"TD Investment Conclusion: We are increasing our target price to $3.50 (from $2.50) and maintaining our BUY rating. In our view, the combination of the acquisition of a 100% interest in QIO and debt refinancing greatly simplifies the company's capital structure, increases its leverage to iron ore prices, and puts the company on a strong footing to fund Phase 2."

@sirius from ceo.ca:

Upgrade this morning from TDW!! We have updated our estimates to reflect yesterday's announcement that Champion has concluded an agreement to acquire Ressources Quebec's 36.8% equity interest in Bloom Lake (QIO subsidiary) for $211mm. In conjunction with the increased equity interest, it also entered into an agreement for a preferred share purchase offering of $185mm and a commitment for a US$200mm credit facility. Impact: POSITIVE ■ Accretive to our estimates. Based on the value being paid for a 36.8% interest in Bloom Lake, this transaction alone would have increased our 10%NAVPS to $2.91 from $2.29. However, we have also increased our iron ore price deck as discussed below. ■ Higher iron ore prices for longer. We have also modestly increased our iron ore price forecasts in 2019-2021 to reflect record steel production out of China YTD (+10% y/y through April), and the ongoing supply uncertainty out of Brazil post the Vale dam breach in January and its impact on the higher-quality segment of the iron ore industry (+65%-Fe). ■ The net impact of our increased iron ore price forecasts and a 100% interest in QIO, increases our 10%NAVPS to $3.05 and our F2020 and F2021 EBITDA to $398mm and $344mm, respectively. At current spot prices of ~US$120/ t 65%-Fe, we calculate F2020 EBITDA and FCF of $571mm and $278mm, respectively. ■ An investment decision on the Phase 2 expansion to 15Mtpa would be the next significant catalyst, in our view. A feasibility study is expected to be completed this summer, and we assume the project will be sanctioned by the board thereafter. We assume the company will have net debt of only $10mm in Q2/ F20. Based on our Phase 2 capex assumption of $500mm, with first production in calendar H1/21, we believe that the expansion can be financed through a combination of minimal project debt (~$150mm) and free cash flow from Phase 1, without any equity dilution. TD Investment Conclusion We are increasing our target price to $3.50 (from $2.50) and maintaining our BUY rating. In our view, the combination of the acquisition of a 100% interest in QIO and debt refinancing greatly simplifies the company's capital structure, increases its leverage to iron ore prices, and puts the company on a strong footing to fund Phase 2.