Cliffs Natural Resources – Preliminary Capital Estimates for Chromite Project Based on Ongoing Prefeasibility Study

THUNDER BAY – The Ring of Fire development has been cited as a cause for optimism in Northwestern Ontario. Cliffs Natural Resources reports the company plans to invest approximately $1 billion, comprised of approximately $300 million of sustaining capital and $700 million of growth and productivity-improvement capital. Cliffs’ 2012 capital budget represents an expected 12% increase over the Company’s 2011 capital expenditures of approximately $880 million. The bulk of the projected investment will be in the Ferrochrome Processing Facility.

Cliffs indicates this amount was less than its previous estimate of $900 million and an original 2011 budget of $1 billion. Cliffs controls three large chromite deposits in Northern Ontario, Canada. With a timeline to begin production in 2015 from its wholly owned Black Thor deposit, Cliffs is currently in the prefeasibility study phase of the project. As part of prefeasibility, the Company continues to evaluate many factors, scenarios and strategic alternatives that may ultimately impact future investment and timing of the project.

At the time of Cliffs’ initial investment in chromite assets in 2009, the Company predicated preliminary comments for capital requirements on a baseline expectation of a project annually producing approximately 600,000 tons of ferrochrome. Subsequently, and after significant additional prefeasibility work, Cliffs now anticipates an expanded project annually producing 1 million tons of export chromite ore concentrate in addition to the original 600,000 tons of ferrochrome.

Preliminary capital estimates for the project, based on prefeasibility work completed to date, include the following major engineering components:

Mine development — Approximately $150 million
Near-mine Concentrating Plant — Approximately $800 million
Ferrochrome Processing Facility — Approximately $1.8 billion

Cliffs also estimates that an integrated transportation system, including an all-weather road servicing the project, would require further investment totaling approximately $600 million, which was not included in Cliffs’ initial investment estimate. However, because this transportation system is provincial infrastructure required for the general use of remote northern communities and other Ring of Fire mining projects, Cliffs anticipates its commitment to invest in the all-weather road would be partial, with the balance to be contributed by other industry participants and government entities.

Cliffs indicated that, although it believes the chromite deposits it controls are world-class, a number of additional studies, including feasibility, and other project milestones need to be achieved before the Company begins allocating a significant portion of capital to the project’s construction. Based on the completion of these, Cliffs anticipates a majority of the project’s anticipated capital requirements would be made in 2014 and 2015, with an early works program initiated prior to 2014 to maintain project execution timeline. More information about the project will be provided upon completion of the prefeasibility study in the first half of 2012.