Labrador Iron Ore Royalty Corporation - Results for the Third Quarter Ended
Labrador Iron Ore Royalty Corporation -
Results for the Third Quarter Ended
September 30, 2020
TORONTO
,
Nov. 5, 2020
/CNW/ - Labrador Iron Ore Royalty Corporation ("LIORC"), (TSX: LIF)
announced today its operation and cash flow results for the third quarter ended
September 30,
2020
.
Royalty revenue for the third quarter of 2020 amounted to
$52.4 million
compared to
$45.5 million
for the third quarter of 2019. Net income was
$57.7 million
or
$0.90
per share for the third quarter of
2020 compared to
$57.5 million
or
$0.90
per share for the same period in 2019. Equity earnings
from Iron Ore Company of
Canada
("IOC") amounted to
$34.9 million
or
$0.55
per share in the third
quarter of 2020 compared to
$28.7 million
or
$0.45
per share in the second quarter of 2020 and
$32.0 million
or
$0.50
per share in the third quarter of 2019. Cash flow from operations for the third
quarter was
$11.1 million
or
$0.17
per share compared to
$72.6 million
or
$1.13
per share for the
same period in 2019. The third quarter of 2019 included a dividend of
$40.1 million
or
$0.63
per
share from IOC.
Royalty revenue for the third quarter of 2020 was 15% higher than the third quarter of 2019,
predominantly as a result of higher realized iron ore prices and marginally higher sales tonnage.
While prices for concentrate were higher in the third quarter of 2020 compared to the third quarter of
2019, pellet premiums were lower. The average price for the Platts index for 62%
Fe Iron Ore
, CFR
China ("62% Fe index") increased 16% to
US$118
per tonne in the third quarter of 2020, compared
to the average price of
US$102
per tonne in the third quarter of 2019. The Atlantic Basin blast
furnace pellet premium, as reported by Platts, averaged
US$29
per tonne in the third quarter of
2020, a 49% decrease over the third quarter of 2019. Despite the impacts on the operations of IOC
from the COVID-19 pandemic, the total IOC's sales for calculating the royalty to LIORC
(concentrate for sale ("CFS") plus pellets) of 4.7 million tonnes were 3% higher in the third quarter of
2020 compared to the same period in 2019. However, while pellet sales in the third quarter of 2020
of 2.3 million tonnes were 15% higher than in the third quarter of 2019, CFS sales of 2.3 million
tonnes were 6% lower than in the same period in 2019. Cash flow from operations in the third
quarter of 2020 was lower than in the third quarter of 2019 largely because IOC elected not to pay
a shareholder dividend in the third quarter of 2020 in order to retain a substantially higher cash
balance due to concerns that the COVID-19 pandemic may adversely affect IOC's operations and
demand for its iron ore products. Equity earnings from IOC in the third quarter of 2020 were higher
than in the third quarter of 2019, mainly due to higher realized iron ore prices.
LIORC's results for the three months and nine months ended
September 30
are summarized below:
(in millions except per share information)
3 Months
Ended
Sept. 30,
2020
3 Months
Ended
Sept. 30,
2019
9 Months
Ended
Sept. 30,
2020
9 Months
Ended
Sept. 30,
2019
(Unaudited)
Revenue
$52.9
$46.2
$147.9
$138.7
Cash flow from operations
$11.1
$72.6
$59.4
$145.4
Operating cash flow per share
$0.17
$1.13
$0.93
$2.27
Net income
$57.7
$57.5
$153.2
$157.9
Net income per share
$0.90
$0.90
$2.39
$2.47
Iron Ore Company of Canada Operations
Production
Total concentrate production in the third quarter of 2020 was 4.2 million tonnes. This was 21% lower
than the third quarter of 2019 and 12% lower than the second quarter of 2020 due mainly to
unplanned mechanical issues and power outages affecting the processing plant and a longer annual
maintenance shutdown in September.
During the third quarter of 2020, total saleable production (CFS plus pellets) of 4.0 million tonnes
was 21% lower than the third quarter of 2019, mainly as a result of lower concentrate production
referred to above. CFS production in the third quarter of 2020 of 1.8 million tonnes was 26% lower
than in the third quarter of 2019 and 32% lower than the second quarter of 2020. Pellet production in
the third quarter of 2020 of 2.2 million tonnes was 17% lower than the third quarter of 2019, and 5%
higher than the second quarter of 2020. Pellet production in the third quarter of 2020 was reduced
due to IOC's decision to continue to align the product mix with customer demand by having one
pellet line retired from operations during the quarter because of low demand from
Europe
. In the
third quarter of 2019 all six pellet lines were in operation and in the second quarter of 2020 two
pellet lines were retired from operations because of low European pellet demand. Pellet production
in the third quarter of 2020 was also adversely impacted by the lack of pellet feed due to the
concentrator issues noted above and a rescheduled two-month outage to rebuild one of the pellet
lines from March to September due to COVID-19.
Total concentrate production for the nine months of 2020 was 13.8 million tonnes. This was 4%
lower compared to the same period in the prior year, mainly as a result of the unplanned mechanical
issues and power outages affecting the processing plant in the third quarter of 2020. Pellet
production for the nine months of 2020 of 7.1 million tonnes was 7% lower compared to the same
period in the prior year, mainly as a result of the decision to temporarily retire pellet lines from
operations to align the product mix with customer demand. CFS production for the nine months of
2020 of 5.9 million tonnes was the same as the same period in the prior year.
Sales as Reported for the LIORC Royalty
Total iron ore sales tonnage by IOC (CFS plus pellets) of 4.7 million tonnes in the third quarter of
2020 was 3% higher compared to the same period in 2019. In the third quarter of 2020 CFS
tonnage sold by IOC was 6% lower than in the same period in 2019 due to lower CFS production.
Pellet sales tonnage was 15% higher than in the third quarter of 2019 mainly due to availability
issues with ship-loaders in the third quarter of 2019, and 4% higher than the second quarter of 2020
due to an increase in pellet production as one of the two pellet lines retired in the first quarter of
2020 was brought back online in July as the demand for pellets in
Europe
improved.
Total iron ore sales tonnage by IOC (CFS plus pellets) for the nine months of 2020 was 14.0 million
tonnes. This was 11% higher compared to the same period in 2019. CFS tonnage sold by IOC for
the nine months of 2020 of 6.3 million tonnes was 17% higher compared to the same period in the
prior year, mainly due to breakdowns on reclaiming and ship-loading equipment in the third quarter of
2019. Pellet tonnage sold by IOC for the nine months of 2020 of 7.6 million tonnes was 6% higher
compared to the same period in the prior year, mainly due to breakdowns on reclaiming and ship-
loading equipment in the third quarter of 2019, offset by lower pellet production in the second and
third quarter of 2020 due to the decision to temporarily retire pellet lines from operations to align the
product mix with customer demand.
IOC sells CFS based on the Platts index for 65%
Fe Iron Ore
, CFR China ("65% Fe index"). In the
third quarter of 2020 the average price for the 65% Fe index was
US$129
per tonne, a 18%
increase from the average price in the third quarter of 2019 and a 19% increase from the second
quarter of 2020. Prices for iron ore concentrate increased in the third quarter of 2020, due to
continuing strong demand from
China
and tighter supply conditions. In the third quarter the 65% Fe
index traded at an average premium of 9% to the 62% Fe index. This was higher than the 7%
average premium in the third quarter of 2019 but was lower than the average premium of 16% in the
second quarter of 2020, as higher prices caused some steel producers to switch to lower grade iron
ore.
Despite an increase in pellet demand in
Europe
, overall low global steel demand and margins
outside of
China
, and high iron ore base prices, pushed pellet premiums lower in the third quarter of
2020 to multi-year lows. The Atlantic Basin blast furnace pellet premium, as reported by Platts,
averaged
US$29
per tonne in the third quarter of 2020, a 49% decrease over the third quarter of
2019 and a 5% decrease over the second quarter of 2020.
Higher prices for CFS, partially offset by lower pellet premiums resulted in royalty revenue for
LIORC in the third quarter of 2020 increasing 15% compared to the royalty revenue in the third
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
Sept. 30,
2020
3 Months
Ended
Sept. 30,
2019
9 Months
Ended
Sept. 30,
2020
9 Months
Ended
Sept. 30,
2019
Year
Ended
Dec. 31,
2019
Pellets
2.35
2.04
7.61
7.17
9.62
Concentrates
(1)
2.31
2.46
6.35
5.43
7.51
Total
(2)
4.65
4.51
13.96
12.60
17.14
(1)
Excludes third party ore sales.
(2)
Totals may not add up due to rounding.
Outlook
IOC production and sales volumes remain on target despite the additional challenges presented by
COVID-19. In its third quarter operational report, Rio Tinto recently reaffirmed its 2020 guidance for
IOC's saleable production of CFS and pellets at between 17.9 and 20.4 million tonnes.
IOC continues to optimise its product mix to match market demand. Following signs of some
recovery in pellet demand from
Europe
, IOC increased pellet production in the third quarter by
operating five out of six lines in the pellet plant, and plans to bring back the sixth line before the end
of 2020.
Iron ore prices currently remain at multi-year highs. Since
September 30, 2020
the average price for
the 65% Fe index has remained above the average during the third quarter of 2020. Global
economic activity is generally strong, and iron ore demand in
China
is at record levels as a result of
commodity-intensive stimulus measures. However, steel production outside of
China
remains down
significantly year over year, and earlier constraints on seaborne iron ore as a result of supply
disruptions due to COVID-19 are easing and the major producers are expected to deliver strong
volumes in the fourth quarter of 2020 which could result in lower iron ore prices. Also, there remain
concerns of renewed lockdowns as a result of the ongoing COVID-19 pandemic that could threaten
IOC operations and the global economic recovery.
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 nine months of 2020, LIORC paid a
total of
$1.25
per share in dividends to shareholders from cash received from its IOC royalty. In
addition, LIORC's share of equity earnings in IOC was
$88.3 million
. However, despite the positive
earnings at IOC, IOC decided not to declare a shareholder dividend in the nine months of 2020, in
order to retain a higher cash balance because of the global economic uncertainty created by the
COVID-19 pandemic. As a result, should IOC continue to be able to successfully operate
throughout the duration of the COVID-19 pandemic, LIORC would expect that this substantial cash
balance at IOC will ultimately benefit LIORC in the form of higher future IOC dividends. LIORC
continues to maintain a strong balance sheet with no debt and positive working capital (current
assets minus current liabilities) of
$29.8 million
as at
September 30
, 2020.
Respectfully submitted on behalf of the Directors of Labrador Iron Ore Royalty Corporation,
John F. Tuer
President and Chief Executive Officer
November 5, 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
September 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 third quarter of 2020 amounted to
$52.4 million
compared to
$45.5 million
for the third quarter of 2019. Net income was
$57.7 million
or
$0.90
per share for the third quarter of
2020 compared to
$57.5 million
or
$0.90
per share for the same period in 2019. Equity earnings
from IOC amounted to
$34.9 million
or
$0.55
per share in the third quarter of 2020 compared to
$28.7 million
or
$0.45
per share in the second quarter of 2020 and
$32.0 million
or
$0.50
per share
in the third quarter of 2019. Cash flow from operations for the third quarter was
$11.1 million
or
$0.17
per share compared to
$72.6 million
or
$1.13
per share for the same period in 2019. The
third quarter of 2019 included a dividend of
$40.1 million
or
$0.63
per share from IOC.
Royalty revenue for the third quarter of 2020 was 15% higher than the third quarter of 2019,
predominantly as a result of higher realized iron ore prices and marginally higher sales tonnage.
While prices for concentrate were higher in the third quarter of 2020 compared to the third quarter of
2019, pellet premiums were lower. The average price for the 62% Fe index increased 16% to
US$118
per tonne in the third quarter of 2020, compared to the average price of
US$102
per tonne
in the third quarter of 2019. The Atlantic Basin blast furnace pellet premium, as reported by Platts,
averaged
US$29
per tonne in the third quarter of 2020, a 49% decrease over the third quarter of
2019. Despite the impacts on the operations of IOC from the COVID-19 pandemic, the total IOC's
sales for calculating the royalty to LIORC (CFS plus pellets) of 4.7 million tonnes were 3% higher in
the third quarter of 2020 compared to the same period in 2019. However, while pellet sales in the
third quarter of 2020 of 2.3 million tonnes were 15% higher than in the third quarter of 2019, CFS
sales of 2.3 million tonnes were 6% lower than in the same period in 2019. Cash flow from
operations in the third quarter of 2020 was lower than in the third quarter of 2019 largely because
IOC elected not to pay a shareholder dividend in the third quarter of 2020 in order to retain a
substantially higher cash balance due to concerns that the COVID-19 pandemic may adversely
affect IOC's operations and demand for its iron ore products. Equity earnings from IOC in the third
quarter of 2020 were higher than in the third quarter of 2019, mainly due to higher realized iron ore
prices.
Total concentrate production in the third quarter of 2020 was 4.2 million tonnes. This was 21% lower
than the third quarter of 2019 and 12% lower than the second quarter of 2020 due mainly to
unplanned mechanical issues and power outages affecting the processing plant and a longer annual
maintenance shutdown in September.
During the third quarter of 2020, total saleable production (CFS plus pellets) of 4.0 million tonnes
was 21% lower than the third quarter of 2019, mainly as a result of lower concentrate production
referred to above. CFS production in the third quarter of 2020 of 1.8 million tonnes was 26% lower
than in the third quarter of 2019 and 32% lower than the second quarter of 2020. Pellet production in
the third quarter of 2020 of 2.2 million tonnes was 17% lower than the third quarter of 2019, and 5%
higher than the second quarter of 2020. Pellet production in the third quarter of 2020 was reduced
due to IOC's decision to continue to align the product mix with customer demand by having one
pellet line retired from operations during the quarter because of low demand from
Europe
. In the
third quarter of 2019 all six pellet lines were in operation and in the second quarter of 2020 two
pellet lines were retired from operations because of low European pellet demand. Pellet production
in the third quarter of 2020 was also adversely impacted by the lack of pellet feed due to the
concentrator issues noted above and a rescheduled two-month outage to rebuild one of the pellet
lines from March to September due to COVID-19.
Total concentrate production for the nine months of 2020 was 13.8 million tonnes. This was 4%
lower compared to the same period in the prior year, mainly as a result of the unplanned mechanical
issues and power outages affecting the processing plant in the third quarter of 2020. Pellet
production for the nine months of 2020 of 7.1 million tonnes was 7% lower compared to the same
period in the prior year, mainly as a result of the decision to temporarily retire pellet lines from
operations to align the product mix with customer demand. CFS production for the nine months of
2020 of 5.9 million tonnes was the same as the same period in the prior year.
Total iron ore sales tonnage by IOC (CFS plus pellets) of 4.7 million tonnes in the third quarter of
2020 was 3% higher compared to the same period in 2019. In the third quarter of 2020 CFS
tonnage sold by IOC was 6% lower than in the same period in 2019 due to lower CFS production.
Pellet sales tonnage was 15% higher than in the third quarter of 2019 mainly due to availability
issues with ship-loaders in the third quarter of 2019, and 4% higher than the second quarter of 2020
due to an increase in pellet production as one of the two pellet lines retired in the first quarter of
2020 was brought back online in July as the demand for pellets in
Europe
improved.
Total iron ore sales tonnage by IOC (CFS plus pellets) for the nine months of 2020 was 14.0 million
tonnes. This was 11% higher compared to the same period in 2019. CFS tonnage sold by IOC for
the nine months of 2020 of 6.3 million tonnes was 17% higher compared to the same period in the
prior year, mainly due to breakdowns on reclaiming and ship-loading equipment in the third quarter of
2019. Pellet tonnage sold by IOC for the nine months of 2020 of 7.6 million tonnes was 6% higher
compared to the same period in the prior year, mainly due to breakdowns on reclaiming and ship-
loading equipment in the third quarter of 2019, offset by lower pellet production in the second and
third quarter of 2020 due to the decision to temporarily retire pellet lines from operations to align the
product mix with customer demand.
IOC sells CFS based on the 65% Fe index. In the third quarter of 2020 the average price for the
65% Fe index was
US$129
per tonne, a 18% increase from the average price in the third quarter of
2019 and a 19% increase from the second quarter of 2020. Prices for iron ore concentrate
increased in the third quarter of 2020, due to continuing strong demand from
China
and tighter
supply conditions. In the third quarter the 65% Fe index traded at an average premium of 9% to the
62% Fe index. This was higher than the 7% average premium in the third quarter of 2019 but was
lower than the average premium of 16% in the second quarter of 2020, as higher prices caused
some steel producers to switch to lower grade iron ore.
Despite an increase in pellet demand in
Europe
, overall low global steel demand and margins
outside of
China
, and high iron ore base prices, pushed pellet premiums lower in the third quarter of
2020 to multi-year lows. The Atlantic Basin blast furnace pellet premium, as reported by Platts,
averaged
US$29
per tonne in the third quarter of 2020, a 49% decrease over the third quarter of
2019 and a 5% decrease over the second quarter of 2020.
Higher prices for CFS, partially offset by lower pellet premiums resulted in royalty revenue for
LIORC in the third quarter of 2020 increasing 15% compared to the royalty revenue in the third
quarter of 2019.
Results for the nine months were affected by the same factors as affected the three month period.
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
Third Quarter
$52.9
$57.7
$0.90
$11.1
$0.17
$0.46
$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
$0.17
for
the quarter (2019 -
$1.13
). Cumulative standardized cash flow from inception of the Corporation is
$31.90
per share and total cash distributions since inception is
$31.59
per share, for a payout ratio
of 99%.
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
Sept. 30, 2020
3 Months Ended
Sept. 30, 2019
9 Months Ended
Sept. 30, 2020
9 Months Ended
Sept. 30, 2019
Standardized cash flow from operating activities
$11,084
$72,646
$59,351
$145,446
Changes in amounts receivable, accounts payable and income taxes payable
18,070
(7,049)
22,268
(3,557)
Adjusted cash flow
$29,154
$65,597
$81,619
$141,889
Adjusted cash flow per share
$0.46
$1.02
$1.28
$2.22
Liquidity and Capital Resources
The Corporation had
$18.8 million
in cash as at
September 30, 2020
(
December 31, 2019
-
$77.9
million
) with total current assets of
$73.3 million
(
December 31, 2019
-
$114.0 million
). The
Corporation had working capital of
$29.8 million
as at
September 30, 2020
(
December 31, 2019
-
$28.2 million
). The Corporation's operating cash flow for the quarter of
$11.1 million
was negatively
impacted by the payment of previously delayed income tax instalments and the higher royalty
receivable. The dividend paid during the quarter was
$28.8 million
, resulting in cash balances
decreasing by
$17.7 million
during the third 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 production and sales volumes remain on target despite the additional challenges presented by
COVID-19. In its third quarter operational report, Rio Tinto recently reaffirmed its 2020 guidance for
IOC's saleable production of CFS and pellets at between 17.9 and 20.4 million tonnes.
IOC continues to optimise its product mix to match market demand. Following signs of some
recovery in pellet demand from
Europe
, IOC increased pellet production in the third quarter by
operating five out of six lines in the pellet plant and plans to bring back the sixth line before the end
of 2020.
Iron ore prices currently remain at multi-year highs. Since
September 30, 2020
the average price for
the 65% Fe index has remained above the average during the third quarter of 2020. Global
economic activity is generally strong, and iron ore demand in
China
is at record levels as a result of
commodity-intensive stimulus measures. However, steel production outside of
China
remains down
significantly year over year, and earlier constraints on seaborne iron ore as a result of supply
disruptions due to COVID-19 are easing and the major producers are expected to deliver strong
volumes in the fourth quarter of 2020 which could result in lower iron ore prices. Also, there remain
concerns of renewed lockdowns as a result of the ongoing COVID-19 pandemic that could threaten
IOC operations and the global economic recovery.
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 nine months of 2020, LIORC paid a
total of
$1.25
per share in dividends to shareholders from cash received from its IOC royalty. In
addition, LIORC's share of equity earnings in IOC was
$88.3 million
. However, despite the positive
earnings at IOC, IOC decided not to declare a shareholder dividend in the nine months of 2020, in
order to retain a higher cash balance because of the global economic uncertainty created by the
COVID-19 pandemic. As a result, should IOC continue to be able to successfully operate
throughout the duration of the COVID-19 pandemic, LIORC would expect that this substantial cash
balance at IOC will ultimately benefit LIORC in the form of higher future IOC dividends. LIORC
continues to maintain a strong balance sheet with no debt and positive working capital (current
assets minus current liabilities) of
$29.8 million
as at
September 30
, 2020.
John F. Tuer
President and Chief Executive Officer
Toronto, Ontario
November 5, 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
September 30,
December 31,
(in thousands of Canadian dollars)
2020
2019
(Unaudited)
Assets