TORONTO, Aug. 14, 2019 /CNW/ - Labrador Iron Ore
Royalty Corporation ("LIORC", TSX: LIF) announced today its
operation and cash flow results for the second quarter ended
June 30, 2019.
Royalty revenue for the second quarter of 2019 amounted to
$52.6 million as compared to
$5.1 million for the second quarter
of 2018. Equity earnings from IOC amounted to $33.9 million or $0.53 per share in the second quarter of 2019 as
compared to a loss of $6.1 million or
$0.09 per share in the second quarter
of 2018. Net income was $61.1 million
or $0.95 per share for the second
quarter of 2019 compared to a net loss of $3.2 million or $0.05 per share for the same period in 2018. Cash
flow from operations for the second quarter was $47.8 million or $0.75 per share as compared to $15.5 million or $0.24 per share for the same period in 2018.
LIORC received a dividend from Iron Ore Company of Canada ("IOC") in the second quarter of 2019
in the amount of $25.4 million or
$0.40 per share, whereas LIORC
received no dividend in the second quarter of 2018. The 2018
production was negatively impacted by a nine-week work
stoppage.
The cash flow from operations, equity earnings and net income
for the second quarter of 2019 were higher than the second quarter
of 2018, as a result of higher prices for concentrate and pellets,
and higher production.
The average price for the Platts index for 62% Fe Iron Ore, CFR China ("62% Fe index")
increased 53% to US$100 per tonne in
the second quarter of 2019 compared to the average price in the
second quarter of 2018 of US$65 per
tonne. IOC's total sales for calculating the royalty to LIORC -
concentrate for sale ("CFS") plus pellets - was 4.6 million tonnes
in the second quarter of 2019 compared to 0.5 million tonnes in the
same period in 2018, largely because 2018 CFS tonnages and pellet
sales tonnages were negatively impacted by the work stoppage.
LIORC's results for the three months and six months ended
June 30 are summarized below:
(in millions
except per share information)
|
3 Months
Ended
Jun. 30,
2019
|
3 Months
Ended
Jun. 30,
2018
|
6 Months
Ended
Jun. 30,
2019
|
6 Months
Ended
Jun. 30,
2018
|
|
(Unaudited)
|
|
|
|
|
|
Revenue
|
$53.3
|
$5.2
|
$92.5
|
$39.5
|
Cash flow from
operations
|
$47.8
|
$15.5
|
$72.8
|
$35.8
|
Operating cash flow
per share
|
$0.75
|
$0.24
|
$1.14
|
$0.56
|
Net income
|
$61.1
|
$(3.2)
|
$100.4
|
$27.1
|
Net income per
share
|
$0.95
|
$(0.05)
|
$1.57
|
$0.42
|
Iron Ore Company of Canada Operations
Production
Total concentrate production in the second quarter of 2019 of 4.5
million tonnes was 201% higher than the second quarter of 2018,
which was negatively impacted by the work stoppage, and 1% higher
than the first quarter of 2019, which was negatively impacted by
frozen material and blocked feeders in the ore barn. Total
concentrate production in the second quarter of 2019 was negatively
impacted by a delay in the restart after the planned annual
outage in June as a result of a flooding issue.
CFS production in the second quarter of 2019 of 2.0 million
tonnes was 109% higher than in the second quarter of 2018 and 34%
higher than the previous quarter. Pellet production in the second
quarter of 2019 of 2.3 million tonnes was 347% higher than the
second quarter of 2018 and 16% lower than the previous quarter. The
pellet plant production in the second quarter of 2019 was
negatively impacted by lack of feed as a result of lower
concentrate production than planned, as well as lower indurating
machine availability during the quarter.
Sales as Reported for the LIORC Royalty
Total iron ore tonnage sold by IOC (CFS plus pellets) was 4.6
million tonnes in the second quarter of 2019 compared to 0.5
million tonnes in the same period in 2018, largely as a result of
the lower production in 2018 due to the work stoppage. Second
quarter 2019 sales tonnage of CFS was 2.1 million tonnes and pellet
sales tonnage was 2.4 million tonnes, compared to second quarter
2018 sales tonnage of 0.05 million tonnes of CFS and 0.5 million
tonnes of pellets.
IOC sells CFS based on the Platts index for 65% Fe Iron Ore, CFR China ("65% Fe index"). The
average price for the 65% Fe index was US$115 per tonne in the second quarter of 2019, a
34% increase over the average price in the second quarter of 2018
of US$86 per tonne, and 20% higher
than the average price in the first quarter of 2019 of US$95 per tonne. The seaborne iron ore prices
continued to be positively affected by a reduction of iron ore
supply as a result of mine closures in Brazil and lower production in Australia. The premium for the 65% Fe index
compared to the 62% Fe index, which had been expanding over the
last few years as the Chinese governments enacted and enforced
measures to reduce pollution, remained lower in the second quarter
of 2019 at 15%, as compared to 31% in the second quarter of 2018
and 15% in the first quarter of 2019, as steel producers continued
to react to lower profit margins by substituting higher quality
iron ore with cheaper lower quality iron ore. The quarterly
Atlantic Basin blast furnace pellet premium, as reported by Platts,
averaged US$68 per tonne in the
second quarter of 2019, a 17% increase over the second quarter of
2018 and 1% higher than the first quarter of 2019.
A summary of IOC's sales for calculating the royalty to LIORC in
millions of tonnes is as follows:
|
3 Months
Ended Jun.
30,
2019
|
3 Months
Ended Jun.
30, 2018
|
6 Months
Ended Jun.
30, 2019
|
6 Months
Ended Jun.
30,
2018
|
Year
Ended
Dec. 31,
2018
|
|
|
|
|
|
|
Pellets
|
2.42
|
0.48
|
5.13
|
3.02
|
8.41
|
Concentrates(1)
|
2.14
|
0.05
|
2.97
|
1.40
|
6.70
|
|
|
|
|
|
|
Total(2)
|
4.57
|
0.53
|
8.10
|
4.43
|
15.10
|
|
(1)
Excludes third party ore sales
|
(2)
Totals may not add up due to rounding
|
Outlook
As a result of lower than anticipated first half production, Rio
Tinto lowered the 2019 guidance for IOC's saleable production of
CFS and pellets on a 100% basis to between 18.2 and 19.2 million
tonnes from between 19.2 and 20.9 million tonnes.
Benchmark prices for concentrate and pellet premiums remain
attractive relative to historical levels despite recent price
declines due to softer demand and uncertainty over trade
tensions. On August 7, 2019 the
62% Fe index was US$93 per tonne as
compared to an average of US$120 per
tonne in July. Supply continues to be constrained,
predominantly as a result of mine closures in Brazil. Vale reaffirmed its 2019 iron ore
sales guidance of 307 to 332 million tonnes, stating that expected
sales volume will move towards the midpoint of the range with the
restart of the Brucutu mine in June and the partial resumption of
dry processing operations at Vargem Grande. This compares to Vale's
2018 iron ore production of 385 million tonnes.
China crude steel production
was up 9.9% in the first half of 2019 as compared to the same
period in 2018, and the immediate outlook for China steel production continues to be
positive despite higher iron ore prices and weaker steel producer
margins. Weaker steel producer margins are expected to continue to
have some effect on iron ore demand outside of China. Despite the pullback, higher
China import fines prices have
made iron ore pellet premiums under existing formulas unaffordable
for some producers given prevailing steel and raw materials
prices. As a result, some steel producers in Europe have reduced output or replaced high
cost pellets where possible with lower quality grades. Longer term,
we would expect an increase in the global seaborne iron ore supply
and for iron ore prices to begin to revert to levels more in line
with historical averages.
The LIORC cash balance at June 30,
2019 stood at $47.7 million
before LIORC dividends payable on July 25,
2019 of $0.90 per share or
$57.6 million. The net royalty from
IOC was paid on the same date, maintaining the Corporation's strong
cash balance.
On August 7, 2019 the Board of IOC
declared a dividend of US$200
million, payable to shareholders of IOC on August 22, 2019.
Respectfully submitted on behalf of the Directors of Labrador
Iron Ore Royalty Corporation,
John F. Tuer
President and Chief Executive Officer
August 14, 2019
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 2018 Annual Report, and the financial
statements and notes contained therein and the June 30, 2019 interim condensed consolidated
financial statements. 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 second quarter of 2019 amounted to
$52.6 million as compared to
$5.1 million for the second quarter
of 2018. Equity earnings from IOC amounted to $33.9 million or $0.53 per share in the second quarter of 2019 as
compared to a loss of $6.1 million or
$0.09 per share in the second quarter
of 2018. Net income was $61.1 million
or $0.95 per share for the second
quarter of 2019 compared to a net loss of $3.2 million or $0.05 per share for the same period in 2018. Cash
flow from operations for the second quarter was $47.8 million or $0.75 per share as compared to $15.5 million or $0.24 per share for the same period in 2018.
LIORC received a dividend from IOC in the second quarter of 2019 in
the amount of $25.4 million or
$0.40 per share, whereas LIORC
received no dividend in the second quarter of 2018. The 2018
production was negatively impacted by a nine-week work
stoppage.
The cash flow from operations, equity earnings and net income
for the second quarter of 2019 were higher than the second quarter
of 2018, as a result of higher prices for concentrate and pellets,
and higher production.
The average price for 62% Fe index increased 53% to US$100 per tonne in the second quarter of 2019
compared to the average price in the second quarter of 2018 of
US$65 per tonne. IOC's total sales
for calculating the royalty to LIORC - CFS plus pellets - was 4.6
million tonnes in the second quarter of 2019 compared to 0.5
million tonnes in the same period in 2018, largely because 2018 CFS
tonnages and pellet sales tonnages were negatively impacted by the
work stoppage.
Total concentrate production in the second quarter of 2019 of
4.5 million tonnes was 201% higher than the second quarter of 2018,
which was negatively impacted by the work stoppage, and 1% higher
than the first quarter of 2019, which was negatively impacted by
frozen material and blocked feeders in the ore barn. Total
concentrate production in the second quarter of 2019 was negatively
impacted by a delay in the restart after the planned annual
outage in June as a result of a flooding issue.
CFS production in the second quarter of 2019 of 2.0 million
tonnes was 109% higher than in the second quarter of 2018 and 34%
higher than the previous quarter. Pellet production in the second
quarter of 2019 of 2.3 million tonnes was 347% higher than the
second quarter of 2018 and 16% lower than the previous quarter. The
pellet plant production in the second quarter of 2019 was
negatively impacted by lack of feed as a result of lower
concentrate production than planned, as well as lower indurating
machine availability during the quarter.
Total iron ore tonnage sold by IOC (CFS plus pellets) was 4.6
million tonnes in the second quarter of 2019 compared to 0.5
million tonnes in the same period in 2018, largely as a result of
the lower production in 2018 due to the work stoppage. Second
quarter 2019 sales tonnage of CFS was 2.1 million tonnes and pellet
sales tonnage was 2.4 million tonnes, compared to second quarter
2018 sales tonnage of 0.05 million tonnes of CFS and 0.5 million
tonnes of pellets.
IOC sells CFS based on the 65% Fe index. The average price for
the 65% Fe index was US$115 per tonne
in the second quarter of 2019, a 34% increase over the average
price in the second quarter of 2018 of US$86 per tonne, and 20% higher than the average
price in the first quarter of 2019 of US$95 per tonne. The seaborne iron ore prices
continued to be positively affected by a reduction of iron ore
supply as a result of mine closures in Brazil and lower production in Australia. The premium for the 65% Fe index
compared to the 62% Fe index, which had been expanding over the
last few years as the Chinese governments enacted and enforced
measures to reduce pollution, remained lower in the second quarter
of 2019 at 15%, as compared to 31% in the second quarter of 2018
and 15% in the first quarter of 2019, as steel producers continued
to react to lower profit margins by substituting higher quality
iron ore with cheaper lower quality iron ore. The quarterly
Atlantic Basin blast furnace pellet premium, as reported by Platts,
averaged US$68 per tonne in the
second quarter of 2019, a 17% increase over the second quarter of
2018 and 1% higher than the first quarter of 2019.
Results for the six months were affected by the same factors as
affected the three month period. Royalty and commission interests
amortization expense increased by $1.1
million for the six months compared to the same period in
2018 due to the increase in production. The 2018 production was
negatively impacted by a nine-week work stoppage.
The following table sets out quarterly revenue, net income, cash
flow and dividend data for 2019, 2018 and 2017.
|
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)
|
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
$39.2
|
$39.3
|
$0.61
|
$25.0
|
$0.39
|
$0.34
|
$1.05
|
|
|
|
|
|
|
|
|
Second
Quarter
|
$53.3
|
$61.1
|
$0.95
|
$47.8(2)
|
$0.75(2)
|
$0.86(2)
|
$0.90
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
$34.3
|
$30.3
|
$0.47
|
$20.3
|
$0.32
|
$0.29
|
$0.35
|
|
|
|
|
|
|
|
|
Second
Quarter
|
$5.2
|
$(3.2)
|
$(0.05)
|
$15.5
|
$0.24
|
$0.04
|
$0.25
|
|
|
|
|
|
|
|
|
Third
Quarter
|
$44.6
|
$58.1
|
$0.91
|
$59.7(3)
|
$0.93(3)
|
$1.30(3)
|
$0.55
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
$46.8
|
$43.4
|
$0.68
|
$53.3(4)
|
$0.83(4)
|
$0.79(4)
|
$0.60
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
$43.4
|
$42.9
|
$0.67
|
$28.2(5)
|
$0.44(5)
|
$0.53(5)
|
$0.50
|
|
|
|
|
|
|
|
|
Second
Quarter
|
$34.2
|
$32.3
|
$0.50
|
$45.6(6)
|
$0.71(6)
|
$0.53(6)
|
$0.60
|
|
|
|
|
|
|
|
|
Third
Quarter
|
$40.4
|
$43.8
|
$0.69
|
$53.6(7)
|
$0.84(7)
|
$0.85(7)
|
$1.00
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
$40.6
|
$38.3
|
$0.60
|
$39.6(8)
|
$0.62(8)
|
$0.65(8)
|
$0.55
|
(1) "Adjusted cash flow" (see below)
(2)
Includes $25.4 million IOC
dividend.
(3) Includes $58.6
million IOC dividend.
(4) Includes
$25.3 million IOC
dividend.
(5) Includes $10.0
million IOC dividend.
(6) Includes
$15.2 million IOC
dividend.
(7) Includes $32.2
million IOC dividend.
(8) Includes
$19.3 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
cash flow statements as the Corporation does not incur capital
expenditures or have any restrictions on dividends.
Standardized cash flow per share was $0.75 for the quarter (2018 - $0.24). Cumulative standardized cash flow from
inception of the Corporation is $28.61 per share and total cash distributions
since inception is $28.29 per share,
for a payout ratio of 99%.
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
Jun. 30,
2019
|
3 Months
Ended
Jun. 30,
2018
|
6 Months
Ended
Jun. 30,
2019
|
6 Months
Ended
Jun. 30,
2018
|
Standardized cash
flow from operating activities
|
$47,837
|
$15,496
|
$72,800
|
$35,773
|
Changes in amounts
receivable, accounts payable and income
taxes payable
|
6,943
|
(13,210)
|
3,492
|
(14,801)
|
Adjusted cash
flow
|
$54,780
|
$2,286
|
$76,292
|
$20,972
|
Adjusted cash flow
per share
|
$0.86
|
$0.04
|
$1.19
|
$0.33
|
Liquidity and Capital Resources
The Corporation had $47.7 million
in cash as at June 30, 2019
(December 31, 2018 - $80.5 million) with total current assets of
$102.8 million (December 31, 2018 - $127.0
million). The Corporation had working capital of
$27.6 million as at June 30, 2019 (December
31, 2018 - $76.3 million). The
Corporation's operating cash flow for the quarter was $47.8 million and the dividend paid during the
quarter was $67.2 million, resulting
in cash balances decreasing by $19.4
million during the second quarter of 2019.
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 normally pays cash
dividends from its net income 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, 2021 with provision for annual
one-year extensions. No amount is currently drawn under this
facility (2018– nil) leaving $50.0
million available to provide for any capital required by IOC
or requirements of the Corporation.
Outlook
As a result of lower than anticipated first half production, Rio
Tinto lowered the 2019 guidance for IOC's saleable production of
CFS and pellets on a 100% basis to between 18.2 and 19.3 million
tonnes from between 19.2 and 20.9 million tonnes.
Benchmark prices for concentrate and pellet premiums remain
attractive relative to historical levels despite recent price
declines due to softer demand and uncertainty over trade
tensions. On August 7, 2019 the
62% Fe index was US$93 per tonne as
compared to an average of US$120 per
tonne in July. Supply continues to be constrained,
predominantly as a result of mine closures in Brazil. Vale reaffirmed its 2019 iron ore
sales guidance of 307 to 332 million tonnes, stating that expected
sales volume will move towards the midpoint of the range with the
restart of the Brucutu mine in June and the partial resumption of
dry processing operations at Vargem Grande. This compares to Vale's
2018 iron ore production of 385 million tonnes.
China crude steel production
was up 9.9% in the first half of 2019 as compared to the same
period in 2018, and the immediate outlook for China steel production continues to be
positive despite higher iron ore prices and weaker steel producer
margins. Weaker steel producer margins are expected to continue to
have some effect on iron ore demand outside of China. Despite the pullback, higher
China import fines prices have
made iron ore pellet premiums under existing formulas unaffordable
for some producers given prevailing steel and raw materials
prices. As a result, some steel producers in Europe have reduced output or replaced high
cost pellets where possible with lower quality grades. Longer term,
we would expect an increase in the global seaborne iron ore supply
and for iron ore prices to begin to revert to levels more in line
with historical averages.
The LIORC cash balance at June 30,
2019 stood at $47.7 million
before LIORC dividends payable on July 25,
2019 of $0.90 per share or
$57.6 million. The net royalty from
IOC was paid on the same date, maintaining the Corporation's strong
cash balance.
On August 7, 2019 the Board of IOC
declared a dividend of US$200
million, payable to shareholders of IOC on August 22, 2019.
John F. Tuer
President and Chief Executive Officer
Toronto, Ontario
August 14, 2019
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, the renewal of the
mining leases, outcomes of existing or future litigation,
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
7, 2019 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 STATEMENTS OF FINANCIAL POSITION
|
|
|
|
|
|
As
at
|
|
June
30,
|
|
December
31,
|
(in thousands of
Canadian dollars)
|
2019
|
|
2018
|
|
|
(Unaudited)
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and short-term
investments
|
$
|
47,695
|
|
$
|
80,495
|
|
Amounts
receivable
|
55,080
|
|
46,548
|
Total Current
Assets
|
102,775
|
|
127,043
|
|
|
|
|
Non-Current
Assets
|
|
|
|
|
Iron Ore Company of
Canada ("IOC")
|
|
|
|
|
royalty
and commission interests
|
250,913
|
|
253,846
|
|
Investment in
IOC
|
412,273
|
|
382,704
|
Total Non-Current
Assets
|
663,186
|
|
636,550
|
|
|
|
|
Total
Assets
|
$
|
765,961
|
|
$
|
763,593
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
$
|
11,377
|
|
$
|
9,969
|
|
Dividend
payable
|
57,600
|
|
38,400
|
|
Taxes
payable
|
6,201
|
|
2,613
|
Total Current
Liabilities
|
75,178
|
|
50,982
|
|
|
|
|
Non-Current
Liabilities
|
|
|
|
|
Deferred income
taxes
|
125,420
|
|
121,760
|
Total
Liabilities
|
200,598
|
|
172,742
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Share
capital
|
317,708
|
|
317,708
|
|
Retained
earnings
|
256,313
|
|
280,759
|
|
Accumulated other
comprehensive loss
|
(8,658)
|
|
(7,616)
|
|
565,363
|
|
590,851
|
|
|
|
Total Liabilities and
Shareholders' Equity
|
$
|
765,961
|
|
$
|
763,593
|
|
-
|
|
|
Approved by the
Directors,
|
|
|
|
|
|
|
|
John F.
Tuer
|
Patricia M.
Volker
|
|
|
Director
|
Director
|
|
|
LABRADOR IRON ORE
ROYALTY CORPORATION
|
INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
|
June
30,
|
(in thousands of
Canadian dollars except for per share information)
|
2019
|
|
2018
|
|
|
(Unaudited)
|
Revenue
|
|
|
|
|
IOC
royalties
|
$
|
52,610
|
|
$
|
5,081
|
|
IOC
commissions
|
449
|
|
53
|
|
Interest and other
income
|
245
|
|
94
|
|
|
53,304
|
|
5,229
|
Expenses
|
|
|
|
|
Newfoundland royalty
taxes
|
10,522
|
|
1,016
|
|
Amortization of
royalty and commission interests
|
1,325
|
|
461
|
|
Administrative
expenses
|
787
|
|
808
|
|
|
12,634
|
|
2,285
|
|
|
|
|
|
Income before
equity earnings and income taxes
|
40,670
|
|
2,943
|
Equity earnings
(losses) in IOC
|
33,935
|
|
(6,060)
|
|
|
|
|
|
Income (loss)
before income taxes
|
74,605
|
|
(3,117)
|
|
|
|
|
|
Provision for
income taxes
|
|
|
|
|
Current
|
12,609
|
|
1,118
|
|
Deferred
|
896
|
|
(1,035)
|
|
|
13,505
|
|
83
|
|
|
|
|
|
Net income for the
period
|
61,100
|
|
(3,200)
|
|
|
|
|
|
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 2019 - $386; 2018
- $5)
|
(2,187)
|
|
(28)
|
|
|
|
|
|
Comprehensive
income (loss) for the period
|
$
|
58,913
|
|
$
|
(3,228)
|
|
|
|
|
|
Net income (loss)
per share
|
$
|
0.95
|
|
$
|
(0.05)
|
LABRADOR IRON ORE
ROYALTY CORPORATION
|
INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
For the Six Months
Ended
|
|
|
June
30,
|
(in thousands of
Canadian dollars except for per share information)
|
2019
|
|
2018
|
|
|
(Unaudited)
|
Revenue
|
|
|
|
|
IOC
royalties
|
$
|
91,106
|
|
$
|
38,892
|
|
IOC
commissions
|
797
|
|
436
|
|
Interest and other
income
|
611
|
|
213
|
|
|
92,514
|
|
39,541
|
Expenses
|
|
|
|
|
Newfoundland royalty
taxes
|
18,221
|
|
7,778
|
|
Amortization of
royalty and commission interests
|
2,933
|
|
1,790
|
|
Administrative
expenses
|
1,559
|
|
1,670
|
|
|
22,713
|
|
11,238
|
|
|
|
|
|
Income before
equity earnings and income taxes
|
69,801
|
|
28,303
|
Equity earnings in
IOC
|
56,344
|
|
8,589
|
|
|
|
|
|
Income before
income taxes
|
126,145
|
|
36,892
|
|
|
|
|
|
Provision for
income taxes
|
|
|
|
|
Current
|
21,838
|
|
9,121
|
|
Deferred
|
3,860
|
|
720
|
|
|
25,698
|
|
9,841
|
|
|
|
|
|
Net income for the
period
|
100,447
|
|
27,051
|
|
|
|
|
|
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 2019 - $184; 2018
- $10)
|
(1,042)
|
|
(55)
|
|
|
|
|
|
Comprehensive
income for the period
|
$
|
99,405
|
|
$
|
26,996
|
|
|
|
|
|
Net income per
share
|
$
|
1.57
|
|
$
|
0.42
|
LABRADOR IRON ORE
ROYALTY CORPORATION
|
INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
For the Six Months
Ended
|
|
June
30,
|
(in thousands of
Canadian dollars)
|
2019
|
|
2018
|
|
(Unaudited)
|
Net inflow
(outflow) of cash related
|
|
|
|
|
to the following
activities
|
|
|
|
|
|
|
Operating
|
|
|
|
|
Net income for the
period
|
$
|
100,447
|
|
$
|
27,051
|
|
Items not affecting
cash:
|
|
|
|
|
|
Equity earnings in
IOC
|
(56,344)
|
|
(8,589)
|
|
|
Current income
taxes
|
21,838
|
|
9,121
|
|
|
Deferred income
taxes
|
3,860
|
|
720
|
|
|
Amortization of
royalty and commission interests
|
2,933
|
|
1,790
|
|
Common share dividend
from IOC
|
25,440
|
|
-
|
|
Change in amounts
receivable
|
(8,532)
|
|
36,496
|
|
Change in accounts
payable
|
1,408
|
|
(7,263)
|
|
Income taxes
paid
|
(18,250)
|
|
(23,553)
|
|
Cash flow from
operating activities
|
72,800
|
|
35,773
|
|
|
|
|
Financing
|
|
|
|
|
Dividends paid to
shareholders
|
(105,600)
|
|
(57,600)
|
|
Cash flow used in
financing activities
|
(105,600)
|
|
(57,600)
|
|
|
|
|
Decrease in cash,
during the period
|
(32,800)
|
|
(21,827)
|
|
|
|
|
Cash, beginning of
period
|
80,495
|
|
40,498
|
|
|
|
|
Cash, end of
period
|
$
|
47,695
|
|
$
|
18,671
|
LABRADOR IRON ORE
ROYALTY CORPORATION
|
INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
other
|
|
|
Share
|
Retained
|
comprehensive
|
|
(in thousands of
Canadian dollars)
|
capital
|
earnings
|
loss
|
Total
|
|
(Unaudited)
|
|
|
|
|
|
Balance as at
December 31, 2017
|
$
|
317,708
|
$
|
264,272
|
$
|
(8,391)
|
$
|
573,589
|
Net income for the
period
|
-
|
27,051
|
-
|
27,051
|
Dividends declared to
shareholders
|
-
|
(38,400)
|
-
|
(38,400)
|
Share of other
comprehensive loss from investment in IOC (net of taxes)
|
-
|
-
|
(55)
|
(55)
|
Balance as at June
30, 2018
|
$
|
317,708
|
$
|
252,923
|
$
|
(8,446)
|
$
|
562,185
|
|
|
|
|
|
Balance as at
December 31, 2018
|
$
|
317,708
|
$
|
280,759
|
$
|
(7,616)
|
$
|
590,851
|
Adjustment on initial
application of IFRS 16
|
|
(93)
|
|
(93)
|
Net income for the
period
|
-
|
100,447
|
-
|
100,447
|
Dividends declared to
shareholders
|
-
|
(124,800)
|
-
|
(124,800)
|
Share of other
comprehensive loss from investment in IOC (net of taxes)
|
-
|
-
|
(1,042)
|
(1,042)
|
Balance as at June
30, 2019
|
$
|
317,708
|
$
|
256,313
|
$
|
(8,658)
|
$
|
565,363
|
The complete consolidated financial statements for the second
quarter ended June 30, 2019,
including the notes thereto, are posted on sedar.com and
labradorironore.com.
SOURCE Labrador Iron Ore Royalty Corporation