Labrador Iron Ore Royalty Corporation - 2013 Results of Operations

Labrador Iron Ore Royalty Corporation - 2013 Results of Operations 
TORONTO, March 3, 2014 /CNW/ - Labrador Iron Ore Royalty Corporation ("LIORC") 
(TSX: LIF) announced the results of its operations for the year ended December 
31, 2013. 
To the Holders of Common Shares of Labrador Iron Ore Royalty Corporation 
Financial Performance 
The Shareholders' adjusted cash flow (see Management's Discussion & Analysis 
for definition and calculation) for the year ended December 31, 2013 was 
$115.4 million or $1.80 per share as compared to $75.1 million or $1.17 per 
share for 2012. 
IOC's 2013 iron ore sales totaled 14.8 million tonnes compared to 14.1 million 
tonnes in 2012. The combination of the increased sales, a price that averaged 
approximately 5% higher than 2012 and the lower value of the Canadian dollar 
against its US counterpart resulted in LIORC's royalty revenue rising to 
$137.6 million, an increase of 12% compared to $122.5 million in 2012. While 
this is a satisfactory result, the severe weather that disrupted IOC's 
operations did not allow the true potential of the capacity expansion at IOC 
to be realized. The Canadian dollar which had been trading at par to its U.S. 
counterpart in 2012 averaged $0.97 in 2013. 
The Shareholders' consolidated net income for the year ended December 31, 2013 
was $148.8 million or $2.33 per share compared to $122.5 million or $1.91 per 
share in 2012.  Equity earnings from IOC amounted to $82.3 million compared to 
$58.7 million in 2012. 
IOC Developments 
The expansion program to increase IOC's capacity from 18 million tonnes per 
annum to 23.3 million tonnes is almost complete with current capacity in 
excess of 22 million tonnes. The project should be completed in the first half 
of 2014 with the full benefit being realized in the second half of the year. 
We had expected concentrate production in 2013 to exceed 19 million tonnes. 
However, because of operating problems related to the expansion exacerbated by 
adverse weather conditions, this did not happen. In June and July wildfires in 
the area and power outage caused by severe weather resulted in substantial 
production losses.  Operations gradually recovered and by November were 
approaching a 20 million tonne per annum operating rate. Unfortunately, the 
"polar vortex" brought extreme cold weather to the Labrador City and Sept 
Isles areas, resulting in temperatures at or below -30 degrees centigrade for 
a 25 day period commencing December 11, 2013. With sustained temperatures 
below -30, no amount of preparation can prevent a disruption of operations. As 
a result, losses of production and shipments occurred in December. IOC 
continued to make progress on its program of cost reduction in the year. 
Press reports early in 2013 reported that Rio Tinto was seeking offers on its 
58.72% equity interest in IOC. Recently the press is reporting that amounts 
offered by potential purchasers are inadequate and Rio Tinto is likely to take 
the shares off the market. An investment banker and special counsel were hired 
in order to assess the effect on LIORC if a sale were to occur and to advise 
what action, if any, should be taken by LIORC. 
Outlook 
With the completion of IOC's expansion program, we expect to see record 
production at IOC in 2014, even though production has been negatively affected 
by the adverse weather conditions in the early part of the year. Prices are 
currently slightly below 2013's average level and are expected to remain in 
the current range for the balance of the year. LIORC's royalty revenue is 
expected to be higher than 2013, due to the higher volume and the weaker 
Canadian dollar against its US dollar counterpart. The major risk to higher 
royalty revenue is a sharp decline in iron ore prices, which is not expected. 
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 Labrador Iron Ore Royalty Corporation, 
Bruce C. Bone
President and Chief Executive Officer
March 3, 2014 
Corporate Structure 
Labrador Iron Ore Royalty Corporation ("LIORC" or the "Corporation") 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. Under the Arrangement, the Fund distributed $248 million of subordinated 
notes to its unitholders and the unitholders exchanged their units of the Fund 
for common shares of LIORC. Effective October 3, 2012, the $248 million 
subordinated notes outstanding were exchanged for additional common shares and 
the common shares were consolidated, with the result that each holder of 
common shares ("Shareholder") ended up holding the same number of common 
shares as before the transactions, and LIORC had 64 million common shares 
outstanding. Interest on the subordinated notes ceased to accrue after 
September 30, 2012. 
LIORC, directly and through its wholly-owned subsidiary Hollinger-Hanna 
Limited ("Hollinger-Hanna"), holds a 15.10% equity interest in Iron Ore 
Company of Canada ("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. Two of the eight Directors sit on the board of IOC and the 
five independent Directors serve as members of the Audit, Nominating and 
Compensation Committees. Scotia Managed Companies Administration 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 (2012 includes interest payments on the $248 million 
of subordinated notes that were expensed up to July 20, 2012). Hollinger-Hanna 
is a taxable corporation. 
Income Taxes 
Distributions 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. 2013 quarterly distributions were comprised entirely of dividends (2012 
- up to September 30, 2012 were comprised of interest and dividends). The 
dividends paid in 2013 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 Canada's largest iron ore producer, operating a mine, concentrator and 
pellet plant at Labrador City, Newfoundland, and is among the top five 
producers of 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 the markets of the Great Lakes and the balance of the world 
from its year-round port facilities at Sept-Îles, Quebec. 
IOC has ore reserves sufficient for approximately 29 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 Quebec North Shore and Labrador Railway, 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 2013 sales totaled 14.8 million tonnes comprised of 6.2 million tonnes 
of iron ore concentrate and 8.6 million tonnes of iron ore pellets. Production 
in 2013 was 8.6 million tonnes of pellets and 6.8 million tonnes of 
concentrate. Production in 2013 was negatively affected by the severe weather 
that disrupted operations in the first quarter, the summer and again in 
December. IOC generated ore sales revenues (excluding third party ore sales) 
of $1,952 million in 2013 (2012 - $1,779 million). IOC sales traditionally 
have been approximately 35% in Europe, 35% in North America and 25% in Asia 
with minor amounts to other areas. The strong recovery in Europe and 
continuing strength in China offset the continued weakness in the North 
America market. 
Selected IOC Financial Information 


                          2013      2012      2011      2010         2009
                                                 ($ in thousands) 
    Operating Revenues 2,193,836 1,963,444 2,443,195 2,521,935 1,144,204(1)
    Cash flow from      780,976   505,319   946,240    911,637      42,450
    operating
    activities
    Net income2         549,010   393,437   826,677   863,226     215,254
    Capital             349,454   757,323   647,209   237,977     190,467
    expenditures
    1 Revenue in 2009 was reduced by idling of pellet machines and a shut
      down of Carol Lake operations from July 7 to August 10.
    2 Net income includes unrealized foreign exchange gains before tax on
      U.S. debt translation of $18,248 in 2013, $1,143 in 2012, $4,122 in
      2011, $10,033 in 2010 and $11,494 in 2009. 2013, 2012, 2011 and 2010
      are presented in accordance with IFRS.

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 2013, the 
average royalty (net of the 20% tax) had been $109.3 million per year and in 
2013 the net royalty was $110.1 million (2012 - $98.0 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 2013, Hollinger-Hanna received a total of $1.4 
million in commissions from IOC (2012 - $1.4 million).

Quarterly Distributions

Distributions of $1.875 per share, including special distributions of $0.875 
per share, were declared in 2013 (2012 - distributions of $1.50 per share 
including special distributions of $0.50 per share). These distributions were 
allocated as follows:
                                                                    
                                             Interest
                                   Dividend   Income                  Total
               Period     Payment   Income     Per    Distribution Distribution
                Ended      Date   per Share   Share    Per Share   ($ Million)
                                                                               
    Mar. 31, 2013         Apr.      $  0.250      -              $           $ 
                          25,                                0.250         16.0
                          2013
    Special Distribution  Apr.         0.125      -          0.125          8.0
                          25,
                          2013
    Jun. 30, 2013         Jul.         0.250      -          0.250         16.0
                          25,
                          2013
    Special               Jul.                    -          0.125          8.0
    Distribution          25,          0.125
                          2013
    Sep. 30, 2013         Oct.                    -          0.250         16.0
                          25,          0.250
                          2013
    Special               Oct.                    -          0.125          8.0
    Distribution          25,          0.125
                          2013
    Dec. 31, 2013         Jan.                    -          0.250         16.0
                          25,          0.250
                          2014
    Special               Jan.                    -          0.500         32.0
    Distribution          25,          0.500
                          2014
                                                                               
    Distribution to Shareholders     $ 1.875    $   -           $            $ 
    - 2013                                                   1.875        120.0
                                                                                
    Mar. 31, 2012         Apr.      $  0.133    0.117            $            $ 
                          25,                                0.250          16.0
                          2012
    Special Distribution  Apr.         0.125        -        0.125           8.0
                          25,
                          2012
    Jun. 30, 2012         Jul.         0.133    0.117        0.250          16.0
                          25,
                          2012
    Special               Jul.                      -        0.125           8.0
    Distribution          25,          0.125
                          2012
    Sep. 30, 2012         Oct.                  0.117        0.250          16.0
                          25,          0.133
                          2012
    Special               Oct.                      -        0.125          8.0
    Distribution          25,          0.125
                          2012
    Dec. 31, 2012         Jan.                      -        0.250          16.0
                          25,          0.250
                          2013
    Special               Jan.                      -        0.125          8.0
    Distribution          25,          0.125
                          2013
                                                                                
    Distribution to Shareholders     $ 1.149  $ 0.351           $              
    - 2012                                                    1.50        $96.0

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 Labrador Iron Ore Royalty Corporation ("LIORC" or 
the "Corporation") for the years ended December 31, 2013 and 2012.  This 
discussion should be read in conjunction with the consolidated financial 
statements of the Corporation and notes thereto for the years ended December 
31, 2013 and 2012.  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 
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. Under the Arrangement, the Fund distributed $248 
million of subordinated notes to its unitholders and the unitholders exchanged 
their units of the Fund for common shares of LIORC. Effective October 3, 2012, 
the $248 million subordinated notes outstanding were exchanged for additional 
common shares and the common shares were consolidated, with the result that 
each holder of common shares ("Shareholder") ended up holding the same number 
of common shares as before the transactions, and LIORC had 64 million common 
shares outstanding. Interest on the subordinated notes ceased to accrue after 
September 30, 2012. For the purposes of the following discussion and analysis, 
all references to shareholders and per share figures may refer to holders of 
stapled units and per stapled units, respectively, as applicable.

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 sold 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 has $52.6 million in cash as at December 31, 2013 with total 
current assets of $88.4 million. The Corporation has a working capital of 
$24.6 million. The Corporation earned operating cash flows of $121.7 million 
and increased the cash balance by $25.7 million during 2013.

Cash balances consist of deposits in Canadian 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 Company 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 intends to pay cash 
dividends of the net income derived from IOC to the maximum extent possible, 
subject to the maintenance of appropriate levels of working capital and debt.

The Corporation has a $50 million revolving credit facility with a term ending 
September 18, 2016 with provision for annual one-year extensions.  No amount 
is currently drawn under this facility leaving $50.0 million available to 
provide for any capital required by IOC or requirements of the Corporation.

Operating Results

The following table summarizes the Corporation's 2013 operating results as 
compared to 2012 results.
    Revenue                                        2013           2012
    IOC royalties (net of 20% Newfoundland                  
    royalty tax)                              $110,109,340   $97,967,041
    IOC commissions                              1,445,192     1,380,402
    Other                                          203,191       370,179
                                               111,757,723    99,717,622
    Expenses                                                            
    Administrative expenses                      2,846,566     2,414,220
    Interest expense:                                                   
      Credit facility                              375,000       376,027
      Subordinated notes                               -      22,464,000
    Income taxes expense - current              33,143,074    21,873,226
                                                36,364,640    47,127,473
    Net Income before undernoted items          75,393,083    52,590,149
    Non cash revenue (expense)                                          
    Equity earnings in IOC(1)                   82,269,765    58,747,108
    Deferred income taxes (1)                  (5,146,000)   (7,438,000)
    Amortization                               (3,686,708)   (3,867,792)
                                                73,437,057    47,441,316
                                                                        
    Net income for the year                    148,830,140   100,031,465
    Other comprehensive gain (loss)(1)           9,992,000   (3,712,000)
    Comprehensive income for the year         $158,822,140   $96,319,465
    (1)
        2012 restated

IOC's 2013 iron ore sales totaled 14.8 million tonnes compared to 14.1 million 
tonnes in 2012. The combination of the increased sales, a price that averaged 
approximately 5% higher than 2012 and the lower value of the Canadian dollar 
against its US counterpart resulted in LIORC's royalty revenue rising to 
$137.6 million, an increase of 12% compared to $122.5 million in 2012. While 
this is a satisfactory result, the severe weather that disrupted IOC's 
operations did not allow the true potential of the capacity expansion at IOC 
to be realized. The Canadian dollar which had been trading at par to its U.S. 
counterpart in 2012 averaged $0.97 in 2013.

The Shareholders' consolidated net income for the year ended December 31, 2013 
was $148.8 million or $2.33 per share compared to $122.5 million or $1.91 per 
share in 2012.  Equity earnings from IOC amounted to $82.3 million compared to 
$58.7 million in 2012.

Fourth quarter 2013 sales of 3.6 million tonnes were slightly lower than last 
year, but the stronger Canadian dollar and improved sales price, resulted in 
royalty income of $34.2 million for the quarter as compared to $32.4 million 
for the same period in 2012. Adjusted cash flow from operations was $57.6 
million ($0.90 per share) compared to 2012 of $19.9 million ($0.31 per share). 
2013 cash flow includes an IOC dividend of $40.0 million or $0.63 per share. 
Production and thus sales in the fourth quarter were adversely affected by 
weather related operating problems.

Selected Consolidated Financial Information

The following table sets out financial data from a Shareholder's perspective 
for the three years ended December 31, 2013, 2012 and 2011. (See note 1 to the 
financial statements.)
                                             Years Ended December 31
    Description             2013       2012                    2011
                         (in millions except per Share information)
    Revenue               $139.3     $124.2                  $162.5
    Net Income            $148.8     $122.5 (1) (5)          $209.3 (1)
    Net Income per Share   $2.33      $1.91 (1) (5)           $3.27 (1)
    Adjusted Cash Flow
    (2)                   $115.4 (3)  $75.1 (1)              $158.1 (1) (4)
    Adjusted Cash Flow
    per Share(2)           $1.80      $1.17 (1)               $2.47 (1)
    Total Assets          $775.6     $696.3 (5)             $669.0 
    Cash Distribution
    per Share             $1.875      $1.50                  $2.25 
    Number of Common
    Shares outstanding      64.0       64.0                    64.0
      (1) Includes interest income for the year ended December 31, 2012 of
          $22,464,000 or $0.351 per share (2011 includes $29,952,000 or
          $0.468 per share) on the subordinated notes of the Corporation.
      (2) "Adjusted cash flow" (see below)
      (3) Includes $40.0 million of IOC dividends.
      (4) Includes $60.2 million of IOC dividends.
      (5) 2012 restated

The following table sets out quarterly revenue, net income and cash flow data 
for 2013 and 2012.
                                                   Adjusted
                                                     Cash
                                   Net    Adjusted   Flow   Distributions
                         Net     Income     Cash       per    Declared
               Revenue  Income  per Share Flow(1)  Share(1)   per Share
                                                                      
                  (in millions except per Common Share/Unit information)
    2013                                                              
    First
    Quarter     $26.4    $21.7     $0.34    $14.4    $0.22       $0.375
    Second
    Quarter     $42.2    $39.2     $0.61    $23.4    $0.37       $0.375
    Third
    Quarter     $36.1    $41.2     $0.65    $20.0    $0.31       $0.375
    Fourth
    Quarter     $34.6    $46.7     $0.73  $57.6(2)   $0.90       $0.750
    2012                                                              
    First
    Quarter(3)  $22.4    $23.0     $0.36    $14.4    $0.23       $0.375
    Second
    Quarter(3)  $36.4    $36.8     $0.57    $22.3    $0.35       $0.375
    Third
    Quarter(3)  $32.6    $29.7     $0.47    $18.5    $0.28       $0.375
    Fourth
    Quarter     $32.8  $33.0(4) $0.51(4)    $19.9    $0.31       $0.375
      (1) "Adjusted cash flow"(see below) 
      (2) Includes a $40.0 million IOC dividend
      (3) Prior to the fourth quarter of 2012, net income, adjusted cash
          flow, distributions and per share figures referred to in this
          table use the totals according to the consolidated financial
          statements plus (where applicable) the $7,488,000 ($0.117 per
          unit) interest on the subordinated notes
      (4) 2012 restated

Standardized Cash Flow and Adjusted Cash Flow

For the Corporation, standardized cash flow is the same as cash flow from 
operating activities as recorded in the Corporation's cash flow statements as 
the Corporation does not incur capital expenditures or have any restrictions 
on dividends.  Standardized cash flow per share was $1.90 for 2013 (2012 - 
$0.80((1))).  Cumulative standardized cash flow from inception of the 
Corporation is $18.84 per share and total cash distributions since inception 
are $18.29 per share, for a payout ratio of 97%.
    (1) Excludes interest on subordinated notes paid directly to
        Shareholders of $0.351 per share.

"Adjusted cash flow" is defined as cash flow from operating activities after 
adjustments for changes in amounts receivable, accounts and interest payable 
and income taxes 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.
                                                  2013            2012
    Standardized cash flow from operating                 
    activities                              $121,690,503      $51,473,237
    Changes in amounts receivable, accounts               
    and interest payable and
    income taxes recoverable and payable     (6,278,509)        1,116,912
    Adjusted cash flow                      $115,411,994   $52,590,149(1)
    Adjusted cash flow per share                   $1.80         $0.82(1)
    (1) The year ended December 31, 2012 excludes interest on subordinated
        notes paid directly to Shareholders of $22,464,000 or $0.351 per
        share.

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 officers 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, 2013.

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, 2013.

No material change in the Corporation's internal control over financial 
reporting occurred during the year ended December 31, 2013.

Outlook

With the completion of IOC's expansion program, we expect to see record 
production at IOC in 2014, even though production has been negatively affected 
by the adverse weather conditions in the early part of the year. Prices are 
currently slightly below 2013's average level and are expected to remain in 
the current range for the balance of the year. LIORC's royalty revenue is 
expected to be higher than 2013, due to the higher volume and the weaker 
Canadian dollar against its US dollar counterpart. The major risk to higher 
royalty revenue is a sharp decline in iron ore prices, which is not expected.

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.

Bruce C. Bone, President and Chief Executive Officer
Toronto, Ontario
March 3, 2014
    LABRADOR IRON ORE ROYALTY CORPORATION                               
    CONSOLIDATED BALANCE SHEETS                            
                                                                        
                                                                        
                                          
                                                            As at
                                         December 31,      December 31,
    Canadian $                                  2013             2012
                                                                        
    Assets                                                 
    Current Assets                                                  
        Cash                               $ 52,613,924     $ 26,923,421
        Amounts receivable                   35,818,924       29,308,484
        Income taxes recoverable                      -        3,130,130
    Total Current Assets                     88,432,848       59,362,035
                                                                        
    Non-Current Assets                                     
    Iron Ore Company of Canada ("IOC"),                    
        royalty and commission interests    279,576,792      283,263,500
    Investment in IOC (1)                   407,622,445      353,685,591
    Total Non-Current Assets                687,199,237      636,949,091
                                                                        
    Total Assets                          $ 775,632,085    $ 696,311,126
                                                                        
                                                                        
    Liabilities and Shareholders' Equity                   
    Current Liabilities                                    
        Accounts payable                    $ 7,508,145      $ 6,167,138
        Dividend payable                     48,000,000       24,000,000
        Income taxes payable                  8,317,812                -
    Total Current Liabilities                63,825,957       30,167,138
                                                                        
    Non-Current Liabilities                                
        Deferred income taxes(1)            128,478,000      121,638,000
    Total Liabilities                       192,303,957      151,805,138
                                                                        
    Shareholders' Equity                                   
        Share capital                       317,708,147      317,708,147
        Retained earnings (1)               273,225,981      244,395,841
        Accumulated other comprehensive                  
        loss(1)                             (7,606,000)     (17,598,000)
                                            583,328,128      544,505,988
                                                                        
    Total Liabilities and Shareholders'   $ 775,632,085    $ 696,311,126
    Equity                                               
                                                                        
    (1) 2012 restated                                                   
    LABRADOR IRON ORE ROYALTY CORPORATION                                  
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                        
                                                                           
                                                                           
                                                                           
                                                                           
    For the years ended December 31                2013
    (Canadian $)                                                    2012
                                                                           
    Revenue                                                                
        IOC royalties                        $ 137,631,880    $ 122,463,597
        IOC commissions                          1,445,192        1,380,402
        Interest and other income                  203,191          370,179
                                               139,280,263      124,214,178
    Expenses                                                               
        Newfoundland royalty taxes              27,522,540       24,496,556
        Amortization of royalty and                         
        commission interests                     3,686,708        3,867,792
        Administrative expenses                  2,846,566        2,414,220
        Interest expense:                                                  
          Credit facility                          375,000          376,027
          Subordinated                                      
        notes                                            -       22,464,000
                                                34,430,814       53,618,595
                                                                           
    Income before equity earnings and          104,849,449
    income taxes                                                 70,595,583
    Equity earnings in IOC (1)                  82,269,765       58,747,108
                                                                           
    Income before income taxes                 187,119,214      129,342,691
                                                                           
    Provision for income taxes                                             
        Current                                 33,143,074       21,873,226
        Deferred (1)                             5,146,000        7,438,000
                                                38,289,074       29,311,226
                                                                           
    Net income for the year                    148,830,140      100,031,465
                                                                           
    Other comprehensive gain/(loss)                                        
        Share of other comprehensive
        income/(loss) of IOC that will not                  
        be                                                                 
        reclassified subsequently to profit                 
        or loss (net of taxes)(1)                9,992,000      (3,712,000)
                                                                           
    Comprehensive income for the year        $ 158,822,140     $ 96,319,465
                                                                           
    Net income per share                            $ 2.33           $ 1.56
                                                                           
    (1) 2012 restated                                                      
    LABRADOR IRON ORE ROYALTY CORPORATION      
    CONSOLIDATED STATEMENTS OF CASH FLOWS  
     
     
                                                              
    For the years ended December 31              2013     
    (Canadian $)                                                    2012
    Net inflow (outflow) of cash related                                   
      to the following activities                                          
    Operating                                                              
      Net income for the year              $ 148,830,140      $ 100,031,465
      Items not affecting cash:                                            
          Equity earnings in IOC            (82,269,765)       (58,747,108)
          Current income taxes                33,143,074         21,873,226
          Deferred income taxes                5,146,000          7,438,000
          Amortization of royalty and                     
          commission interests                 3,686,708          3,867,792
          Interest expense                       375,000         22,840,027
      Common share dividend from IOC          40,018,911                  -
      Change in amounts receivable and       (5,169,433)
      accounts payable                                            9,109,045
      Interest paid                            (375,000)       (30,328,027)
      Income taxes paid                     (21,695,132)       (24,611,183)
      Cash flow from operating activities    121,690,503         51,473,237
                                                              
    Financing                                                              
      Dividends paid to shareholders        (96,000,000)       (66,048,000)
      Cash flow used in financing           (96,000,000)
      activities                                               (66,048,000)
                                                              
    Increase/(decrease) in cash, during       25,690,503  
    the year                                                   (14,574,763)
                                                              
    Cash, beginning of year                   26,923,421         41,498,184
                                                              
    Cash, end of year                       $ 52,613,924       $ 26,923,421
    LABRADOR IRON
    ORE ROYALTY                                               
    CORPORATION
    CONSOLIDATED
    STATEMENTS OF                                             
    CHANGES IN
    EQUITY
                                               Accumulated
                                                  other 
                       Share       Retained   comprehensive 
    Canadian $        capital      earnings        loss            Total
                                                                       
                                                                       
    Balance as at                           $             $
    December 31,   $ 69,708,147   217,900,376   (13,886,000)  $ 273,722,523
    2011
    Exchange of
    subordinated                                                          -
    notes for
    common shares
    on October 3,   248,000,000                            -    248,000,000
    2012
    Net income
    for the year              -   100,031,465                   100,031,465
    (1)
    Dividends
    declared to               -  (73,536,000)                  (73,536,000)
    shareholders 
    Share of
    other
    comprehensive
    loss from                 -             -    (3,712,000)    (3,712,000)
    investment in
    IOC (net of
    taxes)(1)
    Balance as at             $             $             $
    December 31,    317,708,147   244,395,841   (17,598,000)  $ 544,505,988
    2012
                                                                           
    Net income                -   148,830,140              -    148,830,140
    for the year
    Dividends
    declared to               - (120,000,000)              -  (120,000,000)
    shareholders 
    Share of
    other
    comprehensive
    income from               -             -      9,992,000      9,992,000
    investment in
    IOC (net of
    taxes)
    Balance as at             $             $
    December 31,    317,708,147   273,225,981  $ (7,606,000)  $ 583,328,128
    2013
                                                              
    (1) 2012
    restated

The complete consolidated financial statements for the year ended December 31, 
2013, including the notes thereto, are posted on sedar.com and 
labradorironore.com.



SOURCE  Labrador Iron Ore Royalty Corporation 
Bruce C. Bone President & Chief Executive Officer (416) 863-7133 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/March2014/03/c8890.html 
CO: Labrador Iron Ore Royalty Corporation
ST: Ontario
NI: FIN ERN  
-0- Mar/04/2014 00:40 GMT
 
 
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