* Adjusted earnings $0.60/share vs $0.85/share a year earlier
* Revenue slips 6 percent to $1.14 billion
* Talks with government on Black Thor chromite still on hold
April 24 (Reuters) - Cliffs Natural Resources Inc reported a drop in first-quarter profit on Wednesday but earnings were much better than analysts had expected, sending the iron ore and metallurgical coal miner's shares higher.
Revenue was just shy of expectations, dropping 6 percent to $1.14 billion. Analysts had been expecting $1.20 billion, according to Thomson Reuters I/B/E/S.
Cliffs' hard-hit stock rose 5.7 percent to $19.25 in after-market trading.
As of Wednesday's close, its shares had plunged more than 70 percent over the previous 12 months, hurt by volatile iron ore prices that have weighed on Cliffs' earnings, and higher-than-expected costs at a key project, Bloom Lake iron ore in Quebec.
"We are headed in the right direction in 2013," said Chief Executive Joseph Carrabba in a statement. "During the first quarter, we took deliberate measures to reduce our balance sheet leverage and improve our cash position."
The Cleveland-based company raised $995 million in an equity offering announced in January, when it also slashed its dividend 76 percent.
On Wednesday, Cliffs nudged up its full-year sales forecast for the U.S. iron ore segment to 21 million long tons, from 20 million long tons, and reaffirmed its previous outlook for other segments.
Cliffs said talks with the Ontario government on its Black Thor chromite project in Canada's Ring of Fire mining district are still suspended, as they have been since January, when a new premier took office.
"Cliffs will not pursue approving the transition of the project to execution until key elements supporting economic viability are resolved," it said, but added that it would continue its environmental assessment and consultations.
Cliffs' project may be key to the development of the Ring of Fire.
The company said sales at its U.S. iron ore segment slipped in the first quarter because of the bankruptcy of one customer. But revenue per long ton rose 2 percent from a year earlier.
In Asia Pacific, iron ore sales volume fell 17 percent, partly because of one operation, Cockatoo Island, that shut down in the third quarter of 2012. Revenue per tonne dropped 9 percent.
Net income was $97.1 million, or 66 cents a share, down from $375.8 million, or $2.63 a share, a year earlier. Excluding a $255 million tax benefit in the previous year and other items, adjusted earnings fell to $89 million, or 60 cents a share, from $121 million, or 85 cents a share.
Analysts, on average, had been expecting earnings of 34 cents a share.