Divestment Cliffs announced the sale of its Chromite assets in Northern Ontario, Canada to Noront Resources Ltd. The assets were sold under a revised purchased agreement for $27.5 million in cash, an increase from the previously announced sale price of $20 million. The assets comprise three chromite deposits and associated claims held by Cliffs subsidiaries. The transaction was completed following the approval of the sale by the court under the Companies' Creditors Arrangement Act (CCAA) proceedings in Canada. The sale was a part of the company’s strategy to do away with its non-core assets. Proceeds from the sale will be used to cover expenses associated with the CCAA proceeding. Discontinued Operations The deconsolidation of the Canadian Entities led to a pretax loss of $818 million, which was recorded in Loss from Discontinued Operations. The company also recorded an impairment charge associated with North American Coal of $73 million, also included in Loss from Discontinued Operations. Financial Position Cliffs had $355.7 million in cash and cash equivalents as of Mar 31, 2015, compared with $364 million as of Mar 31, 2014. Long-term debt stood at $2,880.9 million as of Mar 31, 2015, compared with $3,194.8 million as of Mar 31, 2014. At the end of first quarter of 2015, Cliffs had net debt of $2.5 billion compared with net debt of $2.9 billion at the end of first-quarter 2014. There was nothing drawn on the company's new asset-based lending facility at the end of the reported quarter. Reduction in net debt was a result of several actions including earlier-announced exchange offers and open-market bond repurchases. Capital expenditure reduced 85% year over year to $16 million in the first quarter. This includes capital spending related to North American Coal. Depreciation, depletion and amortization amounted to $33 million. Outlook Starting in 2015, Cliffs is providing full-year expected revenues-per-ton ranges based on different assumptions of seaborne iron ore prices to offer more financial transparency to its shareholders. The company has trimmed its selling, general and administrative (SG&A) expenses guidance to $120 million from its previous expectation of $140 million. The company no longer expects any spending related to exploration. Consolidated 2015 depreciation, depletion and amortization is expected to be roughly $140 million. Cliffs reduced its 2015 capital expenditures budget to a range of $100—$125 million, from its earlier expectation of $125—$150 million. This reduction is a part of the company’s strategy of reducing expenditures. The expected expenditure includes outflows related to North American Coal and assumes no additional asset divestitures. U.S. Iron Ore Outlook For 2015, Cliffs reduced its full-year sales and production volume expectation to 20.5 million tons of iron ore pellets, reflecting currently low capacity utilization rates among U.S. steel makers, mainly due to heavy imported steel penetration. The company, however, is maintaining its previous cash production cost outlook of $55—$60 per ton and the previous expectation for cash cost of goods sold per ton of $60—$65. Asia Pacific Iron Ore Outlook For 2015, Cliffs reiterated its 2015 Asia Pacific Iron Ore expected sales and production volumes of roughly 11 million tons. However, the company lowered its cash production cost per ton expectation to $30—$35. Further, Cliffs lowered its cash cost of goods sold per ton outlook to $35—$40. North American Coal Outlook The company will not provide detailed outlook for its North American Coal business anymore due to its accounting treatment. Cliffs currently carries a Zacks Rank #3 (Hold). Better-ranked mining stocks include Gold Fields Ltd. GFI, Sibanye Gold Limited SBGL and AngloGold Ashanti Ltd. AU. While Gold Fields and Sibanye Gold sport a Zacks Rank #1 (Strong Buy), AngloGold holds a Zacks Rank #2 (Buy). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CLIFFS NATURAL (CLF): Free Stock Analysis Report ANGLOGOLD LTD (AU): Free Stock Analysis Report GOLD FIELDS-ADR (GFI): Free Stock Analysis Report SIBANYE GLD-ADR (SBGL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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