Labrador Iron Ore Royalty Corporation · TSX:LIF
Labrador Iron Ore Royalty — Investor Presentation (January 2020)
14 slides from Labrador Iron Ore Royalty's investor presentation, January 2020
Slide 1: Labrador Iron Ore Royalty Corporation
LABRADOR IRON ORE ROYALTY CORPORATION January 2020
Slide 2: Notice to Reader
NOTICE TO READER All dollar figures are stated in Canadian (“CDN”) dollars unless noted otherwise. The information contained in this presentation is derived from publicly available sources, such as annual and quarterly financial reports and the annual information form filed by Labrador Iron Ore Roya
Slide 3: Agenda
AGENDA ❖ LIORC Financial Highlights ❖ Iron Ore Market Update ❖ IOC Update ❖ IOC and LIORC Strengths ❖ LIORC Cash Flow and Total Return ❖ Outlook ❖ Questions 3
Slide 4: LIORC Financial Highlights
LIORC FINANCIAL HIGHLIGHTS Third Quarter Fiscal Year 2019 2018 2018 2017 ($ in millions except per share information) Revenue 46.2 44.6 130.9 158.6 Net Income 57.5 58.1 128.5 157.3 Cash Flow from Operations 72.6(1) 59.7(2) 148.8(3) 167.0(4) Net Income per Share $0.90 $0.91 $2.01 $2.46 Cash Flow from
Slide 5: Iron Ore Prices and Premiums
IRON ORE PRICES AND PREMIUMS ▪ Iron ore prices showing strength at start of 2020 Platts Quarterly Prices - 65% Fe vs. 62% Fe, CFR North China January 15, 2020 ▪ Platts 62% Fe price averaged US$94.34 per 140 tonne to Jan 15 up from US$88.61 in Q4 2019 ▪ Platts 65% Fe averaged US$106.90 to Jan 15 120
Slide 6: Pellet Premium
PELLET PREMIUM ▪ Platts pellet premium for Atlantic Platts Quarterly Prices - Atlantic Basin Pellets vs. Concentrate 62% Fe, CFR North China to January 15, 2019 Basin BF pellets averaged US$37 200 per tonne in Q4 2019, down from US$56 in Q4 2019 and was set at 180 US$29 on Jan 1 160 ▪ The DR pellet
Slide 7: IOC Production
IOC PRODUCTION IOC Quarterly Production ▪ IOC’s saleable production (CFS and pellets) for the full year 2019 was 17.9 6 million tonnes up 17.7% from 2018 (which was impacted by a nine week strike) 5 ▪ Saleable production in Q4 2019 was 4.4 million tonnes down 13% from Q3 2019 4 ▪ Pellet production w
Slide 8: Sales Reported for the LIORC Royalty
SALES REPORTED FOR THE LIORC ROYALTY ▪ Total iron ore sold by IOC (CFS plus IOC Quarterly Sales pellets) of 4.5(1) million tonnes for Q4 6 2019 in line with Q3 2019 5 ▪ Shipments were affected by breakdowns on reclaiming and Millions of tonnes 4 shiploading equipment ▪ Q4 pellet sales were affected
Slide 9: IOC Unit Operating Costs
IOC UNIT OPERATING COSTS ▪ IOC working towards target cash operating cost of US$30-33 per tonne FOB Sept-Îles (excludes royalty and selling costs) ▪ As production increases to nameplate capacity of 23.3 million tonnes per year, unit costs expected to improve ▪ IOC has high margins given its high qua
Slide 10: IOC Strengths and LIORC Strengths
IOC STRENGTHS LIORC STRENGTHS ▪ Leading producer of high quality, ▪ Impressive underlying asset in IOC low impurity iron ore products ▪ Attractive 7% top line royalty (65% Fe) including higher margin ▪ Royalty limits operational risk pellets ▪ 15.1% equity investment in IOC ▪ Large, high quality res
Slide 11: Strong LIORC Cashflow
STRONG LIORC CASHFLOW 3.50 200 ▪ Strong base of after-tax cash 180 3.00 flow per share from royalty 160 and commissions with upside from IOC dividends 2.50 140 ▪ Over the past 8 years (2011 – 120 2018) cash flow from royalty 2.00 CAD$ / Share CAD$ / dmt and commissions averaged 100 $1.15 per share a
Slide 12: Average Annual Returns Outperform
AVERAGE ANNUAL RETURNS OUTPERFORM 1 Year 3 Year 5 Year 10 Year 15 Year 20 Year Labrador Iron Ore Royalty Corporation (TR) 17.3% 23.2% 16.8% 9.7% 14.3% 16.7% TSX Global Mining Index (TR) 25.4% 12.5% 8.8% 0.3% n/a n/a S&P TSX Composite Index (TR) 22.9% 6.9% 6.3% 6.9% 7.1% 6.2% ▪ The average annual ret
Slide 13: Outlook
OUTLOOK ▪ IOC outlook for production and sales remains positive ▪ China’s stimulus for infrastructure spending and property construction expected to support continued strong steel production ▪ Offsetting potential weaker U.S. and European steel production ▪ Iron ore supply growth expected to be limi
Slide 14: Questions
QUESTIONS 14
Labrador Iron Ore Royalty — Investor Presentation (January 2020) on 6ix