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Labrador Iron Ore Royalty Corporation - Results for the Third Quarter Ended September 30, 2017

November, 06, 2017

TORONTO, Nov. 6, 2017 /CNW/ - Labrador Iron Ore Royalty Corporation ("LIORC", TSX: LIF) announced today its operation and cash flow results for the third quarter ended September 30, 2017.

Royalty revenue for the third quarter of 2017 amounted to $39.8 million as compared to $27.9 million for the third quarter of 2016. LIORC received a dividend from Iron Ore Company of Canada ("IOC") in the third quarter of 2017 in the amount of $32.2 million or $0.50 per share. Equity earnings from IOC amounted to $21.2 million or $0.33 per share in the third quarter of 2017 as compared to $7.7 million or $0.12 per share in the third quarter of 2016. Net income was $43.8 million or $0.69 per share for the third quarter of 2017 compared to $21.2 million or $0.33 per share for the same period in 2016. Cash flow from operations for the third quarter was $53.6 million or $0.84 per share as compared to $15.2 million or $0.24 per share for the same period in 2016.

The cash flow from operations, equity earnings and net income for the third quarter of 2017 were higher than the third quarter of 2016, mainly due to improved prices for concentrate and pellets and also due to increased sales tonnages.  As reported by Bloomberg, the benchmark iron ore price of 62% Fe CFR China averaged US$71 per tonne in the third quarter of 2017 and reached a high of US$80 in August. The comparable average price in the third quarter of 2016 was US$58 per tonne. Total iron ore sales tonnage – pellets plus concentrate for sale ("CFS") of 5.0 million tonnes was 8% higher in the third quarter of 2017 compared to the same period in 2016, driven largely by pellet tonnage sales being 14% higher than in the same period in 2016. The CFS sales tonnage in the third quarter of 2017 was slightly higher (plus 2%) than in the third quarter of 2016.

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,
2017

3 Months
Ended

Sept 30,
2016

9 Months
Ended

Sept 30,
2017

9 Months
Ended

Sept 30,
2016



(Unaudited)







Revenue


$40.4

$28.4

$118.0

$76.5

Cash flow from operations


$53.6

$15.2

$127.4

$35.2

Operating cash flow per share


$0.84

$0.24

$1.99

$0.55

Net income


$43.8

$21.2

$118.9

$40.4

Net income per share


$0.69

$0.33

$1.86

$0.63

 

Iron Ore Company of Canada Operations

Production
Total concentrate production in the third quarter of 2017 of 5.7 million tonnes was 8% higher than the third quarter of 2016 and was 16% higher than the second quarter of 2017. The record concentrate production in the third quarter of 2017 was due to a higher weight yield and an increase of ground tonnes resulting from improved asset reliability.

The increased concentrate production in the third quarter enabled improved production tonnages for both pellets and CFS. Pellet production in the third quarter of 2017 was 8% higher than the third quarter of 2016 and 24% higher than the second quarter of 2017. All six pellet lines operated in the third quarter of 2017 as planned, whereas in the second quarter of 2017 the No. 2 pellet line was down for the scheduled refurbishment of the induration machine. CFS production was 9% higher in the third quarter of 2017 than in the third quarter of 2016 and 12% higher than in the second quarter of 2017. Pellet production in the third quarter was again favoured by the strong demand and margins.

Sales as Reported for the LIORC Royalty
Third quarter 2017 total iron ore tonnage sold by IOC (CFS plus pellets) of 5.0 million tonnes was 8% above the total sales tonnage in the third quarter 2016 and 24% improved over the second quarter of 2017. In the third quarter of 2017, the pellet sales tonnage was 14% higher and CFS sales tonnage was 39% higher than the second quarter of 2017. The higher CFS sales were largely due to improved concentrate production, referred to above. Continued strong pellet demand and premiums supported maximizing pellet production and sales. While tonnage sales of both CFS and pellets improved in the third quarter as compared to previous quarters, port loading and therefore sales tonnages, were constrained by maintenance over a 34-day period in July and August on the dumper for the rail wagons that transport the iron ore products to the port at Sept Isles. As a result of the constraint in unloading the rail wagons and the inventory of CFS at the Carol Lake mine site was unusually high at the end of the third quarter at some 0.6 million tonnes over plan.

The benchmark price for 62% Fe CFR China was 22% higher in the third quarter of 2017 as compared to the third quarter of 2016 and pellet premiums were also much improved. The Canadian dollar was 4% stronger in the third quarter of 2017 as compared to the third quarter of 2016. As a result of the stronger iron ore prices and pellet premiums, and net of the stronger Canadian dollar, the royalty revenue for LIORC in the third quarter of 2017 was 42% higher than the revenue in last year's third quarter.

A summary of IOC's sales for calculating the royalty to LIORC in millions of tonnes is as follows:


3 Months
Ended
Sept 30, 
2017

3 Months
Ended
Sept 30, 
2016

9 Months
Ended
Sept 30, 
2017

9 Months
Ended
Sept 30, 
2016

Year
Ended 
Dec. 31,
2016







Pellets

2.78

2.44

7.70

6.98

10.06

Concentrates(1)

2.23

2.18

6.01

6.38

8.17







Total(2)

5.00

4.62

13.71

13.36

18.22

(1)

Excludes third party ore sales

(2)

Totals may not add up due to rounding

 

Outlook

Following a strong third quarter in 2017, IOC is expecting good production and sales tonnages in the fourth quarter of 2017. The refurbishment of the induration machine for the No. 5 pellet line commenced in late September 2017 as planned. The No. 5 pellet line is expected to be offline for approximately nine weeks.

Rio Tinto, in its release of production results for the third quarter, maintained the IOC production guidance for 2017 of 11.4 to 12.4 million tonnes of iron ore pellets and concentrates for their 58.72% interest in IOC, which is total saleable production of 19.4 to 21.1 million tonnes on a 100% basis. Achieving the low end of the guidance would be a 6% improvement over the saleable production in 2016 of 18.2 million tonnes.

The 62% Fe CFR China benchmark iron ore price rose from approximately US$64 per tonne at the beginning of the third quarter to a peak of US$80 per tonne in August and declined back to approximately US$62 per tonne at the end of the quarter. The increase was supported by improved margins for Chinese steel mills and the decline was precipitated by concerns on the timing of large Chinese infrastructure projects and reduced steel production in China to meet environmental targets. Forecasts for the 62% Fe CFR China seaborne price vary considerably but tend to forecast prices trending lower for the balance of 2017 and the longer term, driven by increased supply, notably from Brazil. However, premiums for the higher grade iron ore concentrates and pellets, such as produced by IOC, have been exceptionally strong and the value-in-use premiums may continue to be supported by the Chinese efforts to reduce pollution.

In recent weeks the Canadian dollar has somewhat weakened, reflecting concern over the NAFTA negotiations and the outlook for interest rate increases by the Bank of Canada, and iron ore prices have weakened. These factors are offsetting but could affect LIORC's results.

The IOC employees and management have had success in their efforts to increase production and reduce unit operating costs. We note the strong third quarter performance, and we expect strong fourth quarter sales as the inventories at Carol Lake are reduced to more normal levels.

The LIORC cash balance at September 30, 2017 stood at $64.9 million with LIORC dividends payable on October 25, 2017 of $64.0 million. The net royalty from IOC was paid on the same date, maintaining the Corporation's strong cash balance. As noted in our second quarter results, with a strong cash balance, iron ore prices at about US$60 per tonne, the exchange rate at present, and the expected increased production at IOC, LIORC is in a good position to maintain the regular dividend.

Respectfully submitted on behalf of the Directors of Labrador Iron Ore Royalty Corporation,

William H. McNeil
President and Chief Executive Officer 
November 6, 2017

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 2016 Annual Report and the financial statements and notes contained therein.  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 2017 amounted to $39.8 million as compared to $27.9 million for the third quarter of 2016. The shareholders' cash flow from operations for the third quarter was $53.6 million or $0.84 per share as compared to $15.2 million or $0.24 per share for the same period in 2016. LIORC received a dividend from IOC in the third quarter of 2017 in the amount of $32.2 million or $0.50 per share. Equity earnings from IOC amounted to $21.2 million or $0.33 per share in the third quarter of 2017 as compared to $7.7 million or $0.12 per share in the third quarter of 2016. Net income was $43.8 million or $0.69 per share for the third quarter of 2017 compared to $21.2 million or $0.33 per share for the same period in 2016.

The cash flow from operations, equity earnings and net income for the third quarter of 2017 were higher than the third quarter of 2016, mainly due to improved prices for concentrate and pellets and also due to increased sales tonnages.  As reported by Bloomberg, the benchmark iron ore price of 62% Fe CFR China averaged US$71 per tonne in the third quarter of 2017 and reached a high of US$80 in August. The comparable average price in the third quarter of 2016 was US$58 per tonne. Total iron ore sales tonnage – pellets plus CFS of 5.0 million tonnes was 8% higher in the third quarter of 2017 compared to the same period in 2016, driven largely by pellet tonnage sales being 14% higher than in the same period in 2016. The CFS sales tonnage in the third quarter of 2017 was slightly higher (plus 2%) than in the third quarter of 2016.

Total concentrate production in the third quarter of 2017 of 5.7 million tonnes was 8% higher than the third quarter of 2016 and was 16% higher than the second quarter of 2017. The record concentrate production in the third quarter of 2017 was due to a higher weight yield and an increase of ground tonnes resulting from improved asset reliability.

The increased concentrate production in the third quarter enabled improved production tonnages for both pellets and CFS. Pellet production in the third quarter of 2017 was 8% higher than the third quarter of 2016 and 24% higher than the second quarter of 2017. All six pellet lines operated in the third quarter of 2017 as planned, whereas in the second quarter of 2017 the No. 2 pellet line was down for the scheduled refurbishment of the induration machine. CFS production was 9% higher in the third quarter of 2017 than in the third quarter of 2016 and 12% higher than in the second quarter of 2017. Pellet production in the third quarter was again favoured by the strong demand and margins.

Third quarter 2017 total iron ore tonnage sold by IOC (CFS plus pellets) of 5.0 million tonnes was 8% above the total sales tonnage in the third quarter 2016 and 24% improved over the second quarter of 2017. In the third quarter of 2017, the pellet sales tonnage was 14% higher and CFS sales tonnage was 39% higher than the second quarter of 2017. The higher CFS sales were largely due to improved concentrate production, referred to above. Continued strong pellet demand and premiums supported maximizing pellet production and sales. While tonnage sales of both CFS and pellets improved in the third quarter as compared to previous quarters, port loading and therefore sales tonnages, were constrained by maintenance over a 34-day period in July and August on the dumper for the rail wagons that transport the iron ore products to the port at Sept Isles. As a result of the constraint in unloading the rail wagons, the inventory of CFS at the Carol Lake mine site was unusually high at the end of the third quarter at some 0.6 million tonnes over plan.

The benchmark price for 62% Fe CFR China was 22% higher in the third quarter of 2017 as compared to the third quarter of 2016 and pellet premiums were also much improved. The Canadian dollar was 4% stronger in the third quarter of 2017 as compared to the third quarter of 2016. As a result of the stronger iron ore prices and pellet premiums, and net of the stronger Canadian dollar, the royalty revenue for LIORC in the third quarter of 2017 was 42% higher than the revenue in last year's third quarter. 

Results for the nine months were affected by the same factors as affected the three month period. Administrative expenses for the nine months include a non-cash foreign exchange loss of $0.3 million on the conversion of the dividend received from IOC in December 2016 and the 2016 bonuses awarded by the Compensation Committee to the executive officers totaling $0.1 million. Amortization expense for royalty and commission interests increased $1.2 million for the nine months due to an increased amortization rate reflecting lower estimated total mineral resources over the prior year.

The following table sets out quarterly revenue, net income and cash flow data for 2017, 2016 and 2015.


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)









2017
















First Quarter

$43.4

$42.9

$0.67

$28.2(2)

$0.44(2)

$0.53(2)

$0.50









Second Quarter

$34.2

$32.3

$0.50

$45.6(3)

$0.71(3)

$0.53(3)

$0.60









Third Quarter

$40.4

$43.8

$0.69

$53.6(4)

$0.84(4)

$0.85(4)

$1.00









2016
















First Quarter

$22.3

$11.0

$0.17

$12.5

$0.19

$0.19

$0.25









Second Quarter

$25.8

$8.3

$0.13

$7.6

$0.12

$0.22

$0.25









Third Quarter

$28.4

$21.2

$0.33

$15.2

$0.24

$0.24

$0.25









Fourth Quarter

$38.6

$37.7

$0.59

$28.3(5)

$0.44(5)

$0.57(5)

$0.25









2015
















First Quarter

$23.7

$10.0

$0.16

$15.2

$0.24

$0.20

$0.25









Second Quarter

$24.0

$15.4

$0.24

$12.5

$0.20

$0.21

$0.25









Third Quarter

$32.0

$19.0

$0.30

$12.2

$0.19

$0.28

$0.25









Fourth Quarter

$22.0

$10.3

$0.15

$20.0

$0.31

$0.19

$0.25



(1)

"Adjusted cash flow" (see below)

(2)

Includes $10.0 million IOC dividend.

(3)

Includes $15.3 million IOC dividend.

(4)

Includes $32.2 million IOC dividend.

(5)

Includes $15.1 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 consolidated statements of cash flow as the Corporation does not incur capital expenditures or have any restrictions on dividends.  Standardized cash flow per share was $0.84 for the quarter (2016 - $0.24). Cumulative standardized cash flow from inception of the Corporation is $24.53 per share and total cash distributions since inception is $24.04 per share, for a payout ratio of 98%.

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, 2017

3 Months
Ended

Sept 30, 2016

9 Months
Ended
Sept 30, 2017

9 Months
Ended
Sept 30, 2016

Standardized cash flow from operating activities

$53,640

$15,159

$127,398

$35,211

Excluding: changes in amounts receivable, accounts payable and income
taxes payable

 

798

 

370

 

(5,276)

 

6,471

Adjusted cash flow

$54,438

$15,529

$122,122

$41,682

Adjusted cash flow per share

$0.85

$0.24

$1.91

$0.65

 

Liquidity and Capital Resources

The Corporation had $64.9 million in cash as at September 30, 2017 (December 31, 2016 - $23.9 million) with total current assets of $102.4 million (December 31, 2016 - $62.9 million). The Corporation had working capital of $26.6 million as at September 30, 2017 (December 31, 2016 - $38.8 million). The Corporation's operating cash flow for the quarter was $53.6 million and the dividend paid during the quarter was $38.4 million, resulting in cash balances increasing by $15.2 million during the third quarter of 2017.

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 intends to pay cash dividends of the net income derived from IOC to the maximum extent possible, subject to the maintenance of appropriate levels of working capital.

The Corporation has a $50 million revolving credit facility with a term ending September 18, 2019 with provision for annual one-year extensions.  No amount is currently drawn under this facility (2016 – nil) leaving $50.0 million available to provide for any capital required by IOC or requirements of the Corporation.

Outlook

Following a strong third quarter in 2017, IOC is expecting good production and sales tonnages in the fourth quarter of 2017. The refurbishment of the induration machine for the No. 5 pellet line commenced in late September 2017 as planned. The No. 5 pellet line is expected to be offline for approximately nine weeks.

Rio Tinto, in its release of production results for the third quarter, maintained the IOC production guidance for 2017 of 11.4 to 12.4 million tonnes of iron ore pellets and concentrates for their 58.72% interest in IOC, which is total saleable production of 19.4 to 21.1 million tonnes on a 100% basis. Achieving the low end of the guidance would be a 6% improvement over the saleable production in 2016 of 18.2 million tonnes.

The 62% Fe CFR China benchmark iron ore price rose from approximately US$64 per tonne at the beginning of the third quarter to a peak of US$80 per tonne in August and declined back to approximately US$62 per tonne at the end of the quarter. The increase was supported by improved margins for Chinese steel mills and the decline was precipitated by concerns on the timing of large Chinese infrastructure projects and reduced steel production in China to meet environmental targets. Forecasts for the 62% Fe CFR China seaborne price vary considerably but tend to forecast prices trending lower for the balance of 2017 and the longer term, driven by increased supply, notably from Brazil. However, premiums for the higher grade iron ore concentrates and pellets, such as produced by IOC, have been exceptionally strong and the value-in-use premiums may continue to be supported by the Chinese efforts to reduce pollution.

In recent weeks the Canadian dollar has somewhat weakened, reflecting concern over the NAFTA negotiations and the outlook for interest rate increases by the Bank of Canada, and iron ore prices have weakened. These factors are offsetting but could affect LIORC's results.

The IOC employees and management have had success in their efforts to increase production and reduce unit operating costs. We note the strong third quarter performance, and we expect strong fourth quarter sales as the inventories at Carol Lake are reduced to more normal levels.

The LIORC cash balance at September 30, 2017 stood at $64.9 million with LIORC dividends payable on October 25, 2017 of $64.0 million. The net royalty from IOC was paid on the same date, maintaining the Corporation's strong cash balance. As noted in our second quarter results, with a strong cash balance, iron ore prices at about US$60 per tonne, the exchange rate at present, and the expected increased production at IOC, LIORC is in a good position to maintain the regular dividend.

William H. McNeil
President and Chief Executive Officer
Toronto, Ontario
November 6, 2017

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 aboriginal groups, 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 2, 2017 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 BALANCE SHEETS












As at



September 30, 


December 31,

(in thousands of Canadian dollars)

2017


2016



(Unaudited)

Assets




Current Assets





Cash

$

64,935


$

23,937


Amounts receivable 

37,475


38,487


Income taxes recoverable

-


490

Total Current Assets

102,410


62,914






Non-Current Assets




Iron Ore Company of Canada ("IOC"),





royalty and commission interests

260,589


265,384

Investment in IOC 

408,613


408,680

Total Non-Current Assets

669,202


674,064






Total Assets

$

771,612


$

736,978











Liabilities and Shareholders' Equity




Current Liabilities





Accounts payable

$

7,677


$

8,073


Dividend payable

64,000


16,000


Taxes Payable

4,170


-

Total Current Liabilities

75,847


24,073






Non-Current Liabilities





Deferred income taxes 

127,660


129,060

Total Liabilities

203,507


153,133






Shareholders' Equity





Share capital 

317,708


317,708


Retained earnings 

261,136


276,588


Accumulated other comprehensive loss 

(10,739)


(10,451)



568,105


583,845






Total Liabilities and Shareholders' Equity

$

771,612


$

736,978











Approved by the Directors,














William H. McNeil

Patricia M. Volker



Director

Director



 

LABRADOR IRON ORE ROYALTY CORPORATION




INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME














For the Three Months Ended



September 30,

(in thousands of Canadian dollars except for per share information)

2017


2016



(Unaudited)

Revenue





IOC royalties

$

39,810


$

27,939


IOC commissions

493


455


Interest and other income 

110


32



40,413


28,426

Expenses





Newfoundland royalty taxes

7,962


5,588


Amortization of royalty and commission interests

1,824


1,199


Administrative expenses 

662


675



10,448


7,462






Income before equity earnings and income taxes

29,965


20,964

Equity earnings in IOC

21,150


7,670






Income before income taxes 

51,115


28,634






Provision for income taxes 





Current 

9,519


6,633


Deferred

(2,183)


834



7,336


7,467






Net income for the period

43,779


21,167






Other comprehensive loss





Share of other comprehensive loss of IOC that will not be 





reclassified subsequently to profit or loss 





(net of income taxes of 2017 - $17; 2016 - $54)

(96)


(306)






Comprehensive income for the period

$

43,683


$

20,861






Net income per share 

$

0.69


$

0.33

 

LABRADOR IRON ORE ROYALTY CORPORATION




INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME













For the Nine Months Ended



September 30,

(in thousands of Canadian dollars except for per share information)

2017


2016



(Unaudited)

Revenue





IOC royalties

$

116,400


$

75,067


IOC commissions

1,350


1,315


Interest and other income 

252


112



118,002


76,494

Expenses





Newfoundland royalty taxes

23,280


15,013


Amortization of royalty and commission interests

4,795


3,608


Administrative expenses 

2,356


2,012



30,431


20,633






Income before equity earnings and income taxes

87,571


55,861

Equity earnings in IOC  

57,713


6,694






Income before income taxes 

145,284


62,555






Provision for income taxes 





Current 

27,685


17,787


Deferred

(1,349)


4,346



26,336


22,133






Net income for the period

118,948


40,422






Other comprehensive loss





Share of other comprehensive loss of IOC that will not be 





reclassified subsequently to profit or loss (net of income taxes 





of 2017 - $51; 2016 - $206)

(288)


(734)






Comprehensive income for the period

$

118,660


$

39,688






Net income per share  

$

1.86


$

0.63

 

LABRADOR IRON ORE ROYALTY CORPORATION

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS




For the Nine Months Ended


September 30,

(in thousands of Canadian dollars except for per share information)

2017


2016


(Unaudited)

Net inflow (outflow) of cash related





to the following activities








Operating





Net income for the period

$

118,948


$

40,422


Items not affecting cash:






Equity earnings in IOC

(57,713)


(6,694)



Current income taxes

27,685


17,787



Deferred income taxes

(1,349)


4,346



Amortization of royalty and commission interests

4,795


3,608


Common share dividend from IOC

57,441


-


Change in amounts receivable

1,012


(7,073)


Change in accounts payable

(396)


1,286


Income taxes paid 

(23,025)


(18,471)


Cash flow from operating activities

127,398


35,211





Financing





Dividends paid to shareholders

(86,400)


(48,000)


Cash flow used in financing activities

(86,400)


(48,000)





Increase (decrease) in cash, during the period

40,998


(12,789)





Cash, beginning of period

23,937


24,463






Cash, end of period

$

64,935


$

11,674

 

LABRADOR IRON ORE ROYALTY CORPORATION




INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY




Accumulated





other 



Share

Retained

comprehensive 


(in thousands of Canadian dollars except for per share information)

capital

earnings

loss

Total








Balance as at December 31, 2015

$

317,708

$

262,415

$

(11,150)

$

568,973

Net income for the period

-

40,423

-

40,423

Dividends declared to shareholders 

-

(48,000)

-

(48,000)

Share of other comprehensive loss from investment in IOC (net of taxes)

-

-

(734)

(734)

Balance as at September 30, 2016

$

317,708

$

254,838

$

(11,884)

$

560,662






Balance as at December 31, 2016

$

317,708

$

276,588

$

(10,451)

$

583,845

Net income for the period

-

118,948

-

118,948

Dividends declared to shareholders 

-

(134,400)

-

(134,400)

Share of other comprehensive loss from investment in IOC (net of taxes)

-

-

(288)

(288)

Balance as at September 30, 2017

$

317,708

$

261,136

$

(10,739)

$

568,105

 

The complete consolidated financial statements for the third quarter ended September 30, 2017, including the notes thereto, are posted on sedar.com and labradorironore.com.  

SOURCE Labrador Iron Ore Royalty Corporation

please contact: William H. McNeil, President & Chief Executive Officer, (416) 863-7133