TORONTO, June 18, 2018 /CNW/ - Labrador Iron Ore Royalty
Corporation ("LIORC") (TSX: LIF) announced today that its
Board of Directors has determined to call a special meeting of
shareholders, expected to be held in September, 2018, to seek
approval of an amendment to LIORC's articles of incorporation to
provide LIORC with the flexibility to invest in additional
non-operating metal or mineral assets, including royalties and
streams, and issue shares to finance such investments.
The management and the Board of Directors of LIORC have 23
years' experience successfully managing the iron ore royalty of
Iron Ore Company of Canada
("IOC") and have created significant value for
shareholders. From time to time, they become aware of
promising investment opportunities which could provide diversity to
its revenue sources and be accretive to net income and shareholder
value. Recently, they became aware of an opportunity to
invest in a producing royalty on a very high-quality base metal
asset. The Board of Directors has determined that this opportunity
is attractive and accretive to shareholder value and should be
acted upon quickly. The current LIORC articles, which require
supermajority shareholder approval prior to completing such an
investment, make it practically impossible to purchase additional
royalties at competitive prices. Sellers have legitimate concern
with the delay and uncertainty associated with the requirement for
LIORC to seek shareholder approval prior to completing, and
possibly financing, the acquisition, and thus may ask for large
break fees or favour others who do not have these
restrictions. Passage of the proposed amendment to the
articles would allow LIORC to pursue attractive non-operating metal
or mineral royalties like the one currently being contemplated.
Specifically, the proposed amendment contemplates a change to
the restrictions placed on LIORC's business to permit it to invest
in additional non-operating metal or mineral assets, a reduction in
the supermajority shareholder approval threshold for certain
fundamental matters from 75% to 66 2/3% and the elimination of the
requirement to obtain shareholder approval for the issuance of
additional shares. The business restrictions and the
requirement to seek supermajority shareholder approval contained in
LIORC's articles fetter the discretion of the Board of Directors to
manage, or supervise the management of, the business and affairs of
LIORC in accordance with the Canada Business Corporations Act (the
"CBCA"). These restrictions were first introduced upon
formation of Labrador Iron Ore Royalty Income Fund (the
"Fund"), a limited purpose trust, pursuant to a declaration
of trust dated October 5, 1995.
These restrictions were then carried forward upon the conversion of
the Fund into LIORC under the plan of arrangement completed on
July 1, 2010. Since that time,
the market has developed to the point where metal streams and
royalties have become more commonplace. Managing the IOC royalty
will continue as LIORC's main focus but, as the recent nine-week
labour disruption at IOC demonstrated, there are disadvantages in
relying on a single source of revenue to cover costs and the
payment of dividends.
Upon the amendment of these restrictions, shareholders will
enjoy all of the rights and protections afforded to shareholders of
a TSX-listed CBCA corporation (including with respect to corporate
law duties on directors and officers and the requirement to obtain
shareholder approval of fundamental changes and certain dilutive
share issuances), ensuring that their interests continue to be
adequately protected. The Board of Directors believes these
measures, which are consistent with those enjoyed by shareholders
of other TSX-listed CBCA corporations, are appropriate to protect
the interests of LIORC's shareholders.
Additional details regarding the special meeting and the
proposed resolution to amend the articles will be included in a
management information circular to be sent to LIORC's shareholders
in the coming weeks. The management information circular will
also be filed with the applicable Canadian securities regulators
and will be available on SEDAR at www.sedar.com.
Forward-Looking Statements
This news release contains "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 news release.
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 or any other LIORC investments, 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 8, 2018
under the heading, "Risk Factors". Although the forward-looking
statements contained in this news release 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 news release and LIORC assumes no
obligation, except as required by law, to update any
forward-looking statements to reflect new events or circumstances.
This news release 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.
SOURCE Labrador Iron Ore Royalty Corporation