons, which was down 6% from the prior year. The decrease in production was due to extended plant downtime in the second and third quarters of 2023, as a result of equipment failures at IOC and the forest fires that were experienced in the region. More recently, we have seen some improvement in the first quarter of 2024. Available production at IOC was up 4.4 million tons, which was up 3% from the first quarter of 2023. As IOC benefited from a lower strip ratio, which resulted in more crushed ore being delivered to the concentrator.
As far as sales, IOC sales go, in 2023, IOC sales were similar to the sales in 2022. In both years, sales were negatively affected by a lack of inventory at the port at Sept-Îles. In 2022, they produced more product, but had trouble transporting all that product to the port, and that resulted in less sales than production in 2022. In 2023, they sold most of the product that they produced, but still had backlogged inventory at Labrador City. Again, Q1 2024 is looking better, with sales up 20% quarter-over-quarter. IOC's profitability, and hence LIORC's profitability, is highly correlated to the price of iron ore, which is, in turn, highly dependent on the global demand for crude steel.
Growth and demand for steel has largely been driven over time by the growth in China. From 2011 to 2019, global steel production grew at a rate of 2.5% globally, mainly due to the 4.5% growth in steel production in China. However, since 2019, global steel production has been relatively flat, both in China and the rest of the world. While there was some variance during 2020 and 2021 due to the impact of the pandemic, levels have since normalized, as concerns regarding China's troubled property sector have muted growth of steel demand in China. As a result, we've been in a fairly balanced supply-demand market.
This trend was seen continuing in the Q1 of 2024, as global steel production was up 1% compared to the same quarter in 2023. Well, while there tends to be a lot of short-term volatility in iron ore prices, we have seen this balanced market environment play out recently. In 2023, the 65 index, which is what we use to sell our product, or IOC uses to sell its product, has averaged $132 a ton, down 5% from the prior year. However, the big change that we've seen has been the impact of low steel producer margins, which has affected the pellet premium. When steel producer margins get squeezed, we see producers switch from higher quality, cheaper product to lower quality product.
Sorry, higher quality product to lower quality, cheaper product. In 2023, the pellet premium averaged $45 per ton, down from $72 a ton in the prior year, when steel producer margins were more robust. This has had a significant impact on IOC since about half of its product is pellets. And it's shown up in the average realized price for their saleable production, which is both pellets and CFS, has averaged $130 a ton in 2023. That's a 15% decrease from 2022. And again, that decreased predominantly as a result of lower pellet premiums, but also slightly lower concentrate prices and a lower percentage of pellets sold. In Q1, the iron ore prices improved somewhat, but pellet premiums slipped further, more than offsetting any gains for IOC.
And you can see in Q1 that the average realized price was $133 per ton. As I indicated earlier, LIORC generates cash flow from two sources: its top-line 7% royalty in IOC revenues, and the dividends that it gets paid from IOC in respect of its 15% equity interest. On the graph on page 8, you can see I've broken out where the adjusted cash flow comes from based on dividends from IOC versus our royalty. So the blue bars on that graph show you what our royalty generated each year, and you can see that it's far more consistent over time than the dividends that we receive from IOC. Now, that's not unusual because IOC, the IOC operations tend to be a very fixed cost business, and so when iron ore prices are higher, they generate a lot more cash flow.
Their profitability is a lot more volatile to the iron ore price, and hence, our dividends are a lot more volatile to the iron ore price than our royalty, which tends to correlate more directly to the iron ore price changes. The lower iron ore prices and pellet premiums in 2023 resulted in adjusted cash flow, as I said earlier, of CAD 2.52 per share. That was made up of CAD 1.73 from the royalty and CAD 0.79 from IOC dividends. Both of these were down from what they were a year before. In Q1, adjusted cash flow was CAD 0.49 per share, up from the 41 cents in the first quarter of 2022. In both first quarters, both 2023 and 2022, we received no dividend from IOC.
Finally, as we look out 2024, you can see that IOC production guidance, this is given by IOC and Rio Tinto, who are our operators at IOC, is for production of 16.7 million-19.6 million tons of pellets and CFS. This compares to our production volume of 16.5 last year. In the first quarter of this year, again, we produced 4.4 million tons, which was 3% higher than last year's first quarter. So we're slightly ahead of where we were last year. But the guidance, again, is somewhat similar to what we produced last year, with more openness on the upside.
IOC's capital expenditures for 2024 are forecast to be $431 million, up from $362 million in 2023, and $371 million in 2022. And while in the short term, this increase in CapEx hurts our ability to receive dividends from IOC, in the long run, it's very helpful for our business in that we don't end up paying for that CapEx with respect to our royalties. So improving the quality of the assets, improving the production levels, is a net benefit in the long term for LIORC. LIORC's returns remain highly correlated to iron ore prices. There continues to remain uncertainty regarding the outlook for seaborne iron ore. China's property market continues to be a concern.
However, the World Steel Association forecasts that global steel demand will grow by 1.7% in 2024 and 1.2% in 2025, mainly as a result of 3.5% growth outside of China, and again, predominantly, the emergence of India with an 8% growth in its steel demand. In addition, there's a longer-term trend for increased demand for the type of product that IOC produces. High-quality iron ore product will benefit from the transition to Green Steel technologies, as steel producers convert to higher quality iron ore to reduce their GHG emissions. Finally, regarding where iron ore prices are now. So since the first quarter, we saw a further weakening of iron ore prices towards the end of the first quarter and into April.
However, so far in May, the average price of the 65 index has rebounded to $133 per ton, and the pellet premium is now $43 per ton. I think yesterday, the 65 index was $130. So currently, the outlook is very consistent with the average pricing that we saw in 2023. So that's where we are today. At this point, I'm happy to take any questions from anybody in the room here at the meeting or online. Sandra, is there any questions from online? There's one question here in the room. No. Historically, we did. We shipped it that way, but now all of the iron ore goes in the other direction, on the out the St. Lawrence.
St. Lawrence and predominantly to Europe, China, Middle East, and the US, where all of our iron ore goes to. Another question? Yes. So, yeah, if I just go back in the presentation, if I can. Sorry. The machine's a little slow here. I have trouble reading off the screen there. But so in the first quarter of this year—so last year, if you take on average all of IOC's product, that's a combined pellet price and concentrate price. The average, which is freight- on- board, so this is the price we received on in Sept-Îles, once we loaded on the ships, was $130 per ton on average.
In the first quarter of 2024, the average price that we received was $133, so up slightly from where we were last year. Are there any other questions? As it appears that there are no further questions, I want to thank everyone for their attendance at today's meeting. This concludes the 2023 annual and special shareholder meeting of Labrador Iron Ore Royalty Corporation. Thank you.
This concludes the meeting. You may now disconnect.