The Globe and Mail reports in its Wednesday, Feb. 19, edition that RBC Dominion Securities analyst Alexander Jackson began coverage of Champion Iron with an "outperform" rating on Tuesday. The Globe's David Leeder writes in the Eye On Equities column that Mr. Jackson targets the shares at $3, which 18 cents below the consensus. Mr. Jackson thinks investment made at its flagship Bloom Lake iron ore mine in Quebec by its previous owner provide Champion with a "unique" opportunity to more than double its production and free cash flow in 2022 by a completing a low capital intensive expansion with an estimate cost of $589-million. Mr. Jackson says in a note: We estimate that the expansion will generate an incremental $620-million in NPV at a 22-per-cent IRR and that Champion will average 21-per-cent FCF yield at flat $65 (U.S.) per ton iron ore following the ramp-up. We expect that Champion will be able to fund the expansion with cash from operations and $300-million in debt. Bloom Lake produces a high-grade iron ore concentrate that receives premium pricing. We expect premiums to remain strong due to its higher productivity in blast furnaces and lower CO2 emissions during the steel-making process."
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