Cliffs Natural Resources (CLF) reports 4th quarter earnings on Thursday before the opening bell and things are looking optimistic. The trend of iron ore prices and the results from Rio Tinto (RIO) are giving the indication that results will be similarly optimistic.

Iron ore prices are back at $80 per dry metric ton in 2017 after hitting a near-term low of $41 just over a year ago. Share prices have rebounded amid renewed optimism and the weakening risk of bankruptcy. Rio is up around 64% in the past 12 months while Vale (VALE) has risen 275%. Cliffs, which dipped as low as $1.67 is back up above $9 and could be positioned to make a move back into the double digit area for the first time since the end of 2014.

Rio trimmed its semiannual dividend in half in order to preserve cash in the low price environment. Now that energy prices are returning to more normal range, the company is returning capital back to shareholders. The $1.70 dividend that was declared is higher than the $1.33 dividend analysts were estimating and the company also announced a $500 million share buyback. I don’t think Cliffs will be in a position to make a similar commitment but the company should be headed in the same direction.

Also, consider that JP Morgan announced that it expects iron ore prices to hold in 2017 calling for $73 a ton. That’s lower than current levels but indicates that the profitable environment for miners should stick.

I expect Cliffs to report a solid Q4, offer solid guidance for 2017 but not yet recommit to the dividend that eliminated altogether at the end of 2014. The stock has short term support in the $8.60 area which could act as something of a floor if the company disappoints.

(Click on image to enlarge)