Markets
CDE

Cliffs Closes Sale of Remaining North American Coal Business

An image of a man at his desk working using two monitors
Credit: Shutterstock photo

Cliffs Natural Resources Inc.CLF has concluded the sale of its remaining coal business, Pinnacle Mine in West Virginia and Oak Grove Mine in Alabama, to Seneca Coal Resources, LLC. The transaction closed once the deal was signed. At closing, the transaction was valued at $268 million.

Further, Seneca Coal may pay Cliffs an earn out of up to $50 million dependent on the terms of a revenue sharing plan which extends through 2020.

Cliffs stated that the deal structure is a sale of the equity interests of its remaining coal business which includes the legal entities of Cliffs North American Coal LLC; Pinnacle Mining Company, LLC; Pinnacle Land Company, LLC; Oak Grove Resources, LLC; Oak Grove Land Company, LLC; and Beard Pinnacle, LLC.

The sale of these mines signifies Cliffs' exit from the coal business, and represents the company's execution of its U.S. iron ore pellet-centric strategy that is environmentally compliant.

Last month, Cliffs' affiliates also completed the divestment of 60% ownership of the Decar nickel project, located in central British Columbia, to First Point Minerals Corp. for a price of $4.75 million. After completion of the transaction, First Point now owns 100% of the project, which includes 60 claims covering about 24,500 hectares.

Cliffs' net loss (attributable to common shareholders) for third-quarter 2015 was 10 cents per share, narrower than a net loss of $38.49 per share recorded in the year-ago quarter. Adjusted loss came in at 15 cents per share, lower than the Zacks Consensus Estimate of a loss of 23 cents.

Sales for the quarter came in at $593.2 million, down 39% from $979.7 million in the prior-year quarter. Sales also missed the Zacks Consensus Estimate of $622 million.

At the end of the third quarter, Cliffs had net debt of $2.5 billion versus net debt of $2.9 billion a year ago. There was nothing drawn on the company's new asset-based lending facility at quarter end. Reduction in net debt was due to a number of actions, including asset sales, exchange offers and open-market bond repurchases.

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

Some better-ranked mining stocks include Rare Element Resources Ltd. REE , Fortescue Metals Group Limited FSUGY and Coeur Mining, Inc. CDE . All these stocks hold 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 >>

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

COEUR MINING (CDE): Free Stock Analysis Report

FORTESCUE METAL (FSUGY): Free Stock Analysis Report

RARE ELEMENT RS (REE): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

CDE CLF

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More