Replies to post #6929 on The Rising Influence of Rising Affluence

[DewDiligence]

CLF 1Q13 CC post-mortem…


The good news:

• No major problems in the quarterly results or outlook for the year.

• CEO, Joseph Carrabba rebutted the bear thesis in Credit Suisse’s 3/27/13 report (#msg-87259460).


The bad news:

• CLF will not complete the second phase of Bloom Lake development until Quebec drops its stated intention to extract a 5% royalty on gross revenue (which would be one of the highest mining taxes anywhere in the world by a provincial government).

• The uncertainty vis-à-vis the Quebec mining tax means that completion of Bloom Lake development in 2014 is looking less and less likely. Even if Quebec eventually softens its planned tax, the delay in Bloom Lake development will reduce CLF’s near-term earning power rather significantly.


Bottom line: CLF has some excellent assets, and the company is worth considerably more than the current valuation, IMO (unless iron-ore prices go down the toilet, which I do not expect to happen). I’m holding my shares because, in due course, an activist shareholder or buyout offer will likely emerge if management does not produce profitably commensurate with the company’s asset portfolio.

[jbog]

I hope Carrabba is aware that Nucor is building its own 2.5 million ton DRI facility.

The manufacturers are fed up with being held hostage to the shenanigans of wall street.

Has anyone ever thought if it is logical that a iron ore company could earn anywhere in the vicinity of 60% to 70% gross margins? Let's get real.

[wow_happens28]

Seeking Alpha CLF article out today.

Why Cliffs Natural Resources Is A Buy

http://seekingalpha.com/article/1388601-why-cliffs-natural-resources-is-a-buy?source=email_investing_ideas&ifp=0