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James Duade

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  • Mesabi Trust: Cliffs Natural Resources' Q3 Conference Call Has Big Implications [View article]
    Hi Plazmo44,

    Yes, Northshore did restart the two lines this winter, so production should be on schedule for approximately 5 million tonnes of saleable pellet products in 2014.

    I haven't attempted to look at the Q2, Q3 or Q4 distributions just yet because I would like to see what happens with the price of iron ore as well as the shipping numbers from Silver Bay. My inclination is to think that 2014 may have a comprable annual distribution to 2012. I would continue to hold through July, hopefully you'll be pleasantly surprised with a big distribution at that point.

    Best,
    James
    Apr 24 12:50 PM | Likes Like |Link to Comment
  • FT: Tesla bond sale brings in $2B [View news story]
    Thanks Esekla, I see my silly math error. I appreciate the correction.
    Feb 28 08:04 AM | 1 Like Like |Link to Comment
  • FT: Tesla bond sale brings in $2B [View news story]
    Serious question:

    The annual interest payments on these convertibles per year for Tesla will be $34.5 million (i.e., 125 basis points + 25 basis points * $2.3 Billion). Is this correct? Thanks to anyone who can provide further clarity.

    James
    Feb 28 07:17 AM | 1 Like Like |Link to Comment
  • Peltz renews attempt to break up PepsiCo [View news story]
    What is the Pepsi beverage business worth on it's own? Anyone have a good number, any help is much appreciated!
    Feb 20 10:55 AM | 1 Like Like |Link to Comment
  • Cliffs Broke Up With Canada On Valentine's Day [View article]
    Hello Tobin,

    Thank you for reading and commenting. You present some interesting and detailed information about Wabush, I was wondering if you have any source material that I can review that backs these numbers up. Unfortunately for me, the only reports I've seen on Wabush's Geology come from the Newfoundland and Labrador Geoscience Website (see link below for 2006 Wabush FS) and what I've cobbled together from quarterly filings from Cliffs and a company called MFC Industrial (formerly known as Terra Nova Royalty) which I used to own shares in. I'd be very interested to review any detailed information you have on the storied deposit.

    *2006 Wabush FS to help reduce manganese*
    http://bit.ly/1h8383Y

    The $143 number I posted came directly from the Cliffs February 11th press release that you can find on the Cliffs Natural Resources website. The $143 figure was also discussed a few times on the Valentine's day conference call as well (see text excerpt below). Cliffs also mentioned that the $143 cash cost was down 14% from the previous year, and this mainly reflected the fact that the Sept-Illes pellet plant was not in operation in Q4 of 2013 and it was in Q4 of 2012.


    *Text Excerpt From Cliffs Q4 Tele Conference*

    "Turning to Wabush. Earlier this week, we announced the idling of our Wabush Scully Mine. Over the past 24 months, we undertook a number of initiatives at Wabush for lower cost, improved productivity, increased long-term profitability. Unfortunately these initiatives did not impact the operations cost structuring up to justify continuing to run this mine. We understand this is a very difficult time for our employees and the community impacted by this decision and we will do our best with system through this transition. We expect to incur approximately $100 million in cash costs related to the Wabush Idle in 2014... Cash cost per ton at Wabush Mine was $143 down 14% from the year ago quarter. This was primarily due to the absence of pelletizing costs from the Pointe Noire pellet plant."


    Regarding the extra "special" charges that were baked into the Q4 Wabush cash cost total, the only note I can find in the 10-K mentions that Cliffs took a $28 million write down charge that was reflected in it's cost of goods sold which I assume is reflected in the cash cost per tonne at Wabush. Even with this the cash cost per tonne was still well above $120 for the Wabush concentrate alone. The fact remains that Wabush has habitually had a very high cash cost per tonne over the last several years that Cliffs has not been able to bring down, and Cliffs has nearly 20 years of experience operating this mine.

    All that being said, I'm sure there will be suitors for the Wabush mine and it's infrastructure. The Consolidated Thompson group made an offer for the mine in October of 2009 for $120 million (see link below), and while the company was bought out by Cliffs in 2011 many of the principals of Consolidated Thompson are still around. Last week Mark Morabito--with much political theater--made a overture to the Newfoundland and Labrador government that the Alderon group could purchase the mine and use the infrastructure for it's Kami deposit located 10 Km's to the south west (see link below). Of course former Consolidated Thompson CEO Brian Tobin might find the Wabush mine interesting as well, and certainly knows a good deal about the deposit from his days at Consolidated, it would be interesting to see him convince a group of investors of Wabush's merits.

    *Consolidated Thompson Offers $120 Million for Wabush in 2009*
    http://bit.ly/1h83982

    *Mark Morabito and Alderon Discuss Purchasing Wabush*
    http://bit.ly/1h839og

    Best,
    James
    Feb 19 07:59 PM | Likes Like |Link to Comment
  • Cliffs Broke Up With Canada On Valentine's Day [View article]
    Hi W999surf,

    I think it really all depends on your perspective on the directionality of iron ore. Most analysts and industry professionals are predicting a slow and steady decline towards $100 a tonne for 62% Fe and 4.5% SiO2 quality concentrate. At Wabush the cash cost per tonne this past quarter was $143 to produce a what I presume to be 65% Fe concentrate (the pellet product is 64.5%) with elevated levels of the impurity manganese. Let's run the numbers on this with ore at $120 and see what happens to cliffs operating margins per tonne.

    Wabush 65% Fe concentrate sales price with ore at $120
    Iron Ore at $120 for 62% Fe
    DMTU= 120/62 = $1.935 per dmtu
    $1.935 * 65 DMTunits= $125.81
    $125.81 sales price - $143 operating cost= -$17.19 loss per tonne

    So you can see that operations at Wabush are hemorrhaging money with ore at $120, let alone an ore price of $100. The other issue with Wabush is the fact that the remaining raw ore at the lower portions of the deposits has an extremely high level of manganese which proves extremely expensive to beneficate. In 2006 Cliffs and Arcelormittal did a FS to enhance the resource base by tacking on an additional benefication unit that would help reduce the level of manganese, but it appears that the productive mine life may have run its course with ore at $120 a tonne. The remaining reserves according to Cliffs are around 200 Million Tonnes of 35.1% Fe that is upgraded to 65% Fe concentrate and then can be pelletized at a plant to the south in Sept-Illes, but this adds on additional costs.

    Regarding Bloom Lake, a lot of work needs to be done, and its likely that hundreds of millions of dollars need to be pumped into upgrading the infrastructure and deposits in order to enhance production rates at Bloom Lake. My guess is that Cliffs sees the potential cap-ex issues and knows that it will take a lot of time and money to make Bloom Lake very profitable. Op-Ex per tonne has consistently been running in the $90 range ever since Cliffs bought Consolidated Thompson. The issue with the geology of the Southern Labrador Trough is that it's very tricky to beneficate due to the varied nature of the deposits. Consolidated Thompson, just like Alderon's Kami are alternating bands of Hematite and magnetite. The hematite is present in larger amounts than the magnetite so the processing flowsheet requires to account for these two elements that are generally beneficated in different ways (i.e., more expensive than one process alone). In my opinion Cliffs gave a little bit too much credit to Consolidated Thompson and blindly trusted that the flow sheet and mine pit schedule would work. While these issues can be resolved, it has and will result in a great deal of cash and time to fix them. A larger mining firm with bigger pockets and more mining experience would probably be able to fix these problems and get Bloom Lake back to a lower cash cost per tonne and a higher production rate.
    Feb 19 02:31 PM | 4 Likes Like |Link to Comment
  • Cliffs Broke Up With Canada On Valentine's Day [View article]
    Hi Tom Field,

    Cliffs will likely book a loss on their investment $5 Billion dollar investment in Consolidated Thompson (Cliffs I believe paid $4 Billion and WISCO paid $1 Billion), but the spirit of my comment is that an outright sale would result in a large cash infusion that would go towards reducing debt on the balance sheet. It's unclear right now what the Consolidated Thompson property would sell for, but it's likely in the several billion range. The Wabush property will obviously fetch fewer dollars due to the idiosyncrasies of this deposit, but again the cash from an outright sale would certainly help bolster Cliffs balance sheet and free up future cash flow for buybacks or enhanced dividends.

    Best,
    James
    Feb 19 12:46 PM | 3 Likes Like |Link to Comment
  • Cliffs Broke Up With Canada On Valentine's Day [View article]
    Thanks for reading and commenting MJtroll1. Cliffs seems to be heeding the requests of the market to reduce cap-ex spending on its exploration and development activities in Canada, and in doing so will shore up its balance sheet and focus on its core US business which is US Iron Ore. I think these moves will prove to be beneficial to Cliffs and its shareholders over the course of the next year. Regarding Casablanca, I'm not so sure that Cliffs will eventually have an MLP style spin-off, but management did state that they were actively studying this option during the Valentine's day press conference.
    Feb 19 12:33 PM | 1 Like Like |Link to Comment
  • Why Casablanca Wants To Split Cliffs Natural Resources, The Bloom Lake Project And The Future Of Iron Ore [View article]
    The biggest issue with Cliffs is their management. Cliffs exec's have made some seriously bad investments over the last several years that have killed the stock.

    Bloom Lake was bought at the top of the commodity cycle and Cliffs overpaid. Additionally, it's very apparent that Cliffs did little diligence on Bloom Lake as they were immediately dealing with pre-stripping issues at the mine, and flow sheet issues at the concentrating facility.

    Additionally, the chromite assets that Cliffs purchased near the Ring of Fire in Canada have proven to be a tremendous boondoggle, and were scrapped late in 2013 due to a variety of issues. Cliffs was riding high in 2011, but got greedy and overextended their balance sheet and now the company will be lucky to get through the next down turn without having to sell off some of their assets.

    In my opinion the Casablanca team is correct in their assertion that splitting Cliffs up would benefit shareholders more than keeping the company together. Just my two cents.
    Feb 8 03:57 PM | 1 Like Like |Link to Comment
  • Loonie dives as BOC leans dovish [View news story]
    The Bank of Canada should consider loaning it's money out to all of the wonderful infrastructure and resource development projects occurring in Canada. Can you imagine the multiplier effect of all that? Purchases of construction materials, infrastructure development, employment, taxes, long term projects that create generational wealth? Why not focus the spending on Canada's bountiful natural resource projects? That would be a fantastic stimulus program in my opinion--assuming the projects are vetted.
    Jan 22 11:01 AM | 1 Like Like |Link to Comment
  • Microsoft's CEO search may be done; H-P promotes Windows 7 [View news story]
    Congrats Randal, I'm sure you'll hear back in a matter of days ;-)
    Jan 21 03:56 PM | 2 Likes Like |Link to Comment
  • Mesabi Trust: Cliffs Natural Resources' Q3 Conference Call Has Big Implications [View article]
    FYI...Cliffs/Northshore is starting to recall workers. The restart date for the pellet plant is in February 2014.
    .
    http://bit.ly/1klOGs0
    Dec 19 09:24 AM | 3 Likes Like |Link to Comment
  • Facebook set to launch video ads [View news story]
    $2 million is probably what it would cost for a 30 second spot at the Super Bowl...it would be an interesting study to see what has more impact. Could be a big Hit if the Advertisers tailor the commercials to the audience and the medium.

    No position on Facebook.
    Dec 17 08:57 AM | Likes Like |Link to Comment
  • New Millennium Iron: A Stock That's Hard To Ignore [View article]
    Hi Mpomperlo,

    Thanks for reading and commenting. I agree with your comment. I do plan on writing another piece on NML, but am waiting for two items before I do so. I would like to see a little guidance on what their cost per tonne will be at their DSO opearation, and I'd like to see what the results of their Taconite Feasibility Study are as well.

    The DSO information should start trickling in over the course of the next few months once their state of the art processing facility is up and running. The DSO should hit its full stride in the Summer of 2014 when they have their rail link to the QNS&L finished and the new port at Sept-Iles is completed. The unofficial guidance I had from a VP at NML was a cost per tonne in the neighborhood of $50 including shipping to Europe.

    Regarding the Taconite FS, my guess is that the results should be out by the end of the month.

    I'm hoping that NML can put 2013 in the rear view mirror and get to the business of selling significant amounts of iron ore in 2014 in addition to closing a deal on the Taconites with Tata and 2 additional joint venture partners.

    Hope that helps,
    James
    Nov 5 02:18 PM | Likes Like |Link to Comment
  • Mesabi Trust: Cliffs Natural Resources' Q3 Conference Call Has Big Implications [View article]
    Hi Dweiss60,

    The trust isn't likely to terminate for many decades to come, but if the trust does terminate prior to the iron ore reserves being exhausted then I believe that the property interest can be sold to another party and the proceeds will be distributed to unitholders on a prorata basis. Section 4.6 of the original trust document discusses this scenario, see the below link for more details.
    http://bit.ly/1hrK1TY

    Regarding the production of Direct Reduction "DR" pellets; Cliffs mentioned that they aren't likely to produce DR pellets in 2014. They did say that once demand for this type of product picked up, that they would be ready to meet it and that Northshore would be the most likely candidate to produce DR pellets. My guess is that DR pellets will likely be an additional revenue stream for Northshore that is above and beyond the 5.3-5.5 MT's per year that they are capable of producing. The other exciting aspect about DR pellets is that they generally sell at a significant premium to fluxed pellets because of their low levels of impurities and higher iron content. It's a little early to project what kind of impact this would have on Mesabi, but it's likely that Cliff's production of DR pellets could be substantially beneficial to Mesabi--unfortunately this is probably more of a 2015 story than a 2014 story.

    Hope that helps,
    James
    Oct 29 09:08 PM | Likes Like |Link to Comment
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