Important 108.5Mt 58.0% Fe DSO Useful resource Outlined at Hamersley Iron Ore Venture

Monetary Efficiency

Within the first quarter of 2024, LIORC’s monetary outcomes benefited from larger 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% larger than the primary quarter of 2023 and three% larger 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. Internet 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 circulate per share for the primary quarter of 2024 was $0.49 per share, which was 20% larger than in the identical interval in 2023 and 4% larger than the fourth quarter of 2023. Whereas adjusted money circulate shouldn’t be a acknowledged measure underneath Worldwide Monetary Reporting Requirements (“IFRS”), the Administrators consider that it’s a helpful analytical measure because it higher displays money accessible for dividends to shareholders.

Ongoing uncertainty relating to the outlook for international metal demand and an surprising enhance in iron ore shipments from Brazil contributed to an nearly 25% lower in iron ore costs throughout the first quarter of 2024.  Based on the World Metal Affiliation, international 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, significantly on account of China’s troubled property sector and decrease revenue margins for metal producers has put strain on the demand for larger high quality iron ore and pellets. On the provision aspect, decreases in seaborne iron ore shipments from western Australia had been offset by a 15% enhance in iron ore shipments by Vale because of operational enhancements throughout Brazil’s historically wet season.

IOC sells focus on the market (“CFS”) primarily based on the Platts index for 65% Fe, CFR China (“65% Fe index”). All references to tonnes and per tonne costs on this report discuss with moist metric tonnes, apart from references to Platts quoted pricing, which discuss 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 median of US$46 per tonne in the identical quarter of 2023, as decrease metal margins continued to trigger metal producers to substitute larger high quality pellets with inexpensive decrease high quality iron ore. Based mostly 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% larger 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% larger than the identical quarter of 2023. Pellet manufacturing of two.5 million tonnes was 15% larger than the corresponding quarter in 2023, because 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 larger 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% larger than the full gross sales tonnage for a similar interval in 2023 and 1% larger 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% larger than the identical quarter of 2023 and seven% larger than the fourth quarter of 2023. CFS gross sales tonnages had been 13% larger than the identical quarter of 2023 and 6% decrease than the fourth quarter of 2023.

Outlook

Rio Tinto’s 2024 steerage 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, larger inflation and financial tightening proceed to negatively have an effect on international metal demand, not too long ago seaborne iron ore costs have proven some resiliency. For the reason that 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% larger than on the finish of the primary quarter of 2024.  Long run the outlook for iron ore and high-quality iron ore specifically, is constructive.  The World Metal Affiliation forecasts that international 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 displaying a significant choose up in 2025 and continued resilience within the US, Japan and Korea.

Lastly, important further 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.  At the moment, metal manufacturing accounts for 7% – 9% of the world’s greenhouse fuel (“GHG”) emissions.  The transition to metal manufacturing by the use of the Electrical Arc Furnace (“EAF”) course of and away from the Blast Furnace or Primary Oxygen Furnace course of has the potential to considerably scale back GHG emissions.  This transition to EAF expertise requires iron ore merchandise with very low deleterious supplies and a excessive iron content material, similar to these produced by IOC. Based on Wooden Mackenzie, simply 8% of iron ore manufacturing is prime grade appropriate for inexperienced steelmaking and one other 15% – 20% might be processed to turn into such prime grade materials.

On April 16, 2024 , the Federal Finance Minister tabled the Federal Finances 2024 which proposed a rise within the capital features inclusion price for firms from one half to 2 thirds for capital features realized on or after June 25, 2024 . If this tax change is handed into regulation, it is going to 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 acquire equal to the carrying worth of its funding in IOC much less its value. If the capital features price change is enacted, it could have the impression 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 impression LIORC within the occasion it sells its shares in IOC.

LIORC has no debt and at March 31, 2024 had constructive 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 needs to be learn together with 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 quantity of iron ore offered, the Company’s royalty income is affected by the value of iron ore and the Canadian – U.S. greenback change price. The primary quarter gross sales of IOC are historically adversely affected by the overall winter working situations and are normally 15% – 20% of the annual quantity, with the stability 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 because of larger 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 larger by 20%. Whereas CFS gross sales tonnages had been 13% larger than the identical quarter in 2023, pellet gross sales had been 25% larger, predominantly because 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 circulate 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 primarily based 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, significantly on account of China’s troubled property sector and a 15% enhance in iron ore shipments by Vale because of operational enhancements throughout Brazil’s historically wet season, contributed to an nearly 25% lower in iron ore costs throughout 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 median of US$46 per tonne in the identical quarter of 2023, as decrease metal margins continued to trigger metal producers to substitute larger high quality pellets with inexpensive decrease high quality iron ore.

Based mostly 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 Movement and Adjusted Money Movement

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

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

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

Liquidity and Capital Assets

The Company had $14.4 million in money as at March 31, 2024 ( December 31, 2023 – $13.2 million ) with complete 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 circulate was $30.0 million and the dividend paid throughout the quarter was $28.8 million , leading to money balances growing by $1.2 million throughout the first quarter of 2024.

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

Working money circulate 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 circulate generated from IOC to the utmost extent doable, 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 presently drawn underneath this facility (2023 – nil) leaving $30.0 million accessible 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-Wanting Statements
This report might include “forward-looking” statements that contain dangers, uncertainties and different elements that 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 similar to “might”, “will”, “count on”, “consider”, “plan”, “intend”, “ought to”, “would”, “anticipate” and different related terminology are supposed to establish 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 might be achieved. A variety of elements may trigger precise outcomes to fluctuate considerably, together with iron ore worth and quantity volatility; the efficiency of IOC; market situations within the metal business; 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 brought on by pure disasters, extreme climate situations and public well being crises, together with the COVID-19 outbreak; failure of knowledge techniques or harm from cyber safety assaults; antagonistic adjustments in home and international financial and political situations; 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 underneath the heading, “Danger Elements”. Though the forward-looking statements contained on this report are primarily based upon what administration of LIORC believes are cheap assumptions, LIORC can’t guarantee traders that precise outcomes might be per 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 needs to be seen together with LIORC’s different publicly accessible filings, copies of which might 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 impartial 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