Killing is overdone in CLF. I think the smart is beginning to buy shares now. LG should at least buyback $100 mil worth shares.
Selling wave may come late in the afternoon. If SP holds around $3 w/o getting killed by Shorts , I think the SP may start to make a sustained move up..IMO
Per LG , Tariffs may apply as early as in December or early next year. BL CCAA will get
settled and CLF will get some money .. hopefully some $500 mil. DR trial of 60,000 tons is scheduled early next year and if successful as it is hoped, It would provide premium pellets at premium price. all this is plus plus for CLF and not to forget eventual sale of 2 Met coal mines
Lets hope the SP will cross $3 today. Steel imports are falling with anti-dumping and Tariff threats. Also Note that USIO margins have improved by $4 in Q-3. and Much lower AUD now 71cents US is helping APIO being CF positive and contributing to EBITDA.
CLF SP up 3.3% @ $2.85. Even NAC Operations will be CF and EBITDA positive with cost cut in half.
nick is all wet. They have $244 mil cash on hand at the end of Q-3 per LG. This is after buying back Notes in Q-3.
Hopefully Coal mines sale at some point and some cash from BL CCAA may help further reduce debt too. In the meantime , If NAC Operations becomes CF and EBITDA positive , it will aid in earnings. All that will be well will end well.
In 2 years , CLF will be only a US IO company and would not have to worry about Rio,BHP or Vale or SB IO.
Also the imports of cheap steel that were around 35% at the beginning of this year and now down to 25% and going down more. Steel companies have filed anti-dumping grievances and tariffs will likely be imposed late this year or early next year per LG.
Also if coal mines are not sold shortly , LG is planning to cut cost in half as he said in CC and that will aid to the EBITDA
CLF is going to have a trial of its 60,000 tons of DR pallets in early next year and hopefully it will be successful and that will produce much higher quality steel and pellets will command premium price. LG is very Optimist about this operation.
So all in all I think CLF's future is going to be bright . The only big problem is their debt but they reducing it by some $100 mil each QTR.
nick, $160 mil tax refund is a part of $244 mil cash they have on hand in Q-3. The CFO said that the idling of UTAC will cause loss in EBITDA on the ave of $5 -$6 mil per month for may be next 12 months.
I wanted to know what you think of transportation and delivery charges per ton for both USIO and APIO IO shipping. I also think NAC will show some positive EBITDA and positive CF once they cut the operations cost in half per LG, if NOT sold.
Corrections in paragraph 1..sorry!!
T and D cost added to $49 (not 4?)
Margins of $ 27.5/ton($82.5 minus $55)
LG in Q-3 CC said the cash cost of IO from USIO Operations is $49/ton and realized price is between $80-$85/ton . Do you have any idea about the Transportation and Delivery cost per ton that needs to be added to $4?. I estimated about $6/ton. So the gross production cost will be $55/ton($49+$6). The ave.of $80 and $85 is $82.5/ton realized price which gives the gross profit margins of $27.5/ton($82.5 #$%$. Multiply that by 17.5mil tons sales ..gives $481mil Gross Profit from USIO Operations . Am I right ?
Similarly APIO, IO cash cost is $26/ton (per LG) and add $10/ton delivery and transportation to China from Australia....making the gross production cost of $36/ton, and if the realized price is $46/ton, the gross profits are $10/ton and for 11.5 mil tons sales, it will generate $115mil (11.5milton x410/ton) Gross profits from APIO operations.
Consider NAC a WASH..meaning 0 gross profit but No loss
$480mil(USIO )+ $115 mil (APIO) = $595 mil gross profit/yr
Expenses: $90 mil SG&A + $90 mil CapEx = $180 mil
$595mil Total Profit minus $180 expenses = $415 EBITDA for year
$415 EBITDA - [ $235mil (Interest) +$140 mil DD&A ] = $40/yr profit B4 taxes or $0.26/sh per year from Continuing Operations. I will take it as it is positive earnings instead Loss ..how small it may be.
Surf...does this make any sense to you? If Not what do you think? I have ignored the Pref. Dividend as it will disappear after the next QTR and assumed No Fed taxes for year 2015 or 2016.
Any one else has any other thoughts ,you are welcome for your input.
Read them all. And I try to buy and sell CLF( and other stocks) or combination of stock/calls and puts of my CLF holdings when I am here and Not consulting, to keep lowering my cost now under $10.
In the Nutshell.... here it is.
Save $20 mil in Capex and $20 mil in SG&A equals total $40 mil or $10/QTR in EBITDA by more cost
cutting. Also Cut CapEx for USIO operations and Coal mines and closing Cola mines till sold and keeping only maintainenance staff .
Raise gross margins by just $3/ton and increase gains by $88 mil /yr or $22 mil EBITDA toward each QTR
Additional $8mil/QTr can come from saving on closing the Coal mines and cutting employees by 75%
Thats my take on raising EBITDA by $40 mil per QTR
Additonal cost savings can come from MNGT taking 25% haircut in their salaries and bonuses and more until Company gets better..
If CLF can increase gross margins just by $3/ton on both USIO and APIO..ie. 17.5 milons t plus 11.5 mil tons which totals 29 mil tons x $3/ton = $87 mil additional/yr or $22 mil per QTR toward EBITDA.
Here is one idea. LG said their CapEx for Q-3 was $24 mil ..That amounts to about $95 mil/year. LG also said in Q-2 CC that APIO CapEx is Only $5 mil per year.
There is No or very little CapEx for Coal mines. He should Close coal mines until sold and incur only the maintainenance cost and only support small staff for that purpose.. This should save $20 mil in SG&A by cutting it from $90 mil to $70 mil and it can go toward EBITDA.
Why LG must have a CapEx of $90 mil ($95mil total minus$5mil APIO) for USIO. They have only 5 US mines and can be cut down to $70 mil or less saving $20 mil toward EBITDA.
This is my take on saving $40 mil yearly or Extra $10 mil/QTR toward EBITDA.