In a visit with Cliffs Natural Resources' management recently, FBR Capital said, among other things, that the life of the Empire mine may be extended past 2014.
FBR said, "Last week we visited Cliffs Natural Resources' management and came up with the impression that (a) management remains committed to its met coal business; (b) North American iron ore pricing should be finalized in 4Q10 and not in 3Q10; (c) about 80% of Asia Pacific iron ore business has now moved to spot-based pricing from quarterly contracts; and (d) there is a possibility of extending the mine life at Empire mine beyond the current 2014 planned closure."
FBR also raised its earnings per share estimates for the full year 2010, while lowering EPS for the third quarter of 2010.
"This morning we are increasing our 2010 EPS/EBITDA estimates to $7.40/$1,805 million from $7.08/$1,725 million, but are lowering our 3Q10 EPS/EBITDA estimates to $2.47/$572 million from $2.73/$619 million, primarily to reflect the delay in finalizing North American iron ore prices and about 9% higher 4Q10 iron ore prices in Asia Pacific, where about 80% of sales are now spot based and 20% quarterly contract based," said FBR.
Cliffs closed Monday at $66.17, dropping $1.37, or 2.03 percent. FBR has a price target of $81 on them.
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