Rio Tinto Responds to the Announcement by the Trustees of the Labrador Iron Ore Royalty Income Fund

Business Wire, April 6, 2001

Business Editors

LONDON--(BUSINESS WIRE)--April 6, 2001

Rio Tinto (NYSE: RTP) responded on 5 April 2001 to the announcement by the Trustees of the Labrador Iron Ore Royalty Income Fund (the "Fund") that they have declared distributions of C$0.375 per unit for each of the remaining three quarters of 2001 and that they will increase annual distributions to C$1.50 until the expansion of the Iron Ore Company of Canada ("IOC") is completed. The Trustees' actions are misleading and potentially harmful to the long-term value of the Fund.

The Fund paid C$1.05 per unit in distribution in 2000 and the consensus estimate from research analysts, based on the current outlook for IOC, is C$1.04 per unit for 2001. In order to finance the increased distributions, the Fund's subsidiary will be required to borrow money, something that the Fund itself is specifically prohibited from doing. By taking the unprecedented step of declaring future distributions today, the total amount of the Fund's liability is unknown. While certainly not adding value, the Trustees' actions may harm the long-term value of the Fund since principal and interest payments will reduce future distributions.

The Trustees' press release fails to state that the increase in distributions will be funded solely by borrowing money. The Trustees have also claimed that Unitholders may receive distributions of as much as C$2.00 at some future date. While the assumptions underlying such a claim are not provided, undoubtedly the Trustees are relying on IOC maintaining current real pricing and full production capacity - assumptions that are problematic given the difficult conditions for the steel industry and expected increased foreign iron ore production. Such a claim is also dependent upon IOC resuming dividends, something that is outside the control of the Fund. Rio Tinto believes that the Trustees have misled Unitholders and intends to raise its concerns with the Ontario Securities Commission.

Rio Tinto reiterates that it will not increase its C$14.25 Offer. Unitholders who are concerned about the yield on their investment should accept the Offer and reinvest the proceeds in other income trusts with higher yields based on earned income, not borrowed money (for example, the average weighted yield of an income trust included in the Merrill Lynch Canada Trust Index is 13.7%).