Labrador Iron Ore Royalty Income Fund - Results for the third quarter ended September 30, 2006

November 2, 2006

TORONTO, Nov. 1 /CNW/ - Labrador Iron Ore Royalty Income Fund (TSX:
LIF.UN) announced its results for the third quarter ended September 30, 2006.
Royalty income for the third quarter of 2006 amounted to $19.86 million
as compared to $16.88 million for the third quarter of 2005, an increase of
18% over the same period last year. The Fund's cash flow from operating
activities after adjustments for changes in amounts receivable, accounts
payable and income taxes payable/recoverable (adjusted cash flow) for the
third quarter was $20.58 million or $0.64 per unit as compared to
$10.97 million or $0.34 per unit for the same period in 2005. Net income was
$20.31 million or $0.63 per unit compared to $17.87 million or $0.56 per unit
for the same period in 2005.
Royalty revenue for the quarter was above last year due to increased
volume, which was partially offset by the higher value of the Canadian dollar
against its U.S. counterpart. For the nine months, royalty revenue
approximated last year's level with a slightly higher volume offsetting the
Canadian dollar appreciation. Prices received were approximately neutral with
decreases in pellet prices offsetting increases in concentrate pricing.
Equity earnings from IOC during the quarter were approximately the same
as 2005 in spite of the appreciation of the Canadian dollar and higher fuel
costs. On August 31, 2006 IOC declared a dividend payable October 2, 2006. The
Fund's share of this dividend was US$7.6 million equating to CDN$8.5 million
or $0.26 per unit.

<<
Results for the three months ended September 30 are summarized below:

                                                    2006          2005
                                                 ------------------------
                                                        (Unaudited)

Revenue (in millions)                             $  20.25      $  17.23
                                                 ----------    ----------
Adjusted cash flow (in millions)                  $  20.58      $  10.97
                                                 ----------    ----------
Adjusted cash flow per unit                       $   0.64      $   0.34
                                                 ----------    ----------
Net income (in millions)                          $  20.31      $  17.87
                                                 ----------    ----------
Net income per unit                               $   0.63      $   0.56
                                                 ----------    ----------


"Adjusted cash flow" (defined as cash flow from operating activities as
shown on the attached financial statements less changes in amounts receivable,
accounts payable and income taxes payable/recoverable) is not a recognized
measure under Canadian GAAP. The Trustees believe that adjusted cash flow is a
useful analytical measure as it better reflects cash available for
distributions to Unitholders.

A summary of IOC's sales in millions of tonnes follows:

                            9 Months         9 Months       Year Ended
                         Ended Sept. 30,  Ended Sept. 30,     Dec. 31,
                              2006             2005             2005
                         --------------   --------------   --------------

Pellets                       8.63             8.63            12.87
Concentrates                  1.52             1.37             2.12
                         --------------   --------------   --------------
Total                        10.15            10.00            14.99
                         --------------   --------------   --------------
>>

During the quarter agreement was reached with IOC to include the
previously excluded Wabush 3 property in the Sublease Agreement between
Labrador Mining Company Limited, a subsidiary of the Fund, and IOC in
consideration of a 7% royalty on sales of iron ore products derived from the
property. Parts of the Knight deposit previously held exclusively by IOC are
also to be included in the Sublease Agreement and subject to the 7% royalty.
Arrangements under the Sublease Agreement have been simplified with Labrador
Mining granting IOC rights to mine 100% of the ore for the 7% royalty. IOC is
proceeding with a drilling program on the Wabush 3 deposit to evaluate it for
inclusion in IOC's ore reserves.
This is an important step in IOC's planning to increase production. An
increase in production and sales of iron ore products from properties covered
by the Sublease Agreement would increase the 7% royalty receivable by the
Fund.
Unitholders are invited to visit the Fund's website at
www.labradorironore.com.

Respectfully submitted on behalf of the Trustees of Labrador Iron Ore
Royalty Income Fund,


Bruce C. Bone
Chairman and Chief Executive Officer
November 1, 2006



Management's Discussion and Analysis

The following discussion and analysis should be read in conjunction with
the Management's Discussion and Analysis section of the Fund's 2005 Annual
Report and the interim financial statements and notes contained in this
report. Although management believes that expectations reflected in
forward-looking statements are reasonable, such statements involve risk and
uncertainties including the factors discussed in the Fund's 2005 Annual
Report.
The Fund's revenues are entirely dependent on the operations of Iron Ore
Company of Canada (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 Fund's royalty revenue is affected by the price of iron ore and the
Canadian - U.S. dollar exchange rate.
The sales of IOC are usually 15% - 20% of the annual volume in the first
quarter, with the balance spread fairly evenly throughout the other three
quarters. Because of the size of individual shipments some quarters may be
affected by the timing of the loading of ships that can be delayed from one
quarter to the next.
Royalty revenue for the quarter was above last year due to increased
volume, which was partially offset by the higher value of the Canadian dollar
against its U.S. counterpart. For the nine months, royalty revenue
approximated last year's level with a slightly higher volume offsetting the
Canadian dollar appreciation. Prices received were approximately neutral with
decreases in pellet prices offsetting increases in concentrate pricing.
Equity earnings from IOC during the quarter were approximately the same
as 2005 in spite of the appreciation of the Canadian dollar and higher fuel
costs.
Cash flow from operating activities after adjustments for changes in
amounts receivable, accounts payable and income taxes payable/recoverable
(adjusted cash flow) for the third quarter was $20.58 million or $0.64 per
unit as compared to $10.97 million or $0.34 for the same period in 2005.
The following table sets out quarterly revenue, net income and cash flow
data for 2006, 2005 and 2004.

<<
                                                                Distrib-
                                         Adjusted  Adjusted     utions
                    Net      Net Income  Cash      Cash Flow    Declared
           Revenue  Income   per Unit    Flow(1)   per Unit(1)  per Unit
           -------  -------  ----------  --------  ----------   --------
                     (in millions except per Unit information)
2006
----
First
 Quarter    $14.4    $11.9     $0.37     $9.4       $0.29        $0.35
Second
 Quarter    $19.2    $33.5     $1.05    $25.3(2)    $0.79        $0.65
Third
 Quarter    $20.2    $20.3     $0.63    $20.6(3)    $0.64        $0.60

2005
----
First
 Quarter    $14.9    $15.5     $0.48    $10.0       $0.31        $0.25
Second
 Quarter    $21.3    $21.3     $0.67    $13.5       $0.42        $0.35
Third
 Quarter    $17.2    $17.9     $0.56    $11.0       $0.34        $0.35
Fourth
 Quarter    $26.2    $31.4     $0.98    $40.1(4)    $1.26        $1.20

2004
----
First
 Quarter     $8.3     $4.5     $0.15     $6.2       $0.21        $0.25
Second
 Quarter    $13.7     $8.3     $0.26    $11.2       $0.36        $0.25
Third
 Quarter     $6.9     $3.9     $0.12     $6.1       $0.19        $0.25
Fourth
 Quarter     $8.8     $3.2     $0.11     $7.1       $0.22        $0.25

Notes:    (1)  "Adjusted cash flow" (see below)
          (2)  Includes a $12.5 million IOC dividend
          (3)  Includes a $8.5 million IOC dividend
          (4)  Includes a $24.1 million IOC dividend
>>

Adjusted Cash Flow
------------------

"Adjusted cash flow" is defined as cash flow from operating activities as
shown on the attached financial statements less changes in amounts receivable,
accounts payable and income taxes payable/recoverable. It is not a recognized
measure under Canadian GAAP. The Trustees believe that adjusted cash flow is a
useful analytical measure as it better reflects cash available for
distributions to Unitholders. The current quarter included a dividend
receivable from IOC of $8.5 million or $0.26 per unit. For the nine months,
the adjusted cash flow was $55.3 million or $1.73 per unit, including
dividends from IOC of $20.9 million or $0.65 per unit, as compared to
$34.4 million or $1.08 per unit in prior year. Excluding the dividend from
IOC, the nine months adjusted cash flow is almost identical to last year in
spite of the appreciation of the Canadian dollar.
The following reconciles cash flow from operating activities to adjusted
cash flow.

<<
                         3 Months     3 Months     9 Months     9 Months
                            Ended        Ended        Ended        Ended
                         Sept. 30,    Sept. 30,    Sept. 30,    Sept. 30,
                             2006         2005         2006         2005
                      ------------ ------------ ------------ ------------
Cash flow from
 operating activities $12,502,172  $15,812,009  $38,926,689  $35,434,522
Excluding: changes in
 amounts receivable,
 accounts payable and
 income taxes
 payable/recoverable    8,076,874   (4,846,188)  16,344,231   (1,028,175)
                      ---------------------------------------------------
Adjusted cash flow    $20,579,046  $10,965,821  $55,270,920  $34,406,347
                      ---------------------------------------------------
Adjusted cash flow
 per unit                   $0.64        $0.34        $1.73        $1.08
                      ---------------------------------------------------
>>

Liquidity
---------

The Fund has a $75 million revolving credit facility reducing by
$25 million in each of 2007 and 2008 with the balance due in 2009. The amount
drawn under this facility is currently $3.6 million ($8.1 million at
September 30, 2006) leaving $71.4 million available to provide for any capital
required by IOC or other Fund requirements.

Outlook
-------

Steel markets remain firm and IOC expects to be able to sell all the
concentrates and pellets it can produce in 2006. Prices for iron ore for 2006
were settled by IOC during the second quarter retroactive to January 1 for
most contracts, with pellet prices decreasing by 3.5% and concentrate
increasing by 17.3%. The net effect on IOC revenues is approximately neutral.
IOC production, which encountered some problems due to severe winter
conditions in the first quarter, has subsequently improved and full year
production is expected to exceed 2005 production. IOC's cost cutting program
continues to make progress in spite of cost increases for fuel and supplies
which are beyond its control. With production and sales at levels that should
exceed 2005 levels, the year's results should be comparable to last year,
despite the increase in the value of the Canadian dollar, which during the
first nine months of 2006 averaged $0.8828 (2005 - $0.8169) against its U.S.
counterpart.

Bruce C. Bone
Chairman and Chief Executive Officer

Toronto, Ontario
November 1, 2006


<<
LABRADOR IRON ORE ROYALTY INCOME FUND
CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------

                                                        As at
                                           ------------------------------
                                              September 30,  December 31,
                                                  2006          2005
                                           ------------------------------
                                              (Unaudited)    (Audited)
Assets
Current
  Cash and cash equivalents                $     274,147   $  23,600,474
  Amounts receivable                          28,277,956      25,616,617
  Income taxes recoverable                     1,441,641               -
                                           --------------  --------------
                                              29,993,744      49,217,091

Deferred charges                                 374,980         468,733

Iron Ore Company of Canada ("IOC"),
    royalty and commission interests         313,397,114     316,702,318

Investment in IOC                            154,039,604     151,382,144
                                           --------------  --------------

                                           $ 497,805,442   $ 517,770,286
                                           --------------  --------------
                                           --------------  --------------


Liabilities and Unitholders' Equity
Current
  Accounts payable                             4,839,037       5,623,809
  Income taxes payable                                 -      11,456,479
  Distributions payable to unitholders        19,200,000      38,400,000
                                           --------------  --------------
                                              24,039,037      55,480,288

Long-term debt                                 8,146,984               -

Future income tax liability                  114,520,000     125,670,000
                                           --------------  --------------
                                             146,706,021     181,150,288

Unitholders' equity
  Trust units                                317,708,147     317,708,147
  Undistributed income                        33,391,274      18,911,851
                                           --------------  --------------

                                           $ 497,805,442   $ 517,770,286
                                           --------------  --------------
                                           --------------  --------------



LABRADOR IRON ORE ROYALTY INCOME FUND
CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------------------------------------

                                                 For the Three Months
                                                  Ended September 30,
                                                  2006          2005
                                           ------------------------------
                                                      (Unaudited)
Revenue
  IOC royalties                            $  19,863,703   $  16,883,083
  IOC commissions                                378,883         345,059
  Interest and other income                        4,100           6,026
                                           --------------  --------------
                                              20,246,686      17,234,168
                                           --------------  --------------
Expenses
  Newfoundland royalty taxes                   3,972,741       3,376,617
  Amortization of royalty and
   commission interests                        1,265,823       1,142,757
  Administrative expenses (note 2)               907,041         813,839
  Interest expense                               246,097         184,012
                                           --------------  --------------
                                               6,391,702       5,517,225
                                           --------------  --------------

Income before equity earnings and
 income taxes                                 13,854,984      11,716,943
Equity earnings in IOC                         9,104,823       9,438,660
                                           --------------  --------------

Income before income taxes                    22,959,807      21,155,603
                                           --------------  --------------

Provision for (recovery of) income taxes
  Current                                      3,029,833       1,925,130
  Future                                        (380,000)      1,362,647
                                           --------------  --------------
                                               2,649,833       3,287,777
                                           --------------  --------------

Net income for the period                     20,309,974      17,867,826

Undistributed income, beginning of period     32,281,300      19,316,122

Distributions to unitholders                 (19,200,000)    (11,200,000)
                                           --------------  --------------

Undistributed income, end of period        $  33,391,274   $  25,983,948
                                           --------------  --------------
                                           --------------  --------------

Net income per unit                        $        0.63   $        0.56
                                           --------------  --------------
                                           --------------  --------------



LABRADOR IRON ORE ROYALTY INCOME FUND
CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------------------------------------

                                                 For the Nine Months
                                                  Ended September 30,
                                                  2006          2005
                                           ------------------------------
                                                      (Unaudited)
Revenue
  IOC royalties                            $  52,690,502   $  52,419,623
  IOC commissions                                999,018         984,259
  Interest and other income                       83,743          12,934
                                           --------------  --------------
                                              53,773,263      53,416,816
                                           --------------  --------------
Expenses
  Newfoundland royalty taxes                  10,538,100      10,483,925
  Amortization of royalty and
   commission interests                        3,305,204       3,252,462
  Administrative expenses (note 2)             1,270,545       1,314,445
  Interest expense                               721,916         673,565
                                           --------------  --------------
                                              15,835,765      15,724,397
                                           --------------  --------------

Income before equity earnings and
 income taxes                                 37,937,498      37,692,419
Equity earnings in IOC                        23,575,256      27,706,812
                                           --------------  --------------

Income before income taxes                    61,512,754      65,399,231
                                           --------------  --------------

Provision for (recovery of)
 income taxes (note 3)
  Current                                      6,983,331       6,632,287
  Future                                     (11,150,000)      4,048,460
                                           --------------  --------------
                                              (4,166,669)     10,680,747
                                           --------------  --------------

Net income for the period                     65,679,423      54,718,484

Undistributed income, beginning of period     18,911,851       1,665,464

Distributions to unitholders                 (51,200,000)    (30,400,000)
                                           --------------  --------------

Undistributed income, end of period        $  33,391,274   $  25,983,948
                                           --------------  --------------
                                           --------------  --------------

Net income per unit                        $        2.05   $        1.71
                                           --------------  --------------
                                           --------------  --------------



LABRADOR IRON ORE ROYALTY INCOME FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------

                                                 For the Three Months
                                                  Ended September 30,
                                                  2006          2005
                                           ------------------------------
                                                      (Unaudited)

Net inflow (outflow) of cash related
 to the following activities

Operating
  Net income for the period                $  20,309,974   $  17,867,826
  Items not affecting cash:
    Equity earnings in IOC                    (9,104,823)     (9,438,660)
    Future income taxes                         (380,000)      1,362,647
    Amortization of royalty and
     commission interests                      1,265,823       1,142,757
    Amortization of deferred charges              31,251          31,251
  Common share dividend from IOC               8,456,821               -
  Change in amounts receivable,
   accounts payable and income taxes
   payable/recoverable                        (8,076,874)      4,846,188
                                           --------------  --------------
  Cash flow from operating activities         12,502,172      15,812,009
                                           --------------  --------------

Financing
  Distributions paid to unitholders          (20,800,000)    (11,200,000)
  Proceeds from (repayment of)
   long-term debt                              8,146,984      (5,431,719)
                                           --------------  --------------
                                             (12,653,016)    (16,631,719)
                                           --------------  --------------

Decrease in cash and cash equivalents
 during the period                              (150,844)       (819,710)
Cash and cash equivalents,
 beginning of period                             424,991       1,802,312
                                           --------------  --------------

Cash and cash equivalents, end of period   $     274,147   $     982,602
                                           --------------  --------------
                                           --------------  --------------

Cash income taxes paid                     $   3,109,679   $     373,359
                                           --------------  --------------
                                           --------------  --------------

Cash interest paid                         $     127,334   $     189,659
                                           --------------  --------------
                                           --------------  --------------



LABRADOR IRON ORE ROYALTY INCOME FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------

                                                 For the Nine Months
                                                  Ended September 30,
                                                  2006          2005
                                           ------------------------------
                                                      (Unaudited)

Net inflow (outflow) of cash related
 to the following activities

Operating
  Net income for the period                $  65,679,423   $  54,718,484
  Items not affecting cash:
    Equity earnings in IOC                   (23,575,256)    (27,706,812)
    Future income taxes                      (11,150,000)      4,048,460
    Amortization of royalty and
     commission interests                      3,305,204       3,252,462
    Amortization of deferred charges              93,753          93,753
  Common share dividend from IOC              20,917,796               -
  Change in amounts receivable,
   accounts payable and income taxes
    payable/recoverable                      (16,344,231)      1,028,175
                                           --------------  --------------
  Cash flow from operating activities         38,926,689      35,434,522
                                           --------------  --------------

Financing
  Distributions paid to unitholders          (70,400,000)    (27,200,000)
  Proceeds from (repayment of)
   long-term debt                              8,146,984      (7,402,213)
                                           --------------  --------------
                                             (62,253,016)    (34,602,213)
                                           --------------  --------------

Increase (decrease) in cash and cash
 equivalents during the period               (23,326,327)        832,309
Cash and cash equivalents,
 beginning of period                          23,600,474         150,293
                                           --------------  --------------

Cash and cash equivalents, end of period   $     274,147   $     982,602
                                           --------------  --------------
                                           --------------  --------------

Cash income taxes paid                     $  19,881,451   $     500,751
                                           --------------  --------------
                                           --------------  --------------

Cash interest paid                         $     535,526   $     714,261
                                           --------------  --------------
                                           --------------  --------------



Notes to Consolidated Financial Statements

1.  Basis of Presentation

    The financial statements have not been reviewed in accordance with
    section 7050 of the CICA Handbook, Auditor Review of the Interim
    Financial Statements, by the Fund's Auditor.

    Not all disclosures required by Canadian generally accepted
    accounting principles for annual financial statements have been
    presented and, accordingly, these interim financial statements should
    be read in conjunction with the most recently prepared annual
    financial statements for the year ended December 31, 2005.

    These interim financial statements follow the same accounting
    policies and method of application as the most recent annual
    financial statements for the year ended December 31, 2005.

    Seasonality

    The results of operations and operating cash flows of the Fund vary
    considerably from quarter to quarter. The operations of the Fund are
    dependent on the royalty and commission revenues from IOC, whose
    production and revenues are not constant throughout the year, being
    lower during the winter months when the St. Lawrence Seaway is
    closed.

2.  Unit appreciation rights

    On May 18, 2005, the Fund adopted a unit appreciation rights plan for
    the trustees of the Fund. The Fund granted to each of its six
    trustees unit appreciation rights in respect of 50,000 units, for a
    total of 300,000 units. One-fourth of the unit appreciation rights
    vested at the time of issue, one-fourth vested on May 18, 2006,
    one-fourth vest on May 18, 2007 and one-fourth vest on May 18, 2008.
    Unit appreciation rights which have vested may be exercised at any
    time. At the time of exercise, for each right exercised, the Fund
    will pay the difference between the fair market value of a unit on
    the date of exercise and $23.00, the fair market value of the units
    at the time the rights were issued. The unit appreciation rights
    expire on May 18, 2010 and become fully vested in the event of an
    offer, as defined, for the units of the Fund. Since the grant date,
    75,000 unit appreciation rights have been exercised.

    Compensation expense is not recognized when rights are issued, but is
    accrued as an expense over the period that the rights vest. The unit
    appreciation rights are marked to market each quarter to the extent
    the units exceed $23.00. Compensation expense of $521,000 for the
    three months and $319,000 for the nine months ended September 30,
    2006 have been accrued in connection with the unit appreciation
    rights.

3.  Income taxes

    In the second quarter of 2006, the Federal Government enacted
    legislation which will result in a 2% reduction in the federal
    corporate income tax rate by 2010 and the elimination of surtax by
    January 1, 2008. These changes resulted in a reduction of
    $10.6 million to the provision for future income taxes in the second
    quarter.

Corporate Information

Principal Office                  Registrar & Transfer Agent

40 King Street West               Computershare Investor Services Inc.
Scotia Plaza, 26th Floor          100 University Avenue
Box 4085, Station "A"             Toronto, Ontario
Toronto, Ontario M5W 2X6          M5J 2Y1
Telephone : (416) 863-7133
Facsimile : (416) 863-7425

Trustees                          Legal Counsel

Bruce C. Bone                     McCarthy TDetrault LLP
Chairman and Chief Executive      Toronto, Ontario
Officer, Labrador Iron Ore
Royalty Income Fund

William J. Corcoran(x)            Auditors
Vice-Chairman,
Jarislowsky Fraser Limited        Deloitte & Touche LLP
                                  Toronto, Ontario

James C. McCartney                Stock Exchange Listing
Counsel and former Chairman,      The Toronto Stock Exchange
McCarthy TDetrault LLP

Paul H. Palmer(x)                 Symbol
Company Director                  LIF.UN

Alan R. Thomas(x)                 Website
Company Director                  www.labradorironore.com

Donald J. Worth(x)
Company Director

Officers

Bruce C. Bone
Chairman and Chief Executive Officer

James C. McCartney
Secretary - Treasurer


(x)Member of Audit and Compensation Committees
>>

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