Labrador Iron Ore Royalty Corporation (LIFZF) Stock Analysis & Winston Score

Labrador Iron Ore Royalty Corporation is a Canadian company that collects royalties and dividends from the Iron Ore Company of Canada (IOC), a large iron ore mine in Labrador, Canada. IOC mines and processes iron ore into pellets and concentrate, which are sold to steel mills in North America, Europe, and Asia. Labrador Iron Ore owns about 15% of IOC and holds a royalty on every tonne of iron ore that IOC sells. The company makes money in two ways: a per-tonne royalty on IOC's iron ore sales and dividend payments from its ownership stake in IOC. This simple structure explains the unusually high gross and operating margins — there are almost no operating costs. The business is entirely tied to one asset in one location, which is both its strength and its biggest risk. Iron ore prices are set by global commodity markets, so falling steel demand or lower iron ore prices directly reduce the company's income.