Cliffs Natural Resources Inc. Announces Definitive Agreement to Acquire Consolidated Thompson Iron Mines Limited for C$4.9 Billion, or C$17.25 in Cash Per Share

CLEVELAND, Jan. 11, 2011 /PRNewswire/ -- Cliffs Natural Resources Inc.(NYSE: CLF) (Paris: CLF), an international mining and natural resources company, today announced that it has entered into a definitive arrangement agreement with Consolidated Thompson Iron Mines Limited (TSX: CLM) to acquire all of Consolidated Thompson's common shares in an all-cash transaction valued at approximately $4.9 billion Canadian dollars (including net debt), or C$17.25 per share, which represents an implied premium of 30% to Consolidated Thompson's closing share price as of Jan. 10, 2011. Cliffs has committed financing and available liquidity sufficient to fund the purchase price. Cliffs expects to arrange for permanent financing by accessing the capital markets, which may include long-term debt and equity.

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The transaction is expected to be modestly accretive to Cliffs' earnings-per-share and cash flow in 2011 and 2012. The transaction is expected to close early second quarter 2011, subject to the satisfaction or waiver of various customary closing conditions.

The transaction has been approved by Consolidated Thompson's Board of Directors. In addition, Consolidated Thompson's Board of Directors has recommended that its shareholders support the transaction, which would be completed by way of a statutory plan of arrangement that is subject to shareholder approval in a court-supervised process under Canadian law. In addition, Cliffs has entered into a support agreement with Consolidated Thompson's largest shareholder, Wuhan Iron and Steel (Group) Corporation of China, which owns nearly 19% of Consolidated Thompson's outstanding shares. Consolidated Thompson's directors and certain senior officers have also entered into support agreements with Cliffs.

Strategic Rationale

The proposed acquisition of Consolidated Thompson reflects Cliffs' strategy to build scale by owning expandable and exportable steelmaking raw material assets serving international markets. Once the acquisition and planned expansion projects are complete, Cliffs expects nearly half of its iron ore production in North America will be exported. The transaction will provide Cliffs greater access to Asia and opportunities to build and grow strong business relationships with Consolidated Thompson's current customers.

All of Consolidated Thompson's current production capacity is contracted under long-term off-take arrangements at sales-per-ton rates that move with the global seaborne prices. This production capacity includes the existing strategic alliance with Wuhan Iron and Steel (Group) Corporation, China's third largest steel producer, and two large Asian commodity brokers. Consolidated Thompson has established strong relationships with its existing customers. Upon completion of the acquisition, Cliffs expects to maintain and enhance these strategic relationships. These new customers would also enable Cliffs to strategically diversify its customer base beyond its historical North American steelmaking customers. Upon completion of the acquisition and completion of the planned ramp-up in production, it is expected that over half of the combined revenue base will be generated from customers outside of North America.

Joseph A. Carrabba, Cliffs' chairman, president and chief executive officer, said, "The acquisition of Consolidated Thompson will combine a low-operating risk profile with access to high-growth global markets and broaden our exposure to seaborne iron ore prices. We have followed Consolidated Thompson closely since its founding in 2006, and have been very impressed with its significant progress and development to date. We are also enthusiastic about expanding our investment in Eastern Canada, where we have over 45 years of experience and where the regulatory environment, political system and environmental stewardship are consistent with our core values."