TSX:CIA - Post Discussion
Post by
retiredcf on Mar 17, 2023 11:46am
TD
Champion Iron Ltd.
(CIA-T) C$6.72
Investor Meeting Takeaways Event
March 17, 2023Metals & Minerals
Yesterday, we hosted Champion's CEO David Cataford in Toronto for investor meetings.
Impact: NEUTRAL
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The meetings reinforced our view that the company is well positioned to deliver on several near term organic growth opportunities and highlighted the strategic importance its operations can play in the effort to reduce carbon emissions in the steel industry, which represents 7% of all carbon emissions globally.
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The Phase 2 plant expansion at Bloom Lake is operating well, however, some previously announced delays in delivering mining equipment to site, along with some stresses on the crushing circuit during the winter months did slow the ramp- up. Management remains optimistic that it can hit a sustainable run-rate of 15Mtpa by mid-year and lower costs into the C$65/t (FOB) range once production stabilizes.
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Construction decision on DR plant expected later this year — Work on the direct-reduction (DR) plant to convert Phase II's capacity (7.5Mtpa) to 69%-Fe concentrate continues to advance. A formal construction decision is expected later this year pending receipt of the necessary power allocation from the Quebec Government and financing package. Management remains very confident in its 30-month construction timeline starting February 1 and US$350mm capital estimate and expects to be able to largely self-fund the project similar to the Phase II expansion. That said, the company plans to enter into a non-dilutive financing facility to provide a buffer in the event of a market correction.
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Next phase of growth opportunities — Mr. Cataford noted the next project on its priority list, after the DR-plant upgrade, would likely be a de-bottlenecking of the Bloom Lake operation to achieve an additional 2Mtpa. Management expects this project to be relatively low-capital intensity. While feasibility studies on both the development of Kami and the Pointe Noire pellet plant are expected in the second half of the year, management suggested that the full conversion of Bloom Lake to DR concentrate would likely take priority based on the level of interest from industry participants looking to secure Bloom Lake DR material.
TD Investment Conclusion
We have made no changes to our estimates, $8.50 target price or BUY rating.
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