TORONTO, Aug. 5, 2021 /CNW/ - Labrador Iron Ore Royalty Corporation ("LIORC") (TSX: LIF) announced today its operation and cash flow results for the quarter ended June 30, 2021.
Financial Performance
In the second quarter of 2021, LIORC's financial results benefited from higher iron ore prices and pellet premiums, partially offset by lower volumes of concentrate for sale ("CFS") sales. Royalty revenue for the second quarter of 2021 amounted to $78.8 million compared to $46.2 million for the second quarter of 2020. Equity earnings from Iron Ore Company of Canada ("IOC") were $66.2 million in the second quarter of 2021 compared to $28.7 million in the second quarter of 2020. Net income per share for the second quarter of 2021 was $1.72 per share, which was a 126% increase over the same period in 2020. The adjusted cash flow per share for the second quarter of 2021 was $1.85 per share, which was 363% higher than in the same period in 2020, as a result of higher royalty revenues and the decision by IOC to pay a dividend. In the second quarter of 2021, LIORC received a dividend in the amount of $74.4 million from IOC.
In the second quarter of 2021, iron ore prices reached record levels as global steel production increased and seaborne iron ore supply growth was limited. According to the World Steel Association, global crude steel production in the first half of 2021 increased 14% over the first half of 2020. Strong increases in crude steel production were seen in China, which accounts for over 70% of all seaborne iron ore demand, as well as all other regions and major steel producing countries, as these nations continued to recover from the global downturn in 2020. While, in aggregate, the supply of seaborne iron ore from the major producers was generally in line with the prior annual production guidance, it wasn't enough to lessen the tight supply dynamics in the market.
IOC sells CFS based on the Platts index for 65% Fe, CFR China ("65% Fe index"). All references to tonnes and per tonne prices in this report refer to wet metric tonnes, other than references to Platts quoted pricing, which refer to dry metric tonnes. Historically, IOC's wet ore contains approximately 3% less ore per equivalent volume than dry ore. In the second quarter of 2021, the 65% Fe index averaged US$233 per tonne, a 115% increase over the average of US$108 per tonne in the second quarter of 2020, and a 22% increase over the average of US$191 in the first quarter of 2021. The monthly Atlantic Blast Furnace 65% Fe pellet premium index as quoted by Platts (the "pellet premium") averaged US$65 per tonne in the second quarter of 2021, up substantially from an average of US$30 in the same quarter of 2020, which had been negatively impacted by a reduction in demand from European steel producers due to COVID-19.
Rio Tinto has disclosed that the average realised price achieved for IOC pellets, FOB Sept-les, in the second quarter of 2021 was US$247 per tonne, compared to US$118 per tonne in the same quarter of 2020. Based on sales as reported for the LIORC Royalty, the overall average price realized by IOC for CFS and pellets, FOB Sept-les, was approximately C$275 per tonne in the second quarter of 2021, compared to approximately C$143 per tonne in the second quarter of 2020 and C$226 per tonne in the first quarter of 2021.
https://www.newswire.ca/news-releases/labrador-iron-ore-royalty-corporation-results-for-the-second-quarter-ended-june-30-2021-885572987.html