TORONTO, March 7, 2019 /CNW/ - Labrador Iron Ore Royalty
Corporation ("LIORC") (TSX: LIF) announced the results of its
operations for the year ended December 31,
2018.
To the Holders of Common Shares of Labrador Iron Ore Royalty
Corporation
81 Years in Labrador West
Labrador Iron Ore Royalty Corporation has been involved in
Labrador West for 81 years. Under a Statutory Agreement with
Newfoundland made in 1938, a
predecessor company, Labrador Mining and Exploration Limited, was
granted extensive exploration and mining rights in Labrador West.
LM&E found the iron ore bodies that now constitute the mine
operated by Iron Ore Company of Canada. LM&E received grants of leases and
licences under the Statutory Agreement. It also received a grant of
surface rights to establish the town site that became Labrador City. LM&E sublet the leases to
IOC and IOC, with major steel companies as original shareholders,
built the infrastructure, mine, railway and port. Under the
sublease, LIORC receives a 7% gross overriding royalty on iron ore
products produced and sold by IOC.
Financial Performance
The Shareholders' cash flow from operations for the year ended
December 31, 2018 was $148.8 million or $2.32 per share as compared to $167.0 million or $2.61 per share for 2017. The financial results
for LIORC in 2018 were adversely affected by the nine-week labour
strike from March 26 to May 29, 2018,
which halted all iron ore production at IOC.
The Shareholders' consolidated net income for the year ended
December 31, 2018 was $128.5 million or $2.01 per share compared to $157.3 million or $2.46 per share in 2017. Equity earnings from
Iron Ore Company of Canada ("IOC")
amounted to $57.0 million compared to
$74.3 million in 2017. LIORC received
dividends from IOC in 2018 totaling $83.9
million or $1.31 per share
compared to $76.7 million in 2017, or
$1.20 per share. Post the labour
strike, IOC drew down its cash balance to pay the higher annual
dividend. LIORC received an IOC dividend in the fourth quarter of
2018 in the amount of $25.3 million
or $0.40 per share compared to
$19.3 million or $0.30 per share in the fourth quarter of 2017.
IOC's 2018 iron ore sales for calculating the royalty to LIORC
totaled 15.10 million tonnes compared to 19.15 million tonnes in
2017. Royalty revenue decreased to $128.8
million as compared to $156.4
million in 2017 due to the labour strike in the second
quarter of 2018.
The cash flow from operations, equity earnings and net income
for the year were lower than last year mainly due to the reduced
sales tonnages for concentrate and pellets caused by the labour
strike. As in 2017, prices and premiums were higher than most
forecasts, with the Chinese governments continuing to enforce
measures to reduce pollution; these measures favoured higher
quality products such as the concentrate for sale ("CFS") and
pellets produced by IOC.
While the Platts index for 62% Fe, CFR China averaged
US$69 per tonne in 2018 compared to
US$71 per tonne in 2017, a 3%
decline, the Platts index for 65% Fe, CFR China averaged
US$90 per tonne in 2018 compared to
US$87 per tonne in 2017, a 3%
increase. Since the CFS sold by IOC is priced on the 65% Fe, CFR
China benchmark, the stronger prices for the 65% Fe product
somewhat offset the lower CFS sales tonnages in 2018. The monthly
Atlantic Blast Furnace 65% Fe pellet premium index, as quoted by
Platts, averaged US$59 per tonne for
2018, and was 31% higher than in 2017. Blast Furnace pellet
premiums were stable at approximately US$58 per tonne for most of 2018 but increased to
US$62 per tonne in November and
December 2018. The strong
year-over-year increase in pellet premiums was supported by
generally healthy margins for steel producers in 2018.
The average price realized by IOC for CFS and pellets, FOB
Sept-Îles, net of selling costs and royalties was approximately
C$110 per tonne in 2018 compared to
C$108 per tonne in
2017. Increased freight rates and lower sales tonnages
affected the average realized price FOB Sept-Îles in 2018. The
premiums for 65% Fe concentrate and pellets continued to be
supported by the environmental policies of the Chinese governments,
which, as in 2017, caused Chinese steel producers to favour the
usage of higher value-in-use iron ore, such as the concentrate and
pellets produced by IOC. With strong pellet premiums in 2018, IOC
again focused on maximizing pellet production to the extent
possible, given the labour strike and the refurbishment of one
pellet line in 2018, as compared to two lines in 2017. The sales
tonnage of pellets in 2018, for calculating the royalty to LIORC,
was 20% lower than in 2017. The CFS tonnage in 2018 was lower than
in 2017 by 23%.
Iron Ore Company of Canada Operations
Production
Total concentrate production of 15.73 million tonnes in 2018 was
22% lower as compared to 2017 of 20.21 million tonnes, largely due
to the labour strike in the second quarter of 2018. The Moss Pit
(formerly known as Wabush 3)
commenced production in the third quarter. Monthly concentrate
production records were set in July and October of 2018. However,
third quarter production was adversely affected by maintenance and
the commissioning of a productivity improvement project on the
spiral plant, which temporarily restricted throughput. Fourth
quarter production at IOC was 4% higher than the corresponding
period of 2017. The overall IOC saleable production (CFS plus
pellets) was slightly below Rio Tinto's lower revised guidance,
provided after the labour strike.
The unit operating costs for concentrate and pellets were higher
than in 2017 due to the labour strike and the fixed costs incurred
during the suspension of production. The total cash costs were
lower in 2018 than in 2017 by 6%.
Haulage by the Quebec North Shore and Labrador Railway Company,
Inc. ("QNS&L") for the iron ore concentrate from the Bloom Lake
Mine, owned by Champion Iron Limited ("Champion"), began in
March 2018, as scheduled by Champion.
As reported by Champion, the dry metric tonnes of iron ore
concentrate sold totaled 5.4 million tonnes in the nine months
ending December 31, 2018.
Sales as Reported for the LIORC Royalty
Total iron ore tonnage sold by IOC (CFS plus pellets) of 15.10
million tonnes was 21% below the total sales tonnage in 2017. The
pellet sales tonnage was 20% lower and CFS sales tonnage was 23%
lower than in 2017. The reduced sales tonnages were the result of
the reduced production tonnages, as explained above.
As noted above, pellet premiums were strong in 2018 and IOC
maximized pellet production. Pellet sales were comparable in the
second half of 2018 to the same period in 2017. Production and
sales in both periods were affected by the refurbishment of a
pellet line. IOC is focused on restoring the capacity of the pellet
plant to 12.5 million tonnes per annum by improving maintenance and
operating practices.
Capital Expenditures
Capital expenditures for IOC in 2018 were $205 million in total as compared to $265 million in 2017. The 2018 capital
expenditures were essentially on budget and included the completion
of the development of the Moss Pit in September, the refurbishment
of the No. 4 Pellet Line, the track replacement program for 2018
for the QNS&L railway and dewatering for the Luce Pit.
Outlook
The collapse of the tailings dam and loss of human life at
Vale's Corrego de Feijao mine in Brumadinho, Minas Gerais state,
Brazil ("Brumadinho") on
January 25, 2019 had a profound
influence on the seaborne iron ore market. The full impacts are
uncertain at present. The initial price response for the 62% Fe,
CFR China benchmark index was a sharp increase to over US$90 per tonne from US$74 per tonne the day prior to the disaster.
However, low profit margins for Chinese steelmakers at present
could limit the duration of the price spike. The benchmark price
for the 62% Fe, CFR China index declined in mid-February 2019 to US$84 per tonne, as steelmakers looked to
purchase less expensive, lower grade products and reduce port
stocks in China.
Vale announced on January 29, 2019
plans to cut production of some 40 million tonnes per year,
including the pellet feed needed for the production of 11 million
tonnes per year of pellets. Additional Vale production cuts of 30
million tonnes per annum were announced in February 2019 as a result of a civil court order
which Vale is appealing.
As reported by Platts on February 13,
2019, in response to the Vale supply cuts, the National
Australia Bank raised its forecast for iron ore from US$62 to US$80 per
tonne for 2019 and from US$60 to
US$70 per tonne for 2020. The
forecast decline over the two years is because of the expectation
of softer growth in Chinese demand.
As at mid-February there was uncertainty in the Atlantic pellet
market, as the Brumadinho disaster caused delays in the annual
pellet negotiations between Vale and the European steelmakers. In
late 2019 steelmakers were faced with falling margins which causes
them to purchase less expensive, lower quality iron ore. In
addition, just prior to the disaster, Vale had been negotiating to
change the annual pricing of pellet contracts to be based on the
65% index as opposed to the 62% index. The steelmakers judged that
this would result in an increase in the cost of pellets and
resisted the change. The Brumadinho disaster is expected to result
in a decreased supply of pellets worldwide, and there are reports
that Vale will fill Brazilian orders for pellets over other
customers.
Prior to the Brumadinho disaster, the market was generally
assuming the re-opening of the Samarco pellet plant in Brazil in 2020. This is now seen as highly
unlikely. Some analysts are modelling a partial re-start of Samarco
in 2021.
On February 2, 2019 Platts listed
the February price index for the Atlantic Blast Furnace 65% Fe
pellet premium at US$67.50 per tonne,
no change from the January 2019
price. Pellet producers were maximizing pellet production before
the Brumadinho disaster, and therefore it is expected that pellet
premiums will remain strong for the balance of 2019 at least,
considering no likely Samarco production, the cuts to pellet
production announced by Vale, and the limited ability of existing
major producers to ramp up production. A potential brake on pellet
price increases is the consideration that the margins for European
steelmakers are relatively low at present.
Rio Tinto's guidance for 2019 is 11.3 million to 12.3 million
tonnes for its 58.7% share of IOC's saleable production tonnage
(CFS and pellets). This is 19.2 million to 20.9 million tonnes of
saleable production on a 100% basis. With the strong pellet
premiums, IOC is expected to continue to prioritize pellet
production in 2019. The 2019 IOC objective is approximately 20
million tonnes of concentrate production with sales of up to 12.5
million tonnes of pellets and approximately 6 million tonnes of
CFS.
The capital expenditures for 2019 at IOC are expected to be in
the range of $225 million to
$245 million, higher than the 2018
amount of $205 million. The
refurbishment of one induration machine in the pellet plant, a new
rope shovel for the mine, productivity improvements in the
concentrator and pellet plant, and additional locomotive capacity
for the QNS&L railway are planned for 2019. IOC expects to earn
revenue from hauling product from the Bloom Lake mine of Champion.
The reported production capacity of the Bloom Lake is 7.5 million
tonnes per annum of iron concentrate. Tacora Resources Inc.
(Tacora) announced on November 27,
2018 that the financing for the re-start of the Scully Mine
is complete. The concentrate produced by Tacora is to be hauled by
the QNS&L.
The price of iron ore early in 2019 has exceeded forecasts. If
the strong prices and premiums continue in 2019, the policies of
the Chinese government on pollution are not materially relaxed,
there are no major negative impacts from the China-US trade
negotiations, IOC achieves the production guidance, and the
Canadian dollar does not appreciate materially against the US
dollar, the 2019 outlook for LIORC will be continued strong cash
flows.
Responses to Shareholder Questions
On June 18, 2018 the Corporation
announced in a press release that its Board of Directors had
determined to call a special meeting of shareholders 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, for the
specific purpose of allowing the Company to pursue a potentially
compelling opportunity that it had been made aware of. That
opportunity never materialized as anticipated and after extensive
consultation with shareholders, in a press release dated
February 6, 2019 it was stated that
the directors wished to indicate that they have no intention of
calling a special meeting on or before the upcoming Annual General
Meeting, nor is a further special meeting currently contemplated.
The directors also clarified that they have no intention of making
an acquisition without shareholder approval.
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. It was noted in the
February 6, 2019 press release that
there have been times when the directors have determined that it is
appropriate to draw down on its cash reserves and other times where
it has been prudent to build cash reserves back up. The recent
increase in the cash balance was based on the directors' view that
it was prudent at that particular time to have some additional
financial flexibility. On March 7,
2019 the directors determined that the cash balance be
reduced to a more typical level with excess cash distributed to
shareholders by means of a special dividend to be paid on
April 25, 2019.
I would like to take this opportunity to thank our Shareholders
for their interest and loyalty and my fellow Directors for their
wisdom and support.
Respectfully submitted on behalf of the Directors of the
Corporation,
William H. McNeil
President and Chief Executive Officer
March 7, 2019
Corporate Structure
LIORC is a Canadian corporation resulting from the conversion of
the Labrador Iron Ore Royalty Income Fund (the "Fund") under an
Arrangement effective on July 1,
2010. LIORC is also the successor by amalgamation under the
Arrangement of Labrador Mining Company Limited, formerly a
wholly-owned subsidiary of the Fund.
LIORC, directly and through its wholly-owned subsidiary
Hollinger-Hanna, holds a 15.10% equity interest in IOC and receives
a 7% gross overriding royalty and a 10
cent per tonne commission on all iron ore products produced,
sold and shipped by IOC. Generally, LIORC pays cash dividends
from its net income to the maximum extent possible, subject to the
maintenance of appropriate levels of working capital. The common
shareholders receive quarterly dividends on the common shares on
the 25th day of the month following the end of each quarter.
Eight Directors are responsible for the governance of the
Corporation and also serve as directors of Hollinger-Hanna. The
Directors, in addition to managing the affairs of the Corporation
and Hollinger-Hanna, oversee the Corporation's interests in IOC.
The Compensation and Nominating Committees are composed of five
independent Directors. The Audit Committee is composed of four
independent Directors. Effective January 1,
2019, Suske Capital Inc., pursuant to an administration
agreement, acts as the administrator of the Corporation and
Hollinger-Hanna.
Taxation
The Corporation is a taxable corporation. Dividend income
received from IOC and Hollinger-Hanna is received tax free while
royalty income is subject to income tax and Newfoundland royalty tax. Expenses of the
Corporation include administrative expenses. Hollinger-Hanna is a
taxable corporation.
Income Taxes
Dividends to a shareholder that are paid within a particular
year are to be included in the calculation of the shareholder's
taxable income for that year. All dividends paid in 2018 were
"eligible dividends" under the Income Tax Act.
Review of Operations
Iron Ore Company of Canada
The income of the Corporation is entirely dependent on IOC as
the only assets of the Corporation and its subsidiary are related
to IOC and its operations. IOC is one of Canada's largest iron ore producers, operating
a mine, concentrator and pellet plant at Labrador City, Newfoundland and Labrador, and is among the top five producers
of seaborne iron ore pellets in the world. It has been
producing and processing iron ore concentrate and pellets since
1954. IOC is strategically situated to serve markets
throughout the world from its year-round port facilities at
Sept-Iles, Quebec.
IOC has ore reserves sufficient for approximately 24 years at
current production rates with additional resources of a greater
magnitude. It currently has the nominal capacity to extract
around 55 million tonnes of crude ore annually. The crude ore is
processed into iron ore concentrate and then either sold or
converted into many different qualities of iron ore pellets to meet
its customers' needs. The iron ore concentrate and pellets are
transported to IOC's port facilities at Sept-Îles, Quebec via its wholly-owned QNS&L, a 418
kilometer rail line which links the mine and the port. From
there, the products are shipped to markets throughout North America, Europe, the Middle
East and the Asia-Pacific
region.
IOC's 2018 sales totaled 15.0 million tonnes, comprised of 8.4
million tonnes of iron ore pellets and 6.6 million tonnes of iron
ore concentrate. Production in 2018 was 8.5 million
tonnes of pellets and 6.7 million tonnes of CFS. IOC generated ore
sales revenues (excluding third party ore sales) of $1,815 million in 2018 (2017 - $2,249 million).
Selected IOC Financial Information
|
2018
|
2017
|
2016
|
2015
|
2014
|
($ in
millions)
|
Operating
Revenues
|
1,930
|
2,315
|
1,676
|
1,495
|
1,794
|
Cash Flow from
Operating
Activities
|
578
|
923
|
456
|
267
|
455
|
Net Income
|
383
|
499
|
170
|
21
|
273
|
Capital
Expenditures
|
205
|
265
|
99
|
143
|
187
|
IOC Royalty
The Corporation holds certain leases and licenses covering
approximately 18,200 hectares of land near Labrador City. IOC has leased certain portions
of these lands from which it currently mines iron ore. In return,
IOC pays the Corporation a 7% gross overriding royalty on all sales
of iron ore products produced from these lands. A 20% tax on the
royalty is payable to the Government of Newfoundland and Labrador. For the five years prior to 2018,
the average royalty net of the 20% tax had been $99.6 million per year and in 2018 the net
royalty was $103.0 million (2017 -
$125.1 million).
Because the royalty is "off-the-top", it is not dependent on the
profitability of IOC. However, it is affected by changes in sales
volumes, iron ore prices and, because iron ore prices are
denominated in US dollars, the United
States - Canadian dollar exchange rate.
IOC Equity
In addition to the royalty interest, the Corporation directly
and through its wholly owned subsidiary, Hollinger-Hanna, owns a
15.10% equity interest in IOC. The other shareholders of IOC
are Rio Tinto Limited with 58.72% and Mitsubishi Corporation with
26.18%.
IOC Commissions
Hollinger-Hanna has the right to receive a payment of
10 cents per tonne on the products
produced and sold by IOC. Pursuant to an agreement, IOC is
obligated to make the payment to Hollinger-Hanna so long as
Hollinger-Hanna is in existence and solvent. In 2018,
Hollinger-Hanna received a total of $1.5
million in commissions from IOC (2017 - $1.9 million).
Quarterly Dividends
Dividends of $1.75 per share
including special dividends of $0.75
per share were declared in 2018 (2017 – dividends of $2.65 per share including special dividends of
$1.65). These dividends were
allocated as follows:
Period
|
Payment
|
Dividend
Income
|
Total
Dividend
|
Ended
|
Date
|
per
Share
|
($
Million)
|
|
|
|
|
Mar. 31,
2018
|
Apr. 25,
2018
|
$0.25
|
$
16.0
|
Special
Dividend
|
Apr. 25,
2018
|
0.10
|
6.4
|
Jun. 30,
2018
|
Jul. 25,
2018
|
0.25
|
16.0
|
Sep. 30,
2018
|
Oct. 25,
2018
|
0.25
|
16.0
|
Special
Dividend
|
Oct. 25,
2018
|
0.30
|
19.2
|
Dec. 31,
2018
|
Jan. 25,
2019
|
0.25
|
16.0
|
Special
Dividend
|
Jan. 25,
2019
|
0.35
|
22.4
|
|
|
|
|
Dividend to
Shareholders - 2018
|
|
$1.75
|
$112.0
|
Mar. 31,
2017
|
Apr. 25,
2017
|
$0.25
|
$
16.0
|
Special
Dividend
|
Apr. 25,
2017
|
0.25
|
16.0
|
Jun. 30,
2017
|
Jul. 25,
2017
|
0.25
|
16.0
|
Special
Dividend
|
Jul. 25,
2017
|
0.35
|
22.4
|
Sep. 30,
2017
|
Oct. 25,
2017
|
0.25
|
16.0
|
Special
Dividend
|
Oct. 25,
2017
|
0.75
|
48.0
|
Dec. 31,
2017
|
Jan. 25,
2018
|
0.25
|
16.0
|
Special
Dividend
|
Jan. 25,
2018
|
0.30
|
19.2
|
|
|
|
|
Dividend to
Shareholders - 2017
|
|
$ 2.65
|
$169.6
|
The quarterly dividends are payable to all shareholders of
record on the last day of each calendar quarter and are paid on the
25th day of the following month.
Management's Discussion and Analysis
The following is a discussion of the consolidated financial
condition and results of operations of the Corporation for the
years ended December 31, 2018 and
2017. This discussion should be read in conjunction with the
consolidated financial statements of the Corporation and notes
thereto for the years ended December 31,
2018 and 2017. This information is prepared in
accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB") and all amounts are shown in Canadian dollars unless
otherwise indicated.
The Corporation is a Canadian corporation resulting from the
conversion of the Fund under an Arrangement effective on
July 1, 2010. LIORC is also the
successor by amalgamation under the Arrangement of Labrador Mining
Company Limited, formerly a wholly-owned subsidiary of the
Fund.
General
The Corporation is dependent on the operations of IOC. IOC's
earnings and cash flows are affected by the volume and mix of iron
ore products produced and sold, costs of production and the prices
received. Iron ore demand and prices fluctuate and are affected by
numerous factors which include demand for steel and steel products,
the relative exchange rate of the US dollar, global and regional
demand and production, political and economic conditions and
production costs in major producing areas.
Liquidity and Capital Resources
The Corporation had $80.5 million
(2017 - $40.5 million) in cash as at
December 31, 2018 with total current
assets of $127.0 million (2017 -
$82.6 million). The Corporation had
working capital of $76.3 million
(2017 - $33.1 million). The
Corporation's operating cash flow was $148.8
million (2017 - $167.0
million) and dividends paid during the year were
$108.8 million, resulting in cash
balances increasing by $40.0 million
during 2018.
Cash balances consist of deposits in Canadian dollars and US
dollars with Canadian chartered banks. Accounts 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. As noted above, the Corporation increased its cash balance
based on the directors' view that it was prudent at that particular
time to have some additional financial flexibility. On
March 7, 2019 the directors
determined that the cash balance be reduced to a more typical level
with excess cash distributed to shareholders by means of a special
dividend to be paid on April 25,
2019.
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 leaving $50 million
available to provide for any capital required by IOC or
requirements of the Corporation.
Operating Results
The following table summarizes the Corporation's 2018 operating
results as compared to 2017 results (in '000's).
Revenue
|
2018
|
|
2017
|
IOC royalties (net
of 20% Newfoundland royalty tax)
|
$103,047
|
|
$125,094
|
IOC
commissions
|
1,486
|
|
1,885
|
Other
|
580
|
|
374
|
|
105,113
|
|
127,353
|
Expenses
|
|
|
|
Administrative
expenses
|
3,503
|
|
2,938
|
Income taxes expense
– current
|
30,521
|
|
37,283
|
|
34,024
|
|
40,221
|
Net Income before
undernoted items
|
71,089
|
|
87,132
|
Non cash revenue
(expense)
|
|
|
|
Equity earnings in
IOC
|
56,987
|
|
74,300
|
Deferred income
taxes
|
5,597
|
|
2,204
|
Amortization
|
(5,186)
|
|
(6,352)
|
|
57,398
|
|
70,152
|
|
|
|
|
Net income for the
year
|
128,487
|
|
157,284
|
Other comprehensive
gain
|
775
|
|
2,060
|
Comprehensive income
for the year
|
$
129,262
|
|
$
159,344
|
A summary of IOC's sales for calculating the royalty to LIORC in
millions of tonnes is as follows:
|
First
Quarter
2018
|
Second
Quarter 2018
|
Third
Quarter 2018
|
Fourth
Quarter 2018
|
Total
Year
2018
|
Total
Year
2017
|
Pellets
|
2.54
|
0.48
|
2.79
|
2.59
|
8.41
|
10.48
|
Concentrates(1)
|
1.35
|
0.05
|
2.64
|
2.65
|
6.70
|
8.67
|
Total(2)
|
3.89
|
0.53
|
5.43
|
5.24
|
15.10
|
19.15
|
(1)
|
Excludes third
party ore sales.
|
(2)
|
Totals may not
add up due to rounding.
|
IOC's 2018 iron ore sales for calculating the royalty to LIORC
totaled 15.10 million tonnes compared to 19.15 million tonnes in
2017. Royalty revenue decreased to $128.8
million as compared to $156.4
million in 2017. Equity earnings from IOC amounted to
$57.0 million compared to
$74.3 million in 2017. The lower
royalty revenue and equity earnings achieved in 2018 as compared to
2017 was mainly due to the reduced sales tonnages for concentrate
and pellets caused by the labour strike. As in 2017, prices and
premiums were higher than most forecasts with the Chinese
governments continuing to enforce measures to reduce pollution;
these measures favoured higher quality products such as the
concentrate for sale and pellets produced by IOC.
While the Platts index for 62% Fe, CFR China averaged
US$69 per tonne in 2018 compared to
US$71 per tonne in 2017, a 3%
decline, the Platts index for 65% Fe, CFR China averaged
US$90 per tonne in 2018 compared to
US$87 per tonne in 2017, a 3%
increase. Since the CFS sold by IOC is priced on the 65% Fe, CFR
China benchmark, the stronger prices for the 65% Fe product
somewhat offset the lower CFS sales tonnages in 2018. The monthly
Atlantic Blast Furnace 65% Fe pellet premium index, as quoted by
Platts, averaged US$59 per tonne for
2018, and was 31% higher than in 2017. Blast Furnace pellet
premiums were stable at approximately US$58 per tonne for most of 2018 but increased to
US$62 per tonne in November and
December 2018. The strong
year-over-year increase in pellet premiums was supported by
generally healthy margins for steel producers in 2018.
The average price realized by IOC for CFS and pellets, FOB
Sept-Îles, net of selling costs and royalties was approximately
C$110 per tonne in 2018 compared to
C$108 per tonne in 2017. Increased
freight rates and lower sales tonnages affected the average
realized price FOB Sept-Îles in 2018. The premiums for 65% Fe
concentrate and pellets continued to be supported by the
environmental policies of the Chinese governments, which, as in
2017, caused Chinese steel producers to favour the usage of higher
value-in-use iron ore, such as the concentrate and pellets produced
by IOC. With strong pellet premiums in 2018, IOC again focused on
maximizing pellet production to the extent possible, given the
labour strike and the refurbishment of one pellet line in 2018, as
compared to two lines in 2017. The sales tonnage of pellets in
2018, for calculating the royalty to LIORC, was 20% lower than in
2017. The CFS tonnage in 2018 was lower than in 2017 by 23%.
Capital expenditures for IOC in 2018 were $205 million in total as compared to $265 million in 2017. The 2018 capital
expenditures were essentially on budget and included the completion
of the development of the Moss Pit in September, the refurbishment
of the No. 4 Pellet Line, the track replacement program for 2018
for the QNS&L railway and dewatering for the Luce Pit.
The Shareholders' consolidated net income for the year ended
December 31, 2018 was $128.5 million or $2.01 per share compared to $157.3 million or $2.46 per share in 2017. Equity earnings
from IOC amounted to $57.0 million
compared to $74.3 million in 2017.
The main cause of IOC's lower earnings for 2018 as compared to 2017
was the labour strike in the second quarter.
Administration expenses for the year ended December 31, 2018 totaling $3.5 million include cash bonuses and grants of
restricted share units accrued to date totaling $0.3 million. Amortization expense for royalty
and commission interests decreased $1.1
million for the year ended December
31, 2018 due to the decrease in production as a result of
the labour strike in the second quarter of 2018.
Fourth quarter 2018 CFS sales were basically flat
year-over-year, but pellet sales were lower by 7% as a result of
the refurbishment of the No. 4 pellet line, which required more
downtime than expected. However, the achieved sales prices of CFS
and pellets were improved, resulting in royalty income of
$45.9 million for the quarter as
compared to $40.0 million for the
same period in 2017. Fourth quarter 2018 cash flow from operations
was $53.3 million or $0.83 per share compared to 2017 of $39.6 million or $0.62 per share. LIORC received an IOC dividend
in the fourth quarter of 2018 in the amount of $25.3 million or $0.40 per share (2017 - $19.3 million or $0.30 per share). Equity earnings from IOC
amounted to $17.8 million or
$0.28 per share in the fourth quarter
2018 compared to $16.6 million or
$0.26 per share for the same period
in 2017.
Selected Consolidated Financial Information
The following table sets out financial data from a Shareholder's
perspective for the three years ended December 31, 2018, 2017 and 2016.
|
Years Ended December
31
|
|
|
Description
|
2018
|
2017
|
2016
|
|
|
|
(in millions
except per share information)
|
|
|
|
|
Revenue
|
$130.9
|
$158.6
|
$115.1
|
|
|
|
|
Net Income
|
$128.5
|
$157.3
|
$78.2
|
|
|
|
|
Net Income per
Share
|
$2.01
|
$2.46
|
$1.22
|
|
|
|
|
Cash Flow from
Operations
|
$149.0(1)
|
$167.0(2)
|
$63.5(3)
|
|
|
|
|
Cash Flow from
Operations per Share
|
$2.32(1)
|
$2.61(2)
|
$0.99(3)
|
|
|
|
|
Total
Assets
|
$763.6
|
$750.0
|
$737.0
|
|
|
|
|
Dividends Declared
per Share
|
$1.75
|
$2.65
|
$1.00
|
|
|
|
|
Number of Common
Shares outstanding
|
64.0
|
64.0
|
64.0
|
(1)
|
Includes IOC
dividends totaling $83.9 million or $1.31 per Share.
|
|
|
(2)
|
Includes IOC
dividend totaling $76.7 million or $1.20 per Share.
|
|
|
(3)
|
Includes IOC
dividend totaling $15.1 million or $0.23 per Share.
|
The following table sets out quarterly revenue, net
income, cash flow and dividend data for 2018 and 2017. Due to
seasonal weather patterns the first and fourth quarters generally
have lower production and sales. Royalty revenues and equity
earnings in IOC track iron ore spot prices, which can be very
volatile. Dividends, included in cash flow, are declared and paid
by IOC irregularly according to the availability of
cash. There were limited sales in the second quarter of 2018
due to the labour strike.
|
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)
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
$34.3
|
$30.3
|
$0.47
|
$20.3
|
$0.32
|
$0.29
|
$0.35
|
|
|
|
|
|
|
|
|
Second
Quarter
|
$5.2
|
$(3.3)
|
$(0.05)
|
$15.5
|
$0.24
|
$0.04
|
$0.25
|
|
|
|
|
|
|
|
|
Third
Quarter
|
$44.6
|
$58.1
|
$0.91
|
$59.7(2)
|
$0.93(2)
|
$1.30(2)
|
$0.55
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
$46.8
|
$43.4
|
$0.68
|
$53.3(3)
|
$0.83(3)
|
$0.79(3)
|
$0.60
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
$43.4
|
$42.9
|
$0.67
|
$28.2(4)
|
$0.44(4)
|
$0.53(4)
|
$0.50
|
|
|
|
|
|
|
|
|
Second
Quarter
|
$34.2
|
$32.3
|
$0.50
|
$45.6(5)
|
$0.71(5)
|
$0.53(5)
|
$0.60
|
|
|
|
|
|
|
|
|
Third
Quarter
|
$40.4
|
$43.8
|
$0.69
|
$53.6(6)
|
$0.84(6)
|
$0.85(6)
|
$1.00
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
$40.6
|
$38.3
|
$0.60
|
$39.6(7)
|
$0.62(7)
|
$0.65(7)
|
$0.55
|
|
|
(1)
|
"Adjusted cash
flow" (see below)
|
(2)
|
Includes $58.6
million IOC dividend.
|
(3)
|
Includes $25.3
million IOC dividend.
|
(4)
|
Includes $10.0
million IOC dividend.
|
(5)
|
Includes $15.2
million IOC dividend.
|
(6)
|
Includes $32.2
million IOC dividend.
|
(7)
|
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 $2.32 for
2018 (2017 - $2.61). Cumulative
standardized cash flow from inception of the Corporation is
$27.47 per share and total cash
distributions since inception are $26.34 per share, for a payout ratio of 96%.
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
distributions to Shareholders.
The following reconciles standardized cash flow from operating
activities to adjusted cash flow (in '000's).
|
2018
|
|
2017
|
Standardized cash
flow from operating activities
|
$148,797
|
|
$166,960
|
Changes in amounts
receivable, accounts and interest payable and
income taxes
recoverable and payable
|
6,377
|
|
(3,116)
|
Adjusted cash
flow
|
$155,174
|
|
$163,844
|
Adjusted cash flow
per share
|
$2.42
|
|
$2.56
|
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, the Executive Vice
President and Secretary 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 Analyses, 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 year ended
December 31, 2018.
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 year ended December 31, 2018.
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 change in the Corporation's internal control over
financial reporting occurred during the year ended December 31, 2018.
Outlook
The collapse of the tailings dam and loss of human life at
Vale's Corrego de Feijao mine in Brumadinho, Minas Gerais state,
Brazil ("Brumadinho") on
January 25, 2019 had a profound
influence on the seaborne iron ore market. The full impacts are
uncertain at present. The initial price response for the 62% Fe,
CFR China benchmark index was a sharp increase to over US$90 per tonne from US$74 per tonne the day prior to the disaster.
However, low profit margins for Chinese steelmakers at present
could limit the duration of the price spike. The benchmark price
for the 62% Fe, CFR China index declined in mid-February 2019 to US$84 per tonne, as steelmakers looked to
purchase less expensive, lower grade products and reduce port
stocks in China.
Vale announced on January 29, 2019
plans to cut production of some 40 million tonnes per year,
including the pellet feed needed for the production of 11 million
tonnes per year of pellets. Additional Vale production cuts of 30
million tonnes per annum were announced in February 2019 as a result of a civil court order
which Vale is appealing.
As reported by Platts on February 13,
2019, in response to the Vale supply cuts, the National
Australia Bank raised its forecast for iron ore from US$62 to US$80 per
tonne for 2019 and from US$60 to
US$70 per tonne for 2020. The
forecast decline over the two years is because of the expectation
of softer growth in Chinese demand.
As at mid-February there was uncertainty in the Atlantic pellet
market, as the Brumadinho disaster caused delays in the annual
pellet negotiations between Vale and the European steelmakers. In
late 2019 steelmakers were faced with falling margins which causes
them to purchase less expensive, lower quality iron ore. In
addition, just prior to the disaster, Vale had been negotiating to
change the annual pricing of pellet contracts to be based on the
65% index as opposed to the 62% index. The steelmakers judged that
this would result in an increase in the cost of pellets and
resisted the change. The Brumadinho disaster is expected to result
in a decreased supply of pellets worldwide, and there are reports
that Vale will fill Brazilian orders for pellets over other
customers.
Prior to the Brumadinho disaster, the market was generally
assuming the re-opening of the Samarco pellet plant in Brazil in 2020. This is now seen as highly
unlikely. Some analysts are modelling a partial re-start of Samarco
in 2021.
On February 2, 2019 Platts listed
the February price index for the Atlantic Blast Furnace 65% Fe
pellet premium at US$67.50 per tonne,
no change from the January 2019
price. Pellet producers were maximizing pellet production before
the Brumadinho disaster, and therefore it is expected that pellet
premiums will remain strong for the balance of 2019 at least,
considering no likely Samarco production, the cuts to pellet
production announced by Vale, and the limited ability of existing
major producers to ramp up production. A potential brake on pellet
price increases is the consideration that the margins for European
steelmakers are relatively low at present.
Rio Tinto's guidance for 2019 is 11.3 million to 12.3 million
tonnes for its 58.7% share of IOC's saleable production tonnage
(CFS and pellets). This is 19.2 million to 20.9 million tonnes of
saleable production on a 100% basis. With the strong pellet
premiums, IOC is expected to continue to prioritize pellet
production in 2019. The 2019 IOC objective is approximately 20
million tonnes of concentrate production with sales of up to 12.5
million tonnes of pellets and approximately 6 million tonnes of
CFS.
The capital expenditures for 2019 at IOC are expected to be in
the range of $225 million to 245
million, higher than the 2018 amount of $205
million. The refurbishment of one induration machine in the
pellet plant, a new rope shovel for the mine, productivity
improvements in the concentrator and pellet plant, and additional
locomotive capacity for the QNS&L railway are planned for 2019.
IOC expects to earn revenue from hauling product from the Bloom
Lake mine of Champion. The reported production capacity of the
Bloom Lake is 7.5 million tonnes per annum of iron concentrate.
Tacora Resources Inc. (Tacora) announced on November 27, 2018 that the financing for the
re-start of the Scully Mine is complete. The concentrate produced
by Tacora is to be hauled by the QNS&L.
The price of iron ore early in 2019 has exceeded forecasts. If
the strong prices and premiums continue in 2019, the policies of
the Chinese government on pollution are not materially relaxed,
there are no major negative impacts from the China-US trade
negotiations, IOC achieves the production guidance, and the
Canadian dollar does not appreciate materially against the US
dollar, the 2019 outlook for LIORC will be continued strong cash
flows.
Forward-Looking Statements
This report may contain "forward-looking" statements that
involve risks, uncertainties and other factors that may cause the
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Words such
as "may", "will", "expect", "believe", "plan", "intend", "should",
"would", "anticipate" and other similar terminology are intended to
identify forward-looking statements. These statements reflect
current assumptions and expectations regarding future events and
operating performance as of the date of this report.
Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indications of whether or not such results will be achieved. A
number of factors could cause actual results to vary significantly,
including iron ore price and volume volatility, exchange rates, the
performance of IOC, market conditions in the steel industry, mining
risks and insurance, relationships with aboriginal groups, changes
affecting IOC's customers, competition from other iron ore
producers, estimates of reserves and resources and government
regulation and taxation. A discussion of these factors is
contained in LIORC's annual information form dated March 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.
Additional information
Additional information relating to the Corporation, including
the Annual Information Form, is on SEDAR at www.sedar.com.
Additional information is also available on the Corporation's
website at www.labradorironore.com.
William H. McNeil,
President and Chief Executive Officer
Toronto, Ontario
March 7, 2019
LABRADOR IRON ORE
ROYALTY CORPORATION
|
|
|
|
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
at
|
|
|
December
31,
|
(in thousands of
Canadian dollars)
|
|
2018
|
|
|
2017
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash and short-term
investments
|
$
|
80,495
|
|
$
|
40,498
|
|
Amounts
receivable
|
|
46,548
|
|
|
42,092
|
Total Current
Assets
|
|
127,043
|
|
|
82,590
|
|
|
|
|
|
|
|
Non-Current
Assets
|
|
|
|
|
|
|
Iron Ore Company of
Canada ("IOC")
|
|
|
|
|
|
|
royalty and
commission interests
|
|
253,846
|
|
|
259,032
|
|
Investment in
IOC
|
|
382,704
|
|
|
408,691
|
Total Non-Current
Assets
|
|
636,550
|
|
|
667,723
|
|
|
|
|
|
|
|
Total
Assets
|
$
|
763,593
|
|
$
|
750,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts
payable
|
$
|
9,969
|
|
$
|
8,601
|
|
Dividend
payable
|
|
38,400
|
|
|
35,200
|
|
Taxes
payable
|
|
2,613
|
|
|
5,703
|
Total Current
Liabilities
|
|
50,982
|
|
|
49,504
|
|
|
|
|
|
|
|
Non-Current
Liabilities
|
|
|
|
|
|
|
Deferred income
taxes
|
|
121,760
|
|
|
127,220
|
Total
Liabilities
|
|
172,742
|
|
|
176,724
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
|
Share
capital
|
|
317,708
|
|
|
317,708
|
|
Retained
earnings
|
|
280,759
|
|
|
264,272
|
|
Accumulated other
comprehensive loss
|
|
(7,616)
|
|
|
(8,391)
|
|
|
|
590,851
|
|
|
573,589
|
|
|
|
|
|
|
|
Total Liabilities and
Shareholders' Equity
|
$
|
763,593
|
|
$
|
750,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approved by the
Directors,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H.
McNeil
|
|
Patricia M.
Volker
|
|
|
|
Director
|
|
Director
|
|
|
|
LABRADOR IRON ORE
ROYALTY CORPORATION
|
|
|
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
|
|
|
|
AND COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year
Ended
|
|
|
December
31,
|
(in thousands of
Canadian dollars except for per share information)
|
|
2018
|
|
|
2017
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
IOC
royalties
|
$
|
128,809
|
|
$
|
156,367
|
|
IOC
commissions
|
|
1,486
|
|
|
1,885
|
|
Interest and other
income
|
|
580
|
|
|
374
|
|
|
|
130,875
|
|
|
158,626
|
Expenses
|
|
|
|
|
|
|
Newfoundland royalty
taxes
|
|
25,762
|
|
|
31,273
|
|
Amortization of
royalty and commission interests
|
|
5,186
|
|
|
6,352
|
|
Administrative
expenses
|
|
3,503
|
|
|
2,938
|
|
|
|
34,451
|
|
|
40,563
|
|
|
|
|
|
|
|
Income before
equity earnings and income taxes
|
|
96,424
|
|
|
118,063
|
Equity earnings in
IOC
|
|
56,987
|
|
|
74,300
|
Income before
income taxes
|
|
153,411
|
|
|
192,363
|
|
|
|
|
|
|
|
Provision for
income taxes
|
|
|
|
|
|
|
Current
|
|
30,521
|
|
|
37,283
|
|
Deferred
|
|
(5,597)
|
|
|
(2,204)
|
|
|
|
24,924
|
|
|
35,079
|
|
|
|
|
|
|
|
Net income for the
year
|
|
128,487
|
|
|
157,284
|
|
|
|
|
|
|
|
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 2018 - $137; 2017
- $364)
|
|
775
|
|
|
2,060
|
|
|
|
|
|
|
|
Comprehensive
income for the year
|
$
|
129,262
|
|
$
|
159,344
|
|
|
|
|
|
|
|
Net income per
share
|
$
|
2.01
|
|
$
|
2.46
|
LABRADOR IRON ORE
ROYALTY CORPORATION
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year
Ended
|
|
December
31,
|
(in thousands of
Canadian dollars)
|
|
2018
|
|
|
2017
|
|
|
|
|
Net inflow
(outflow) of cash related
|
|
|
|
|
|
to the following
activities
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
|
|
|
|
Net income for the
period
|
$
|
128,487
|
|
$
|
157,284
|
|
Items not affecting
cash:
|
|
|
|
|
|
|
|
Equity earnings in
IOC
|
|
(56,987)
|
|
|
(74,300)
|
|
|
Current income
taxes
|
|
30,521
|
|
|
37,283
|
|
|
Deferred income
taxes
|
|
(5,597)
|
|
|
(2,204)
|
|
|
Amortization of
royalty and commission interests
|
|
5,186
|
|
|
6,352
|
|
Common share dividend
from IOC
|
|
83,886
|
|
|
76,713
|
|
Change in amounts
receivable
|
|
(4,456)
|
|
|
(3,605)
|
|
Change in accounts
payable
|
|
1,368
|
|
|
528
|
|
Income taxes
paid
|
|
(33,611)
|
|
|
(31,090)
|
|
Cash flow from
operating activities
|
|
148,797
|
|
|
166,961
|
|
|
|
|
|
|
|
Financing
|
|
|
|
|
|
|
Dividends paid to
shareholders
|
|
(108,800)
|
|
|
(150,400)
|
|
Cash flow used in
financing activities
|
|
(108,800)
|
|
|
(150,400)
|
|
|
|
|
|
|
|
Increase in cash,
during the year
|
|
39,997
|
|
|
16,561
|
|
|
|
|
|
|
|
Cash, beginning of
year
|
|
40,498
|
|
|
23,937
|
|
|
|
|
|
|
|
Cash, end of
year
|
$
|
80,495
|
|
$
|
40,498
|
LABRADOR IRON ORE
ROYALTY CORPORATION
|
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
other
|
|
|
|
Share
|
Retained
|
comprehensive
|
|
|
(in thousands of
Canadian dollars)
|
capital
|
earnings
|
loss
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at
December 31, 2016
|
$
|
317,708
|
$
|
276,588
|
$
|
(10,451)
|
$
|
583,845
|
Net income for the
period
|
|
-
|
|
157,284
|
|
-
|
|
157,284
|
Dividends declared to
shareholders
|
|
-
|
|
(169,600)
|
|
-
|
|
(169,600)
|
Share of other
comprehensive income from investment in IOC (net of
taxes)
|
|
-
|
|
-
|
|
2,060
|
|
2,060
|
Balance as at
December 31, 2018
|
$
|
317,708
|
$
|
264,272
|
$
|
(8,391)
|
$
|
573,589
|
|
|
|
|
|
|
|
|
|
Balance as at
December 31, 2017
|
$
|
317,708
|
$
|
264,272
|
$
|
(8,391)
|
$
|
573,589
|
Net income for the
period
|
|
-
|
|
128,487
|
|
-
|
|
128,487
|
Dividends declared to
shareholders
|
|
-
|
|
(112,000)
|
|
-
|
|
(112,000)
|
Share of other
comprehensive income from investment in IOC (net of
taxes)
|
|
-
|
|
-
|
|
775
|
|
775
|
Balance as at
December 31, 2018
|
$
|
317,708
|
$
|
280,759
|
$
|
(7,616)
|
$
|
590,851
|
The complete consolidated financial statements for the year
ended December 31, 2018, including
the notes thereto, are posted on sedar.com and
labradorironore.com.
SOURCE Labrador Iron Ore Royalty Corporation