Just needs to come out and outline the financial benefits to the Bloom Lake bankruptcy. Have been trying to figure out the ownership of real assets at Bloomlake and have been coming up short of answers. I am almost certain that the parent company owns the mine and the Bloomlake Partnership has mining leases and mining camps that they paid somewhere between $1 million to $33 million each. But I have not come up with a single breakdown of the structure. CLF knows it and should address the structure to the market now, what can it hurt?
Iron ore is sold in USD and Australian operations are paid in AUS dollars which benefits CLF. Since closing CAN operations, little effect there. And no impact on US operations except for the increase in steel imports. I guess I am not seeing a problem here.
That is ON TOP of the tax benefits from the previous impairment charges that were carried forward.
I agree your charts do influence the price, especially when the volume is low. But when the stock starts trading over 10 million a day, then fundamentals take over. The one thing I think we can all agree is that this company is not going bankrupt with the future tax benefits more than covering all future interest payments and the cash that is generated off US operations. All we need is for management to promote the strong fundamentals every day for several months.
So I was not far off with my $2 estimate. The market just doesn't seem to understand the accounting of impairments.
Jeff, some pretty generic statements…
Debt, while just under $3 billion it is not ideal but yet it is manageable with the nearest bond due in 2018 and all interest rates are fixed. CLF generates more than enough cash to service their debt and actually pay it down.
They do have buyers for their marginal assets, just takes time to put the deals together after all it is not like selling a $250,000 house.
Yes, they did make a mistake as many did buying assets at the high of iron ore prices, but again they can manage their purchases and have enough cash to pay for those mistakes and move forward. Tax benefits from writing down these assets is helping the company to pay for these mistakes which many of the shorts are not taking account of.
On moving forward, they are concentrating on US market where they have healthy margins with a value added iron ore pellet operation. Looking to the future, they are not looking to expand into international iron ore markets, rather reach an untapped US DRI market where scrap based steel mills need it to stay competitive with the iron ore based steel mills domestic and international.
10:15 and the stock is at it's highs and the volume is on a 1 million share per hour pace, could be the turn we have been waiting for… just wish there was some news out of CLF, progress statement about Bloom Lake should be out by the end of the month.
CLF has been taken down by world iron ore demand and seems to have an impact on CLF. Of course the shorts have blasted CLF on the fall in world iron ore prices and it only seems like they will be true to form if they ignore increases in world prices.
From Mining Guru:
"Over 60% sponge iron plants in Karnataka have shut operations due to shortage of iron ore, impacting small and medium steel companies such as Kalyani Steel, Sathavahana Ispat and Kirloskar Ferrous.
According to the Karnataka Iron and Steel Manufacturers Association, more than half of the 60 sponge iron plants have shut shops and several others have suspended operations partially as the mining ban in the state has crippled mining operations and created a shortage of raw material for steel units."
Half of India's steel production comes from sponge iron ore and it appears that domestic supplies can't keep up with India's growing steel production. This is confirming the shift from China to India as India is becoming the world's number one producer of steel.
CLF's silence feeds the shorts and anyone acting as a mouthpiece for CLF is just ignored. CS projection that CLF was headed to $1 pushed the stock lower as shorts jumped on while their current reversal was ignored and had no effect on the stock price.
The Bloom Lake partnership has several mineral right leases and mining camps on their list of real estate holdings but there is no listing who they are leasing those rights from. I have to assume that they have leases from the parent company of CLF and Wuhan, but in the filings I don't see this since the parent company and Wuhan is not the ones going into bankruptcy. As I see it, if CLF sells the actual mine, they will get the proceeds of the sale minus the courts set value of those leases and structures which will go into the pot to pay against creditor's claims. At current iron ore prices, those leases and mining camps are not worth much.
CLF needs to come out and clear all of this up for the market to understand. But they will most likely wait until a deal is inked to provide the market with the break down of proceeds.
Overall the volume of trades in CLF is 50% of normal with very low buying pressure. This is the biggest reason this short ratio is so high.
Carrying forward losses reduces future tax payments allowing you to keep more profits but carrying your losses back allows you to collect taxes paid in the past. This is like a big tax refund that injects cash into your account. For CLF these tax benefits are huge and easily account for an additional $2 a share in earnings that will continue for years.
Jeff, if you are keeping score, took another $100, would have held but my rule going into the close, if I have a profit, take it and see what the price is at 10:15 tomorrow.
noticed overall volume in the market is low… could be Greece, Chinese New Year, the Fed… something is keeping the market on the sidelines.
Try to keep this simple for you. A home owner is underwater on their home but they continue to pay their mortgage payment through their earnings. These people are far from bankrupt because they are earning enough to continue meet their obligations. Same with CLF, they are earning enough to not only meet their interest obligations, but continue to pay down their debt load. This earnings is what CS sees and the value added nature of iron ore pellets is the reason they give them a 20 PE which gives them future earnings to continue to pay down debt ahead of their due dates.
You are bankrupt when you no longer can meet loan obligations and other lender obligations. Book value has nothing to do with it. Again, tell us which lenders can foreclose on CLF instead of sticking with your short based argument.