Canada's Labrador Iron Ore Royalty Q1 net income drops on weaker IOC profitability

Overview

• Canada iron ore royalty firm's Q1 revenue was flat yr/yr amid low concentrate and pellet sales

• Q1 net income per share fell 36% yr/yr due to reduced profitability at IOC

• Company cited reduced haul truck availability and lower mine material movement as key factors

Outlook

• LIORC expects 2026 IOC sales to be at the low end of 15-18 mln tonnes range

• Company says increased stripping will negatively impact IOC production and future cash flow

• Iron ore prices and pellet premiums have remained resilient since the end of the first quarter

Result Drivers

• OPERATIONAL CONSTRAINTS - Co said reduced haul truck availability, longer cycle times, and lower payloads at IOC constrained concentrate and pellet production

• LOWER PELLET PRODUCTION - Pellet production fell 26% yr/yr due to feed availability and machine reliability issues, notably drive failures on Machines 4 and 6

• SOFT PELLET PREMIUMS - Pellet premiums remained soft as steel producers prioritized cost-saving over efficiency gains from high-grade feedstocks

Company press release: ID:nCNWlQ2wla

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is no "strong buy" or "buy", 5 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the iron & steel peer group is "buy."

• Wall Street's median 12-month price target for Labrador Iron Ore Royalty Corp is C$29.75, about 6.3% above its May 4 closing price of C$28.00

• The stock recently traded at 15 times the next 12-month earnings vs. a P/E of 12 three months ago

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