eResearch has issued an updated report on Century IronMines (TSE:FER) recently, giving the iron ore explorer a "speculative buy" rating as more drilling, resource estimates and some feasibility studies "should all increase investor focus" on the company's share price potential.
The analyst Bob Weir notes that Century Iron's share price has, over the past 12 months, fallen from a high of $2.35 at the end of February to the current 52 cents.
The price of iron ore began to decline in 2011, but it bottomed last September at US$86.70 per tonne.
The eResearch analyst notes that most iron ore company stocks bottomed around the same time, but the same was not true for Century Iron, which he says makes "little sense".
"This for a company that increased its total resource estimate phenomenally: Measured + Indicated from 31.3 million tonnes (Mt) to 8.31 billion tonnes (Bt), and Inferred from 821.1 Mt to 10.98 Bt," Weir writes.
"From that September low, the price of iron ore has risen sharply, reaching a high of US$158/tonne. Yet, the iron ore stocks have not responded. The market must think that the iron ore price is going to decline again.
"But, the outlook for steel demand in China has improved recently, which should keep iron ore consumption at higher levels. As this economic scenario begins to be accepted, the iron ore stocks should recover," he concludes.
Century Iron Mines 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.
The company has interests in four iron ore projects in Canada. The Duncan Lake project is located in western Québec, while three others, Sunny Lake, Attikamagen, and the Altius Properties, are located in the Labrador Trough region of Québec and Newfoundland & Labrador.
It is in the process of compiling NI 43-101 resource estimates for all of its properties, having completed reports for three thus far.
The company has also brought on board two blue-chip Chinese investors, in WISCO (Wuhan Iron & Steel Company) and MinMetals, with huge ambitions and the deep pockets required to unlock the potential of Century's assets.
WISCO is the fourth-largest steel producer in China, controlling 3 billion tonnes of overseas iron ore resources.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.