What happened

Shares of iron-ore miner Cleveland-Cliffs Inc. (NYSE:CLF), formerly Cliffs Natural Resources, went up 12% in August. That was more than double the gains at iron-ore focused BHP Billiton and Rio Tinto, which advanced 5% and 4%, respectively. The main driver of the gain was an iron-ore price advance, but that doesn't explain all of the relative outperformance.

So what

The first fact that underpins Cleveland-Cliffs' strong showing is its focus on iron ore. The metal is vital to Rio Tinto and BHP, but they're broadly diversified miners that do much more than just pull iron ore from the ground.

Cleveland-Cliffs only mines for iron ore. Therefore, it's more leveraged to the price of the metal than either of those miners. Iron ore has been strong lately, helping to explain a portion of Cleveland-Cliffs' outperformance in August.

A woman looking out over a field with a paper and highlighter

Image source: Getty Images.

There was other good news in August that's worth noting, too. On the last day of July, the miner announced that it had issued $575 million worth of debt at 5.75%, due in 2025. The proceeds were used to fund the redemption of 2020 debt with a coupon of 8.25%.

The final results of the tender for that higher coupon debt was announced in early August. Not only were commodity prices going Cleveland-Cliffs' way in August, but there were positive developments on the balance sheet, as well, as it pushed out its debt maturities and lowered its interest costs.

That's a big deal for Cleveland-Cliffs since not too long ago, when the commodity downturn was hitting its lows, investors were legitimately worried that the miner's debts would push it into bankruptcy. That said, even after much improvement, shareholder equity remains negative -- which means that debt makes up more than 100% of the capital structure.

Now what

Cleveland-Cliffs has made a lot of progress over the last couple of years in its efforts to mend its balance sheet and strengthen its business. Lately, that's included a good tailwind from iron ore, the only commodity it produces.

Although the news has been positive, the miner remains most appropriate for aggressive investors, at this point. The risk of bankruptcy has receded, but debt remains an overhang. Unlike Rio Tinto and BHP, iron ore is the sole driver of the top line, meaning that buying Cleveland-Cliffs is a specific bet on the performance of just one commodity.