TORONTO (miningweekly.com) – Cleveland-based Cliffs Natural Resources on Thursday said it would record a goodwill impairment of $1-billion related to the 2011 acquisition of Consolidated Thompson Iron Mines.
The goodwill impairment charge will be recorded as a noncash expense for the year ended December 31, 2012, and is mainly driven by the project's expected lower long-term volumes and higher capital and operating costs.
The delay of the Phase 2 expansion of the Bloom Lake mine, which the company acquired with the Thompson Iron Mines transaction, also contributed to the impairment.
Cliffs also said it expected to incur costs of between $100-million and $150-million for other charges related to its Eastern Canadian iron-ore business segment.
Meanwhile, Cliffs' board recently authorised the sale of the company's 30% interest in Amapa. Based on the pending terms of the sale, Cliffs expects to record a noncash pretax impairment expense of $365-million within its fourth-quarter results.
In the fourth quarter, Cliffs also expected to record $542-million in noncash valuation allowances related to two of the company's deferred tax assets, namely the mineral resource rent tax, in Australia and alternative minimum tax, in the US, carryforwards.
Lower long-term pricing assumptions and the related impact on profitability and expected future tax payments primarily drives these valuation allowances.
As a result, Cliffs would record these valuation allowances as an expense within the income tax expense line item on its statement of operations.
The company’s stock traded down 1.75% on the NYSE at $36.53 apiece on Thursday morning.