IOC Announces $60 Million Expansion Program in Response to Customers Demand

    TORONTO, Aug. 2 /CNW/ - The Iron Ore Company of Canada (IOC) announced a
$60 million program to expand production to 18.4 million tonnes by mid-2008,
and a feasibility study to increase production further to 21 million tonnes
annually as per the attached press release.
    The increased production will enable IOC to increase sales which will
result in increased royalty revenue to the Fund. The income of the Fund is
entirely dependent upon royalties and dividends received from IOC.


    Iron Ore Company of Canada

    IOC Announces $60 Million Expansion Program in Response to Customers

    (Canada) Montreal, Sept-Iles, Labrador City, August 1st, 2007 - The Iron
Ore Company of Canada announced today the approval of C$60M to expand
production capacity at its operations. The expansion will increase concentrate
production capacity to 18.4 million tonnes by mid-2008, and a feasibility
study will assess further expansion to 21 million tonnes annual capacity.
    The expansion will address operating bottlenecks and improve winter
performance. New equipment will be acquired for the mine and concentrator at
Labrador City, including mine loading & haulage equipment, upgrades to the
Automatic Train System which delivers ore from the mine to the plants and
additional process spirals for the concentrator. It also includes new railway
cars to increase haulage capacity on the QNS&L Railway to IOC's portin
Sept-Iles, Quebec.
    This investment reflects the commitment of shareholders to expanding IOC.
Rio Tinto, IOC's majority shareholderhas embarked on a major investment
program for its iron ore businesses in recent years, equivalent to the iron
ore division's entire profit since 2003. Rio Tinto Iron Ore Chief Executive
and IOC Chairman Sam Walsh said that the expansion program would add
substantial value and take advantage of the strong on-going market demand.
    "These decisions are a vote of confidence in our ability to maintain
improved performance following the recent achievement of a five-year
collective agreement," Mr. Walsh said. "IOC has added approximately 100 highly
skilled jobs since the beginning of the current growth efforts in 2005 and
expects to continue to hire as these expansion plans are implemented."
    The feasibility study for expanding concentrate production to 21 million
tonnes includes an extensive Resource Assessment Program to increase IOC's Ore
Reserves by advancing high priority targets and further evaluating IOC's 3
billion tonnes(*) of in-situ Mineral Resources. Pre-feasibility engineering
studies were sufficiently encouraging for IOC to order the additional primary
grinding mill required for the expansion.
    Terence F. Bowles, President and CEO of IOC, said this advance purchase
would avoid delays caused by long delivery times in the current market. "We
are very pleased to be able to proceed with expansion of our business in this
strong market. This growth is being driven by strong market demand, and
ordering the mill now allows us to overcome constraints due to the current
demand for mining equipment. Following on from the achievement of a five-year
labour agreement, these decisions reflect continued confidence in our people
and commitment to the provinces of Newfoundland & Labrador and Quebec. IOC's
outstanding product quality and commitment to meeting the needs of our
customers, helps ensure our ongoing success in a highly competitive market. I
am optimistic that the feasibility study results will be positive and that we
will be able to commence expanding our capacity to 21 million tonnes by late
    Rio Tinto is the major shareholder and operator of IOC (58.72%), along
with Mitsubishi Corporation (26.18%), and LIORIF (15.10%). IOC is the largest
manufacturer of iron ore pellets in Canada and has a global customer base. The
Company operates a mine, concentrator and a pelletizing plant in Labrador
City, Newfoundland and Labrador, as well as port facilities located in
Sept-Iles, Quebec. It also operates a 418 kilometer railroad that links the
mine to the port, and has 1,900 employees.

    (*) Source: IOC internal report "2006 Report of Ore Reserves and Mineral
    Resources". In-situ Mineral Resource tonnes (3,155 billion) are
    equivalent to 1,371 million tonnes of saleable product listed in the
    2006 Rio Tinto annual report as approved for release by IOC's
    Competent Persons: Tim Leriche P.Eng and Mark Blake P.Geo.

    Michel Filion
    Director Communications & External Relations
    1000 Sherbrooke Street West, Suite 1920
    Montreal (Quebec) H3A 3G4
    Info: (514) 217-6253

    %SEDAR: 00002722E

For further information:

For further information: Bruce C. Bone, Chairman & Chief Executive
Officer, (416) 863-7133

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