* Cliffs struggles with high costs at Canada growth project
* Analyst sees dilutive offering weighing on shares
* Shares fall 18.3 percent to $29.92 on NYSE
Feb 13 (Reuters) - Shares of Cliffs Natural Resources Inc plunged more than 18 percent on Wednesday after the miner, grappling with lower iron ore prices and rising costs at a key mine in eastern Canada, slashed its dividend and announced a new share offering.
Cliffs announced its fourth quarter earnings and the share offering on Tuesday after market close.
Dahlman Rose analyst Anthony Rizzuto said disappointing cost guidance for the Bloom Lake mine - seen as a crucial growth driver - was a major factor pulling the stock lower.
"It's critically important for the company's future, no question," said Rizzuto on Bloom Lake, which Cliffs acquired in 2011 and is pushing to expand.
Bloom Lake's cash costs in the fourth quarter rose 15 percent to $86 per tonne, as fuel, contract labor, maintenance and supply costs rose, and the company expects costs between $85 and $90 per tonne for 2013.
On a conference call with analysts and investors on Wednesday, Cliffs said Bloom Lake's revenue per tonne fell 26 percent to $89 in the fourth quarter.
Rizzuto said dilution from the share offering, which includes both common and convertible preferred shares, could be upwards of 20 percent.
He said the 76 percent dividend cut likely took some investors by surprise, though it soothed some of his worries about the firm's balance sheet.
"I think there was a view that they might borrow to pay the dividend for a bit, and I think that the management and board took a realistic view of the variability that is in the iron ore market," he said.
In January, Cliffs said it would take a $1 billion impairment charge on its C$4.07 billion ($4.06 billion) takeover of Consolidated Thompson Iron Mines Ltd, a 2011 deal that gave the company control of the Bloom Lake mine.
Bloom Lake is near Cliffs' other Canadian operations in the Labrador Trough, an iron-rich region that extends through Quebec and Labrador.
Shares were down 18.3 percent at $29.92 on Wednesday morning on the New York Stock Exchange. ($1 = 1.0025 Canadian dollars) (Reporting by Allison Martell; Editing by Janet Guttsman and Andrew Hay)