Iron Ore Exploration Commences within the Pilbara

Monetary Efficiency

Within the first quarter of 2024, LIORC’s monetary outcomes benefited from increased gross sales tonnages of pellets and focus on the market (“CFS”), partly offset by decrease iron ore costs and pellet premiums. Royalty income for the primary quarter of 2024 of $56.0 million was 20% increased than the primary quarter of 2023 and three% increased than the fourth quarter of 2023. Fairness earnings from Iron Ore Firm of Canada (“IOC”) had been $34.3 million within the first quarter of 2024 in comparison with $21.8 million within the first quarter of 2023 and $26.2 million within the fourth quarter of 2023. Web revenue per share for the primary quarter of 2024 was $0.93 per share, which was a 36% enhance over the identical interval in 2023 and a 15% enhance over the fourth quarter of 2023. The adjusted money stream per share for the primary quarter of 2024 was $0.49 per share, which was 20% increased than in the identical interval in 2023 and 4% increased than the fourth quarter of 2023. Whereas adjusted money stream shouldn’t be a acknowledged measure beneath Worldwide Monetary Reporting Requirements (“IFRS”), the Administrators consider that it’s a helpful analytical measure because it higher displays money out there for dividends to shareholders.

Ongoing uncertainty relating to the outlook for world metal demand and an sudden enhance in iron ore shipments from Brazil contributed to an nearly 25% lower in iron ore costs in the course of the first quarter of 2024.  In response to the World Metal Affiliation, world crude metal manufacturing was up 1% within the first quarter of 2024 in comparison with the primary quarter of 2023. Nonetheless, issues relating to metal demand, notably on account of China’s troubled property sector and decrease revenue margins for metal producers has put stress on the demand for increased high quality iron ore and pellets. On the availability aspect, decreases in seaborne iron ore shipments from western Australia had been offset by a 15% enhance in iron ore shipments by Vale as a consequence of operational enhancements throughout Brazil’s historically wet season.

IOC sells focus on the market (“CFS”) based mostly on the Platts index for 65% Fe, CFR China (“65% Fe index”). All references to tonnes and per tonne costs on this report check with moist metric tonnes, aside from references to Platts quoted pricing, which check with dry metric tonnes. Traditionally, IOC’s moist ore accommodates roughly 3% much less ore per equal quantity than dry ore. Within the first quarter of 2024, the 65% Fe index averaged US$136 per tonne, a 2% lower over the prior quarter and a 3% lower over the common of US$140 per tonne within the first quarter of 2023. Nonetheless, whereas the 65% Fe Index began the quarter at a strong US$153 per tonne, it completed the quarter at US$115 per tonne.

The month-to-month Atlantic Blast Furnace 65% Fe pellet premium index as quoted by Platts (the “pellet premium”) averaged US$40 per tonne within the first quarter of 2024, down 12% from a mean of US$46 per tonne in the identical quarter of 2023, as decrease metal margins continued to trigger metal producers to substitute increased high quality pellets with cheaper decrease high quality iron ore. Primarily based on gross sales as reported for the LIORC royalty, the general common worth realized by IOC for CFS and pellets, FOB Sept-Îles, was roughly US$133 per tonne within the first quarter of 2024, in comparison with roughly US$136 per tonne within the first quarter of 2023.

Iron Ore Firm of Canada Operations

Operations

IOC focus manufacturing within the first quarter of 2024 of 4.7 million tonnes was 3% increased than the identical quarter of 2023 and 5% decrease than the fourth quarter of 2023. Focus manufacturing within the first quarter of 2024 benefited from a decrease strip ratio on account of adjustments within the mining sequence, which resulted in a rise within the quantity of crushed ore that was delivered to the concentrator.

IOC saleable manufacturing (CFS plus pellets) of 4.4 million tonnes within the first quarter of 2024 was 3% increased than the identical quarter of 2023. Pellet manufacturing of two.5 million tonnes was 15% increased than the corresponding quarter in 2023, as a consequence of a rise within the availability of focus and fewer plant reliability points than in 2023. CFS manufacturing of 1.9 million tonnes was 9% decrease than the identical quarter of 2023 primarily as a result of increased manufacturing of pellets.

Gross sales as Reported for the LIORC Royalty

Whole iron ore gross sales tonnage by IOC (CFS plus pellets) of 4.4 million tonnes within the first quarter of 2024 was 20% increased than the entire gross sales tonnage for a similar interval in 2023 and 1% increased than the fourth quarter of 2023.  The rise in IOC gross sales tonnage was largely a results of improved availability of stock and timing of vessels. Pellet gross sales tonnages had been 25% increased than the identical quarter of 2023 and seven% increased than the fourth quarter of 2023. CFS gross sales tonnages had been 13% increased than the identical quarter of 2023 and 6% decrease than the fourth quarter of 2023.

Outlook

Rio Tinto’s 2024 steering for IOC’s saleable manufacturing (CFS plus pellets) stays at 16.7 million to 19.6 million tonnes. This compares to 16.5 million tonnes of saleable manufacturing in 2023. IOC continues to give attention to upgrading its capital belongings by way of elevated capital expenditures.  As reported within the 2023 Annual Report, IOC’s capital expenditures for 2024 are forecasted to be US$431 million , up from US$362 million in 2023.

Whereas decrease capital funding charges, increased inflation and financial tightening proceed to negatively have an effect on world metal demand, not too long ago seaborne iron ore costs have proven some resiliency. Because the finish of the primary quarter, iron ore costs have improved. On the finish of April 2024 , the 65% Fe index was US$131 per tonne or 14% increased than on the finish of the primary quarter of 2024.  Long term the outlook for iron ore and high-quality iron ore particularly, is optimistic.  The World Metal Affiliation forecasts that world metal demand will develop by 1.7% in 2024 and 1.2% in 2025. It expects that metal demand in China in 2024 will stay flat, as declining demand from actual property investments is offset by progress in metal demand from infrastructure investments and manufacturing sectors. Nonetheless, it forecasts broad-based progress in metal demand for the world excluding China of three.5% every year over 2024 and 2025, with India rising because the strongest driver with 8% progress in its metal demand over 2024 and 2025. It additionally forecasts metal demand within the European Union exhibiting a significant decide up in 2025 and continued resilience within the US, Japan and Korea.

Lastly, important extra demand for the kind of high-quality iron ore merchandise that IOC is able to producing will come from the worldwide transition to inexperienced metal.  Presently, metal manufacturing accounts for 7% – 9% of the world’s greenhouse fuel (“GHG”) emissions.  The transition to metal manufacturing by means of the Electrical Arc Furnace (“EAF”) course of and away from the Blast Furnace or Fundamental Oxygen Furnace course of has the potential to considerably cut back GHG emissions.  This transition to EAF expertise requires iron ore merchandise with very low deleterious supplies and a excessive iron content material, corresponding to these produced by IOC. In response to Wooden Mackenzie, simply 8% of iron ore manufacturing is prime grade appropriate for inexperienced steelmaking and one other 15% – 20% could be processed to turn out to be such prime grade materials.

On April 16, 2024 , the Federal Finance Minister tabled the Federal Funds 2024 which proposed a rise within the capital positive aspects inclusion charge for firms from one half to 2 thirds for capital positive aspects realized on or after June 25, 2024 . If this tax change is handed into regulation, it will likely be accounted for within the interval of enactment and mirrored within the monetary outcomes at the moment.  LIORC’s deferred revenue taxes payable features a capital achieve equal to the carrying worth of its funding in IOC much less its price. If the capital positive aspects charge change is enacted, it might have the influence of accelerating deferred revenue taxes by roughly $25.3 million or $0.40 per share.  This might be a non-cash entry and can solely influence LIORC within the occasion it sells its shares in IOC.

LIORC has no debt and at March 31, 2024 had optimistic web working capital (present belongings much less present liabilities) of $30 million , which included the primary quarter web royalty cost acquired from IOC on April 25, 2024 and the LIORC dividend within the quantity of $0.45 per share paid to shareholders on the following day.

Respectfully submitted on behalf of the Administrators of the Company,

John F. Tuer
President and Chief Govt Officer
Might 8, 2024

Administration’s Dialogue and Evaluation

The next dialogue and evaluation ought to be learn at the side of the Administration’s Dialogue and Evaluation part of Labrador Iron Ore Royalty Company’s (“LIORC” or the “Company”) 2023 Annual Report, and the monetary statements and notes contained therein and the March 31, 2024 interim condensed consolidated monetary statements.

Overview of the Enterprise

The Company’s revenues are totally depending on the operations of IOC as its principal belongings relate to the operations of IOC and its principal income is the 7% royalty it receives on all gross sales of iron ore merchandise by IOC. Along with the amount of iron ore bought, the Company’s royalty income is affected by the worth of iron ore and the Canadian – U.S. greenback change charge. The primary quarter gross sales of IOC are historically adversely affected by the final winter working circumstances and are often 15% – 20% of the annual quantity, with the steadiness unfold pretty evenly all through the opposite three quarters. Due to the scale of particular person shipments, some quarters could also be affected by the timing of the loading of ships that may be delayed from one quarter to the following.

Monetary Highlights

The upper income, web revenue and fairness earnings from IOC achieved within the first quarter of 2024 as in comparison with 2023 had been primarily as a consequence of increased gross sales tonnages of pellets and CFS, partly offset by decrease iron ore costs and pellet premiums. The primary quarter of 2024 gross sales tonnages (CFS plus pellets) had been increased by 20%. Whereas CFS gross sales tonnages had been 13% increased than the identical quarter in 2023, pellet gross sales had been 25% increased, predominantly as a consequence of improved availability of stock and timing of vessels.

The upper pellet and CFS gross sales tonnages resulted in royalty revenue of $56.0 million for the quarter as in comparison with $46.5 million for a similar interval in 2023. First quarter 2024 money stream from operations was $30.0 million or $0.47 per share in comparison with $19.5 million or $0.30 per share for a similar interval in 2023. Fairness earnings from IOC amounted to $34.3 million or $0.54 per share within the first quarter of 2024 in comparison with $21.8 million or $0.34 per share for a similar interval in 2023.

Working Highlights

IOC sells CFS based mostly on the 65% Fe index.  Within the first quarter of 2024, the 65% Fe index averaged US$136 per tonne, a 3% lower over the common of US$140 per tonne within the first quarter of 2023. Ongoing issues relating to metal demand, notably on account of China’s troubled property sector and a 15% enhance in iron ore shipments by Vale as a consequence of operational enhancements throughout Brazil’s historically wet season, contributed to an nearly 25% lower in iron ore costs in the course of the first quarter of 2024. The 65% Fe Index, which began the quarter at a strong US$153 per tonne, completed the quarter at US$115 per tonne.  The month-to-month pellet premium averaged US$40 per tonne within the first quarter of 2024, down 12% from a mean of US$46 per tonne in the identical quarter of 2023, as decrease metal margins continued to trigger metal producers to substitute increased high quality pellets with cheaper decrease high quality iron ore.

Primarily based on gross sales as reported for the LIORC royalty, the general common worth realized by IOC for CFS and pellets, FOB Sept-Îles was roughly US$133 per tonne within the first quarter of 2024 in comparison with US$136 per tonne within the first quarter of 2023. The lower within the common realized worth FOB Sept-Îles in 2024 was a results of decrease CFS costs and decrease pellet premiums.

Standardized Money Stream and Adjusted Money Stream

For the Company, standardized money stream is identical as money stream from working actions as recorded within the Company’s money stream statements because the Company doesn’t incur capital expenditures or have any restrictions on dividends.  Standardized money stream per share was $0.47 for the quarter (2023 – $0.30 ).

The Company additionally stories “Adjusted money stream” which is outlined as money stream from working actions after changes for adjustments in quantities receivable, accounts payable and revenue taxes recoverable and payable.  It’s not a acknowledged measure beneath IFRS. The Administrators consider that adjusted money stream is a helpful analytical measure because it higher displays money out there for dividends to shareholders.

The next reconciles standardized money stream from working actions to adjusted money stream.

Liquidity and Capital Sources

The Company had $14.4 million in money as at March 31, 2024 ( December 31, 2023 – $13.2 million ) with whole present belongings of $71.9 million ( December 31, 2023 – $67.5 million ). The Company had working capital of $29.7 million as at March 31, 2023 ( December 31, 2023 – $27.2 million ). The Company’s working money stream was $30.0 million and the dividend paid in the course of the quarter was $28.8 million , leading to money balances rising by $1.2 million in the course of the first quarter of 2024.

Money balances include deposits in Canadian {dollars} with a Canadian chartered financial institution. Quantities receivable primarily include royalty funds from IOC. Royalty funds are acquired in U.S. {dollars} and transformed to Canadian {dollars} on receipt, often 25 days after the quarter finish. The Company doesn’t usually try to hedge this short-term overseas foreign money publicity.

Working money stream of the Company is sourced totally from IOC by way of the Company’s 7% royalty, 10 cents fee per tonne and dividends from its 15.10% fairness curiosity in IOC. The Company usually pays money dividends from its free money stream generated from IOC to the utmost extent potential, topic to the upkeep of acceptable ranges of working capital.

The Company has a $30 million revolving credit score facility with a time period ending September 18, 2026 with provision for annual one-year extensions.  No quantity is at the moment drawn beneath this facility (2023 – nil) leaving $30.0 million out there to supply for any capital required by IOC or necessities of the Company.

John F. Tuer
President and Chief Govt Officer
Toronto, Ontario
Might 8, 2024

Ahead-Trying Statements
This report could include “forward-looking” statements that contain dangers, uncertainties and different elements which will trigger the precise outcomes, efficiency or achievements to be materially completely different from any future outcomes, efficiency or achievements expressed or implied by such forward-looking statements. Phrases corresponding to “could”, “will”, “count on”, “consider”, “plan”, “intend”, “ought to”, “would”, “anticipate” and different related terminology are supposed to determine forward-looking statements. These statements mirror present assumptions and expectations relating to future occasions and working efficiency as of the date of this report. Ahead-looking statements contain important dangers and uncertainties, shouldn’t be learn as ensures of future efficiency or outcomes, and won’t essentially be correct indications of whether or not or not such outcomes can be achieved. A lot of elements might trigger precise outcomes to differ considerably, together with iron ore worth and quantity volatility; the efficiency of IOC; market circumstances within the metal trade; fluctuations within the worth of the Canadian and U.S. greenback; mining dangers that trigger a disruption in operations and availability of insurance coverage; disruption in IOC’s operations attributable to pure disasters, extreme climate circumstances and public well being crises, together with the COVID-19 outbreak; failure of knowledge techniques or injury from cyber safety assaults; adversarial adjustments in home and world financial and political circumstances; adjustments in authorities regulation and taxation; nationwide, provincial and worldwide legal guidelines, rules and insurance policies relating to local weather change that additional restrict the emissions of greenhouse gases or enhance the prices of operations for IOC or its prospects; adjustments affecting IOC’s prospects; competitors from different iron ore producers; renewal of mining licenses and leases; relationships with indigenous teams; litigation; and uncertainty within the estimates of reserves and sources. A dialogue of those elements is contained in LIORC’s annual info kind dated March 12, 2024 beneath the heading, “Danger Elements”. Though the forward-looking statements contained on this report are based mostly upon what administration of LIORC believes are affordable assumptions, LIORC can’t guarantee traders that precise outcomes can be according to these forward-looking statements. These forward-looking statements are made as of the date of this report and LIORC assumes no obligation, besides as required by regulation, to replace any forward-looking statements to mirror new occasions or circumstances. This report ought to be seen at the side of LIORC’s different publicly out there filings, copies of which could be obtained electronically on SEDAR+ at www.sedarplus.ca .

Discover:
The next unaudited interim condensed consolidated monetary statements of the Company have been ready by and are the accountability of the Company’s administration. The Company’s unbiased auditor has not reviewed these interim monetary statements.

The entire consolidated monetary statements for the primary quarter ended March 31, 2024 , together with the notes thereto, are posted on http://www.sedarplus.ca and labradorironore.com .

SOURCE Labrador Iron Ore Royalty Company

View authentic content material: http://www.newswire.ca/en/releases/archive/May2024/08/c4418.html