Century Global Commodities Corporation (TSE:CNT) on Thursday highlighted that depressed market conditions for precious and base metals have created investment opportunities to deliver significant shareholder value.
The company which changed its name from Century Iron Mines Corporation in 2015, delivered its results for the year ended March 31 and said it has allocated resources to review acquisition opportunities and its designated special task force is conducting a global search for attractive investments, including those in precious and base metals.
The focus has been on high quality, but undervalued assets as a result of the market downturn, which present an excellent opportunity for value creation in the long run as the market improves.
The company also updated that it had retained Industrial and Commercial Bank of China (Canada) (ICBC), the largest bank in the world, as its international financial advisor. Under the agreement, ICBC Canada will tap its global networks, particularly in mainland China and Hong Kong, to identify prospective investors who are compatible with Century’s investment strategy in the mining sector.
“Management continues to search for a quality non-ferrous asset acquisition compatible with its strategy and investment criteria,” Century said.
For its iron ore operations, Century said that between early 2011 and late 2015, iron ore prices declined by more than 70% to below US$40/Mt 62% CFR China, but that at the beginning of 2016, the iron ore market experienced a substantial rebound to more than US$68/Mt 62% CFR China by mid-April 2016.
“However, this rebound appeared to be short-lived, with the iron ore price at time of writing trending lower to approximately US$51/Mt 62% CFR China. This reflects market fundamentals pointing to an oversupply triggered by the multi-billion dollar investments made during the mining super-cycle of the past decade,” Century said.
Nevertheless, although it will take several years to absorb excess supply, China’s demand for iron ore is expected to grow with its continuous urbanization and the One Belt One Road initiative, a multi-trillion US dollar investment.
“Management continues to believe in the long-term outlook for iron ore. In preparation for a return to higher iron ore prices, Century will maintain its current iron ore properties and has also completed post-feasibility optimization studies and an Environmental Impact Statement at its flagship Joyce Lake DSO project, bringing it closer to production. With the ongoing support from our strategic partners, WISCO and Minmetals, Century is well positioned for market recovery by having secured one of the largest iron ore mineral resource bases in the world, across five projects in Quebec and Newfoundland and Labrador.”