We like to think that our favorite stocks can just keep rolling along, day in and day out. But sometimes, things get in the way. Floods, geopolitical tensions, and even forest fires can slow or even halt operations. That’s what happened to iron ore miner Champion Iron (TSE:CIA), as it slipped nearly 2% in Monday afternoon’s trading after forest fires shuttered some operations.
More specifically, Champion Iron shut down the Bloom Lake mine due to forest fires currently burning near Labrador City. There are 11 such fires currently in progress, and the weather isn’t doing them any favors. Plus, with Labrador City itself evacuated and Bloom Lake only about 20 kilometers away, it became one of those “excess of caution” situations.
The Bloom Lake mine is an open-pit mine and features two concentrators powered by locally-generated hydroelectric power. Still, with multiple fires in the area and more likely on the way thanks to current weather conditions, shutting down that operation until the danger has passed is likely the most prudent move overall.
Terrible Timing
While this is likely the right move to make, it couldn’t have come at a much worse time. In a little over two weeks, on July 31, Champion Iron will have a conference call to talk about first-quarter figures. The question of the Bloom Lake shutdown is likely to come up during that time and will likely re-emerge during the shareholder meeting roughly a month later.
On the upside, though, iron ore prices have been doing well. A recent four-day rally was interrupted by some profit-taking, but that suggests that prices are still comparatively decent. At least for now, as longer-term projections suggest that iron prices will start to decline with the September quarter and continue to slide down into March 2025.
Is Champion Iron a Good Investment?
Turning to Wall Street, analysts have a Strong Buy consensus rating on CIA stock based on seven Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 16.6% rally in its share price over the past year, the average CIA price target of C$7.57 per share implies 26.59% upside potential.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
