Cliffs Natural Issues Open Letter To Shareholders Regarding Casablanca's Purported "Plan"

CLIFFS NATURAL RESOURCES INC. ISSUES OPEN LETTER TO SHAREHOLDERS Casablanca's Short-term Agenda is Value Destructive in Current Pricing Environment Casablanca's Purported "Plan" Clearly Demonstrates Its Lack of Experience in Mining Industry and with Commodity Driven Businesses Cliffs Board and Management Team Implementing Value-Enhancing Changes To Drive Long-term, Profitable Growth Recommends Shareholders Vote WHITE Proxy Card Today CLEVELAND - June 26, 2014 - Cliffs Natural Resources Inc. CLF today issued a letter to shareholders in connection with its upcoming 2014 Annual Meeting of Shareholders scheduled to be held on July 29, 2014. The Company issued the following letter to all shareholders: Dear Fellow Cliffs Shareholder, At Cliffs, our Board and management team have been laser-focused on executing a strategy to enable your Company to succeed in the current iron ore and met coal pricing environment. We maintain an open dialogue with our shareholders and continue to take decisive actions to improve our financial and operating performance across all businesses to enhance shareholder value at Cliffs. As you know, Cliffs operates in a highly cyclical industry and our share price is closely correlated with the prices of the products we sell. As such, sharp increases and decreases in the pricing for the steelmaking raw materials we sell impacts the volatility of Cliffs' share price. Global iron ore benchmark pricing, one of the main drivers in determining the revenue for our business, has dropped below $100 per ton. As such, Cliffs' share price has followed the downward movement in iron ore pricing. Importantly, the fundamentals supporting our long-term strategy are intact despite the recent cyclical decline in pricing, which is not expected to continue for the longer term. Cliffs' management team is, however, taking the necessary steps to ensure your company can operate efficiently through a cyclical downturn. During this period of volatility, Cliffs has also been focused on strengthening its balance sheet and taking steps to improve its financial and operating performance across all of its businesses. Your Board and management team understand how to right-size mining operations to navigate commodity down cycles while preserving upside potential when prices recover. For example, just yesterday Cliffs announced its intention to temporarily idle operations, if market dynamics do not improve, at its Pinnacle coal mine to improve operational effectiveness. In the current pricing environment, Casablanca's purported "plan" would be significantly value destructive for shareholders. The core tenet of Casablanca's "plan" seems to be to sell assets - at the trough of the cycle. This clearly shows that Casablanca lacks a sensible and actionable plan and instead remains focused on personal attacks and financial engineering while Cliffs' Board and new executive leadership are focused on the Company's long-term success. As an investor, we urge you to protect your investment and support the continued execution of Cliffs' disciplined strategy to drive long-term value for all shareholders as opposed to the potentially value-destroying short-term agenda of a single shareholder with no mining or commodity driven company experience looking to establish a reputation as an "activist" investor. THE TRUTH ABOUT CASABLANCA'S "PLAN" Casablanca's purported "plan" ignores two basic facts: 1) the time to sell valuable assets is not at the bottom of a commodity cycle, and 2) a strong balance sheet is important to weather commodity cycles. Furthermore, Casablanca has not articulated a plan for Cliffs to operate in an environment with iron ore prices below $100 per ton. Casablanca Proposal: Divest non-core assets and exit international operations Why It Is Value-Destructive: Casablanca is effectively calling for a "fire-sale" of assets at the bottom of a commodity cycle. Liquidation in today's iron ore and met coal pricing environment is not a strategy, and investors should be aware that Casablanca's proposals will forego significant value over time as prices recover. The better course is to optimize the assets in our portfolio, instead of disposing of them and causing significant value degradation. The divestiture of Asia Pacific in particular would eliminate one of Cliffs' strongest earnings and cash flow generating businesses during a volatile pricing environment. There are also potentially significant adverse credit implications of such a move that could limit Cliffs' financial flexibility and liquidity. Furthermore, the divestiture of Cliffs' infrastructure assets makes no strategic sense, as these assets are crucial to the success of any mining company. Experienced mining executives know that rail/port infrastructure assets are to be desired, not discarded. Conversely, Cliffs' Board and management team remain focused on navigating through the difficult iron ore and met coal pricing environment and preserving upside potential for when prices recover. Casablanca Proposal: Double the dividend Why It Is Irresponsible: Proposing to double Cliffs' dividend as iron ore and met coal prices fall is an example of Casablanca's short sightedness and unfamiliarity with cyclical mining businesses. Cliffs' Board and management team believe a strong balance sheet is required to weather commodity cycles. We regularly evaluate Cliffs' return of capital policy and dividend in the context of servicing our existing debt, funding our operations and selectively investing in growth initiatives throughout the commodity cycle all within the context of maintaining a strong balance sheet, sustainable liquidity and an investment-grade profile. Casablanca's proposal is unsustainable and puts the Company's operations and long-term viability at risk. Our assets require conservative financial management, which is why we use balance sheet liquidity to maintain strategic stability during periods when pricing is under pressure. The strength of our balance sheet is paramount in today's economic environment. Casablanca Proposal: Convert U.S. assets into a Master Limited Partnership (MLP) or sell the Company Why It Is Shortsighted: Casablanca's proposed conversion of Cliffs' U.S. assets into an MLP isn't the panacea Casablanca suggests it to be and is another example of Casablanca's overly simplistic proposals. Our Board and management team have been studying - since long before Casablanca's recent investment - and continue to study the feasibility of a potential MLP structure with its advisors. The specific characteristics of the Company's U.S. iron ore business involve complex tax and structural components that require careful consideration before deciding to proceed. With regard to a sale, we know our industry well, and our Board is committed to fulfilling its fiduciary duties. Selling mining assets at the bottom of a commodity cycle is not the way to maximize long-term shareholder value. CASABLANCA'S ILL-ADVISED "STRATEGIES" ARE NOT SURPRISING GIVEN ITS LACK OF EXPERIENCE WITH MINING AND COMMODITY DRIVEN COMPANIES Casablanca's purported "plan" demonstrates its clear lack of experience and understanding of Cliffs and the mining industry in general. Casablanca has also proposed a new CEO who has never led a mining organization or any organization as large and diverse as Cliffs. Lourenco Goncalves, who Casablanca is proposing as a new CEO for Cliffs, has no meaningful experience managing large-scale, long-lived mining assets in complex ore bodies or operating global assets in multiple geographies. Mr. Goncalves' metals industry experience has largely been with processing and distribution businesses with low fixed cost structures, limited commodity price exposure and low capital intensity. Under Mr. Goncalves' watch in his last position as a CEO of a publicly traded company, Metals USA significantly underperformed its peers, eventually leading to the sale of the company at a discount to its IPO price. It is clear that Casablanca's nomination of Mr. Goncalves underscores its lack of understanding of the mining business and its lack of a track record in activist investing. If Casablanca elects a majority of your Board, they will replace Gary Halverson as CEO, who has garnered significant shareholder support as a result of setting a new strategic direction for Cliffs and making significant progress, with their proposed CEO, Mr. Goncalves, who is not equipped to run Cliffs and has no strategy to operate the Company in the volatile pricing environment that exists today. Now is not the time to hand the Cliffs Board over to an unproven activist investor and a metals distribution executive without any mining experience. Cliffs needs a steady hand at the helm, which the Board found in Mr. Halverson, to navigate this volatile industry environment. YOUR CURRENT BOARD AND MANAGEMENT TEAM ARE EXPERIENCED IN MANAGING THROUGH COMMODITY CYCLES Your Board and Management team have years of industry and commodity experience, and have a plan in place to address the pricing environment and position Cliffs for the long-term. We began implementing Cliffs' new strategic direction in July 2013, well before Casablanca purchased a single share of Cliffs. This decisive action fundamentally shifted the strategic, operational and financial direction of the Company, in keeping with the Board's active approach in overseeing Cliffs' strategy and its execution. Our new CEO, Mr. Halverson has more than 30 years of experience managing international large-scale, long-lived mining operations through many commodities cycles and understands the importance of a strong balance sheet in weathering these conditions.