Strategic Rationale

The acquisition will allow Cliffs Natural Resources to apply its expertise in open-pit mining and mineral processing to a chromite ore resource base which would form the foundation of North America’s only ferrochrome production operation. The planned mine is expected to produce 1 million to 2 million tonnes of high-grade chromite ore annually, which will be further processed into 400,000-800,000 tonnes of ferrochrome. Cliffs believes the Black Thor, Black Label and Big Daddy deposits are the highest quality deposits in Canada’s “Ring of Fire” district, and would provide a significantly long mine life and expansion potential.

Cliffs’ Chairman, President and CEO Joseph A. Carrabba commented: “This long-term project is consistent with Cliffs’ stated strategy to broaden its mineral diversification and opens the door to a new universe of customers. In addition to furnishing the raw-material needs of carbon steel producers, we will become a supplier to producers of stainless steel.

“Ferrochrome is imported by the world’s fastest growing steel markets and many countries have categorized it as a strategic resource. We believe this discovery represents one of the premier chromite deposits in the world. Given the operation’s unique location, our objective will be to supply ferrochrome to stainless steel producers around the world.”

Expected Mining and Processing of the Reserve

Cliffs acquired a significant position in Freewest Resources in a private placement in June 2009 and has closely followed the technical development of these assets. A formal study of the chromium deposits will commence in early 2010, and is expected to be completed in the first half of the year. The study will meet industry standards and be comparable to an NI 43-101 Technical Report or a Joint Ore Resource Committee (JORC) assessment of the mineral resource. Diamond-drill core samples within these deposits have consistently intersected significant chromite zones with world-class thickness, grade and chromium to iron (Cr:Fe) ratios to supply a low-cost, open-pit mining operation.

Cliffs expects commercial plans to bring the deposit to market would include construction of the open-pit mine and mine-site processing facility, as well as a remote electric arc furnace (EAF) to further process the ore into high-grade ferrochrome. The EAF facility is anticipated to be located on the north shore of Lake Superior. Should the project go forward as planned, the permitting process is anticipated to require approximately three years, with production commencing around 2015.

Overview of the Chromite Market

Chromite is an essential raw material for the production of chromium. Cliffs estimates that more than 90% of chromite ore is converted to ferrochrome, a critical ingredient in the production of stainless steel, as well as other steels and nonferrous alloys. End markets for stainless steel, alloy steel and other products that use ferrochrome include transportation, electrical, engineering, building & construction and metal goods.

In addition, chromite is a key industrial mineral in the steel industry for the manufacture of refractory bricks, furnace linings and foundry sand. Chromite is also used in the production of chromium chemicals. In many applications, it is considered irreplaceable, as substitution would result in increased costs and decreased performance.

Currently, most resources and production are in the Eastern Hemisphere, requiring all stainless steel producers in North America and most of Europe and Asia to import ferrochrome. Market reports estimate that four countries—South Africa, Kazakhstan, Finland and Turkey—control nearly 80% of the world’s 24 million tonnes of chromite ore production. Cliffs indicated that, because of its proximity to North American and European stainless steel production, a merchant ferrochrome operation in Ontario would have a distinct competitive freight advantage over producers in other parts of the world.