Engineering & Mining Journal

NOV 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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2 E&MJ • MONTH 2018 FROM THE EDITOR The mining industry could be entering the early stages of another bull run, but one would never know that based on how the investment community treats publicly held miners. While mining CEOs should resist the urge to capitalize on questionable projects and carefully consider some acqui- sitions, they shouldn't give in to short-sighted shareholder demands. They need to strike a balance to achieve their long-term vision. Mining CEOs are constantly forced to do this odd tap dance answering questions publicly with some uninformed analysts especially when the market faces uncertainty. That's why it was so refreshing to hear Cleveland-Cliffs CEO Lourenco Goncalves call an analyst out during the company's third-quarter earnings call and then double-down, defending the comments he made. This happened during the morning of Friday, October 19. Prior to the call, Gold- man Sach's Matthew Korn issued a neutral rating on Cleveland-Cliffs, saying that the company had modestly missed consensus estimates, but investors would likely focus on the dividend as the major takeaway. In retrospect, Goncalves must have been furious. Cleveland-Cliffs is the largest iron ore miner in the U.S. In addition to reporting third-quarter earnings that beat Wall Street expectations, the company had recently announced it was resuming a dividend payment, and that it reached a labor agree- ment with its union miners (See News, p. 12). They had a lot of good news to report. He questioned how the company could miss on its operating results, even though the company reported an increase in profi t and improving revenue. Dovetailing on an answer to a question posed by another analyst, Goncalves said, "You're absolutely right. We are going to generate a lot of cash in Q4, a lot of cash in 2019, a lot of cash for the foreseeable future. In Q4, that's the very fi rst thing that the numbers will show and that will probably surprise some of the ana- lysts that can't read numbers. It's unbelievable… these big banks …. It's not like you don't understand our business. You don't understand your own business. You are a disaster…" He reached out to Korn on the call and he didn't respond. "We are going to use money to reward the long-term shareholders," Goncalves said. "So, if the stock continues to go down, based on these kids that play with computers and somebody else's money, we are going to buy back stock." This ex- change was only a few minutes, but it overshadowed some really good explanations of how Cleveland-Cliffs plans to improve its business moving forward. Later in the day, Goncalves appeared on CNBC and said he would do it again. "Oh yeah, absolutely...when you're not the CEO of Facebook, Google or Tesla, being on CNBC at 3 p.m. is a big accomplishment," Goncalves said. "It's totally unac- ceptable that a Goldman Sachs analyst with bad math puts out a paper before the call — before the call — calling a miss when it's not a miss." Goncalves is a signifi cant Cleveland-Cliffs shareholder. As the chairman and CEO, he acted on behalf of the company and defended the company's shareholders. CEO Calls Out Goldman Analyst Steve Fiscor Publisher & Editor-in-Chief Steve Fiscor, Publisher & Editor-in-Chief sfi scor@mining-media.com Mining Media International, Inc. 11655 Central Parkway, Suite 306; Jacksonville, Florida 32224 USA Phone: +1.904.721.2925 / Fax: +1.904.721.2930 Editorial Publisher & Editor-In-Chief—Steve Fiscor, sfi scor@mining-media.com Associate Editor—Jennifer Jensen, jjensen@mining-media.com Technical Writer—Jesse Morton, jmorton@mining-media.com Contributing Editor—Russ Carter, rcarter@mining-media.com Latin American Editor—Oscar Martinez, omartinez@mining-media.com South African Editor—Gavin du Venage, gavinduvenage@gmail.com Graphic Designer—Tad Seabrook, tseabrook@mining-media.com Sales Midwest/Eastern U.S. & Canada, Sales—Victor Matteucci, vmatteucci@mining-media.com Western U.S., Canada & Australia, Sales—Frank Strazzulla, fstrazzulla@mining-media.com Scandinavia, UK & European Sales—Colm Barry, colm.barry@telia.com Germany, Austria & Switzerland Sales—Gerd Strasmann, info@strasmann-media.de Japan Sales—Masao Ishiguro, ma.ishiguro@w9.dion.ne.jp Production Manager—Dan Fitts, dfi tts@mining-media.com www.e-mj.com Engineering & Mining Journal, Volume 219, Issue 11, (ISSN 0095-8948) is published monthly by Mining Media International, Inc., 11655 Central Parkway, Suite 306, Jacksonville, FL 32224 (mining-media.com). Periodicals Postage paid at Jacksonville, FL, and additional mailing offi ces. Canada Post Publi- cations Mail Agreement No. 41450540. Canada return address: PO Box 2600, Mississauga ON L4T 0A8, Email: circulation@mining-media.com. Current and back issues and additional resources, including subscription request forms and an editorial calendar, are available at www.e-mj.com. SUBSCRIPTION RATES: Free and controlled circulation to qualifi ed subscrib- ers. Visit www.e-mj.com to subscribe. Non-qualifi ed persons may subscribe at the following rates: USA & Canada, 1 year, $90. Outside the USA & Can- ada, 1 year, $150. For subscriber services or to order single copies, contact E&MJ, c/o Stamats Data Management, 615 Fifth Street SE, Cedar Rapids IA 52401, 1-800-553-8878 ext. 5028 or email subscriptions@e-mj.com. ARCHIVES AND MICROFORM: This magazine is available for research and retrieval of selected archived articles from leading electronic databases and online search services, including Factiva, LexisNexis, and Proquest. For mi- croform availability, contact ProQuest at 800-521-0600 or +1.734.761.4700, or search the Serials in Microform listings at www.proquest.com. POSTMASTER: Send address changes to E&MJ, 11655 Central Parkway, Suite 306, Jacksonville, FL 32224-2659. REPRINTS: Mining Media International, Inc., 11655 Central Parkway, Suite 306, Jacksonville, FL 32224 USA; email: subscriptions@e-mj.com; phone: +1.904.721.2925, fax: +1.904.721.2930; www.mining-media.com. PHOTOCOPIES: Authorization to photocopy articles for internal corporate, personal, or instructional use may be obtained from the Copyright Clear- ance Center (CCC) at +1.978.750.8400. Obtain further information at copyright.com. EXECUTIVE OFFICE: Mining Media International, Inc., 11655 Central Park- way, Suite 306, Jacksonville, FL 32224 USA phone: +1.904.721.2925, fax: +1.904.721.2930, www.mining-media.com. COPYRIGHT 2018: Engineering & Mining Journal, incorporating World Mining Equipment, World Min- ing and Mining Equipment International. ALL RIGHTS RESERVED. The mining industry could be entering the early stages of another bull run, but one would never know that based on how the investment community treats publicly held miners. While mining CEOs should resist the urge to capitalize on questionable projects and carefully consider some acqui- sitions, they shouldn't give in to short-sighted shareholder

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