Cleveland-Cliffs Closes Acquisition Of Real Estate Interests

Cleveland-Cliffs Inc.’s (NYSE:CLF) fully-owned subsidiary, Cleveland-Cliffs Minnesota Land Development LLC, completed acquisition of certain real estate interests located in Itasca County west of Nashwauk, MN, from Glacier Park Iron Ore Properties LLC.

According to the company, the interests include a combination of whole and undivided fee interests along with surface and mineral leases, all lying within the Biwabik Iron Formation. The acquired acreage is roughly 553 acres and the acreage being leased is roughly 3,215 acres.

The company expects to leverage the acquired real estate interests for developing a financially sustainable plan for the site, which may be considered as deplete for other iron ore resources.

Cleveland-Cliffs has been operating in Minnesota for 115 years and presently employs around 1,750 people in three separate pelletizing and mining operations throughout the state.

Shares of Cleveland-Cliffs have moved up 3.6% in the past six months, underperforming the industry’s 14.6% growth.

Cleveland-Cliffs, in October, reduced its sales volume expectation for its U.S. Iron Ore unit for 2017 by 500,000 tons to 18.5 million long tons, due to considerable reduction in pellet nomination by a large customer, which was partly offset by higher export sales. Further, the company expects iron-ore cash cost of goods sold and operating expense in the range of $55-$60 per long ton, which remain unchanged from previous expectations.

Cleveland-Cliffs is likely to benefit from its pellet supply contracts with its U.S. iron ore customers which will help it to mitigate the impact of fluctuation in seaborne iron ore pricing.

The company also remains focused on de-leveraging its balance sheet. Its net debt was roughly $1.4 billion at the end of the third quarter, down from around $2 billion at the end of the year-ago quarter. Cleveland-Cliffs expects to cut net debt to below $1 billion by the end of 2017. This would lead to a reduction in its annualized interest expense.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are Westlake Chemical Corporation (NYSE:WLK) , Daqo New Energy Corp. (NYSE:DQ) and Kronos Worldwide Inc. (NYSE:KRO) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Westlake Chemical has an expected long-term earnings growth rate of 10.6%. Its shares have moved up 79.7% year to date.

Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have surged a whopping 170.5% year to date.

Kronos Worldwide has an expected long-term earnings growth rate of 5%. Its shares have rallied 115.3% year to date.

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