Anglo Pacific acquired a 7.01% equity stake in Labrador Iron Ore Royalty Corporation (LIORC) between May 2018 and February 2020, investing a total C$109m (£64.4m). LIORC is a Toronto listed company which holds both a royalty and equity interest in the Labrador Iron Ore (IOC) project. This entitles LIORC to revenue fromits 7% gross revenue royalty (along with a small commission) on revenue from the operation, along with dividend income from its equity stake.
LIORC is effectively a pass-through vehicle in so much that it has limited mandate other than to pass through its net cash to shareholders by way of dividend, subject to retaining sufficient working capital. Given the restricted investment mandate available to its management, Anglo Pacific considers this to effectively be a part ownership of the IOC royalty and accounts for this income as such.