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Cliffs Temporarily Halts Chromite Project

Zacks Equity Research

Cliffs Natural Resources Inc. (CLF) has announced that it is temporarily suspending the environmental assessment activities for its Chromite Project in the “Ring of Fire” region of Northern Ontario due to certain unresolved issues.

Cliffs, which is among the prominent players in the mining industry along with BHP Billiton (BHP), Rio Tinto (RIO) and Newmont Mining Corp (NEM), cited a number of issues that were responsible for the suspension of the environmental assessment process for the Chromite Project.

These issues include delayed approval of the Terms of Reference for the provincial Environmental Assessment (EA) process, unresolved land surface rights issues, unfinished agreements with the Government of Ontario that are crucial to the project's economic viability and uncertainty regarding the federal EA process due to the current judicial challenge by a number of the impacted First Nations. Once these issues are resolved, Cliffs will go ahead with the project.

Cliffs is an international mining and natural resources company, a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. The company released its first-quarter 2013 results in Apr 2013.

Cliffs posted adjusted earnings of 60 cents per share in the quarter, down 29.4% from 85 cents earned in the year-ago quarter but ahead of the Zacks Consensus Estimate of 32 cents. The adjusted earnings exclude a tax benefit of 6 cents per share.

On a reported basis, Cliffs’ earnings were 66 cents per share compared with $2.63 reported in the year-ago quarter. Weak iron ore pricing coupled with lower volume hurt Cliffs’ earnings in the quarter.

Sales for the quarter came in at $1,140.5 million, down roughly 5.9% from $1,212.4 million in the prior-year quarter and also missed the Zacks Consensus Estimate of $1,226 million. Decline in global iron ore sales volumes led to reduced sales in the quarter.

Cliffs currently retains a Zacks Rank #3 (Hold).

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