Cliffs Natural Resources Inc (CLF) Sells Remaining North American Coal Business


Today, Cliffs Natural Resources Inc (NYSE:CLF) has announced the sale of the remainder of their North American coal business, which includes Pinnacle Mine in West Virginia and Oak Grove Mine in Alabama. The business is being sold to a company called Seneca Coal Resources LLC, and the value of the deal is worth around $268 million when one includes the fact that Seneca will assume any and all liabilities of these businesses. In addition to the up front cash, and taking on of liabilities, Cliffs Natural Resources Inc (NYSE:CLF) could receive an earn out of as much as $50 million before the year 2020. With a market cap of just $244 million, this deal certainly seems to show how undervalued Cliffs Natural Resources Inc (NYSE:CLF) may be.

Lourenco Goncalves, Cliffs’ Chairman, President and Chief Executive Officer said, “The sale of Pinnacle and Oak Grove to Seneca Coal marks Cliffs’ exit from the coal business, and represents another very important step in the implementation of our US iron ore pellet-centric, environmentally compliant strategy. We are pleased to have found a buyer that was able to agree on a transaction that not only brings real value to Cliffs shareholders, but will also preserve jobs for the exceptional people at these two mines.”

The market is reacting very positively in the pre-market this morning. The stock decreased 0.63% or $0.01 during the last trading session, hitting $1.58. Approximately 102,144 shares traded hands. CLF shares have declined 68.39% since May 20, 2015 and are currently downtrending. It has underperformed the S&P500 by 66.13%.

From a total of 4 analysts covering Cliffs Natural Resources Inc (NYSE:CLF) stock, 0 rate it a “Buy”, 1 a “Sell”, and 3 a “Hold”. This means that 0 of the ratings are positive. The highest target price is $3.50 while the lowest target price is $2. The mean of all analyst targets is $2.90 which is 83.54% above today’s ($1.58) stock price. Cliffs Natural Resources Inc was the topic of 7 analyst reports since August 4, 2015 according to the firm StockzIntelligence Inc. FBR Capital maintained shares on November 2 with a “Mkt Perform” rating. Vetr downgraded CLF stock in a recent report from August 31 to a “Hold” rating. Finally, Axiom Capital initiated the stock with a “Sell” rating in a report they issued on an August 21.

The institutional sentiment decreased to 0.5 in Q2 2015. It’s down 0.22, from 0.72 in 2015Q2. The ratio turned negative, as 59 funds sold all their Cliffs Natural Resources Inc shares they owned while 78 reduced their positions. 20 funds bought stakes while 49 increased their total positions. Institutions now own 87.44 million shares which is 5.27% less than the previous share count of 92.30 million in 2015Q2.

Casablanca Capital Lp holds 100% of its total portfolio in Cliffs Natural Resources Inc, equating to 7.91 million shares. Long Oar Global Investors Llc owns 250,000 shares representing 2.82% of their total US portfolio. Moreover, Walthausen & Co. Llc has 0.89% of their total portfolio invested in the company, equating to 4.19 million shares. The New York-based Tegean Capital Management Llc has a total of 0.73% of their portfolio invested in the stock. New Century Advisors Llc, a Maryland-based fund reported 279,000 shares owned.

Cliffs Natural Resources Inc. is a mining and natural resources company. The company has a market cap of $243.94 million. The Firm is a supplier of iron ore pellets to the North American steel industry from its mines and pellet plants located in Michigan and Minnesota. It currently has negative earnings. The Firm also produces low-volatile metallurgical coal in the United States from its mines located in Alabama and West Virginia.