Editorial: Cliffs and Casablanca – the start of a beautiful friendship?

It’s the biggest shareholder revolt of the current downturn in mining, but as we go to press it looks like Casablanca Capital has succeeded fulsomely in its long-shot bid to swamp the 11-member board of Cliffs Natural Resources with six...

It’s the biggest shareholder revolt of the current downturn in mining, but as we go to press it looks like Casablanca Capital has succeeded fulsomely in its long-shot bid to swamp the 11-member board of Cliffs Natural Resources with six of its own nominees.

Cleveland-based Cliffs is a major producer of iron ore and metallurgical coal worldwide, but its share price has suffered in the past three years owing to a combination of low iron ore and coal prices, and over-expansions into such ill-fated projects as its chromite project in Ontario’s Ring of Fire region. Earlier this year, Cliffs idled its high cost Wabush iron ore mine in Labrador and suspended an expansion of its Bloom Lake iron ore mine in Quebec, and is now set to idle its Pinnacle coal mine in West Virginia for more than six months starting in late August.

In the lead-up to the vote, Cliffs woes showed in its second quarter net loss of US$2 million on revenues of US$1 billion. That compares with net earnings of US$133.1 million, or US82¢ per share, on revenues of $1.4 billion in the same quarter of 2013.

Based in New York and founded in 2010 by Donald G. Drapkin and Douglas Taylor, Casablanca Capital describes itself as an "event-driven and activist investment manager."

Read the complete article at NorthernMiner.com/news/editorial-cliffs-and-casablanca

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