July 31, 2012 (Investorideas.com Mining stocks newswire) - eResearch Corp reports: In a conference call with analysts on July 25, 2012, Canadian National Railway (CN) management was asked about opportunities in northern Quebec. Claude Mongeau, CEO and President of CN, said the Company needs the support of more mining companies operating in the area in order to move forward with an application and feasibility study for a railroad to ship iron ore to port. The southern leg of the railroad would be an investment of over $3 billion. If the railroad were to run further north to Schefferville, the investment would rise to around $6 billion.
CN has given a deadline of another week or two for more mining companies to sign up. Mining companies that would use the railroad are expected to share in the cost of the feasibility study and, ultimately, the financing and development of the project.
The downturn in the commodities markets includes that of iron ore. With the visible slow-down occurring in China's economy, that country's demand for steel and, therefore, iron ore, has softened.
This has led to a corresponding decline in world iron ore prices, in the order of about 30% to around US$130/tonne from a high of around US$180/tonne in 2011.
As a consequence, all of the iron ore stocks, including Century Iron, have hit the skids.
While we are encouraged by Century Iron's significant operating plans over the next 2 – 2 ½ years, our Target Price of $3.00 per share now has a longer time horizon attached to it in which to be realized.
Thus, while the stock recently hit an all-time low and may have bottomed, recovery is going to take time.
We rate the shares of Century Iron as a Speculative Buy, and being suitable for risk-tolerant investors.
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