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Cliffs Natural Resources

Lacking buyers, Cliffs Natural looks to exit Quebec’s Bloom Lake mine – by Bertrand Marotte (Globe and Mail – November 19, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

MONTREAL — Hobbled by an iron ore price plunge and high costs, Cliffs Natural Resources Inc. says it is “pursuing exit options” for its Eastern Canadian iron ore operations which may result in the closure of the Bloom Lake mine.

The U.S. iron ore producer, cut to junk status by Standard & Poor’s last month, said on Wednesday that a “potential investment” in Bloom Lake is not “achievable within a time frame acceptable to Cliffs.”

Closing costs at the mine, located north of Sept-Îles, Que., would be in the range of $650-million (U.S.) to $700-million over the next 5 years, the company said. About 500 people work at Bloom Lake.

The price for iron ore – a key ingredient in steel-making – has slipped to its lowest level in more than five years. It is now in the $72-per-tonne range and could fall to less than $60 as output continues to rise and global demand remains weak, Citigroup Inc. said in a report.

A slump in Chinese demand and a global iron ore glut as Australian producers ramp up production have pushed prices down. “The drop in the iron ore price is forcing the closure of some of the higher-cost ore mines,” Raymond James analyst Adam Lowe said.

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NEWS RELEASE: Cliffs Natural Resources Inc. to Pursue Exit Options for its Eastern Canadian Operations

CLEVELAND, Nov. 19, 2014 /CNW/ — Cliffs Natural Resources Inc. (NYSE: CLF) announced today that it is pursuing exit options for its Eastern Canadian iron ore operations which may result in the closure of the Bloom Lake mine.

Lourenco Goncalves, Cliffs’ Chairman, President and Chief Executive Officer said, “Despite the continued interest of the prospective equity partners in Bloom Lake and in its high quality ore, the potential investment is not achievable within a time frame acceptable to Cliffs. With expansion no longer viable, we have shifted our focus to executing an exit option for Eastern Canadian operations that minimizes the cash outflows and associated liabilities.”

The Company previously disclosed that to make Bloom Lake viable, the development of the mine’s Phase 2 was necessary. The investment was estimated to cost $1.2 billion. In the event of a closure, the estimated closure costs are expected to be in the range of $650 million to $700 million in the next five years.

Cliffs stated also that the Company’s subsidiary, Cliffs Quebec Iron Mining Limited, along with Bloom Lake General Partner Limited and The Bloom Lake Iron Ore Limited Partnership, recently lost an arbitration claim they filed against a former Bloom Lake customer relating to the August 2011 termination of an iron ore sales agreement. In November 2014, the arbitrators decided in favor of the former customer and awarded it damages in an amount of approximately $71 million as well as attorneys’ fees and accrued interest from the date of termination of the offtake agreement in August 2011.

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Steelworkers president optimistic for future of Wabush Mines – by Ty Dunham (St. John’s Telegram – November 4, 2014)

http://www.thetelegram.com/

Businesses and families are feeling the slowdown of the iron ore market, especially those affected by the idling of Wabush Mines in February.

The recent news of Cliff’s Natural Resources choosing to shut the mine down permanently after negotiations with potential buyer MFC Industrial fell through has prompted many to worry about their future in Wabush.

But MFC is continuing to explore options to take over the mine, which is why United Steelworkers (USW), Local 6285 president Jason Penney is remaining optimistic.

“From what we’ve been told, as royalty holders they have certain contractual rights, which will allow them to re-enter the plant,” explained Penney. He said it’s not a matter of if MFC reopens the mine, but when.

“MFC seems like a very solid and strong company. This is not their first rodeo. And they’re adamant that they’ll reopen the mine. We just

hope it can be done in a quick time frame.” While it isn’t the preferred route, Penney said it’s better than the alternative. “There’s no doubt we’re disappointed by the sale. This way will be longer. The important thing I want people to remember is all hope is not lost.”

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CEO Mocks Analyst, Refuses To Answer His Question On Public Webcast Because His Stock-Price Target Is Too Low – by Myles Udland (Business Insider – October 29, 2014)

http://www.businessinsider.com/

Lourenco Goncalves, CEO of the mining and natural resources company Cliffs Natural, doesn’t take questions from haters.

On Cliffs’ earnings conference call on Tuesday morning, Goncalves told Wells Fargo analyst Sam Dubinsky that he wouldn’t answer Dubinsky’s questions because “you already know everything about my company.”

“You have a $4 price target and you think we can’t sell assets, so I’m going to take the next question, I’m not going to answer you,” Goncalves said. It is a jarring exchange.

In a note to clients following the report, Dubinsky wrote that Goncalves was “pretty bold” on the earnings call. It was also Goncalves’ first earnings call as CEO since being named to the position on Aug. 7.

And the exchange, or really just the shutting down of Dubinsky’s questions by Goncalves, shows some of the complications inherent in the relationship between companies and analysts.

It is Dubinsky’s job, as a research analyst, to publish his assessment of the companies in his coverage area and, based on this work, publish a recommendation on how he believes the stock will perform going forward.

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New Cliffs CEO sees ‘zero hope,’ no asset sale in Ontario’s Ring of Fire – by Peter Koven (National Post – October 29, 2014)

The National Post is Canada’s second largest national paper.

The new chief executive of Cliffs Natural Resources Inc. doubts that Ontario’s “Ring of Fire” will be developed for decades to come, or that anyone will buy his company’s rich chromite assets in the region in the near future.

Lourenco Goncalves, 55, said in an interview Tuesday that he has “zero hope” that a solution will be reached to spur on development in the region anytime soon.

“I don’t believe under my watch, and I plan to stay [alive] for the next 50 years… that the Ring of Fire will be developed,” he said.

A handful of junior mining companies, including KWG Resources Inc. and Noront Resources Ltd., are more optimistic and are interested in buying Cliffs’ Ring of Fire properties. But according to Mr. Goncalves, they all have the same problem: “They do not have any money.”

His comments have to be discouraging for the Ontario government, which made the Ring of Fire the centerpiece of its northern development plans. To date, Cleveland-based Cliffs is the only large mining company to take a serious interest in the area.

The Ring of Fire, located in the remote James Bay Lowlands, was discovered amid much fanfare in 2007. It is thought to hold about $60-billion of chromite, base metals and other minerals.

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Cliffs Turnaround Plan Derailed by Iron Ore at 5-Year Low – by Sonja Elmquist (Bloomberg News – October 27, 2014)

http://www.bloomberg.com/

Other assets are being sold off quickly. The sale of a minority holding in a graphite
mining company was completed in August. Goncalves said he’s trying to sell a chromite
project in Canada’s Ring of Fire mining region “as soon as I can.”

Activist investor Casablanca Capital LLC’s plan to revive the fortunes of the largest iron ore producer in the U.S. is crumbling as the price of the commodity drops to a five-year low.

Casablanca went public in January with demands for Cliffs Natural Resources Inc. (CLF) to spin off or sell foreign mines and return more cash to investors. Casablanca won a proxy contest in July with the election of its slate of directors on the Cliffs board, one of whom was appointed chief executive officer.

With the iron ore market now in a worse state than it was at the start of the year, Cliffs may struggle to sell mines for a satisfactory price. Instead of raising its dividend, the Cleveland-based miner may have to eliminate the payout entirely, analysts at Citigroup Inc. and Nomura Holdings Inc. say.

A higher dividend “was something Casablanca promised before I joined,” Chairman and CEO Lourenco Goncalves said by phone in an Oct. 14 interview. “I’m not Casablanca.”

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Cliffs books $5.9bn loss on iron-ore, coal asset write-downs – by Henry Lazenby (MiningWeekly.com – October 28, 2014)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – US miner Cliffs Natural Resources reported a third-quarter net loss of $5.9-billion, or $38.49 a share, after booking a $5.7-billion write-down of its iron-ore and coal assets.

The Cleveland, Ohio-based company, who came under new management in July, following activist shareholder Casablanca Capital’s victory in a proxy contest, wrote down $4.5-billion related to the Bloom Lake iron-ore project, in Quebec, $28-million related to the shuttered Wabush iron-ore mine, in Labrador, $390-million related to its Asia Pacific Iron Ore (APIO) business segment and $539-million related to its North American Coal assets.

The company also booked a $254-million charge on its chromite assets, after indefinitely pulling out of Ontario’s Ring of Fire earlier this year.

Excluding the one-off charges, the company reported an adjusted profit of $33-million, or $0.21 a share, compared with an adjusted net income of $144-million, or $0.88 a share, in the same three-month period ended October 30 a year earlier.

Consolidated revenues of $1.3-billion were 16% lower year-on-year, mainly owing to iron-ore pricing sliding 32% in the past year, while metallurgical coal pricing declined 17%.

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Iron ore price collapse claims more victims (Northern Miner – October 17, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

Cliffs Natural Resources (NYSE: CLF) and London Mining (LSE: LOND) have become the latest casualties of falling iron ore prices, with Cliffs declaring a US$6 billion non-cash impairment charge in the third quarter on its iron ore and coal assets, and London Mining placed into administration.

London Mining says it will try to work with its administrator, PwC, to maintain its Marampa iron ore mine in Sierra Leone as a going concern, while Cliffs is working with its banking group to get an amendment that will eliminate the debt-to-capitalization covenant of 45% currently present in its revolving credit facility, as the non-cash impairment charge will increase the debt-to-capitalization ratio over that threshold.

Iron ore prices have fallen to five-year lows and are down about 40% so far this year at about US$80 per tonne. When London Mining’s Marampa iron ore mine in Sierra Leone entered production in December 2011, iron ore was selling for about US$140 per tonne, well above today’s levels.

It’s not the first time Marampa, which was operated between 1933 and 1975 by the Sierra Leone Development Company and William Baird, has suffered from depressed prices. The mine was closed for a period of time in the 1960s due to low prices for the metal.

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KWG, Noront react to Cliffs shakeup – by Ian Ross (Northern Ontario Business – October 3, 2014)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

Frank Smeenk was direct in his appraisal of Cliffs Natural Resources ending up on the wrong end of an acrimonious proxy fight with a New York hedge fund. “I thought they deserved everything that befell them,” said the president-CEO of KWG Resources. “They haven’t been easy to get along with at all.”

There’s no love lost between the Toronto junior and the Ohio miner, but a change in leadership and corporate philosophy in Cleveland may signal the thawing of a frosty relationship.

The head of KWG wasn’t at Cliffs’ July 29 shareholders meeting to gloat over the demise of the old guard at the 167-year-old mining giant, but it was a get-acquainted opportunity to meet the new blood as Casablanca Capital seized control of the board of directors.

Casablanca has vowed to make good on its promise to carve off Cliffs’ costly international projects, including its mothballed Ring of Fire chromite properties, like the Black Thor deposit, from its core U.S. mines.

“I’m trying to persuade them that KWG can be the (development) vehicle,” said Smeenk, “that it might be opportune for (us) to be their partner of choice.

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COMMENT: Cliffs to sell Ring of Fire – by Marilyn Scales (Canadian Mining Journal – September 22, 2014)

http://www.canadianminingjournal.com/

Word is getting around that Cliffs Natural Resources wants to shed its properties in the Ring of Fire. The Cleveland, OH-based company slammed the door on its Big Daddy chromium project last November, and sold the exploration camp this summer. Thus, the largest player in an exciting new Canadian mining camp went home.

Now that Cliffs has ousted its Canadian-born executive Gary Halverson and replaced him with chairman, president and CEO Lourenco Goncalves, the idea of selling Big Daddy is gaining traction.

The Big Daddy project covers three deposits – Big Daddy, Black Thor and Black Label. The Big Daddy chromite deposit was discovered in 2008 by KWG Resources of Toronto and partner Spider Resources. The next year KWG approached Cliffs about becoming a partner at Big Daddy, and since 2010 Cliffs has spent in the neighbourhood of $500 million in the Ring of Fire at Big Daddy and Black Thor, which it owns outright. KWG retains a 30% interest in the Big Daddy deposit.

The partners fell out after KWG staked land for a potential rail line to the region. Cliffs balked, preferring a road instead.

Now it emerges that KWG president and CEO Frank Smeenk has had discussions with the Goncalves about buying out Cliffs’ share. If KWG can raise the money, a sale might suit both companies very nicely.

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Cliffs says it’s weighing its options in the ‘Ring’ – Star Staff (Sudbury Star – September 20, 2014)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Reports are suggesting that Cliffs Natural Resources is looking at selling its Ring of Fire chromite properties.
 If so, the move would be full circle for Cleveland-based Cliffs, which at one time planned to have an open pit mine and ferrochrome refinery in Capreol, creating as many as 600 jobs in the Sudbury area, by the middle of this decade.

In the fall, however, Cliffs halted all exploration and technical work on its Big Daddy chromite deposit and suspended spending on the project. In the summer, it sold off its remote exploration camp to Noront Resources. 
The Globe and Mail is now reporting that Cliffs sent a letter to First Nation chiefs in the area that it was considering selling its chromite properties in the James Bay region.

The letter, obtained by the newspaper, included a statement from Cliffs vice-president of corporate development Bill Boor, that a sale of the project was among those options.

The Globe is also reporting that KWG is looking at buying Cliffs holdings in the Ring of Fire area.

Cliffs spokesperson Patricia Persico, reached on Friday, said a potential sale of Ring of Fire properties is only one of several options the company is considering.
“Cliff’s is exploring alternatives with the chromite project,” Persico said. “Potential sale is an option, but it’s a range of strategic options we’re looking at.

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AUDIO: NDP MP Claude Gravelle blasts Tories over Ring of Fire inaction (CBC Radio Sudbury – September 19, 2014)

http://www.cbc.ca/news/canada/sudbury

Feds claim Ontario has not identified Ring of Fire mining project as a priority

Concerns about the development of the Ring of Fire are being raised in Ottawa. This week, KWG Resources announced it’s talking to Cliffs Natural Resources about the company selling its assets.

So far, Cliffs is only saying it is exploring strategic alternatives. During question period, Nickel Belt NDP MP Claude Gravelle questioned the Conservative party about the mining developme

“Northerners are fed up,” he said. “Instead of a real plan from the Liberals of Ontario, there is real trouble. Start-up is delayed, the smelter is on hold. Thousands of potential jobs are in jeopardy, but we see no leadership from the Conservatives.”

He asked what the Conservatives will now do to get the Ring of Fire file moving. “Unlocking the vast potential of the Ring of Fire will require a nation-to-nation approach and real engagement from the federal government,” Gravelle continued.

“Northern communities should not be forced to pay for the price of government’s inaction. We’re talking about good value-added jobs and economic development that would transform our region.”

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Cliffs may be looking sell Ring of Fire claim – Interviews by Jason Turnbull (Points North – September 18, 2014)

http://www.cbc.ca/news/canada/sudbury A news report claimed Cliffs Natural Resources wants to sell off its assets in the mineral deposit. Interviews with KWG Resources’ Moe Lavigne and Ontario NDP MPP’s Michael Mantha. Click here for an audio interview: http://www.cbc.ca/player/Radio/Local+Shows/Ontario/Up+North/ID/2522905241/

Cliffs wants out of the Ring of Fire – by Staff (Northern Ontario Business – September 18, 2014)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

Cliffs Natural Resources is considering selling its Ring of Fire chromite properties, and a Toronto junior miner operating in the remote region of Ontario said it’s arranging the financing to take control of the project.

KWG president-CEO Frank Smeenk told the Globe and Mail newspaper he has discussed a transaction with new Cliffs boss Lourenco Goncalves, who is eager to sell the dormant Far North project as the new corporate blood at the Ohio miner looks to divest itself of its international projects and focus on its core U.S. iron assets.

Smeenk declined to tell the newspaper of his source of funding, but he expects it to be in place very soon. Goncalves was named chairman, president and CEO on Aug. 7 after a New York hedge fund, Casablanca Capital, toppled management in a proxy battle. He replaced Gary Halverson, a Sudbury native, as CEO.

Smeenk had met with Casablanca officials at Cliffs’ annual shareholders meeting in July and pitched the concept of a partnership with the fund with KWG being the development vehicle in the Ring.

Earlier this week, rumours began circulating that Cliffs had sent a letter to First Nation chiefs that it was considering selling its chromite properties in the James Bay region.

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Cliffs Director Quits Citing ‘Bullying’ at Board Meeting – by Sonja Elmquist (Bloomberg News – September 10, 2014)

http://www.bloomberg.com/

A director resigned from Cliffs Natural Resources Inc. (CLF), the U.S. iron ore producer that’s trying to sell its foreign mines, saying management won’t listen to dissenting views.

In his Sept. 4 resignation letter, which was published in a filing late yesterday, Richard K. Riederer said resolutions were presented for approval at a board meeting the week before without input from directors.

“There was an unwillingness to discuss options and bullying of directors who considered other options,” he said in the letter to Chairman and Chief Executive Officer Lourenco Goncalves. “I have a fundamental disagreement with your approach to corporate governance.”

Riederer, who had been a director for 12 years, is the second person to quit the board since its overhaul in July, when a slate of nominees from activist investor Casablanca Capital LP was elected following a six-month proxy contest. Timothy Sullivan resigned Aug. 11, saying Goncalves and newly elected directors rejected “anything that might be contrary to your per-scripted plan.”

Casablanca, which holds a 5.2 percent stake in Cliffs, has urged the Cleveland-based company to raise its dividend and sell assets outside the U.S. It backed Goncalves’ appointment as CEO last month. The company is looking to sell iron ore mines in Canada and Australia amid a slump in the price of the commodity.

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