Mining operator Cliffs Natural Resources Inc. (CLF) announced that it will increase its quarterly cash dividend by 100% to $0.28 a share. The increased dividend will be paid on September 1, 2011, to shareholders of record at the close of business on August 15, 2011.
The company’s decision to raise its quarterly dividend clearly demonstrates its purpose to distribute excess cash to shareholders through sustainable ordinary dividend increases. The projected growth from its strategic execution, current operations and organic project pipeline has positioned Cliffs to deliver strong future cash flows in 2011 and beyond.
About a month ago, the company closed a 10.35 million common stock offering at $85.63 per share for net proceeds of $853.7 million. Cliffs planned to use the funds to repay debt incurred as part of its takeover of Consolidated Thompson Iron Mines as well as for general corporate purposes.
Cliffs completed its acquisition of Consolidated Thompson Iron Mines Ltd. for C$4.9 billion ($4.95 billion) in May 2011. The company financed the transaction (including net debt) through committed financing, including a $1.25 billion term loan, $750 million in bridge financing and available cash on hand.
With the acquisition of Consolidated Thompson, and on successful completion of its development projects, Cliffs will have significant exposure to the growing Asian markets, including the potential to generate over half of its revenues from customers outside North America.
Consolidated Thompson operates the Bloom Lake open-pit iron ore mine and two nearby properties in Quebec that are close to the existing Cliffs mines.
Cliffs is a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. Cliffs’ strategy is to continually achieve greater scale and diversification in the mining industry by serving the world’s largest and fastest growing steel markets.
In April 2011, Cliffs posted record revenues and earnings for the first quarter of 2011. Net earnings of $423 million or $3.11 per share in the first quarter were 449%, above last year’s $77 million or 57 cents. Cliffs’ Earnings surpassed the Zacks Consensus Estimate of $2.25 per share.
Quarterly revenues came in at $1.2 billion, up 63% year over year. The increase was driven by certain factors, such as higher pricing in each of Cliffs’ business segments and the favorable effect of Cliffs’ previously disclosed negotiated settlement with ArcelorMittal (MT).
The company anticipates that global steel production would continue to grow in 2011, primarily driven by emerging economies such as China, India and Brazil.
Cliffs faces stiff competition from CONSOL Energy Inc. (CNX) and Peabody Energy Corp (BTU).
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