Tim Flanagan - Executive Vice President and Chief Financial Officer Lourenco Goncalves - Chairman, President and Chief Executive Officer.

Lucas Pipes - B. Riley FBR Seth Rosenfeld - Jefferies Matthew Fields - Bank of America.

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In December, President Trump signed in the law the Tax Cuts and Job Act of 2017, which among many other reforms repealed the Alternative Minimum Tax.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 debt reduction, as well as future CapEx needs associated with our core business, and last but not least, potential capital returns to shareholders.

Now moving to our financials. We wrapped up 2017 on a solid note with fourth quarter adjusted EBITDA of $129 million propelling us to $513 million in adjusted EBITDA on the full-year. This was a 38% increase in the prior year and our second straight year of EBITDA growth in excess of 25%. Segment-wise, starting with the U.S.

business, we posted $160 million adjusted EBITDA performance in the quarter, a $9 million improvement from the prior year quarter despite a 1.4 million ton decrease in sales volume.

Because of both strong customer appetite for pellets during the first nine months of the year, and a customer nomination reduction previously announced, which occurred late in Q3, the actual tonnage shift in Q4 was lower than last year's fourth quarter.

That said, on a full-year basis, we sold 18.7 million long tons, a 500,000 long ton improvement from the prior year. In 2018, we expect another increase in sales volume, 20 million long ton as a result of strong customer nominations and our third quarter acquisition of the remaining interest in the Tilden Mine.

Consistent with our disclosures in the third quarter 10-Q we’ve adopted the new revenue recognition standard effective January 1 of this year. As a result, we will be recognizing sales sooner than we historically have. In the past and through 2017, Q1 sales represented vessels shipments made from December through February.

Going forward, Q1 reported sales tons will reflect shipments made from January through March. Even though actual sales are unaffected by the reporting methodology change, our overall reported volume in Q1 2018 will be lighter than what is typical for Q1. This is because we are replacing a heavier December shipping schedule with a lighter one in March.

Conversely, the second quarter will show a more pronounced tonnage increase resulting in greater seasonality in our results in comparison with previous years. In sum, we expect the always seasonally light first quarter to only show about 1 million long tons this year, offset with much higher volumes in the remaining three quarters.

There will be no impact to our full-year expectation of 20 million long tons nor will the new revenue recognition practice result in a change in timing of our cash inflows. As for the revenue rate during the fourth quarter, we saw in USA a realization of $83 per long ton, representing a 13% increase from the prior year quarter.

However, given the reduction in nomination from a major customer we discussed last quarter, as well as lower average Q4 IODEX pricing and higher freight rates we saw this rate fall from a quarter ago. Looking into 2018, based on the performance to date for iron ore, U.S.

hot-rolled steel and Atlantic pellet premiums, and assuming that these pricing levels persist throughout the remainder of the year, we should expect a substantially positive impact in our full-year 2018 price realizations.

As we begin the year in order to provide some further transparency into some new customer arrangements, along with the customer mix we anticipate for 2018, we provided an expected realized revenue range in our press release this morning using year-to-date average prices for the commodities that impact our realizations most.

It figures, we have utilized do not reflect our internal view on pricing, and therefore should not be construed with guidance. Rather, we are just using what has transpired thus far in the year.

So, with the $77 iron ore price of $675 per net HRC prices in the United States and Atlantic pellet premium of $58 and holding all other assumptions such as mix, freight rates and PPI constant, our U.S. realizations would range from $97 to $102 per long ton. This would represent a double-digit percentage improvement from 2017.

And just to be clear this yearly range already includes a first quarter realization that is expected to be only around $75 per long ton. The reasons for lower price realization in Q1 then what we anticipate for entire 2018 are well known by the investors following Cliffs for some time.

Consistent with previous years, it includes negative carry-over effects, the lower reported volume driven by the winter shipping restrictions and an unfavorable customer mix dictated by rail only delivery, which for this specific yield were exacerbated by the accounting standard change during the year.

By using these data points, coupled with historical sensitivity information from previous results, the investment community should have an adequate starting point to model out expected realizations for the rest of the year. U.S.

Iron Ore cash cost for the fourth quarter were $59 for a long ton, close to our best performance of the year, putting our full year cash cost at $60 per long ton.

Thanks to our excellent operational performance, we are able to remain within our original cash cost guidance despite higher employee related expenses, higher energy rates for natural gas, diesel and electricity, the implementation of a new product, Mustang pellet, and two additional unanticipated DR-grade pellet runs.

In 2018, we expect to see cash cost at a similar level as in 2017 with the guidance range of $58 to $63 per long ton. Now moving over to Asia Pacific. The increasing preference of Chinese steel makers for higher grade ore has put a lot of pressure on our APIO business, which reported a negative $3 million of adjusted EBITDA in the fourth quarter.

Throughout the entire year 2017, the discounts applied to lower grade ore have only worsened. Over the past two years, our expected realization relative to IODEX has decreased over 40%. In addition, over the past six months, the Aussie dollar exchange rate has become more unfavorable for us.

In today's iron ore price, lump premium, FX, and discount environment, we would expect slightly negative EBITDA on a full-year basis and as such we expect to see some mining operations in Australia sometime during 2018. Lourenco will address this in more detail during his remarks.

SG&A expense during the quarter was down 22%, primarily due to lower incentive compensation. On the full-year, we finished out favorable to our guidance by about $4 million. For 2018, we expect SG&A expenses of about $150 million, which is higher than last year due mostly to a Pension/OPEB reclassification driven by new accounting standard.

As it is simply a reclassification within the income statement there will be no impact on net income or EBITDA. Overall, on an apples-to-apples basis, our expected 2018 SG&A lines up very similarly to what it looked like in 2017.

As for miscellaneous net, we expect to continue to incur empire idle expense at a rate of about $7 million per quarter for the full year of 2018.

Total capital spending for the quarter was $77 million, which includes sustaining capital, preliminary spending related to HBI, as well as our acquisition of certain land rights in Northern Minnesota, which pushed us above our previously disclosed guidance.

We finished the year with total free cash flow generation of $182 million, which in large part went towards successful efforts in enhancing the core business, including the acquisition of the remaining minority interest in both Tilden and Empire mines.

For 2018, capital expenditures will be taking a large step up as we begin major spending on the HBI Project, our most important strategic priority over the next couple of years. Capital expenditures will be broken down to three areas.

We expect spending related to sustaining our ongoing operations of about $85 million, spending related to the DR-grade pellet upgrade at Northshore of $50 million, and the largest and final piece, spending on the HBI Project is estimated at $250 million for 2018, or about 35% of the overall project cost.

With the completion of our capital rising in December 2017, the $700 million total needed for the HBI project is now fully funded. Finally, I will conclude my remarks with one of the major themes for 2017, capital structure optimization. We finished the year with net debt of $1.3 billion, nearly our lowest level in over six years.

Along with a vastly extended maturity profile. We also lowered the average carrying cost on our outstanding notes to 5%, compared to the 6.8% it was at the beginning of the year.

The balance sheet is clearly in much better shape now than it was a year ago with the improved capital structure in place and strong earnings outlook, we’re very well positioned to both grow the company and whether any volatility the market may throw at us. With that, I’ll now turn it over to Lourenco..

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 misguided view. As a producer of high quality pellets, we knew that are not all iron ore was created equal. As we look at what transpired in 2017, China finally started to care about pollution.

With this new attitude towards environmental stewardship, the Chinese government mandate curtailments of some highly polluting steelmaking capacity. These action forces the remaining operating steel mills to produce more steel, while generating reduced emissions all for an end market that was and still is very healthy.

Exactly as we predicted a few years ago, the Chinese became a lot more selective over the feedstock they use in their blast furnaces and the [indiscernible] low-grade fines coming out of Australia just weren't going to cut anymore. This resulted in the price for benchmark rate iron ore increasing over 20% in 2017.

Even further, pellets became a lot more expensive. Good pellets are scarce, difficult to produce, and they allow the blast furnace to run the down most environmentally friendly and productive operation possible. With our patience finally paying off this international market development helped improve our U.S. IO results in 2017.

Our full-year realized revenue rate of $88 per long ton was up 17% over 2016, and segment EBITDA was up 55% year-over-year.

With the Atlantic Basin pellet premium jumping to a value of $58 per metric ton since the beginning of this year, we expect our segment EBITDA to take another substantial move upwards in 2018, especially with our 20 million long term order book for the year.

On the operational side, I asked so much of our team last year and of course they absolutely delivered. This included the ramp up of the Mustang pellet production, which could not have gone any better. The planning of the upcoming Northshore upgrade project in two additional DR-grade pellet runs.

This operational excellence continues to support and serve well our healthy domestic markets. The steel prices in the United States are at a six-year high and our customers have a strong appetite for pellets. In addition, two weeks ago, the Department of Commerce submitted their result of Section 232 investigation to the White House.

We don’t have much visibility on the contents of the reports and have even less clarity on what Pres Trump will actually do with the report, but what I believe is most important, is the enforcement of any restrictions that are put in place.

We as a country, continue to look the other way when the conversation is about domestic buyers that are recipients over unfairly traded steel.

The Department of Commerce knows and the White House knows that we must focus on these folks, make a few serious examples out of them, and hopefully put an end to this bad behavior that as the industry knows is steel is a huge part of the problem.

Amazingly cheap steel does not exist because other countries are amazingly more efficient than the United States. It exists because some foreign players cheat and some American companies enable them by acquiring that steel.

That includes for example, the steel from Iran sold in the international markets and in the United States as ‘Made in Turkey’ or steel produced in North Korea disguised as ‘Made in Indonesia’ or ‘Made in China.’ By the way, a huge portion of the iron ore produced in North Korea is consumed by the Chinese steel mills to produce the so-called cheap steel.

If you are a buyer of this so-called cheap steel, you are an enabler and Section 232 should be coming for you.

One final important strategic highlight for our US business, during the fourth quarter, we acquired additional real state interests in Northern Minnesota from Glacier Park Iron Ore Properties, including a significant portion of the land previously leased to Mesabi Metallics, formerly known as Essar Steel Minnesota.

As a mining company in business for 170 years Cleveland Cliffs is constantly in the pursuit of new iron ore reserves. In order to continue to grow and to make sure we have unrestricted access to fit stock in the future.

You saw two other examples of that this year with our acquisitions of the remaining minority interests in iron ore reserves in both Empire and Tilden Mines in Michigan from ArcelorMittal and U.S. Steel respectively. With that in mind, the land acquisition in Minnesota is just part of our long-term growth plan.

While the acquisitions in Michigan not only increased our annual US-IO production capacity to 20 million long tons for 2018 and beyond, but also created future optionality for Cleveland Cliffs in Michigan. Mining is a long-term business and what we do or don't do today will have repercussions for generations.

Despite the fact that the State of Minnesota has backed the wrong horse for the last several years we still believe that we are best positioned to bring new growth and market diversification to Minnesota. As evidence of that, we are proud to present our real projects Mustang at United, DR-grade pellets at Northshore, and HBI in Toledo, Ohio.

Cleveland Cliffs still stands ready to implement all plans in Minnesota, but will not wait forever. In the meantime, we are very comfortable with what we have done so far in Minnesota, in Ohio, and in Michigan and look forward to continue to methodically execute our overall business plan. Now moving on to Asia Pacific Iron Ore.

Our negative $3 million EBITDA performance in the fourth quarter should not be a surprise for those following us closely. As the Chinese preference for higher grade ores has only increased over the past year, our non-core low-grade operation in Australia has continued to refine its mine plan and perform to the best of its ability.

That said, we will likely cease mining operations in our Australia later this year. Our goal is striking the right balance between economically mining the remaining mineral reserve base and fulfilling our contractual obligations. In any case, we will continue to meet our obligations as they can do and we work to minimize their impact on our business.

For most of my time with Cliffs, I have stressed that I would not tolerate a loss-making performance in APIO. I appreciate the hard work and sacrifices our great team in Australia has made and continue to make to keep this business viable, much longer than we thought it could.

I will certainly be keeping the market updated on the status of our Australian operations throughout the year. With EBITDA contribution from Australia ultimately going away, we have our eyes firmly set on the new EBITDA contributors we will be adding to our business over the coming years the starting with the HBI plant in Toledo, Ohio.

During the fourth quarter, we completed the significant accomplishment of fully funding the entire $700 million construction cost of the plant. Why did we decide to fund the entire project cost upfront? Number one, this is an incredibly important project.

Not just from a business diversification standpoint, but also in that it will add significant EBITDA power to Cleveland Cliffs. Because of this importance, we wanted to remove any uncertainty with respect to our ability to fund the construction cost entirely.

We saw the opportunity to do this while securing very favorable interest rates and removing any other market risks. And finally, we wanted to eliminate any uncertainty around the necessity of partners making abundantly clear that we can and will proceed without one.

We issued a combination of secured bonds and convertible notes and we’re able to price the deal at a very attractive weighted average coupon of 3.4%. The 1.4% convertible note will be treated as debt, not equity, both accounting wise and as we plan out our business. Our issuance of the convert was not a dilutive exercise.

You see that reflected in our financials with the converts categorized as a debt instrument on the balance sheet and with no change to our share count on the income statement in the calculation of earnings per share this quarter. With that important transaction behind us, the year 2018 we will be all about execution.

Our capital structure is in the right shape to support our future growth. Our HBI team is in place and the important contractors for technology construction and material handling are officially assigned.

The permitting process is well on track and we’re very pleased with the support from the EPA, as well as from the State of Toledo, and from the State of Ohio. Our conversations with future customers continue to go well and it has become abundantly clear what sought after products our customized HBI is.

Groundbreaking at the side, will happen in April and we will commence construction work shortly thereafter. I thank the HBI Project team for moving through this process so effectively and keeping us well on track to add this important plant to our asset portfolio by mid-2020.

Just as important, we have also begun working earnest on the upgrade of our Northshore plant, which upon project completion will be able to produce up to 3.5 million long tons of low-silica DR-grade pellets. Cliffs’ Northshore is currently is and will continue to be the only source for this this type of pellets in the Great Lakes.

The ability for Cliffs to produce DR-grade pellets is what makes our venture in HBI so value accretive and this unique quality is why we are the only company who could visibly develop HBI production in the region.

With the Northshore upgrade, by 2020 Cleveland Cliffs will have three very effective EBITDA generating businesses, blast furnace pellets, DR-grade pellets, and HBI. I have every faith that we have the right people in place at each project to get us to where we need to be. For the time being, we have a sold-out U.S.

pellet business that just added additional capacity. The stable and well-run operations, and an environment for iron ore, domestic steel, and pellet premiums that should generate us a lot of cash. On top of that, we will receive a meaningful $250 million cash infusion from the IMT - the AMT monetization.

Our strategy of protecting and enhancing our core business was executed well in 2017. And we’re certainly prime to reap more benefits in 2018. Combining these strengths with our soon-to-be expanded asset portfolio and customer base we definitely have a lot to look forward to, for the years to come.

With that, I will now turn it back to Jody for the Q&A portion of the call..

[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 iron ore price would go to 60 than 55 then 50, until when? How much longer? The bosses at Goldman Sachs need to see that their people or they don't know what they are doing or they are doing something very well thought after because you know, Goldman Sachs has been in all my deals, they are very supportive, they like to put their money with us.

They know that our views are completely different from their commodities desk and they even had one of my deals, this was a bought [ph] deal with Goldman Sachs, against their own commodity there. So, it is like one side of the coin they win, the other side they win as well. So that’s one way to do it. The other way is JPMorgan. JP Morgan can’t be worse.

The can’t be worse. JPMorgan is so much better off, if they fire everybody in their commodities desk. Maybe, they would learn how to read balance sheet and miscellaneous and stuff like that without the value [ph] input of the commodities disk. Some guys over time they lose their hand. So anyway, that’s the biggest thing.

But you guys are on your own, especially Jefferies, because at least you are better than the average because you don't have a commodity desk that’s great. You have, actually you have a commodities desk, but you seem not to follow them too much. So, and I hope that other analysts will do like you said. So that’s my thing.

[indiscernible] I would like to have them gone. They are a disaster, they are training wreck. So, you guys are good. You guys try to do a good job and I appreciate 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..