One other thing, why in the _____ did CLF not disclose this in their PR statement, instead we got flooded with articles of CLF giving away their chromite holdings for pennies on the dollar. It is like they want the public to think they are stupid to spring it on them later in order to trap someone.
I did not notice this, totally changes the dynamics of this deal. Could this be the way Wabush and Bloom Lake is sold as well.
Thanks for finding this.
Absolutely not, unlike a tree, with a transportation line you can't have a bunch of branches. Have put in many subdivisions and I know all about access right of ways and how important they are.
And this is why CLF should have bailed on seaborne iron ore a year ago. On the plus side, if RIO's cash cost at the mine is $20, it takes $25 to pelletize it, $20 to ship it to the US (higher due to limited quantities and multiple ports) , $10 to deal with limited quantities as US mills operate a JIT inventory system which all totals $75 in cash cost without the overhead required to operate sales and support here.
It is easy to see that CLF is the lowest cost iron ore producer in the US market.
The projected cash cost is $42.17 loaded at the port at Sept Lles. If they can pick up CLF's assets and get the government to kick in some, they will be able to get their cash cost below $40. This will make a great deal for their partners, Hebie Steel and Liberty Metal and Mining Holdings to insure a future of low cost iron ore. This is why it is important to pick up on the Wabush assets now.
With a little bit of work you can find the IP address on any posters here, after doing a few times and pulling some information, it just isn't worth the time it takes. Better to just ignore them.
Yes these are short lines, but can be extended to service nearby mines as these short lines are the ones that connect into the main lines. Think of it in terms of a main road. You have a side street and any property beyond the reach of the side street has two options, connect into the side street or build a complete new street. Then you have the restriction on the number of connections you can make to the new street. This is where the Kami mine falls and with MT, they can connect into the BL rail and route more ore from the are to their dock.
Been through bankruptcy several times and know the difference between secured and non secured holders. Also know where leases fall into the mix. When people that was leasing one of my houses filed bankruptcy on me, my rent due was placed in non secured. You have to realize that CLF is not filing bankruptcy, their subsidiary is. So CLF is gets up to a specific amount for the sale of these assets and with the courts approval, they can sell these assets outside of the bankruptcy as the case with the Ring of Fire holdings. The court's approval is required to make sure they are getting market value for the asset and not trying to hide money through selling it to a friend of a friend.
That $700 million is a non secured lease which goes into the non secured pot. All of the property is owned by CLF and leased to the subsidiaries. RIO will only get money if CLF is paid more than the current book value of the assets.
You and everyone else need to ignore and not reply to his post. Just let him continue to talk to himself and the handful of his "supporters". I know it is hard as I have found myself replying to him only to realize what I am doing and cancel the reply. Post here do not impact the price of this stock at all, postings provide information and that is what you should use this board for, not arguing with these paid bashers or just plain nut jobs.
The government will install power to the mine area if Alderon can proceed with the project and hire all of the displaced workers from the Wabush mine. That alone will save Alderon between $100 to $300 million.
We all know Wabush is totally worthless to CLF and LG did not go through with the deal with MFC had worked out with the old management. It is clear the existing rail and dock facilities will cost less than building new. So what we have is two companies that want to pick these assets up as cheap as they can, but their future depends on buying Wabush, without it Alderon cannot complete the Kami project or without it, MFC will not see a royalty for many years to come. Will CLF make a windfall, absolutely not, but they should get a better deal than what the old management worked out after you factor in the reduction in liabilities CLF has. CLF will walk away with cash which I don't think they would have done with the original deal they had with the old management. The ones that are going to get fleeced is all the secured claim holders that will not get enough from the sale of their assets to cover what is owed.
So to answer your question about CLF getting fleece, I would say they will not. They will not get their current book value out of the assets either, but no one really expected it. I would be surprised if they get $100 million, but eliminating future liabilities is huge for CLF's future profits.
As I have said many times on this board, mining in Canada comes down to controlling transportation cost. It is the Wabush and BL rail systems and the dock facilities at Sept Lles that have the real value. It not only saves cost, they generate revenue as all the miners need to use them to get their ore out of this remote area.
Because of current market conditions Alderon has problems securing financing for their project which includes rail and dock facilities. The cost to build these today is extremely high and will push their ore cost too high. They need to be able to cut their cost by acquiring these assets below current cost from CLF and to have the government pay to supply power to the area. Without these deals, the Kami project is dead until iron ore prices recover. If they can put a deal together to pick up CLF's assets, they could be back on track to having the Kami mine open in 2016.
This is really a complex situation and I still think MFC is in a better position to buy the Wabush assets and stand to lose the most if Wabush never produces iron ore again.