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LETTER TO UNITHOLDERS RE RESTRUCTURING

April, 15, 2010

Toronto

Dear Unitholders:

At the Annual and Special Meeting to be held on May 19, 2010, Unitholders will be asked to consider and, if thought fit, approve a Plan of Arrangement to convert the Fund from a trust to a corporation.

Currently the Fund owns all of the shares and $248 million Notes of Labrador Mining Company Limited (‘‘LabMin’’) and receives dividends and interest from LabMin, which are then distributed to the Unitholders without income taxes being incurred by the Fund. Under changes to the Income Tax Act, commencing in 2011, the interest received by the Fund will be taxable thus reducing the amount available to be distributed to the Unitholders.

Under the proposed Plan of Arrangement, the Fund will distribute $248 million of Subordinated Notes to the Unitholders and then complete a series of steps that will effectively result in Unitholders exchanging their units for shares of a successor to LabMin called Labrador Iron Ore Royalty Corporation (‘‘LIORC’’). The common shares of LIORC and the Subordinated Notes the Unitholders will then own will trade together as Stapled Units on the Toronto Stock Exchange. Each Stapled Unit will consist of one common share and one Subordinated Note Receipt representing a $7.75 face amount of Subordinated Notes and entitled to interest payments of $0.936 per annum or $0.234 per quarter. The Arrangement will enable LIORC to pay interest and dividends directly to holders of Stapled Units on essentially the same basis as interest and dividends are currently distributed to the Unitholders. The Unitholders will continue to receive a quarterly distribution on the 25th day of the month following the end of each quarter.

It is expected that the Unitholders will be able to receive the LIORC shares and Subordinated Note Receipts, which will comprise the Stapled Units, on a tax-deferred basis for Canadian income tax purposes.

The Trustees, having assessed the options to continue to pay dividends and interest in a manner that preserves the Unitholders’ value, unanimously recommend that the Unitholders vote FOR the Arrangement Resolution.

If you are unable to attend the Annual and Special Meeting please complete and send in your proxy.

Yours truly,
(Signed) Bruce C. Bone
Chairman and Chief Executive Officer

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For further information, please contact:
Bruce C. Bone
Chairman & Chief Executive Officer
(416) 863-7133