the sale of BL and Wabush by providing 20% financial interest in the mines as well as buying the transportation systems. Alderon needs the Wabush transportation systems to support their Kami project, but does not need the Wabush mine and will hire all the displaced workers from Wabush to operate Kami. Not mining Wabush causes a loss of revenue to MFC and now I understand the objection they filed with the Canadian courts. IOC does not want to see someone like Alderon to have a subsided price advantage which is the real reason for their objections. Again, this is pure speculation based on actions of the parties involved.
From the Fool:
"Now what: We need to put this in a little context. $123 million in debt is a small dent in that $2.7 billion debt burden weighing on the company. Even after this repurchase, there are still $313 million in notes outstanding in 2018. After that, the company has another $1.6 billion due in 2020."
Now lets put this in realty, $123 million is not a small dent, it is 25% of the bond due!
$2.7 billion in debt is $1.1 billion LESS than it was a year ago and they took it down with only selling off a coal mine for $175 million!
They have cash on hand NOW to pay the $313 outstanding and they will be able to buy them at much less than this stated face value!
Finally $1.6 billion due in 2020, again that is face value and will be able to buy back those bonds at less and we are talking 5 years from now!
All of this debt could be gone IF they get a fair price for all of their assets they are selling. But if they don't, all this debt is totally manageable. The reason the stock is up is that investors are finally seeing through all this media bashing!
Market cap has absolutely nothing to do with managing debt. Simply put managing debt is all about making interesest payments and meeting near term maturity dates. So far, CLF has paid all interest due while posting earnings and positive cash flow. There is no maturity due in the near term and CLF has enough liquid cash to meet future obligations. The fact is CLF has managed to reduce debt over the last year by $1 billion or 25% of their debt.
Due to CLF's US pellet contracts, they are in a unique position where they don't need to increase output to maintain cash flow. They continue to produce ore to meet orders, not to oversupply. But thanks to the drop in seaborne iron ore prices, they are picking up more demand due to closing of their competition's mines.
Finally, CLF is eliminating future liabilities to the tune of $700 million with the CCAA process. They have stopped all production that is not generating profits. Both would have been a drain on future profits, now they can use that savings to reduce debt further without selling assets and pay down debt by another $1 billion.
came in at 5,534,299 tons. For Q2 that makes 15,404,011 tons. On the conservative side if you take 40% of that number, you come up with 6,161,694 tons that would be what CLF shipped on the Great Lakes. There are some rail and truck shipments that need to be added to that total that will put CLF's Q2 US shipments between 6 and 7 million tons.
From Bloomberg Business:
"Lourenco Goncalves, Chairman and Chief Executive Officer of Cliffs Natural Resources Inc. (Cliffs) (NYSE:CLF) said that Cliffs is seeking to sell rest of the coal assets to Coronado Coal II LLC. Coronado Coal II is one of the potential buyers. The coal assets include the Pinnacle complex in West Virginia and Oak Grove mine in Alabama. Lourenco declined to disclose other potential buyers."
This confirms my speculation...
On the fall of iron ore prices just as iron ore prices are rising. It is about time they recognize editorials that backed by certain interest, not facts.
Cash burn? Paid down debt by almost $1 billion, built cash to over $300 million, built inventories to over $400 million, tax refund due around $150 million. The proper classification is non cash expenses, not non-repeating and that should explain your misconception. And do you realize they took impairments on Canadian assets to bring down the value to the $350 million range. If they get more than $350 million, they will have to report the excess as income which will reduce their future tax benefits.
" In the second calendar quarter of 2015, Northshore credited Mesabi Trust with 1,315,630 tons of iron ore, as compared to 1,113,443 tons during the second calendar quarter of 2014."
This shows that CLF's iron ore volumes will be up for Q2 as they only increase ore from this source when they have trouble keeping up from the other mines that they don't have to pay royalties.
Read the Daily Media Report, CLF is sending a customized pellet to the Nucor DRI pellet plant now. I don't know the specifics, but it sounds like this pellet is converted to DRI since it is being shipped to the DRI plant, not the steel mill. If CLF has worked out a pellet that can be economically converted to DRI at the steel mill, they just solved the major logistic problem associated with the DRI supply chain.
Can someone explain why so many of you bashers have changed their screen names so many times over the last 3 years? That is why they are called bashers.
$2.32 per share in cash
$2.49 billion in levered free cash flow
124 million shares float
Earned 2 cents per share in Q1 which is the slowest quarter and is used to build inventories (over $400 million).
The mine may not sell, but they will get good bids on the rails and port. Along with elimination of liabilities, this would be the best outcome for CLF. They could really use the iron ore in the future with the growth into DRI.
2018 bonds outstanding that needs to be paid is $435 million.
8 quarters of earnings available to pay this amount which makes it $54 million needed per quarter. At the current price of bonds, CLF need to come up with $27 million a quarter.
$30 million a quarter in DD and A which is available cash to use to pay against this debt.
$400 million in inventories that cost $250 million to produce per year. Leaves $150 million per year or $37 million per quarter to pay against debt.
Without touching earnings, asset sales or tax refunds, CLF has $67 million per quarter to pay off debt before the due dates. This is why CLF has insisted that their current debt is totally manageable.
"25. As previously reported, pursuant to the SISP, the Phase I Bid Deadline for the expression of non-binding letters of intent was May 19, 2015 and a number of letters of intent were received on or before that date. In order to protect the integrity of the SISP, specific details in respect of the letters of intent received have been kept confidential.
26. The Phase II Bid Deadline for the submission of binding offers was 5:00 p.m. Montréal Time on July 16, 2015. A number of offers were received prior to the Phase II Bid Deadline, which offers the CCAA Parties and the Monitor are in the process of reviewing. In order to protect the integrity of the SISP, specific details in respect of the offers received will be kept confidential at this time.
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27. In parallel with the SISP, the Monitor has obtained proposals for the liquidation of assets. A number of liquidation proposals have been received and are being reviewed by the CCAA Parties and the Monitor in conjunction with their review of the offers submitted under the SISP."
Looks like we are not getting bidder information yet.