Cleveland-Cliffs to sell assets to PolyMet

Cleveland-Cliffs to sell assets to PolyMet

Iron pellet producer Cleveland-Cliffs Inc. announced that it has reached an agreement with PolyMet Mining Corp. regarding terms of PolyMet’s early exercise of its option to acquire assets formerly owned by Cliffs’ Erie site in Hoyt Lakes, Minnesota. Under terms of the agreement, entered in February 2004, Cliffs will receive $3.4 million in cash and 6.2 million shares of PolyMet. PolyMet will also assume Cliffs’ ongoing site-related environmental and reclamation obligations. PolyMet has until June 2006 to exercise this option. In return, PolyMet will receive selected assets formerly owned by Cliffs Erie’s LTV Steel Mining Company. When this transaction closes, Cliffs will hold 7.2 million common shares of PolyMet, representing nearly eight percent of all currently outstanding shares. Cliffs also has anti-dilutive rights allowing pro-rata participation in any future cash equity financings of PolyMet. Cleveland-Cliffs Inc, headquartered in Cleveland, Ohio, is the largest producer of iron ore pellets in North America and sells the majority of its pellets to integrated steel companies in the United States and Canada. They operate a total of six iron ore mines located in Michigan, Minnesota and Eastern Canada. The company is majority owner of Portman Limited, the third-largest iron ore mining company in Australia, serving the Asian iron ore markets with direct-shipping fines and lump ore.