Results for the first quarter ended March 31, 2009

May 5, 2009

TORONTO, May 5 /CNW/ - Labrador Iron Ore Royalty Income Fund (TSX: LIF.UN) announced its results for the first quarter ended March 31, 2009.

Royalty income for the first quarter of 2009 amounted to $16.27 million as compared to $16.36 million for the first quarter of 2008. The Fund's cash flow from operating activities after adjustments for changes in amounts receivable, accounts payable and income taxes payable (adjusted cash flow) for the first quarter was $11.11 million or $0.35 per unit as compared to $10.36 million or $0.32 per unit for the same period in 2008. Net income was $16.53 million or $0.52 per unit compared to $10.78 million or $0.34 per unit for the same period in 2008.

The first quarter sales of Iron Ore Company of Canada (IOC) are traditionally adversely affected by the closing of the St. Lawrence Seaway and general winter shipping conditions and are not indicative of the full year's sales.

The current world recession which resulted in a sharply reduced demand for iron ore in the fourth quarter of 2008 continues to cause reduced iron ore demand and as a result pellet sales in the quarter were substantially lower than last year with the decreased volume partially offset by increased sales of concentrates. Royalty revenue for the quarter was approximately the same as 2008 with the lower volume being offset by the lower value of the Canadian dollar against its U.S. counterpart and prices that were higher than those received in last year's first quarter. Last year's first quarter prices were at 2007 levels as the 2008 price increases were not settled until the second quarter. Last year's price increase which occurred in the second quarter resulted in retroactive income relating to the 2008 first quarter of approximately $0.20 per unit which would have increased adjusted cash flow to $0.52 per unit. Prices for 2009 are still under negotiation and when settled they are expected to be significantly lower than 2008. Royalties for the first quarter are not expected to be materially affected when 2009 benchmark pricing is settled.

Equity earnings from IOC amounted to $6.8 million ($0.21 per unit) as compared to $1.3 million ($0.04 per unit) in 2008. If the retroactive price increase had been included in the first quarter of 2008 IOC equity earnings would have been increased by $16 million or $0.50 per unit to $0.54 per unit.

Results for the three months ended March 31 are summarized below:

                                                  2009        2008
                                               --------------------
                                                     (Unaudited)

Revenue (in millions)                           $16.59      $16.64
                                                ------      ------
Adjusted cash flow (in millions)                $11.11      $10.36
                                                ------      ------
Adjusted cash flow per unit                     $ 0.35      $ 0.32
                                                ------      ------
Net income (in millions)                        $16.53      $10.78
                                                ------      ------
Net income per unit                             $ 0.52      $ 0.34
                                                ------      ------

"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) 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 is as follows:

                                          3 Months   3 Months
                                             Ended      Ended       Year
                                           Mar. 31,   Mar. 31, Ended Dec.
                                              2009       2008   31, 2008
                                          ---------- --------- ----------
Pellets                                       1.21       2.55      12.30
                                          ---------- --------- ----------
Concentrates                                  0.92       0.26       2.76
                                          ---------- --------- ----------
Total                                         2.13       2.81      15.06
                                          ---------- --------- ----------

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

Bruce C. Bone
Chairman and Chief Executive Officer
May 5, 2009

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 2008 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 2008 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. The current state of the market may cause 2009 sales to deviate from this pattern.

Royalty income for the first quarter of 2009 amounted to $16.27 million as compared to $16.36 million for the first quarter of 2008. The Fund's cash flow from operating activities after adjustments for changes in amounts receivable, accounts payable and income taxes payable (adjusted cash flow) for the first quarter was $11.11 million or $0.35 per unit as compared to $10.36 million or $0.32 per unit for the same period in 2008. Net income was $16.53 million or $0.52 per unit compared to $10.78 million or $0.34 per unit for the same period in 2008.

The current world recession which resulted in a sharply reduced demand for iron ore in the fourth quarter of 2008 continues to cause reduced iron ore demand and as a result pellet sales in the quarter were substantially lower than last year with the decreased volume partially offset by increased sales of concentrates. Royalty revenue for the quarter was approximately the same as 2008 with the lower volume being offset by the lower value of the Canadian dollar against its U.S. counterpart and prices that were higher than those received in last year's first quarter. Last year's first quarter prices were at 2007 levels as the 2008 price increases were not settled until the second quarter. Last year's price increase which occurred in the second quarter resulted in retroactive income relating to the 2008 first quarter of approximately $0.20 per unit which would have increased adjusted cash flow to $0.52 per unit. Prices for 2009 are still under negotiation and when settled they are expected to be significantly lower than 2008. Royalties for the first quarter are not expected to be materially affected when 2009 benchmark pricing is settled.

Equity earnings from IOC amounted to $6.8 million ($0.21 per unit) as compared to $1.3 million ($0.04 per unit) in 2008. If the retroactive price increase had been included in the first quarter of 2008 IOC equity earnings would have been increased by $16 million or $0.50 per unit to $0.54 per unit.

Net income for the first quarter was $16.53 million or $0.52 per unit as compared to $10.78 million or $0.34 per unit in 2008. Had the price increase been recorded in the first quarter the net income would have increased by $22.6 million ($0.70 per unit).

Cash flow from operating activities after adjustments for changes in amounts receivable, accounts payable and income taxes payable (adjusted cash flow) for the quarter was $11.11 million or $0.35 per unit as compared to $10.36 million or $0.32 per unit for the same period in 2008.

The following table sets out quarterly revenue, net income and cash flow data for 2009, 2008 and 2007.



                                                      Adjusted    Distri-
                                                          Cash   butions
                                       Net  Adjusted      Flow  Declared
                             Net    Income      Cash       per       per
               Revenue    Income  per Unit    Flow(1)   Unit(1)     Unit
               -------    ------  --------    -------   -------     ----
                         (in millions except per Unit information)

2009
----
First Quarter    $16.6     $16.5     $0.52    $11.11     $0.35     $0.50

2008
----
First Quarter    $16.6     $10.8     $0.34     $10.4     $0.32     $0.35

Second Quarter   $58.1     $73.9     $2.31     $32.9     $1.03     $1.00

Third Quarter    $43.7     $65.6     $2.05    $104.1(2)  $3.25     $3.00

Fourth Quarter   $45.0     $26.2     $0.82     $27.5     $0.86     $0.50

2007
----
First Quarter    $13.1     $10.7     $0.34      $8.7     $0.27     $0.35

Second Quarter   $15.7     $15.2     $0.47      $9.5     $0.30     $0.35

Third Quarter    $20.1     $23.0     $0.72   $30.8(3)    $0.96     $0.70

Fourth Quarter   $18.7     $32.0     $1.00     $11.5     $0.36     $0.55

Notes:    (1)  "Adjusted cash flow" (see below)
          (2)  Includes a $77.9 million IOC dividend
          (3)  Includes a $18.8 million IOC dividend

Standardized Cash Flow and Adjusted Cash Flow

For this Fund, standardized cash flow is the same as cash flow from operating activities as recorded in the Fund's cash flow statements as the Fund does not incur capital expenditures or have any restrictions on distributions. Standardized cash flow (after making a $25.2 million payment re: 2008 income taxes) per unit was $0.08 for the quarter (2008 - $0.46). Cumulative standardized cash flow from inception of the trust is $22.32 per unit and total cash distributions since inception are $21.43 per unit, for a payout ratio of 96%.

"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. 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 following reconciles cash flow from operating activities to adjusted cash flow.


                                          3 Months Ended  3 Months Ended
                                           Mar. 31, 2009   Mar. 31, 2008
                                         ---------------- ---------------
Standardized cash flow from operating
 activities                                  $ 2,521,897     $14,787,921
                                         ---------------- ---------------
Excluding: changes in amounts receivable,
 accounts payable and income taxes
 payable/recoverable                           8,592,557      (4,432,449)
                                         ---------------- ---------------
Adjusted cash flow                           $11,114,454     $10,355,472
                                         ---------------- ---------------
Adjusted cash flow per unit                        $0.35           $0.32
                                         ---------------- ---------------

Liquidity
---------

The Fund has a $50 million revolving credit facility to September 18, 2011
with provision for annual one-year extensions. No amounts are currently drawn
under this facility ($3.9 million at March 31, 2008) leaving $50 million
available to provide for any capital required by IOC or other Fund
requirements.

Outlook
-------
At the present time markets remain unsettled and it is difficult to
predict sales volumes and thus royalty revenue. Also, price negotiations are
progressing slowly and until they are settled it is difficult to predict
royalty revenue. The weakness of the Canadian dollar against its U.S.
counterpart is a positive factor somewhat offsetting volume and price
weakness. Steel markets remain very weak in Europe and North America and
although Asian demand has weakened somewhat it remains relatively strong. 2009
is expected to be disappointing when compared to last year's results.

Bruce C. Bone
Chairman and Chief Executive Officer
Toronto, Ontario
May 5, 2009



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

                                                      As at
                                    -------------------------------------
                                           March 31          December 31
                                             2009                2008
                                    -------------------------------------
                                         (Unaudited)
Assets
Current
  Cash and cash equivalents          $    14,317,467     $    27,795,570
  Amounts receivable                      15,459,327          36,476,337
                                    -----------------   -----------------
                                          29,776,794          64,271,907

Deferred charges                             371,999             392,666

Iron Ore Company of Canada ("IOC"),
 royalty and commission interests        301,515,962         302,198,099

Investment in IOC                        194,247,708         187,452,133
                                    -----------------   -----------------
                                     $   525,912,463    $    554,314,805
                                    -----------------   -----------------
                                    -----------------   -----------------


Liabilities and Unitholders' Equity
Current
  Accounts payable                   $     3,354,811    $      7,484,614
  Income taxes payable                       162,128          25,641,892
  Distributions payable to
   unitholders                            16,000,000          16,000,000
                                    -----------------   -----------------
                                          19,516,939          49,126,506

Future income tax liability              103,790,000         103,110,000
                                    -----------------   -----------------
                                         123,306,939         152,236,506

Unitholders' equity
  Trust units                            317,708,147         317,708,147
  Undistributed income                    84,897,377          84,370,152
                                    -----------------   -----------------
                                    $    525,912,463    $    554,314,805
                                    -----------------   -----------------
                                    -----------------   -----------------



LABRADOR IRON ORE ROYALTY INCOME FUND
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME AND UNDISTRIBUTED INCOME
-------------------------------------------------------------------------

                                               For the Three Months
                                                  Ended March 31,
                                             2009                2008
                                    -------------------------------------
                                                   (Unaudited)
Revenue
  IOC royalties                      $    16,265,101     $    16,361,263
  IOC commissions                            209,529             276,336
  Interest and other income                  118,970               1,767
                                    -----------------   -----------------
                                          16,593,600          16,639,366
                                    -----------------   -----------------
Expenses
  Newfoundland royalty taxes               3,253,020           3,272,253
  Amortization of royalty and
   commission interests                      682,137             905,415
  Administrative expenses (note 2)           318,278           1,005,185
  Interest expense                           113,132             172,433
                                    -----------------   -----------------
                                           4,366,567           5,355,286
                                    -----------------   -----------------

Income before equity earnings and
 income taxes                             12,227,033          11,284,080
Equity earnings in IOC                     6,795,575           1,327,271
                                    -----------------   -----------------
Income before income taxes                19,022,608          12,611,351
                                    -----------------   -----------------
Provision for (recovery of) income
 taxes
  Current                                  1,815,383           1,865,274
  Future                                     680,000             (30,000)
                                    -----------------   -----------------
                                           2,495,383           1,835,274

Net income and comprehensive income
 for the period                           16,527,225          10,776,077

Undistributed income, beginning of
 period                                   84,370,152          63,053,439

Distributions to unitholders             (16,000,000)        (11,200,000)
                                    -----------------   -----------------
Undistributed income, end of period  $    84,897,377     $    62,629,516
                                    -----------------   -----------------
                                    -----------------   -----------------
Net income per unit                  $          0.52     $          0.34
                                    -----------------   -----------------
                                    -----------------   -----------------



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

                                                For the Three Months
                                                  Ended March 31,
                                             2009                2008
                                    -------------------------------------
                                                   (Unaudited)
Net inflow (outflow) of cash related
 to the following activities

Operating
  Net income for the period          $    16,527,225     $    10,776,077
  Items not affecting cash:
    Equity earnings in IOC                (6,795,575)         (1,327,271)
    Future income taxes                      680,000             (30,000)
    Amortization of royalty and
     commission interests                    682,137             905,415
    Amortization of deferred charges          20,667              31,251
  Change in amounts receivable,
   accounts payable and income taxes
   payable/recoverable                    (8,592,557)          4,432,449
                                    -----------------   -----------------
  Cash flow from operating activities      2,521,897          14,787,921
                                    -----------------   -----------------

Financing
  Distributions paid to unitholders      (16,000,000)        (17,600,000)
  Proceeds from long-term debt                     -           2,848,480
                                    -----------------   -----------------
                                         (16,000,000)        (14,751,520)
                                    -----------------   -----------------

Increase (decrease) in cash and cash
 equivalents during the period           (13,478,103)             36,401
Cash and cash equivalents, beginning
 of period                                27,795,570             151,256
                                    -----------------   -----------------
Cash and cash equivalents, end of
 period                              $    14,317,467     $       187,657
                                    -----------------   -----------------
                                    -----------------   -----------------
Cash and cash equivalents are
 comprised of:
  Cash in bank                       $       865,534     $       187,657
  Term deposits                           13,451,933                   -
                                    -----------------   -----------------
                                     $    14,317,467     $       187,657
                                    -----------------   -----------------
                                    -----------------   -----------------
Cash income taxes paid               $    27,295,147     $       260,000
                                    -----------------   -----------------
                                    -----------------   -----------------
Cash interest paid                   $        94,521     $        97,915
                                    -----------------   -----------------
                                    -----------------   -----------------

%SEDAR: 00002722E


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