Good morning, ladies and gentlemen. My name is Emily and I am your conference facilitator today. I would like to welcome everyone to Cliffs Natural Resources 2017 Second 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 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 on the earnings release, which was published this morning. At this time, I would like to introduce Tim Flanagan, Executive Vice President, Chief Financial Officer and Treasurer. Please go ahead.

Thanks, Emily and thanks to everyone for joining us this morning. I'll start the call with a discussion of our results and outlook before turning it over to Lourenco for his remarks. During the second quarter, we reported total company adjusted EBITDA of $137 million, a 35% increase over the prior year quarter. This significant year-over-year increase is attributable to the U.S. iron ore business and more specifically to our realized prices in this segment. USIO adjusted EBITDA was $162 million. Our best quarterly performance out of this business unit since 2014. As we mentioned last quarter, we have now worked off all of the carry over tons from 2016. The $97 per long ton realized pricing we reported is now reflecting the new 2017 formulas, thus promoting the sizable lift that we foreshadowed relative to both Q1 and prior year realizations. Despite seeing a bit of volatility in both iron ore and steel pricing during the quarter, the formulaic and yearly average nature of our contracts protected us from these swings and ultimately gave us the strong improvement which carried the quarter for us. From a cost standpoint, higher employee related costs as well as increased energy rates drove cash costs higher compared to the year ago quarter. Based on this and with the use of our standard cost methodology we expect cash costs to land at the higher end of our guidance range for the remainder of the year. As for our sales 4.3 million long ton – 4.3 million long ton quarter was stronger than originally anticipated as our customers' increased appetite for pellets earlier in the shipping season led to higher volumes. For the full year, we are maintaining our guidance of 19 million long tons of sales, with the remaining 11.5 million tons more weighted…

Thank you, Tim. And thanks to everyone for joining us on this morning's call. This quarter results were remarkable for a number of reasons. But what I am most proud of is that we were able to show the true earnings power of the U.S. iron ore business. The outstanding results achieved in the second quarter were so driven by the strengths of our U.S. iron ore business, which consists of supplying customized pellets to blast furnaces located in the Great Lakes. In the second quarter of 2017, Cliffs reported total Company adjusted EBITDA of $137 million. That is as much as we made in the entire first half of last year. Thanks to a significant increase in realized prices in our U.S. iron ore business, our adjusted EBITDA for the first half of 2017 easily passed the $200 million mark, achieving $229 million. Our U.S. iron ore business is a beast. In the second quarter, we reported a realized revenue rate of $97 per long ton, with an adjusted EBITDA margin of 39%. This generated $162 million in adjusted EBITDA on just 4.3 million long tons sought. The power of this business is what attracted me to Cliffs, because it's exactly what the previous management and the previous Board of Directors neglected, to the point that an outsider had to come in and stop them from wasting something so special. Well, Cliffs is in great shape now. How is this business able to achieve EBITDA margins of nearly 40% in the metals and mining industry in the United States where EBITDA margins of 9.5%, 10% are considered to be very good and 15% are considered great. Number one, cost to enter. Cliffs is the only real merchant supplier within the Great Lakes markets, and we have all the good…

[Operating Instructions] Your first question comes from the line of Lucas Pipes with FBR and Company. Your line is open. Please go ahead. Lucas N. Pipes - FBR & Co.: Yes. Thank you very much for taking my question, and Lourenco, congratulations on another strong quarter. So I wanted to ask about the announcement in regards to the HBI capacity in Toledo. And specifically, I wanted to, maybe, get a little bit more detail, in terms of how you think about the financing for the project? So I think, in the past, you spoke about bringing in equity partners. Are you still talking to potential partners on that level? And if so, what sort of equity partners have shown the greatest interest? And would you, for example, also consider though, borrowing at the corporate or at the project level? Thank you.

Thanks for the question, Lucas. Look, we are discussing with potential passive financial partners. We are. We like the idea of having financial technical partners that could add to the project and be adding value to the entire thing. Do we need them to do this? Not really. We would be mitigating the cash out of the door by having one or two minority partners. But we will also be share – allowing someone to share in the profits after we are done. And depending on how prices will go in United States, and iron ore prices will go in the world, we might not even need them. But because we're being so selective, and we're discussing with companies that really like – the possibility of having them together with us, we are continuing to do that. It's not open to anyone, and it's not something that I'm going to share our numbers and our IRR, and everything that we're going to do with everyone that wants to show up at the door. Because we're not desperate for partners. We don't want partners that are not completely in line with our goals and what we're going to accomplish with this project. The reason why they are so attracted to the project is the IRR. It's a phenomenal IRR. It's very impressive, very good. I don't know, if I've covered all the things you'd like to hear about that. If not, please ask a follow-up. Lucas N. Pipes - FBR & Co.: Yes, no, no. That's helpful. And you mentioned the attractive project economics. And I understand that you maybe don't want to get into all the details. But if you were to, kind, of think about cost ASP, in the current environment. So we'd be thinking about, maybe on the HBI side, a $20 margin, $50 margin? Where would the, kind of, – I've put out some numbers, but kind of, if I had go to back to the drawing board and revisit those, what sort of margins would you guide to?

Look, like I said last quarter, when we were discussing the Q1 results, so that would be the last time that you would be – you guys would be seeing the dollars per ton margin for pellets in United States at the level that we saw, because that was a carryover; the last carryover months from the previous year, and the previous calculations, based on the previous contracts. So take the margin per ton that we got this quarter, and multiply it by 2, 2.5, and that's what the HBI project took before us. I'm giving the margin and dollars per ton, not the IRR or anything like that. Lucas N. Pipes - FBR & Co.: That's very helpful. Great. Well, I will leave it here. I appreciate it and good luck with everything.

Thanks, Lucas.

Your next question comes from the line of Michael Gambardella with JPMorgan. Your line is open. Please go ahead.

Good morning, Lourenco. Congratulations again on another good quarter.

Thanks, Mike.

A question – another question on the HBI project. I'm assuming that you could get more attractive financing if you had a partner with – that was a customer or a take-or-pay contract with some customers. Yet, a lot of the customers, especially, on the EAF side in America, have their own captive – direct reduced iron source or some similar – something similar to the DRI source. Could you talk a little bit on potential for customers being partners or take-or-pay contracts? And also, how you're going to entice these customers who have their own DRI projects to buy from you?

Okay. Mike, let's start from the end. Customers with the DRI project these days are only one, Nucor. Nucor has a DRI facility in Trinidad, and another DRI facility in Louisiana. They are both on the coast, so they are positioned to receive seaborne pellets. And they are both in locales that are very good to serve the mini-mills that they own, that are located in the south of United States. They do not produce anything in the Great Lakes. So am I expecting Nucor to be a client? Absolutely. Because they have several other mini-mills now, up north there, that are out of reach for that – from their own locations in the south. So that's number one in terms of how I want the customers to be positioned in our project. As far as take-or-pay contracts and stuff like that, honestly, I don't like that. I don't like that. I don't like that, but then you might say, oh, but that's exactly what you have at Cliffs. Well, there are historical reasons for that. And it goes back several decades. It goes through the bankruptcy of LTV, Bethlehem, Stelco, Acoma, long, long, long ago. So, there are historical reasons for the configuration that we have, which we like and which we enjoy. But starting fresh, starting from scratch, it's better to do – to position the customers to continue to be customers, to be treated like customers, to improve their ability to produce better and to accomplish their goals in terms of their product mix that they would like to produce out of their EAFs. So, money is money. The money coming from a customer, the money coming from a financial partner or a technological partner, they're exactly the same. And these other guys don't buy the products for their own use. So I like to separate things, and that's the way we are treating this thing. And even more important, I will emphasize this one more time, these financial partners are not something that we must have. It might be a nice to have. But it's not must have. The projects can happen with or without the partnership.

So I'm assuming – I just want to understand; I'm assuming, you would not focus on these take-or-pay contracts, because you feel that your cost structure to the customers up in the Midwest will be very attractive versus alternative material coming in from the Gulf, or coming in through the Saint Lawrence Seaway just like they have a problem bringing iron ore through the Saint Lawrence Seaway, they have a problem bringing [local design] through the Saint Lawrence Seaway. Is that why you're not focused on these take-or-pay contracts?

That's part of the reason. Not the entire reason, because of – like I said, in my prepared remarks, we will of course have the logistic advantages of being inside the Great Lakes, whereas everyone else is outside the Great Lakes. So we are able to be enjoy the logistics advantage within our market. But on top of that, you go for take-or-pay contracts when you don't have an alternative to position your product to another client. We're talking about 1.6 million metric tons a year production in a market, just Great Lakes, not the entire United States, just Great Lakes, in a market that, as of today, is 3 million metric tons. So if mill A doesn't want the product, I'll sell to mill B. The only thing is that mill A will have it or mill B will have it and mill A will not have it. And so I don't need a take-or-pay. I'm going to the sell to the ones that are willing to buy. My market is bigger than my production. Life is good. Don't need to take or pay. We're not going to have take-or-pays.

And when do you think first production will start?

July 2020. I will invite you for the groundbreaking ceremony.

Okay. Thanks, Lourenco. Thank you. Have a great day.

You are going to enjoy a beautiful summer day in Ohio.

Take care

You too.

Your next question comes from the line of Novid Rassouli with Cowen. Your line is open, please go ahead.

Good morning, guys. Thanks for taking my questions. First off, I just wanted to drill down into the guidance. So the $50 million cut to guidance, I wanted to see if the majority of that move is being driven by the change in HRC. So, in April, which I believe was – your last guidance was based on April HRC average of around 650 And now the year-to-date average is $620 Just wanted to see if that kind of $30 delta is the primary driver of the reduction?

Good morning, Novid. I will let Tim Flanagan answer that, but before he does that, I just would like to make sure you understand that during my prepared remarks, I said very loud and very clearly that this might prove itself conservative. We are being conservative here. It's about under promise and over delivery. We are taking a lot of conservative assumptions. And that's why, even though we're increasing a lot, our forecast above consensus, it's a reduction of $50 million over previous guidance. So Tim, please go ahead.

Yes. And I'll add to my prepared remarks as well, in terms of just – there's a number of factors playing in. And certainly, first and foremost, the lower HRC and IODEX prices from guidance to guidance does have an impact on that. But we're also looking at the APIO discounting that we talked about, the sales volume expectation for APIO coming down slightly. U.S. IO costs, we've guided to a slightly higher SG&A number. And all of those numbers are offset by, really higher-than-expected pellet premiums as well as lump premiums out of the Australian business. So when you look at those all those factors, is how you get to that $50 million Delta.

Novid, it's important that you clarify these things. Because you know these days, there's big agencies, associated press Reuters, when they read the press release, the computers read the press release, and they print line by line, the bullets. And after that, it becomes the only reality. Since important that people – that it's not artificial intelligence, it's natural intelligence because artificial intelligence will fight more like a natural ignorance. So I need – natural intelligence to process these things and come up with something that makes sense. Remember, we have a bunch of guys out there that they make a living just screwing up companies. So if you allow these guys to continue to make a living, these guys will continue to screw up companies forever. And these guys belong to jail. I'm working on one right now. So anyway, just do your homework; Gambardella, and Brett Levy and Jerry Sussman and Evan Kurtz, and Seth Rosenfield and Lucas Pipes and Jerry Sussman, Phil Gibbs, these guys have a brain. Let these other idiots who die with no money, and probably, if the SEC does their job, behind bars. So go ahead, Tim. Please

I do know anything about that.

Okay. All right.

Let's go to the second question, guys. So the second question, and Lourenco, you said that you were happy to elaborate on this in your prepared remarks. But I'm just curious, you're very confident in higher iron ore prices. I just want to see, does the rationalization of Chinese steel production, does that play into kind of your thought process? Or does that worry you as the large consumer of iron ore, that that could ultimately pressure prices, maybe not today or tomorrow, but longer term?

Look, the only rationale for prices, iron ore prices to go down, is to believe that Australia will continue to produce more iron ore. And when I say Australia, include Vale. So Australia plus Vale. So every time I say Australia is Australia plus Vale because all the rest is irrelevant. So the only way for iron ore prices to go down, anytime, any day in the future, is if Australia plus Vale, that I'll for now call Australia, will continue to produce more iron ore than China is able to digest. And digest is not buying. Digest is putting inside a blast furnace and getting at the bottom as liquid pig iron. That is digesting. But what these guys are doing, these guys mean, for abundance of clarity, Fortescue, BHP and Rio Tinto, Vale and even the midget, Roy Hill, they sell to traders. And these traders do not have blast furnaces. They buy because it's cheap to borrow money in Chinese banks. Then they put that iron ore in the ground, not in a blast furnace, at the port. And then they go back to the banks, and say, hey, I have collateral, can I borrow more? And the banker say, yes, and they borrow more, and they buy more for the same idiots. And then their port site keeps growing because there is no blast furnace over there. But they need to open space for more. It's not because they want to sell anything. They're in the business of buying more, borrowing more because they use money for other things besides iron ore. But they need to open space. Then they go ahead and sell for any price to the blast furnace, the same blast furnace that the miners would sell to. That's my problem with the…

Got it. Thanks guys.

Thank you. My name is Lourenco, not guys. Just kidding. Emily, whose next?

Your next question comes from the line of Nick Jarmoszuk from Stifel. Your line is open. Please go ahead. Nicholas Jarmoszuk - Stifel, Nicolaus & Co., Inc.: Hi, Lourenco.

Hi, Nick. Nicholas Jarmoszuk - Stifel, Nicolaus & Co., Inc.: I wanted to ask you about the Toledo financing. Given that you want to start construction in, roughly, a year, when would you like to have the financing in place? And I know, it sounds like there is a push, pull between generating cash flow and not bringing somebody in, versus bringing somebody and having the financing in place. So how do you think about that?

Look, we have the cash flow that we need for the project, pretty much, designed and in place. We are going to have something like 35% of our expenditures next year and then, 50% in 2019 with the remainder in 2020. So we believe that we're going to need the money, more or less, between the first and second quarter of 2018. So that's what we have in mind at this point. Nicholas Jarmoszuk - Stifel, Nicolaus & Co., Inc.: Okay. And then, regarding the discount for the lower grades, how do you guys think about that? Because it's obviously lower than it has been historically. Fortescue put out that they're expecting, I believe, 75% to 80% for their upcoming fiscal year. So what do you think is causing this and what can bring it back to more normalized level?

One thing that can help that is the usual suspects, at least reduce their sales to traders, that won't add any real consumption. They just add low-quality – low price material to the marketplace that comes back one quarter later to complicate our lives when we sell the new material in the marketplace. But that's something that I do not control. They need to do that. I was very – I give you guys a lot of details in my previous answer. As far as we are concerned, in our APIO, our plan is the same, as it always has been. We continue to operate as long as the APIO is cash flow positive. At this point, APIO is still a cash flow generator. Even in that quarter that was horrible, like Q2, we were still able to generate $3 million of EBITDA. We had to cancel a couple of shipments that will result in negative EBITDA. But that's what management should be doing. We manage for cash, that thing. So right now, the life of mine is three years. I can't wait to get out of that place. And then let them have fun, selling to traders and stuff like that if between now and then, they don't fix their act. Nicholas Jarmoszuk - Stifel, Nicolaus & Co., Inc.: That's all I had. Thank you.

Thanks, Nick.

There are no further questions at this time. I'll now turn the call back over to our presenters.

Thank you very much, and we will continue to be in touch. Have a great day.

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