Algoma Steel Group Stock

Greetings. Welcome to the Algoma Steel Group, Inc. Second Quarter 2026 Earnings Call. [Operator Instructions] Please note this conference is being recorded. We will now turn the conference over to Laura Devoni, Vice President of Human Resources and Corporate Affairs. Thank you, Laura. You may begin.

Good morning, everyone, and welcome to Algoma Steel Group, Inc.'s Second Quarter 2026 Earnings Conference Call. My name is Laura Devoni, Vice President of Human Resources and Corporate Affairs, and I will be moderating today's call. Leading the prepared remarks are Rajat Marwah, our Chief Executive Officer, and Michael Moraca, our Chief Financial Officer. As a reminder, this call is being recorded and will be made available for replay later today in the Investors section of Algoma Steel's corporate website at www.algoma.com.

I would like to remind you that comments made on today's call may contain forward-looking statements within the meaning of applicable securities laws, which involve assumptions and inherent risks and uncertainties. Actual results may differ materially from statements made today. In addition, our financial statements are prepared in accordance with IFRS, which differs from U.S. GAAP. And our discussion today includes reference to certain non-IFRS financial measures. Last evening, we posted an earnings presentation to accompany today's prepared remarks. The slides for today's call can be found in the Investors section of our corporate website.

With that in mind, I would ask everyone on today's call to read the legal disclaimers on slide 2 of the accompanying earnings presentation and to also refer to the risks and assumptions outlined in Algoma Steel's second quarter 2026 Management's Discussion and Analysis. Please note that our financial statements are prepared using the U.S. dollar as our functional currency and the Canadian dollar as our presentation currency. Please also note that amounts referred to on today's call are in Canadian dollars unless otherwise noted. Following our prepared remarks, we will conduct a question-and-answer session. I will now turn the call over to our Chief Executive Officer, Rajat.

Thank you, Laura, and good morning, everyone. Thank you for joining us to discuss our second quarter 2026 results. As always, I want to begin with safety. The pace of activity on our site remains extraordinary. With our first EAF unit running around the clock, construction on our second unit nearing completion, commissioning activities commencing. Just as important to us as every milestone in this transformation is sending every employee home safely every day. I'm proud of the discipline our teams continue to demonstrate toward these shared goals. The second quarter demonstrated the resilience of our transformed business against a stubbornly challenging industry backdrop.

Before we get into the details, I want to highlight three key themes. We generated positive adjusted EBITDA of $13.8 million, in line with our previously announced guidance range. That result includes the benefit of a $45 million final insurance settlement and a $54.7 million capacity utilization adjustment, which Mike will walk you through shortly. But the underlining message is clear, as transition costs are falling, real life pricing is rising, and the transition we described to you last quarter is playing out as expected.

Second, we delivered a second consecutive quarter of record plate sales. It placed shipments of 125,000 tons in the quarter, up from 116,000 tons in the first quarter. As Canada's only producer of discrete plate, we hold a unique competitive position and demand from infrastructure, construction, and defense and market remain healthy throughout the quarter. Our [ Volta ] brand of low carbon steel produced through our EAF platform is delivering the same trusted performance our customers rely on. It is made in Canada.

Average net sales realization rose to $1,361 per ton, up 20% from the prior year quarter, driven by this mix improvement. We expect plate production to continue to increase as our ramp-up progresses through 2026. Third, we are entering the final stage of the most significant transformation in Algoma's history. The quarter was our first full quarter with all liquid steel production sourced entirely from our EAF platform. A ramp-up of this scale is inherently complex. We are bringing a new steelmaking platform at rated capacity while retiring more than a century of integrated operation.

Our throughput is increasing daily as we work through the equipment learning curves and process stabilization that accompany our transformation of this magnitude. Unit 1 is operating on a full 24-hour schedule, and quality metrics have been achieved across a broad range of plate and hot roll coil grades. Construction on our second EAF unit is nearing completion, with commissioning and testing of critical equipment underway. We expect first steel production from Unit 2 later this quarter. I would also like to note that we have scheduled operational downtime in the third quarter in connection with operational tie-in of Unit 2 alongside plant maintenance activities at the melt shop and our power generation plant.

As a reminder, once fully transitioned, our facility will have an annual raw steel production capacity of approximately 3.7 million tons. It is projected to reduce our annual carbon emission by approximately 70% from pre-EAF levels. On the broader market environment, the 25% U.S. Section 232 tariff on steel imports from Canada continues to define the operating landscape. We incurred $18.7 million in direct tariff costs in the quarter, down from the prior quarter, as we continue to reduce volumes shipped to the U.S. The Canadian market remains supply pressured.

The coil pricing continue to trade lower than the U.S. benchmark pricing due to domestic oversupply. Conditions reinforce why a pivot to a Canada-centric plate-first strategy is the right response. Tariff remains a structural headwind. The rise in steel pricing is encouraging. On the strategic front, our diversification initiatives continue to advance. Roshel Algoma Defence, the joint venture we formed in April with Roshel, a Canadian-owned defense manufacturer, is establishing a Canadian center of excellence for ballistic steel production with full cycle capabilities in fabrication, forming, welding, and machining. This initiative positions Algoma as a strategic pillar of Canada's industrial and defense supply chain.

With respect to our previously announced strategic relationship with Hanwha Ocean, the Government of Canada recently selected TKMS as the preferred bidder for the Canadian Patrol Submarine Project. As a result, our binding MOU with Hanwha Ocean has been suspended in accordance with its terms. That said, our strategic rationale for pursuing a structural steel beam will remain unchanged. We continue to engage constructively with governments as we advance to potential development of the project, which we believe has the potential to strengthen Algoma's long-term role in supporting Canada's infrastructure, industrial, and defense priorities.

I want to recognize the continued support of the federal and the provincial governments as we complete this transition and build a stronger, more sustainable Canadian steel industry. I will now turn the call over to Mike for a closer look at the financials. Mike?

Thanks, Rajat. Good morning, everyone. As a reminder, all numbers are expressed in Canadian dollars unless otherwise noted. I will start off with a brief note on currency. The Canadian dollar weakened over the course of the second quarter, moving from approximately CAD 1.39 per U.S. dollar at March 31st, 2026, to CAD 1.42 per U.S. dollar at June 30th, 2026, an approximate 2% decline. The foreign exchange gain in the quarter of $18.8 million reflects the favorable impact of a weaker Canadian dollar.

Comparisons between the second quarter of 2026 and the second quarter of 2025 were significantly impacted by the transition from legacy blast furnace operations to our EAF platform. In the prior year quarter, the company was producing steel exclusively through its legacy blast furnace operations, which were permanently halted on January 18, 2026. In the second quarter of 2026, all liquid steel production was sourced from our first EAF unit, which continues to ramp up. In addition, direct tariff costs were substantially lower than the prior year quarter, reflecting our deliberate reduction of U.S.-bound shipments as part of the pivot to a Canada-centric, plate-first strategy.

Now onto the results. We shipped 181,000 tons compared to 472,000 tons in the prior year quarter. The decline reflects the transition to EAF-only steelmaking and our deliberate pivot towards the Canadian plate market. And shipments were slightly above the high end of our guidance range of 175,000 to 180,000 tons. Consolidated revenue was $267.5 million compared to $589.7 million in the prior year quarter, with steel revenue of $247 million. Average net sales realization was $1,361 per ton, up 20.2% from $1,132 per ton in the prior year quarter, reflecting the improved product mix under our plate-first strategy.

Cost per ton of steel products sold was $1,411 per ton compared to $1,144 per ton in the prior year quarter, primarily reflecting lower fixed cost absorption at reduced production volumes during the ramp-up. I want to highlight that this metric excludes the $54.7 million related to capacity utilization. As volumes build with Unit 2 startup and the elimination of legacy fixed costs, we expect this metric to improve meaningfully. Direct tariff costs in the quarter were $18.7 million, down from $64.1 million in the prior year quarter.

Adjusted EBITDA for the quarter was $13.8 million, representing an adjusted EBITDA margin of 5.2%. This compares to an adjusted EBITDA loss of $32.4 million in the prior year quarter, which represented a margin of negative 5.5%. A few items I want to call out specifically. First on capacity utilization, adjusted EBITDA includes the benefit of a $54.7 million capacity utilization adjustment tied to excess fixed costs from our previous operating configuration. It is down from $90.2 million in the first quarter and on track to be fully eliminated by the fourth quarter.

Second, on the prior year comparison, adjusted EBITDA in the quarter includes the benefit of $45 million of insurance proceeds recognized in other income. This now closes out our claim related to the January 2024 utility corridor collapse in full, of which we recovered $145 million net of applicable deductibles. There were no comparable insurance proceeds in the prior year quarter. On an apples-to-apples basis, excluding the insurance benefit, adjusted EBITDA was a loss of approximately $31 million, an improvement of approximately $1 million versus the prior year quarter, despite substantially lower shipment volumes.

On the sequential trajectory versus the prior quarter, excluding the insurance benefit, adjusted EBITDA was roughly in line with the first quarter. But when you exclude both the insurance benefit and the capacity utilization adjustment from each quarter, results improved by approximately $33 million sequentially, which reflects our improving trajectory. Loss from operations was $134.2 million compared to a loss of $85.1 million in the prior year quarter, primarily reflecting lower shipments partially offset by improved mix and lower labor and other fixed costs. Net loss in the quarter was $96 million compared to $110.6 million in the prior year quarter, primarily reflecting the $45 million in insurance proceeds offset by the higher loss from operations.

Turning to cash flow and liquidity, our $79.4 million of cash used in operating activities during the quarter was driven mostly by the increased loss from operations, offset by a continued reduction in working capital. This was driven by a further release of approximately $26 million of inventories during the quarter as we fully transitioned to our current EAF-based platform. We ended the quarter with $62.6 million of cash, $206.7 million of unused availability under a revolving credit facility, and $168 million available to draw under the [ LETL ] facilities.

Total available liquidity at quarter end was approximately $437 million. During the quarter, we drew $124.5 million under the [ LETL ] facilities to support operations and completion of the EAF transition. Looking ahead on cash flow, we continue to expect a number of positive items to benefit the company over the balance of 2026, including the recovery of approximately $200 million related to income tax refunds. Combined with declining capacity utilization costs, lower capital intensity, and a Unit 2 startup, we believe we have the liquidity and financial flexibility to complete the ramp-up and position the business for improved profitability.

As Rajat highlighted earlier, we have scheduled operational downtime during the third quarter to complete the operational tie-in of EAF Unit 2, together with planned maintenance activities at both the melt shop and our power generation plant. As a result, we estimate that third quarter shipments will be directionally lower by 10% to 20% versus the second quarter. From a volume perspective, we view this as the trough quarter of the transition. That said, we expect our underlying EBITDA performance, excluding any benefit of capacity utilization adjustment, to continue to improve sequentially as we continue realizing the operational and financial benefits of our EAF platform.

Finally, on legal matters, as previously disclosed, we have initiated and are responding to legal proceedings in connection with certain supply agreements, taking the position that these agreements have been frustrated by the extraordinary and unforeseen tariff environment. We believe we have valid legal remedies and defenses and we will continue to defend our position. We are not in a position to comment further on this at this time. I'd now like to turn the call back over to Rajat for closing comments.

Thanks, Mike. The second quarter showed that our transformed business can deliver, even against a difficult backdrop. We continue to ramp our first EAF unit, set a plate sales record for the second consecutive quarter. Transition costs decline meaningfully and remain on track to be eliminated by the fourth quarter. And our second EAF unit is weeks away from first steel, the final major milestone in our transformation. Our position remains clear as Canada's only producer of discrete plate. Demand across infrastructure, construction, and defense and market is healthy and growing as our EAF platform gives us a structural cost and carbon advantage that will serve us across market cycles.

I want to thank our employees for their continued dedication and disciplined execution, our customers for their trust, and the federal and the provincial government for their continued partnership. We look forward to updating you on the startup of Unit 2 when we report our third quarter results this fall. Thank you for your continued interest in Algoma Steel. At this point, we are happy to take your questions. Operator, please provide the instructions for the Q&A session.

[Operator Instructions] Our first question is from Katja Jancic. Please proceed with your question.

Hi, thank you for taking my questions. Maybe starting on the volume commentary, Mike, you said sequential in Q3 volumes down again. Is that purely due to demand and some seasonality or is part of that also due to the maintenance work you mentioned?

Good morning, Katja. I think that it's related to the maintenance activities. We're trying to put all of the maintenance activities in place ahead of Unit 2 coming online, which includes some work at our power plant. That's scheduled routine maintenance that we will do for preventative maintenance, as well as in the steel shop at the first unit that's online, and then some tie-in activities at Unit 2. So trying to bulk all of that together so that we enter Q4 with both units online and able to move up the capacity curve.

And then how should we think about the mix between plate and sheet because my understanding is that plate should continue to move higher.

Yes, I think that for this quarter there are activities that we will also do at the plate mill. So it will be close, but it may be slightly less plate for this quarter as those maintenance activities happen with a little bit more volume on the sheet mill.

And maybe one more if I may, given the maintenance, how should we think about costs?

Yes, so I mean, the capacity utilization charge is going to come down really related to the elimination of the costs. However, we will have the fixed cost absorption with lower volume that comes into that. So you should see pricing improving as we've seen in the marketplace and costs being reduced around the same as where they were.

Okay, thank you.

Our next question is from James McGarragle with RBC. Please proceed with your question.

Hey, I appreciate you having me on. I just wanted to ask a question on your production capacity as the second EAF comes online. Can you just talk about what you expect your production run rate to be as you exit 2026? And then, I guess the demand environment in the Canadian market to kind of take on that level of production, especially on the sheet side of the business.

Hi, James. So our exit will be similar to what we had said in the past, 1.5 million to 2 million tons will be the run rate when we get into 2027 calendar year. And we are ramping up on the plate side, and you've seen that happening, and that will be our first priority. And sheet definitely depends on how the market plays out next year. We are looking at some other avenues as well, as I mentioned in the last call that, you know, we are looking at applying to other jurisdictions because of our green steel that we have. And there is the demand that's increasing of green steel, especially in Europe. And we are looking at those opportunities for next year.

And then in terms of your cost targets, I guess, as that second EAF mill comes online, is there any change to your cost targets versus what you've been communicating on the prior earnings calls?

No, I mean, as the denominator increases, we're certainly going to have a significant improvement in the costs on the fixed cost absorption side as we exit calendar Q4 into next year. Across the board, we're continuing to focus on cost and driving down our cost across the board, but the volume is the biggest lever in improving that.

Okay, and just one last one for me before I turn it over. Any update on a potential [ LSP ] monetization and how you're viewing the opportunity and optionality surrounding that?

We feel that that asset's going to be very important for us and it's going to continue to serve us. The best way to monetize it really will be a factor of what the available revenue stream is for that facility and we continue to work through those optionalities. So we don't have an update at this time but we really think that that asset provides us a tremendous amount of flexibility in a world where power demand is only going up.

I appreciate the call. I'll turn the line over. Thank you.

Our next question is from Ian Gillies with Stifel. Please proceed with your question.

Good morning everyone. Could you provide a bit of an update on what you think a realistic outcome is for plate production in 2027? Just given customer demands and what you're able to make versus what they want and kind of how you're thinking about that moving into next year.

Sure. So our plate production has been growing and you see that it's closer to half a million ton a year. We can grow it further to let's say 600,000 tons and that's our plan to get into the next year to that kind of level for next year. The demand in Canada definitely is growing and we would be able to cater to a lot of it in the following year and also it depends on how these projects that are being launched play out from demand perspective. But we feel comfortable that the demand that's available will be met by or we'll be able to meet the demand that 600,000 tons of production for next year.

That's helpful. Maybe switching gears a little bit, obviously the Canadian government has gone with someone other than Hanwha for the subcontract. Can you maybe talk a little bit about how you intend to pivot and service some of this defense demand and even though another competitor got the contract, whether you still think you might be able to participate in some way, shape, or form?

Sure. So being the Canadian producer of steel and green steel as well, we do participate in all of the programs that are out there from the government perspective and otherwise as well on the private sector. And that is continuing. We are talking to everybody and engaging with everybody from that perspective. So a strategy to pivot into beams is not changing, because that market is there and it's available, and we will be working towards getting that initiated. On the plate side we are supplying to defense right now. There will be more and more as we go through next year.

From the new party who was courted, we will and we are engaging with them. The steel that will be needed for submarine is one part and then there is steel that's needed for infrastructure on both sides of the country. And that will be made in Canada if Canada can make it by that time, and that will be plate and beams. So we are quite focused on ensuring that we are at least involved in all these programs out where we can as Canadian producer supply steel.

That's helpful. And then maybe last one for me is, on the [ LETL ] loan as you work your way through that, I guess, towards the end of this year, early next year. Would the intention then be to move into, if you need to, the ABL, or would you try and source some other version of financing, perhaps from the government, to continue until there's some sort of either relief on tariff or other alternatives?

Yes, I think, look, Ian, we have a number of other cash items that are going to be supportive that are coming through the rest of this year. We have the $45 million of insurance settlement that is as a receivable right now. So that will be cash that we add at this point. We have the $200 million of tax refund that we're going to receive at this point. That's, you know, just follow the statutory requirement that we will return, we'll get those funds this year. So those are going to be supportive. Beyond that, we're working on driving costs down and improving the revenue to get this business to cash flow break even. So, that's goal number one. We'll look at other options on the balance sheet if required, but we're really working to get this business to cash flow break even is the goal.

Understood. Thanks very much. I'll turn it back over.

[Operator Instructions] We reached the end of the question and answer session. I would like to turn the floor back over to Laura Devoni for closing comments.

Thank you again for your participation in our second quarter 2026 earnings conference call and for your continued interest in Algoma Steel. We look forward to updating you on our results and progress when we report our third quarter results this fall.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the Algoma Steel Group First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Laura Devoni, Vice President of Human Resources and Corporate Affairs. Please go ahead.

Good morning, everyone; and welcome to Algoma Steel Group, Inc.'s First Quarter 2026 Earnings Conference Call. My name is Laura Devoni, Vice President of Human Resources and Corporate Affairs, and I will be moderating today's call. Leading the prepared remarks are Rajat Marwah, our Chief Executive Officer; and Mike Moraca, our Chief Financial Officer.

As a reminder, this call is being recorded and will be made available for replay later today in the Investors section of Algoma Steel's corporate website at www.algoma.com.

I would like to remind you that comments made on today's call may contain forward-looking statements within the meaning of applicable securities laws, which involve assumptions and inherent risks and uncertainties. Actual results may differ materially from statements made today. In addition, our financial statements are prepared in accordance with IFRS, which differs from U.S. GAAP, and our discussion today includes references to certain non-IFRS financial measures.

Last evening, we posted an earnings presentation to accompany today's prepared remarks. The slides for today's call can be found in the Investors section of our corporate website. With that in mind, I would ask everyone on today's call to read the legal disclaimers on Slide 2 of the accompanying earnings presentation and to also refer to the risks and assumptions outlined in Algoma Steel's first quarter 2026 Management's Discussion and Analysis.

Please note that our financial statements are prepared using the U.S. dollar as our functional currency and the Canadian dollar as our presentation currency. Please also note that amounts referred to on today's call are in Canadian dollars, unless otherwise noted. Following our prepared remarks, we will conduct a question-and-answer session.

I will now turn the call over to our Chief Executive Officer. Rajat?

Thank you, Laura; and good morning, everyone. Thank you for joining us to discuss our first quarter 2026 results.

Before reviewing the quarter's results, I want to take a moment to recognize what our team achieved in early 2026. On January 18, we permanently halted blast furnace operations, marking the end of 125 years of coal-based integrated steelmaking at Algoma. That moment also closed out over 50 years of production at our #7 blast furnace, which, over its lifetime, produced more than 100 million tonnes of liquid iron. This is a refining moment for this company, not a conclusion, but a transformation. Algoma is now a fully electric arc furnace operation and everything we are building from here rests on that foundation.

Let me frame today's results around 3 themes. First, our EAF ramp-up is progressing as expected, and the operational foundation for Algoma's next chapter is in place. Second, this was a transitional quarter by design. While shipment remained low and transition-related costs were elevated, adjusted EBITDA was broadly consistent with the prior quarter, when excluding the impacts of capacity utilization adjustments and insurance proceeds. Performance was supported by a deliberate mix shift towards higher-value plate products and improved net steel revenues.

We achieved record plate sales of 116,000 net tonnes with further upside expected as our plate-first strategy scales. Importantly, we view this quarter as the EBITDA trough with performance expected to improve as we continue ramping the EAF platform, increase operational stability and eliminate remaining transition-related costs.

Third, we have the financial runway to execute. The LETL facilities continue to provide meaningful liquidity support, and we remain focused on reducing cash burn as EAF production scales.

Let me expand on each of these. Starting with our EAF. The Unit 1 furnace and associated melt shop are performing as designed, with quality metrics achieved across a range of plate and hot-rolled coil grades. The Q-One power system and other key process components have demonstrated stable performance, supporting consistent metallurgical quality on a full 24-hour per day schedule. This is not a pilot. This is Algoma's steelmaking platform running around the clock, producing Volta, low-carbon steel at scale.

Our average net sales realization improved meaningfully, driven by a deliberate mix shift towards discrete plate sales, where Algoma holds a unique competitive position as Canada's only producer. Plate demand for infrastructure, construction and defense end markets remain healthy. That pricing resilience, combined with an improved cost structure as EAF volumes build, is the foundation of our path to profitability.

On the broader market environment, the 50% U.S. Section 232 tariff on steel imports from Canada continues to define the operating landscape. We incurred CAD 27.4 million in direct tariff cost in the quarter, down from the prior quarter, as we continue to reduce volumes shipped to the U.S. The Canadian market, meanwhile, remains supply pressured with coil pricing held down by domestic oversupply, import offers and the continued presence of U.S. steel in the Canadian market. These are structural conditions, not cyclical ones. Our strategic response focusing on plate, deemphasizing coil and advancing diversification initiatives that orient our business towards the Canadian market is the right response.

On the strategic front, I want to highlight 2 developments that reinforce the long-term thesis of this company. First, in April, we announced the foundation of Roshel Algoma Defence, a joint venture with Roshel Inc., a Canadian-owned defense manufacturer, to establish a Canadian center of excellence for ballistic steel production. This partnership is purpose-built to deliver sovereign ballistic steel defense solutions, including full cycle capabilities, metal fabrication, forming, welding and machining right here in Canada. This is a meaningful step in the diversification of our product portfolio and our growing role in Canada's defense industrial base.

Second, our binding MOU with Hanwha Ocean announced in January and valued at up to USD 250 million, including a USD 200 million contribution towards the potential development of a structural beam mill and up to USD 50 million in anticipated product purchases tied to the Canadian Patrol Submarine Program, remains subject to Hanwha Ocean being awarded the CPSP contract and the execution of definitive agreements. We continue to advance this work and remain encouraged by what it represents for Algoma's long-term role in Canada's defense industrial base. Taken together, these initiatives reflect the deliberate positioning of Algoma as a strategic pillar of Canada's industrial and defense supply chain, not simply a commodity steel producer.

I want to be direct about something. Algoma is more exposed to tariff than virtually any steel company in North America. We are Canada's only independent steelmaker, and that reality has made Sault Ste. Marie a focal point of the trade disruption that has reshaped the steel industry over the past year. We are not going to understate that impact nor are we going to minimize the challenge it has created. But this is what we would ask investors to focus on: The investments Algoma has made in a state-of-the-art electric arc furnace platform and the modernization of Canada's only discrete plate mill have positioned the company at the center of Canada's emerging industrial and defense strategy.

Industrial sovereignty requires domestic steelmaking capability. Armored vehicles require ballistic steel. National infrastructure programs are strengthened by structural steel produced domestically by Canadian workers for Canadian supply chain. Algoma is uniquely positioned to support these priorities alongside our customers, partners and peers across the broader Canadian industrial base. The Roshel Algoma Defence JV and the Hanwha Ocean beam MOU are not peripheral initiatives or aspirational concepts, they are tangible evidence of where industrial policies and strategic demands are moving.

Canada is actively seeking to reduce reliance on foreign supply chain for critical material and defense-grade products, and Algoma is participating directly in that effort, working alongside government, customers and industrial partners to help build resilient domestic capacity. Importantly, the current tariff environment, while undeniably challenging, has accelerated the urgency around domestic sourcing and industrial self-sufficiency. In many respects, it has reinforced the strategic value of Canadian steelmaking capacity in ways that were far less visible even 2 years ago. We are managing through the tariff headwinds; at the same time, we are building the company Canada increasingly needs. Those are not competing narratives, they are fundamentally the same story.

I'll now turn the call over to Mike for a closer look at the financials. Mike?

Thanks, Rajat. Good morning, everyone. As a reminder, all numbers are expressed in Canadian dollars, unless otherwise noted.

I will start off with a brief note on currency. The Canadian dollar weakened modestly over the course of Q1 2026, moving from approximately CAD 1.37 per U.S. dollar at December 31, 2025, to CAD 1.39 at March 31, 2026, an approximate 1% decline. Our foreign exchange gain in the quarter of $14.3 million reflects the favorable impact of a weaker Canadian dollar.

Comparisons between the first quarter of 2026 and the first quarter of 2025 were significantly impacted by several important factors. In the prior year period, the company was producing steel exclusively through its legacy blast furnace operations, which were permanently halted on January 18, 2026. In contrast, steel production during the first quarter of 2026 reflected a transitory operating environment with production coming from both the legacy blast furnace platform and the company's new electric arc furnace platform, which remains in the ramp-up phase. In addition, the tariff environment during the 2026 quarter was materially more adverse than in the comparable prior year period, creating a significantly different operating and commercial backdrop.

Now on to the results. We shipped approximately 224,000 net tonnes in the quarter, down 52.4% versus the prior year period. Importantly, the prior year quarter reflected production from a fully operating blast furnace platform that no longer exists. We are continuing the ramp-up of our new EAF steelmaking platform with operating performance expected to improve as EAF production stabilizes and transition-related inefficiencies are reduced.

Our average net sales realization was $1,193 per tonne, an increase of 21% versus $986 per tonne in the prior year period. This improvement reflects the deliberate shift of our product mix towards discrete plate, where our pricing premium over hot-rolled coil remains significant, and we achieved record plate sales volumes during the quarter. Steel revenue was $266.9 million for the quarter, down 42.4% from the prior year period, as the significant decline in shipment volumes more than offset the meaningful improvement in realized pricing.

Cost per tonne of steel products sold was $1,180 in the quarter compared to $1,137 in the prior year period. The increase reflects tariff costs of CAD 27.4 million and the impact of reduced fixed cost absorption at lower production volumes. I want to highlight that this metric excludes $90 million related to capacity utilization. Adjusted EBITDA for the quarter was a loss of $28.7 million, representing an adjusted EBITDA margin of negative 9.7%. This compares to an adjusted EBITDA loss of $46.7 million in the prior year period, which represented a margin of negative 9%. The variance in absolute terms was driven primarily by improved product mix.

A few items I want to call out specifically. First, on capacity utilization. The $90.2 million capacity utilization charge in the quarter reflects excess fixed costs carried by the company beyond what was required to operate the EAF and the downstream operations supplied by the EAF at the production volumes achieved during the quarter. These costs primarily relate to labor, fixed utilities, equipment and maintenance costs. These costs are expected to decline over the course of the next 2 quarters as the transition progresses and are anticipated to be fully eliminated by the fourth quarter. This cost is excluded from adjusted EBITDA as it does not reflect the ongoing economics of the business under the company's intended operating configuration.

Second, on the prior year comparison. Q1 2025 included $50 million in insurance proceeds related to the structural corridor collapse of January 2024. There are no comparable insurance proceeds in Q1 2026. On an apples-to-apples basis, the underlying adjusted EBITDA improvement of $18 million is a meaningful step in the right direction as the EAF ramp continues.

Third, on working capital. As the company expected, during the quarter, the company released over $100 million of working capital, which was primarily related to the significant release of work-in-process slab inventory, as we rolled slabs from inventory at our plate mill. This slab inventory had been built prior to the closure of the blast furnace.

Turning to liquidity. We ended the quarter with $65.3 million of cash, $195 million of unused availability on our revolving credit facility and $292 million of remaining availability under the LETL facilities. Total available liquidity at quarter end was approximately $553 million. During Q1, we drew $126 million under the LETL facilities, net of PIK interest, which was largely deployed to offset operating cash consumption and support the transition. Capital expenditures in the quarter were $20.4 million, substantially below the $127 million invested in Q1 2025 when EAF construction activity was far greater. We expect our maintenance CapEx profile to run meaningfully below our historical sustaining capital level of approximately $120 million annually as we operate a newer, lower maintenance EAF facility.

Prospectively, on cash flow. As we have discussed previously, there are a number of positive cash flow items expected to benefit the company over the course of 2026, including the recovery of approximately $200 million related to income tax refunds and the receipt of the remaining insurance proceeds associated with the final closeout of the previously disclosed insurance claim.

On legal matters, as previously disclosed, we have initiated and are responding to legal proceedings in connection with certain supply agreements, taking the position that these agreements have been frustrated by the extraordinary and unforeseen tariff environment. We believe we have valid legal remedies and defenses and we'll continue to defend our position. We are not in a position to comment further on this at this time.

I'd like to now turn the call back over to Rajat for closing comments.

Thanks, Mike. Q1 2026 was largely the quarter we anticipated: a transitional period with lower volumes, elevated costs and the logistical complexity of winding down one steelmaking route while ramping another. But the operational progress during the quarter was real, and the strategic trajectory is clear. Our EAF is ramping. Our plate mill is positioned competitively. We are Canada's only producer of discrete plate and demand for infrastructure, construction and defense end market is healthy and growing. Roshel Algoma Defence JV and the Hanwha Ocean MOU are tangible evidence that this company is building something with long-term industrial relevance to Canada, not just managing through a difficult steel cycle.

The path back to profitability runs through scale, more EAF production, more plate tonnes and a cost structure that improves with every additional heat we cast. We are not there yet, but the trajectory is the right one, and we have the liquidity to execute.

I want to close with a word to our employees. The first quarter of 2026 was not easy. The transition required an extraordinary level of execution from each part of this organization and the workforce reduction taken in late March added a layer of human difficulty that no restructuring plan makes easier. I'm proud of how every member of our team navigated all of it, and I'm committed to building an Algoma worthy of their continued efforts. Thank you for your continued interest in Algoma Steel.

At this point, we are happy to take your questions. Operator, please provide the instructions for the Q&A session.

[Operator Instructions] Our first question is from James McGarragle with RBC Capital Markets.

I wanted to ask a question on the capacity utilization adjustment. Can you just give us some cadence on how you expect that to trend down in Q2 and Q3? And then on that, when we think about Q4 EBITDA, obviously, a lot can change in terms of the price of inputs, the price of steel. But all else equal, should we be thinking about adjusted EBITDA of minus $30 million in Q4 or is there kind of a path to breakeven EBITDA towards the end of the year?

Yes. Thanks, James. I think that we still are on the pathway to breakeven EBITDA, that's our expectation by the fourth quarter. And the capacity utilization adjustment really will trend down linearly from where we're at here at $90 million this quarter to 0 in Q4. So I think you could think of it stepping down in a pretty linear fashion over the next 2 quarters.

Okay. I appreciate the color there. And then just as a follow-up to that, obviously, the capacity utilization going away is going to be predicated on higher volumes. So can you just give us some cadence on how you expect volumes to trend in Q2? And then can you talk about more broadly the appetite in the Canadian market to support higher levels of production, specifically on the plate as that ramps up? And then on the coil side, is the increase in production going to be from higher sheet and what you think profitability might look like on the sheet side if you're ramping up production there as well?

Yes. I think I'll start and Rajat can add some color here. But I think that directionally, the shipments, we would expect to be directionally lower in the next quarter. But on the plate side, we're still going to ship as much as we possibly can, so pushing that as quickly as we can up. The sheet side is really where the constraint is on the market with the oversupply situation we have in Canada.

So James, that's a good question and a lot of questions. So on the capacity utilization, there is some carrying costs that will drop off, which I think will bring us to the capacity of 1 million tonnes, 1.2 million tonnes and our costs aligned with that. So that's what we expect to see in the fourth quarter. From the market perspective, the plate market is healthy, as I said in my prepared remarks, and it's doing okay. We are quite disciplined in our approach. We've started gaining market share. And I would thank the Canadian government on the Buy Canadian Policy and also our customers who are sticking with us, and we are ensuring that they -- we are ensuring that we do whatever we can to be with them and not disappoint them.

But on the plate side, we are fine, and we are increasing our volume. On the coil side, the market is oversupplied, and we are seeing that putting pressure on the pricing. From our side, we have been quite disciplined in our approach on the coil by taking orders that make sense. And as we start ramping up, we will be mindful of that market.

Our next question is from Katja Jancic with BMO Capital Markets.

Mike, just to confirm, did you say that sheet volumes in 2Q are going to be lower sequentially?

Correct. Yes.

And then will that be fully offset by higher plate -- or how should we think about plate volumes relative to first quarter? How much higher can it get in the near term?

Yes. I think directionally a little bit higher. We're working on trying to maximize the availability of those orders in the Canadian market and capturing more and more market share. But we do expect it to be slightly higher in Q2, and really, we're flexing the coil volumes in light of that.

So overall, volumes are going to be slightly higher or flattish?

Slightly lower is the expectation for the quarter.

Slightly lower?

Yes.

So I'm just thinking from a utilization perspective or utilization adjustment, what will drive, I guess, lower adjustments?

The driver of the lower adjustments is really shedding those costs that are associated with the legacy assets. So if you think we're staffed with some of the headcount still hadn't come out in Q1 as we had layoffs near the end of this quarter, and then we have other fixed costs as well that were associated with those legacy operations, those will start to shed and it will be the main driver of the reduction in the capacity utilization adjustment.

And then maybe shifting on the cost side, can you talk a bit about your sourcing of scrap right now? Where you're sourcing it, how the pricing is currently?

That's a very good question. The scrap is coming from Canada and some from U.S., but mostly from Canada. There is enough scrap available from a sourcing perspective as we are ramping up. Pricing is a different dynamic right now. Price of scrap is still following the North American selling price, and it's not being adjusted by any other dynamics between Canada and the U.S. As we have seen that the pricing of sheet has been affected between Canada and U.S. due to the oversupply of sheet in Canada and the 232 tariffs. So scrap is still moving at the price, which is the index price linked to the North American CRU Index.

Okay. And one more, if I may. You talked about the defense JV, can you talk a bit more about how big the defense market actually is in Canada? Because usually, when we look in the U.S. steel market, defense as a percentage of consumption of steel, it's pretty small. So we just want to -- maybe if you could talk about the Canadian market?

Yes. The analysis is very similar in Canada as well that when you look at the overall market and divide into equipment, construction, manufacturing and then defense, it's smaller. But there is a lot of spending that is happening and supposed to happen in Canada. And what we don't look at is the whole supply chain and the whole -- the entire product that finally get produced and not just the steel. So we look at steel, steel supply will be limited, but there will be a lot of value add when you start looking at fabrications, assembling, welding and so on and so forth. So we are looking at the entire supply chain to provide a full solution to Canadian needs as well as offshore, where everything from nuts to bolts, everything is done in Canada with Canadian labor, Canadian IP, Canadian steel. And that's where the value comes from this JV.

Our next question is from Ian Gillies with Stifel.

Has there been much in the way of developments on an overseas sales strategy since the last time you guys provided an update just because that seems like a pretty important piece to get to economies of scale and reduce some of these capacity charges as well?

Ian, we are continuously working on that aspect. There are trials being planned on steel that we can supply. There are discussions happening on both sides on how the supply chain will work and how these -- how this will be done over a longer period of time. So things are progressing. We do not expect much supply to happen in this quarter or the next, but we expect that all of that will get finalized towards the end of the year and start supplying those products.

Okay. On the scrap side, noting that you're talking about price following the North American price, is there any workarounds or potential workarounds in Canada through additional procurements of DRI or pig that might provide a cost advantage or is that just completely unlikely?

Till the time the market is open on both sides of the border, I think it will be the way it used to be for selling price, where you have opportunities on the other end to supply that product. Normally, DRI or HBI, they do carry a premium. And depending upon demand/supply, the price will be established. But there's no quick solution from that perspective. The solution that we do have, if, let's say, this becomes a long-term structure in the market, we have #6 blast furnace that does produce -- can produce pig depending upon how the market price fares out. That's a mitigation that we have. But otherwise, from a market perspective, we do see the market to be porous between U.S. and Canada, and the pricing will remain the way it is.

Understood. And with respect to the energy sector in Canada, it seems to be thawing a little bit here. I'm just curious with what you're seeing? Are you seeing any potential for incremental orders just in the West, especially in the context of what appears to be some amount of relief on rail rates through CN and CP?

So we are selling into the West right now. And as I said, that our sales on the plate side with our existing customers and the new that we are getting is increasing, and we are seeing that support coming. The challenge still remains on the transportation side. The government is working on it. That program should come into being soon, and we are having those discussions. So it's the logistic cost to get the product there. But the actions that are taken up till now on restricting some of the imports coming in and then going into the -- some subsidy on the rates definitely will help. But to say the least, there is supply happening, and we are seeing some amount of volume uptick towards the West.

Our next question is from Albert Realini with Jefferies.

I want to ask on the structural beam mill. Assuming, obviously, that's still a strategic interest, but just any update to maybe the thinking there? Any conversations with the government on that? And is that something that's kind of dependent on tariffs staying on longer term and I guess, being more of a longer-term diversification strategy? Or is it kind of independent on tariffs and more of when maybe the cash profile is a bit better, we could see some advancements there?

SO there's a lot of work happening on the beam side from a work perspective, and we are in continuous discussion with the government as well on various aspects. We've looked at the market and we have studied the market. A lot of work has gone into the market analysis as well. And as we've said in the past, the beam market is supplied by imports, and that market is there. And with the investments that's going to happen in Canada over the next many years will only increase that demand. So we are looking at the best way to get this project off the ground and done.

Tariffs do play a role right now, as we do not have enough products in Canada that can meet the demands in Canada. And this product seems to be a strategy that fits really well with our electric arc furnace. Being in electric arc, this is a natural fit for us to be in the beam market. So I would say that, and we are working pretty hard and diligent on getting things nailed down in this in this project.

There are no further questions at this time. I would like to hand the floor back over to Mike Moraca for any closing remarks.

Thank you, again, for your participation in our first quarter 2026 earnings conference call and for your continued interest in Algoma Steel. We look forward to updating you on our results and progress when we report our second quarter results this summer. Have a great day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the Algoma Steel Group Inc. Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Laura Devoni, Vice President of Human Resources and Corporate Affairs. Please go ahead.

Good morning, everyone, and welcome to Algoma Steel Group, Inc.'s Fourth Quarter 2025 Earnings Conference Call. My name is Laura Devoni, Vice President of Human Resources and Corporate Affairs, and I will be moderating today's call. Leading the prepared remarks are Rajat Marwah, our Chief Executive Officer; and Mike Moraca, our Chief Financial Officer. As a reminder, this call is being recorded and will be made available for replay later today in the Investors section of Algoma Steel's corporate site at www.algoma.com.

I would like to remind you that comments made on today's call may contain forward-looking statements within the meaning of applicable securities laws, which involve assumptions and inherent risks and uncertainties. Actual results may differ materially from statements made today. In addition, our financial statements are prepared in accordance with IFRS, which differs from U.S. GAAP, and our discussion today includes references to certain non-IFRS financial measures. Last evening, we posted an earnings presentation to accompany today's prepared remarks.

The slides for today's call can be found in the Investors section of our corporate website. With that in mind, I would ask everyone on today's call to read the legal disclaimers on Slide 2 of the accompanying earnings presentation and to also refer to the risks and assumptions outlined in Algoma Steel's Fourth Quarter 2025 Management's Discussion and Analysis.

Please note that our financial statements are prepared using the U.S. dollar as our functional currency and the Canadian dollar as our presentation currency. As a reminder, the company changed its fiscal year-end from March 31 to December 31, resulting in a 9-month fiscal reporting period ending December 31, 2024. For ease of comparison, we will focus our comments today on the 3- and 12-month periods ending December 31, 2025, and 2024. Please also note that amounts referred to on today's call are in Canadian dollars unless otherwise noted.

Following our prepared remarks, we will conduct a question-and-answer session. I will now turn the call over to our Chief Executive Officer. Rajat?

Thank you, Laura, and good morning, everyone. Thank you for joining us to discuss our fourth quarter and full year 2025 performance. Before I get into our results, I want to acknowledge that this is Mike's and my first earnings call as CFO and CEO, respectively, roles we formally assumed on January 1. I also want to recognize Michael Garcia, who led this company through 1 of its most consequential transformations and who left Algoma in a fundamentally strong position. Employee safety remains our top priority and a core value.

The scale of activity on our site today with the end of blast furnace operations, and our EAF running around the clock, demands an unwavering focus on safe execution, and I'm proud of the discipline our teams have demonstrated throughout this transition. Every milestone we achieved in our transformation must be earned with the same commitment to sending every employee home safely every day.

Before I get into the details of the quarter, I want to highlight 3 key themes. First, the 50% U.S. Section 232 tariff has permanently altered the landscape for Canadian steel producers. The American market effectively close to us, we have responded accordingly. Exiting our primary blast furnace and coke oven operations, pivoting our entire commercial strategy towards the Canadian market, restructuring our cost base and accelerating our transformation that positions Algoma for the realities of this new trade environment.

Second, we have the financial foundation to execute. The CAD 500 million in government-backed liquidity support, combined with our ABL facility provides the runway we need to advance our transformation, reduce cash burn and pursue new opportunities to diversify the business.

Third, our operational pivot is not a plan. It is underway. Our blast furnace and coke oven operations have been wound down. Our first EAF unit is running on a full 24-hour schedule and our second unit remains on schedule. Our strategic focus is now squarely on delivering high-value products for the Canadian market.

Let me expand on each of these. The extreme tariff environment on steel imports and derivative products from Canada remains the defining challenge for our industry. The unprecedented 50% tariff implemented in June fundamentally broke the cross-border business model that Canadian producers, including Algoma, had built over decades. The consequences extended well beyond the U.S. border, creating an oversupply of coil in Canada and driving domestic transactional price as much as 40% below comparable U.S. levels across many categories.

For the full year, besides the impact of lower pricing, we absorbed $225 million in direct tariff costs. These are not cyclical headwinds. They represent an unprecedented structural shift that required a structural response. Our fourth quarter financial results reflect that reality. Lower shipments, elevated costs and continued pressure on realized pricing as the Canadian market absorbed excess supply. Shipments to the U.S. were approximately 30% lower than the average U.S. sales over the previous 3 quarters as we began our exit from the U.S. market.

Against that backdrop, our plate mill stands out as a genuine competitive advantage. As Canada's only producer of discrete plate, we are not subject to the same oversupply dynamics that are compressing coil pricing. Demand for plate products across infrastructure, construction and defense remains healthy, and we expect trade production to increase sequentially as our EAF ramps through 2026. This is exactly the market position we are leaning into.

Next, let me talk about our EAF, the heart of our transformation and the foundation of Algoma's future. Ramp-up activities are progressing in line with expectations. The furnace and melt shop assets are performing as designed, with stable metallurgical quality and process control demonstrated across a broad range of plate and hot rolled coil grades.

The Q1 power system and other critical process components are operating reliably on a full 24-hour per day schedule, a significant milestone from where we were just 1 quarter ago. As of December 31, 2025, cumulative investment in the project stood at $920 million, and we continue to expect a final aggregate cost of approximately $987 million.

Alongside this operational progress, we have taken deliberate step to strengthen our strategic and financial position. Mike will walk you through the details of our liquidity actions later in the call, but I do want to highlight one development that speaks directly to where this company is headed. In January 2026, we announced a binding MOU with Hanwha Ocean Co. Limited, a long-term strategic arrangement with an aggregate potential value of USD 250 million, including a USD 200 million contribution towards the potential development of a structural steel beam mill and up to USD 50 million in anticipated product purchases connected to the Canadian patrol submarine program.

This is a meaningful signal of Algoma's emerging role as a critical partner in Canada's defense and industrial supply chain. Taken together, these actions reflect our deliberate strategic repositioning. We are moving away from our historical model as a cross-border commodity producer and towards something more focused, more resilient and more aligned with Canada's long-term industrial priorities. By concentrating on as rolled and heat treat plate products, along with selected coil products for the domestic market, we are optimizing for margin quality rather than volume, deepening customer partnerships and reducing our exposure to tariff distorted global markets.

This repositioning achieved 3 things. We supply Canadian industry with the high-quality plate products needed for infrastructure, manufacturing and defense, we create operational stability that supports continued investment in our transformation, and we reinforce Algoma's role as a critical supplier in Canada's industrial future. In short, we are evolving from a cross-border commodity producer to a Canadian-focused steel supplier with lower cost, lower emissions and greater long-term resilience.

The work is not finished, but the direction is clear and the foundation is in place. Thank you. And I'll now turn the call over to Mike for a deeper dive into our financials. Mike?

Thanks, Rajat. Good morning, and thank you all for joining the call. Before I get into the details, I want to remind listeners that our functional currency is the U.S. dollar, and we present our results in Canadian dollars. The Canadian dollar strengthened approximately 5% over the course of 2025, moving from roughly CAD 1.44 per [ USD ] at year-end 2024 to approximately CAD 1.37 at December 31, 2025.

I'd encourage you to keep that currency backdrop in mind as we go through the numbers. Our fourth quarter results included adjusted EBITDA that was a loss of $95.2 million, which reflects an adjusted EBITDA margin of minus 20.9% and cash used in operating activities of $3 million. We finished the quarter with a strong balance sheet, including $77 million of cash, availability of $195 million under our revolving credit facility and $417 million available under the large enterprise tariff loan facility.

Now let me dive into the key drivers of our performance. We shipped 378,000 net tons in the quarter, down 31% versus the prior year quarter. The decrease in shipments was largely attributable to the impact of U.S. tariffs, which as Rajat said, effectively closed that market to our products. Net sales realizations averaged $1,077 per ton compared to $976 per ton in the prior year period. The increase versus prior year level reflects improvements in value-add product mix as a proportion of sales, partially offset by weaker market conditions.

Plate pricing continued to enjoy a significant premium relative to hot rolled coil during the quarter driven by resilient demand. This resulted in steel revenue of $408 million in the quarter, down 23.9% versus the prior year period as the lower shipment volumes more than offset higher realized prices. On the cost side, Algoma's cost per ton of steel products sold averaged $1,332 per ton in the quarter compared to $1,032 per ton in the prior year period, which is primarily due to tariff costs and worse fixed cost absorption due to lower steel production volumes.

Important to note that during the quarter, accelerated depreciation of blast furnace and basic auction steelmaking assets and stranded inventory related to accelerated closing of the blast furnace was captured in cost of steel revenue. Cash used in operations totaled $3 million in the quarter compared to a use of $77 million in the prior year period. The significant improvement was driven in large part by a meaningful release of working capital. Inventories at fiscal year-end were $569 million compared to $790 million at the end of the third quarter. A reduction of approximately $221 million in the quarter. That reduction reflects the deliberate wind-down of blast furnace raw material inventories as we exited that steelmaking route as well as continued shipments of finished goods.

We also saw a decrease in accounts receivable consistent with lower revenue levels. Taken together, working capital was a significant source of cash in the quarter, largely offsetting the operating losses and we expect to see further working capital benefits in 2026 as work-in-process inventories are normalized and we recover significant income taxes receivable.

Now let me run through the full year comparisons. We shipped 1.7 million net tons for the full year 2025 compared to 2 million net tons in calendar 2024. Net sales realizations averaged $1,080 per ton compared to $1,107 per ton in the prior year, reflective of softer market conditions on average across the year, partially offset by improvements in value-added product mix as a portion of steel sales. This resulted in steel revenue of $1.9 billion compared to $2.2 billion in the prior year.

On the cost side, Algoma's Cost of steel products sold averaged $1,216 per ton for the year compared to $1,054 in the prior year, primarily due to tariff costs and worse fixed cost absorption due to lower steel production volumes. Adjusted EBITDA for the full year was a loss of $261.4 million, representing an adjusted EBITDA margin of minus 12.5% compared to an adjusted EBITDA gain of $22.4 million and an adjusted EBITDA margin of 0.9% in calendar 2024. The decrease was primarily attributable to lower shipments.

Cash flow used in operating activities for 2025 was $66 million compared to cash generated of $82 million in calendar 2024. The decrease year-over-year was primarily due to factors previously discussed. As mentioned earlier, inventories at fiscal year-end were $569 million. That compares to $879 million in 2024, a reduction of $310 million over the year.

Before I turn it back to Rajat, let me make a few comments on our calendar first quarter 2026 results so far. Due to persistently weak market demand, we expect shipments this quarter to be sequentially lower than the fourth quarter. We expect to see better pricing and cost performance, which should result in adjusted EBITDA that is directionally better as compared to calendar fourth quarter 2025.

I also want to briefly note that we are aware of the pending litigation with U.S. Steel in Ontario and arbitration in the U.S.A. regarding an iron ore supply agreement. As that matter is now in litigation, we are not in a position to comment further on it today. I'd like to now turn the call back over to our CEO, Rajat Marwah, for closing comments. Rajat?

Thanks, Mike. Let me close with this. 2025 was the most challenging year in recent memory for Canadian steel producers. The 50% U.S. Section 232 tariff dismantled a cross-border business model that had defined this industry for decades, flooded the Canadian market with excess supply and forced every producer to fundamentally adjust how they operate. We were not immune to those pressures, and our financial results this year reflects that reality.

But what I'm most proud of is how this organization responded. We did not wait for conditions to improve. We were compelled to make difficult decisions, accelerating the wind-down of our blast furnace and coke oven operations ahead of our original time line, pivoting our commercial strategy towards the Canadian market and securing the financial resources to execute our transformation without compromising our future. Those were not easy calls, and they require conviction, speed and coordination across every part of this business.

None of this came without real human cost. The accelerated transition required us to wind down our blast furnace in coke oven operations earlier than planned, and that had meant issuing layoff notices to approximately 1,000 of our colleagues effective later this month. I want to be direct about this. Those are not just numbers. They are people who help build this company. We have worked with our unions and government resources to put mitigation programs in place, and I'm committed to the view that this is not the end of the story for Algoma's workforce.

We are actively exploring product diversification initiatives to expand our footprint and support Canadian industrial policy, and we applaud the Canadian and Ontario governments for the measures they have taken to supporting the Canadian steel industry. The result is a fundamentally different Algoma. Our EAF is running around the clock, performing as designed and producing Volta, our sustainable low carbon steel brand, at scale. This is the sustainable steel this company has invested years and nearly $1 billion to bring to life. We are Canada's only producer of discrete plate with a modernized plate mill a purpose-built low carbon steelmaking platform and CAD 500 million in government-backed liquidity to support our next phase of growth.

Defense and ship building demand for our plate product is real and growing. We are already shipping daily shipbuilders for the Polar Max program and the Hanwha Ocean MOU opens a further compelling path into Canada's defense and industrial supply chain. We enter 2026, not defined by the headwinds we face, but by the ground we gained while facing them. The foundation for long-term value creation is in place, and I'm extremely confident in the direction of this company.

To our employees, what you accomplished in 2025 was extraordinary. You navigated a period of profound uncertainty and changed with professionalism, dedication and resilience and you did so while keeping safety at the forefront every single day. I look forward to building on what we have started together.

Thank you very much for your continued interest in Algoma Steel. At this point, we would be happy to take your questions. Operator, please give the instructions for a question-and-answer session.

[Operator Instructions] Our first question is from Katja Jancic with BMO Capital Markets.

Maybe starting on the shipment side. You mentioned first quarter shipments sequentially are going to be lower. But can you remind us how you're thinking about full year shipments and then also how this is going to be split between plate and sheet?

Katja, it's Mike. Yes, I think that, look, over the course of the year, we expect to have total shipments between 1 million and 1.2 million tons, there will be a little bit of a ramp as we are building up our capacity at EAF, and we'll see slightly lower shipments in the first quarter, but ramping up to a run rate here in that 1 million to 1.2 million tons as the year progresses. So slightly lower in Q1, but growing over the course of the year.

And then on the mix?

The mix will be roughly 50-50, I would say, on the plate and sheet based on what we see today.

Okay. And maybe just shifting gears to your cost side. Can you talk about how much of your energy costs are exposed to the current spot market?

Yes, sure. I think that we have 2. We are generating power from our own natural gas-fired power plants. So there is commodity price exposure to the natural gas price. And we do consume power directly from the grid, which is subject to Ontario's spot rate pricing. So it is a nice mix to have because we do have the ability to generate our own power. So if the Ontario pricing does swing up to a higher price. We are generating our own as a safeguard.

Further to that, as you know, we have the Northern Electricity Advantage program, which is specific to Northern Ontario-based producers and does give us a $20 per megawatt advantage, Canadian dollar advantage on our power pricing.

And just on the natural gas, are you any -- are you hedged at all or you're fully on spot for your own power supply?

We generally would have fixed price for the most volatile months of the year, which is traditionally the winter months, where we have fixed pricing. And then the other months where there's less volatility, we would take it on spot.

Our next question is from Ian Gillies with Stifel.

Can you provide an update on what you're seeing as it pertains to plate pricing in Canada. Obviously, over the last number of months, there's been some new government initiatives to try and keep imports. out of the country. And I'm just curious on how that's progressing and whether you're seeing that flow through in your price book.

Sure. So the pricing on the plate side is holding up it's much better than the sheet pricing. On the sheet side, we are seeing a 40% lower pricing from the index. On the plate side, it's less than that. It's ranging anywhere between 15% to 20%. The pricing is definitely better. The measures that the government is taking definitely is helping. It's, let's say, slow coming in right now, but we see a lot of inbounds coming from our customers and some new customers for steel. And that's encouraging.

As it pertains to the HRC side, and pricing being 40% lower, can you just help reconcile that pricing discount versus what we might be seeing in the fast markets, Canadian price quote that's now out that's saying Canadian steel prices are around $800 a ton right now?

Yes, that -- I don't know how those pricing are calculated by fast market, but the pricing in the market is roughly 40% lower, and it makes a lot of sense as well when you see how -- what the tariffs are and the oversupply that's happening in Canada. Over time, what we have seen that pricing started strengthening a little bit in Canada where it was better. But overall, it's hovering around 40% discount to the index.

Okay. As it pertains to the beam mill, can you maybe outline how critical milestones that you think may be achieved or may be announced over the next, call it, 12 to 18 months because it feels like bidding is moving along reasonably quickly, but formal contracts won't be announced until 28%. So just curious there.

Yes. So from our perspective, we are working on the beam mill project. It's a big project. So we are doing engineering cost estimates and time lines. We are also working on the market side. There's not much that I can share right now, but what I can say is that the beam market is one where the supply is less than the demand in Canada, and we are very well suited to support that market with our EAF. Now from Hanwha perspective, that is one of the components of, let's say, the whole project, there their application has been in, and I think the government is really moving pretty fast to decide which one will get it.

I think the government will do the right job in finding the right partner for the Canadian -- for Canada. But from our perspective, we are moving fast on our assessment of this project. And once we have more details around it, we'll definitely come out and disclose on the key milestones.

And last one for me. As you think about how the business progresses through the remainder of this year. Is there -- where do you think CapEx ends up for the full year? And is there really much left on the EAF at this point?

Yes. I think that there -- we've said we're at $920-ish million or so. We don't expect any change in the total project budget. So we'll incur those capital costs over the first half of this year as we ramp up the second EAF. As for sustaining CapEx, I think we're seeing a step change lower as we've taken the blast furnace and coke making facilities out of the mix. So you should expect to see significantly lower sustaining CapEx in line with what we had mentioned in the past of being close to around $80 million a year.

Okay. And one last one actually. On the scrap side, can you just provide an update on how that's gone so far as it pertains to the EAF and how your JV is working as well on the sourcing side?

It's going pretty well. The scrap availability and supply in the U.S. is going pretty well. The JV is working fine, and we are ramping up pretty fast from that perspective. So we are pretty happy with the way where these things are moving on the scrap side and also the availability.

[Operator Instructions] There are no further questions at this time. I'd like to hand the floor back over to Laura Devoni for any closing comments.

Thank you again for your participation in our fourth quarter 2025 earnings conference call and for your continued interest in Algoma Steel. We look forward to updating you on our results and progress when we report our first quarter results in the spring.

This concludes today's conference. We thank you again for your participation. You may disconnect your lines at this time.

Greetings, and welcome to the Algoma Steel Group, Inc. Third Quarter 2025 Earnings Call. [Operator Instructions] [Technical Difficulty] being recorded.

It is now my pleasure to introduce Michael Moraca, Vice President and Corporate Development and Treasurer. Please go ahead, sir.

Good morning, everyone, and welcome to Algoma Steel Group, Inc.'s Third Quarter 2025 Earnings Conference Call. Leading today's call are Michael Garcia, our Chief Executive [Technical Difficulty] is being recorded and will be made available for replay later today in the Investors section of Algoma Steel's corporate website at www.algoma.com.

I'd like to remind everyone that comments made on today's call may contain forward-looking statements within the meaning of applicable securities laws, which involve assumptions and inherent risks and uncertainties. Actual results may differ materially from statements made today. In addition, our financial statements are prepared in accordance with IFRS, which differs from U.S. GAAP, and our discussion today includes references to certain non-IFRS financial measures.

Last evening, we posted an earnings presentation to accompany today's prepared remarks. The slides for today's call can be found in the Investors section of our corporate website. With that in mind, I would ask everyone on today's call to read the legal disclaimers on Slide 2 of the accompanying earnings presentation and to also refer to the risks and assumptions outlined in Algoma's third quarter 2025 management's discussion and analysis.

Our financial statements are prepared using the U.S. dollar as our functional currency and the Canadian dollar as our presentation currency. All amounts referred to on today's call are in Canadian dollars unless otherwise noted. Following our prepared remarks, we will conduct a Q&A session.

I will now turn the call over to Chief Executive Officer, Michael Garcia. Mike?

Good morning, everyone, and thank you for joining us today. As we do each quarter, I'll begin with safety. Our commitment to workplace safety remains at the core of everything we do. I'm pleased to report that we maintained our strong safety performance this quarter, building on the improvements we achieved throughout 2024. With EAF Unit 1 ramping up and our accelerated transition to electric arc furnace steelmaking underway, we continue to prioritize the health and well-being of our workforce during this pivotal transformation.

Before diving into the details, I want to highlight 3 important themes. First, the U.S. 50% tariffs have effectively closed that market to us, driving lower shipments and higher production costs as we've pivoted our entire go-to-market strategy.

Second, we've secured the capital to strengthen our liquidity through $500 million in government support and an expanded USD 375 million ABL facility, extending our liquidity runway so that we can develop opportunities to diversify the business.

Third, we have embarked on an operational pivot, accelerating our EAF transformation and focusing on products for the domestic market with the goal of significantly reducing our cash burn.

The steel industry is experiencing significant disruption. The 50% U.S. tariffs implemented in June have effectively made that market no longer viable for Canadian steel producers, completely undermining our historically successful cross-border business model. These trade disruptions are reverberating globally, forcing producers worldwide to seek alternative markets, while macroeconomic uncertainty compounds the headwinds facing our industry.

Our third quarter performance was in line with our previously disclosed guidance across both shipment volumes and adjusted EBITDA metrics. As expected, we experienced lower shipment volumes and realized pricing as well as elevated cost pressures, resulting in year-over-year declines in both revenues and adjusted EBITDA.

A bright spot continues to be our fully modernized plate mill. Plate shipments totaled approximately 97,000 tons, roughly in line with the 103,000 tons in the prior quarter despite taking a planned 2-week outage during the quarter. We expect Q4 plate production to increase sequentially as we capitalize on our position as Canada's only discrete plate producer.

Turning to our electric arc furnace project, the foundation of our future. I'm pleased to report continued progress. Since achieving first arc and first steel production in early July, commissioning and ramp-up activities for Unit 1 have progressed in line with expectations. The furnace and associated melt shop assets have demonstrated stable and reliable performance, achieving quality metrics across a broad range of plate and hot-rolled coil product grades.

The Q1 power system and other critical process components continue to perform as designed, supporting consistent metallurgical quality and process control. As of September 30th, 2025, cumulative investment for the EAF project was $910 million, including $30 million during the third quarter. All material aspects of the project have been contracted, and we continue to expect final aggregate cost of completion will be approximately $987 million.

We have announced a number of decisive actions to strengthen our balance sheet and liquidity, including $500 million of federal and provincial loan facilities. Rather than covering each in detail, I'll ask Rajat to take you through the specific steps and their impact on our financial flexibility later in the call.

This government support directly addresses the sustained tariff environment that has forced us to reimagine our operating strategy. We are accelerating retirement of our blast furnace and coke oven operations as we ramp up EAF production through 2025 and 2026.

We're strategically refocusing production on as-rolled and heat-treated plate products, along with select coil products primarily for sale in the Canadian market. We are uniquely positioned as Canada's only discrete plate producer, and this strategy aligns our production with domestic demand, while reducing exposure to volatile and oversupplied coil markets.

Our focus aligns with infrastructure, construction and renewable energy growth sectors, preserving Algoma's relevance by supporting national industrial priorities. We remain focused on extending our liquidity runway to develop new opportunities, including advancing our energy strategy and pursuing product diversification initiatives. Rather than competing as a commodity producer in a tariff-distorted global market, we are positioning Algoma as a premium Canadian supplier of essential steel products.

This repositioning achieves 3 outcomes. We supply Canadian industries with high-quality plate products needed for infrastructure, manufacturing and defense. We create operational stability that supports continued investment aligned with Canada's industrial needs. And we reinforce our role as a critical partner in Canada's industrial and defense capabilities.

By concentrating on higher-value specialized products, we can strengthen customer partnerships and optimize margins. Combined with government support, this strategy positions Algoma not just to withstand current conditions, but to emerge as a stronger, more focused company.

In short, we are evolving from a cross-border commodity producer to a Canadian-focused steel supplier with lower cost, lower emissions and greater resiliency. This transformation strengthens both Algoma and Canada's industrial future.

Now I'd like to take a moment on a more personal note. As announced last evening, I will be retiring at the end of this year from Algoma Steel, concluding what has been an extraordinary journey with Algoma. I want to congratulate Rajat Marwah on his appointment as CEO effective January 1st, 2026, and Michael Moraca on his promotion to Chief Financial Officer.

Rajat has been a trusted partner throughout our transformation. His leadership in finance, strategy and stakeholder engagement has been instrumental in securing the foundation we've built together. And I know Michael will bring the same discipline and strategic insight to the CFO role as he has demonstrated leading our integrated business planning and capital markets efforts.

I'm proud of how far this company has come and confident that the management team under Rajat's leadership will continue to strengthen Algoma's position as a Canadian leader in sustainable steelmaking.

I would like to pass it over to you, Rajat, to cover the financials and for closing remarks.

Thanks, Mike. Good morning, everyone. First, I want to express my deep appreciation for Mike's leadership. His vision and discipline have guided Algoma through one of the most significant transformations in our history. The foundation he built strategically, operationally and culturally positions us for long-term success.

Talking about the results for the third quarter, adjusted EBITDA was a loss of $87.1 million. For the quarter, tariffs expense totaled $90 million, and we estimate Canadian sales prices were approximately 40% lower on account of tariffs, resulting in lower revenue of approximately $32 million.

Cash used in operating activities was $117.3 million. We finished the quarter with $337 million of liquidity.

We shipped 419,000 net tons in the quarter, a decline of 12.7% versus the prior year quarter. Lower steel shipment was the result of weakening market conditions, particularly due to Section 232 tariffs, which impacted the company's export sales and resulted in oversupply of the Canadian market at reduced transactional pricing.

Net sales realization averaged $1,129 per ton compared to $1,036 per ton in the prior year period. The increase versus the prior year level reflects improvements in value-added product mix as a proportion of sales, which more than offset weaker market conditions.

Plate prices continues to enjoy a premium relative to hot-rolled coils during the quarter. This resulted in steel revenue of $473 million in the quarter, down 12.2% versus the prior year period.

On the cost side, Algoma's cost per ton of steel products sold averaged $1,282 in the quarter, up 24.2% versus the prior year period. Starting March 12, the company was subject to 25% tariff on outbound steel shipments to the United States, which increased to 50% in June.

For the third quarter, tariffs costs were $90 million or $214 per ton, which was included in cost of sales. Excluding the impact of tariff cost of sales was only 3.6% higher versus the prior year period despite a 20% lower shipping volume and a higher mix of plate sales for the period. We will continue to focus and drive down the cost of sales as we make our strategic pivot to focus primarily on plate and selected coil products.

Net loss in the third quarter was $485.1 million compared to a net loss of $106.6 million in the prior year quarter. The increase in net loss was driven primarily by the $503 million noncash impairment loss.

As of September 30th, 2025, the company identified 2 impairment indicators, its market capitalization falling below the carrying value of its net assets and the impact of U.S. Section 232 tariffs. Accordingly, an impairment test was performed to assess whether the recoverable amount of the cash-generating unit exceeded its carrying value, which resulted in the noncash impairment loss.

Cash used in operations totaled $117 million for the quarter compared to cash generated by operations of $26 million in the prior year period.

Inventories ended the quarter at $790 million, up approximately $54 million from the second quarter, reflecting a physical build in raw materials and finished goods, partially offset by a $14.8 million noncash write-down of inventories to net realizable value.

Looking ahead, we expect a significant inventory drawdown beginning in the fourth quarter and accelerating through 2026 as we exit the blast furnace and coke oven operations and transition to a far more efficient EAF-based supply chain.

As Mike mentioned, we have announced a number of decisive actions to strengthen our balance sheet and liquidity. We increased our ABL credit facility from USD 300 million to USD 375 million with Export Development Canada joining as a new lender.

More significantly, late last month, we announced binding term sheets securing $500 million in liquidity support from the governments of Canada and Ontario. We want to thank the government for their efforts in supporting Canadian industry, and we feel this package reflects their confidence in Algoma's strategic importance to Canada's industrial base.

The financing includes $400 million from the federal large enterprise tariff loan facility and $100 million from the province of Ontario, consisting of a $100 million third lien secured tranche and a $400 million unsecured tranche with 6.77 million share purchase warrants at $11.08 per share.

The facility carries a 7-year term at CORRA plus 200 basis points, stepping up after year 3 by 200 basis points annually. A combination of our strategic operational pivot, liquidity support, working capital efficiency improvements and continued effort on driving down cost is expected to extend our liquidity runway well into the future as we look to capture opportunities and diversify the business.

In closing, as we look ahead, our direction is clear: complete the EAF ramp-up, pursue diversification opportunities and continue building on the strength of our exceptional team. The past several months have brought unprecedented trade disruption. But through it all, our people have maintained exemplary safety performance and advanced the commissioning of EAF Unit 1.

We have taken decisive action to secure our future. The $500 million in government liquidity facilities, together with our expanded USD 375 million ABL facility, provide the resources and flexibility to complete this transformation with confidence. These arrangements reflect a shared commitment between Algoma and our government partners to preserve critical domestic steel capacity and industry resilience.

By pivoting to become a domestically focused high-value steel producer anchored in plate and specialty products, we are creating a stronger, more resilient enterprise aligned with Canada's long-term economic and defense priorities. Our accelerated EAF transition is central to that vision, positioning Algoma as one of the North America's lowest cost and most sustainable producers.

While near-term trade uncertainty will remain, we are building a company that is leaner, more focused and more competitive. When markets normalize, we expect to emerge stronger with improved margins and advanced cost structure and deeper alignment with national priorities.

To our employees, thank you for your dedication and adaptability. To our government and financial partners, thank you for your confidence. And to our shareholders and customers, thank you for your continued support as we execute this pivotal transformation.

The work we are doing today is preserving and modernizing a strategic national asset and laying the foundation for enduring value creation. We remain focused, disciplined and confident in the path ahead. Thank you very much for your continued interest in Algoma Steel.

At this point, we would be happy to take your questions. Operator, please give the instructions for Q&A.

[Operator Instructions] And our first question we will hear from Ian Gillies with Stifel.

In the event we remain in this tariff environment, i.e., 50%, could you maybe just outline where you think the production profile ends up in 2026 and whether you think you can be at EBITDA breakeven in that scenario? And I think that would be helpful.

Sure. This is Mike. I'll start and then hand it over to Rajat. Obviously, our original intention was to get to full production on the EAFs at the end of 2026, initial part of 2027. Because of what's happened to our business model with the 50% tariffs and the market dynamics, we've seen clearly that the right choice in front of us now is to execute a transition to full EAF production basically a year early. That's going to give us the best ability to deal with the current environment.

So we are accelerating and pushing on that transition as we speak, and we need to execute it in the coming months and ramp up EAF as quick as possible because that will put us at the lowest cost, most flexible cost position, and it matches the available business we have right now. So as far as the specifics to your question of the ramp-up and where we would reach EBITDA positive or EBITDA neutral, I'll let Rajat address that.

Thanks, Mike. So as Mike mentioned, now we are looking at accelerating it. Our market in the U.S. is practically close to us closed. And what remains is in Canada, we have our plate mill being the only plate producer in Canada, we are taking advantage of that and trying to ship as much plate as we can in Canada.

The market on the plate side itself is weaker with all the projects being announced, that definitely will help the market to get stronger. So from the way we look at it for next year, we will not be selling our 50% portion into the U.S., and we'll be maintaining our share in Canada for plate and coil. So that from a numbers perspective, could be as close as 1 million to 1.2 million tons for the year, if situation remains the way it is without taking any upside on investments coming into Canada on the plate side, defense side, infrastructure side. So that's where we see it going.

And from an EBITDA perspective, once all the -- once the transition is fully complete, which probably will take 3 to 6 months after the shutdown of the blast furnace with all the cost moving into the P&L, we see that we start getting pretty close to EBITDA breakeven in those volumes.

We will be making money on the plate side. Coil is still stretched with 50% tariff and the market in Canada is broken from that perspective because coil is being sold at 40% lower than the CRU, which is not making money for anybody. So that's how we see it, Ian, at a very high level.

That's helpful. And just one quick one on the plate before I follow on to one other separate question. The plate production was down a little bit sequentially from Q2 to Q3. Is that just a function of reorienting demand and you expect that to maybe start rising, whether it be in Q4 or Q1 next year?

I think that's a big part of it, Ian. Another part of it is we did have more maintenance days in the outage I mean, in the quarter. So taking the maintenance -- the difference in the amount of maintenance days in the 2 quarters, they were roughly the same.

But practically speaking, we're running our plate mill at full production other than the days we need to take for maintenance and the actual mix of the different type of plate products, how much heat treat is in there will affect the total volume numbers.

Understood. And -- next question. I'm just curious what, I guess, capital infusions you'd expect to get in the next year or so as it pertains to insurance proceeds, where I believe there's still a bit left to come, government grants. And then I'm just curious if there's anything that could potentially come in on the tax side as well, just given losses incurred.

Sure. I'll ask Mike Moraca to take that question.

Ian, look, on the insurance side, we do expect to somewhere between $30 million and $50 million more to come as we adjudicate through the claim. And then there is some other related cash flow items that you hit on. We will have a significant working capital release over the next 12 months, as we move to the EAF supply chain. It will be quite significant. I think we'll see something north of $100 million, $150 million, some in that range on the working capital side.

And then as you alluded to, we will see some tax refunds as we really start to collect on the taxes that we paid in 2022 and have had obviously some net operating losses through the last little bit. So those are the big movers on the cash flow front.

Yes. And that's -- we see most of it coming next year, some of it in the first half, some in the second half depending upon timing. But there will be a big amount of inflow that will happen both on all 3 fronts, but big coming from working capital release as well as taxes coming in.

And from a working capital perspective, we did mention earlier that there will be $100 million release happening this next year as we transition to EAF, we expect that to happen and more than that because we'll be running at lower levels. So we should see, as Mike mentioned, $150-odd million of reduction from the working capital and over $100 million or so coming from taxes.

And our next question we will hear from James McGarragle with RBC Capital Markets.

Wish you all the best going forward. And then Rajat and Mike, congrats on the new roles. I just wanted to follow up on the -- some of the commentary you made on cash flow. So those numbers were into 2026, I believe. But then can you just give us an updated CapEx number and an updated net working capital number for what we can expect into Q4?

Sure. So on the working capital side, we normally build working capital in the last quarter, and it's primarily on the inventory side. So we will not see any build happening on the inventory side in the last quarter. We'll probably see some release coming on the inventories. And there will be other movements happening between receivables and others.

But the big part of our change normally quarter-over-quarter in the last quarter, calendar quarter is inventories. So the release that we are saying of $100 million, $150 million will include some release coming in the last quarter.

And on the CapEx side, we will see the CapEx coming down as we go into next year as the blast furnace and coke batteries shut down. We normally spend around $40-odd million in those facilities. So that in the maintenance CapEx will come down and will get further optimized during next year and year after.

And then I just wanted to follow up on one of the initial comments and the initial questions that were asked. You've given previously some targets, cost -- scrap plus targets on the cost side with regards to the new furnace that you're bringing on. So can you kind of give us an updated view on how you're thinking about that scrap plus cost targets given the impact from tariffs and that you might not be running that furnace at full capacity initially. So just how we can expect that to evolve into 2026 and then how you're thinking about those targets longer term?

So on the cost side, what we said is that it's scrap plus USD 220 roughly for sheet products and that will be slightly higher. It will be in the range of [ 220 to 250 ] for the initial period as we will be running the EAF at lower capacity than 1 EAF at full capacity. So we'll see that slightly higher. And then it won't be double, but it will be slightly higher. And then we see that coming down to around [ 220-odd ] once we have -- once we are running at least 2 million, 2.5 million tonnes. So that's how we see the change on the cost side.

On the plate will be -- plate from a conversion perspective will be very similar, just that the variable cost will be higher. You have alloys and there is a little bit more processing that comes through.

And then I guess, in the current environment, do you think the Canadian market can support that 2.5 million tonnes that you think is necessary in order to achieve that cost-plus target? Or do you think something would have to change in terms of tariffs for the Canadian market to be able to support that 2.5 million tonnes?

James, this is Mike. I think critical, part of this, the future of Algoma Steel is to be the foundation steel company for the future of the Canadian nation building agenda, if you will. We have the lowest cost, most flexible liquid steel base in the industry in Canada or we will soon be there once the transition to EAF is complete and we've ramped up in the next year.

But I would say that, that market has not -- is not yet fully developed as we sit here in November -- almost November of 2025. So the market continues and will continue to develop. The nation building agenda that the new government has laid out is pretty clear in terms of everything that wants to be pursued around defense projects, infrastructure projects, shipbuilding, energy, manufacturing, reshoring, and this is all without kind of a return to a somewhat normal trade relationship with the U.S. This is all kind of future development and evolution of the Canadian market.

So my answer is if all that comes to fruition and even just a portion of it comes to fruition, Algoma Steel will be far and away the most advantageous and the best position to take advantage of it. So I think the market is going to be there for us.

If in the meantime or as part of that, there's a return to an improved trade relationship to the U.S., which gives us more access to the historical U.S. market, that will put wind in the sails of everything that we've talked about. It will open up the ability to get -- to take advantage of U.S. business. It will lift the margin across all of our business on both sides of the border.

We still believe and are committed to being a strategic part of Canada's nation building agenda. So I don't think it would immediately mean and certainly not for Algoma Steel, it wouldn't mean a return of business as usual where we're just a commodity steel supplier looking for the best business, whether it's in the U.S. or Canada, we would be mindful of the strategic risk of just going back to the old business model.

I know it's a little bit long-winded answer to your question. But yes, we believe in the future of the Canadian market built on the nation-building agenda that the government of Canada has laid out and our unique position as Algoma Steel to take advantage of that.

And next, we'll hear from Ian Gillies with Stifel.

Just in the Canadian market, are you seeing any positive implications yet from some of the trade barriers that have been instituted by the Canadian government? Or do they need to -- I guess, do the walls need to be taken up a bit higher?

Yes. I think we've shared our frank views around -- with the government around opportunities we see for them to put those walls higher and put more teeth into moves that would strengthen the health of the Canadian market. Obviously, the government has a lot to think through when they hear feedback from the steel industry in terms of are there any other consequences to doing something like that, which they may not see as positive.

But certainly, from a steel perspective, we think that there's more that they could do, and we've been very vocal about that with them. I will say what we are seeing is a tremendous amount of interest in understanding Algoma Steel's capabilities, both current and potential future capabilities.

From every sector of the country, every sector of the economy, we've gotten phone calls, visits, inquiries in terms of what do you make? How can you make something for my steel uses? And if you can't make it today, what type of investment or how soon could you make it? And that's all very positive.

Some of it is for business that's actually being made right now. Some of it is for future business that may be still a few years away. But the visibility, the intention and the interest in Algoma Steel and what role we can and will play in the future of Canada's nation building is definitely there, and we've already seen that for the last several months.

I suspect this question is unanswerable, but do you have any sense of what you think the incremental plate demand could be or broader steel demand could be from these initiatives, maybe even just on projects announced or potential projects?

You're right. That's hard to -- it's hard to give you a big number. I know that a lot of these -- for instance, the shipbuilding, we've had visits from major shipbuilders who are looking at the -- just the defense shipbuilding agenda over the next several years. And we can make all the ship needed in 10 -- Canadian war ships we could make the amount of plate needed for those 10 ships in 2 days. So it's not going to be one major program, which moves the needle. It's going to be a lot of demand throughout the entire economy and all types of projects.

Certainly, the defense spending and ice breakers and pipelines will get a lot of visibility, but we need multiple projects. The plate market in Canada is roughly 600,000 tonnes to 700,000 tonnes right now. We're easily capturing 50% of that. And so it's a relatively small market, and it doesn't take hundreds of projects to start building that market up north of 1 million tonnes. It takes more than a handful, but it doesn't take hundreds. So we feel pretty bullish about the future prospects in plate, but it's hard to give you a specific number.

And then last one for me, and this is probably for Rajat. Could you maybe provide a view on how you intend to start using the credit facilities as you start moving into a bit more cash burn given the implications, some could be picked, some of dilution, some carry interest. It's just -- I think that would be useful.

Yes, sure. So the way the facilities have been put together, we have a secured line that doesn't have any warrants attached to it. So the intention will be to draw that line first and then go into the unsecured line, where warrants are there. So that helps us to manage that. Most of it is [ spec ] for 2 years, and we will pick it, which makes sense, and then it goes to cash payments.

The -- and from a use perspective, we have the ABL, which we want to keep as much as possible from working capital and other perspective and start using the other line. So we will be looking at it as we draw on what's the most and the best optimum use of cash is and which cash and based on our plan for next year and keep drawing. So we'll be quite mindful of how we are drawing it from that perspective.

There are no further questions at this time. I would like to turn the floor back to Michael Moraca for closing remarks.

Thank you, again for your participation in our third quarter 2025 earnings conference call and your continued interest in Algoma Steel. We look forward to updating you on our results and progress when we report our fourth quarter and full year results early next year. Thank you.

And that does conclude today's teleconference. We thank you for your participation. You may now disconnect your lines at this time.