Iron Ore Company of Canada Site Visit Enterprise Value (C$ M) 1,935.54

17 September 2012 Americas/Canada Equity Research Steel

Labrador Iron Ore Royalty

Corp. (LIF_u.TO) Rating OUTPERFORM* Price (14 Sep 12, C$) 30.80 FORECAST REDUCTION Target price (C$) 40.00¹ 52-week price range 38.65 - 26.82 Market cap. (C$ m) 1,971.20 Iron Ore Company of Canada site visit Enterprise value (C$ m) 1,935.54

*Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. ■ On Friday 14 September we visited the Iron Ore Company of Canada (IOC) assets in Canada’s Labrador Trough. The visit was part of a week- Research Analysts long North American tour hosted by LIF_u.TO’s equity partner, Rio Tinto. Nathan Littlewood This was our tenth trip to the Labrador Trough in the past 12 months, and we 1 416 352 4585 [email protected] have now seen all of the operating iron ore mines in the region except for Yan Truong CLF’s Wabush. 1 416 352 4584 [email protected] ■ Key takeaways: 1) capex for CEP1 was revised up to US$628mn ($539mn) – we believe this compromises distributions to LIF_u.TO unitholders by around $0.21/sh. 2) The CEP3 (23.3 to 26mtpa) expansion is apparently less defined than we had previously understood and in the current market, its approval would seem far from a certainty. We trimmed our LT capacity forecasts from 26 to 23.3mtpa. 3) IOC has had far less contact with the junior mining companies in recent weeks with regard to infrastructure access – presumably a function of the iron ore market. ■ IOC is nearly finished with the CEP1 expansion (18 to 22mtpa), and with a 2H12 benefit from this project suggests that 2012 sales will be around 16mt (CSe 15.5mt, 1H12A 5.8mt). CEP2 (22 to 23.2mtpa) is expected to be complete by YE12, with commissioning in January 2013. ■ Our earnings changes to $1.39/sh reflect learnings from the recent site visit, as well as a 2H2012 mark to market on iron ore pricing – consistent with that already implemented in our CLF and LIM.TO models.

Share price performance Financial and valuation metrics

Daily Sep 19, 2011 - Sep 14, 2012, 9/19/11 = C$37.67 Year 12/11A 12/12E 12/13E 12/14E 41 EPS (CS adj.) (C$) 2.80 1.39 3.45 2.83 36 Prev. EPS (C$) — 2.09 3.66 2.98 P/E (x) 11.0 22.2 8.9 10.9 31 P/E rel. (%) 78.4 156.3 71.9 97.1 26 Revenue (C$ m) 162.1 121.7 194.8 178.8 Sep-11 Jan-12 May-12 EBITDA (C$ m) 159.9 119.1 192.8 176.8 Price Indexed Price Relative OCFPS (C$) 0.97 0.86 3.24 2.58 On 09/14/12 the S&P/TSX COMPS INDEX closed at 12499.47 P/OCF (x) 38.9 35.9 9.5 11.9 EV/EBITDA (current) 13.7 18.4 11.4 12.4 Net debt (C$ m) 207 -36 -108 -146 ROIC (%) 14.27 10.73 20.21 18.47

Quarterly EPS Q1 Q2 Q3 Q4 Number of shares (m) 64.00 IC (current, C$ m) 480.22 2011A 0.98 1.27 1.07 0.60 BV/share (Next Qtr., C$) 4.3 EV/IC (x) 4.3 2012E 0.24 0.46 0.36 0.32 Net debt (Next Qtr., C$ m) 210.3 Dividend (Next Qtr., C$) 0.38

Net debt/tot cap (Next Qtr., %) 70.1 Dividend yield (%) 1.2

2013E 0.69 0.92 0.95 0.89 Source: Company data, Credit Suisse estimates.

DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON-US ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION™ Client-Driven Solutions, Insights, and Access

17 September 2012

Exhibit 1: Financial summary

Metals and Materials - CANADA Labrador Iron Ore Royalty Corporation Nathan Littlewood +1 (416) 352-4585 LIF_u.TO Rating Price Target ROR(%) [email protected]

OUTPERFORM C$ 30.8 C$ 40.0 30% Basic Industries - Steel Summary assumptions 2010 2011 2012 2013 2014 2015 CANADA 62 IODEX Fines (US$/t CFR) $132 $167 $121 $145 $128 $115 Price C$ 30.80 Pellet price (US$/t FOB) $106 $146 $100 $120 $103 $90 Ticker LIF_u.TO USDCAD 1.030 1.017 1.000 1.000 0.970 0.950 Shares outstanding (mn) Market Capitalization (C$ mn) Summary income statement (C$ mn) 2010 2011 2012 2013 2014 2015 Relative Index S&P/TSX Sales $164 $162 $122 $195 $179 $164 Year end Dec.31 Operating costs $0 $0 $0 $0 $0 $0 Pricing currency CAD$ EBIT $156 $155 $113 $184 $168 $154 Accounting currency C$ DD&A ($6) ($5) ($6) ($6) ($6) ($6) EBITDA $161 $160 $118 $190 $174 $159 Investment Case Net income (adjusted) $197 $174 $87 $218 $178 $149 - relatively low capex requirements EPS $6.15 $2.72 $1.36 $3.40 $2.78 $2.32 - strategic value of infrastructure Avg. shares - Common (mn) 32.0 64.0 64.0 64.0 64.0 64.0 Strengths & - established end markets Avg. shares - FD (mn) 32.0 64.0 64.0 64.0 64.0 64.0 Opportunities - backed by industry heavy weight (RIO)

Summary cash flow statement (C$ mn) 2010 2011 2012 2013 2014 2015 Net income $197 $174 $87 $218 $178 $149 - low leverage to commodity price Non-cash items $6 $5 ($6) ($6) ($6) ($6) Weaknesses & - aging asset base Working capital changes $0 $9 ($2) $21 ($5) ($1) Threats Cash from operations $156 $122 $74 $230 $198 $178 Distributions to unitholders ($89) ($154) ($81) ($157) ($161) ($170) Net change in total debt $0 $0 $0 $0 $0 $0 Balance Sheet - (C$ mn) last reported Net change in common equity $0 $0 $0 $0 $0 $0 Cash and cash equivalents $34 Cash from financing activities ($89) ($154) ($81) ($157) ($161) ($170) Net working capital $35 Property and equipment $0 $0 $0 $0 $0 $0 Net PP&E $557 Cash from investing activities $0 $3 $2 $0 $0 $0 Total assets $630 Free cash flow $156 $122 $74 $230 $198 $178 Short term debt $0 Net change in cash $67 ($32) ($6) $73 $37 $9 Long term debt $0 Total shareholders' equity $234 Summary balance sheet (C$ mn) 2010 2011 2012 2013 2014 2015 Total liabilities & shareholder equity $630 Cash & equivalents $74 $41 $36 $108 $146 $154 Net debt (cash) ($34) Total current assets $125 $83 $42 $114 $152 $161 Shares outstanding - fully diluted 32.0 Fixed assets $540 $586 $615 $621 $626 $632 Book value per share $7.30 Total assets $665 $669 $657 $735 $778 $793 Net debt/net debt + equity (%) -17% STD $0 $0 $0 $0 $0 $0 Total current liabilities $89 $32 $30 $34 $33 $33 4.0 LTD $0 $248 $0 $0 $0 $0 Shareholder equity $219 $274 $509 $583 $627 $641 3.0 Total liabilties & equity $665 $669 $657 $735 $778 $793 Net debt (cash) ($74) $207 ($36) ($108) ($146) ($154) 2.0 Ratio analysis 2010 2011 2012 2013 2014 2015 P/E (NTM) 4.2 13.1 24.3 9.1 11.1 13.3 1.0 P/CF (NTM) 5.3 18.7 28.6 8.6 9.9 11.0 EV/EBITDA (NTM) 4.7 15.5 17.6 9.8 10.5 11.4 0.0 ROE 82% 62% 17% 36% 28% 23% 2010 2011 2012 2013 2014 2015 ROIC 71% 57% 22% 32% 27% 24% Concentrate Sales (mt) Pellet Sales (mt) Gearing (ND/ND+E) net cash 43% net cash net cash net cash net cash

Production (100% basis) 2010 2011 2012 2013 2014 2015 Net Asset Value (NAV) Concentrate Sales (mt) 1.8 1.3 1.4 1.6 1.6 1.6 Pellet Sales (mt) 0.5 0.7 0.9 1.4 1.5 1.5 Projects & Mines C$mn C$/sh Total Sales (mt) 2.3 2.1 2.3 3.0 3.1 3.1 15.1% Equity Interest $2,839 $44.35 75% Cash Cost (US$/t) 60.4 59.4 66.7 66.5 69.2 70.4 7% Sales Royalty $1,129 $17.64 30% 10c/t commission $21 $0.33 1% Resources & Reserves (100% basis) Sub-Total $3,989 $62.33 106% In-situ Saleable Product Ore %Fe Contained Ore %Fe Contained Corporate C$mn C$/sh Reserves 578 65.0 376 Corporate ($210) ($3.29) -6% Resources (M&I) 1092 38.4 420 Corporate ($12) ($0.19) 0% Resources (M,I&I) 2464 38.1 939 Corporate ($223) ($3.48) -6% LOM assumption 867 65.0 622 Total $3,766 $58.85

Source: Company data, Credit Suisse estimates

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 2 17 September 2012 Key Takeaways Infrastructure ownership provides IOC and ArcelorMittal Mines Canada (AMMC) are to the Labrador Trough what BHP and RIO are to the Pilbara. ■ IOC and AMMC are the oldest, largest scale, and lowest costs assets in the region. ■ Both companies own their port/rail solutions directly, and therefore do not have to pay third party infrastructure access fees. Exhibit 2: CSe 2013 Labrador Trough cost curve relative to spot iron ore price Note: All costs have been normalized to 62% IODEX equivalent pricing terms

140

Wabush

Scheffervile

Bloom Lake Bloom -

120 -

DSO/hematite

CLF CLF

Mont Wright Mont Carol Lake Carol

100 -

LIM.TO

NML.TO NML.TO IOC

80 AMMC AMMC

40 Cash Costs (US$/t CFR) (US$/t Costs Cash

0 0 10 20 30 40 50 60 70 Sales (mt)

Source: Company data, Credit Suisse estimates Even at iron ore’s recent lows of US$87/t CFR, we believe that IOC and AMMC were still making healthy margins. CEP1 was more expensive than previous guidance IOC indicated that the capital cost of CEP1 (18 to 22mtpa expansion) had increased to US$628mn, up from previous C$539mn.

■ This amount is 97% sunk so from a project DCF perspective it has very little impact, but the increase implies that there is more debt on IOC’s balance sheet than we would have otherwise expected and therefore IOC’s ability to pay distributions to its shareholders is less.

■ IOC has a balance sheet independent of RIO, and we understand that the balance sheet currently has around $300mn debt through a revolver facility and no cash.

■ This $300mn has be repaid from operating cash flows, which means distributions to shareholders will be lower.

■ LIF_u.TO is a 15.1% shareholder of IOC, so the extra debt represents US$13mn or $0.21/sh less in distributions to LIF_u.TO unitholders. We don’t expect this to be addressed as a one-off, but rather recouped over a several quarters. US$277mn guidance for CEP2 (22 to 23.3mtpa expansion) was not restated, but it is probably not unreasonable to expect some inflation on this amount as well. Capital costs on CEP2 are ~ 60% sunk

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 3 17 September 2012

CEP3 scope less defined than we had anticipated The approval, scope, and by implication cost of CEP3 was less defined than we had previously understood.

■ Approval cannot be guaranteed. The IOC board makes decisions about distributions or re-investment of earnings, and IOC suggests that to date there has not been any disagreement on such matters. The board consists of 6 Rio Tinto representatives, 3 from Mitsubishi, and 2 from LIF_u.TO). From a RIO perspective, IOC has to compete with other projects in the portfolio for the investment dollar, but LIF_u.TO does not have the same investment alternatives that RIO does. We suspect that in a capital constrained world IOC may struggle to compete against alternatives such as the Pilbara. Approval for CEP3 is now expected end 2013 (from end 2012) but is unlikely in our view without a stronger iron ore market than what we see today.

■ Scope seems less defined than we had previously understood. Until a few months ago, we’d understood that this project was going to be ready for board approval at end 2012 – and on this basis had assumed that the scope, scale, and budget must therefore be reasonably well defined. This does not seem to be the case. What we’d understood to be a 23.3 to 26mtpa expansion now seem to have potential to increase to 30mtpa. IOC indicated that there were still a number of alternatives and options being considered. Note: when IOC quotes volumes, it uses capacities and not actual production / sales. We apply a 90% utilization factor to all ‘capacity’ figures to get a sales volume estimate. i.e. 23.3mtpa nameplate capacity generates 21mtpa of production / sales. Read throughs for the rest of the sector Juniors will understate the complexity of infrastructure access economics Infrastructure ownership not only facilitates one of the lowest cost bases in the industry, but it is also provides opportunities to capture profits from those seeking third party access deals (such as ADV.TO, CLF, LIM.TO and NML.TO). Rail access

■ IOC confirmed that with fairly modest capital investment that their QNS&L railway line would be capable of handling 80mtpa of material.

■ IOC has very little interest in taking on financing risk for rail upgrades. In other words IOC doesn’t want to pay for these upgrades unless it can be guaranteed that the proponents are feasible projects and their failure would not leave IOC out of pocket.

■ The juniors which are planning to use IOC’s QNS&L all seem to assume that the economics of rail access will be comparable to historic deals or based on current rail economics. As we have pointed out previously, we think it is unreasonable to assume that the economics of rail access will not change once latent capacity has been absorbed. Increasing the capacity of this railway line beyond what it is currently capable of means more capital and more risk to IOC – both of which it is going to be seeking compensation for. Port

■ IOC’s port facilities cannot handle much more material without capital upgrades

■ Unlike the railway, IOC does not have a legal obligation to handle third party material. As we have seen with LIM.TO however, it is willing to do so on commercially favorable terms.

■ Like the railway, we suspect that IOC may be reluctant to invest in these facilities on behalf projects with flimsy economics.

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 4 17 September 2012 Earnings changes

Exhibit 3: Earnings changes CY12 CY13 CY14 Profit & Loss Old Q1 Q2 Q3 Q4 New % change Old New % change Old New % change

Sales C$mn 142 22 36 33 30 122 -14.3% 196 195 -0.4% 179 179 -0.1% IOC Royalties (7%) C$mn 139 22 36 32 29 119 -14.3% 191 190 -0.4% 174 174 -0.1% IOC Commissions (10c/t) C$mn 2 0 0 0 1 2 0.0% 2 2 0.0% 2 2 0.0%

Gross Operating Profit C$mn 141 22 36 32 30 121 -14.2% 193 192 -0.4% 176 176 -0.1% IOC Royalties C$mn 139 22 36 32 29 119 -14.3% 191 190 -0.4% 174 174 -0.1% IOC commissions C$mn 1.5 0.2 0.3 0.5 0.5 1.5 0.0% 2.0 2.0 0.0% 2.1 2.1 0.0%

EBITDA C$mn 138 22 36 31 29 118 -14.4% 191 190 -0.4% 174 174 -0.1% Depreciation & Amortisation C$mn 6 1 1 1 1 6 0.0% 6 6 0.0% 6 6 0.0% EBIT (reported) C$mn 132 20 34 30 28 113 -15.1% 185 184 -0.4% 169 168 -0.1% Net Interest C$mn - 22 - 7 - 7 - 7 0 - 22 -1.3% 1 1 -16.8% 1 2 21.8% NPBT C$mn 110 13 27 23 28 90 -18.3% 186 185 -0.5% 170 170 0.0% Taxation C$mn 56 9 16 11 12 47 -15.3% 80 79 -0.5% 73 73 0.0% NPAT (operating) C$mn 55 4 11 12 16 43 -21.4% 107 106 -0.6% 97 97 0.1% Minorities (15.1% equity) C$mn 78 11 18 11 4 45 -42.5% 125 112 -10.3% 91 81 -10.7% NPAT (reported) C$mn 132 15 29 23 20 87 -34.1% 231 218 -5.8% 188 178 -5.1% EPS C $ps 2.06 0.24 0.45 0.35 0.32 1.36 -34.1% 3.61 3.40 -5.8% 2.93 2.78 -5.1% DPS C $ps 1.97 0.26 0.26 0.38 0.25 1.14 -42.2% 2.85 2.87 0.9% 2.31 2.48 7.2%

Cash Flow Statement & Balance Sheet

Operating Cash Flow (LIF-U) C$mn 102 17 2 34 22 74 -27.9% 229 230 0.2% 198 198 -0.1% Capex (100% basis, IOC level) C$mn - 514 - 137 - 104 - 134 - 138 - 614 -19.6% - 408 - 156 61.7% - 367 - 115 68.7% Net Debt (LIF-U) C$mn - 82 - 42 220 210 - 36 - 36 56.8% - 103 - 108 -5.3% - 109 - 146 -33.2%

Operational Assumptions

Key Macro assumptions Iron Ore pellets (66% Fe) US$/t CFR dry 171 184 171 130 120 151 -11.7% 191 175 -8.4% 174 158 -9.2% Iron Ore fines (62% Fe) US$/t CFR dry 136 140 135 110 100 121 -11.0% 145 145 0.0% 128 128 0.0% USDCAD 1.00 1.00 1.00 1.00 1.00 1.00 0.0% 1.00 1.00 0.0% 0.97 0.97 0.0%

Volumes IOC (attributable to LIF-U) mt 2.347 0.355 0.519 0.717 0.755 2.347 0.0% 3.020 3.020 0.0% 3.126 3.126 0.0% IOC (100% basis) mt 15.5 2.4 3.4 4.8 5.0 15.5 0.0% 20.0 20.0 0.0% 20.7 20.7 0.0%

Average realised price US$/t FOB 128 133 149 96 83 109 -14.4% 136 136 -0.4% 117 117 -0.1%

Cash Costs (CS derived) US$/mt 67.3 68.3 78.0 61.6 63.0 66.7 -0.9% 67.7 66.5 -1.8% 68.3 67.1 -1.7% Source: Company data, Credit Suisse estimates Our earnings changes reflect:

■ A 2H2012 mark to market on iron ore pricing. We use US$110/t for SepQ12 and US$100/t for DecQ12. These assumptions are consistent with those already implemented for LIM.TO and CLF.

■ Although not evident within the 2014 timeframe shown above, we have reduced our long term capacity assumption from 26 to 23.3mtpa – effectively removing the CEP3 expansion project and assumed $500mn capex assumption.

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 5 17 September 2012 Asset Review LIF-U.TO offers pure iron ore exposure backed by the financial and technical capabilities of the second largest iron ore miner in the world, Rio Tinto. LIF_u.TO, via its wholly owned subsidiary called ‘Labrador Iron Ore Royalty Corporation (LIORC)’ holds: ■ A minority equity 15.1% interest in the Iron Ore Company of Canada (IOC or IOCC). Rio Tinto has a controlling equity interest at 58.7%, and Mitsubishi Corporation owns the other 36.2%. ■ A 7% gross overriding royalty covering 100% of production from IOC. ■ A 10 cent per tonne commission on all iron ore products produced, sold and shipped by IOC. ■ In addition to the above, as a stapled unit each LIF-U.TO unitholder also owns a 12.08%/$3.875 parcel of subordinated notes, which pays a quarterly coupon of $0.117/stapled unit. LIF-U.TO recently announced that the anticipated tax advantages of this stapled structure are no longer available to it, and on 1 October 2012 the subordinated notes will be consolidated with common shares LIF-U.TO ’s interests in IOC LIF-U.TO has exposure to IOC through a revenue based royalty, an equity interest, and a sales commission. IOC Royalty

■ LIORC holds certain mining leases and mining licenses covering approximately 18,200 hectares of land near Labrador City. IOC has leased certain portions of these lands from which it currently mines iron ore. In return, IOC pays LIORC a 7% gross overriding royalty on all sales of iron ore products produced from these lands. A 20% tax on the royalty is payable to the Government of Newfoundland and Labrador.

■ Because the royalty is revenue based, it is not dependent on the profitability of IOC. It is however obviously affected by changes in sales volumes, iron ore prices and, because iron ore prices are denominated in US dollars, the United States – Canadian dollar exchange rate. IOC Equity

■ In addition to the royalty interest, LIF-U, directly and through its wholly owned subsidiary, Hollinger-Hanna, owns a 15.10% equity interest in IOC. The other shareholders of IOC are Rio Tinto Limited with 58.72% and Mitsubishi Corporation with 26.18%. IOC Commissions

■ Through its directly owned subsidiary Hollinger-Hanna, LIF-U.TO has the right to receive a payment of 10 cents per tonne on the products sold by IOC. The 10c/t payment is the result of a marketing commission that Hollinger-Hanna once charged IOC for selling its ore. Pursuant to the agreement, IOC is obligated to make the payment to Hollinger-Hanna so long as Hollinger-Hanna is in existence and solvent.

■ IOC leases the Carol Lake mine from LIF-U.TO (hence the royalty), but IOC directly owns the hematite/magnetite concentrator, pellet plant (all located in Newfoundland & Labrador), a 418km railway line between the mine and the Port of Sept Iles (in Quebec, on the St. Lawrence seaway), and at Sept Iles has a 6mt stockyard, stacker, reclaimer and shiploader.

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 6 17 September 2012

Background Incorporated in 1949, IOC was founded when mining companies Hollinger, MA Hanna and others combined their exploration interests. Construction of an iron ore mine commenced in 1950, and by 1954 the company was loading its first shipment of material from Schefferville (assets which are today owned by LIM.TO and NML.TO). In 1961 IOC commenced pelletizing iron ore concentrate for the first time, and in 1962 the current Carol Lake mine was commissioned. IOC has changed hands many times in its 60 year history. Japan’s Mitsubishi Corporation acquired a 20% interest in 1992 and remains the company’s second largest shareholder (after Rio Tinto) though has since increased its interest to 26.2%. Bethlehem Steel and National Steel sold a majority interest in IOC to North Limited in 1997, and in 1999 LIF-U.TO acquired Dofasco’s equity taking its equity interest in IOC from 10.1% to 18.9%. This marked the end of steel company participation in IOC. In 2000 Rio Tinto acquired Australia’s North Limited, and although this transaction was predominantly about the Robe River assets in Western Australia’s Pilbara region, it also gave RIO a 56.07% interest in IOC. Today RIO’s interest has increased to 58.7%, while LIF-U.TO has been diluted down to 15.1%. RIO attempted to acquire LIF-U.TO in 2001, but an overly optimistic offer price did not result in a successful attempt, and RIO’s holding in LIF-U.TO was disposed of in 2005. If RIO were ever genuinely wanting to increase production from IOC to 50mtpa, we think it makes sense for RIO to take out LIF_u.TO before doing so - to avoid an effective doubling of the royalty payment to LIF_u.TO. Products and Pricing

■ IOC currently sells around 9.6 mtpa of its product as pellets with the balance of 2012f sales of 15.5mt being concentrate. Announced expansions will see a growing proportion of sales in the form of concentrate. Exhibit 4 demonstrates the reason for this. ■ We do not believe that neither AMMC nor IOC actually make money from pelletizing. The North American and European customer base, and a heavily unionized work force are probably the only reason that IOC (and AMMC) continue to operate their pellet plants. Shutting IOC’s pellet plant down would mean ~ 700 redundancies and also make it difficult to sell iron units locally. Although the pellet plant might not be making a profit, it is presumably better than the alternative – which is more sales to China. Exhibit 4: Indicative pellet plant economics Pellet Plant Brownfield concentrate project Canada Canada

Capital Intensity US$/t 100 150

Realized price US$/t 115 90 COGS US$/t 115 45 Margin US$/t 0 45

ROI 0% 30% Source: Company data, Credit Suisse estimates

■ IOC sales traditionally are approximately 22% in North America, 41% in Europe, 35% in the Asia-Pacific with an increasing volume (essentially almost all of the growth tonnage) heading to China. ■ In May, 2010 IOC announced that it was resuming CEP1 which was originally approved in May 2008 but halted later in the year because of the market downturn.

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 7 17 September 2012

This phase will increase production of concentrates by 4 million tonnes to an annual rate of 22 million tonnes. It has cost US$628mn (from prev C$539mn) and will be complete in 2H 2012 (from a 2010 target of YE2011). ■ In February 2011, IOC also announced that it was restarting CEP2 which was also halted in 2008. This project involves improving the magnetite recovery circuit, and is expected to further increase production to 23.3 million tonnes of concentrate. Target completion is end 2012 at a cost of US$277mn (unchanged). ■ CEP2 had previously been expected to increase production to 26 million tonnes, but the scope is still being defined - as is the ultimate expansion increment. IOC’s presentation seemed to indicate that this may be a 30mtpa expansion. ■ We walked away from the site visit a lot less confident that this expansion will happen absent a material recovery in the iron ore market. In a capital constrained world we expect RIO to take its IOC’s dividends and reinvest them in the Pilbara. We have removed IOC’s CEP3 expansion from our model, and therefore flatline at 23.3mtpa capacity longer term. ■ Although the above are all 'nameplate' production rates, the age of this asset base means that it has relatively low availability rates. We apply an 90% utilization factor in our modeling, so 23.3mtpa nameplate capacity generates 21mtpa of production / sales. ■ RIO/IOC has announced that it is evaluating options to 50mtpa, but we do not currently model this. Exhibit 5: Realized Price forecasts Exhibit 6: Volumes forecasts (100% basis)

Realised price forecasts Iron Ore Volumes 250 6.0

200 5.0 4.0 150 3.0

100 mt US$/t 2.0 50 1.0 0 2009Q1 2010Q1 2011Q1 2012Q1 0.0 2008Q1 2010Q1 2012Q1 2014Q1 Realised Price CS ref Concentrate Price Concentrate Sales Volume Pellet Sales Volume CS ref Pellet Price CS ref price - wt'd avg

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Our price modeling starts with CFR China Index prices for fines and pellet, which we then adjust for freight, quality, and grade in order to derive our own estimates for IOC’s realized concentrate (‘CS ref Concentrate Price’ above) and pellet (‘CS ref Pellet Price’).

■ Although there is not a perfect historical correlation, we assume that LT our weighted average reference price is the same as IOC’s average realized price.

■ Through 2010/2011 RIO and IOC were still using a QALAM (quarter averaged lagged a month) reference period mechanism, but as we had flagged in our December 2011 initiation report this has since been abandoned in favor of a shorter term price referencing method – similar to other majors such as BHP and FMG. We don't include QALAM referencing in our historicals, but if we did it would address some of the spread illustrated in Exhibit 5. Roughly 20% of full year volumes are shipped in MarQ with the balance evenly spread – this is a function of the northern hemisphere winter. .

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 8 17 September 2012

Mining and Processing Mine IOC’s Carol Lake mine has produced over 1.3bt of crude ore since it started up in 1962. Today it is mined at a rate of approximately 77mtpa, roughly 40mtpa of which is ore. The strip ratio seems to have increased from 0.3:1 in 2010/11 to 0.9:1 currently, but longer term it is expected that the LOM average will be around 0.7:1.

Exhibit 7: Waste:ore and waste:saleable product ratios

10 8 6 4 2

Kami

Nkout

KeMag

Carol Lake Carol

Kaunisvaara

Southdown

Lac Otelnuk Lac

Mont Wright Mont

Sydvaranger

(Magnetite)

Fire Lake North FireLake

Tonkolili - Phase 3 - Phase Tonkolili

Marampa - Phase 2a- Phase Marampa

Marampa - Phase 2b- Phase Marampa Irvine Island Iron Ore Iron Irvine Island

Waste : Ore Waste : Product

Source: Company data, Credit Suisse estimates On a waste:saleable product basis, Carol Lake has one of the best strip ratios in the world for a concentrate project, and certainly much better than its closest comparable which is Mont Wright. ROM ore has a head grade of around 39% Fe, consisting of roughly 50/50% hematite and magnetite. Although the grade of the resource is better than the comparable Mont Wright operation (~ 30%) Mont Wright is almost pure specular hematite and we suspect that Mont Wright therefore has a slightly cheaper flow sheet. The crude ore is transported 13km to the primary crushers via either a railway line or the recently completed overland conveyor. Carol Lake has one of the highest resource grades in the world for a concentrate /magnetite project too, at around 39% Fe. The fact that this is only upgraded to around 65% Fe by the primary concentrators is perhaps a function of the age of these assets. On the basis that pure magnetite is around 71% Fe (the other 29% in Fe3O4 being oxygen) we suspect that some of the projects targeting product grades above 69% Fe may be a tad bullish.

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 9 17 September 2012

Exhibit 8: Product grade and resource grade 71%

Nkout Isua 70% Yerecoin LabMag KeMag 69% Kaunisvaara Southdown Lake Giles magnetite Hannukainen Lac Otelnuk 68% Minas Rio Phase 1 Duncan Lake Lac Ritchie Sudeste - Bom Sucesso 67% Gum Flat Yalgoo Sudeste - Serra Azul Hopes Advance Mont Wright 66% Sydvaranger Irvine Island Iron Ore Kami Carol Lake Product Grade (%Fe) Grade Product 65% Fire Lake North Marampa

64% Mt Forrest magnetite 63% 23% 25% 27% 29% 31% 33% 35% 37% 39% Resource Grade (% Fe) Source: Company data, Credit Suisse estimates Process Plant & Concentrator All of the existing mines in the Labrador City area use spirals to recover iron from their specular hematite dominant material. The IOC flow sheet is currently unique in the Labrador Trough, in that it is the only facility with a low intensity magnetic separation (LIMS) circuit for recovering magnetite in addition to the specular hematite. Nearby Bloom Lake (CLF/ex-CLM) had been planning to install LIMS in 2012 due to an increasing portion of magnetite in the mine plan, but we learnt on the August 2012 site visit that CLF has postponed the LIMS installation and will instead target more hematite rich orebody extensions. Nearby Alderon Iron Ore (ADV.TO) with its Kami project (guidance 2015 / 8mtpa) is expected to need LIMS from day 1, as it has a much higher portion of magnetite in the orebody than assets like Mont Wright, Carol Lake and Bloom Lake. ■ The IOC concentrator upgrades Run-Of-Mine (ROM) ore to a ~65% Fe iron concentrate. ■ After crushing, the ore is ground to liberate the iron bearing minerals (primarily hematite and magnetite) from the gangue or waste material (silica). ■ The iron bearing minerals are separated from the waste and recovered in three processing areas. The Primary Spiral Plant accounts for approximately 88% of total production, and utilizes gravity separation methods to separate the (heavier) iron bearing minerals from the (lighter) silica based waste particles. ■ Material not recovered by the Primary Spiral Plant grades only about 15-20% iron, and is separated into a magnetic and non-magnetic stream using LIMS. ■ The magnetite bearing stream is further processed in the Magnetite Plant. This process uses one 3000kW and three 800kW ball mills, hydro-cyclones, two additional stages of LIMS, and 75 micron screens to recover approximately 165 tonnes per hour of magnetite based concentrate (7% of total production). ■ The non-magnetic stream from the first stage of LIMS is further processed in the Hematite Plant. Additional screens and close to 1,000 spiral separators are used to recover approximately 100 tonnes per hour of a hematite based concentrate (5% of total production).

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 10 17 September 2012

Exhibit 9: Grind size and mass recovery 45 Askaf Cashmere Downs El Aouj 43 Mayoko Iron Ore 41 Carol Lake Karara magnetite 39 Lake Giles magnetite Middleback Range Hopes Advance magnetite Kami 37 Mont Wright

Southdown 35 Bungalow - magnetite Duncan Lake Mt Oscar Kaunisvaara 33 Balmoral South Yerecoin Sino Iron ore

31 Ridley Magnetite Mass Recovery (%) Recovery Mass 29 Gum Flat Roche Bay Lebtheinia 27 Lac Otelnuk Tonkolili - Phase 3 Jack Hills magnetite (Magnetite) 25 Hawsons 10 100 1000 P80 grind size (um) Source: Company data, Credit Suisse estimates The P80 grind size on the Carol Lake concentrator is around 100um, which is better than most concentrate projects but certainly not nearly as attractive as projects like Mont Wright (500um). A fine grind size (i.e. small P80 number) means more energy is required, but Canada’s relatively cheap hydro-electricity means that this is less of an issues as it would be in other parts of the world Pellet Plant Magnetite Plant concentrate is pumped to the Pellet Plant which has a current capacity of 12.5mtpa (which seems to have been revised down from previous 14.1mtpa). Concentrate from the Primary Spiral and Hematite Plants is de-watered using horizontal vacuum filters to moisture levels of approximately 5.5% solids, and then conveyed to either concentrate stockpiles, train silos, or to the Pellet Plant.

■ Neighbors AMMC have their pellet plant located at the port end of the railway whereas IOC’s is located at the mine. AMMC’s configuration is a function of the legacy ownership structure, and does not reflect optimal engineering design. IOC has the better pellet plant location. ■ The Pellet Plant performs further processing of the concentrate to produce a pellet product for blast furnace and DRI furnace operations. ■ The concentrate, fluxes and coke additives are reground and mixed in the regrind section to produce a filter feed. The filter feed is dewatered and agglomerated in the filtering and balling plant section. The product from the filter and balling section is dried and fired in the induration section to achieve the pellet physical properties. The pellets are screened and stored in the Loadout, ready for shipment to Sept-Îles. When there is a requirement to reduce the concentrate to a lower silica level to produce low silica pellets, the reground concentrate is directed through a flotation circuit to achieve the required silica level before mixing to produce a filter feed. ■ The Pelletizing Plant produces five grades of pellets: standard acid, high silica flux, low silica acid, low silica flux, and direct reduction (DR). ■ The concentrate must be reground to a finer size structure for optimal agglomeration and induration pellet quality. The Pellet Plant operates 14 ball mills to achieve the grinding requirements for the pelletizing process. The grinding mills regrind the spiral concentrate in 12 ball mills of which seven operate at 2,250kW and five that operate at 3,00kW. The two remaining ball mills are used separately to grind the coke breeze and

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 11 17 September 2012

flux materials used in the pelletizing process. The ground coke breeze and flux materials are transported to the coke and flux slurry storage tanks. Transport and Logistics The iron ore concentrate and pellets are transported via a 418km railway line to the port of Sept-Îles, on the St. Lawrence Seaway. This railway line is owned by an IOC subsidiary called QNS&L (Quebec North Shore & Labrador). ■ Common carrier status. The fact that this railway line crosses the provincial Newfoundland & Labrador and Quebec provincial boundary means that it is deemed ‘common carrier’ status. IOC is obliged to carry third party tonnage on this railway line so long as the railway has capacity to do so. To date this is quite different to RIO's Pilbara iron ore railway, which does not have third party access obligations, but FMG as recently as this week seems to be making some progress with its legal claims to access RIO's Pilbara rail - so perhaps this might change in the future. ■ Surplus rail capacity carries the hopes of the junior miners in this region. It is understood that the railway line has a current capacity of 50mtpa, however it could be upgraded to 80-85mtpa by adding additional sidings and bridges. CLF’s Wabush, Bloom Lake, and LIM.TO's Schefferville project are all current customers of QNS&L/IOC. Within the next 12 months they will be joined by NML/Tata Steel Mines Canada. ■ At the Port of Sept-Îles, a railway damper unloads the wagons and a stacker places this material into a stockpile of 6mt capacity. One of two reclaimers collect stockpiled material and loads it into capesize vessels. The IOC berth is the only one at Sept-Îles that is capable of loading directly into capesize vessels. The CLF facilities require more expensive transshipping at this stage.

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 12 17 September 2012 Appendix 1: Canadian Iron Ore Production Background We estimate that in 2012 Canada will produce around 50 million tonnes of iron ore annually, most of which will be exported, making it the 5th largest iron ore exporter in the world. Canadian iron ore is almost all beneficiated / upgraded product - meaning that it is technically not 'ore' at all, but rather iron concentrate. Canadian iron concentrate is generally recognized as being of very high quality; with high iron content (typically 65-68% Fe) and low impurities, giving it a higher Value in Use than most Australian and Indian material. Since 1999, nearly all of Canada's iron ore production has come from the Labrador Trough region in Labrador and Quebec. History The Labrador Trough is a 1600km long, by 160km wide geographic belt that runs through Quebec and Newfoundland & Labrador in Canada. It is believed that there have been at least two large magmatic events in the Labrador Trough – the first occurring around 2,170 million years ago and the second 1,880 million years ago. The banded iron formation hosts a type of magnetite referred to locally as Taconite, similar to that found in the Mesabi Iron Ranges of the USA. There are some smaller pockets of hematite some of which can be direct shipped (DSO) without the need for further upgrading. The Iron Ore Company of Canada (IOC) moved into the area in 1950, undertook one of the biggest civil construction projects in Canadian history, and in 1954 became the first iron ore miner in the region. IOC developed a mine site and the company town of Schefferville, constructed the Sept-Illes shipping terminal on the Gulf of St Lawrence, and built a 565km railway connecting the two sites. Back then, IOC was owned by the major US steel companies, and their main objective was to make sure they had enough iron ore supply. IOC was considered a cost center, not a profit center. Following the development of Carol Lake which is further south, IOC no longer had a need for the Schefferville area properties, and in 1982 walked away from Schefferville leaving all of the old infrastructure and 250mt of mineable reserves. Although the mine is long since shut, part of the railway continues to be operated by IOC subsidiary Quebec North Shore & Labrador Railway (QNSL). The northern section of rail from Labrador City to Schefferville was gifted to a local indigenous group called TSH (see further details below) Geology From a geological and infrastructure perspective it is useful to think about the Labrador Trough in three separate zones; Northern, Central and Southern. Northern Trough

■ The Northern section of the Labrador Trough contains sedimentary banded iron formations with low or no alteration. The orientation of the iron/silica layers are generally horizontal or close to. This material is a magnetite dominant form of mineralisation known in North America as taconite.

■ The Northern zone is not serviced by infrastructure. Access is by float plane or helicopter only.

■ The Northern Trough is home to Adriana Resources’ Lac Otelnuk and NML’s Lac Ritchie. There is no historical production from this area.

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 13 17 September 2012

Exhibit 10: Central and Southern Labrador Trough Exploration & Production Development

Rio Tinto/ IOC Eclipse Murdoch Arcelormittal Canada KeMag Kivivic Cliffs Resources Howse LabMag Attikamagen James Astray CLM (Cliffs) Redmont Sawyer Houston Labrador Iron Mines Alderon Resource Corp. Champion Minerals New Millennium Quebec Newfoundland & Carol Lake Labrador Wabush Mine Bloom Lake Mont Wright Kami

Fermont Lamelee Fire Lake Peppler Lake

Mont Reed

Source: Labrador Iron Mines

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 14 17 September 2012

Central Trough

■ The Central Section of the Labrador Trough near Schefferville was mined by IOC until 1982, and currently hosts deposits owned by LIM.TO and NML.TO and Century Mines

■ The intersecting Greenville fault has caused some metamorphism to what would have once been sedimentary taconite. The result of this tectonic collision is that small pockets of magnetite (Fe3O4) have been converted to hematite (Fe2O3). The taconite material in this area is mostly still flat lying, but the hematite mineralization is folded and faulted.

■ LIM.TO has learnt that this very fine grained hematite cannot be efficiently recovered with gravity/spirals alone, and is currently installing a WHIMS circuit. NML/TSMC will include a WHIMS circuit as part of the flowsheet for their 4.2mtpa hematite operation as well. Coarser hematite (as is found further south) and magnetite are both easier and cheaper to process.

■ Back in the 1970's and 80's when IOC was operating here, this material was genuinely DSO material and did not require beneficiation.

■ IOC’s historic presence in this area means that it is serviced by road and rail, although the rail extension to this area is only light gauge and in need of upgrade for longer term use by the iron ore industry.

■ Although there are some small pockets of higher grade (50 – 58% Fe) hematite material, the vast majority of the mineralization in the Central Section is taconite magnetite Southern Trough

■ In the Southern Section of the Labrador Trough is where we find most of the current producers; Cliffs Natural Resources’ Wabush and Bloom Lake, Arcelor Mittal’s Mont Wright and Iron Ore Company of Canada’s Carol Lake, which is owned by Rio Tinto (58.72%), Mitsubishi Corporation (26.18%) and Labrador Iron Ore Royalty Corporation (15.1% equity interest, plus royalties). ■ Development projects in this area include Alderon’s Kami - which has a great location but more complicated geology than its neighbors. ■ Trough rocks in this Grenville Province are highly metamorphosed and complexly folded. Iron deposits in the Gagnon Terrane, Grenville part of the Trough, include those on the Property and Lac Jeannine, Fire Lake, Mont-Wright, Mont-Reed, and Bloom Lake in the Manicouagan-Fermont area and the Luce, Humphrey and Scully deposits in the Wabush-Labrador City area. The high-grade metamorphism of the Grenville Province is responsible for recrystallization of both iron oxides and silica in primary iron formation, producing coarse-grained sugary quartz, magnetite, and specular hematite schist or gneiss (meta-taconites) that are of improved quality for concentration and processing. Production The Labrador Trough contains four main types of iron deposits:

■ Soft iron ores formed by supergene leaching and enrichment of the weakly metamorphosed cherty iron formation; they are composed mainly of friable fine grained secondary iron oxides (hematite, goethite, limonite).

■ Taconites, the fine-grained, weakly metamorphosed iron formations with above average magnetite content and which are also commonly called magnetite iron formations.

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 15 17 September 2012

■ More intensely metamorphosed, coarser‐grained iron formations, termed metataconites which contain specular hematite and subordinate amounts of magnetite as the dominant iron minerals.

■ Minor occurrences of hard high‐grade hematite ore occur southeast of Schefferville at Sawyer Lake, Astray Lake and in some of the Houston deposits. The Labrador Trough currently produces around 50 mtpa of iron ore, consisting of a number of different products:

■ Concentrate – a magnetite dominant product that has been upgraded or beneficiated using magnetic and gravity based separation methods. Products with a P80 (80% passing) size of less than around 220 um (which is most) require aggregation into pellets before they can be used for steel making. Concentrate can be transported over land by truck, train, or pipeline (Savage River, Samarco and Minas Rio all being examples, and we hope in the future NML.TO’s KeMag/LabMag as well). Concentrate grades are typically 62 – 68%, and the high iron content combined with generally low impurities can sometimes attract a price premium relative to more globally common hematite fines.

■ Pellets – these are formed by adding a small amount of clay to a concentrate, then rolling the material into small marble sized balls. These soft concentrate + clay balls are fired at around 800 deg C which oxidizes the magnetite, converting Fe3O4 into Fe2O3 (or hematite). This is an exothermic reaction (i.e. it releases energy) – you will also notice that the product gains weight (around 1-3%) as a result. Pellets have the highest Value In Use (VIU) of all iron ore products, and for this reason attract a price premium.

■ Hematite Fines – the big iron ore regions such as Australia and Brazil, and even Canada historically, generally sell hematite fines as a direct shipped ore (DSO) – meaning that it does not need to be beneficiated or upgraded in between being dug out of the ground and sold to a steel mill. As head grades continue to decline globally, beneficiation of hematite fines is becoming more and more common. If it is of direct shippable grade, hematite ores are generally considered superior to magnetite because the capital and operating costs are lower. However, once we start talking about lower grade ores (< 50%) magnetite is often more desirable because as the name suggests magnetite is magnetic, making its separation from other minerals a lot easier. Hematite can be fairly easily upgraded using gravity if it is very coarse grains (as is done in the Southern Labrador Trough) but finer grained hematite requires Wet High Intensity Magnetic Separation (WHIMS) which are often not economically viable. Infrastructure Rail All there are various small spur lines that connect individual projects, there are essentially four sections of rail to be aware of in relation to the Canadian iron ore industry.

■ Northern section (Tshiuetin Railway) - Schefferville to Ross Bay Junction (217km). After IOC shut down its Schefferville mining operations this was gifted to what is now the Tshiuetin Rail Transportation (TSH), a consortium of First Nation communities, who rely on it to carry only passengers and light freight. Suffering from many years of neglect, this section of the railway is in dire need of maintenance in order to accommodate proposed iron ore tonnages. This rail way is shown in orange in Exhibit 10.

■ Central section (QNS&L Railway) – Ross Bay Junction to Emeril Junction (360km). This rail is owned and in use by IOC. This railway crosses a provincial border, between Newfoundland & Labrador and Quebec, which means that it is federally

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 16 17 September 2012

regulated and must adhere to the Canadian Transportation Act, under which ‘common carrier’ obligation apply. ‘Common carrier’ status essentially means that the owner, IOC subsidiary QNS&L, is obliged to transport others’ ore – and QNS&L indeed does this for Wabush, Bloom Lake, and LIM.TO’s Schefferville already. This rail way is also shown in orange in Exhibit 10.

■ Southern section (Chemin de fer Arnaud, or CFA Railway) – is the short section of railway which runs around the edge of Sept Iles port to Pointe Noire and is owned by Wabush Mining Company (CLF). This railway is currently used by Wabush and Bloom Lake. This rail way is shown in purple in Exhibit 10.

■ Independent of the above three connected sections is the Quebec Cartier railway line which runs South West from the Labrador Trough and is shown in green in Exhibit 10. The QCM railway is owned and operated by ArcelorMittal and because it does not cross a provincial border it is not federally regulated and ArcelorMittal has no obligation to let others use it. Were it accessible, this railway would be of interest to CLF and ADV. Five railway companies operate in the Labrador Trough;

■ TSH - runs passengers and freight from Schefferville to Emeril Junction

■ QNS&L - hauling iron concentrates and pellets from Labrador City/Wabush area via Ross Bay Junction to Sept Îles

■ Bloom Lake Railway - hauling ore from the CML mine to Wabush

■ Arnaud Railways - hauling iron ore for Wabush Mines (“Wabush”) and Consolidated Thompson Limited (“CLM”) between Arnaud Junction and Pointe Noire

■ CRC hauls iron concentrates from Fermont area to Port Cartier for Quebec Cartier Mining Company (ArcelorMittal) Port There is only really one port to consider in the context of our coverage, being Sept Iles, but for completeness readers should also be aware of Port Cartier which is used exclusively by Quebec Cartier Mining / ArcelorMittal. Sept-Iles (Seven Islands)

■ Sept-Îles exported 25mt of material in 2010, 22mt of which was iron ore, with other major commodities including alumina, aluminum, coke breeze and oil/gasoline.

■ Sept-Îles is a 40km2 deepwater port with a depth of 80m at its entrance. The draft varies considerably across the various berths within the port – some allowing capesize loading and others constrained at around 8-9 meters (suitable for small ships or barges only).

■ By late 2014 - 2015, the Port of Sept-Îles hopes to have completed the first of three 50mtpa expansion increments in anticipation of increased iron ore production from the region. This is the port capacity growth upon which much of the proposed Labrador Trough production growth depends.

Labrador Iron Ore Royalty Corp. (LIF_u.TO) 17 17 September 2012

Companies Mentioned (Price as of 14 Sep 12) Alderon Iron Ore Corp. (ADV.TO, C$2.10, UNDERPERFORM [V], TP C$2.10) ArcelorMittal (MT.N, $17.32, OUTPERFORM, TP $21.00) Cliffs Natural Resources, Inc. (CLF, $45.55, UNDERPERFORM [V], TP $30.00) Labrador Iron Mines (LIM.TO, C$1.62, NEUTRAL [V], TP C$1.50) Labrador Iron Ore Royalty Corp. (LIF_u.TO, C$30.80, OUTPERFORM, TP C$35.00) New Millennium Iron Corp. (NML.TO, C$1.44, NEUTRAL [V], TP C$2.05) Rio Tinto (RIO.AX, A$56.58, OUTPERFORM, TP A$70.00)

Disclosure Appendix Important Global Disclosures I, Nathan Littlewood, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. See the Companies Mentioned section for full company names. 3-Year Price, Target Price and Rating Change History Chart for LIF_u.TO LIF_u.TO Closing Target Price Price Initiation/ 48 48 Date (C$) (C$) Rating Assumption 45 45 43 12/1/11 35.6 45 O X 40 1/17/12 36.39 47.5 38 4/12/12 35.57 45 O 7/11/12 32.49 40 33

23 12/1/11 C$ 18

Closing Price Target Price Initiation/Assumption Rating

O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered

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Labrador Iron Ore Royalty Corp. (LIF_u.TO) 18 17 September 2012

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Labrador Iron Ore Royalty Corp. (LIF_u.TO) 20 17 September 2012 Americas/Canada Equity Research

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