That would be crazy, when CLF sells more shares into the market, they are going to buy back bonds to eliminate debt that they pay interest on. Bottom line is their balance sheet is going to improve and their income will increase with the reduction in interest cost and interest rates.
$46 a ton for pellets is amazing! This net income number is good as well considering there was no gain from buying back bonds at a discount this quarter. Last quarter they were at a loss when you removed the gains from the bond buy back.
Yes I did as I traded this stock all the way down and made enough on those trades to where my cost on my base holdings is less than zero. I have been holding stock knowing that the company is sound and that one day the shorts will have to cover in mass. Seen this with many other heavily shorted stocks like GMCR and LVS and I sold them way too soon. Won't make the same mistake with CLF, this time I am watching the material cycle and we have a long way to go on the upside.
Short term I see $10 to $15. Long term, I don't know but the material cycle has a long way to go and CLF could run up to over $50.
Doubt they can sell it, best if they just run it until they shut it down. If they can extend the life of the mine, they should wait until the price of ore goes up high enough to pay for the upgrades. Too bad they did not sell it earlier when they had a buyer, but Kirsch killed that deal before losing control of the company.
What is going to push CLF higher will be the earnings out of Asia Pacific. Prices have been moving up CLF's cost has been moving down which will be a good bump to US IO earnings. Best thing is that there will be no real drag on earnings.
LG has been working real hard on DRI, may get an announcement here since there will be no income gains from buying bonds at a discount.
I am surprised Mesabi Trust is so high, if CLF gets the Essar mine, they could cut off shipments from Northshore all together. Just like Wabush, nobody will pick them up with the high royalty commitment.
In bankruptcy, you cannot bankrupt the state. Back taxes, loans, etc... all have to be paid back no matter what and paid before any secured loans. This why many assets are sold for taxes only.
When you posted yesterday I was thinking iron ore was trading in a tight range. Now it looks to be having a break out to the next level which could be in the $70 range.
The Mesabi Trust needs to see iron ore demand much higher to keep the flow of iron ore out of their holdings. CLF can cut off shipments from Northshore for a whole quarter in today's market. And if they pick up that Essar mine, they could shutdown Northshore for a year. Mesabi would be wise to renegotiate their royalty agreement or they could be another Wabush.
They know how to use the bankruptcy system to build their billions off the backs of working people, much like one of our presidential candidates.
Essar promised a steel mill in Minnesota, the State loaned them money on this and Essar pulled the plug on the steel mill, keeping the money Minnesota lent them. Essar then stopped paying on this loan as well as paying all their obligations to contractors and suppliers. The only thing sad here is the time it took for the State to act... this should have been done a year ago!
In both cases, the State has total control of the iron ore. In option 2, if Essar wanted to build condos, the State cannot control that activity as long as it meets zoning requirements.
I have to agree with ironorenstrong on this one. Plus the State and local governments are increasing their ownership with the loan, interest and back taxes which must be paid ahead of all other claims in bankruptcy. Plus, if the proceeds of sales does not satisfy all these claims, Essar will be billed as government claims will not be forgiven in bankruptcy.