LABRADOR IRON ORE ROYALTY CORPORATION (TSX:LIF) - RIO TINTO RELEASES IOC PRODUCTION AND SALES INFORMATION

The October 14, 2025 news release provides the third-quarter 2025 production and sales figures for the Iron Ore Company of Canada (IOC), as reported by Rio Tinto. * Q3 2025 Saleable Production: 4.00 million tonnes (Mt), consisting of 2.40 Mt of pellets and 1.59 Mt of concentrate for sale (CFS). * Q3 2025 Sales: 4.02 Mt. * Full Year 2025 Guidance: The guidance range of 16.5 to 19.4 Mt remains officially unchanged, but IOC now expects production to be at the "lower end of guidance."

This news is materially negative. While the guidance range was not formally changed, stating that production will be at the "lower end" is a de facto guidance reduction. This signals ongoing operational challenges at IOC and tempers expectations for the full year.

Analysis of Production Progression: * Q1 2025 Production: 3.95 Mt * Q2 2025 Production: 4.24 Mt * Q3 2025 Production: 4.00 Mt * Year-to-Date (YTD) Total: 12.19 Mt

To meet the low end of guidance (16.5 Mt), IOC must produce 4.31 Mt in Q4 2025. This is achievable (Q4 2024 production was 4.31 Mt), but it leaves no room for error. The market was likely hoping for production in the mid-range (~18 Mt), and this update effectively removes that possibility.

This follows a similar negative pattern from 2024, where full-year guidance was significantly cut in the third quarter (from 16.7-19.6 Mt down to 15.5-16.3 Mt) due to operational issues. The recurrence of this pattern is a significant concern.

The financial context makes this news even more critical. The company's Q1 and Q2 2025 results already showed significant year-over-year declines in revenue, net income, and cash flow, driven by weaker iron ore markets. The cash balance plummeted from $42.3M at year-end 2024 to just $4.8M at the end of Q2 2025, largely because the company paid dividends in excess of its operating cash flow. Lower-than-expected production will further strain cash flow and places the sustainability of the current dividend at high risk. The Q2 dividend of $0.30 and Q3 dividend of $0.40 are already sharply down from the $1.10 and $0.70 paid in the respective quarters of 2024. This production update suggests that a return to higher dividend levels is unlikely in the near term.

Labrador Iron Ore Royalty Corporation (LIORC) is a passive investment vehicle. It does not engage in mining operations itself. Its assets and revenue streams are entirely derived from the Iron Ore Company of Canada (IOC), one of Canada's largest iron ore producers, which is majority-owned and operated by Rio Tinto. LIORC's assets consist of: 1. A 7% gross overriding royalty on all iron ore products produced and sold by IOC. 2. A $0.10 per tonne commission on all iron ore products sold by IOC. 3. A 15.10% equity interest in IOC, which provides dividend income. The properties are royalty-bearing, which is the core of LIORC's business model.