LABRADOR IRON ORE ROYALTY CORPORATION - RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2024
The Directors of
Financial Performance
In the second quarter of 2024, LIORC's financial results benefited from higher pellet sales tonnages and higher iron ore prices, as well as a more favourable US/CAD exchange rate, partly offset by lower concentrate for sale ("CFS") sales tonnages and lower pellet premiums. Royalty revenue for the second quarter of 2024 of
Despite ongoing uncertainty regarding the outlook for global steel demand and an increase in iron ore shipments from the largest seaborne iron ore producers, iron ore prices during the second quarter of 2024 remained relatively consistent with last year's second quarter prices. According to the
Rio Tinto has disclosed that the average realised price achieved for
Operations
Sales as Reported for the LIORC Royalty
Total iron ore sales tonnage by
Outlook
In its second quarter production report, Rio Tinto disclosed that the 2024 guidance for
Looking forward, analysts at S&P Global Commodity Insights forecast further weakening in third quarter iron ore prices, suggesting that mill margins are likely to remain under pressure and sentiment bearish given the weak housing market data. Longer term the
On
LIORC has no debt and at
Respectfully submitted on behalf of the Directors of the Corporation,
President and Chief Executive Officer
Management's Discussion and Analysis
The following discussion and analysis should be read in conjunction with the Management's Discussion and Analysis section of
Overview of the Business
The Corporation's revenues are entirely dependent on the operations of
Financial Highlights
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Three Months Ended |
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Six Months Ended |
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2024 |
2023 |
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2024 |
2023 |
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(in millions except per share information) |
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Revenue |
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Equity earnings from IOC |
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Net income |
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Net income per share |
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Dividend from |
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Cash flow from operations |
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Cash flow from operations per share(1) |
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Adjusted cash flow(1) |
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Adjusted cash flow per share(1) |
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Dividends declared per share |
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(1) This is a non-IFRS financial measure and does not have a standard meaning under IFRS. |
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Please refer to Standardized Cash Flow and Adjusted Cash Flow section in the MD&A. |
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The higher revenue, net income and equity earnings from
The higher pellet sales tonnages, higher iron ore prices, as well as a more favourable US/CAD exchange rate, partly offset by lower CFS sales tonnages and lower pellet premiums resulted in royalty income of
Operating Highlights
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Three Months Ended |
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Six Months Ended |
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IOC Operations |
2024 |
2023 |
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2024 |
2023 |
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(in millions of tonnes) |
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Sales (1) |
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Pellets |
2.54 |
2.30 |
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4.98 |
4.26 |
Concentrate for sale ("CFS")(2) |
1.70 |
2.09 |
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3.61 |
3.79 |
Total(3) |
4.23 |
4.40 |
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8.60 |
8.05 |
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Production |
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Concentrate produced |
3.87 |
3.83 |
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8.61 |
8.46 |
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Saleable production |
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Pellets |
2.14 |
1.61 |
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4.66 |
3.79 |
CFS |
1.58 |
1.91 |
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3.51 |
4.02 |
Total(3) |
3.72 |
3.51 |
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8.17 |
7.81 |
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Average index prices per tonne (US$) |
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65% Fe index(4) |
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62% Fe index(5) |
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Pellet premium(6) |
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(1) For calculating the royalty to LIORC. |
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(2) Excludes third party ore sales. |
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(3) Totals may not add up due to rounding. |
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(4) The Platts index for 65% Fe, CFR China. |
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(5) The Platts index for 62% Fe, CFR China. |
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(6) The Platts Atlantic Blast Furnace 65% Fe pellet premium index. |
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Based on sales as reported for the LIORC royalty, the overall average price realized by
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
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 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.
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3 Months Ended
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3 Months Ended
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6 Months Ended
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6 Months Ended
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(in millions except per share information) |
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Standardized cash flow from operating activities |
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Changes in amounts receivable, accounts payable and income taxes payable |
(11.1) |
7.4 |
(9.9) |
14.0 |
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Adjusted cash flow |
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Adjusted cash flow per share |
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Liquidity and Capital Resources
The Corporation had
Cash balances consist of deposits in Canadian dollars with a Canadian chartered bank. Amounts receivable primarily consist of royalty payments from
Operating cash flow of the Corporation is sourced entirely from
The Corporation has a
President and Chief Executive Officer
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
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.
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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
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As at |
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(in thousands of Canadian dollars) |
2024 |
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2023 |
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(Unaudited) |
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Assets |
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Current Assets |
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Cash |
$ 67,698 |
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$ 13,192 |
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Amounts receivable |
49,096 |
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53,872 |
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Income taxes recoverable |
- |
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465 |
Total Current Assets |
116,794 |
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67,529 |
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Non-Current Assets |
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royalty and commission interests |
219,632 |
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222,901 |
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Investment in IOC |
558,828 |
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546,614 |
Total Non-Current Assets |
778,460 |
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769,515 |
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Total Assets |
$ 895,254 |
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$ 837,044 |
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Liabilities and Shareholders' Equity |
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Current Liabilities |
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Accounts payable and accrued liabilities |
$ 10,097 |
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$ 11,542 |
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Dividend payable |
70,400 |
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28,800 |
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Taxes payable |
6,099 |
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- |
Total Current Liabilities |
86,596 |
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40,342 |
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Non-Current Liabilities |
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Deferred income taxes |
138,240 |
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137,370 |
Total Liabilities |
224,836 |
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177,712 |
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Shareholders' Equity |
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Share capital |
317,708 |
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317,708 |
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Retained earnings |
358,228 |
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347,927 |
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Accumulated other comprehensive loss |
(5,518) |
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(6,303) |
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670,418 |
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659,332 |
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Total Liabilities and Shareholders' Equity |
$ 895,254 |
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$ 837,044 |
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- |
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Approved by the Directors, |
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Director |
Director |
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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
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For the Three Months Ended |
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(in thousands of Canadian dollars except for per share information) |
2024 |
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2023 |
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(Unaudited) |
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Revenue |
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$ 52,286 |
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$ 50,941 |
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416 |
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433 |
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Interest and other income |
423 |
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163 |
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53,125 |
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51,537 |
Expenses |
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10,457 |
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10,188 |
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Amortization of royalty and commission interests |
1,647 |
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1,464 |
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Administrative expenses |
684 |
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774 |
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12,788 |
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12,426 |
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Income before equity earnings and income taxes |
40,337 |
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39,111 |
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Equity earnings in |
18,495 |
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13,543 |
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Income before income taxes |
58,832 |
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52,654 |
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Provision for income taxes |
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Current |
12,597 |
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12,174 |
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Deferred |
(3,939) |
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(1,384) |
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8,658 |
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10,790 |
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Net income for the period |
50,174 |
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41,864 |
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Other comprehensive income (loss) |
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Share of other comprehensive income (loss) of |
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reclassified subsequently to profit or loss (net of income taxes |
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of 2024 - |
785 |
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(315) |
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Comprehensive income for the period |
$ 50,959 |
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$ 41,549 |
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Net income per share |
$ 0.78 |
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$ 0.65 |
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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
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For the Six months Ended |
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(in thousands of Canadian dollars except for per share information) |
2024 |
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2023 |
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(Unaudited) |
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Revenue |
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$ 108,269 |
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$ 97,484 |
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846 |
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792 |
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Interest and other income |
669 |
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475 |
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109,784 |
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98,751 |
Expenses |
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21,654 |
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19,497 |
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Amortization of royalty and commission interests |
3,269 |
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3,046 |
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Administrative expenses |
1,515 |
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1,429 |
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26,438 |
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23,972 |
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Income before equity earnings and income taxes |
83,346 |
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74,779 |
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Equity earnings in |
52,819 |
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35,360 |
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Income before income taxes |
136,165 |
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110,139 |
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Provision for income taxes |
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Current |
25,933 |
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23,284 |
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Deferred |
731 |
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1,426 |
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26,664 |
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24,710 |
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Net income for the period |
109,501 |
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85,429 |
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Other comprehensive income (loss) |
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Share of other comprehensive income (loss) of |
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reclassified subsequently to profit or loss (net of income |
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taxes of 2024 - |
785 |
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(315) |
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Comprehensive income for the period |
$ 110,286 |
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$ 85,114 |
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Basic and diluted income per share |
$ 1.71 |
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$ 1.33 |
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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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For the Six months Ended |
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(in thousands of Canadian dollars) |
2024 |
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2023 |
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(Unaudited) |
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Net inflow (outflow) of cash related |
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to the following activities |
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Operating |
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Net income for the period |
$ 109,501 |
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$ 85,429 |
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Items not affecting cash: |
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Equity earnings in |
(52,819) |
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(35,360) |
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Current income taxes |
25,933 |
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23,284 |
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Deferred income taxes |
731 |
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1,426 |
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Amortization of royalty and commission interests |
3,269 |
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3,046 |
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Common share dividends from |
41,529 |
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19,890 |
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Change in amounts receivable |
4,776 |
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(11,928) |
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Change in accounts payable |
(1,445) |
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1,960 |
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Income taxes paid |
(19,369) |
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(27,331) |
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Cash flow from operating activities |
112,106 |
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60,416 |
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Financing |
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Dividends paid to shareholders |
(57,600) |
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(76,800) |
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Cash flow used in financing activities |
(57,600) |
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(76,800) |
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Increase (decrease) in cash, during the period |
54,506 |
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(16,384) |
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Cash, beginning of period |
13,192 |
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39,904 |
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Cash, end of period |
$ 67,698 |
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$ 23,520 |
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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
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Accumulated |
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other |
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Common |
Share |
Retained |
comprehensive |
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(in thousands of Canadian dollars except share amounts) |
shares |
capital |
earnings |
loss |
Total |
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(Unaudited) |
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Balance as at |
64,000,000 |
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$ (5,070) |
$ 637,459 |
Net income for the period |
- |
- |
85,429 |
- |
85,429 |
Dividends declared to shareholders |
- |
- |
(73,600) |
- |
(73,600) |
Share of other comprehensive loss from investment in |
- |
- |
- |
(315) |
(315) |
Balance as at |
64,000,000 |
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$ (5,385) |
$ 648,973 |
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Balance as at |
64,000,000 |
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$ (6,303) |
$ 659,332 |
Net income for the period |
- |
- |
109,501 |
- |
109,501 |
Dividends declared to shareholders |
- |
- |
(99,200) |
- |
(99,200) |
Share of other comprehensive income from investment in |
- |
- |
- |
785 |
785 |
Balance as at |
64,000,000 |
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$ (5,518) |
$ 670,418 |
The complete consolidated financial statements for the second quarter ended
SOURCE