CIA

4.78%

$6.14 champion iron limited

65% Fe at US$199/t, page-5

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Greatone

928 Posts.

1165

01/03/21

19:20

Post #: 51430195
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Originally posted by sam0408: ↑

Hi Greatone, it's refreshing to read your post (I'm tired of seeing mine here!) & I completely agree with your bullish sentiment on the phase 2 expansion.

There is currently nothing in the share price, zip, that reflects the ongoing expansion process & as you say, no further debt needed. The current share price undervalues the operating margin CIA is realising right now (over US$130/t) but the market may finally bring this to at least $6 once quarterly results are released in late April?

Using your Phase 2 calculations & 7.5 PE as a starting point, I crunched some numbers but took a more conservative approach & have still come up with a very compelling case for CIA next year.

Phase 2 (15mtpa) Feasibility report has all in sustaining costs FOB Sept-Isles at CAD$52.3/t or US$41/t.

Capesize shipping rates likely higher next year as Brazil (Vale) starts to recover - so I'll use US$23/t ex Quebec to China.

So total costs CFR China US$64/t.

Then lets assume benchmark 62% Fe Iron Ore comes off 40% by 2nd half 2022 from US$175 now to US$105.

With the IO price lower, the 65% Fe premium will rise in percentage terms over the 62% Fe (from 14% now to 20%). This is because 65% will be in more demand at lower prices as steel mills can still make healthy profit margins at same time as meeting pollution targets.

So at US$105/t for 62% Fe, CIA's 65% Fe will fetch US$125/t.

Phase 2 quarterly sales will be 3.8 million tonnes x US$61/t profit margin for EBITDA at US$232 million or approx CAD$295 million.

This will result in average quarterly EPS of 35 cents or yearly CAD$1.40.

Multiply this by your 7.5 PE & this translates to a CAD$10.50 share price.So in summary, the Iron Ore price can fall by 40% from here & CIA will still be valued at a conservative minimum of $10 per share with the expansion.

I am buying what I can during the next 12 months!

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Thanks mate I agree. There is a lot of upside in this company.

CIA Price at posting: $5.39 Sentiment: Buy Disclosure: Held
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(20min delay)
Last $6.14		Change 0.280(4.78%)		Mkt cap ! $3.182B

Open	High	Low	Value	Volume
$5.89	$6.18	$5.84	$10.58M	1.752M

Buyers (Bids)

No.	Vol.	Price($)
3	7446	$6.10

Sellers (Offers)

Price($)	Vol.	No.
$6.14	4455	1

View Market Depth

No.	Vol.	Price($)
3	7446	6.100
2	4736	6.080
1	3736	6.070
1	3736	6.060
1	600	6.000

Price($)	Vol.	No.
6.140	4455	1
6.160	15097	4
6.170	3710	2
6.190	3736	1
6.200	3736	1

Last trade - 16.10pm 01/11/2024 (20 minute delay)

CIA (ASX) Chart

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65% Fe at US$199/t, page-5

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