Labrador Iron Ore Royalty Corporation - Results for the Second Quarter Ended
Labrador Iron Ore Royalty Corporation -
Results for the Second Quarter Ended June 30,
2020
TORONTO
,
Aug. 6, 2020
/CNW/ - Labrador Iron Ore Royalty Corporation ("LIORC") (TSX: LIF)
announced today its operation and cash flow results for the second quarter ended
June 30, 2020
.
Royalty revenue for the second quarter of 2020 amounted to
$46.2 million
compared to
$52.6 million
for the second quarter of 2019. Net income was
$48.9 million
or
$0.76
per share for the second
quarter of 2020 compared to
$61.1 million
or
$0.95
per share for the same period in 2019. Cash
flow from operations for the second quarter was
$37.6 million
or
$0.58
per share compared to
$47.8 million
or
$0.75
per share for the same period in 2019. The Corporation received no dividend
from IOC in the second quarter of 2020 compared to
$25.4 million
or
$0.40
per share for the same
period in 2019. Equity earnings from Iron Ore Company of
Canada
("IOC") amounted to
$28.7
million
or
$0.45
per share in the second quarter of 2020 compared to
$24.7 million
or
$0.39
per
share in the first quarter of 2020 and
$33.9 million
or
$0.53
per share in the second quarter of 2019.
Royalty revenue and net income for the second quarter of 2020 were lower than the second quarter
of 2019, predominantly as a result of lower iron ore prices and a change in IOC's product mix which
was beneficial to IOC's earnings, but lowered IOC's revenue from which the LIORC royalty is
calculated. While prices for concentrate remained strong in the second quarter, both concentrate
and pellet prices were lower in the second quarter of 2020 compared to the second quarter of 2019.
The average price for the Platts index for 62%
Fe Iron Ore
, CFR China ("62% Fe index") decreased
7% to
US$93
per tonne in the second quarter of 2020, compared to the average price of
US$100
per tonne in the second quarter of 2019. The Atlantic Basin blast furnace pellet premium, as
reported by Platts, averaged
US$30
per tonne in the second quarter of 2020, a 55% decrease over
the second quarter of 2019. Total IOC's sales for calculating the royalty to LIORC (concentrate for
sale ("CFS") plus pellets) of 4.6 million tonnes were 1% higher in the second quarter of 2020
compared to the same period in 2019. However, while CFS sales of 2.4 million tonnes were 10%
higher than in the same period in 2019, pellet sales in the second quarter of 2020 of 2.2 million
tonnes were 7% lower than in the second quarter of 2019. Cash flow from operations in the second
quarter of 2020 was lower than in the second quarter of 2019 largely because IOC elected not to
pay a shareholder dividend in the second quarter of 2020 due to the global economic uncertainty
created by the COVID-19 pandemic. While equity earnings from IOC in the second quarter of 2020
were lower than in the second quarter of 2019, mainly due to lower iron ore prices, equity earnings
from IOC were higher than in the first quarter of 2020, due to higher iron ore prices and lower
operating costs. IOC's operating costs were lower in the second quarter of 2020 because of the
reduction in pellet production and as a result of operational changes made to deal with COVID-19
that limited the number of contractors on site and reduced overtime costs. IOC also benefitted from
lower fuel costs in April and May.
LIORC's results for the three months and six months ended
June 30
are summarized below:
(in millions except per share information)
3 Months
Ended
Jun. 30,
2020
3 Months
Ended
Jun. 30,
2019
6 Months
Ended
Jun. 30,
2020
6 Months
Ended
Jun. 30,
2019
(Unaudited)
Revenue
$46.7
$53.3
$95.0
$92.5
Cash flow from operations
$37.6
$47.8
$48.3
$72.8
Operating cash flow per share
$0.58
$0.75
$0.75
$1.14
Net income
$48.9
$61.1
$95.5
$100.4
Net income per share
$0.76
$0.95
$1.49
$1.57
Iron Ore Company of Canada Operations
Production
During the second quarter, IOC's mining, processing, rail and shipping operations continued to
operate safely within the COVID-19 guidelines of both the
Quebec
and
Newfoundland
and
Labrador
governments. Despite the inclusion of social distancing protocols and limitations placed on certain
employee and contractor movements, total concentrate production in the second quarter of 2020 of
4.8 million tonnes was 7% higher than the second quarter of 2019 and 3% higher than the first
quarter of 2020. The total material moved was lower in the second quarter of 2020 than the second
quarter of 2019, mainly driven by the absence of development contractors impacting waste
movement and a lack of haul truck operators. However, this was more than offset by a lower strip
ratio. Concentrate production in the second quarter of 2019, was also adversely affected by a
flooding incident.
During the second quarter of 2020, total saleable production (CFS plus pellets) of 4.7 million tonnes
was 9% higher than the second quarter of 2019. During the second quarter of 2020, IOC optimised
its product mix to match market demand, by temporarily suspending two pellet machines from
operation in order to increase production of CFS. As a result, CFS production in the second quarter
of 2020 of 2.6 million tonnes was 28% higher than in the second quarter of 2019 and 65% higher
than the first quarter of 2020. Pellet production in the second quarter of 2020 of 2.1 million tonnes
was 7% lower than the second quarter of 2019 and 24% lower than the first quarter of 2020.
Sales as Reported for the LIORC Royalty
Total iron ore sales tonnage by IOC (CFS plus pellets) of 4.6 million tonnes in the second quarter of
2020 was 1% higher compared to the same period in 2019. In the second quarter of 2020 CFS
tonnage sold by IOC was 10% higher than in the same period in 2019 and pellet sales tonnage was
7% lower than in the second quarter of 2019, mainly as a result of the strategic change in product
mix by IOC.
IOC sells CFS based on the Platts index for 65%
Fe Iron Ore
, CFR China ("65% Fe index"). In the
second quarter of 2020 the average price for the 65% Fe index was
US$108
per tonne, a 6%
decrease from the average price in the second quarter of 2019 and a 5% increase from the first
quarter of 2020. Overall, prices for iron ore concentrate remained historically strong in the second
quarter of 2020, due to continuing demand from
China
, the largest importer of iron ore, offsetting
weaker demand outside of
China
. In the first half of 2020,
China
imported 547 million tonnes of iron
ore, up 9.6% over the same period in 2019. In addition, during the second quarter iron ore prices
benefited from ongoing supply concerns regarding future Brazilian production as a result of COVID-
19 disruptions. In the second quarter the 65% Fe index traded at an average premium of 16% to the
62% Fe index. This was the same average premium as in the first quarter of 2020 and similar to the
15% average premium in the second quarter of 2019.
The COVID-19 pandemic continued to negatively affect the demand for iron ore outside of
China
. As
a result, in the second quarter of 2020 there was reduced demand for pellets in various markets
across
Europe
and
North America
. The Atlantic Basin blast furnace pellet premium, as reported by
Platts, averaged
US$30
per tonne in the second quarter of 2020, a 55% decrease over the second
quarter of 2019 and 3% higher than the first quarter of 2020. The average pellet price realized by
IOC in the first half of 2020 was
US$117
per tonne, a 17% decrease from the average realized
price of
US$141
per tonne in the first half of 2019.
A change in product mix and lower iron ore prices, and in particular lower pellet premiums, resulted
in royalty revenue for LIORC in the second quarter of 2020 decreasing 12% compared to the royalty
revenue in the second quarter of 2019.
A summary of IOC's sales for calculating the royalty to LIORC in millions of tonnes is as follows:
3 Months
Ended
Jun. 30,
2020
3 Months
Ended
Jun. 30,
2019
6 Months
Ended
Jun. 30,
2020
6 Months
Ended
Jun. 30,
2019
Year
Ended
Dec. 31,
2019
Pellets
2.25
2.42
5.27
5.13
9.62
Concentrates
(1)
2.36
2.14
4.04
2.97
7.51
Total
(2)
4.61
4.57
9.31
8.10
17.14
(1)
Excludes third party ore sales.
(2)
Totals may not add up due to rounding.
Outlook
IOC continues to effectively operate its mining, processing, rail and shipping operations safely during
the COVID-19 pandemic. IOC production and sales volumes remain strong despite the additional
challenges presented by COVID-19, and Rio Tinto has recently reaffirmed its 2020 guidance for
IOC's saleable production of CFS and pellets at between 17.9 and 20.4 million tonnes.
Capital expenditures at IOC for 2020 which were originally forecasted to be approximately
$350
million
, are now projected to be approximately
$270 million
. The
$80 million
reduction in the capital
expenditure forecast is due to the deferral of certain development projects, mainly related to
COVID-19 protocol restrictions on bringing contractors and consultants on-site during the second
quarter, as well as a delay in the finalization of the third-party service contract that is a prerequisite
to increasing the haulage capacity of Québec North Shore and Labrador Railway.
Since
June 30
, the 65% Fe index has consistently been above its average price during the second
quarter of 2020. However, it is anticipated that the economic impact from the COVID-19 pandemic
will continue to cause both demand and supply disruptions to the seaborne iron ore market. While
the outlook for
China
steel production in the second half of 2020 remains positive, it is unclear
whether iron ore demand strength from
China
will be enough to offset the expected continued
weakness of steel producers in
Europe
and North America. In addition, while steel prices benefited
in the second quarter from fears that there would be supply constraints from
Brazil
, those fears
were never fully realized, and recently Brazilian miner Vale reconfirmed its original production
guidance, albeit at the lower end of its 310 to 330 million tonne range.
In such an uncertain economic environment, IOC's ability to optimize its production mix to meet
changing market demands is a clear advantage. At the end of the first quarter of 2020, IOC halted
production of two pellet machines in order to focus on meeting the demand for CFS. Recently, the
Atlantic pellet market has shown some improvement in demand and, as a result, IOC brought back
on-line one of the two idled pellet lines.
IOC remains well positioned to benefit from its royalty and equity investments in IOC given strong
iron ore market conditions and current production levels. In the first half of 2020, LIORC paid a total
of
$0.75
per share in dividends to shareholders from cash received from its IOC royalty. In addition,
while IOC decided not to declare a shareholder dividend in the first half of 2020, LIORC's share of
equity earnings in IOC was
$53.4 million
. LIORC continues to maintain a strong balance sheet with
no debt and positive working capital (current assets minus current liabilities) of
$29.4 million
as at
June 30
, 2020.
Respectfully submitted on behalf of the Directors of Labrador Iron Ore Royalty Corporation,
John F. Tuer
President and Chief Executive Officer
August 6, 2020
Management's Discussion and Analysis
The following discussion and analysis should be read in conjunction with the Management's
Discussion and Analysis section of the Corporation's 2019 Annual Report, and the financial
statements and notes contained therein and the
June 30, 2020
interim condensed consolidated
financial statements. The Corporation's revenues are entirely dependent on the operations of IOC as
its principal assets relate to the operations of IOC and its principal source of revenue is the 7%
royalty it receives on all sales of iron ore products by IOC. In addition to the volume of iron ore sold,
the Corporation's royalty revenue is affected by the price of iron ore and the Canadian – U.S. dollar
exchange rate.
The first quarter sales of IOC are traditionally adversely affected by the closing of the St. Lawrence
Seaway and general winter operating conditions and are usually 15% – 20% of the annual volume,
with the balance spread fairly evenly throughout the other three quarters. Because of the size of
individual shipments, some quarters may be affected by the timing of the loading of ships that can be
delayed from one quarter to the next.
Royalty revenue for the second quarter of 2020 amounted to
$46.2 million
compared to
$52.6 million
for the second quarter of 2019. Net income was
$48.9 million
or
$0.76
per share for the second
quarter of 2020 compared to
$61.1 million
or
$0.95
per share for the same period in 2019. Cash
flow from operations for the second quarter was
$37.6 million
or
$0.58
per share compared to
$47.8 million
or
$0.75
per share for the same period in 2019. The Corporation received no dividend
from IOC in the second quarter of 2020 compared to
$25.4 million
or
$0.40
per share for the same
period in 2019. Equity earnings from IOC amounted to
$28.7 million
or
$0.45
per share in the
second quarter of 2020 compared to
$24.7 million
or
$0.39
per share in the first quarter of 2020 and
$33.9 million
or
$0.53
per share in the second quarter of 2019.
Royalty revenue and net income for the second quarter of 2020 were lower than the second quarter
of 2019, predominantly as a result of lower iron ore prices and a change in IOC's product mix which
was beneficial to IOC's earnings, but lowered IOC's revenue from which the LIORC royalty is
calculated. While prices for concentrate remained strong in the second quarter, both concentrate
and pellet prices were lower in the second quarter of 2020 compared to the second quarter of 2019.
The average price for the 62% Fe index decreased 7% to
US$93
per tonne in the second quarter of
2020, compared to the average price of
US$100
per tonne in the second quarter of 2019. The
Atlantic Basin blast furnace pellet premium, as reported by Platts, averaged
US$30
per tonne in the
second quarter of 2020, a 55% decrease over the second quarter of 2019. Total IOC's sales for
calculating the royalty to LIORC (CFS plus pellets) of 4.6 million tonnes were 1% higher in the
second quarter of 2020 compared to the same period in 2019. However, while CFS sales of 2.4
million tonnes were 10% higher than in the same period in 2019, pellet sales in the second quarter of
2020 of 2.2 million tonnes were 7% lower than in the second quarter of 2019. Cash flow from
operations in the second quarter of 2020 was lower than in the second quarter of 2019 largely
because IOC elected not to pay a shareholder dividend in the second quarter of 2020 due to the
global economic uncertainty created by the COVID-19 pandemic. While equity earnings from IOC in
the second quarter of 2020 were lower than in the second quarter of 2019, mainly due to lower iron
ore prices, equity earnings from IOC were higher than in the first quarter of 2020, due to higher iron
ore prices and lower operating costs. IOC's operating costs were lower in the second quarter of
2020 because of the reduction in pellet production and as a result of operational changes made to
deal with COVID-19 that limited the number of contractors on site and reduced overtime costs. IOC
also benefitted from lower fuel costs in April and May.
During the second quarter, IOC's mining, processing, rail and shipping operations continued to
operate safely within the COVID-19 guidelines of both the
Quebec
and
Newfoundland
and
Labrador
governments. Despite the inclusion of social distancing protocols and limitations placed on certain
employee and contractor movements, total concentrate production in the second quarter of 2020 of
4.8 million tonnes was 7% higher than the second quarter of 2019 and 3% higher than the first
quarter of 2020. The total material moved was lower in the second quarter of 2020 than the second
quarter of 2019, mainly driven by the absence of development contractors impacting waste
movement and a lack of haul truck operators. However, this was more than offset by a lower strip
ratio. Concentrate production in the second quarter of 2019, was also adversely affected by a
flooding incident.
During the second quarter of 2020, total saleable production (CFS plus pellets) of 4.7 million tonnes
was 9% higher than the second quarter of 2019. During the second quarter of 2020, IOC optimised
its product mix to match market demand, by temporarily suspending two pellet machines from
operation in order to increase production of CFS. As a result, CFS production in the second quarter
of 2020 of 2.6 million tonnes was 28% higher than in the second quarter of 2019 and 65% higher
than the first quarter of 2020. Pellet production in the second quarter of 2020 of 2.1 million tonnes
was 7% lower than the second quarter of 2019 and 24% lower than the first quarter of 2020.
Total iron ore sales tonnage by IOC (CFS plus pellets) of 4.6 million tonnes in the second quarter of
2020 was 1% higher compared to the same period in 2019. In the second quarter of 2020 CFS
tonnage sold by IOC was 10% higher than in the same period in 2019 and pellet sales tonnage was
7% lower than in the second quarter of 2019, mainly as a result of the strategic change in product
mix by IOC.
IOC sells CFS based on the 65% Fe index. In the second quarter of 2020 the average price for the
65% Fe index was
US$108
per tonne, a 6% decrease from the average price in the second quarter
of 2019 and a 5% increase from the first quarter of 2020. Overall, prices for iron ore concentrate
remained historically strong in the second quarter of 2020, due to continuing demand from
China
, the
largest importer of iron ore, offsetting weaker demand outside of
China
. In the first half of 2020,
China
imported 547 million tonnes of iron ore, up 9.6% over the same period in 2019. In addition,
during the second quarter iron ore prices benefited from ongoing supply concerns regarding future
Brazilian production as a result of possible COVID-19 disruptions. In the second quarter the 65% Fe
index traded at an average premium of 16% to the 62% Fe index. This was the same average
premium as in the first quarter of 2020 and similar to the 15% average premium in the second
quarter of 2019.
The COVID-19 pandemic continued to negatively affect the demand for iron ore outside of
China
. As
a result, in the second quarter of 2020 there was reduced demand for pellets in various markets
across
Europe
and
North America
. The quarterly Atlantic Basin blast furnace pellet premium, as
reported by Platts, averaged
US$30
per tonne in the second quarter of 2020, a 55% decrease over
the second quarter of 2019 and 3% higher than the first quarter of 2020. The average pellet price
realized by IOC in the first half of 2020 was
US$117
per tonne, a 17% decrease from the average
realized price of
US$141
per tonne in the first half of 2019.
A change in product mix and lower iron ore prices, and in particular lower pellet premiums, resulted
in royalty revenue for LIORC in the second quarter of 2020 decreasing 12% compared to the royalty
revenue in the second quarter of 2019.
Results for the six months were affected by the same factors as affected the three month period.
Royalty and commission interests amortization expense increased by
$0.3 million
for the six months
compared to the same period in 2019 due to the increase in production.
The following table sets out quarterly revenue, net income and cash flow data for 2020, 2019 and
2018.
Revenue
Net
Income
Net Income
per Share
Cash
Flow
Cash Flow
from
Operations
per Share
Adjusted
Cash Flow
per Share
(1)
Dividends
Declared per
Share
(in millions except per share information)
2020
First Quarter
$48.3
$46.7
$0.73
$10.7
$0.17
$0.42
$0.35
Second Quarter
$46.7
$48.9
$0.76
$37.6
$0.58
$0.40
$0.45
2019
First Quarter
$39.2
$39.3
$0.61
$25.0
$0.39
$0.34
$1.05
Second Quarter
$53.3
$61.1
$0.95
$47.8
(2)
$0.75
(2)
$0.86
(2)
$0.90
Third Quarter
$46.2
$57.5
$0.90
$72.6
(3)
$1.13
(3)
$1.02
(3)
$1.00
Fourth Quarter
$39.6
$47.4
$0.74
$79.1
(4)
$1.24
(4)
$1.03
(4)
$1.05
2018
First Quarter
$34.3
$30.3
$0.47
$20.3
$0.32
$0.29
$0.35
Second Quarter
$5.2
$(3.3)
$(0.05)
$15.5
$0.24
$0.04
$0.25
Third Quarter
$44.6
$58.1
$0.91
$59.7
(5)
$0.93
(5)
$1.30
(5)
$0.55
Fourth Quarter
$46.8
$43.4
$0.68
$53.3
(6)
$0.83
(6)
$0.79
(6)
$0.60
(1)
"Adjusted cash flow" (see below).
(2)
Includes $25.4 million IOC dividend.
(3)
Includes $40.1 million IOC dividend.
(4)
Includes $44.6 million IOC dividend.
(5)
Includes $58.6 million IOC dividend.
(6)
Includes $25.3 million IOC dividend.
Standardized Cash Flow and Adjusted Cash Flow
For the Corporation, standardized cash flow is the same as cash flow from operating activities as
recorded in the Corporation's cash flow statements as the Corporation does not incur capital
expenditures or have any restrictions on dividends. Standardized cash flow per share was
$0.58
for
the quarter (2019 -
$0.75
). Cumulative standardized cash flow from inception of the Corporation is
$31.73
per share and total cash distributions since inception is
$31.14
per share, for a payout ratio
of 98%.
The Corporation also reports "Adjusted cash flow" which is defined as cash flow from operating
activities after adjustments for changes in amounts receivable, accounts payable and income taxes
recoverable and payable. It is not a recognized measure under International Financial Reporting
Standards ("IFRS"). The Directors believe that adjusted cash flow is a useful analytical measure as
it better reflects cash available for dividends to shareholders.
The following reconciles standardized cash flow from operating activities to adjusted cash flow (in
'000's).
3 Months Ended
Jun. 30, 2020
3 Months Ended
Jun. 30, 2019
6 Months Ended
Jun. 30, 2020
6 Months Ended
Jun. 30, 2019
Standardized cash flow from operating activities
$37,614
$47,837
$48,267
$72,800
Changes in amounts receivable, accounts payable and income taxes payable
(11,975)
6,943
4,198
3,492
Adjusted cash flow
$25,639
$54,780
$52,465
$76,292
Adjusted cash flow per share
$0.40
$0.86
$0.82
$1.19
Liquidity and Capital Resources
The Corporation had
$36.5 million
in cash as at
June 30, 2020
(
December 31, 2019
-
$77.9 million
)
with total current assets of
$83.7 million
(
December 31, 2019
-
$114.0 million
). The Corporation had
working capital of
$29.4 million
as at
June 30, 2020
(
December 31, 2019
-
$28.2 million
). The
Corporation's operating cash flow for the quarter was
$37.6 million
and the dividend paid during the
quarter was
$22.4 million
, resulting in cash balances increasing by
$15.2 million
during the second
quarter of 2020.
Cash balances consist of deposits in Canadian dollars with Canadian chartered banks. Amounts
receivable primarily consist of royalty payments from IOC. Royalty payments are received in U.S.
dollars and converted to Canadian dollars on receipt, usually 25 days after the quarter end. The
Corporation does not normally attempt to hedge this short-term foreign currency exposure.
Operating cash flow of the Corporation is sourced entirely from IOC through the Corporation's 7%
royalty,
10 cents
commission per tonne and dividends from its 15.10% equity interest in IOC. The
Corporation normally pays cash dividends from its net income to the maximum extent possible,
subject to the maintenance of appropriate levels of working capital.
The Corporation has a
$30 million
revolving credit facility with a term ending
September 18, 2022
with provision for annual one-year extensions. No amount is currently drawn under this facility (2019
– nil) leaving
$30.0 million
available to provide for any capital required by IOC or requirements of the
Corporation.
Outlook
IOC continues to effectively operate its mining, processing, rail and shipping operations safely during
the COVID-19 pandemic. IOC production and sales volumes remain strong despite the additional
challenges presented by COVID-19, and Rio Tinto has recently reaffirmed its 2020 guidance for
IOC's saleable production of CFS and pellets at between 17.9 and 20.4 million tonnes.
Capital expenditures at IOC for 2020 which were originally forecasted to be approximately
$350
million
, are now projected to be approximately
$270 million
. The
$80 million
reduction in the capital
expenditure forecast is due to the deferral of certain development projects, mainly related to
COVID-19 protocol restrictions on bringing contractors and consultants on-site during the second
quarter, as well as a delay in the finalization of the third-party service contract that is a prerequisite
to increasing the haulage capacity of Québec North Shore and Labrador Railway.
Since
June 30
, the 65% Fe index has consistently been above its average price during the second
quarter of 2020. However, it is anticipated that the economic impact from the COVID-19 pandemic
will continue to cause both demand and supply disruptions to the seaborne iron ore market. While
the outlook for
China
steel production in the second half of 2020 remains positive, it is unclear
whether iron ore demand strength from
China
will be enough to offset the expected continued
weakness of steel producers in
Europe
and North America. In addition, while steel prices benefited
in the second quarter from fears that there would be supply constraints from
Brazil
, those fears
were never fully realized, and recently Brazilian miner Vale reconfirmed its original production
guidance, albeit at the lower end of its 310 to 330 million tonne range.
In such an uncertain economic environment, IOC's ability to optimize its production mix to meet
changing market demands is a clear advantage. At the end of the first quarter of 2020, IOC halted
production of two pellet machines in order to focus on meeting the demand for CFS. Recently, the
Atlantic pellet market has shown some improvement in demand and, as a result, IOC brought back
on-line one of the two idled pellet lines.
IOC remains well positioned to benefit from its royalty and equity investments in IOC given strong
iron ore market conditions and current production levels. In the first half of 2020, LIORC paid a total
of
$0.75
per share in dividends to shareholders from cash received from its IOC royalty. In addition,
while IOC decided not to declare a shareholder dividend in the first half of 2020, LIORC's share of
equity earnings in IOC was
$53.4 million
. LIORC continues to maintain a strong balance sheet with
no debt and positive working capital (current assets minus current liabilities) of
$29.4 million
as at
June 30
, 2020.
John F. Tuer
President and Chief Executive Officer
Toronto, Ontario
August 6, 2020
Forward-Looking Statements
This report may contain ''forward-looking'' statements that involve risks, uncertainties and other
factors that may cause the actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or implied by such forward-looking
statements. Words such as ''may'', ''will'', ''expect'', ''believe'', ''plan'', ''intend'', ''should'', ''would'',
''anticipate'' and other similar terminology are intended to identify forward-looking statements. These
statements reflect current assumptions and expectations regarding future events and operating
performance as of the date of this report. Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future performance or results, and will not
necessarily be accurate indications of whether or not such results will be achieved. A number of
factors could cause actual results to vary significantly, including iron ore price and volume volatility,
exchange rates, the performance of IOC, market conditions in the steel industry, mining risks and
insurance, relationships with indigenous groups, natural disasters, severe weather conditions and
public health epidemics, changes affecting IOC's customers, competition from other iron ore
producers, estimates of reserves and resources and government regulation and taxation. A
discussion of these factors is contained in LIORC's annual information form dated
March 5, 2020
under the heading, ''Risk Factors''. Although the forward-looking statements contained in this report
are based upon what management of LIORC believes are reasonable assumptions, LIORC cannot
assure investors that actual results will be consistent with these forward-looking statements. These
forward-looking statements are made as of the date of this report and LIORC assumes no
obligation, except as required by law, to update any forward-looking statements to reflect new
events or circumstances. This report should be viewed in conjunction with LIORC's other publicly
available filings, copies of which can be obtained electronically on SEDAR at
www.sedar.com
.
Notice:
The following unaudited interim condensed consolidated financial statements of the Corporation have
been prepared by and are the responsibility of the Corporation's management. The Corporation's
independent auditor has not reviewed these interim financial statements.
LABRADOR
IRON ORE ROYALTY CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at
June 30,
December 31,
(in thousands of Canadian dollars)
2020
2019
(Unaudited)
Assets
Current Assets
Cash and short-term investments
$
36,526
$
77,859
Amounts receivable
47,138
36,156
Total Current Assets
83,664
114,015
Non-Current Assets
Iron Ore Company of Canada ("IOC")
royalty and commission interests
244,434
247,701
Investment in IOC
434,138
381,310
Total Non-Current Assets
678,572
629,011
Total Assets
$
762,236
$
743,026
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable
$
10,032
$
7,939
Dividend payable
28,800
67,200
Taxes payable
15,401
10,710
Total Current Liabilities
54,233
85,849
Non-Current Liabilities
Deferred income taxes
126,810
119,840