Engineering & Mining Journal

MAY 2017

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NEWS-LEADING DEVELOPMENTS 6 E&MJ; • MAY 2017 www.e-mj.com with a strong balance sheet and a lot less to pay in interest expense. This is partic- ularly evident in our strong first quarter results… We expect 2017 to be a phe- nomenal year of EBITDA and free cash flow generation." The cash costs for USIO was $58.57/ long ton, a 7% decrease from $62.88/ long ton in the prior year's first quarter. The company attributed the decrease to having no idled active mines during the first quarter of 2017, compared to having two idled mines during the pri- or-year quarter. First-quarter 2017 Asia Pacific iron ore (APIO) sales volume increased 9% to 3.0 million metric tons (mt), from 2.8 million mt in the first quarter of 2016 (1 mt = 1.1 st). The company said the volume increase was primarily related to the timing of shipments. Revenues of $54.35/mt increased by 32% compared to the prior-year quarter, driven by im- proved seaborne market prices. Cash cost for APIO was $37.27/mt in the first quarter of 2017, a 15% increase from $32.42/mt in the prior-year quarter. The company attributed the higher cost to higher royalties, increased mining costs driven by a higher strip ratio, and an un- favorable exchange rate compared to the prior-year quarter. Cliffs expects to produce more than 33 million tons of iron ore in 2017, in - cludes 19 million long tons of USIO and 11.5 million mt of APIO. MAC, PDAC Applaud Canada's 2017 Budget The Mining Association of Canada (MAC) and the Prospectors & Developers Asso- ciation of Canada (PDAC) issued state- ments in late March applauding measures included in the Canadian federal govern- ment's 2017 budget that support a com- petitive and responsible mining industry in Canada. MAC specifically welcomed planned investments in key areas such as infrastructure and innovation but also encouraged the government to act quickly on these items to improve Canada's in- vestment climate. "This is especially important given that Canada has experienced nine con- secutive quarters of declining business investment and is facing competitiveness challenges from global developments," the MAC statement said. MAC especially welcomed programs that seek to address Canada's infrastruc- ture challenges, especially as they relate to remote, northern, and Indigenous com- munities. MAC has long advocated for the Canada Infrastructure Bank as a mecha- nism to address unique northern needs and encourage new investment into Canada. On innovation, MAC noted that it had strongly supported the 2016 budget's C$1 billion investment in driving inno- vation in natural resources sectors and that it continues to be encouraged by the 2017 budget's innovation commitments. Specifically, MAC and its members strong- ly support the Canada Mining Innovation Council's "Towards Zero Waste Mining" program as the mechanism to drive wide- spread adoption of transformational tech- nologies across the sector, such as electric vehicles and energy efficiency. PDAC cited the 2017 budget's clear emphasis on innovation, clean technolo- gies, and gender equality, specifically: • Renewal of the Mineral Exploration Tax Credit (METC) until March 31, 2018 and maintenance of the flow-through share system, as announced by Minis- ter of Natural Resources Jim Carr during PDAC's 2017 convention in early March; • Commitment to important infrastruc- ture investments in remote and northern Canada, including through the Canada Infrastructure Bank, which is respon- sible for investing at least C$35 billion over 11 years. An additional $2 billion, also over 11 years, was announced for northern and rural infrastructure to help communities where many PDAC mem- bers live and work; • Support for access to skills develop ment and training for Aboriginal people through the C$50 million Aboriginal Skills and Employment Training Strate- gy, which can assist with accessing em- ployment and economic opportunities generated by the minerals industry; • Continued investment in clean technol- ogy development through a C$1-billion commitment over four years and a new five-year Strategic Innovation Fund; and • Emphasis on gender equality in society, which PDAC has championed through- out the minerals industry. "The Mineral Exploration Tax Credit has been renewed by successive govern- ments because it is a proven, effective incentive that has stimulated investment in grass-roots exploration and created greater opportunity," PDAC Executive Director Andrew Cheatle said. "Without this vital tax credit, there would be less exploration, which would mean fewer mineral discoveries, and, ultimately, few- er of the economic benefits that are gen- erated by producing mines." Canada's mineral exploration and min- ing industry contributes around C$56 bil- lion annually to the nation's gross domes- tic product and directly employs more than 373,000 workers, plus a further 190,000 indirectly, the PDAC statement concluded. The industry is the largest private-sector employer of Aboriginal people in Canada. A leaner, more-focused Cliffs expects to produce more than 33 million tons of iron ore in 2017.

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