“Iron ore prices continue to increase with P65 prices now over US$170 per ton,” he said. “In our view the recent prices reflect ongoing strong demand, lower-than-expected production forecasts from Vale in 2021 and recent cyclone warnings in Australia which highlight the potential for supply disruptions.”

Maintaining an “outperform” rating for Champion Iron, Mr. MacArthur raised his target to $5.50 from $5, which is the current consensus on the Street.

“We believe Champion offers investors good exposure to premium iron ore through its Bloom Lake asset, which is a long-life, lower-cost asset producing high-grade iron ore concentrate (66 per cent iron) located in Quebec, Canada, a lower-risk jurisdiction,” he said. “In addition, we believe Champion has potential for growth through its Bloom Lake Phase 2 expansion project at favourable capital costs, given the previous owners spent significant capital. Given Champion’s exposure to premium iron ore (which we believe should trade at a premium given structural changes in the iron ore industry), high-quality asset, growth potential, and low jurisdictional risk, we rate the shares Outperform.”