Vancouver, British Columbia, February 8, 2012 - Toronto based eResearch Corp. has initiated coverage on Century Iron Mines (TSX:FER), giving the company a speculative buy recommendation with a 12 month target price of $3.00, a healthy premium to Friday's price of $1.85, the day the report was issued.
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The company has four iron ore projects, with three in Quebec (Duncan Lake, Sunny Lake and Attikamagen) and one in Newfoundland and Labrador (Altius).
The Duncan Lake project in western Quebec has a NI 43-101 with estimated resources of 852 million tonnes, grading 23% - 25% iron.
Century Iron is benefiting from the interest of Chinese steel companies in diversifying their iron ore supplies. To date, two Chinese giants, WISCO and Minmetals, have made a combined $73 million investment, with a further $120 million for exploration expected to come from WISCO shortly. These funds are being directed to the three Quebec projects, all of which will become subject to joint venture agreements.
Century Iron has off-take agreements for almost 70% of its future production. WISCO has a right of first refusal to buy, at cost, up to 40% of iron ore production by the joint venture, and another 20% at market prices. Minmetals has the right to buy up 10% of Duncan Lake's production at market prices.
Out of the $5 billion maximum capital cost of building the mine at Duncan Lake, WISCO and Minmetals may invest up to $850 million in equity. The planned Bankable Feasibility Study should help raise $3.5 billion in debt, which WISCO agreed to assist in procuring.
WISCO is the fourth largest steel producer in China, controlling 3 billion tonnes of overseas iron ore resources. It produces 36 million tonnes of steel annually, with plans to raise production to 60 million tonnes.
The 165,000 hectare Altius properties in Newfoundland and Labrador have a $28 million exploration budget, and will be financed independently by Century Iron from its cash position, which is currently around $85 million.
eResearch cautions that the current off-take agreements are preliminary in nature, and future agreements will depend on the success of the project's exploration and the iron ore market.
Subsequent to the eResearch report, the company appointed Hubert Valleé as the Company's Senior Vice President of Logistics, Mine Development and Operations. Prior to joining Century Iron, Mr. Valleé was with Cliffs Natural Resources, where he was part of a team which brought the first new Labrador Trough iron mine in 35 years into production.
The shares trade at $2.10 and with approximately 95 million shares outstanding, the company is capitalized at $200 million.
For more information on the company and their various projects, please visit their website at www.centuryiron.com, or phone 416-977-3188.
For a copy of the report, contact eResearch at www.eresearch.ca. While on their site, sign up for their free reports.
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