Good morning, ladies and gentlemen. My name is Jodie, and I am your conference facilitator today. I would like to welcome everyone to Cliffs Natural Resources' 2016 Fourth Quarter 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 with the SEC, which are available on the company's website. Today's conference call is also available and being broadcast at cliffsnaturalresources.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 Lourenco Goncalves, Chairman, President and Chief Executive Officer.

Thanks, Jodie. And thanks to everyone for joining us this morning. Before we start, I would like to introduce our new Chief Financial Officer, Tim Flanagan. In his previous position as our Controller and Treasurer, Tim has been a key player in our financial transformation over the last two years. Now, as CFO, he will continue to carry out our strategy of derisking our balance sheet. And Tim is replacing Kelly Tompkins who, as of January 1, was promoted to Executive Vice President and Chief Operating Officer. As COO, Kelly will continue to be my second in command. I feel comfortable that this new line-up will allow our company to expand upon the many successes of 2016, which we will discuss today. For now, I'll turn it over to Tim Flanagan for the financial review portion of the call. Tim?

Thanks, Lourenco. I appreciate your introduction and I truly look forward to taking on the responsibilities of CFO here at Cliffs. While the names have changed and its role, the mindset and the strategy have not. Kelly, myself and all of us at Cliffs share the view that it's important for us to continue to derisk ourselves as much as possible when the right opportunities present themselves. The ultimate goal remains a bullet-proof balance sheet that can withstand the inherent cyclicality in our business. This strategy has worked very well and much progress has been made, but we are not done yet. With that in mind, our focus on debt reduction and maturity extension will continue to be front and center as I begin my tenure as CFO. As I move to the discussion of our financials, I will lead with this very topic. Our net debt as of year-end was $1.8 billion, over a $600 million reduction from last year and our lowest recorded level of net debt since early 2011. Consistent with our priorities as well as what we have voiced throughout 2016, reducing our debt balance has been our number one focus and I can happily say that we have beat even our own aggressive targets. Now transitioning to our fourth quarter results. Our adjusted EBITDA of $174 million was the highest quarterly EBITDA result in two years. This achievement was a direct consequence of the massive cost reduction initiatives we implemented over the past two years. Additionally, we experienced much healthier sales volume in response to increased customer demand and better realized pricing. Starting with the U.S. business, we post $151 million adjusted EBITDA performance compared to $98 million in the prior year quarter. The increase is attributable mainly to a solid cash cost performance of…

Thank you, Tim. In each of our quarterly calls, I share with our investors and research analysts my perspectives on Cliffs and my views on the entire iron to steel industry in the most honest and direct way possible. Let's briefly recap a few points I brought to your attention in our previous calls. First, in this setting, last year for our Q4 2015 conference call, I told you that the principal executives of the major iron ore producers were hanging by their fingernails to their respective jobs, as a result of their reckless execution, which I call their strategy of self-destruction, allowing iron ore prices to deteriorate. And as a direct consequence of their deliberate actions, decimating the equity value of their respective companies. Within a few months, one CEO and two Presidents of iron ore operations went on to, "pursue other opportunities". Since those departures, iron ore prices have doubled from $40 to over $80 per metric ton. Second, in our Q1 conference call in April of 2016, I announced that we would start the deployment of capital toward the development of a customized pallet product, the Mustang Pellet, for our largest customer, ArcelorMittal; even though we had, at the time, not yet finalized our sales contract renewal with the customer. Despite all of the naysayers telling us that we would not be able to renew the contract, we knew here, internally, the strengths of our codependent relationship with the client and that the renewal was only a matter of time. Within a couple of months, we had renewed our contract for the full tonnage amount for the next 10 years. And at the time we signed the renewal, the Mustang Project was already underway. Third, in August 2016, during our Q2 conference call, I told you that,…

Certainly. Your first question comes from the line of Michael Gambardella from JPMorgan. Your line is open.

Good morning, Lourenco.

Good morning, Mike.

I just wanted to say a couple of things. First of all, congratulations, but most of all, thank you for making my job so much easier in covering Cliffs. You've been so honest and you've given everyone the details of your analysis of the iron ore marketplace over the last year-and-a-half. You've been spot-on and anyone who listen to you would be spot-on too with their call on Cliffs. So again, congratulations and thank you. But I have to say listening to your comments this morning, I think you might've missed a positive point on the iron ore market and I'd like you to comment on it, and that is it seems like the market may be anticipating too much production out of Vale's Samarco operations from what I'm hearing. What are you hearing on that?

First of all, Mike, I can't thank you enough for your kind words about what I have done here in our interaction. I'm doing my job. I'm doing what I feel like is my obligation with not only the investors that are honest and fair in terms of their analysis and their ability to deploy their money and make it to grow like a real investor does. But also I'm trying to educate these people because they are by and large very smart people. If they listen, if they pay attention, if they put their arguments on and you have an intelligent conversation. We will always be able to grow together and make money together. Anyway, moving to your point, Samarco. Well, Samarco at this point is (38:04). The current scenario there is that they have an idled facility over there, that they're of course trying to bring back to operation, and in the process they need to bring along lots of different constituents that have different agenda. For the company, what they want is to be back in operation. For the regions that were affected and for the towns that were shut down by that disaster, what they need is to be brought to life again, hasn't happened yet since November of 2015 when the incident happened. For the several people that lost their loved ones for a total of 19 deaths, they want to at least see justice be served. The process of indemnifying the family members, cleaning up the region that was affected and doing good with everyone that was, one way or another, brought down by the Samarco disaster is a very costly one. And I don't know why people don't talk about that. The Samarco doesn't have any money left on them, nor they have…

No. That's great. One last question. Could you discuss or give us your thoughts on how you feel the U.S. Steel, the restart of Keetac impacts you longer term. I know you're sold out this year.

That's a good question about Keetac. First of all, let me take one step back and think about why Keetac shut down in the first place. Keetac was the supplier of two U.S. Steel mills, one was Fairfield, the other one was Granite City. Fairfield shut down with the assumption that they would replace blast furnaces with EAF and therefore they would not be using pellets anymore, they would be using scraps. So, Fairfield was never a player to be brought back to support Keetac. But Granite City was idled more than a year ago. I don't recall how long ago, but long time ago. And they never said that they would shut down for good. So, it was easy to assume that Keetac would be supplying Granite City once Granite City comes back to operation. This being said, we heard the announcement of Keetac coming back and we did not hear the announcement of Granite City coming back yet. While I fully believe that Granite City will come back, because otherwise there is no – well, it's a mathematical impossibility to have the output of Keetac allocated without having Granite City in operation. I also try to understand where U.S. Steel is going to sell their pellets, because – certainly not to ArcelorMittal because I know the contracts we have in place. Certainly not to AK Steel Dearborn, because I also know the contract we have in place. And then I have to guess. I guess that they're not selling to AK Steel Middletown, because AK Steel Middletown is very happy with our pellets and they don't seem to be the type of steel makers that replace good pellets with bad pellets, like Algoma did, when they did not have an option back in 2015, when I blew up…

All right. Thank you. Thank you, Lourenco.

You're very welcome, Mike.

Your next question comes from the line of Evan Kurtz from Morgan Stanley. Your line is open. Evan L. Kurtz - Morgan Stanley & Co. LLC: Hey. Good morning, Lourenco, and congrats to Tim and Kelly; Kelly, if you're around listening.

Thanks.

Thank you very much, Evan. Appreciate it. Good morning. Evan L. Kurtz - Morgan Stanley & Co. LLC: Good morning. So, nice quarter. I just wanted to ask a couple of questions, maybe one following up on some of the last commentary there on Algoma. I know they're in the midst of a restructuring and the USW is now talking about, or threatening a strike. Maybe I'm sure you have some thoughts on this. What's kind of your view on how that situation might play out, and is that a risk to you? How much of that 19 million is committed to Algoma at this point?

We reenacted the old contract and the old contract covered for 1.5 million tons, and we signed an addition that was for 900,000 tons. So, the total January 1 through December 31 is 2.4 million tons. This being said, the union, the USW at Algoma, they are trying to get what they feel is fair, and I'm not going to give you any position on that. But at the end of the day, they know what's feasible, they know what's real, they know what's true and they know what's a lie. And then if you come back, the judge, the monitor – all the parts involved will end up realizing and I think that we are pretty much there that the best course of action is moving on and fixing what needs to be fixed, getting a new owner and working with Cliffs to continue to make their mill a strong mill. I feel that there is room for Algoma. There is a future for the Algoma workers. But they need the right ownership over there. I'm not going to deal with Essar. I put very clear to the court and the court approved that thing was a difficult point to make and we made it. It's approved. It's behind us. I have the right to make that contract if Essar comes back as the owner of their facility. So, that's my position in that situation. Evan L. Kurtz - Morgan Stanley & Co. LLC: Okay. Thanks for that. And then I just have a quick question on the guidance. What are you assuming for pellet premium in that number?

We use the reference of the pellet premiums in the Atlantic Basin. And that pellet premium today is $45. And just for a reference, just in case you need it, the average pellets in the same token is $54. Evan L. Kurtz - Morgan Stanley & Co. LLC: Great. Thanks. And maybe just one final one, if I may. I read an interesting article in Metropolitan (50:28) around on some of the work that you've been doing with the DRI plants. And you had mentioned that potentially, you could see a long-term customer in Trinidad. It was a little easier to get your pellets there versus Gulf Coast. So, just curious, what are you selling there now and what size of opportunity do you there in the future?

Look, DR-grade pellets for us is our future. And we continue to develop the product. We'll continue to produce and sell to our well established clients. And that's Nucor Trinidad. From the logistics standpoint, due to the design of the unloading dock at Louisiana, we can't get there by rail. And it's impossible to get there through the sea because there's a thing called Jones Act that would take a long time to explain in the call, but we can chat offline, that makes departing to United States and arriving to United States a complicated thing. But departing from the United States and arriving Trinidad is unviable (51:41). This being said, we continue to do business in Trinidad. We are very happy with the development and the relationship with Nucor. They will always be my preferred clients for DR-grade pellets because they – when nobody knew what we'll be doing, they first listen (52:01), I really appreciate the support I got from John Ferriola, Joe Stratman and all the people at the plant. And our people work very well with them to develop a project that now we are selling to another client at ArcelorMittal Canada. We just started doing business with them. So if the stock is small (52:22) like these things always start, but ArcelorMittal Canada owns two DRI facilities. And we are going to start supplying them soon. Evan L. Kurtz - Morgan Stanley & Co. LLC: Good to hear. Thanks. I'll hand it over.

Thank you, Evan.

Your next question comes from the line of Lucas Pipes from FBR & Company. Your line is open. Lucas N. Pipes - FBR Capital Markets & Co.: Hey. Good. Good morning, everybody, and good job on the quarter and appreciate the guidance.

Thanks, Lucas.

Good morning. Lucas N. Pipes - FBR Capital Markets & Co.: So, one of the other – another company that I cover, they were asked about a year ago or so on the conference call very clearly about equity. And the response from the CEO was absolutely not, I think we've been very clear on the issue. A common question I get is what are you going to do with the 2020 maturities? And I wondered if you could give a similarly clear message on equity, and if not maybe elaborate on the plans for addressing the 2020 maturity? Thank you.

Look, as you know that these maturities are taken care of here in the company very seriously and we move the right way at the right time. We have been addressing that 2018 and we are still in February of 2017. So, talking about 2020 and specific to your point, equity. I am a large shareholder. I am a large shareholder. I bought a lot of stock in the open market. I bought stock with after-tax dollars. I bought stock at $5, I bought stock at $3.06. I bought a lot of stock in this company for cash, after tax dollars. Very few CEOs do that. I did and I plan to continue to do. So, being a shareholder, I feel that exactly the same things that all shareholders feel. And I always have the shareholders front and center in my mind. Every single transaction that we will do, no matter if it's this or that, or that or more complex or less complex, have one thing in mind and one type of stakeholder in mind, the shareholder. I take dilution extremely seriously. But equity is a tool in the toolbox. We only use equity if it's ultimately accretive to the shareholders. If there's no accretion, there is no deal. If there is accretion involved for the shareholders, we might do it. This being said, we are going to generate a lot of cash in this company in 2017, $550 million at the level of the current guidance. So, that should also go toward addressing the 2020 tower. But everything that I'm telling you is just theoretical. I'm trying to share with you and all the investors in the call, how I feel about using another tool in the toolbox. There are several in the toolbox. Lucas N. Pipes - FBR Capital Markets & Co.: That's very helpful. I appreciate that and maybe one quick follow-up on that topic. Thinking about that 2020 maturity, do you have a certain timeframe in mind for when to address that maturity, or should we think like, look earlier in 2017? You gave a very strong guidance.

Absolutely. We do have a timeframe for that. It will be between February 9, 2017 and December 31, 2019. So, that'll be before 2020. Lucas N. Pipes - FBR Capital Markets & Co.: No. I understood. All right. Well, appreciate that. And maybe turning to the broader market, I appreciate it, the comments you provided on iron ore. I was curious how you're thinking about the demand side of the equation at this time. Seems like economic activity is fairly robust, but what is your outlook? I think in the past you also commented and I think you did it, again, this morning, how China is transitioning away from the fines? What's your outlook on the demand side? I would appreciate that. Thank you.

Are you talking about demand in the United States specifically or... Lucas N. Pipes - FBR Capital Markets & Co.: Globally, please.

You mean steel demand globally? Lucas N. Pipes - FBR Capital Markets & Co.: No, no. Iron ore demand globally.

Iron ore demand, okay. Well, China continues to perform. China is moving toward a more responsible way of performing. The pollution combat in China is real now and we are going to see more and more and more and more moves toward China becoming a lot more like Japan, a lot more like South Korea, because don't forget, Japan and South Korea in the mid- to late-1990s transitioned from what China is now to what they are now. So, the dynamics will be exactly the same. The difference is scale. The difference is size. So, I continue to believe that low-iron content iron ore will continue to accumulate in the port, and it will get to a point that it'll start to be pushed back by the end users, because S11D is a game-changer. 65%, 66%, 67% iron content is a game-changer, because that makes the life of the steel mills a lot easier. Take a look, Lucas, in the gap between the current IODEX that tonight would be $84 per metric ton for the 62% iron and the premium that the 66%, 67%, even the 65% iron content commands right now, it's increasing. So, that's what needs to be seen in China. We're not going to see China not producing, not buying iron ore, not deploying fixed assets. It's the opposite. They will continue to grow fixed asset investments. They'll continue to buy iron ore, but they will be more selective. So, the times of the so-called low-cost iron ore – and nobody talks about iron content, nobody talks about other properties, nobody talks about residuals – it's gone. China is no longer in elementary school. China is at least a senior in high school. Wait until China gets to college, it will be impossible for this guy that produce black stuff, and they called it the black dirty iron ore, to continue to be called suppliers of iron ore. It's a different ballgame that's moving in China. But demand is phenomenal. It's great. We'll continue to support production of good stuff. And the bad stuff, for now, we accumulate at the port. Very soon, we will be accumulating in Australia. That's the way I see it. Lucas N. Pipes - FBR Capital Markets & Co.: That's very helpful. And then, Lourenco, I was very impressed in the fourth quarter with your performance in Australia, both on the revenue as well as on the cost side. As I model that asset going forward, it has a limited reserve life on paper. How do you think about the life of the asset in the current price environment? Should we still be modeling that the mine should be essentially closing down here in a couple of years? Or what is the opportunity for this asset given current iron ore prices? I would appreciate your comments.

Lucas, when I came to this company in August of 2004. APIO had a life of mine of four years. Two-and-a-half years later as of now, APIO has a life of mine of three-and-a-half years. We still have proved and probable reserves in Australia of 43 million metric tons. So, we continue to develop tracts of land, continue to mine in adjacent areas that we can get material and process material and bring the material to the port of Esperance and sell to good clients. So, as long as there is economic reward to mine, as long as the price level is sane and it's justifiable to continue to drill and explore in Australia, we will do it. At the very moment that we no longer have the ore, we will be done. This being said, it doesn't take much for – in two years down the road, we are still with another three more years of life of mine. That's how we operate there. So, don't take the number of years as a picture. It's a movie. My team in Australia is very active in getting the right piece of land and getting the right mines in operation at the right time to get to the right ore, which for the fact that we have a unique position in Australia producing 50% lump ore not just the 50% fines. So, we're in good shape. Lucas N. Pipes - FBR Capital Markets & Co.: That's helpful, Lourenco. I appreciate all the color and continued good luck. Great job.

Thanks a lot, Lucas. Jodie, I will take the last question now.

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

Hi, everyone. Congratulations on another very productive year. And Tim, congratulations on the new gig.

Thanks, Matt.

I just want to ask a couple of housekeeping questions real quick and then maybe somewhat thematical one. It looks like you may have bought some bonds back in the fourth quarter, is that the case?

I'll let Tim Flanagan handle that.

Yeah. So, we took out about $20 million of debt through a combination of open market purchases and a couple of equity swaps that we did, consistent what we've done in previous quarters.

Okay. Great. And then the $550 million free cash flow forecast seems to imply pretty neutral working capital. Is that sort of what you're thinking or after two really strong working capital years, do you imagine you have to give some back in 2017?

Yeah, no, I think if you think about the working capital that the big driver this year was the imbalance of our production and sales tons in the past two years and certainly to the benefit in 2016, especially in USIO. But as we guided to 19 million tons of sales and production in the U.S. and 11.5 million tons in Australia both on the sales and production front, you won't see that same inventory depletion. So, when you think about all the other pieces and parts, AR, payables, things like that, that's just more of a timing issue, so pretty flat overall.

Okay, great. And then Lourenco, you previously – back in our conference, I guess, at the end of November, you said that you sort of had a $60 per ton iron ore IODEX forecast in your head for 2017. It seems like maybe you're thinking about a higher price for this year?

Look, like I said, it was end of November. We are now in mid-February and I continue to watch how things are developing in the marketplace. We are very pleased with how the majors are addressing the business, how they are selling. The cancers that were the reasons why BHP and Rio Tinto were behaving the way they were behaving are now pursuing other opportunities. So, they need to continue to pursue as long as these opportunities are far away from the iron ore business where they don't belong. And even the future guys that work on iron ore as if iron ore was not a physical commodity but just a virtual thing, they are starting to see the future. So, if you look at the numbers for the front-end months, March, they are indicating higher prices. If you look into their most traded contracts, that's the May contract, it indicates higher prices. So, let's assume that it's just that. We are going to go with higher prices just through May and then price will go down again. Well, at that time, it will no longer be $84, it will be more. And then in order to get to my forecast, you need to average down. And I'm still at $80 iron ore and $630 hot-band. So, that's the reason I'm still confident about $850 million. My $850 million EBITDA, Matt, at this point is my old $600 million. My $600 million I called is a very, very, very conservative guidance at that time, and I'm calling the $850 million a very, very, very conservative guidance at this time.

Okay. Thanks. And then, sort of lastly, just kind of you talked a lot about the majors and the bank, the investment bank price forecast. I was just sort of thinking about this from a different point of view. It seems like the majors is bringing on supply or threatening to bring on supply, kind of scared everybody in the market including the banks to reduce forecast time and time again, which makes lending to start-ups like Atlas and Arrium and all the guys have kind of gotten scared away from the market made it impossible for them to secure financing for new operations or for capacity enhancements what-not. Do you think it's kind of The Three Stooges, as some people have called them, kind of did everybody a favor, but they didn't live to see the fruits of their labor by scaring all the new entrants away from the market?

Well, first of all, correction. The Three Stooges, it's not some people that called them, I called them Three Stooges, so this one is mine. I don't put a copyright on that but this is mine. But anyway, look at that. The Three Stooges at the end of the day, they are big, big, huge, enormous. They are big elephants. They can't be afraid of poodles. They can't be afraid of pussycats. This is more than miners. Even if they all come together, let's assume that 10 miners will come to operation and each one of that, we'll produce 5 million tons. 10 times 5 is 50. It still doesn't move the needle. Only someone that does not understand the business or has an agenda, that's not the agenda of his shareholders, can imagine that he will work to destroy $30 billion or $35 billion in market capitalization in one year to take away people that produce 5 million, 8 million, 6 million, 3 million tons a year. So, let all this minor mining companies in Australia to come to operation, they still don't move the needle. Keep in mind, if you paid attention to my explanation about how low iron content iron ore is being treated in China and we will continue to be treated in China. Their window of opportunity at this point, time-wise, is very narrow. They will not be able to sell that crap for too long. You'll never hear, for example, Fortescue nervous about a small mining company, because they understand their size. When you are big, you need to behave like you're big. The problem is when someone is small and behaves like this someone is big because sometimes this small guy will be stopping in a rail track and a freight train like Cliffs will come and pass over. That's happening right now. In the United States pellet market between Cliffs and U.S. Steel. But unfortunately time is up, and we are going to discuss that in the next chapter in three months. So, (1:10:20).

Okay. Well, thank you for your perspective.

Okay. Jodie, we are done. Thank you, investors. I'll talk to you again.

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