NEW YORK (TheStreet) -- Cliffs Natural Resources (CLF) - Get Report stock closed higher by 7.23% to $1.71 on heavy trading volume on Wednesday after the company completed the sale of its last coal businesses.
The company sold the Pinnacle Mine in West Virginia and the Oak Grove Mine in Alabama to Seneca Coal Resources in a deal valued at $268 million.
Cliffs Natural, an iron ore mining company, could receive an additional $50 million as part of the revenue sharing agreement with Seneca Coal Resources.
"The sale of Pinnacle and Oak Grove to Seneca Coal marks Cliffs' exit from the coal business, and represents another very important step in the implementation of our US iron ore pellet-centric, environmentally compliant strategy," CEO Lourenco Goncalves said in a statement.
By the end of the trading day, 5.27 million shares of Cliffs Natural Resources had exchanged hands, compared with its average daily volume of 4.94 million shares.
Insight from TheStreet's Rating Team
TheStreet's Carleton English commented on Cliffs Natural Resources' exit from the coal business in a post on Real Money. Here's what she has to say about the company:
Cliffs Natural Resources continues to whittle away at itself in an effort to rebuild amid a period of low commodities prices.
The decision to sell its coal business did not come lightly, as the company weighed the risks of selling the assets in a depressed market. During the third quarter earnings call, [CEO Lourenco] Goncalves said that the company would try to extract as much value as possible from its mines while it waited for an appropriate bid.
"From our side, we have no intention to be at the mercy of the buyers' timelines. We control the process and not them," Goncalves said in October. "While the effort to sell these assets continues, we must do more to shore up profitability as we operate these mines during the sale process."
The sale of the company's coal business has largely been viewed as a positive, as it will allow Cliffs Natural Resources to focus on its core, iron ore business. That said, the near-term outlook for that business appears bleak, as prices of iron ore have fallen 45% year to date.
Carleton English's "Cliffs Natural Resources Sheds Coal in Attempt to Save Itself" was originally published on 12/23/15 on Real Money.
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