Good morning, ladies and gentlemen. My name is Jody and I am your conference facilitator today. I would like to welcome everyone to Cleveland-Cliffs’ 2017 Fourth Quarter and Full Year Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. The company reminds you that certain comments made on today’s call will include predictive statements that are intended to be made as forward-looking within the Safe Harbor protections of the Private Securities Litigation Reform Act of 1995. Although the company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially. Important factors that could cause results to differ materially are set forth in reports on Forms 10-K and 10-Q and news releases filed within the SEC, which are available on the company website. Today’s conference call is also available and being broadcast at cleveland-cliffs.com. At the conclusion of the call, it will be archived on the website and available for replay. The company will also discuss results excluding certain special items. Reconciliation for Regulation G purposes can be found in the earnings release, which was published this morning. At this time, I would like to introduce Tim Flanagan, Executive Vice President and Chief Financial Officer.

Thanks, Jody and thanks to everyone for joining us this morning. I’ll kick of the call with review of the fourth quarter and full year financial results, and an overview of some important outlook items for 2018. Before diving into the results, I wanted to first highlight a very important event and its positive impact on our business. In December, President Trump signed in the law the Tax Cuts and Job Act of 2017, which among many other reforms repealed the Alternative Minimum Tax. Resulting from the repeal of AMT, the benefit to Cliffs is two-fold. First, we are now able to monetize the approximately $250 million in credits we have accumulated as historic AMT payer. We will begin to see these credits return to us as cash refunds. We will receive approximately $120 million in 2019, as well as $60 million in 2020, and $30 million in each 2021 and 2022, not to mention the $10 million we will have returned to us in 2018. Historically, our AMT credits have had evaluation allowance against them, which we have reversed during the fourth quarter, resulting in the substantial tax benefit you saw flow through our financials. Secondly, we will no longer be limited on the deductibility of historic net operating loss carry forwards. Previously, as an AMT payer we are limited to only utilizing 90% of such carry forwards. With the repeal, this limit goes away with respect to the utilization of historic net operating losses. As such, given our sizeable NOL position of over $2.5 billion we will effectively be a 0% taxpayer for the foreseeable future. While we are still evaluating our options on how to best utilize this meaningful incoming cash flow from tax reform it’s fair to expect that the cash will be primarily deployed towards…

Thank you, Tim, and thanks to everyone joining our call this morning. At the outset of last Year, I promised a strong and sustainable results in 2017, and we delivered. The main metric we focus on, adjusted EBITDA surpassed $500 million. This significant result is a direct consequence of our shift to a U.S. focus strategy taking advantage of our strengths in the domestic market that were ignored for some time in this company, and also making all the necessary improvements across the board commercially, operationally, and financially. Since my first four years with Cliffs in 2015, our EBITDA has increased a lot. From 2015 to 2016, the growth was 28%; and between 2016 and 2017 the increase was 37%. Therefore, despite the undeniable volatility of the iron and the steel business, some companies still deliver consistent growth and increase profitability. If they have the right strategy in place and the discipline to execute without getting distracted by day-to-day noise in the market, that’s Cleveland Cliffs, that’s us. We also enjoyed the positive consequence of the industry finally waking up to the importance of rational supply behavior and the environmental compliance. We actually designed our strategy around these two things. The strategic moves we made at that time, which I have laid out in past conference calls put us in a position to thrive in 2017 and should boost Cliffs results even further in 2018. Dating back to the early days of my tenure as Cliffs’ CEO, the most prevalent thing that [indiscernible] industries so-called experts were focused on was on who was a low-cost producer and who could pump out the most volume? The environmental harm is “low-cost tons,” cost to China was never discussed. So, from the very beginning, I was in a daily fistfight about this deeply…

[Operator Instructions] Your first question comes from the line of Lucas Pipes of B. Riley FBR. Your line is open.

Hi, good morning everybody and thank you very much for the updated guidance that’s quite helpful. Lourenco, I wanted to first turn to that 2020 outlook that you provided towards the end of your prepared remarks, and maybe to touch on Northshore, what makes that particular operation so unique to be able to supply DRI pellets?

We have already - first of all thanks Lucas, good morning. Northshore has already proved itself as a very viable producer of DR-grade pellets that’s where we currently produce and sell DR-grade pellets to our current customers Nucor and ArcelorMittal on [indiscernible] Canada. We use our ore that’s very, very good for DR-grade low silica production out of their Babbitt Mine at Northshore and the product is very well liked by both clients. So that’s what we have there, and that’s what we will continue to have. With the investments, we are going to just be able to produce more, without having absolutely any interference with productivity that’s what we’re doing there. We’re debottlenecking the operation and specializing even further in DR-grade pellets giving them the ability to switch between blast furnace pellets and DR-grade pellets a lot easier with no interference in production.

Thank you. And then, you touched on this very briefly as well and that’s the contracting of the HBI output. Can you maybe go into little bit more detail how much of the tonnage would you like contracted out by what time? That would be very helpful. Thank you.

Well we are already talking to clients for some time because as you well know Lucas, we produce customized products, we don't produce run-of-the-mill commercial cost products, we tend to do what each one of the clients what for their specific points of consumption. So, we’re going to do the same thing with HBI. So, we are in discussions with these clients and we will be cutting this throughout 2018, more likely into 2019 for the tonnage that they want to get, and what I’m seeing right now is that we are very well sized for the desires of the market. Keep in mind they import commercial cost big iron and commercial cost other iron ore substitutes from abroad and they need to buy a lot more. They need to carry inventory. They need to bear with uncertainty of deliveries, they need to bear with the uncertainty of current exchange rates and things like that. With those we are going to carry the inventory for them, we're going to deliver just-in-time, we are going to customize the cargo content and everything else to the desire of each one of the EAFs, so everybody is very happy and very excited. We’re going to do very well with the HBI business, but there is not pressure on timeframes even because we decided long ago not to go project finance, not to have to pre-negotiate commercial DSO, we are doing at the right time the right way.

Okay. That’s great. And then on APIO, appreciate the commentary there and I think you mentioned in your prepared remarks that you asked certain contractual obligations that you intend to honor, so first could you break out what those are, I believe there are some transportation logistical costs, minimum payments associated with those, if you could maybe remind us what those are and then secondly, if you were to seize operations in APIO later this year, what sort of reclamation costs should we be looking forward to from a cash perspective? So, would appreciate your color on that. Thank you.

Yes, look we prepared those ourselves Lucas to be able to exit APIO without any pain. So, if we had to decide to shut down in short term that would not be a painful move for us. We are totally prepared, but I will let Tim Flanagan give you a little more color on that because I think it’s a very important thing to further discuss. Please Tim.

Yes, thank you Lucas. Maybe starting with kind of the big buckets right, you do have predominantly rail and logistics. Our transportation logistics-related contracts rail, port, but the other big one would be Australia is a contract mining operation, so we have our contract miner contract as well. But I think, if you think about the way we look at these costs and certainly us operating the mine as long as it is economic through our team will help us mitigate those costs as much as possible, and then beyond that there’s number of mitigation strategies that we have in place be it sale of assets, the railcars, the mobile equipment, the infrastructure that’s in place that will take place, but to your point let’s assume we operate through the back half of 2018. We get late in the 2018 with the operation, we execute on some of the mitigation strategies. We would expect those are ongoing obligations to be less than $80 million and really what’s important is those obligations would be stretched over about a three-year period. So hopefully that gives you a little bit more perspective on what we’re looking there.

That’s helpful. So, the 80 million would be the aggregate amount over a three-year period or so and that would not include reclamation?

The reclamation would come after that and the reclamation currently is recorded at about $20 million.

So, the way to maybe think about it is that you have $80 million left to play and any additional ton that you produce is incremental cash versus that $80 million, is that maybe a good way to think about it?

That’s a good way to think about it. And keep in mind, we’re going to sell a lot of stuff, but we’re working on that. So, it would be pain free.

And then maybe lastly the reclamation, how quickly would that follow after that and what sort of - how should we model that?

Yes. So, that would still be a couple years out and it’s about $20 million and it stretches over a few-year period.

Okay. Great. Well thank you very much and good luck.

Thanks, Lucas.

Your next question comes from the line of Seth Rosenfeld of Jefferies. Your line is open.

Good morning. I just have a couple of questions just starting out on the 2018 guidance once again. And so first, thanks for providing the explicit guidance on expected realized prices based on the year-to-date trends, but can you just update us on the sensitivity that you might expect, should spot prices for iron ore, hot-rolled coil, or pellet differ over the course of the subsequent 11 months, and has the specificity changed with what you’ve told us in past years? I’ll start there please.

Well in past years, we didn’t have a big impact on pellet premiums because pellets all as commented as premium, but not a premium that would change significantly. The outcome of the number. Knowing that pellets would become more sort after. The most recent contracts that we designed, they have a much bigger influence of the pellet premium. So, the fact that pellet premium grew between, I am talking about the Atlantic Basin pellet premium that doesn't fluctuate everyday like the Chinese pellet premium, talk about the Atlantic Basin premium. The year Atlantic Basin pellet premium that used to be historically low 30s is now 58. So, we saw that coming before the move happened. So, the most recent contracts, they have a much higher influence of the pellet premium and contrasts that were signed prior to my arrival here at Cliffs. So that’s a positive that I would like to point out. As far as iron ore and hot-rolled, you guys know the sensitivity, they don't change much. If the IODEX and the price of domestic hot-rolled in the - that's traded inside the United States, that’s pretty much it. Some contracts have a wait between iron ore and hot-rolled, more towards hot-rolled, less towards iron ore, and then others is the opposite - some others are fixed portion. So, each contract is different, but by now you guys, said - have the fluctuations of iron ore, and hot-rolled well defined within the ore model. The biggest problem continues to be the amount of graft that the commodities desk [ph] of the big banks continues to put out. So, there is absolutely no commodities desk, no big bank that has a price above 65 per iron ore, and [indiscernible] 75.05. And two months ago, Goldman Sachs was saying that…

That’s very kind.

Except the ones that have an agenda because these ones over time they just lose their job, they move from a bad place to another for a worse place, but that people they try to do a good job, they try to educate - I feel bad for the, you know the big funds [ph] they know what they are doing very well, but they retain investors. These guys these poor [indiscernible] they read this thing every day and it’s so bad. All right Seth, what else, what can I do for you?

Well first thank you very much, very kind of you. Is there any way that you can quantify the new sensitivity to the pellet premium? I believe you had maybe one or two years ago, perhaps every $10 move in the Atlantic Basin pellet premium, what impact would that have on your full-year ASP and then a separate question from that I guess, within the US business, you have talked in the past of some of the cost inflation you have seen in that region, given the year higher volumes expected for 2018, we are hoping to see perhaps a lower realized cash cost with the fixed cost leverage. So, slightly surprised you're looking for that stability in cash cost, what do you think are the ongoing cash cost inflationary pressures in the U.S.? Thank you.

First at pellet premium, pellet premium moved from $46, $45 to $58. It was another $100 million in EBITDA increase on a fiscal year basis. So, I hope that that point would help you. As far as the - can you repeat the other question, the other part of the question, I forgot - because I was thinking about the pellet premium, so I believe I didn’t get all the nuances of the other question. So, can you repeat Seth, please?

If you can just talk a little bit about any cost inflationary pressures you are seeing in the U.S. I was somewhat surprised that you're guiding to flat cost per ton in 2018 despite the higher production and shipment expectations. So, what are you saying in underlying cost inflation place?

Look, we do have a cost pressure in the United States and it’s associated - associated with higher energy rates and that we are anticipating. We also are anticipating higher profit share that’s a good problem to have; and the worst of all is higher transportation costs. There are railroads, they basically - they have licensed these deals. And I don't have - myself and other CEOs they don't have a lot of options because they - basically they control the track. So, they continue to force us into cost and these things when they will have to come to an end, but we mitigate as much as we can, but we face that. Also, we are a real operation. So, we spend money maintenance. So, we have obligations that we have to fulfil. We have repairs that we have to go through. So, I think that all-in-all the fact that we’re able to stay for 2018 within the same level 2017 despite of all the pressures is a big game. I’m not going to give you any no, [indiscernible] because we are seeing. The cost reduction is here, the costs are expected to have next year. So, that’s why we are guiding to the singular. So, all the things that I mentioned to you is just my think. That’s my work. That’s what I need to do on myself and Terry Fedor and my General Managers in each one of the mines, the transportation group, at commercial [indiscernible] and that’s ours fight day by day.

Great. Thank you very much.

Thanks Seth.

Your next question comes from the line of Matthew Fields of Bank of America. Your line is open.

Hi everyone. Congrats Lourenco on another strong year.

Thank you very much Matt.

I wanted to ask a couple questions about the Minnesota property, the land rights that you bought. Since you essentially bought, I guess half of the land that the other entity had the rights to, does this essentially shut the door on the [indiscernible] potential project, would you say?

Look, like I said during my prepared remarks the, what we did in Minnesota is normal course of business. We literally have opportunities to buy land or because the existing owner wants to sell or because the existing owner wants to cut the deal for at least for a fee in the loyalty for the long run, or because the one that has the deal is [indiscernible]. We take advantage. I’m a competitive guy, and we have a big commitment. I have a big commitment to continue to stay in Minnesota. Despite of all the bad moves that the State of Minnesota [indiscernible] let's face it, which I - I'm building Ohio because Minnesota never really got it, what they were losing. They will realize over time the mistake they made, but it is what it is. So, the amount of money that we spend is not even material because if it were we will have to disclose, and so the impact on us this optionality. The same impact that we have by acquiring the minority interest of children and prior initiative. So long story short, where Cliffs will go next, if it’s Michigan or Minnesota, if it’s Nashwauk or Tilden [indiscernible] Empire, it is an open question. We have optionality. We have both opportunities to grow. One of them will be explored. The other one will be put to die. That’s what we have. I don't know if I answered your question, but what more color do you need Matt?

That's helpful. I mean, and then further on that, I think the old owner claimed that due to the soft ore and the low stripping ratios their costs to make pellets could be materially lower using that resource, do you anticipate that maybe as your production profile grows through more demand for HBI or what have you or the natural evolution of your mining footprint that you develop that resource and could lower your cost or do you not put a whole lot of stock and what the old owners have said?

The one that first said that was Minnesota Steel back in 2007, Minnesota Steel. Minnesota Steel was never able to become reality, and then came Essar from India, their saviors. The guys that known everything about the steel business. They know how to build, they know how to operate, they know how to pellet size, they know how to sell, they knew a lot of things. They say $1.7 billion is still there on the ground and people call that thing a half-built pellet plant, I call that a 10% built pellet plant and with probably 5% having to be disassembled before we tried to do something with that amount of steel and concrete that was not pulled a properly, but they repeat that thing of the low cost and et cetera. Then came Matthew Stock [ph], Where is Matthew Stock? Matthew Stock was hired because he was a guy with a lot of experience, how to build pellet plants because he had a very, very successful career, guess where, in India. And these guys came after Essar. So, that’s the connection. Matthew Stock came and disappeared, without leaving a trace. I think the reporter should even investigate where is Matthew Stock, what happened with Matthew Stock. And then came Chewbacca, out of Star Wars, out of nowhere. The billionaire character of Star Wars that knows everything about pretty much everything, big iron, blast furnaces, coal, pellets, costs, this and that, investors lined up, Wall Street people try to give him money, money from Dubai, clients in China, wo. No land, no lease, no nothing. So, what was the question, I think I forgot the question. About the cost. I think that in order to talk about costs first you need to know what a pellet is, how to sell the pellet, how you cut a deal, how we cut a contract, you remember when I first came to the company Matt, that we had Magnetation. Magnetation was real. Magnetation was 50% owned by case steel, 50% owned by Larry Latin [ph] and it was selling terms. Magnetation when bankrupt we are 100% supplier of a case steel. That’s undeniable. Then US Steel brought back Keetac, and there are long pellets. Oh, they are going to compete, they are going to do this, they are going to do that. Well, I have all the contracts in the Great Lakes both sides, except Stelco, because Stelco was former U.S. Steel, Canada. Other than that, everything else is mine, including [indiscernible] that in 2017 was U.S. Steel. For the next three years it will be Cleveland-Cliffs. So, what was your question about, when a big competitor should buy. Did I answer your question?

I mean sort of. You know, the thinking is that as he was running around trying to raise money, you know he at least had a 7-million-ton potential for land and now you basically took half is land, so he doesn't even have that, so it sort of shuts the door on the option that he had, so it shuts the door on even the potential competitor of yours down the road and…

Just to clarify, I bought the land from GPIOP, Glacier Park Iron Ore Properties or something like that. And that the owner of the other land is the people of State of Minnesota. So, the other half of land belongs to the people of Minnesota, and the controller of that hand has reverted to govern or mark data. The control is on the [indiscernible], the Department of Natural Resources of the State of Minnesota and these people are public officials. They must do what’s right for the people of Minnesota. A good thing about the land that we acquired control, it’s all contiguous. I can operate that land with absolutely no problem having access from public roads and we can execute the mine plan, which by the way has been initiated. Very soon I’m going to have a mine plant [indiscernible] and we're going to get permits to mining that land. The other side of the thing that’s owned by the State of Minnesota it’s a hodgepodge of separate areas that are not contiguous, unless they use drones to operate in that land through flying machines that will land on pieces of land, and then will fly above again and then we will move to the pellet plant, so it can't operate without Cliffs. So that’s what we have there. So that’s how I operate. And we did everything completely legal, legally complete within the boundaries of what we are allowed to do, and we are ready to talk with the other owner, who is the other owner, [indiscernible].

Congratulations on that.

[Indiscernible] they are gone when an election comes and they are no longer there, but someone will be there sitting in that chair.

Well congratulations on that transaction and the year.

I'm sorry, say again.

I said congratulations on that transaction and the strong year.

Thank you. I appreciate Matt. Okay, we will take the last question Jody.

Your final question comes from the line of Novid Rassouli of Cowen and Company. Your line is open.

Hi good morning this is a [indiscernible] for Novid. Thank you for taking my questions. So first one I have is, I know that in the past there was some shipments so to seaborne market that actually had impact on pricing and cost, so my question is, if that shipments into seaborne market coming down would that lower your cost guidance and increase your price realization guidance for 2018? And then secondly, now since you have enough capital to move forward with the HBI project on your own, should we assume that you won't just go ahead without a partner coming in? Thank you.

Thanks for the questions. The answers are. For the first question, yes. And for the second question, yes, no partner, you’re right. Thank you very much.

Thanks.

Jody, I think we’re done. Thank you very much and I will be speaking with you all as soon as we can and for sure in the next three months. You guys have a great 2018. And I look forward to continue to have these great conversations with our stakeholders. For now, have a good day.

This concludes today's conference call. You may now disconnect.