Cliffs Natural Resources Responds to Casablanca Capital

Ring of Fire Map
Ring of Fire Map.
Ring of Fire Map. Cliffs has suspended Ring of Fire Operations and now sources say the Company will leave Canada completely.
Ring of Fire Map. Cliffs has suspended Ring of Fire Operations and now sources say the Company will leave Canada completely.

CLEVELAND – MINING – Cliffs Natural Resources Inc. (NYSE: CLF) have issued the following statement in response to Casablanca Capital:

Cliffs states:

“The Board of Directors and management team of Cliffs Natural Resources welcome open communications with all of our shareholders and value their input toward the collective goal of enhancing shareholder value.  As part of the goal to enhance shareholder value, over the last year, the Cliffs Board and management team have taken significant steps to improve Cliffs’ financial and operating performance across all businesses.  The Company’s focus has been – and continues to be – on reducing costs, strengthening its balance sheet with cash flow from operations, taking a disciplined approach to capital spending, and evaluating the strategic fit and value creation potential of all the Company’s assets.  In addition, Cliffs has made significant changes to strengthen the Board of Directors and management team, including the addition of four new Board members, a new Chairman and Gary Halverson as the incoming Chief Executive Officer.

:Consistent with its focus on enhancing shareholder value, on Feb. 11, 2014 the Company announced that it expects full-year 2014 capital expenditures to be between $375 – $425 million, a reduction of more than 50% from full-year 2013 capital spending.  This decrease is driven by a significant reduction in the Company’s expansion and capital spending at the Bloom Lake Mine.  Given the wide range of outlook for iron ore prices, the Company decided to reduce 2014 capital expenditures at Bloom Lake as it considers strategic alternatives for the asset.  The Company also announced its plans to idle production at its Wabush Mine in the Province ofNewfoundland and Labrador by the end of the first quarter of 2014.  Following Mr. Halverson’s appointment in Nov. 2013, the management team and the Board are undertaking a comprehensive review of Cliffs’ portfolio, which resulted in these strategic actions.

“Cliffs’ Board and management team regularly evaluate the Company’s strategic options and previously evaluated the key elements ofCasablanca’s overall proposal.  The Board and management team have reviewed – and will continue to review – alternative structures to enhance shareholder value.  The Company believes Casablanca’s overall proposal fails to provide a sustainable, long-term value enhancing alternative. The Company is disappointed that Casablanca seems intent on waging a public campaign rather than continuing its private engagement with our Chairman and management to address our doubts and concerns.

“The Governance and Nominating Committee of Cliffs’ Board will review Casablanca’s notice in due course.  The Company noted that it has a strong Board and management team in place to execute its plan to enhance shareholder value, including Gary Halverson as incoming CEO.  The choice of Mr. Halverson as incoming CEO follows an exhaustive search by the Board, together with a leading executive search firm, which began in July of 2013.  Following a comprehensive search, the Board determined that Mr. Halverson was the right leader given his deep international and large scale mining industry leadership experience.

“Cliffs’ Board is comprised of independent and highly experienced individuals that bring a wide range of relevant expertise to Cliffs from leading mining, steel, basic materials, engineering and natural resources businesses.  Cliffs’ current Board of Directors consists of nine independent directors plus Mr. Halverson and the interim Executive Chairman.  Of these independent directors, four have joined the Board in the last 12 months.

“The Board and management team remain committed to acting in the best interests of Cliffs and its shareholders in order to enhance value.”

Cliffs Natural Resources is working to reduce spending and reduce exploration. The company is packing up in the Ring of Fire chromite zone in Northern Ontario. As well the company is idling iron ore mines in other parts of Canada.

J.P. Morgan and Bank of America Merrill Lynch are acting as financial advisors to the Company and Wachtell, Lipton, Rosen & Katz is acting as legal counsel.

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