Cliffs Natural's Board Approves $200M Share Buyback Program - Analyst Blog

Cliffs Natural Resources Inc. (CLF) announced that its board of directors has authorized it to repurchase shares worth up to $200 million. The buyback authorization is valid till Dec 31, 2015. Cliffs will work with its bank group to make sure that the buyback program is successfully implemented within the stipulated time.

Cliffs' shares rose as much as 3.5% during the trading hours following the news release. The stock is down roughly 37% so far this year.

The board has also authorized Cliffs to employ all measures required to eliminate the limitations and restrictions in the company's current debt agreements which prevent Cliffs from executing the buyback program.

Cliffs also revealed that it has started implementing its new strategy centered on the U.S. iron ore business. The company stated that, at this juncture, the best use of its capital is to invest in its own business, people and assets by buying back its common stock. The company's newly constituted board is in sync with this strategy.

Cliffs also announced that its former CEO Gary Halverson has resigned from his position as a board member.

Cliffs released its second-quarter 2014 results last month. The company posted net loss of $2 million, or a penny per share compared with a net income of $133 million or 82 cents per share in the year-ago quarter, hurt by a double-digit decline in sales. The loss was narrower than the Zacks Consensus Estimate of a loss of 8 cents per share.

Sales for the quarter came in at $1,100.8 million, down 26% from $1,488.5 million in the prior-year quarter. It also missed the Zacks Consensus Estimate of $1,150 million. The decline was due to significantly lower market pricing for iron ore and metallurgical coal, and a 24% reduction in the company's iron ore sales volumes.

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

Other mining companies with favorable Zacks Rank include Silver Standard Resources Inc. (SSRI) Kazakhmys PLC (KZMYY), Orbite Aluminae Inc (EORBF). While Silver Standard sports a Zacks Rank #1 (Strong Buy), both Kazakhmys and Orbite Aluminae hold a Zacks Rank #2 (Buy).