# INTERVIEW: Anglo Pacific Group Diversify with Labrador Iron Ore Royalty Corp share

- Link: https://www.directorstalkinterviews.com/interview-anglo-pacific-group-diversify-labrador-iron-ore-royalty-corp-share/412756823
- Published: 2018-08-17T08:52:07+01:00
- Author: Giles Arbor

**Anglo Pacific Group** (LON:APF) CEO Julian Treger talks to DirectorsTalk about
its 4.25% shareholding in Labrador Iron Ore Royalty Corp. Julian provides some more
detail on this morning’s announcement, the rational behind it, why exactly iron 
ore, whats next for the portfolio and provides 3 reasons why you should invest in
APF.

LIORC is listed on the Toronto Stock Exchange (TSX:LIF), and its operating cash 
flow is sourced entirely from its entitlement to a 7% GRR and a C$0.10 per tonne
commission on products sold, as well as dividends received from its 15.1% equity
interest in IOC.

LIORC has been involved in Labrador West for 80 years. Under a 1938 Statutory Agreement
with the Canadian province of Newfoundland and Labrador, a predecessor company to
LIORC, Labrador Mining and Exploration Limited, was granted extensive exploration
and mining rights in Labrador West. LM&E discovered the iron ore bodies that now
constitute the mine operated by IOC. LM&E received grants of leases and licences
under the Statutory Agreement. It also received a grant of surface rights to establish
the town site that became Labrador City. LM&E sublet the leases to IOC. IOC, with
major steel companies as original shareholders, built the infrastructure, mine, 
railway and port.

**Royalty Entitlements**

LIORC holds certain leases and licences covering approximately 18,200 hectares of
land near Labrador City. The entirety of IOC mining operations occur within lands
subleased from LIORC. In return, IOC pays LIORC a 7% gross overriding royalty on
all sales of iron ore products produced from these subleased lands. A 20% tax on
the royalty is payable to the Government of Newfoundland and Labrador. In 2017, 
LIORC received C$125.1 million (2016 – C$90.5 million) in relation to its 7% GRR
net of the 20% provincial tax.

A wholly owned LIORC subsidiary is also entitled to receive a commission of C$0.10
per tonne on the products produced and sold by IOC. In 2017, LIORC received a total
of C$1.9 million in commissions (2016 – C$1.8 million).

**IOC Equity Stake**

In addition to its royalty interests, LIORC holds a 15.1% equity interest in IOC.
The other shareholders of IOC are Rio Tinto Limited with 58.72% and Mitsubishi Corporation
with 26.18%.

Anglo Pacific Group PLC is a global natural resources royalty and streaming company.
The Company’s strategy is to develop a leading international diversified royalty
and streaming company with a portfolio centred on base metals and bulk materials,
focusing on accelerating income growth through acquiring royalties and streams on
projects that are currently cash flow generating or are expected to be within the
next 24 months, as well as investment in earlier stage projects. It is a continuing
policy of the Company to pay a substantial portion of these royalty and stream revenues
to shareholders as dividends.

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