[ferro-alloys.com]Labrador Iron Ore Royalty Corporation announced its operation and cash flow results for the second quarter ended June 30th 2013.

Royalty income for the Q2 of 2013 amounted to USD 41.7 million as compared to USD 36.0 million for the Q2 of 2012. The shareholders' 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 USD 23.4 million or USD 0.37 per share compared to last year's USD 22.3 million or USD 0.35 per unit.

Equity earnings from Iron Ore Company of Canada amounted to USD 19.3 million or USD 0.30 per share as compared to USD 18.2 million or USD 0.28 per unit in 2012. Net income was USD 39.2 million or USD 0.61 per share compared to USD 36.8 million or USD 0.57 per unit for the same period in 2012. Earnings and cash flow for the quarter, although higher than last year were reduced due to higher income taxes, a result of the elimination of interest expense on the subordinated notes that were cancelled last September.

Increased IOC production for the quarter as compared to last year reflected the successful completion and integration of the first phase of the expansion program into the operations with April and May production achieving annual rates of 19 million tonnes and 20 million tonnes respectively. The annual maintenance shutdown was scheduled for early June and went well but upon resumption of operations some ore quality issues were encountered, which were further aggravated by the wildfires in the area.

Although all assets including the expansion facilities operated well, a number of factors caused June production to be below expected levels. The fires in the area did not directly affect IOC Labrador operations, but required the town of Wabush to be evacuated which impacted employee availability. Additionally, the resulting air quality in the area had an effect on productivity requiring stoppages in the mine and an evacuation of the processing plants for periods of time during June and July.

There were also storms that resulted in power outages which impacted operations in the same period. IOC reports that the ore quality issues are being managed and that the fires are now behind them and they expect August production to return to May levels. The June production restrictions did not negatively affect sales in the Q2 but the lower production over recent months will reduce product available for shipment in the Q3.

At a special meeting held on September 28th 2012, the holders of stapled units approved an exchange of their subordinated notes for common shares of Labrador Iron Ore Royalty Corporation and a consolidation of common shares. The USD 248 million subordinated notes were cancelled and each holder of common shares ended up holding the same number of common shares as before the transactions and LIORC continued to have 64 million common shares outstanding.

Interest on the subordinated notes ceased to accrue after September 30th 2012. For the purposes of this report, all references to shareholders and per share figures may refer to holders of stapled units and per stapled units, respectively, as applicable. Prior to the transactions, the net income attributed to the holders of stapled units consisted of the net income of LIORC plus the interest paid on the subordinated notes.

Thus 2012 net income, adjusted cash flow and per share figures referred to in this report use the totals according to the financial statements plus the USD 7,488,000 (USD 0.117 per stapled unit) and USD 14,976,000 (USD 0.234 per stapled unit) interest on the subordinated notes for the three months and six months periods, respectively.