December 6, 2012 (Investorideas.com Mining stocks newswire) - eResearch Corp Reports: reports The management of Century Iron Mines (TSX: FER) has posted a useful review of the Company's activities over the past six months.
Iron ore prices have recovered from recent overly-depressed levels below $90/t to around $120/t, but remain about 20% below 2012 highs (around $150/t) and at levels that put a definite squeeze on margins.
Our Target Price of $3.00 per share for Century Iron, set at the time of our Initiating Report in February 2012, remains in place, although the economic difficulties confronting the iron ore industry and, consequently, the ensuing negative impact on the shares of the iron ore companies, mean that achieving our $3.00 objective is likely to occur beyond the usual one-year forecast period.
We continue to rate the shares of Century Iron as a Speculative Buy, suitable for risk-tolerant investors.
Century Iron has interests in four iron ore projects in Canada. The Duncan Lake project (1,613 Mt in total NI 43-101 estimated resources, grading 24%-25% Fe) is located in western Quebec, while three others are located in the Labrador Trough region of Quebec/Newfoundland and Labrador. The Company owns the biggest collection of iron ore claims in Canada by area.
The Company has two strategic Chinese shareholders: WISCO (25%) and Minmetals (5%), which have off-take agreements for 70% of future production. In addition to the $20 million Attikamagen injection (see eResearch Perspective September 28, 2012), Century Iron has about $40 million in cash that is available for exploration and acquisitions.
Century Iron's current strategy is to develop the DSO (Direct Shipping Ore) projects first (Joyce Lake, Lac Le Fer and Schefferville West), bring them into production starting from 2015, and use the proceeds to develop lower grade and more capital-intensive BIF (banded iron formation) projects.
According to management, DSO targets have up to 7Mt each @ 60%+ Fe and thus would be mined for 3-4 years. Lower-grade material would be stockpiled at first and processed afterwards. The Company estimates that DSO targets have up to 50Mt of lower-grade (around 50%) material each.
The Rainy Lake (also known as “Full Moon”) and Duncan Lake projects now have resource estimates, and Duncan Lake could have a PEA in the near future. The Joyce Lake and Lac Le Fer projects are expected to obtain resource estimates shortly, and PEAs some time in 2013.
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