NEW YORK (AP) — RBC Capital Markets lowered its rating and price target for Cliffs Natural Resources after the mining company's announcement that it will delay expansion of one of its mines and idle production at two of its iron ore operations due to weak prices.
The company said last month that it was delaying the expansion at its Bloom Lake Mine Phase II in Quebec and that it would idle some operations at Northshore Mining in Minnesota and Empire Mine in Michigan.
H. Fraser Phillips of RBC Capital Markets said that he was anticipating production growth at Bloom Lake, but that the expansion delay is putting a hold on that.
Cliffs may also have to cut its dividend next year, Phillips said, and he estimates that the company would need to draw $450 million from its $1.75 billion revolver in 2013 on top of the $250 million already drawn as of the third quarter in order to maintain the dividend.
Phillips cut Cliffs Natural Resources Inc. to "Sector Perform" from "Outperform" and reduced its price target to $32 from $45.
The company's stock added 18 cents to $29.58 in afternoon trading.