UPDATE: Axiom Capital Initiates Coverage on Cliffs Natural Resources with Sell Rating, $10 PT on Bad Place, Bad Time

In a report published Monday, Axiom Capital analyst Gordon L. Johnson II initiated coverage on Cliffs Natural Resources (NYSE: CLF) with a Sell rating and $10.00 price target.In the report, Axiom Capital noted, “We are initiating coverage of CLF with a SELL, High Risk rating, & $10 12-month price objective. Cliffs is primarily an iron ore producer with mines in the U.S. (59% of 2013 EBITDA), Eastern Canada (4%), and Australia (30%), and, secondarily, a coking coal producer with mines in the U.S. (7%). Before the takeover of Consolidated Thompson (CLM) in 2011, CLF had a steady, profitable, low-growth business. The company owned a couple of iron ore mines around the Great Lakes which provided pellets to steel makers in the U.S. (who, due to their non-coastal location, did not have ready access to iron ore from the global seaborne market). The beauty of this business centered on pricing done under long-term contracts that were typically above CLF's cost of production. However, this position also precluded CLF from participating in the promise of soaring spot prices in China, as the company was limited to selling iron ore to its U.S. non-coastal customers. In its yearning to address the fast-growing spot prices available in the international (seaborne) market, CLF purchased (with debt) iron ore assets in Eastern Canada and Australia, as well as some met coal mines in Appalachia.”Cliffs Natural Resources closed on Friday at $18.65.