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RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2008

August, 12, 2008

Toronto

Labrador Iron Ore Royalty Income Fund (TSX: LIF.UN) announced its results for the second quarter ended June 30, 2008.

Royalty income for the second quarter of 2008 amounted to $57.61 million as compared to $15.30 million for the second quarter of 2007, an increase of 277% over the same period last year. The Fund’s cash flow from operating activities after adjustments for changes in amounts receivable, accounts payable and income taxes payable/recoverable (adjusted cash flow) for the second quarter was $32.95 million or $1.03 per unit as compared to $9.46 million or $0.30 per unit for the same period in 2007. Net income was $73.92 million or $2.31 per unit compared to $15.16 million or $0.47 per unit for the same period in 2007.

The increased volume and prices resulted in the Fund’s share of the equity earnings from IOC increasing to $49.2 million from $5.7 million in the 2007 quarter. Approximately $16.0 million or $0.50 per unit of this increase relates to the retroactive first quarter billings.

Results for the three months and six months ended June 30 are summarized below:

  3 Months Ended June 30 2008 3 Months Ended June 30 2007 6 Months Ended June 30 2008 6 Months Ended June 30 2007
  (Unaudited)
Revenue
(in millions)
$58.06 $15.68 $74.70 $28.83
Adjusted cash flow
(in millions)
$32.95 $ 9.46 $43.30 $18.17
Adjusted cash flow per unit $ 1.03 $ 0.30 $ 1.35 $ 0.57
Net income
(in millions)
$73.92 $15.16 $84.70 $25.90
Net income per unit $ 2.31 $ 0.47 $ 2.65 $ 0.81

“Adjusted cash flow” (defined as cash flow from operating activities as shown on the attached financial statements less changes in amounts receivable, accounts payable and income taxes payable/recoverable) is not a recognized measure under Canadian GAAP. The Trustees believe that adjusted cash flow is a useful analytical measure as it better reflects cash available for distributions to Unitholders.

A summary of IOC’s sales in millions of tonnes is as follows:

  6 Months Ended June 30, 2008 6 Months Ended June 30, 2007 Year Ended
Dec. 31, 2007
Pellets 6.57 4.52 10.99
Concentrates 0.82 0.73 2.41
 
Total 7.39 5.25 13.40

IOC has substantially completed its $60 million expansion to increase its concentrate capacity to 18.4 million tonnes during the quarter and has approved a further $500 million expenditure to increase concentrate capacity to 22 million tonnes by 2010. IOC also announced a feasibility study to further increase concentrate capacity to 25 million tonnes and pellet capacity from 13.5 to 14.5 million tonnes by 2011.

Respectfully submitted on behalf of the Trustees of Labrador Iron Ore Royalty Income Fund,

Please download PDF file for further information.

Bruce C. Bone
Chairman and Chief Executive Officer
August 12, 2008