UPDATE 3-Cliffs shares rise after-hours as earnings beat market

Thu Feb 13, 2014 10:33pm EST
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By Nicole Mordant

Feb 13 (Reuters) - Cliffs Natural Resources Inc, which is facing against an activist investor who wants to break up the mining company, reported much better-than-expected earnings helped by a drop in costs and higher iron ore prices.

Shares in the iron ore and metallurgical coal producer surged 7 percent in after-hours trading to $23.42 Thursday.

Cliffs has recently been targeted by hedge fund Casablanca Capital, following several quarters of weak earnings and share performance. Its stock is down 40 percent in the past year.

Casablanca argues that the company's international assets are weighing on its cash-generating U.S. business and should be spun off. The New York-based fund wants to install a new chief executive at Cliffs as well as a majority of hand-picked directors.

But on Thursday, the Cleveland-based company said its net income rose to $31 million, or 20 cents a share, in the three months to end-December. A year ago, it reported a loss of $1.6 billion, or $11.36 a share, when it wrote down $1 billion related to its 2011 acquisition of Consolidated Thompson Iron Mines Ltd.

Excluding various one-off items, Cliffs earnings were $218 million, or $1.22 per share, up from $89 million, or 63 cents a share, in the same period a year ago.

That was well ahead of analysts' expectations of 77 cents a share, on average, according to Thomson Reuters I/B/E/S.   Continued...