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Cliffs Natural Resources Inc. Message Board

  • southbuckeye southbuckeye May 30, 2013 4:55 PM Flag

    Iron Ore Sale Just Announced

    Arcelor Mittal just sold a stake in its Canadian iron ore operations to an Asian consortium for over a billion dollars. Guess there's hope for Cliffs afterall Someone's interested in buying iron ore properties.

    Sentiment: Buy

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    • I think 2012 was the first year that CLF's stock price fell below book value. CLF has almost no intangible assets. So in theory, if they were to liquidate, the shareholders would walk away with $30 per share (assuming they did it slowly and found buyers willing to pay a good price)?

    • 15% stake worth $1.1 billion, so you can imagine what would be the value of Clf's Bloom Lake today, which is slightly smaller than MT's in Canada.

      • 1 Reply to spitzkohl123
      • You cannot compare the two. MT owns and operates their own railway and port and have significantly lower production costs. Cliffs Labrador mines have high cash costs and must rely on a private (IOC) railway to connect to a public port. Cliffs pelletizing plant at the port has been shut down because the premiums relative to concentrate prices in China are not enough to justify the additional cost of production. With high cash costs at about $100/tonne, Cliffs is highly leveraged to the current, about $115/tonne, spot China prices. Add the vessel cost from Sept Iles and you have a precarious financial situation for these two mines. Their US mines are producing less, will have fewer buyers in the next two years and their remaining US customer base is becoming more integrated by owning their own iron ore mines. Can someone please make an intelligent case to buy CLF at todays stock price?

 
CLF
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