Wednesday, 3 April 2013

Century Iron Mines management buys $600,000 worth of stock

Century Iron Mines (TSE:FER) stock rose again Wednesday, and is up more than 32 percent in the last month, with filings today revealing that the company's CEO, CFO and board director just purchased a total of 1.5 million shares in the iron ore development business at a price of 40 cents each, for some $600,000. 
According to the filings, the acquisitions were carried out privately, with CEO Sandy Chim, interim CFO Chun Wa (Ivan) Wong, and board director Ben Koon (David) Wong each purchasing 500,000 shares. 
This follows further management share purchases last week, with its VP of corporate development and investor relations, Bob Leshchyshen, buying up 63,200 shares last Wednesday, joined by the company's corporate secretary and general counsel, Michael Skutezky, who also acquired 6,000 shares in the public market. 
Shares of Century Iron are currently changing hands Wednesday at 51 cents, up more than 5 percent on the day, and higher by 13 cents, or 32.5 percent, in the past month. 
Last month, the Canadian company released preliminary economic reports for two of its iron ore projects in the span of one week, further de-risking its assets. 
The most recent preliminary economic assessment was for its Joyce Lake direct shipping ore (DSO) project, just days after announcing a similar report for its Duncan Lake property. 
The Joyce Lake NI 43-101 compliant report, based on 100 percent ownership, shows a pre-tax net present value of $94.5 million at an 8 percent discount rate for the property, which is located in the province of Newfoundland and Labrador, near Schefferville, Quebec. 
The internal rate of return was pegged at 35 percent pre-tax, with initial project capex estimated at $96.6 million including contingency, and a projected payback period of just under three years from production start-up. 
The Joyce Lake DSO deposit is part of the Attikamagen project in which Century has joint ventures with Wuhan Iron & Steel Company (WISCO), the fourth-largest steel producer in China, and Champion Iron Mines (TSE:CHM). 
The company's strategy is to build value initially by low-capital expenditure DSO projects to generate early cash flow, positioning Century for the "much larger" magnetite/taconite projects - like its Rainy Lake property in Quebec - which require higher capex and financing. 
Direct shipping ore refers to iron ore that can be shipped directly to a steel furnace. DSO mines are typically rarer than the magnetite-bearing banded iron formations, but are considerably cheaper to mine and process as they require less beneficiation due to the higher iron content. 
The company, which is aiming to become a major iron ore producer, is one of the largest iron ore companies in Canada, in terms of number of claims by area. It has 6,493 claims and titles, covering some 198,779 hectares in the provinces of Québec and Newfoundland & Labrador. It has interests in four iron ore projects, none of which yet generate revenue.
The preliminary economic assessment released for its Duncan Lake project in northern Quebec projected a 20.1 percent internal rate of return (IRR) pre-tax. The preliminary economics report, done by Met-Chem Canada, concluded that based on 100 percent ownership of the project, the net present value is estimated at $4.1 billion pre-tax for a project with a mine life of 20 years. 
Initial capital costs were pegged at $3.8 billion, for a project generating 12 million tonnes per annum of iron pellet production - with a payback period of 4.2 years.

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