I came up with my number by eliminating Canadian and coal losses, cutting interest expense in half with debt reduction from asset sales, cutting overhead by 25% with some operations gone and taking the present US iron ore operational profits at current iron ore prices. The wild card I held out is the tax advantage from taking non cash write off from asset sales and previous impairment charges.
Just a bunch of profit sources in the future!
It would be something, however I would be happy with $750 million. With that and selling off their coal assets, they could easily retire $1.5 billion in long term bonds at current bond prices.
One that will be earning $5 a share at current iron ore prices, at a 12 PE, figure what the stock price will be.
With good news on BL, we should see some short covering and when the Logan County Mine closes before the end of the year, we will see a short squeeze hit.
These non cash paper losses equal future tax gains that create real cash income. Once the dust settles you are going to see a CLF that will earn $800 million a year and will have a total debt load of $1 billion.
Not only the iron ore, but as I have pointed out in the past, the Bloom Lake Rail section is key to moving iron ore from the entire area to the Port. Any company that is currently mining the area needs to secure this line and will put up the money to buy the entire mine to get it.
Not in mainstream media. Shorts still working the CLF high debt angle even though it has no merit. Their analyst friends have convinced the market that CLF is on the edge of default without providing any details of their current debt structure. But that is how a short attack works, throw the attacks without details. CLF has taken the position where talking about it is not an option, they will take action. When they have a firm contract, they will present it to the market and then the market will react.
What you have here is two sets of rules, WS and the company needs to live by rules of disclosures whereas governments can release anything they want to the media. In this case, the Canadian government wanting to impress their voter base that they are working hard for them released information that CLF could not.
This is great news. BL, coal assets and Wabush could allow them to retire up to $2 billion in long term bonds if they can average out a 30% discount on the bonds.
Also, the Provence has given Wabush $3.8 million over 3 years to offset the loss of $2 million a year CLF was paying the town. They are still optimistic that a deal with MFC will be worked out as CLF said it is going to permanently close the mine, but has yet to turn off the heat to the facilities, saving the interior from freeze damage.
Yes they do and LG no longer wants to address them at every turn. Instead he is setting up a bear trap with future actions that he knows is going to take place like sales of assets, earnings, debt reduction… then he will just pick them apart.
Debt is not a problem, that is why CLF will go after buying their 2040 bonds first as they have the highest interest rates. If debt was a problem, they would be going after the 2018 bonds first. But CLF's priorities is to reduce their overall cost.
As much as I would like for something now, don't think we will get anything until next week when they announce the closing of the Logan County coal mine transaction. After the first of the year, we will get other asset sales.
Instead of listening to analyst, why don't you just look at CLF's debt, the first unsecured, not callable, bond is due in 2018 and their revolving credit line has a zero balance. There is NO debt due in the foreseeable future. Unless you can find one!
When CLF starts buying back bonds with cash from asset sales, my guess is they will buy as much of their 2040 bonds because they have the highest interest and the largest discount to face value.
Yes, and I still don't understand why the miners are tracking oil prices. I can see FCX and TCK with their oil holdings, but not the others. CLF took a leg down on dropping IO prices and now another leg down on lower oil prices.
Thank you, this is the key to this posting that Skitter did not take into account for.
They do account for over 46% of US iron ore sales, some of those pellets are shipped from the US to Europe and other countries outside the US. And some of those pellets are shipped to US Steel as well. I recall reading an article that the percentage is over 50% now, but I can't find it now, so I will stick with the 46%.