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Cliffs Natural Resources Inc. Message Board

dansmith46 8 posts  |  Last Activity: Jun 30, 2014 3:19 PM Member since: Jan 10, 2012
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  • Reply to

    No Bashing Today

    by w999surf Jun 30, 2014 1:21 PM
    dansmith46@ymail.com dansmith46 Jun 30, 2014 3:19 PM Flag

    JVs dont work like that, why would the partner allow their $1 billion to simply be a debt payment? they would want it to be an investment in the further expansion of the mine to lower costs and make it potentially profitable

  • Reply to

    Surf there wont be a buyback

    by dansmith46 May 19, 2014 3:07 PM
    dansmith46@ymail.com dansmith46 May 19, 2014 4:46 PM Flag

    how are they going to pay for the current liabilities and the buyback? walk me through it step by step and I will believe it is possible

  • dansmith46@ymail.com by dansmith46 May 19, 2014 3:07 PM Flag

    Surf where are they going to get $350 million to do a 20 million share buyback? Honestly I expect them to likely have to draw more on their credit facility this year just to stay afloat unless they can sell some assets (at a major loss of course). They have 364 million in cash right now with 130 million in addition in receivables. Next to that they claim to have 814 million in inventory built up, but how much is that inventory worth with IO prices falling so heavily? 600 million maybe? They likely have just enough money to make it through 12 months due to their $1 billion in current liabilities. Accounts payable is $700 million on its own.

    Even more troubling is if they arent making money then they will be in violation of their debt covenant that says debt cannot exceed 3.5x EBITDA, and what will they do if they cannot draw on their credit facility. CLF is reliant on a higher IO price, that is the simple reality that is likely going to screw this company hard unless they can offload bloom lake for at least $1 billion.

    Companies who are doing well and have extra cash on the books do buybacks, not failing companies who are desperately just trying to make it through 12 months. If CLF can offload bloom lake for a reasonable price (but who would want it? honestly who?) they have a chance, but otherwise i dont have too much hope

  • dansmith46@ymail.com dansmith46 May 19, 2014 3:04 PM Flag

    Surf where are they going to get $350 million to do a 20 million share buyback? Honestly I expect them to likely have to draw more on their credit facility this year just to stay afloat unless they can sell some assets (at a major loss of course). They have 364 million in cash right now with 130 million in addition in receivables. Next to that they claim to have 814 million in inventory built up, but how much is that inventory worth with IO prices falling so heavily? 600 million maybe? They likely have just enough money to make it through 12 months due to their $1 billion in current liabilities. Accounts payable is $700 million on its own.

    Even more troubling is if they arent making money then they will be in violation of their debt covenant that says debt cannot exceed 3.5x EBITDA, and what will they do if they cannot draw on their credit facility. CLF is reliant on a higher IO price, that is the simple reality that is likely going to screw this company hard unless they can offload bloom lake for at least $1 billion.

  • If the deal is made and the canadian federal government matches ontario's spending to build a transportation network in the ring of fire, this will certainly be beneficial to CLF, but maybe not in the way you might think.

    They literally just shut down their chromite exploration project and this is saving them $35 million per year. In doing so they also had to pay shut down costs and severance costs. I doubt they would start up the project so soon again after just shutting it down. Even more impactful would be the hundreds of million in cappex they would have to spend to get the project started. That is cash they simply do not have, and with iron ore prices where they are, they are in a desperate need to try and hoard any cash they can get their hands on.

    No they won't start up the chromite project with IO prices under $140. Instead though the transportation network deal will make these projects more viable, and thus more attractive to investors. They will have a much better case to sell their chromite project at the price they paid for it - $600 million - than ever if the government approves the deal. This is cash that CLF could certainly benefit from and I would love to see a deal like that happen. that combined with a bit of earnings this year would likely be able to reduce their net debt position to just over $2 billion, and save us shareholders $60 million a year in interest expense. That's $0.40 per share at 153 million shares or $0.35 at 173 million shares if anyone was wondering.

    Sell the chromite operation!

  • the answer to that is simply when it is cash flow negative, and for the first time in quite some time it was just that in Q1. To find out if it is cash flow negative simply look at cash cost vs revenue per ton. It was $5 per ton cash flow negative on the quarter. Basically we are taking out depreciation expense which is a non-cash charge.

    As far as coal goes, Cash costs were $100 per ton versus $88 per ton in revenues. They were $11 cash flow negative on the quarter versus last year Q1 they were $19 cash flow positive. This is one area however where they know that Q2 will look much better than Q1. That is because they included a $14 per ton cost of writing down their inventory in this quarter so cash costs were really $86 per ton, and Q2 should reflect this. Meaning that while net income will still be negative with depreciation added in, Coal will still actually be barely net positive in term of cash flow by positive $2 per ton.

  • dansmith46@ymail.com dansmith46 May 1, 2014 3:29 AM Flag

    when are they going to release their earnings?

  • Reply to

    CASABLANCA IS small

    by espo1900 Apr 30, 2014 11:22 AM
    dansmith46@ymail.com dansmith46 May 1, 2014 12:07 AM Flag

    thats what ive been saying. IO prices are really all that matter with CLF, though they are paying out a lot of money due to not being able to deliver on their canadian take or pay contracts and their mismanagement of that whole division

CLF
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