TORONTO, Nov. 3, 2022
/CNW/ - Labrador Iron Ore Royalty Corporation ("LIORC") (TSX: LIF)
announced today its operation and cash flow results for the third
quarter ended September 30, 2022.
Financial Performance
In the third quarter of 2022, LIORC's financial results were
negatively affected by lower iron ore prices, partially offset by
higher pellet premiums and higher volumes of concentrate for sale
("CFS") sales. Royalty revenue for the third quarter of 2022
amounted to $63.5 million compared to
$74.2 million for the third quarter
of 2021. Equity earnings from Iron Ore Company of Canada ("IOC") were $46.8 million in the third quarter of 2022
compared to $60.5 million in the
third quarter of 2021. Net income per share for the third quarter
of 2022 was $1.24 per share, which
was a 24% decrease over the same period in 2021. The adjusted cash
flow per share for the third quarter of 2022 was $1.09 per share, which was 45% lower than in the
same period in 2021, as a result of lower royalty revenues and
because LIORC received a dividend from IOC in the amount of
$34.2 million from IOC in the third
quarter of 2022, compared to a dividend from IOC in the amount of
$85.8 million in the third quarter of
2021.
In the third quarter of 2022, iron ore prices further declined
from the record levels experienced in 2021, predominantly as a
result of lower global steel production. According to the
World Steel Association, global crude steel production decreased 4%
in the first 9 months of 2022 over the first 9 months of 2021, as
higher inflation and global recessionary concerns reduced the
demand for steel. In China,
which accounts for over 70% of all seaborne iron ore demand, crude
steel production was 3% lower in the first 9 months of 2022,
compared to the first 9 months of 2021, due to China's strict policy of COVID-19 lockdowns
and ongoing concerns about China's
property construction sector. Elsewhere, lower demand and higher
energy costs put pressure on steel producer margins and led to a
number of steel facilities being idled across Europe.
Partially mitigating the decline in demand, total seaborne iron
ore supply contracted 4.5% up to the end of August versus the same
period of 2021. According to Rio Tinto, while the major iron
ore producers shipped the same aggregate volume during the first
three quarters of 2022 as they did over the same period of 2021,
supply from other producers was 17% lower year to date due to,
among other factors, the war in Ukraine and export taxes in
India.
IOC sells CFS based on the Platts index for 65% Fe, CFR China
("65% Fe index"). All references to tonnes and per tonne prices in
this report refer to wet metric tonnes, other than references to
Platts quoted pricing, which refer to dry metric tonnes.
Historically, IOC's wet ore contains approximately 3% less ore per
equivalent volume than dry ore. In the third quarter of 2022, the
65% Fe index averaged US$115 per
tonne, a 39% decrease over the average of US$190 per tonne in the third quarter of 2021,
and a 28% decrease over the average of US$160 per tonne in the second quarter of 2022.
The monthly Atlantic Blast Furnace 65% Fe pellet premium index as
quoted by Platts (the "pellet premium") averaged US$80 per tonne in the third quarter of 2022, up
5% from an average of US$77 per tonne
in the same quarter of 2021, and down 1% from an average of
US$81 per tonne in the second quarter
of 2022.
Based on sales as reported for the LIORC Royalty, the overall
average price realized by IOC for CFS and pellets, FOB Sept-Îles,
was approximately US$146 per tonne in
the third quarter of 2022, compared to approximately US$196 per tonne in the third quarter of 2021 and
US$168 per tonne in the second
quarter of 2022. The decrease in the average realized price FOB
Sept-Îles in 2022 was a result of lower CFS and pellet prices, and
to a lesser extent a change in product mix, as pellets represented
52% of sales in the third quarter of 2022, compared to 57% of sales
in the same quarter of 2021 and the second quarter of 2022.
Iron Ore Company of Canada Operations
Operations
IOC concentrate production of 4.9 million tonnes in the third
quarter of 2022 was 26% higher than the same quarter of 2021, due a
lower strip ratio, as well as a timing difference of the planned
7-day annual maintenance shutdown, which was completed in
June 2022 vs. September 2021. IOC's concentrate production was
2% lower than in the second quarter of 2022, as a result of a
higher weight yield in the second quarter due to pit sequencing,
offset by the timing difference of the annual shutdown referred to
above.
The IOC saleable production (CFS plus pellets) of 4.7 million
tonnes in the third quarter of 2022 was 28% higher than the same
period in 2021, predominantly due to the higher concentrate
production discussed above. The IOC saleable production in the
third quarter of 2022 was 7% higher than the second quarter of
2022, despite the lower concentrate level in the third quarter, due
to a negative stockpile survey adjustment in the second quarter and
lower pellet recovery rates experienced during the second
quarter.
Pellet production in the third quarter of 2022 of 2.6 million
tonnes was 15% higher than the corresponding quarter in 2021
and 17% higher than the second quarter of 2022 due to the planned
7-day annual maintenance shutdown in September 2021 and June 2022. Pellet
production in the second quarter of 2022 was also negatively
impacted by the negative stockpile survey adjustment referred
to above. In the third quarter of 2022, CFS production
of 2.1 million tonnes was 49% higher than the same quarter
last year and 3% lower than the second quarter of 2022, due to
lower concentrate production in the third quarter of 2021.
Sales as Reported for the LIORC Royalty
Total iron ore sales tonnage by IOC (CFS plus pellets) of 4.5
million tonnes in the third quarter of 2022 was 9% higher than the
total sales tonnage for the same period in 2021 and 6% higher than
the second quarter of 2022. Differences in the quarterly sales
tonnages were largely as a result of higher inventory levels driven
by increased CFS production and timing differences. Pellet sales
tonnage in the third quarter of 2022 was 1% lower than the same
period in 2021 and 5% lower than the second quarter of 2022.
CFS sales tonnage was 22% higher than the same quarter last year
and 20% higher than the second quarter of 2022.
Outlook
Rio Tinto's 2022 guidance for IOC's saleable production (CFS
plus pellets) remains at 17.0 million to 18.7 million tonnes. This
compares to 16.6 million tonnes of saleable production in 2021.
Through the first three quarters of 2022, IOC's total saleable
production was 13.3 million tonnes, or 74% of the mid-point of Rio
Tinto's annual guidance.
Post the end of the third quarter, the negative outlook for
steel production has continued to put downward pressure on seaborne
iron ore prices. In October 2022, the
average price of the 65% Fe index fell further to US$105 per tonne, or 10% lower than the average
of the 65% Fe index for the third quarter of 2022. The pellet
premium for October was also lower, falling to US$62 per tonne compared to the average of
US$80 per tonne in the third quarter
of 2022. And, according to the World Steel Association, which
recently revised down its short range outlook for steel production
for the remainder of 2022 and 2023, the balance of risks is largely
skewed to the downside due to increased global economic uncertainty
as a result of the effect of monetary tightening, continuation of
inflation, the direction of the Chinese economy and its COVID
policy, the potential crisis of gas supply in Europe, and the aggravation of the
Russian-Ukraine war with unexpected consequences.
However, despite the negative sentiment regarding the outlook
for the global economy, recent iron ore prices have, to date,
remained fairly attractive from a historical perspective, as the
supply and demand for iron ore products has remained relatively
balanced. LIORC continues to be able to generate cash flow in
the current iron ore pricing environment, and benefits from LIORC's
top-line royalty structure which effectively dampens some of the
recent commodity price volatility.
LIORC has no debt and at September 30,
2022 had positive net working capital (current assets less
current liabilities) of $32 million,
which included the third quarter net royalty payment received from
IOC on October 25, 2022 and the LIORC
dividend in the amount of $1.00 per
share paid to shareholders on the next day.
Respectfully submitted on behalf of the Directors of the
Corporation,
John F. Tuer
President and Chief Executive Officer
November 3, 2022
Management's Discussion and Analysis
The following discussion and analysis should be read in
conjunction with the Management's Discussion and Analysis section
of Labrador Iron Ore Royalty Corporation's ("LIORC" or the
"Corporation") 2021 Annual Report, and the financial statements and
notes contained therein and the September
30, 2022 interim condensed consolidated financial
statements.
Overview of the Business
The Corporation's revenues are entirely dependent on the
operations of IOC as its principal assets relate to the operations
of IOC and its principal source of revenue is the 7% royalty it
receives on all sales of iron ore products by IOC. In addition to
the volume of iron ore sold, the Corporation's royalty revenue is
affected by the price of iron ore and the Canadian – U.S. dollar
exchange rate. The first quarter sales of IOC are traditionally
adversely affected by the general winter operating conditions and
are usually 15% – 20% of the annual volume, with the balance spread
fairly evenly throughout the other three quarters. Because of the
size of individual shipments, some quarters may be affected by the
timing of the loading of ships that can be delayed from one quarter
to the next.
Financial Highlights
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2022
|
2021
|
|
2022
|
2021
|
|
(Unaudited)
|
|
($ in millions
except per share information)
|
|
|
|
|
|
|
Revenue
|
64.1
|
74.7
|
|
184.6
|
219.7
|
Equity earnings from
IOC
|
46.8
|
60.5
|
|
134.4
|
183.7
|
Net
income
|
79.2
|
104.8
|
|
220.9
|
301.6
|
Net income per
share
|
$ 1.24
|
$ 1.64
|
|
$ 3.45
|
$ 4.71
|
Dividend from
IOC
|
34.2
|
85.8
|
|
53.7
|
179.3
|
Cash flow from
operations
|
78.5
|
137.3
|
|
123.7
|
295.9
|
Cash flow from
operations per share(1)
|
$ 1.23
|
$ 2.15
|
|
$ 1.93
|
$ 4.62
|
Adjusted cash
flow(1)
|
69.7
|
127.3
|
|
155.9
|
301.0
|
Adjusted cash flow per
share(1)
|
$ 1.09
|
$ 1.99
|
|
$ 2.44
|
$ 4.70
|
Dividends declared per
share
|
$ 1.00
|
$ 2.10
|
|
$ 2.40
|
$ 4.85
|
(1) This
is a non-IFRS financial measure and does not have a standard
meaning under IFRS.
|
Please refer to
Standardized Cash Flow and Adjusted Cash Flow section in the
MD&A.
|
|
The lower revenue, net income and equity earnings achieved in the
third quarter of 2022 as compared to 2021 were mainly due to
lower iron ore prices, partly offset by higher pellet premiums and
sales of CFS. The third quarter of 2022 sales tonnage (pellets and
CFS) were higher by 9% than the third quarter of 2021 predominantly
due to higher inventories driven by an increase in CFS production.
Pellet sales tonnage in the third quarter of 2022 was 1.2% lower
than the same period in 2021 and 5% lower than the second quarter
of 2022. CFS sales tonnage was 22% higher than the same
quarter last year and 20% higher than the second quarter of
2022.
However, the higher sales tonnage was more than offset by a
decrease in the realized sales price of pellets and CFS, resulting
in royalty income of $63.5 million
for the quarter as compared to $74.2
million for the same period in 2021. Third quarter 2022 cash
flow from operations was $78.5
million or $1.23 per share
compared to $137.3 million or
$2.15 per share for the same period
in 2021. LIORC received an IOC dividend in the third quarter of
2022 in the amount of $34.2 million
or $0.53 per share compared to
$85.8 million or $1.34 per share for the same period in 2021.
Equity earnings from IOC amounted to $46.8
million or $0.73 per share in
the third quarter of 2022 compared to $60.5
million or $0.95 per share for
the same period in 2021.
Operating Highlights
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
IOC
Operations
|
2022
|
2021
|
|
2022
|
2021
|
|
(in millions
of tonnes)
|
Sales(1)
|
|
|
|
|
|
Pellets
|
2.35
|
2.37
|
|
7.23
|
7.08
|
Concentrate for sale
("CFS")(2)
|
2.20
|
1.80
|
|
5.19
|
5.32
|
Total(3)
|
4.55
|
4.18
|
|
12.42
|
12.40
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
Concentrate
produced
|
4.92
|
3.92
|
|
14.33
|
13.12
|
|
|
|
|
|
|
Saleable
production
|
|
|
|
|
|
Pellets
|
2.62
|
2.27
|
|
7.33
|
7.45
|
CFS
|
2.11
|
1.41
|
|
5.93
|
4.86
|
Total(3)
|
4.73
|
3.68
|
|
13.26
|
12.31
|
|
|
|
|
|
|
Average index prices
per tonne (US$)
|
|
|
|
|
|
65% Fe
index(4)
|
$ 115
|
$ 190
|
|
$ 148
|
$ 205
|
62% Fe
index(5)
|
$ 103
|
$ 163
|
|
$ 128
|
$ 177
|
Pellet
premium(6)
|
$ 80
|
$ 77
|
|
$ 76
|
$ 62
|
|
|
(1) For
calculating the royalty to LIORC.
|
|
(2) Excludes third party ore sales.
|
|
(3)
Totals may not add up due to
rounding.
|
|
(4) The
Platts index for 65% Fe, CFR China.
|
|
(5) The
Platts index for 62% Fe, CFR China.
|
|
(6) The
Platts Atlantic Blast Furnace 65% Fe pellet premium
index.
|
IOC sells CFS based on the 65% Fe index. In the third
quarter of 2022, the 65% Fe index averaged US$115 per tonne, a 39% decrease over the average
of US$190 per tonne in the third
quarter of 2021. Iron ore prices decreased, as lower global steel
production reduced the demand for seaborne iron ore. The
monthly pellet premium averaged US$80
per tonne in the third quarter of 2022, up 5% from an average of
US$77 per tonne in the same quarter
of 2021.
Based on sales as reported for the LIORC Royalty, the overall
average price realized by IOC for CFS and pellets, FOB Sept-Îles,
was approximately US$146 per tonne in
the third quarter of 2022, compared to approximately US$196 per tonne in the third quarter of 2021 and
US$168 per tonne in the second
quarter of 2022. The decrease in the average realized price FOB
Sept-Îles in 2022 was a result of lower CFS and pellet prices, and
to a lesser extent a change in product mix, as pellets represented
52% of sales in the third quarter of 2022, compared to 57% of sales
in the same quarter of 2021 and the second quarter of 2022.
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 $1.23 for the quarter (2021 - $2.15).
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.
|
3 Months
Ended
Sept. 30,
2022
|
3 Months
Ended
Sept. 30,
2021
|
9 Months
Ended
Sept. 30,
2022
|
9 Months
Ended
Sept. 30,
2021
|
|
|
(in thousands except
for per share information)
|
|
|
|
|
Cash flow from
operating activities
|
$78,487
|
$137,298
|
$123,700
|
$295,850
|
|
|
Changes in amounts
receivable, accounts payable and income taxes payable
|
(8,828)
|
(9,963)
|
32,154
|
5,163
|
|
Adjusted cash
flow
|
$69,659
|
$198,037
|
$155,854
|
$301,013
|
|
Adjusted cash flow per
share
|
$
1.09
|
$ 1.99
|
$ 2.44
|
$ 4.70
|
|
Liquidity and Capital Resources
The Corporation had $43.4 million
in cash as at September 30, 2022
(December 31, 2021 - $82.9 million) with total current assets of
$107.9 million (December 31, 2021 - $132.6
million). The Corporation had working capital of
$31.8 million as at September 30, 2022 (December 31, 2021 - $29.6
million). The Corporation's operating cash flow was
$78.5 million and the dividend paid
during the quarter was $57.6 million,
resulting in cash balances increasing by $20.9 million during the third quarter of 2022.
In September the Directors of the Corporation declared the third
quarter dividend of $64 million that
was paid on October 26, 2022.
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 $30 million
revolving credit facility with a term ending September 18, 2024 with provision for annual
one-year extensions. No amount is currently drawn under this
facility (2021 – nil) leaving $30.0
million available to provide for any capital required by IOC
or requirements of the Corporation.
Disclosure Controls and Internal Control over Financial
Reporting
The President and CEO and the CFO are responsible for
establishing and maintaining disclosure controls and procedures and
internal control over financial reporting for the
Corporation. Two directors serve as directors of IOC and IOC
provides monthly reports on its operations to them. The
Corporation also relies on financial information provided by IOC,
including its audited financial statements, and other material
information provided to the President and CEO and the CFO by
officers of IOC. IOC is a private corporation, and its
financial statements are not publicly available.
The Directors are informed of all material information relating
to the Corporation and its subsidiary by the officers of the
Corporation on a timely basis and approve all core disclosure
documents including the Management Information Circular, the annual
and interim financial statements and related Management's
Discussion and Analysis, the Annual Information Form, any
prospectuses and all press releases. An evaluation of the
design and operating effectiveness of the Corporation's disclosure
controls and procedures was conducted under the supervision of the
CEO and CFO. Based on their evaluation, they concluded that
the Corporation's disclosure controls and procedures were effective
in ensuring that all material information relating to the
Corporation was accumulated and communicated for the three month
period ended September 30, 2022.
The President and CEO and the CFO have designed internal control
over financial reporting to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
IFRS. An evaluation of the design and operating effectiveness
of the Corporation's internal control over financial reporting was
conducted under the supervision of the CEO and CFO. Based on
their evaluation, they concluded that the Corporation's internal
control over financial reporting was effective and that there were
no material weaknesses therein for the three month period ended
September 30, 2022.
The preparation of financial statements requires the
Corporation's management to make estimates and assumptions that
affect the reported amounts of the assets, liabilities, revenue and
expenses reported each period. Each of these estimates varies with
respect to the level of judgment involved and the potential impact
on the Corporation's reported financial results. Estimates are
deemed critical when the Corporation's financial condition, change
in financial condition or results of operations would be materially
impacted by a different estimate or a change in estimate from
period to period. By their nature, these estimates are subject to
measurement uncertainty, and changes in these estimates may affect
the consolidated financial statements of future periods.
No material changes in the Corporation's internal control over
financial reporting occurred during the three month period ended
September 30, 2022.
John F. Tuer
President and Chief Executive Officer
Toronto, Ontario
November 3, 2022
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; the performance of
IOC; market conditions in the steel industry; fluctuations in the
value of the Canadian and U.S. dollar; mining risks that cause a
disruption in operations and availability of insurance; disruption
in IOC's operations caused by natural disasters, severe weather
conditions and public health crises, including the COVID-19
outbreak; failure of information systems or damage from cyber
security attacks; adverse changes in domestic and global economic
and political conditions; changes in government regulation and
taxation; national, provincial and international laws, regulations
and policies regarding climate change that further limit the
emissions of greenhouse gases or increase the costs of operations
for IOC or its customers; changes affecting IOC's customers;
competition from other iron ore producers; renewal of mining
licences and leases; relationships with indigenous groups;
litigation; and uncertainty in the estimates of reserves and
resources. A discussion of these factors is contained in LIORC's
annual information form dated March 11,
2022 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
|
|
|
September
30,
|
|
December
31,
|
(in thousands of
Canadian dollars)
|
2022
|
|
2021
|
|
|
(Unaudited)
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and short-term
investments
|
$
43,413
|
|
$
82,913
|
|
Amounts
receivable
|
58,265
|
|
49,681
|
|
Income taxes
recoverable
|
6,249
|
|
-
|
Total Current
Assets
|
107,927
|
|
132,594
|
|
|
|
|
|
Non-Current
Assets
|
|
|
|
|
Iron Ore Company of
Canada ("IOC")
|
|
|
|
|
royalty
and commission interests
|
230,359
|
|
235,341
|
|
Investment in
IOC
|
508,603
|
|
421,376
|
Total Non-Current
Assets
|
738,962
|
|
656,717
|
|
|
|
|
|
Total Assets
|
$
846,889
|
|
$
789,311
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
$
12,090
|
|
$
10,786
|
|
Dividend
payable
|
64,000
|
|
73,600
|
|
Taxes
payable
|
-
|
|
18,625
|
Total Current
Liabilities
|
76,090
|
|
103,011
|
|
|
|
|
|
Non-Current
Liabilities
|
|
|
|
|
Deferred income
taxes
|
133,860
|
|
122,240
|
Total
Liabilities
|
209,950
|
|
225,251
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Share
capital
|
317,708
|
|
317,708
|
|
Retained
earnings
|
325,049
|
|
257,772
|
|
Accumulated other
comprehensive loss
|
(5,818)
|
|
(11,420)
|
|
|
636,939
|
|
564,060
|
|
|
|
|
|
Total Liabilities and
Shareholders' Equity
|
$
846,889
|
|
$
789,311
|
|
|
|
|
|
|
|
|
|
|
Approved by the
Directors,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Tuer
|
Patricia M.
Volker
|
|
|
Director
|
Director
|
|
|
LABRADOR IRON ORE ROYALTY
CORPORATION
|
|
|
|
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
September 30,
|
(in thousands of
Canadian dollars except for per share information)
|
2022
|
|
2021
|
|
|
(Unaudited)
|
Revenue
|
|
|
|
|
IOC
royalties
|
$
63,475
|
|
$
74,224
|
|
IOC
commissions
|
447
|
|
411
|
|
Interest and other
income
|
137
|
|
70
|
|
|
64,059
|
|
74,705
|
Expenses
|
|
|
|
|
Newfoundland royalty
taxes
|
12,695
|
|
14,845
|
|
Amortization of royalty
and commission interests
|
1,660
|
|
1,479
|
|
Administrative
expenses
|
687
|
|
607
|
|
|
15,042
|
|
16,931
|
|
|
|
|
|
Income before equity earnings and income
taxes
|
49,017
|
|
57,774
|
Equity earnings in
IOC
|
46,781
|
|
60,522
|
|
|
|
|
|
Income before income
taxes
|
95,798
|
|
118,296
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
Current
|
15,186
|
|
17,763
|
|
Deferred
|
1,410
|
|
(4,230)
|
|
|
16,596
|
|
13,533
|
|
|
|
|
|
Net income for the period
|
79,202
|
|
104,763
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the
period
|
$
79,202
|
|
$
104,763
|
|
|
|
|
|
Net income per share
|
$
1.24
|
|
$
1.64
|
LABRADOR IRON ORE ROYALTY
CORPORATION
|
|
|
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
|
September 30,
|
(in thousands of
Canadian dollars except for per share information)
|
2022
|
|
2021
|
|
|
(Unaudited)
|
Revenue
|
|
|
|
|
IOC
royalties
|
$
183,130
|
|
$
218,265
|
|
IOC
commissions
|
1,223
|
|
1,219
|
|
Interest and other
income
|
238
|
|
170
|
|
|
184,591
|
|
219,654
|
Expenses
|
|
|
|
|
Newfoundland royalty
taxes
|
36,626
|
|
43,653
|
|
Amortization of royalty
and commission interests
|
4,982
|
|
4,536
|
|
Administrative
expenses
|
2,212
|
|
2,149
|
|
|
43,820
|
|
50,338
|
|
|
|
|
|
Income before equity earnings and income
taxes
|
140,771
|
|
169,316
|
Equity earnings in IOC
|
134,355
|
|
183,714
|
|
|
|
|
|
Income before income
taxes
|
275,126
|
|
353,030
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
Current
|
43,618
|
|
52,121
|
|
Deferred
|
10,631
|
|
(667)
|
|
|
54,249
|
|
51,454
|
|
|
|
|
|
Net income for the period
|
220,877
|
|
301,576
|
|
|
|
|
|
Other comprehensive
income
|
|
|
|
|
Share of other
comprehensive income of IOC that will not be
|
|
|
|
|
reclassified
subsequently to profit or loss (net of income taxes
|
|
|
|
|
of 2022 - $989; 2021 -
$557)
|
5,602
|
|
3,156
|
|
|
|
|
|
Comprehensive income for the
period
|
$
226,479
|
|
$
304,732
|
|
|
|
|
|
Net income per share
|
$
3.45
|
|
$
4.71
|
LABRADOR IRON ORE
ROYALTY CORPORATION
|
|
|
|
INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months
Ended
|
|
|
|
|
September
30,
|
(in thousands of
Canadian dollars)
|
2022
|
|
2021
|
|
|
|
|
(Unaudited)
|
Net inflow (outflow)
of cash related
|
|
|
|
|
to the following
activities
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
|
|
|
Net income for the
period
|
$
220,877
|
|
$ 301,576
|
|
Items not affecting
cash:
|
|
|
|
|
|
Equity earnings in
IOC
|
(134,355)
|
|
(183,714)
|
|
|
Current income
taxes
|
43,618
|
|
52,121
|
|
|
Deferred income
taxes
|
10,631
|
|
(667)
|
|
|
Amortization of royalty
and commission interests
|
4,982
|
|
4,536
|
|
Common share dividend
from IOC
|
53,719
|
|
179,282
|
|
Change in amounts
receivable
|
(8,584)
|
|
(19,516)
|
|
Change in accounts
payable
|
1,304
|
|
3,637
|
|
Income taxes
paid
|
(68,492)
|
|
(41,405)
|
|
Cash flow from
operating activities
|
123,700
|
|
295,850
|
|
|
|
|
|
|
|
Financing
|
|
|
|
|
|
Dividend paid to
shareholders
|
(163,200)
|
|
(291,200)
|
|
Cash flow used in
financing activities
|
(163,200)
|
|
(291,200)
|
|
|
|
|
|
|
|
(Decrease) increase
in cash, during the period
|
(39,500)
|
|
4,650
|
|
|
|
|
|
|
|
Cash, beginning of
period
|
82,913
|
|
106,091
|
|
|
|
|
|
|
|
Cash, end of
period
|
$
43,413
|
|
$ 110,741
|
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, 2020
|
$
317,708
|
$
262,000
|
$
(13,340)
|
$
566,368
|
Net income for the
period
|
-
|
301,576
|
-
|
301,576
|
Dividends declared to
shareholders
|
-
|
(310,400)
|
-
|
(310,400)
|
Share of other
comprehensive income from investment in IOC (net of
taxes)
|
-
|
-
|
3,156
|
3,156
|
Balance as at September
30, 2021
|
$
317,708
|
$
253,176
|
$
(10,184)
|
$
560,700
|
|
|
|
|
|
Balance as at December
31, 2021
|
$
317,708
|
$
257,772
|
$
(11,420)
|
$
564,060
|
Net income for the
period
|
-
|
220,877
|
-
|
220,877
|
Dividends declared to
shareholders
|
-
|
(153,600)
|
-
|
(153,600)
|
Share of other
comprehensive income from investment in IOC (net of
taxes)
|
-
|
-
|
5,602
|
5,602
|
Balance as at September
30, 2022
|
$
317,708
|
$
325,049
|
$
(5,818)
|
$
636,939
|
The complete consolidated financial statements for the Third
quarter ended September 30, 2022,
including the notes thereto, are posted on sedar.com and
labradorironore.com.
SOURCE Labrador Iron Ore Royalty Corporation