Annual production of 8 million tonnes at Bloom Lake Mine in Canada

Monday, 13 Jun 2011

Cliffs Natural Resources Inc announced On June 2nd that 2011 and 2012 outlooks for its Bloom Lake Mine an iron ore operation acquired as part of its recent acquisition of Consolidated Thompson Iron Mines Limited.

As previously disclosed, Cliffs completed its acquisition of Consolidated Thompson on May 12 2011. The production ramp-up at Bloom Lake Mine is progressing as planned and the operation is anticipated to reach an 8 million ton annualized production rate by the end of 2011. For the approximately seven and a half months Cliffs will own Consolidated Thompson during 2011, the Company anticipates selling approximately 4.8 million tons of Bloom Lake iron ore concentrate.

Revenue per ton of Bloom Lake iron ore concentrate for 2011 is expected to be USD 170 to USD 175 based on the assumption that the April 15 2011 Platts iron ore spot price of USD 181 per ton is maintained through the end of 2011. Cost of goods sold excluding approximately USD 10 to USD 15 per ton of non-cash inventory valuation step-up costs are expected to be USD 60 to USD 65 per ton. This is comprised of cash costs per ton of USD 50 to USD 55 and depreciation, depletion and amortization of approximately USD 10 per ton.

Capital expenditures related to the Bloom Lake operation for the remainder of 2011 are expected to be approximately USD 300 million. This amount includes capital earmarked for Bloom Lake capacity expansion to 16 million tons.

For the full year 2012 Cliffs said it anticipates Bloom Lake iron ore concentrate sales and production volume to be approximately 8 million tons with a revenue rate of approximately USD 170 to USD 175 per ton based on current iron ore spot prices. With the additional volume expected and resulting fixed cost leverage, Bloom Lake 2012 cash costs per ton are anticipated to decline to USD 45 to USD 50.

In addition, Cliffs anticipates 2012 capital expenditures related to Bloom Lake to be approximately USD 350 million including sustainable and expansion capital.(sourced steelguru)