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Canada's rich iron ore deposits have become much adored by global steel producers hungry for more raw material, offering a bounty of speculative opportunities for investors. The latest deal, announced Monday, has the steel division of India's Tata agreeing to jointly develop deposits in Labrador and Quebec with New Millennium Capital Corp. .

New Millennium stock is trading well off its record high of $4.96 reached on Friday, two days before the deal was announced, suggesting investors aren't terribly pleased with the transaction.

One possibility is that some were thinking Tata, which already owns 27.2 per cent of New Millennium's shares, would simply buy the TSX Venture-listed company, instead of striking the rather complicated funding deal.

But CIBC World Markets Inc. analyst Ian Parkinson suggests investors may be underestimating the potential upside in New Millennium.

"The agreement struck with Tata is better than we expected," Mr. Parkinson said in a note today. "We do not feel that this is reflected in the market price."

Under the deal, which centres on two iron ore deposits, Tata will fund 64 per cent of a $50-million feasibility study that's expected to take about 20 months. Once it decides whether to develop one or both of the deposits, it and New Millennium will form a joint venture. Initially, Tata will have an 80 per cent stake in the project, and New Millennium will have a carry-free equity interest for the remaining 20 per cent. However, New Millennium will be able to expand its holding to 36 per cent within 60 days of Tata's official go-ahead. The company is expecting to exercise that right.

"While it will take some time to get the final decision, we see more potential upside in the stock now," said Mr. Parkinson.

Tata has set a maximum investment in the project of $4.8-billion, which Mr. Parkinson predicts will be sufficient to build one of the deposits, known as KeMag. At that point, internally generated cash flows should be sufficient to build the second project, known as LabMag.

Upside: Mr. Parkinson upgraded New Millennium to "sector outperformer" from "sector performer" and hiked his price target by $2.20 to $7.20, based on the assumption that Tata makes a positive construction decision in 2012.

TVA Group Inc. posted better-than-expected earnings and revenue in the fourth quarter as Quebec TV ad markets finally show signs of sustained strength. Specialty TV channels, in particular, are seeing big gains in advertising and subscription services, noted CIBC World Markets Inc. analyst Robert Bek.

Upside: Mr. Bek raised his price target by $1 to $16 and maintained a "sector performer" rating.

New Gold Inc. reported fourth-quarter earnings and cash flow per share well above consensus, thanks to unexpectedly low taxes and an operationally strong quarter. "New Gold remains our top pick among gold producers for its experienced board and management team, robust balance sheet, large reserve and resource base, and three-year growth profile that shows cash flow more than doubling," said Jennings Capital Inc. analyst Stuart McDougall.

Upside: Mr. McDougall raised his price target by 75 cents to $14.75.

Westshore Terminals has concluded a new handling agreement with Teck Resources Ltd. that involves much-higher-than-anticipated volumes of coal locked in under contract, said RBC Dominion Securities Inc. analyst Walter Spracklin. The deal "underscores the tight capacity and negotiating leverage that Westshore enjoys," and indicates that rates with other producers will also see substantial upward revisions, he said.

Upside: Mr. Spracklin upgraded Westshore Terminals to "outperform" while raising his price target by $2 to $26.

Canyon Services Group Inc. , which provides fracturing and chemical stimulation services to oil and gas companies in Western Canada, reported better-than-expected earnings in the fourth quarter as demand for its services soars. Yet, Canyon Services continues to trade at a discount to its peers "despite zero financial leverage and a younger fleet," commented Wellingston West Capital Markets Inc. analyst Greg Colman.

Upside: Mr. Colman raised his price target by $4 to $17.

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