Assuming CLF sells 3 mil tons of IO in Q-1 and Gross margins are $30/ton and No profit margins from APIO and NAC and both are total wash or neutral.
$30 x 3mil = $90 mil EBITDA minus $45 mil Interest = $45 mil minus $25 mil Dep/Am = $20 mil minus $13 mil Preferred Dividend = $7 mil minus $1 Fed Tax @ 10% = $6 mil net profit or $0.04/sh earnings .. still a lot better than( $0.17/sh) Loss est. by Analysts.
skit..you are shooting off your mouth w/o knowing but its true or CEO will not make an irresponsible statement like that. Not going to argue with you any more on this.
CLF will get that amount from Uncle Sam for impairment charges. This together with $290 mil Cash on hand
will make Total cash available $ 551 mil to use for working capital and any debt reduction
ca.. Go read Q-4 CC report again. As I recall, their Cash cost of APIO was about $50-$55 in Q-4 when SBIO was $70 and CLF 's EBITDAS was $40mil to $50 mil ($10-$12/ton margins and Not $3.5/ton per you) from APIO operations in Q-4. In 2015, LG said APIO cost will be around $43 and still be a bit profitable or
breakeeven. Did I answer your Q?
With IO prices this Low... No other supplier will enter US IO market for Lumps, Fines or Pellets. Its NOT Feasible. So CLF has got it all. Only their worry is APIO and hope they sell it.
ca.. First USIO pellet price doesn't go down proportionally to SB IO fines. If SB IO goes down $10, Pellet price goes down $2-$3 . In Q-4 Selling price of pellets was $99/ton when SBIO was around $65 .So now that IO is around $52, CLF's IO pellet will go for roughly $85-$90. Besides CLF has LT contracts with steel
companies, and LG has said that the Cash cost of IO pellets will be $55 or lower in 2015. So there are plenty of margins. SB IO price is ONLY an INDICATOR for USIO and NOT a DIRECT COMPARISON. CLF's biggest problem is its Debt accumulated under the past management. and LG is doing his best to reduce it to under $2B. Ability to servicing this debt is the Most IMP thing for CLF
Second..APIO depends on SB IO price.That is why LG wants to get out of APIO . He has reduced the cash cost of APIO to $43..so still it is somewhat profitable . We will know more about it in LG's 4/28 CC for Q-1. Perhaps he may announce the sale of APIO. I hope he does.
CLF can dig out IO from mines under $30/ton just like Rio and BHP 'cost as labor cost in Australia is NOT any cheaper than in USA. But its the CONVERSION to PELLET which costs extra $20-$25/ton . But with all cost cuttings, LG can bring down the cash cost of pellet to $50 or under, and No one sells 62% Fe pellets for less than $100/ton in China and
India plus Vet Tax of some 18%. So CLF's selling price of pellet will not go under $85-$90 even if SB IO Spot price goes down to $45. Unlike Vale , RIO or BHP, CLF has this advantage of $25-$35/ton gross margins in USA. However their APIO business will struggle if IO falls below $50. (since SB IO now @ $53/ton)
CLF's major problem is its debt and if its lowered by generating more cash from Business operations or by selling non-performing assets down to under $2 B, Interest cost can go down under $140 mil and its doable. If they also reduce the Preferred Dividend by 40%-50% and cut Dep/Am cost, they will be in a driver's seat and stock price can rise to $20 in next 12 months.
With SB IO @ $53/ton and their Cash Cost @$57, Then its easy for CLF. They are only little in SB IO market and APIO cost is still under $45 and still making a little profit. CLF's USIO pellet Cash Cost is $60 including CapEx and GS&A and their pellets still sell for .$90 plus . So very good EBITDA. and don't know why Analysts still bash CLF.
$600 mil in yearly Debt reduction won't happen unless they increase USIO business t with some 30 mil tons from 22 mi tons and they cut more cost.
L G should send one his assistants to Quebec to talk to the Gov. about selling BL mine to some Can Miner subsidized by the Gov. He should stay at a cheaper hotel like Hampton Inn or Motel 6 and negotiate till sold.
Reducing debt is the Key to CLF and LG. If Interest goes under $150 mil,it will be great. Cutting more SG&A cost and CapEX is a MUST. Who is shark?another long? Good!!
He reported $0.23 Earnings of Q-3,14 and $1.00 for Q-4,14 when all analysts were projecting losses for CLF. LG will again surprise WS and Analysts and report around $0.25 Earnings instead Loss. This time he MUST get visible to MEDIA . So Shorts stop bashing CLF.