Cliffs Natural Resources Inc. (NYSE: CLF) released its sustainability report on Tuesday, and it has resulted in a slight jump for shares of Cliffs in early trading on Wednesday before selling off. The gain of 2% wasn’t exactly the most significant, considering that this one has fallen almost two-thirds from its highs of the past year. It turns out that Wells Fargo is far from complementary here: the firm has huge downside valuations modeled for Cliffs Natural Resources.

The sustainability report read favorably for Cliffs because there were no work-related fatalities and it has been tapering its incidents closer to zero. It has invested more than $13 million in energy-efficient projects that will reduce the company’s energy-related costs. Cliffs has also continued to improve quality-related performance of non-conforming cargoes for its North American iron ore operations.

However, Wells Fargo is quite negative, despite the favorable sustainability report, and took its valuation range down to $4 to $7 from its prior range of $7 to $10 range. In fact, it is more of a downside in the opinion of analyst, Sam Dubinsky. The opinion is marred by iron ore prices being in free fall and the company’s high-cost structure. Dubinsky also sees downside below its target as part of its Underperform rating. Another issue is that asset sales are key, yet they will not be easy:

We value shares at $4-$7. The low end is based on an EV/EBITDA multiple of 7.5X theoretical earnings post restructuring; the high end is based on a P/E multiple of 10X. We are using benchmark iron ore ~$80/MT in our model. Our valuation and estimates could prove overly bearish if iron ore pricing rebounds, China growth accelerates, or low cost miners pare back on supply additions. A succesful Bloom Lake restructuring could also offset some pricing headwinds.

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Dubinsky does at least signal what would change the highly negative stance by saying:

Our valuation and estimates could prove overly bearish if iron ore pricing rebounds, China growth accelerates, or low cost miners pare back on supply additions. A succesful Bloom Lake restructuring could also offset some pricing headwinds.

Shares of Cliffs were down 0.8% at $10.30 shortly after noon on Wednesday, after having traded as high as $10.62 in the early hours. The stock recently hit a multiyear low of $10.19, and the initial move looked to be a bounce off of its lows. These levels have not been seen since before 2005.

Cliffs shares have consensus price target of $15.29 and a 52-week range of $10.19 to $28.98, and the company’s market cap is just under $1.6 billion.

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