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CLEVELAND–(BUSINESS WIRE)–Cliffs Natural Resources Inc. (NYSE: CLF) (Paris: CLF) today
reported fourth-quarter and full-year results for the periods ended Dec.
31, 2009. Full-year revenues of $2.34 billion decreased 35% from the
previous year. The decrease was attributed to lower year-over-year
demand and pricing for steelmaking raw materials due to the global
economic crisis and recessionary environment in some of the Company’s
markets. Net income attributable to Cliffs shareholders for the year was
$205.1 million, or $1.63 per diluted share, compared with $515.8
million, or $4.76 per diluted share, in 2008. The Company ended the year
with $503 million in cash and equivalents.

Joseph A. Carrabba, Cliffs’ chairman, president and chief executive
officer, said, “Despite an extremely challenging environment through
most of 2009, Cliffs achieved strong financial and strategic
performances, delivering respectable earnings and ending the year in a
position of strength. This was the result of exceptional execution by
our management team, whose experience and professionalism allowed them
to recognize 2009’s challenges and opportunities  and act to position
the Company to benefit from each.”

Other 2009 Highlights

In 2009, Cliffs completed a number of significant corporate development
and operational achievements, each implemented to advance its strategy
of achieving scale in the mining industry and exposure to the world’s
largest and fastest growing steel markets. These included:

• Successfully managing each of its businesses to match production with
  the demands of a dynamic and changing market environment,
  characterized by extremes;
• A year of record volume in Asia Pacific Iron Ore and the repositioning
  of this business under the Cliffs Natural Resources corporate name and
  identity;
• The recent addition of Cliffs to Standard & Poor’s S&P 500 Index;
• Reaching an agreement to acquire the remaining 73% interest in Wabush
  Mines;
• A successful bid to acquire Freewest Resources (TSX-V: FWR) and its
  anticipated world-class chromite deposits in Ontario, Canada;
• Publishing the Company’s first Sustainable Development Report under
  the internationally recognized Global Reporting Initiative framework;
• A successful equity offering of 17.25 million Cliffs Natural Resources
  shares, resulting in $347 million of net proceeds;

• Establishing the Cliffs Natural Resources Global Exploration Group
  (GEG), a small team of professional geologists with the mandate to
  form partnerships with junior mining and exploration companies with
  prospects for commercially viable projects; and
• The April 2009 listing of Cliffs Natural Resources on the Professional
  Compartment of NYSE Euronext Paris.

Fourth-Quarter Consolidated Results

Consolidated fourth-quarter revenues were $820.5 million, a decrease of
10% compared with $916.3 million in the same quarter last year. The
decrease for the quarter was driven primarily by lower year-over-year
pricing in each of the Company’s businesses, somewhat offset by higher
sales volumes in Cliffs’ Asia Pacific businesses.

In the fourth quarter, Cliffs’ sales margin declined 39% to $175.0
million, from $285.9 million in the same period of 2008. This decrease
was also primarily the result of lower year-over-year pricing, offset
partially by strong cost-control efforts, in each of the Company’s
business segments.

Consolidated operating income for the fourth quarter increased 6% to
$155.6 million, from $147.3 million in the 2008 fourth quarter. Cliffs
indicated its 2009 fourth-quarter operating income benefited from an
$11.7 million gain on the sale of a non-core asset in Australia, while
2008 fourth-quarter operating income was negatively impacted by $90.1
million in costs related to a terminated merger agreement. Selling,
general and administrative (SG&A) expenses declined 26% to $37.1 million
during the quarter, reflecting lower year-over-year variable
compensation, management salary reductions and other cost-reduction
initiatives.

Fourth-quarter 2009 net income increased 101% to $108.2 million, or
$0.82 per diluted share, from $53.9 million, or $0.47 per diluted share,
in 2008. Cliffs noted that fourth-quarter 2009 net income was impacted
by the $11.7 million pre-tax gain referenced above.

Cliffs also said its fourth-quarter 2008 net income included
approximately $209.1 million pre-tax, or $1.43 per diluted share, of
non-recurring items, including:

• The $90.1 million pre-tax impact from terminated merger costs,
  referenced above;
• $93.9 million pre-tax of negative mark-to-market adjustments related
  to currency hedging; and,
• $25.1 million pre-tax related to the impairment of investment
  securities in two junior mining and exploration companies.

As a result of these items, fourth-quarter 2008 also included an income
tax benefit of $29.4 million, compared with an income tax expense of
$35.4 million in 2009.

North American Iron Ore

Fourth-quarter 2009 North American Iron Ore pellet sales volume was 6.6
million tons, a 1% increase from the 6.5 million tons sold in the fourth
quarter of 2008.

North American Iron Ore revenue per ton was $81.39 during the fourth
quarter, down 9% from the comparable quarter in 2008. The decrease was
driven by lower year-over-year prices for iron ore and steel. Cost per
ton of $55.89 was down 2% from the year-ago quarter.

For the full year, pellet sales volume totaled 16.4 million tons, which
was down from last year’s record 22.7 million tons. Revenue per ton
decreased 11% to $82.48 for the year. Cliffs noted that, as a result of
its long-term, formula-based pricing contracts in North America, its
2009 price decrease of 11% favorably compares to the 48% decrease in the
2009 seaborne price settlement for iron ore blast furnace pellets.
Full-year cost per ton in the North American Iron Ore segment was
$65.70, up 15% from 2008. The increase is primarily related to lower
leverage over fixed costs as the result of lower volume in 2009 compared
with 2008, as well as higher labor rates. This was somewhat offset by
cost-reduction efforts throughout the year, which included the deferral
of certain maintenance activities to 2010.

North American Iron Ore Production

Cliffs’ equity share of its total North American Iron Ore mine
production was 6.0 million tons in the fourth quarter and 17.1 million
tons for the year. Due to lower partner demand, Cliffs acquired 1.6
million tons produced at Tilden and Wabush from its mine partners at
variable cost. As a result, these tons were available to Cliffs to sell
and are included in its production share above.

North American Coal

For the fourth quarter, metallurgical coal sales volume was 748,000
tons, with average revenue per ton of $90.64. This compares with sales
volume of 773,000 short tons in the fourth quarter of 2008 and average
revenue per ton of $100.78. The decrease in revenue per ton was the
result of a weak market for metallurgical coal throughout 2009 in North
America and Europe, as well as a number of test shipments sold to
customers in Asia at lower than full year average pricing.

Cost per ton for the fourth quarter was $102.01, down 8% from the
year-ago period on 3% less sales volume. The 8% decrease in cost per ton
is the result of efforts in 2009 to reduce costs at Cliffs’ North
American coal mines.

The net effect of the above factors was a fourth-quarter loss of $8.5
million at the sales margin level, compared with a sales-margin loss of
$7.6 million in last year’s fourth quarter.

For the full year, sales volume totaled 1.9 million tons. Revenue per
ton was virtually flat with the prior year at $93.44, with cost per ton
of $131.80. Costs throughout 2009 were impacted by low fixed-cost
leverage.

North American Coal Production

Cliffs produced 729,000 short tons of metallurgical coal in the fourth
quarter and 1.7 million tons for the full year.

Asia Pacific Iron Ore

Fourth-quarter 2009 Asia Pacific Iron Ore sales volume increased 21% to
2.1 million tonnes, compared with 1.7 million tonnes in the 2008 fourth
quarter. The increase was primarily the result of Cliffs’ operating team
increasing production to record levels in order to take advantage of
strong steel demand in Asia during the quarter.

Revenue per tonne for the fourth quarter decreased 26% to $64.45,
compared with $86.71 in the prior year. Per-tonne cost in Asia Pacific
Iron Ore during the quarter, which increased 14% from the previous year
to $55.12, was negatively impacted by approximately $14 per tonne
related to unfavorable exchange rate movements of the Australian dollar
compared with the U.S. dollar. Adjusting for this impact, Asia Pacific
Iron Ore achieved a 15% reduction in cost of goods sold per tonne.

Full-year sales volume increased 9% to 8.5 million tonnes, compared with
7.8 million tonnes in 2008. Revenue per tonne for 2009 of $63.69
decreased 35%, with cost per tonne of $53.44 down 1%, compared with
2008. Full-year cost per tonne in 2009 benefited from approximately $4
per tonne due to a lower average exchange rate during the year compared
with 2008.

Asia Pacific Iron Ore Production

Fourth-quarter production in Asia Pacific Iron Ore was 2.2 million
tonnes, up 10% when compared with the fourth quarter of 2008. Full-year
production in 2009 was 8.3 million tonnes, up 8% compared with 7.7
million tonnes in 2008.

Sonoma Coal

In the fourth quarter of 2009, Cliffs’ share of sales volume for its 45%
economic interest in the Sonoma Coal Project was 405,000 tonnes.
Revenues and sales margin loss generated for Cliffs were $33.1 million
and $2.7 million, respectively. Cliffs noted that unfavorable exchange
rate variances during the quarter impacted costs at Sonoma by $9.3
million.

Cliffs’ share of sales volume for the full year was 1.4 million tonnes.
Revenues and sales margin generated during the year were $144.7 million
and $21.4 million, respectively.

Amapá Iron Ore

Cliffs has a 30% ownership interest in the Amapá Iron Ore Project.
During the fourth quarter, Amapá produced approximately 900,000 tonnes.
Equity loss related to the project was $8 million in the quarter and $62
million for the year. Cliffs’ total cash contributions for the year were
approximately $70 million, which includes approximately $11 million in
capital spending.

Cliffs Natural Resources Global Exploration Group

As noted above, in 2009, Cliffs established a Global Exploration Group
to form partnerships with mining and exploration companies around the
world. This group is responsible for understanding the size, scope and
quality of these companies’ mineral deposits and assessing their
commercial viability. In 2010, Cliffs expects to invest $25 million to
$30 million in exploration and development activities with the objective
of securing potentially significant future reserves.

Liquidity

At year-end, Cliffs had $502.7 million of cash and cash equivalents,
with no borrowings drawn on its $600 million revolving credit facility.
For the year, Cliffs generated more than $185 million in cash from
operations. The Company typically collects cash at year-end in its North
American Iron Ore business for shipments that will not occur until the
following year. At the end of 2009, one of the Company’s customers did
not pay $148 million that was due by Dec. 31, 2009, under the terms of
the contract. The customer did pay the full amount on Jan. 4, 2010, but
the cash is not reflected on the year-end balance sheet or included in
cash flow.

Major uses of cash in 2009 included approximately:

• $116 million for capital expenditures;
• $70 million in contributions to fund Amapá; and,
• $27 million to fund investments in various ventures including Cliffs’
  initial investment
  in Freewest Resources, renewaFUEL, KWG
  Resources and other global exploration efforts.

The Company had $525 million in long-term borrowings, comprised of a
$200 million term loan due in 2012, and $325 million in Senior Notes in
two tranches due in 2013 and 2015, respectively.

Outlook

Cliffs expects continued stabilization of the macroeconomic environment
throughout 2010 and corresponding improvements for steelmaking raw
material demand. The Company noted that annual price settlements for
iron ore products in 2010 are not yet concluded. As such, Cliffs is
using the following assumptions based on an average of widely published
industry analyst estimates to provide expectations for its iron ore
businesses. Cliffs’ iron ore businesses use settlement prices as factors
in determining individual customer pricing. Average realized price will
be impacted by any deviation from the following assumptions:

• Increases of 40% for world blast furnace iron ore pellet price
  settlements;
• Increases of 35% and 30%, respectively, for Australian lump and fines
  benchmark price settlements; and,
• North America hard coking coal prices of $125 per short ton FOB mine.

Based on the above assumptions, the following table provides a summary
of Cliffs’ 2010 guidance for its three business segments (with further
detail below):

North American Iron Ore Outlook

For 2010, Cliffs said it is increasing sales volume expectations to
approximately 25 million tons, up from a previous expectation of 23
million tons, due to improving demand from customers.

The Company used a number of widely published analyst estimates, which
call for an average 40% increase in blast furnace pellet pricing
settlements, in providing guidance on average revenue per ton in its
North American Iron Ore segment. Applying this assumption, along with a
2010 range for hot band steel pricing of $550 – $650 per ton and no
inflation for any other factors contained in its current supply
agreements, Cliffs expects revenue per ton in North American Iron Ore to
be $90 – $95. This expectation also considers the contractual base price
changes, lag year adjustments and pricing caps and floors contained in
Cliffs’ North American Iron Ore supply agreements. Actual realized
average revenue per ton will ultimately depend on sales volume levels
and customer mix, blast furnace pellet price settlements, production
input costs and/or steel prices (all of which are factors in the
Company’s formula-based pricing in the North American Iron Ore business
segment).

In addition, Cliffs said the following approximate sensitivities would
impact its actual realized price:

• For every 10% change from the above average analyst expectation for
  blast furnace pellet price settlements, Cliffs would expect its
  average realized revenue per ton in North American Iron Ore to change
  by $4 – $5; and,
• For every $25 change from the estimated 2010 hot rolled steel prices
  noted above, Cliffs would expect its average revenue per ton in North
  American Iron Ore to change by $0.40.

Cliffs said it expects 2010 production of approximately 25 million tons
in its North American Iron Ore business segment. At this production
level, 2010 cost per ton is expected to be $65 – $70. This expectation
includes a $5 per ton benefit from increased volume, offset by increased
costs related to the Wabush Mines acquisition, increases in labor costs
as well as maintenance spending that was deferred in 2009.

North American Coal Outlook

In its North American Coal business segment, Cliffs said it is
increasing its sales volume expectations to approximately 3.4 million
tons, up from a previous expectation of 3.0 million tons.

Cliffs begins 2010 with approximately 1.4 million tons of coal priced
and under contractual obligation, or approximately 40% of its current
annual production guidance. This coal is priced at an average of $110
per ton, which includes production earmarks to fulfill obligations for
2009 international contracts ending March 31, 2010. Cliffs indicated
approximately 30% of its 2010 production volume is committed, but not
yet priced, as benchmark pricing has not yet settled. The Company
currently expects to sell the remaining 30% of uncommitted production on
a spot basis throughout the year.

In 2010, Cliffs anticipates cost per ton for the year of approximately
$105 – $110, with approximately $14 per ton comprised of depreciation,
depletion and amortization.

Asia Pacific Iron Ore Outlook

Asia Pacific Iron Ore 2010 sales volume is expected to be 8.5 million
tonnes, with production of 8.6 million tonnes. With annual price
settlements for iron ore in 2010 not yet concluded, Cliffs used an
average industry analyst estimate of an increase for Australian lump and
fines benchmark price settlements of 35% and 30%, respectively, in
providing guidance on average revenue per tonne in its Asia Pacific Iron
Ore business segment. With these estimates, Cliffs expects 2010 revenue
per tonne in Asia Pacific Iron Ore to be $80 – $85 and costs per tonne
to be approximately $50 – $55.

Outlook for Sonoma Coal and the Amapá Iron Ore Project

Cliffs has a 45% economic interest in Sonoma Coal. In 2010, the Company
expects total production of approximately 3.3 million tonnes. Sonoma
expects sales volume of 3.5 million tonnes with an approximate 65%/35%
mix between thermal and metallurgical coal, respectively. Cliffs
anticipates average revenue per tonne for Sonoma in 2010 to be $85 –
$90. Per-tonne costs at Sonoma are expected to be $80 – $85.

Cliffs has a 30% interest in the Amapá Iron Ore Project. In 2010,
assuming a 30% increase in iron ore pricing settlements for iron ore
concentrate products, Cliffs expects to report an equity loss of
approximately $10 million to $20 million.

SG&A Expenses and Other Expectations

SG&A expenses are anticipated to be approximately $130 million in 2010.
As described above, Cliffs intends to incur costs of approximately $25
million to $30 million related to its global exploration efforts. The
Company anticipates an effective tax rate of approximately 24% for the
year and depreciation and amortization of approximately $275 million.

Cliffs recently completed its previously announced acquisition of
Freewest Resources and, under the terms of the acquisition agreement,
issued approximately 4.2 million shares. As a result, the Company
currently has total diluted shares outstanding of approximately 136
million.

2010 Capital Budget and Other Uses of Cash

Based on the above guidance, Cliffs expects to generate more than $900
million in cash from operations in 2010. The Company expects capital
expenditures of approximately $200 million, comprised of approximately
$110 million in sustaining capital and approximately $90 million
earmarked for expansion, including the following projects:

• $40 million related to installation of a new long-wall mining system
  at the Pinnacle Mine in West Virginia, which is expected to be
  complete in the fourth quarter of 2010;
• $15 million related to an upgrade of the Pinnacle Complex Preparation
  Plant, which is expected to be complete in the third quarter of 2011;
  and,
• $20 million related to installing a new mine shaft closer to current
  mining areas at Oak Grove Mine in Alabama, which is expected to be
  complete in the first quarter of 2011.

Combined, the above projects are anticipated to enable future production
from Cliffs North American Coal assets to ramp to 5.0 million tons
annually from an expectation of 3.4 million tons in 2010. Other expected
uses of cash in 2010 include, approximately:

• $90 million related to the acquisition of Cliffs’ partners’ 73.2%
  interest in Wabush Mines;
• $30 million for Cliffs’ investment in the Amapá Project, including
  expected losses and capital spending;
• $70 million related to reduction of Cliffs’ debt obligation at the
  Amapá Project;
• $15 million related to renewaFUEL’s build-out of its first
  commercial-scale production facility in Michigan; and,
• $10 million related to Cliffs’ recently acquired chromite project in
  Ontario, Canada.

Cliffs Natural Resources will host a conference call to discuss its
fourth-quarter and full-year 2009 results tomorrow, Feb. 18, 2010, at 10
a.m. ET. The call will be broadcast live on Cliffs’ website at www.cliffsnaturalresources.com.
A replay of the call will be available on the website for 30 days.

To be added to Cliffs’ e-mail distribution list, please click on the
link below:

http://www.cpg-llc.com/clearsite/clf/emailoptin.html

Cliffs Natural Resources Inc. is an international mining and natural
resources company. A member of the S&P 500 Index, we are the largest
producer of iron ore pellets in North America, a major supplier of
direct-shipping lump and fines iron ore out of Australia and a
significant producer of metallurgical coal. With core values of
environmental and capital stewardship, our colleagues across the globe
endeavor to provide all stakeholders operating and financial
transparency as embodied in the Global Reporting Initiative (GRI)
framework. Our Company is organized through three geographic business
units:

The North American business unit is comprised of six iron ore mines
owned or managed in Michigan, Minnesota and Canada and two coking coal
mining complexes located in West Virginia and Alabama. The Asia Pacific
business unit is comprised of two iron ore mining complexes in Western
Australia and a 45% economic interest in a coking and thermal coal mine
in Queensland, Australia. The Latin American business unit includes a
30% interest in the Amapá Project, an iron ore project in the state of
Amapá in Brazil.

Other projects under development include a biomass production plant in
Michigan and Ring of Fire chromite properties in Ontario, Canada. Over
recent years, Cliffs has been executing a strategy designed to achieve
scale in the mining industry and focused on serving the world’s largest
and fastest growing steel markets.

News releases and other information on the Company are available on the
Internet at:

http://www.cliffsnaturalresources.com
or

www.cliffsnaturalresources.com/Investors/Pages/default.aspx?b=1041&1=1

“Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995

This news release contains predictive statements that are intended to be
made as “forward-looking” within the safe harbor protections of the
Private Securities Litigation Reform Act of 1995. Although the Company
believes that its forward-looking statements are based on reasonable
assumptions, such statements are subject to risk and uncertainties.

Actual results may differ materially from such statements for a variety
of reasons, including: the impact of the global economic crisis on the
North American and global integrated steel industry; the length and
extent of any potential and current production curtailments at both our
customer’s facility and at our iron ore and coal mining operations;
changes in the sales volumes or mix; the impact of any increases or
decreases in international prices for iron ore and/or metallurgical coal
resulting from the global economic crisis; the impact of
price-adjustment factors on the Company’s sales contracts; changes in
demand for iron ore pellets by North American integrated steel
producers, or changes in Asian iron ore demand due to changes in steel
utilization rates, operational factors, electric furnace production or
imports into the United States and Canada of semi-finished steel or pig
iron; the impact of consolidation and rationalization in the steel
industry; availability of capital equipment and component parts;
availability of float capacity; the impact of the global economic crisis
on our ability to maintain adequate liquidity and on our ability to
access capital market; changes in the financial condition of the
Company’s partners and/or customers; rejection of major contracts and/or
venture agreements by customers and/or participants under provisions of
the U.S. Bankruptcy Code or similar statutes in other countries; events
or circumstances that could impair or adversely impact the viability of
a mine and the carrying value of associated assets; inability to achieve
expected production levels; reductions in current resource estimates;
impacts of increasing governmental regulation including failure to
receive or maintain required environmental permits; problems with
productivity, third party contractors, labor disputes, weather
conditions, fluctuations in ore grade, tons mined, changes in cost
factors including energy costs, transportation, mine closure obligations
and employee benefit costs; the ability to identify, acquire and
integrate strategic acquisition candidates; risks associated with
operations in multiple countries and the effect of these various risks
on the Company’s future cash flows, debt levels, liquidity and financial
position.

Reference is also made to the detailed explanation of the many factors
and risks that may cause such predictive statements to turn out
differently, set forth in the Company’s Annual Report and Reports on
Form 10-K, Form 10-Q and previous news releases filed with the
Securities and Exchange Commission, which are publicly available on
Cliffs Natural Resources’ website. The information contained in this
document speaks as of the date of this news release and may be
superseded by subsequent events.

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