FOR THE NORTHERN DISTRICT OF OHIO EASTERN DIVISION THE ... · 6/30/2016 · [email protected] [email protected] [email protected] Counsel for Defendants Cliffs Natural Resources,

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

THE DEPARTMENT OF THE TREASURY OF THE STATE OF NEW JERSEY AND ITS DIVISION, OF INVESTMENT, on behalf of itself and all others similarly situated,

Plaintiff,

-against-

CLIFFS NATURAL RESOURCES INC., JOSEPH CARRABBA, LAURIE BRLAS, TERRANCE PARADIE, and DAVID B. BLAKE,

Defendants.

Case No. 14-CV-1031-DAP

ELECTRONICALLY FILED

CLASS ACTION

Defendants Cliffs Natural Resources Inc., Joseph Carrabba, Laurie Brlas, Terrance

Paradie, and David B. Blake (“Defendants”) together move this Court, pursuant to Rules 9(b)

and 12(b)(6) of the Federal Rules of Civil Procedure, for an order dismissing Plaintiff The

Department of the Treasury of the State of New Jersey and its Division of Investment’s

(“Plaintiff”) Amended Class Action Complaint (“Complaint”). Plaintiff’s claims against

Defendants fail to meet the pleading requirements and fail to establish the elements of the

purported claims for securities fraud under Sections 10(b) and 20(a) of the Securities Exchange

Act of 1934, and Rule 10b-5. For all the reasons set forth in the accompanying Memorandum of

Law, incorporated herein, Defendants ask that the Court dismiss the Complaint in its entirety,

with prejudice.

Case: 1:14-cv-01031-DAP Doc #: 32 Filed: 10/21/14 1 of 3. PageID #: 404

2

Respectfully submitted,

s/ Gregory A. Markel GREGORY A. MARKEL (pro hac vice granted) MARTIN L. SEIDEL (pro hac vice granted RYAN J. ANDREOLI (pro hac vice granted) GILLIAN GROARKE BURNS (pro hac vice granted) CADWALADER, WICKERSHAM & TAFT LLP One World Financial Center New York, NY 10281 (212) 504-6000 (212) 460-6666 (fax) [email protected] [email protected] [email protected] [email protected] /s/ Christopher S. Williams CHRISTOPHER S. WILLIAMS (OH 0043911) KIMBERLY MOSES (OH 0029601) ERIC S. ZELL (OH 0084318) CALFEE, HALTER & GRISWOLD LLP The Calfee Building 1405 East Sixth Street Cleveland, Ohio 44114 (216) 622-8200 (216) 241-0816 (fax) [email protected] [email protected] [email protected]

Counsel for Defendants Cliffs Natural Resources, Inc., Joseph A. Carrabba, Laurie Brlas, Terrance M. Paradie, and David B. Blake


CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing, and accompanying Memorandum of Law,

was filed electronically on October 21, 2014. Notice of this filing will be sent to all parties by

operation of the Court’s electronic filing system.

/s/ Gregory A. Markel One of the Attorneys for Defendants


UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO

THE DEPARTMENT OF THE TREASURY OF THE STATE OF NEW JERSEY AND ITS DIVISION, OF INVESTMENT, on behalf of itself and all others similarly situated,

Plaintiff,

-against-

CLIFFS NATURAL RESOURCES INC., JOSEPH CARRABBA, LAURIE BRLAS, TERRANCE PARADIE, and DAVID B. BLAKE,

Defendants.

Case No. 14-CV-1031-DAP

ELECTRONICALLY FILED

CLASS ACTION

DEFENDANTS’ MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION TO DISMISS THE AMENDED CLASS ACTION COMPLAINT

CADWALADER, WICKERSHAM & TAFT LLP One World Financial Center New York, NY 10281 Telephone: (212) 504-6000 Facsimile: (212) 504-6666 CALFEE, HALTER & GRISWOLD LLP 1405 East Sixth Street Cleveland, OH 44114-1607 Telephone: (216) 622-8200 Facsimile: (216) 241-0816 Attorneys for Defendants

Case: 1:14-cv-01031-DAP Doc #: 32-1 Filed: 10/21/14 1 of 42. PageID #: 407

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TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ......................................................................................................... iii

PRELIMINARY STATEMENT .....................................................................................................1

BACKGROUND .............................................................................................................................3

ARGUMENT ...................................................................................................................................5

I. The Anonymous Witness Opinions Are Entitled To No Weight ........................................6

A. Many Of The CWs Were Not Employed By Cliffs During The Class Period .......................................................................................................................6

B. The Complaint Does Not Explain The CWs’ Personal Knowledge ........................7

C. Anonymous Witness Suppositions Are Vague And Conclusory .............................9

D. Lack Of Connection To Defendants’ Knowledge .................................................10

II. All Of The Claims Alleged Are Impermissible “Fraud by Hindsight” .............................11

III. Plaintiff Fails To Plead Facts Giving Rise To A Strong Inference of Scienter .................14

A. Alleged Divergence Between Internal Reports And External Statements .............16

1. Operational Issues at Bloom Lake and Expansion Challenges ..................16

a. Internal Reports And Meetings ..................................................... 17

b. Due Diligence And Visits To Bloom Lake ................................... 18

2. Alleged Accounting Manipulations And Dividend Testing ......................19

B. Alleged Closeness In Time Of An Allegedly Fraudulent Statement And The Later Disclosure Of Inconsistent Information ................................................21

C. Alleged Self-Interested Motivation ........................................................................22

IV. The Amended Complaint Does Not Adequately Allege Any Actionable Misrepresentations Or Omissions ......................................................................................23

A. Most Of The Alleged Statements And Omissions Are Not Actionable Because They Are Protected By The PSLRA Safe Harbor ...................................24

B. Many of the Allegedly False Statements Are Nonactionable Puffery ...................29


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V. Plaintiff’s Section 20(a) Claims Fail..................................................................................30

CONCLUSION ..............................................................................................................................30

LOCAL RULE 7.1 CERTIFICATION ..........................................................................................32


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TABLE OF AUTHORITIES

PAGE(S)

CASES:

Albert Fadem Trust v. Am. Elec. Power Co., 334 F. Supp. 2d 985 (S.D. Ohio 2004) .............................................................................. 22-23

Ansfield v. Omnicare (In re Omnicare, Inc. Sec. Litig.), No. 13-5597, 2014 WL 5066826 (6th Cir. Oct. 10, 2014) .............................................. passim

Beaver Cnty. Ret. Bd. v. LCA-Vision Inc., No. 1:07-CV-750, 2009 WL 806714 (S.D. Ohio Mar. 25, 2009) ........................................4, 20

Bonato v. Yahoo, Inc. (In re Yahoo! Inc. Sec. Litig.), No. C-11-02732-CRB, 2012 WL 3282819 (N.D. Cal. Aug. 10, 2012) ...................................29

Brogren v. Pohlad, 933 F. Supp. 793 (D. Minn. 1995) ...........................................................................................14

CalPERS v. Chubb Corp., 394 F.3d 126 (3d Cir. 2004)...............................................................................................6, 7, 8

Charal v. Royal Appliance Mfg. Co., 64 F.3d 663 (TABLE), 1995 WL 490131 (TEXT IN WESTLAW) (6th Cir. 1995)...............29

City of Pontiac Gen. Emps. Ret. Sys. v. Stryker Corp., 865 F. Supp. 2d 811 (W.D. Mich. 2012) .................................................................................10

City of Roseville Emps. Ret. Sys. v. Sterling Fin. Corp., 963 F. Supp. 2d 1092 (E.D. Wash. 2013) ..................................................................................7

Dailey v. Medlock, 551 F. App’x 841 (6th Cir. 2014) (unpub.)............................................................ 11, 13-14, 30

Graf v. Resilience, No. 12-cv-2278, ECF No. 65 (N.D. Ohio Jan. 28, 2014) ........................................5, 15, 19, 22

Graff v. Prime Retail, Inc., 172 F. Supp. 2d 721 (D. Md. 2001), aff’d sub nom. Marsh Grp. v. Prime Retail, Inc., 46 F. App’x 140 (4th Cir. 2002) (per curiam) ..............................................................................................................................14

Helwig v. Vencor, Inc., 251 F.3d 540 (6th Cir. 2001) (en banc) .......................................................................23, 25, 28

IBEW v. Ltd. Brands, Inc., 788 F. Supp. 2d 609 (S.D. Ohio 2011) ..............................................................................12, 30


-iv-

In re Agnico-Eagle Mines Ltd. Sec. Litig., No. 11 Civ. 7968, 2013 WL 144041 (S.D.N.Y. Jan. 14, 2013), aff’d sub nom. Fonden v. Agnico-Eagle Mines Ltd., 533 F. App’x 38 (2d Cir. 2013) (summary order) .........................................................................................13, 15

In re Crown Am. Realty Trust Sec. Litig., No. Civ. A 95-202 J, 1997 WL 599299 (W.D. Pa. Sept. 15, 1997) ........................................14

In re Diebold Sec. Litig., No. 5:05 CV 2873, 2008 WL 3927467 (N.D. Ohio Aug. 22, 2008), aff’d sub nom. Konkol v. Diebold, 590 F.3d 390 (6th Cir. 2009) .................................... passim

In re DRD Gold Ltd. Sec. Litig., 472 F. Supp. 2d 562 (S.D.N.Y. 2007) ....................................................................12, 14, 15, 17

In re FAC Realty Sec. Litig., 990 F. Supp. 416 (E.D.N.C. 1997)...........................................................................................28

In re Fed.-Mogul Corp. Sec. Litig., 166 F. Supp. 2d 559 (E.D. Mich. 2001) ...................................................................................25

In re Ferro Corp. Sec. Litig., Nos. 1:04 CV 1440, 1:04 CV 1589, 2007 WL 1691358 (N.D. Ohio June 11, 2007)................................................................6, 8, 21

In re Ford Motor Co. Sec. Litig., 381 F.3d 563 (6th Cir. 2004) ...................................................................................................29

In re Gold Res. Corp. Sec. Litig., 957 F. Supp. 2d 1284 (D. Colo. 2013) .....................................................................................13

In re Goodyear Tire & Rubber Co. Sec. Litig., 436 F. Supp. 2d 873 (N.D. Ohio 2006) .................................................................. 11, 12, 21-22

In re Huffy Corp. Sec. Litig., 577 F. Supp. 2d 968 (S.D. Ohio 2008) ....................................................................................29

In re Humana, Inc. Sec. Litig., Civ. A. No. 3:08 CV-00162-JHM, 2009 WL 1767193 (W.D. Ky. June 23, 2009) .................26

In re Humphrey Hospitality Trust, Inc. Sec. Litig., 219 F. Supp. 2d 675 (D. Md. 2002) .........................................................................................28

In re Huntington Bancshares Inc. Sec. Litig. 674 F. Supp. 2d 951 (S.D. Ohio 2009) ..................................................................11, 16, 19, 22

In re Keithley Instruments, Inc. Sec. Litig., 268 F. Supp. 2d 887 (N.D. Ohio 2002) ..............................................................................24, 26


-v-

In re Metawave Comm’n Corp. Sec. Litig., 298 F. Supp. 2d 1056 (W.D. Wash. 2003) ...............................................................................18

In re OfficeMax, Inc. Sec. Litig., No. 1:02-cv-2432, 2002 WL 33959993 (N.D. Ohio Mar. 26, 2002) .......................................13

In re OfficeMax, Inc. Sec. Litig., No. 1:02-cv-2432, 2002 WL 33959992 (N.D. Ohio July 26, 2002) ........................................12

In re Regions Morgan Keegan Sec. Deriv. & ERISA Litig., 07-cv-2784, MDL 2009, 2010 WL 5464792 (W.D. Tenn. Dec. 30, 2010) ...............................6

In re Sec. Cap. Assur. Ltd. Sec. Litig., 729 F. Supp. 2d 569 (S.D.N.Y. 2010) ......................................................................................14

In re SmarTalk Teleservs. Sec., Inc. Litig., 124 F. Supp. 2d 505 (S.D. Ohio 2000) ....................................................................................11

In re USF & G Corp. Sec. Litig., No. B-90-2928, 1993 WL 740188 (D. Md. Feb. 11, 1993), aff’d sub nom. Rabinovitz v. USF & G Corp., 16 F.3d 411 (4th Cir. 1994) (unpub.) .......................................................................................14

In re WatchGuard Sec. Litig., No. C05-678LR, 2006 WL 29227663 (W.D. Wash. Oct. 12, 2006) .......................................10

Ind. St. Dist. Council of Laborers & HOD Carriers Pension Welfare Fund v. Omnicare, Inc., 583 F.3d 935 (6th Cir. 2009) .......................................................................................10, 29, 30

Karpov v. Insight Enters., No. CV 09-556-PHX-SRB, 2010 WL 4867634 (D. Ariz. Nov. 16, 2010) ................ 6, 7, 20-21

Konkol v. Diebold Inc., 590 F.3d 390 (6th Cir. 2009) ................................................................................... 9-10, 11, 21

Kowal v. IBM Corp., 163 F.3d 102 (2d Cir. 1998).....................................................................................................30

La. Sch. Emps. Ret. Sys. v. Ernst & Young, 622 F.3d 471 (6th Cir. 2010) .............................................................................................11, 15

Lasker v. N.Y. St. Elec. & Gas Corp., 85 F.3d 55 (2d Cir. 1996) ........................................................................................................30

Ley v. Visteon Corp., 543 F.3d 801 (6th Cir. 2008) .....................................................................................................6


-vi-

Local 295/Local 851 IBT Emp’r Grp. Pension Trust & Welfare Fund v. Fifth Third Bancorp, 731 F. Supp. 2d 689 (S.D. Ohio 2010) ...................................................................... 6-7, 10, 15

Marsh Grp. v. Prime Retail, Inc., 46 F. App’x 140 (4th Cir. 2002) (per curiam) .........................................................................28

Miller v. Champion Enters., Inc., 346 F.3d 660 (6th Cir. 2003) .............................................................................................25, 26

Mittman v. Rally’s Hamburgers, Inc., 278 F. Supp. 2d 831 (W.D. Ky. 2003) .....................................................................................13

Murphy v. Sofamor Danek Grp., Inc., 123 F.3d 394 (6th Cir. 1997) ...................................................................................................23

PR Diamonds, Inc. v. Chandler, 364 F.3d 672 (6th Cir. 2004) .......................................................................................17, 20, 22

Raab v. General Physics Corp., 4 F.3d 286 (4th Cir. 1993) .......................................................................................................29

Ricker v. Zoo Entm’t Inc., 534 F. App’x 495 (6th Cir. 2013) (unpub.)..............................................................................23

Russo v. Bruce, 777 F. Supp. 2d 505 (S.D.N.Y. 2011) ......................................................................................15

Sarafin v. BioMimetic Therapeutics, Inc., No. 3:11-0653, 2013 WL 139521 (M.D. Tenn. Jan. 10, 2013), aff’d, 747 F.3d 435 (6th Cir. 2014) ............................................................................................7

Shy v. Navistar Int’l Corp., No. 3:92 cv 333, 2013 WL1326518 (S.D. Ohio Mar. 29, 2013) ...............................................4

Sinay v. Lamson & Sessions Co., 948 F.2d 1037 (6th Cir. 1991) ...........................................................................................11, 12

Sorkin, LLC v. Fischer Imaging Corp., No. Civ. A. 03-CV-00631-R, 2005 WL 1459735 (D. Colo. June 21, 2005) .................9, 18, 19

Starkman v. Marathon Oil, Co., 772 F.2d 231 (6th Cir. 1985) ...................................................................................................23

Stoneridge Inv. Partners, LLC v. Scientific-Atlanta Inc., 552 U.S. 148 (2008) ...................................................................................................................5


-vii-

Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308 (2007) ......................................................................................................... passim

Wenger v. Lumisys, Inc. 2 F. Supp. 2d 1231 (N.D. Cal. 1998) .........................................................................................9

Wilkof v. Caraco Pharm. Labs., Ltd., No. 09-12830, 2010 WL 4184465 (E.D. Mich. Oct. 21, 2010) ...............................................22

Zaluski v. United Am. Healthcare Corp., 527 F.3d 564 (6th Cir. 2009) ...................................................................................................23

STATUTES & OTHER AUTHORITIES:

H.R. Conf. Rep. No. 104-369 (1995) .............................................................................................25

15 U.S.C.: § 78u-4(b)(1)(B) .........................................................................................................................6 § 78u–4(b)(2)(A) ..................................................................................................................6, 15 § 78u–5(c)(1)(A)(i)) .................................................................................................................24 § 78u-5(c)(1)(B) .......................................................................................................................25 § 78u-5(c)(2)-(3) ......................................................................................................................26 § 78u-5(i)(1) .............................................................................................................................24 § 78u-5(i)(1)(A),(D) .................................................................................................................28 § 78u-5(i)(1)(B),(C) .................................................................................................................24


-viii-

GLOSSARY OF DEFINED TERMS

Term Definition

2011 Form 10-K Annual Report on Form 10-K filed by Cliffs Natural Resources Inc. on February 16, 2012 with the U.S. Securities and Exchange Commission for the year ending December 31, 2011

AC or Complaint Plaintiff’s Amended Class Action Complaint, ECF Docket No. 24, filed August 22, 2014

Appendix A or App. A Appendix A filed with this Memorandum of Law

Appendix B or App. B Appendix B filed with this Memorandum of Law

Appendix to AC “Confidential Witness Appendix” to Plaintiff’s Amended Class Action Complaint, ECF Docket No. 24-1, filed August 22, 2014

Class Period March 14, 2012 to March 26, 2013, inclusive

Cliffs or the Company Cliffs Natural Resources Inc.

CW Confidential Witness

Defendants Cliffs Natural Resources Inc., Joseph Carrabba, Laurie Brlas, Terrance Paradie, and David B. Blake

Exchange Act The Securities Exchange Act of 1934, Pub. L. 73–291, 48 Stat. 881

Individual Defendants Joseph Carrabba, Laurie Brlas, Terrance Paradie, and David B. Blake

PSLRA The Private Securities Litigation Reform Act of 1995, Pub. L. 104-67, 109 Stat. 737

Rule Federal Rule of Civil Procedure

Rule 10b-5 17 C.F.R. § 240.10b-5

Section 10(b) Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b)

Section 20(a) Section 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78t(a)

Citations and internal quotation marks are omitted from quotations unless otherwise indicated.


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STATEMENT OF THE ISSUES

Has Plaintiff adequately pled each of the elements of its claims under Sections 10(b) and

20(a) of the Exchange Act?

SUMMARY OF ARGUMENTS

Plaintiff’s Complaint is based on an implausible fraud by hindsight theory and the

conclusory allegations of anonymous sources. In addition, the alleged misstatements and

omissions are forward-looking statements protected by the PSLRA safe harbor, or mere puffery.

Plaintiff has not and cannot plead two of the required elements of its Section 10(b) claim, namely

a material misstatement or omission and scienter. Further, because Plaintiff has failed to state a

claim for primary liability under Section 10(b), it cannot establish a related claim of secondary

liability under Section 20(a).


-1-

Defendants Joseph Carrabba, Laurie Brlas, Terrance Paradie, and David B. Blake,

together with Cliffs Natural Resources Inc., respectfully submit this memorandum of law and the

appendices attached hereto in support of their motion to dismiss the Amended Class Action

Complaint pursuant to Rules 12(b)(6) and 9(b).

PRELIMINARY STATEMENT

Plaintiff asserts violations of Section 10(b) of the Securities Exchange Act of 1934 and

Rule 10b-5, purportedly on behalf of a class who purchased Cliffs’ stock between March 14,

2012 and March 26, 2013. The Complaint relies on a totally implausible theory. Cliffs’

management spent billions of dollars to acquire a site for mining iron ore and disclosed its plans

to make a major investment to expand that operation to increase production and lower costs.

These disclosures were accompanied by detailed warnings of the risks entailed in the mining

business. Given its economic situation at the time, Cliffs also significantly increased its dividend.

Plaintiff’s theory relies on the utterly implausible premise that management took these actions

while knowing its plans would soon fail and it could not sustain the dividend.

Trying to plead a claim under Section 10(b), Plaintiff contends that Cliffs’ inability to

reach the announced goals compels the conclusion that the original disclosure of its plans must

have been fraudulent. “Must have been” is the critical phrase, for the Complaint offers no

support for its verdict of fraud besides the timing of later disclosures in Company statements that

goals would not be met. Such pleading is known in securities cases as “fraud by hindsight” and

the Sixth Circuit has repeatedly dismissed claims, like those here, relying on fraud by hindsight.

In reality, Cliffs encountered unexpected obstacles at the mine, Bloom Lake, that delayed

and made its expansion much more costly. These issues were compounded by volatility and an

adverse change in the price for iron ore. Cliffs, as the Complaint acknowledges, made frequent

disclosures of the obstacles encountered and the resulting costs and delays. In February 2013,

Cliffs decided it needed to reduce its dividend. In contrast to this reality, Plaintiff’s premise that


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Defendants knowingly misrepresented the viability of the mine expansion project and the

sustainability of the dividend to inflate Cliffs’ share price, knowing that the “truth” would soon

be obvious, is preposterous. A believable motivation for such a foolish strategy is never

explained.

Plaintiff resorts to two transparent strategies to create the illusion of merit for its far-

fetched theory. First, it creates bulk through redundancy and a confusing recitation of the

timeline of events. Second, it relies on unverified, supposed comments from twenty-eight

anonymous witnesses (also referred to herein as confidential witnesses or CWs), many of which

are irrelevant, speculation, or gossip. Plaintiff transformed its 28-page initial complaint into the

133-page amended Complaint primarily by repeating the same unreliable statements of these

unnamed witnesses. The Complaint should be dismissed:

First, the purported statements from anonymous witnesses are not sufficient to establish the elements of a securities fraud claim for several reasons. The Sixth Circuit has held that anonymous witnesses allegations should be accorded little weight. This Court has refused to credit confidential witnesses’ statements because they often “have axes to grind [or] they are lying [or] they don’t even exist.” In re Diebold Sec. Litig., 2008 WL 3927467, at *7 (N.D. Ohio Aug. 22, 2008), aff’d sub nom. Konkol v. Diebold, 590 F.3d 390 (6th Cir. 2009). These statements are unreliable and should not be considered for multiple reasons detailed below and in Appendix A.

Second, Plaintiff’s implausible fraud by hindsight theory is not a basis for pleading either falsity or scienter under Section 10(b). Plaintiff contends that because Cliffs’ projections about Bloom Lake and the dividend ultimately did not materialize, Defendants’ statements must have been knowingly false. This form of pleading has been consistently rejected by the Sixth Circuit.

Third, Plaintiff has not satisfied the Sixth Circuit’s strict requirements for pleading scienter. The Complaint does not assert facts with particularity sufficient to raise the required “strong” inference of fraudulent intent that is “cogent” and at least as “compelling” as a nonfraudulent inference, especially given its extensive reliance on anonymous sources.

Fourth, Plaintiff fails to allege any actionable misstatements or omissions. The alleged misstatements are either forward-looking statements accompanied by meaningful cautionary language that fall within the PSLRA’s safe harbor (as detailed in Appendix B) or mere puffery because they are so vague that no reasonable investor could rely on them.

Fifth, Plaintiff’s Section 20(a) claim fails because there is no underlying liability.1

1 To assist the Court, this Memorandum attaches two appendices. Appendix A lists the defects in the statements by the twenty-eight confidential witnesses. Appendix B identifies the cautionary language and


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BACKGROUND

Cliffs is a mining company headquartered in Cleveland, and the Individual Defendants

are or were Cliffs’ upper management.2 In May 2011, Cliffs acquired Consolidated Thompson

Iron Mines Limited, including a 75% interest in the Bloom Lake iron ore mining operation in

Quebec, managed out of Montreal. AC ¶¶ 2, 38-39, 45-46. The purchase included the mine,

equipment for extracting the ore, a plant for refining the raw ore into saleable iron concentrate,

systems to manage tailings and water from the mine, and a transportation infrastructure

(including a rail line) for collecting and shipping the iron concentrate to a port facility for

shipment to customers. Id. ¶¶ 42, 94, 142-143, 156-57, 164, 259, 297. One factor that affects

production and profitability is the silica content of the ore and concentrate product: typically,

ores with higher iron content and corresponding lower silica content are in higher demand and

can be sold at higher prices. Id. ¶¶ 102, 104, 137, 293-95. A mine’s profitability is determined

by the cost of production, expressed per (metric) ton of product, and the price of iron ore. E.g.,

id. ¶¶ 64, 91, 96, 101, 320.

Following the acquisition, Cliffs announced a long-range three phase plan to take over

the development of Bloom Lake to make it into a more productive and less costly operation. AC

¶¶ 41-44. Phases I and II were already in progress when Cliffs assumed control of the mine.

The goal was to produce 8 million tons of iron ore product annually by the end of Phase I, with

each successive Phase corresponding to the ability to produce an additional 8 million tons of iron

concentrate. Id. ¶ 9. Cliffs also hoped to reduce production costs to the range of $60 to $65 per

ton. Id. ¶¶ 107, 109-111, 125, 218-19. These expansion plans necessarily touched on every

aspect of the mining operation and infrastructure, because achieving increased production

required all of the mine’s operations to be improved. Id. ¶¶ 41-44. While Phase I contemplated

the forward-looking statements to which that language would apply and which trigger the PLSRA safe harbor. 2 Mr. Carrabba was its former Chief Executive Officer; Ms. Brlas was its former Chief Financial Officer and then President, Global Operations; Mr. Blake was its former Senior Vice President, North American Iron Ore Operations; and Mr. Paradie is its current Chief Financial Officer. AC ¶¶ 33-36.


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upgrades to the existing equipment and infrastructure, Phases II and III were designed to

construct entirely new production lines to accommodate the doubling and then tripling of mine

productivity. Id. In March 2012, Cliffs announced it was increasing its dividend, partly in

recognition of its projections for the Bloom Lake operation. AC ¶¶ 68, 74.

Over the course of 2012, as Plaintiff concedes, Defendants provided updates disclosing a

series of setbacks and delays in the production and cost goals for Phase I and the subsequent

phases:3

February 2012: Before the dividend was even announced, Cliffs disclosed that it experienced decreased production at Bloom Lake.4

April 2012: Cliffs disclosed production problems and ongoing higher-than-expected costs, and increased the full-year projections on costs. Id. ¶ 91. Cliffs also noted delays from a fire and alerted investors that only some of the production loss could be recovered through the rest of the year. Id. ¶ 95. It further disclosed the need to continue to adjust Phase I “until we are satisfied with the product’s consistency” and cautioned investors that “in the short term these adjustments could impact cost.” Id. ¶ 277.

July 2012: Cliffs announced a revised strategy at Bloom Lake focusing on producing a higher-grade iron that would increase costs to approximately $85/ton and reduce production volume substantially. Id. ¶¶ 102-03. It further disclosed that it was facing increased costs resulting from updated estimates of labor, tailings, and logistics expenses (because the focus on higher-grade ore was partially responsible for reduced expected production). Id. ¶¶ 104-05.

October 2012: Cliffs announced third quarter costs of $88/ton, reduced production expectations going forward, and stated that it was still working on “getting Bloom Lake Phase I to design levels.” Id. ¶¶ 117, 173. Cliffs also cautioned that development at

3 This sampling draws only from excerpts included in the Complaint. A review of Defendants’ complete public statements demonstrates that timely explanation was made of the ongoing problems at Bloom Lake throughout the Class Period. 4 See Ex. A (Cliffs’ February 15, 2012 Press Release). The court may take judicial notice of documents offered by Defendants to “rebut the complaint’s misleading statements,” In re Omnicare, Inc. Sec. Litig., 2014 WL 5066826, at *7 (6th Cir. Oct. 10, 2014) (“Omnicare III”), as well as items quoted by Plaintiff, to “consider those quotations in their full context.” Id. at *9. As the Sixth Circuit has recognized, “if a plaintiff references or quotes certain documents, or if public records refute a plaintiff’s claim, a defendant may attach those documents to its motion to dismiss, and a court can then consider them in resolving the Rule 12(b)(6) motion without converting the motion to dismiss into a Rule 56 motion for summary judgment.” Id. at *7; see also Shy v. Navistar Int’l. Corp., 2013 WL 1326518, at *14 n.5 (S.D. Ohio Mar. 29, 2013) (filings with the SEC are “matter[s] of public record of which the Court may take judicial notice;” judicial notice extends to “the full text of SEC filings”). Additionally, “[c]ourts may take judicial notice of information that was publicly available to reasonable investors at the time the defendant made the allegedly false statement.” Beaver Cty. Ret. Bd. v. LCA-Vision Inc., 2009 WL 806714, at *4 (S.D. Ohio Mar. 25, 2009) (including “the full text of SEC filings, prospectus, analysts’ reports and statements integral to the complaint” as documents for which judicial notice is appropriate).


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Bloom Lake took priority over the dividend if a choice had to be made. Id. ¶¶ 204, 333.

November 2012: Cliffs announced wide-ranging adjustments to the Phase I plans, delays in Phase II, a halt in planning for Phase III, and a further reduction of annual production estimates. Id. ¶¶ 120, 174.

Throughout the Class Period, Cliffs remained focused on Bloom Lake’s long-term value

to the Company and pressed forward, albeit with delays and increased cost expectations. E.g.,

id. ¶¶ 168, 172-73, 201, 277. Cliffs was also impacted by the fall in iron ore pricing in the

second half of 2012, making production economically challenging. Id. ¶¶ 174, 223, 225.

Though Cliffs had modeled various pricing possibilities in considering the dividend, including a

fall in price per ton to $110, in the second half of 2012, prices dropped lower than that, as even

the Complaint concedes. Id. ¶¶ 228-29.

In early 2013, it became clear that in part as a result of these delays and obstacles at

Bloom Lake, and in part because of market forces, it was no longer financially responsible to

keep the dividend at its increased level, and Cliffs disclosed on February 12 and 13, 2013 that its

Board of Directors had voted to reduce the dividend. Id. ¶¶ 216-17, 223, 225. At the same time,

Cliffs explained that it expected higher costs and delays to continue at Bloom Lake in 2013 as

work moved forward. Id. ¶¶ 217-20.

ARGUMENT

The Complaint fails to adequately allege a claim pursuant to Section 10(b) and Rule

10(b)-5. To state a claim under Section 10(b), a plaintiff must allege “(1) a material

misrepresentation or omission by the defendant; (2) scienter; (3) a connection between the

misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the

misrepresentation or omission; (5) economic loss; and (6) loss causation.” Stoneridge Inv.

Partners, LLC v. Scientific-Atlanta Inc., 552 U.S. 148, 157 (2008); Graf v. Resilience, No. 12-cv-

2278, ECF No. 65, at 4 (N.D. Ohio Jan. 28, 2014) (Polster, J.) (“Graf Order”) (same). In

addition to Rule 9(b)’s requirement that claims of fraud be pled with particularity, securities

fraud cases must comply with the PSLRA. The Sixth Circuit has recently described the PSLRA


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as an “elephant-sized boulder” which creates “heightened pleading standards” that are “not easily

satisfied.” Omnicare III, 2014 WL 5066826, at *1. “To satisfy this heavier, statutorily created

burden, plaintiffs must identify each misleading or false statement and explain how it is

misleading.” Id. (citing 15 U.S.C. 78u-4(b)(1)(B)). In addition, the PSLRA requires plaintiffs to

“state with particularity facts giving rise to a strong inference that the defendant acted with the

required state of mind.” 15 U.S.C. § 78u-4(b)(2)(A).5 Plaintiff has not cleared these hurdles.

I. The Anonymous Witness Opinions Are Entitled To No Weight

In an attempt to create the illusion of substance, Plaintiff relies on purported statements

from twenty-eight anonymous sources, some of whom were not even employed by Cliffs, and

only one of whom is a current Cliffs employee. Appendix to AC. The Sixth Circuit has made

clear that allegations in securities fraud cases based on anonymous witnesses “must be

discounted and usually that discount will be steep,” Ley v. Visteon Corp., 543 F.3d 801, 811 (6th

Cir. 2008), given the possibility that “these confidential sources have axes to grind [or] they are

lying [or] they don’t even exist.” In re Diebold, 2008 WL 3927467, at *7.

Furthermore, Plaintiff’s attempt to “[c]obbl[e] together a litany of inadequate allegations

does not render those allegations particularized in accordance with Rule 9(b) or the PSLRA.”

CalPERS v. Chubb Corp., 394 F.3d 126, 155 (3d Cir. 2004). “[T]he sheer number of

confidential sources [does not] overcome[] the weaknesses in the[ir] statements.” In re Ferro

Corp. Sec. Litig., 2007 WL 1691358, at *12 (N.D. Ohio June 11, 2007); see also Karpov v.

Insight Enters., 2010 WL 4867634, at *6-8 (D. Ariz. Nov. 16, 2010) (dismissing complaint with

31 anonymous witnesses). As set forth in more detail below, the confidential witnesses’ alleged

statements do not enable the Complaint to satisfy the PSLRA’s strict pleading requirements.

A. Many Of The CWs Were Not Employed By Cliffs During The Class Period

Numerous courts have determined that statements made by anonymous witnesses who

5 Plaintiff’s pleading strategy of “[p]rolixity does not equal specificity. The PSLRA demands specificity.” In re Regions Morgan Keegan Sec., Deriv. & ERISA Litig., 07-cv-2784, 2010 WL 5464792 (W.D. Tenn. Dec. 30, 2010).


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were not employed by the company during the class period are irrelevant. See, e.g., Local

295/Local 851 IBT Emp’r Grp. Pension Trust & Welfare Fund v. Fifth Third Bancorp, 731 F.

Supp. 2d 689, 722 (S.D. Ohio 2010) (anonymous witness’ information “pre-dates the class

period and thus, is irrelevant”); Sarafin v. BioMimetic Therapeutics, Inc., 2013 WL 139521, at

*19 (M.D. Tenn. Jan. 10, 2013) (anonymous witnesses who left the company before the start of

the class period “could not have known what was in [defendant’s] mind at the time it issued the

challenged statements”), aff’d, 747 F.3d 435 (6th Cir. 2014). By Plaintiff’s own admission,

seven anonymous witnesses (CWs 10, 12, 14, 15, 20, 21 and 24) were not employed by Cliffs

during the Class Period. Appendix to AC.

Moreover, it is not clear whether CWs 6 and 23 were employed at Cliffs during the Class

Period. Id. For this reason alone, their statements should be deemed unreliable. Cf. City of

Roseville Emps. Ret. Sys. v. Sterling Fin. Corp., 963 F. Supp. 2d 1092, 1127 (E.D. Wash. 2013)

(informant unreliable where “the Court cannot determine for what duration of the Class Period

CW 1 was actually employed at” the company). In addition, many of the anonymous sources

(CWs 3, 5, 8, 9, 16 and 26) left Cliffs during the Class Period. Appendix to AC. Failure to

remain employed for the duration of the class period weighs heavily against a finding that

anonymous witness statements are reliable. Cf. Karpov, 2010 WL 4867634, at *6 (anonymous

witness who left company during the class period was unreliable). Thus, the statements made by

fifteen of the twenty-eight sources should be disregarded or heavily discounted.

B. The Complaint Does Not Explain The CWs’ Personal Knowledge

This Court has refused to credit anonymous witness statements where it cannot determine

“whether a confidential witness is speaking from personal knowledge, or merely regurgitating

gossip and innuendo.” In re Diebold, 2008 WL 3927467, at *7. To show personal knowledge,

Plaintiff must allege sufficient details specifying “how or why such employees would have

access to the information they purport to possess.” Chubb, 394 F.3d at 148. The Complaint

consistently “fail[s] to provide key data” regarding “how each [confidential witness] had


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personal knowledge of the information alleged in the Complaint.” In re Diebold, 2008 WL

3927467, at *7. For example, CW 18 admits, “I wasn’t an insider.” AC ¶ 248.

As in In re Ferro, the anonymous witness statements here “amount to no more than

blatant speculation regarding what [Defendants] should have/could have/would have known

regarding the alleged fraud.” 2007 WL 1691358 at *12.6 Plaintiff purports to rely on second-

hand speculation, by sources such as CW 5, who allegedly “heard all the time” that Cliffs needed

to increase its spending on the Phase II expansion (AC ¶ 181), or CW 28 who “reported that . . .

Cliffs’ employees began to hear that yearly bonuses” would be lower in 2012. Id. ¶ 253. These

are just a few examples of hearsay and vague characterizations that Plaintiff tries to pass off as

allegations of fraud. See In re Ferro, 2007 WL 1691358, at *12 (rejecting confidential witness

opinions consisting of “water-cooler gossip, irrelevant speculation, [or] gratuitous criticism”).7

Such “[g]eneric and conclusory allegations based upon rumor or conjecture” do not come close

to satisfying the PSLRA. Chubb, 394 F.3d at 155.

Moreover, many of the anonymous witnesses are lower level employees who do not

explain how or why they had information concerning management’s knowledge of a subject.

See Sarafin, 2013 WL 139521, at *19 (anonymous witness allegation from lower level employee

“not particularly persuasive”); Chubb, 394 F.3d at 149 (rejecting low-level employees’

allegations). For example, the Complaint describes CW 12 as an “intern” at Bloom Lake, CW

17 as an “analyst,” and CW 22 as a “construction coordinator.” Appendix to AC. Similarly,

numerous of the low-level sources attempt to opine on areas outside the scope of their job

6 For example, CW 16 posits that “anyone . . . would have seen” alleged accounting issues (AC ¶ 182, emphasis added); CW 2 asserts that the challenge in achieving $60 per ton “would have been put in an economic model” for financial controllers (Id. ¶ 134, emphasis added); CW 2 opined that Defendants “should have” been planning for the future. Id. ¶ 214 (emphasis added). These allegations are unrelated to whether there was fraud. 7 There are numerous additional examples of confidential witness statements that constitute nothing more than secondhand rumor or hearsay. See, e.g., AC ¶ 48 (CW 1 reporting that “[i]f you speak with anyone at Bloom Lake, they’d tell you Cliffs” overpaid for Bloom Lake); id. ¶¶ 49, 50, 73, 151 (CW 1 complaining about management, spending, and hiring at Bloom Lake but omitting details of how he allegedly obtained this knowledge); id. ¶¶ 182, 186, 210, 213-15, 243, 245, 248, 251, 25.


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responsibilities. Cf. Sorkin, LLC v. Fischer Imaging Corp., 2005 WL 1459735, at *7 (D. Colo.

June 21, 2005) (dismissing allegation from anonymous source where there were no facts

showing how she would possess such information given her job title). CW 18, an IT manager

based in Cleveland, criticizes rail infrastructure and silica content issues at Bloom Lake. Based

on what is pled, these topics are far outside the scope of her job responsibilities. AC ¶¶ 158, 248.

Moreover, Plaintiff relies heavily on CW 7’s challenge to Cliffs’ dividend modeling (id. ¶ 210)

but does not explain how or why CW 7 had adequate or sufficient information on the subject.

Given that she is described as a “tax director,” her assertions are mere personal and

unsubstantiated opinions.8 Also unreliable is the opinion of CW 16, a construction coordinator,

that iron ore prices were merely a pretext for delaying Phase II expansion (id. ¶¶ 186, 339),

where there is no basis pled for her purported knowledge. Further, CWs 1-5’s supposition that

Cliffs overpaid for Bloom Lake is nothing more than irrelevant personal opinion. Id. ¶¶ 48-50.

C. Anonymous Witness Suppositions Are Vague And Conclusory

To satisfy the PSLRA, anonymous witness allegations must “allege who [at the

company] knew about [the alleged wrongdoing] and what, when, where, and how they knew.”

Ley, 543 F.3d at 811. “When confidential sources are used to support vague and conclusory

allegations, the allegations are not accorded much weight.” Konkol v. Diebold Inc., 590 F.3d

390, 399 (6th Cir. 2009). Here, the anonymous witness statements are invariably general and

lack factual details. For example, CW 23 states that Defendants were “really struggling with

costs” (AC ¶ 181) and CW 1 opines that “management was not spending money wisely.” Id.

¶ 151.9 The Sixth Circuit has found that these types of “bare-bones statements” constitute

8 This deficiency does not, however, dissuade Plaintiff from repeating this criticism eight times throughout the Complaint. Id. ¶¶ 210, 255-56, 269, 287, 306, 321, 335. This repetition does not render the statement reliable. Cf. Wenger v. Lumisys, Inc., 2 F. Supp. 2d 1231, 1243-44 (N.D. Cal. 1998) (dismissing securities class action complaint that “repeats many allegations three or four times” because counsel must state allegations “in short, plain and non-redundant allegations”). 9 Numerous additional allegations are vague and conclusory. See, e.g., AC ¶¶ 49-50, 67, 70, 130-31 (CW 10 speculates that equipment issues were “well-known and well-understood internally,” but never explains who knew of these issues and how or whether the assessments were conveyed to Defendants); id. ¶¶ 132-134, 141, 145, 153-54, 160-61 (CWs 19 and 20 alleged that the transportation problems “cost a lot


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“vague and conclusory allegations . . . that are properly discounted.” Konkol, 590 F.3d at 399.

D. Lack Of Connection To Defendants’ Knowledge

Courts routinely reject confidential witness opinions that do not connect the alleged

improprieties to the Defendants. See Ind. St. Dist. Council of Laborers & HOD Carriers

Pension Welfare Fund v. Omnicare, Inc., 583 F.3d 935, 945-46 (6th Cir. 2009) (“Omnicare I”)

(affirming dismissal where witness allegations were not connected to the defendants). Plaintiff is

required to assert particularized claims that link “ground-level” problems to “corporate-level”

knowledge by defendants. See In re WatchGuard Sec. Litig., 2006 WL 29227663, at *4-5, *7-8

(W.D. Wash. Oct. 12, 2006). Courts disregard anonymous witness statements when the source is

not “alleged to have any direct contact with [an individual defendant] on any topic.” City of

Pontiac Gen. Emps. Ret. Sys. v. Stryker Corp., 865 F. Supp. 2d 811, 824-25 (W.D. Mich. 2012);

see also Fifth Third Bancorp, 731 F. Supp. at 721-22 (dismissing CW allegations where “there

are no facts alleged from which it can be inferred that the confidential witnesses had sufficient

contact with any of the defendants to impute their knowledge of misconduct to the defendants”).

For example, CW 8’s claim that employees “internally questioned the sustainability of the

dividend” (AC ¶ 215) does not allege when, if ever, Defendants learned of these concerns.

With rare exceptions, the confidential witness statements contained in the Complaint do

not even suggest that their concerns were communicated to Defendants, making it impossible to

allege that Defendants knew their public statements were false. Konkol, 590 F.3d at 400-401

(majority of confidential witnesses “not identified as having any contact or interaction with any

of the defendants”). Of the approximately eighty total alleged confidential witness statements in

the Complaint, only three statements refer to information that they allegedly made known to the

Defendants (AC ¶¶ 71, 181, 256), and each of these statements lack particularized facts about the

of money,” without even attempting to quantify the cost or specify its impact); id. ¶¶ 162, 164, 178 (CW 22’s statement that the cost overruns were the result of lack of coordination between the Phase II production and operation teams should be discredited because it lacks any particularized facts); id. ¶¶ 180, 183, 211-14, 243, 246-47, 250, 252, 254, 256.


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content or nature of the information and the date it was supposedly relayed.

II. All Of The Claims Alleged Are Impermissible “Fraud by Hindsight”

The Complaint’s overarching defect is that it pleads fraud by hindsight: identifying

optimistic statements in Cliffs’ public disclosures, and then contending (with the benefit of

hindsight, in light of subsequent setbacks to Cliffs’ plans) that the statements must have been

false when made, and that the speaker must have known so. Compare, e.g., AC ¶¶ 56-58 with id.

¶ 128. The Sixth Circuit has “flatly rejected” this technique, In re Goodyear Tire & Rubber Co.

Sec. Litig., 436 F. Supp. 2d 873, 903 (N.D. Ohio 2006), and repeatedly affirmed dismissals when

faced with a “classic fraud by hindsight case where a plaintiff alleges that the fact that something

turned out badly must mean defendant knew earlier that it would turn out badly.” Dailey v.

Medlock, 551 F. App’x 841, 847 (6th Cir. 2014) (unpub.); La. Sch. Emps. Ret. Sys. v. Ernst &

Young, 622 F.3d 471, 484 (6th Cir. 2010); Konkol, 590 F.3d at 403.10 With deficient fraud by

hindsight pleadings, Plaintiff can show neither scienter, see La. Sch. Emps., 622 F.3d at 484;

Konkol, 590 F.3d at 405, nor the falsity of the statements made. See Sinay v. Lamson & Sessions

Co., 948 F.2d 1037, 1040, 1042 (6th Cir. 1991) (“[T]his court holds . . . that the falsity of a

statement does not depend on ‘whether the prediction in fact proved to be wrong’”); In re

Huntington Bancshares Inc. Sec. Litig., 674 F. Supp. 2d 951, 964-65 (S.D. Ohio 2009)

(“allegations that defendants should have anticipated future events and made certain disclosures

earlier than they actually did do not suffice to make out a claim of securities fraud”).

The Complaint alleges that statements describing Cliffs’ evolving plans for the expansion

and improvement of the newly-acquired Bloom Lake were false. AC ¶¶ 257-347. Nowhere does

Plaintiff credibly allege that these plans were impossible when announced, or that they did not

10 The PSLRA was designed to prevent the pleading of fraud by hindsight. See, e.g., In re SmarTalk Teleservs. Sec., Inc. Litig., 124 F. Supp. 2d 505, 516 (S.D. Ohio 2000) (“The allegations in the Complaints are for the most part, an example of pleading fraud in hindsight, the exact type of claims that the Rule 9(b) and the PSLRA were designed to weed out at the pleading stage”).


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reflect Cliffs’ actual aspirations for Bloom Lake.11 Instead, the Complaint pleads a litany of

setbacks suffered by the Bloom Lake project (which investors had been warned about earlier in

publicly disclosed risk factors). In conclusory terms, it argues that these setbacks demonstrate

Defendants’ knowledge that these disclosed risks would actually eventuate. E.g., AC ¶¶ 128,

261, 264, 282, 284, 288, 298, 306, 315, 327, 336. But Plaintiff concedes that Cliffs provided

regular updates on these setbacks as they occurred. See supra at 4-5. That initial plans met

obstacles does not state a claim for securities fraud – particularly where, as here, the Company

was updating its plans and disclosures to address these difficulties. See, e.g., In re Goodyear,

436 F. Supp. 2d at 904 (no fraud by hindsight where “Defendants acted diligently in remedying

problems as soon as they became aware of their existence”); In re OfficeMax, Inc. Sec. Litig.,

2002 WL 33959992, at *4-5 (N.D. Ohio July 26, 2002). Cliffs’ serial announcements of

mounting problems at Bloom Lake show good faith, not fraud.12 Reasoning backwards from

delays to falsity ab initio is precisely what the fraud by hindsight doctrine prohibits.

The Sixth Circuit has affirmed dismissal with prejudice, citing fraud by hindsight, in

similar circumstances where optimistic growth plans did not materialize. See Sinay, 948 F.2d at

1041-42.13 In addition, this Court has dismissed a complaint claiming that a CEO “must have

11 The Complaint’s few mentions of impossibility, e.g., AC ¶¶ 128, 130, 183, 212, are based on vague and conclusory allegations of confidential witnesses that provide no indication that any Defendant knew of, let alone shared, these views. Such ex post facto confidential witness opinions of “impossibility” have been routinely disregarded by courts in dismissing securities claims. E.g., In re DRD Gold Ltd. Sec. Litig., 472 F. Supp. 2d 562, 571-72 (S.D.N.Y. 2007) (“Based on information from confidential witnesses, . . . the [complaint] alleges that Defendants were able to accurately analyze mine profitability and therefore must have known or recklessly disregarded the fact that the [mining] restructuring could not succeed. Significantly, the [complaint] fails to reference any actual reports reviewed by any specific individuals at DRD on any specific dates that indicated the [mining] restructuring could not succeed”). 12 In IBEW v. Ltd. Brands, Inc., 788 F. Supp. 2d 609 (S.D. Ohio 2011), the court explained that, like here, it was implausible to conclude defendants purposefully concealed problems where they “not only revealed the existence of the problems, but also announced to investors the seemingly drastic plan of reducing demand,” noting that if “Defendants were purposefully concealing the true extent of the problems with the distribution center in order to artificially inflate the stock price, why would they have revealed any of the problems at the distribution center at all?” Id. at 630-31. 13 There, a construction company reported having a “tremendous year” in 1988 and expected to continue to develop its position in 1989, counting on “new products to offset a weaker construction market” and noting it “did not quarrel” with positive earnings estimates. Id. at 1039. As it happened, in 1989, the company was beset by major labor unrest, and the seasonal slowdown did not abate. Id. The forecasts were found nonactionable. Id. at 1040-41.


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already known the major restructuring announced two months earlier would not and could not

work.” In re OfficeMax, Inc. Sec. Litig., 2002 WL 33959993, at *13-15 (N.D. Ohio Mar. 26,

2002) (“The fact that these changes were ‘taking much longer than had been anticipated,’ only

points up the fact that hindsight is more accurate than forecasting”); see also Mittman v. Rally’s

Hamburgers, Inc., 278 F. Supp. 2d 831, 842 (W.D. Ky. 2003) (hindsight opinion that growth

plans “were ‘too little, too late’ and that the plan was doomed to fail from its inception . . . is the

sort of ‘Monday morning quarterbacking’ that is not permitted in establishing securities fraud”).

Given the uncertainty of geological estimates and the risks of construction and operational

issues, courts have been ready to dismiss fraud by hindsight by dissatisfied investors in mining

companies. See, e.g., In re Gold Res. Corp. Sec. Litig., 957 F. Supp. 2d 1284, 1298-99 (D. Colo.

2013) (dismissing allegations that mining company touted an ambitious expansion plan and

concealed setbacks in production and pricing on fraud by hindsight grounds); In re Agnico-Eagle

Mines Ltd. Sec. Litig., 2013 WL 144041, at *17-19 (S.D.N.Y. Jan. 14, 2013) (dismissing claims

that mining executives should have known earlier that a mine would be shut down based on their

supposed knowledge of conditions on the ground, citing the “familiar rule” that “the securities

laws do not recognize fraud by hindsight”), aff’d sub nom. Fonden v. Agnico-Eagle Mines Ltd.,

533 F. App’x 38 (2d Cir. 2013) (summary order).

Plaintiff’s claims regarding statements about Cliffs’ dividend are even more obviously

impermissible fraud by hindsight.14 The later reduction of a dividend cannot ipso facto render

previous statements on dividend plans knowing falsehoods. Cf. Dailey, 551 F. App’x at 847

(“With no facts alleged to support the contention that defendants had prior knowledge [of a

financial adjustment], plaintiffs make the ipso facto assertion that the mere fact that it ultimately

was taken demonstrates such knowledge. It is hard to imagine a clearer example of alleging

14 The Complaint alleges only that Cliffs stated its intent to maintain or increase its dividend (AC ¶¶ 8, 77), that it performed some testing of future pricing scenarios (id. ¶ 78), that Cliffs faced business challenges (id. ¶¶ 128-164), and that the dividend was ultimately reduced in 2013. Id. ¶ 216.


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‘fraud by hindsight’”). For this reason, courts consistently dismiss allegations resting on earlier

dividend projections as fraud by hindsight. E.g., Graff v. Prime Retail, Inc., 172 F. Supp. 2d

721, 728-29 (D. Md. 2001) (finding hindsight does not establish fraud and dismissing allegations

regarding statements that a dividend was “sacred” and “sacrosanct” and the company was

“committed” to it), aff’d sub nom. Marsh Grp. v. Prime Retail, Inc., 46 F. App’x 140 (4th Cir.

2002) (per curiam).15 Similarly, statements about “stress testing” dividend performance cannot

give rise to a fraud claim simply because the testing proved incorrect. See In re Sec. Cap. Assur.

Ltd. Sec. Litig., 729 F. Supp. 2d 569, 582-83, 595 (S.D.N.Y. 2010).

Fatally, Plaintiff identifies no motive for Defendants to undertake such an “elaborate

scheme to defraud.” Brogren v. Pohlad, 933 F. Supp. 793, 802 (D. Minn. 1995) (dismissing

based on fraud by hindsight, an implausible and motiveless alleged scheme); In re Crown Am.

Realty, 1997 WL 599299, at *12-13 (rejecting motive of artificially maintaining a dividend that

“merely postponed the inevitable”). It thus fails to overcome the far more compelling inference

that Defendants genuinely (if unsuccessfully) sought to improve Bloom Lake. See In re DRD

Gold, 472 F. Supp. 2d at 571-73 (dismissing allegations that mining company hid labor and

infrastructure problems in touting the ambitious but unsuccessful restructuring of a critical

operation). The Complaint’s claims are tissue-thin, and disintegrate in the face of the fraud by

hindsight doctrine.

III. Plaintiff Fails To Plead Facts Giving Rise To A Strong Inference of Scienter

The Complaint should also be dismissed because it fails to allege with sufficient

particularity any facts giving rise to a strong inference of scienter as to each Defendant. See

Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308, 319 (2007). To survive dismissal, the

PSLRA and the Supreme Court require a securities complaint to “state with particularity facts

15 See, e.g., In re Crown Am. Realty Trust Sec. Litig., 1997 WL 599299, at *14-15 (W.D. Pa. Sept. 15, 1997); In re USF & G Corp. Sec. Litig., 1993 WL 740188, at *2, *6-7 (D. Md. Feb. 11, 1993) (explaining that Rule 9(b) prohibits fraud by hindsight and dismissing allegations about commitment to dividend increase), aff’d sub nom. Rabinovitz v. USF & G Corp., 16 F.3d 411 (4th Cir. 1994) (unpub.).


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giving rise to a strong inference that the defendant acted with the required state of mind.” 15

U.S.C. § 78u–4(b)(2)(A). To qualify as “strong,” the inference “must be more than merely

plausible or reasonable—it must be cogent and at least as compelling as any opposing inference

of nonfraudulent intent.” Tellabs, 551 U.S. at 314.

Recklessness sufficient to satisfy the pleading requirements in a Rule 10b–5 case refers to

“highly unreasonable conduct which is an extreme departure from the standards of ordinary

care.” La. Sch. Emps., 622 F.3d at 478. Numerous courts have rejected allegations of

recklessness where optimistic statements by a mining company executive are not achieved. A

mining company that endeavors to do “everything it can in an effort to make [a key mining asset]

sustainable should not be charged with recklessness unless it is clear the endeavor could not

possibly succeed.” In re DRD Gold, 472 F. Supp. 2d at 573; see also In re Agnico-Eagle Mines,

2013 WL 144041, at *20 (same); Russo v. Bruce, 777 F. Supp. 2d 505, 521 (S.D.N.Y. 2011).

Here, without specific facts supporting allegations that Defendants knew their optimistic

statements were false, Plaintiff’s allegations fall far short of the recklessness standard.

Of the nine so-called “Helwig” factors applied in the Sixth Circuit to determine whether a

complaint has established a sufficiently strong inference of scienter, see Graf Order at 5,

Plaintiff’s allegations at most touch on only three: (1) a supposed divergence between internal

reports and external statements on the same subject; (2) closeness in time of an allegedly

fraudulent statement or omission and the later disclosure of inconsistent information; and (3) the

self-interested motivation of defendants in the form of saving their salaries or jobs. And the

allegations supporting these three are bereft of the particularity required to support a “strong”

inference of scienter. Tellabs, 551 U.S. at 314. “The complete absence of six of the nine Helwig

factors, particularly the lack of insider trading, suggests that the complaint faces an uphill climb

to establish that any of the Defendants acted with scienter.” Fifth Third Bancorp, 731 F. Supp.

2d at 718; accord Omnicare III, 2014 WL 5066826, at *13-14 (the inference of scienter directly


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correlates with the number of Helwig factors present). Plaintiff primarily relies on anonymous

witness statements to support its scienter allegations, see generally, AC ¶¶ 242-56, but in the

wake of Tellabs, this Court has held that inferences from anonymous sources are neither

“cogent” nor “compelling.” In re Diebold, 2008 WL 3927467, at *7.

A. Alleged Divergence Between Internal Reports And External Statements

Plaintiff’s primary allegation of scienter is that Defendants knew that the situation at

Bloom Lake was dire, but concealed its status from investors. According to Plaintiff, this is

revealed by a divergence between internal information possessed by Defendants and their

external statements regarding Bloom Lake’s operations and timetable for expansion. See, e.g.,

AC ¶ 240. The Complaint also alleges that Defendants knew but hid from the public the fact that

the dividend was not sustainable. Id.

When alleging that a divergence between internal information and external statements

supports a strong inference of scienter, a plaintiff “must include adequate corroborating details,

such as the sources of her information with respect to the reports, how she learned of the reports,

who drafted them, which officers received them, and an adequate description of their contents.”

In re Diebold, 2008 WL 3927467, at *6. This Court looks to whether the allegations specify

“exactly what was in the reports, exactly what statements were made on the same subject, and

how the information in the external statements was different from the information in the internal

reports.” Id.; see In re Huntington, 674 F. Supp. 2d at 971. The Complaint provides none.

1. Operational Issues at Bloom Lake and Expansion Challenges

The Complaint alleges that Defendants possessed internal information regarding the

operational and expansion issues faced at Bloom Lake as a result of: (i) internal reports and

meetings, (ii) due diligence and visits to the mine, and (iii) certain Defendants’ alleged

supervisory roles. See, e.g., AC ¶¶ 182-85, 243-52. These allegations fail to raise a strong

inference of scienter because they draw extensively from CW opinions that must be steeply


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discounted (see supra Point I) and lack particularized facts necessary to conclude that

Defendants knew information different from their public statements. See In re Diebold, 2008 WL

3927467, at *6. Plaintiff’s “ambiguous and conclusory allegations” do not provide the necessary

particularity to support an assertion that “Defendants knew or were reckless in not knowing [that

Bloom Lake] could not possibly succeed.” In re DRD Gold, 472 F. Supp. 2d at 571-72.

a. Internal Reports And Meetings

Plaintiff alleges that internal reports revealed a bleaker state of affairs at Bloom Lake

than what Defendants disclosed publicly. AC ¶¶ 116, 134, 153-55, 162, 177, 182-85, 249-52.

However, only a small subset of these allegations even assert that any Defendant received these

reports, directly or indirectly. Id. ¶¶ 116, 177, 184, 249, 251. Those that do lack the requisite

particularized facts. Id. For example, Plaintiff alleges that “[i]n his capacity as CFO, Defendant

Paradie was privy to the same financial reporting as Brlas,” and this reporting “alerted Defendant

Paradie to the severe problems at Bloom Lake.” Id. ¶ 116. This conclusory, general allegation of

internal reporting is set in supposed contrast to alleged external representations “that Bloom

Lake would be able to achieve cash costs per ton of $60.” Id. However, Plaintiff fails to specify

any details of the content of the alleged reporting, the nature of the allegedly severe problems or

why they would be inconsistent with achieving cash costs of $60 per ton. See PR Diamonds, Inc.

v. Chandler, 364 F.3d 672, 692 (6th Cir. 2004) (vague allegations of a supposed material

divergence between internal reports and statements insufficient under the PSLRA).

In addition, Plaintiff’s internal report allegations rely almost exclusively on conclusory

anonymous witness opinions. AC ¶¶ 134, 153-55, 162, 182-83, 249-52. For example, CW 27

alleges that revenue reports “were distributed to the CFO” (AC ¶ 252) but provides no

particularized facts whatsoever as to “the sources of her information with respect to the reports,

how she learned of the reports,” or the contents of the reports. In re Diebold, 2008 WL 3927467,

at *6. Further, CW 16 alleges that “Cleveland received a report” of a meeting at which a


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consultant “began criticizing the Phase [II] plans, saying that certain things were impossible and

could not happen.” AC ¶ 183. However, this allegation does not specify who received the report

(it makes only this vague reference to the location of Cliffs’ headquarters) and omits any detail

concerning the meeting date, the consultant’s name, content of the report or what aspect of Phase

II was purportedly “impossible.” See In re Metawave Comm’n Corp. Sec. Litig., 298 F. Supp. 2d

1056, 1073 (W.D. Wash. 2003) (dismissing vague CW statements regarding the receipt of

reports). The absence of particularized facts is fatal because it does not allow the Court to assess

whether there is any real discrepancy from public statements. See In re Diebold, 2008 WL

3927467 at *6. The Sixth Circuit has rejected Plaintiff’s tactic of “merely mak[ing] general

statements and heap[ing] inference upon inference.” Omnicare III, 2014 WL 5066826, at *22.

Nor may Plaintiff rely on mere allegations that “senior management” or “[i]ndividuals

from Cliffs’ Cleveland office” attended meetings in which they allegedly learned of operational

issues at Bloom Lake. AC ¶¶ 67, 244, 246-47. Again, Plaintiff’s only support for these

allegations are the conclusory statements from CWs 6 and 10 vaguely referencing the alleged

meeting. Id. But anonymous witness statements “describing meetings where there were

discussions about [a project] are also too general to support an inference of scienter” where there

are no “specific facts about who was present and what information was presented.” Sorkin, 2005

WL 1459735, at *8. Indeed, none of the meeting allegations identify the date of the meetings,

who was in attendance, what specific topics were covered, or the informant’s basis for

possessing this information. See In re Metawave, 298 F. Supp. 2d at 1073.

b. Due Diligence And Visits To Bloom Lake

The Complaint further alleges that Defendants knew about issues at Bloom Lake because

of their due diligence, including “consistent” visits to Bloom Lake. AC ¶ 244; see id. ¶¶ 243-45.

It contends, primarily based on anonymous witness’ statements, that “[t]hese regular visits to

Bloom Lake would have alerted senior management to the severe and systemic problems at


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Bloom Lake,” and similarly, that Defendants’ “due diligence at the mine would have revealed”

issues relating to the silica content of the iron ore. Id. ¶¶ 246, 138 (emphasis added); see id.

¶¶ 243-45. CW 17 asserts that due diligence was conducted by “the Chief Information Officer,

the Controller, and the head of Development.” Id. ¶ 243. But “[g]eneralized allegations [from

anonymous witnesses] relating to senior management are not sufficient” to satisfy Rule 9(b) or

the PSLRA where “[t]he source of this information is unclear and there are no details about how

the source learned such information.” Sorkin, 2005 WL 1459735, at *7-8. Further, without

conveying the basis for their alleged knowledge, or any particularized facts, such as when the

visits or diligence occurred and what took place, the fact of the visits cannot be used to raise a

strong inference that Defendants knew their statements were misleading. See In re Huntington,

674 F. Supp. 2d at 971 (dismissing vague allegations of knowledge based on due diligence).

As this Court has recognized, scienter cannot be inferred in the absence of particularized

allegations that defendants knew that their statements were false. Graf Order at 6. In Graf,

defendants had been retained to restructure the company. This Court refused to find scienter,

and credited the nonfraudulent inference “that Defendants believed that they could use their

expertise in restructuring companies to achieve strong financial results.” Id. at 7. Here, the

entire purpose of the acquisition and capacity-building project was to increase production and

profitability at Bloom Lake. AC ¶ 41. As a well-established international mining company,

Defendants had a reasonable expectation that they could successfully operate and expand Bloom

Lake. As in Graf, the nonfraudulent inference – that Defendants believed they could use their

expertise to bring the project to achieve strong operational and financial results – is far more

compelling than any inference of fraud. Tellabs, 551 U.S. at 314.

2. Alleged Accounting Manipulations And Dividend Testing

The Complaint also makes the conclusory allegation that senior executives (not including

the Defendants) engaged in accounting manipulations to hide the unfeasibility of Phase II


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expansion. AC ¶¶ 177, 179, 182-85. The principle defect with this allegation is its failure to

sufficiently plead that the Defendants themselves knowingly intended to mislead investors

regarding the purported violations. Plaintiff relies on the Individual Defendants’ receipt of

reports (id. ¶¶ 177, 184) and their positions within Cliffs to infer their knowledge. Id. ¶¶ 182-83.

However, the report allegations are wholly conclusory, see supra Point III(A), and “fraudulent

intent cannot be inferred merely from the Individual Defendants’ positions in the Company and

alleged access to information.” PR Diamonds, 364 F.3d at 688; see Beaver Cnty. Ret. Bd. v.

LCA-Vision Inc., 2009 WL 806714, at *21 (allegation that defendants knew of accounting

violations based on their executive status insufficient to establish scienter).

In addition, the Complaint does not even attempt to particularize the alleged accounting

issues. AC ¶ 179. An inference of scienter related to fraudulent accounting may only arise where

the alleged accounting violations are “so simple, basic and pervasive in nature, and so great in

magnitude, that they should have been obvious.” LCA-Vision, 2009 WL 806714, at *18 (citing

PR Diamonds, 364 F.3d at 684). The Complaint provides no specific facts regarding the nature,

scope or severity of the alleged violations. Plaintiff’s conclusion that the alleged manipulations

should have been “obvious”, without any details, (see, e.g., AC ¶ 182) thus fails under this

precedent.

Plaintiff also finds fault with the testing conducted by Defendants to assess the

sustainability of the increased dividend. See, e.g., AC ¶¶ 188, 255-56. It challenges the

adequacy of Cliffs’ financial modeling used in connection with the dividend because it

supposedly “did not follow a particular procedure.” Id. ¶ 255. The only basis alleged for this

defect is the opinion of CW 7. Id. ¶ 255-56. However, CW 7 never states that Defendants

intentionally used deficient price modeling.16 In essence, her opinion is that the modeling

consisted of “sloppy or negligent practices”, and nowhere alleges scienter or an “intent to

16 Obviously, Defendants cannot be faulted for inaccurately forecasting the decline in the price of iron ore, which is inherently unpredictable.


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commit fraud.” Karpov, 2010 WL 2105448, at *11. Moreover, CW 7’s opinion lacks any

particularized facts with respect to why the dividend price modeling was inadequate, how she

possessed this knowledge, whether she had experience in such modeling, or her basis for

contending that “executives” knew of the alleged deficiencies. See supra Point I. CW 7’s

conclusory references to meetings with Mr. Carrabba, or an out of context comment by Ms.

Brlas, do not give required details and therefore do not adequately allege scienter. See Konkol,

590 F.3d at 397-99 (“generalized facts” alleging defendants may have attended meetings do not

show a “strong inference” of scienter and “are properly discounted”). CW 7’s opinion about the

lack of sophistication in price modeling is no more than “water-cooler gossip.” In re Ferro,

2007 WL 1691358, at *12.17

B. Alleged Closeness In Time Of An Allegedly Fraudulent Statement And The Later Disclosure Of Inconsistent Information

Plaintiff also fails to plead a strong inference of scienter based on the closeness in time of

the allegedly fraudulent statements about the dividend and the later disclosure of inconsistent

information. In March 2012, Cliffs announced that it was increasing its dividend by 123%. See,

e.g., AC ¶ 68. Plaintiff alleges, without citing any specific statement, that in October 2012,

Defendants continued to predict that the dividend was sustainable. See, e.g., id. ¶ 20. On

February 12, 2013, Cliffs announced a 76% dividend cut, which Plaintiff emphasizes was “less

than one year after Cliffs more than doubled [it].” See, e.g., id. ¶¶ 24, 216.

The eleven month gap between the March 2012 dividend increase and the February 2013

reduction is not close enough to raise a strong inference of scienter under Sixth Circuit

precedent. This Court has held that gaps of four months have been too distant to infer scienter;

the lag time here is almost triple that. See In re Goodyear, 436 F. Supp. at 901 (“four months is

17 Plaintiff also attempts to infer scienter from Defendants Carrabba, Blake and Brlas’ alleged oversight responsibility for costs at Bloom Lake or supervisory authority for two Bloom Lake general managers. AC ¶ 242. Plaintiff relies exclusively on statements by CWs 1, 17, and 25 in support of this allegation. Id. Their statements should not be credited, however, because they are vague and do not support a strong inference of scienter.


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too distant in time to draw an adverse inference” of scienter).18 Even where there is a strong

temporal proximity, this factor carries little weight and is not dispositive if the totality of the

circumstances does not give rise to a strong inference of scienter. See In re Huntington, 674 F.

Supp. 2d at 973. Here, the fraudulent inference is neither cogent nor compelling given the

nonfraudulent inference – that Defendants believed in good faith the dividend was sustainable,

but intervening events developed differently from their forecasts. See Tellabs, 551 U.S. at 314.

C. Alleged Self-Interested Motivation

The Complaint insinuates that Defendants were personally motivated to cover up the true

situation at Bloom Lake in an effort to keep their jobs and continue to be “compensated

handsomely for their knowingly bad decisions.” AC ¶ 27; see also id. ¶¶ 348, 356. Plaintiff

alleges that Defendants were under pressure to “fabricate Bloom Lake’s success” because many

had criticized the high price paid for the asset. Id. ¶¶ 47-62.

Under well-established precedent, these allegations fail to support a strong inference of

scienter because they describe nonfraudulent motivations, and do not show any motive for fraud.

“[C]ourts distinguish motives common to corporations and executives generally from motives to

commit fraud. All corporate managers share a desire for their companies to appear successful.

That desire does not comprise a motive for fraud.” PR Diamonds, 364 F.3d at 690; see Graf

Order at 8. With no particularized allegations suggesting Defendants’ motivations were

improper, the nonfraudulent inference (i.e., the desire for Bloom Lake to succeed) is stronger.

Also defective is Plaintiff’s assertion that “Defendants Carrabba, Brlas, and Blake have

been forced to resign from the Company or agree to a suspiciously-timed ‘retirement.’” AC

¶¶ 27, 348-53. Where an executive’s departure is preceded by the corporate revelation of a

negative event, that fact without more does not raise a strong inference of scienter. See Albert

18 Even measuring the gap between Cliffs’ November 2012 forecast and the February 2013 dividend cut, the time period is too remote to infer scienter. Cf. Wilkof v. Caraco Pharm. Labs., Ltd., 2010 WL 4184465, at *5 (E.D. Mich. Oct. 21, 2010) (inferring scienter where the time periods between the statement and later disclosure were one day, one week and two weeks).


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Fadem Trust v. Am. Elec. Power Co., 334 F. Supp. 2d 985, 1014 (S.D. Ohio 2004) (proximity of

executive departure and public disclosure is insufficient to plead scienter without some

explanation of why the departure should be viewed with unusual suspicion); see also Ricker v.

Zoo Entm’t Inc., 534 F. App’x 495, 499-500 (6th Cir. 2013) (same). Here, Plaintiff alleges no

particularized facts linking the retirements and any alleged wrongdoing.

Plaintiff’s scienter allegations, when viewed in the aggregate, do not give rise to a

“cogent” inference that Defendants possessed the requisite knowing or reckless intent to defraud

as required by the Supreme Court. Tellabs, 551 U.S. at 314. The far more compelling inference

is that Defendants had a good faith belief in the success of Bloom Lake and the sustainability of

the dividend, but external factors caused results to differ from their expectations.

IV. The Amended Complaint Does Not Adequately Allege Any Actionable Misrepresentations Or Omissions

Plaintiff quotes extensively from Cliffs’ press releases, financial results, earnings and

analyst calls. But the alleged misstatements are nonactionable because they are forward-looking

statements specifically protected by the PSLRA safe harbor or constitute puffery (or are

undisputedly true).19 As for the alleged omissions, Defendants had no duty to offer the negative

predictions about Bloom Lake and the dividend that Plaintiff suggests with hindsight.20

19 After accounting for the vast majority of allegations that rely on forward-looking statements, puffery, or soft information, the small remainder of statements concern background information whose truth is undisputed even by Plaintiff. Compare, e.g., AC ¶¶ 286-87 (alleging statement that dividend was raised in March 2012 to be false) with AC ¶¶ 68, 74 (conceding dividend was raised as stated). The Sixth Circuit readily dismisses such pleading of accurate statements for lack of alleged falsity. E.g., Helwig v. Vencor, Inc., 251 F.3d 540, 565-66 (6th Cir. 2001) (en banc); Zaluski v. United Am. Healthcare Corp., 527 F.3d 564, 574-75 (6th Cir. 2009). 20 The Sixth Circuit has emphasized that companies have no affirmative obligation to disclose “soft information, which includes predictions and matters of opinion.” Murphy v. Sofamor Danek Grp., Inc., 123 F.3d 394, 401-02 (6th Cir. 1997) (“soft information . . . must be disclosed only if . . . virtually as certain as hard facts”); see Starkman v. Marathon Oil, Co., 772 F.2d 231, 241 (6th Cir. 1985) (collecting Sixth Circuit cases). The “limitations on this duty to disclose are necessary because corporations might otherwise face potential second-guessing in a subsequent disclosure suit.” Zaluski, 527 F.3d at 572. This is what Plaintiff attempts here, claiming that Cliffs should have predicted to investors that it would be unsuccessful in reducing costs and increasing production at Bloom Lake. See, e.g., AC ¶¶ 284, 317 (alleging it was false and misleading to state that Bloom Lake’s Phase II construction was “progressing well” and “going very well” without disclosing that the “project was not economically viable”); id. ¶ 298 (alleging it was false and misleading to state plans to reduce costs in transportation while omitting to describe transportation problems that were “leading to increased costs”).


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A. Most Of The Alleged Statements And Omissions Are Not Actionable Because They Are Protected By The PSLRA Safe Harbor

Most of Plaintiff’s allegations relate only to projections about Cliffs’ future performance

and operations, which are not actionable because the impugned “forward-looking statements”

were accompanied by cautionary language. Even were this cautionary language absent, Plaintiff

has failed to adequately allege actual knowledge, which the PSLRA requires to state a claim

based on forward-looking statements. The PSLRA defines a forward-looking statement as:

(A) a statement containing a projection of revenues, income . . . capital expenditures, dividends . . . or other financial items; (B) a statement of the plans and objectives of management for future operations, including plans or objectives . . .; (C) a statement of future economic performance . . . [and] (D) any statement of the assumptions underlying or relating to any statement described in subparagraph (A), (B), or (C).

15 U.S.C. § 78u-5(i)(1). A forward-looking statement is not actionable so long as it “is

identified as such and ‘is accompanied by meaningful cautionary statements identifying

important factors that could cause actual results to differ materially from those in the forward-

looking statements.’” In re Keithley Instruments, Inc. Sec. Litig., 268 F. Supp. 2d 887, 904 (N.D.

Ohio 2002) (quoting 15 U.S.C. § 78u–5(c)(1)(A)(i)).

The Bloom-Lake-related statements that Plaintiff claims are actionable qualify as

forward-looking statements because they are “plans and objectives of management for future

operations [or] future economic performance.” 15 U.S.C. § 78u-5(i)(1)(B), (C). These include

projections concerning (i) the cash cost per ton that could be achieved, (ii) the anticipated “run

rate,” and (iii) the expected completion of the project.21 Defendants’ alleged statements

21 AC ¶ 75 (March 14, 2012 investor call statement that “Defendants’ stated goal was to reduce the per ton cash cost at Bloom Lake to $60 per ton in Phase 1, which had a production goal of 8 million tons”); id. ¶ 91 (acknowledging a April 26, 2012 disclosure that “cash costs at Bloom Lake are higher than expected,” but complaining that “the Company continued to assure investors that Phase 1 was on track, that a $60 per ton cash cost in Phase 1 would be achieved, and that difficulties with the production infrastructure at the mine had or would soon be resolved”); id. ¶ 118 (alleging that on the October 25, 2012 earnings call “Defendant Paradie stated: ‘Additionally, we continue to expect to exit the year producing at an annualized rate of 7.2 million tons and a mid-$60 cash cost per ton. We anticipate our average fourth-quarter cash cost to be approximately $76 per ton at Bloom Lake.’”); id. ¶ 297 (alleging that on the July 26, 2012 call, “Defendant Carrabba falsely told investors that cost savings could be achieved through a new sequencing in the mine, improved tailings management, and improved logistics ‘down at the dock’: ‘With that, the cost will come down from several different very large components’”).


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regarding then-current activity that was expected to support future improvements also fall within

the safe harbor’s purview. For example, Plaintiff alleges that “Defendant Carrabba reassured

investors [in April 2012] that the Company was ‘improving ore recovery rates through blending

and adjustments to the mine’s flow sheet,’ and through that process, had ‘increased Bloom

Lake’s production reliability.’” AC ¶ 94. These qualify as forward-looking statements because

they involve anticipation of continuity of performance into the future to realize a future goal.

See In re Fed.-Mogul Corp. Sec. Litig., 166 F. Supp. 2d 559, 565 (E.D. Mich. 2001) (“claims to

the effect that ‘the consolidation . . . continues as planned’ or that ‘management is proceeding

with their . . . integration’, while in the present tense, are inherently forward-looking”).

Each forward-looking statement claimed to be actionable was accompanied by cautionary

statements that conveyed “‘substantive information about factors that realistically could cause

results to differ materially from those projected in the forward-looking statements, such as, for

example, information about the issuer’s business.’”22 Helwig, 251 F.3d at 558–59 (quoting H.R.

Conf. Rep. No. 104-369, at 43 (1995)). First, Cliffs’ 2011 Form 10-K, filed on February 16,

2012 (a month before the start of the Class Period), included nearly eleven pages of risk factors

that could specifically impact Cliffs’ business as well as a list of cautionary statements directly

addressing any forward-looking statements made therein. See Ex. B, at 92 (excerpts of Cliffs’

2011 Form 10-K). Second, in every press release issued and investor call held during the Class

Period, Cliffs included additional cautionary language and incorporated by reference (and urged

investors to review) the risk factors set out in Cliffs’ 2011 Form 10-K and other SEC filings. See

App. B at n.1.23 Risk factors in SEC filings are meaningful cautionary statements when

22 To the extent any forward-looking statement was not accompanied by cautionary language, the PSLRA nevertheless requires allegations to satisfy an actual knowledge of falsity standard. See Miller v. Champion Enters., Inc., 346 F.3d 660, 672–73 (6th Cir. 2003) (citing 15 U.S.C. § 78u-5(c)(1)(B)). Because Plaintiff’s allegations do not meet even the recklessness standard, see infra Point III, they fall far short of the higher actual knowledge standard. See Omnicare III, 2014 WL 5066826, at *13. 23 See, e.g., Ex. L (excerpt of July 31, 2012 Investor Day Conference Call, Comments of Jessica Moran, Director-Investor Relations, Cliffs Natural Resources Inc.) (“Before we get started, let me remind you that certain comments made on today’s presentation will include predicative statements that are intended


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incorporated by reference into forward-looking statements. See, e.g., Miller, 364 F.3d at 677-78;

15 U.S.C. § 78u-5(c)(2)-(3).

Specifically, Cliffs’ 2011 Form 10-K alerted investors that “[m]ine development projects

typically require a number of years and significant expenditures during the development phase

before production is possible. Such projects could experience unexpected problems and delays

during development, construction and mine start-up.” Ex. B, at 34-35. This warning directly

qualified Cliffs’ statements concerning the three-phase expansion plan for Bloom Lake, a subject

about which Plaintiff complains at length. See, e.g., AC ¶¶ 259-60, 262-63, 274-77, 283, 294,

310, 316, 328, 330-33. The 2011 Form 10-K also detailed eleven risk factors that could affect

the accuracy of estimates based on industry-specific challenges, including:

“changes in tonnage, grades and metallurgical characteristics of ore to be mined and processed.” Cf. AC ¶¶ 293-95 (grade of processed ore); id. ¶¶ 326, 374, 390, 400 (tonnage of processed ore projected and produced); id. ¶¶ 129-34 (inability to produce at projected levels);

“adverse geotechnical conditions.” Cf. AC ¶¶ 102, 104-06, 113, 293-96, 314 (silica levels in mined ore and processed ore); id. ¶¶ 135-49 (high silica content and alleged resultant equipment problems);

“higher input commodity and labor costs.” Cf. AC ¶¶ 104, 150-55, 292 (labor costs); and

“weather or severe climate impacts.” Cf. AC ¶¶ 259, 313 (rail and port infrastructure); id. ¶¶ 156-63 (weather impact on rail infrastructure).

Ex. B, at 34-35. These examples demonstrate that Cliffs’ warnings directly related to the

forward-looking statements about which Plaintiff complains, disclosing the specific risk factors

that actually disrupted predictions, and rendering such forecasts nonactionable. See, e.g. In re

Keithley, 268 F. Supp. 2d at 905 (“Keithley’s cautionary language warned explicitly” of

“precisely . . . the reason for its declining prospects”); In re Humana, Inc. Sec. Litig., 2009 WL

1767193, at *14 (W.D. Ky. June 23, 2009).

Cliffs’ 2011 Form 10-K also identified specific equipment-related risk factors, stating

to be made as forward-looking within the Safe Harbor protections of the [PSLRA]. . . . Important factors that could cause results to differ materially are set forth in reports on Form 10-K and 10-Q and news releases filed with the SEC, which are available on our website”); Ex. C (excerpt of March 13, 2012 Press Release).


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that “[t]he manufacturing processes that take place in our mining operations, as well as in our

processing facilities, depend on critical pieces of equipment. This equipment may, on occasion,

be out of service because of unanticipated failures.” Ex. B, at 30. These cautionary statements

directly warn of the inherent risks which ultimately materialized, such as shut-downs in the

concentrator, transportation challenges, and infrastructure issues. See AC ¶¶ 129-64.

Cliffs also included specific cautionary warnings in each of the press releases that

Plaintiff alleges contained misleading forward-looking statements. They disclosed, for example:

the ability to achieve planned production rates or levels. Cf. App. B, Row 7 and AC ¶¶ 262-63 (statements regarding goals for tons mined); AC ¶¶ 276-78, 310-11 (statements regarding expected costs at full production); id. ¶¶ 292-94 (statements regarding actual tons mined and adjusted projections); id. ¶¶ 326, 374, 390, 400 (statements regarding tonnage of processed ore projected and actually produced);

internal controls over financial reporting. Cf. App. B, Row 9 and AC ¶¶ 153, 211-14, 177-84 (allegations regarding budgeting and reporting of costs);

tons mined. Cf. App. B, Row 10 and AC ¶¶ 262-63 (statements regarding goals for tons mined); AC ¶¶ 292-94 (statements regarding actual tons mined and adjusted projections); id. ¶¶ 326, 374, 390, 400 (statements on tonnage of ore projected and actually produced);

unanticipated geological conditions. Cf. App. B, Row 10 and AC ¶¶ 102, 104-06, 113, 276, 293-96, 314 (statements regarding silica levels in mined and processed ore); AC ¶¶ 135-46 (alleged undisclosed facts on silica content and resultant equipment problems);

equipment failures. Cf. App. B, Row 10 and AC ¶¶ 129-34 (allegations regarding equipment failures); AC ¶¶ 142-49 (allegations regarding equipment defects); id. ¶¶ 279-80 (statement regarding equipment failures); and

transportation. Cf. App. B, Row 10 and AC ¶¶ 156-64 (allegations regarding transportation equipment defects); AC ¶ 259 (statement that Bloom Lake had “established [transportation] infrastructure”).

These warnings appear in each of the press releases alleged to contain false and misleading

statements. See App. B at n.1.24 Related and additional warnings were broadcast in Cliffs’

investor calls and Form 10-Q filings.25 They alerted investors of the specific challenges that

Plaintiff alleges caused a material difference between Cliffs’ stated expectations and its

subsequent performance. Cliffs’ cautionary statements addressed the risks inherent in the mining

24 See also Exs. A, C – H (excerpts from various Press Releases). 25 See Exs. I – Q (excerpts of various Conference Call Transcripts and Form 10-Qs).


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industry and in the Company’s goal of acquiring Bloom Lake and improving its capacity and

value. See generally App. B. In toto, Cliffs’ warnings were more than sufficient to put investors

on notice and place Cliffs’ forward-looking statements within the PSLRA safe harbor. So long

as “an investor has been warned of risks of a significance similar to that actually realized, she is

sufficiently on notice of the danger of the investment to make an intelligent decision about it

according to her own preferences for risk and reward.” Helwig, 251 F.3d at 559.

As for dividends, the “PSLRA explicitly defines forward-looking statements to include ‘a

projection of . . . dividends,’ and any statement relating to such a projection.” Marsh Grp. v.

Prime Retail, Inc., 46 F. App’x 140, 146-47 (4th Cir. 2002) (per curiam)); see 15 U.S.C. § 78u-

5(i)(1)(A), (D). All of Plaintiff’s claims regarding dividends, see, e.g., AC ¶¶ 72, 77-81, 187-

202, thus fall within the ambit of the PSLRA’s safe harbor provision, and were accompanied by

cautionary language setting forth the risks to Cliffs’ business at Bloom Lake and elsewhere that

might cause dividend results to differ from projections. See App. B, Rows 1, 4, 8, 9. For

example, Cliffs specified a number of potential production issues, “any of which could have a

material adverse effect on our results of operations and financial position.” Ex. B, at 35

(emphasis supplied). Accordingly, the statements regarding dividends are nonactionable. See,

e.g., In re Humphrey Hospitality Trust, Inc. Sec. Litig., 219 F. Supp. 2d 675, 683 (D. Md. 2002)

(statement that “we expect to maintain our current dividend rate” nonactionable because it is

“accompanied by cautionary statements”); In re FAC Realty Sec. Litig., 990 F. Supp. 416, 423

(E.D.N.C. 1997) (dismissing under PSLRA as “speculation” statements that there was no plan to

alter the dividend). In Marsh, plaintiffs alleged that despite knowing about setbacks requiring

dividend reductions, management assured investors for months that future dividends were

“sacred” and “sacrosanct” to the company, and “staked its reputation on its commitment to

continue to pay the company’s dividend”; the Fourth Circuit held that such language is

categorically forward-looking and protected by the PSLRA. Marsh, 46 F. App’x at 146-47.


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B. Many of the Allegedly False Statements Are Nonactionable Puffery

Mere “puffery” cannot support a claim of securities fraud, because such statements are

immaterial. See, e.g., Charal v. Royal Appliance Mfg. Co., 64 F.3d 663, 1995 WL 490131, at *3

(6th Cir. 1995) (“‘Soft,’ ‘puffing’ statements . . . generally lack materiality because the market

price of the share is not inflated by vague statements predicting growth”). The Sixth Circuit has

described puffery as “a certain kind of rosy affirmation commonly heard from corporate

managers and numbingly familiar to the marketplace—loosely optimistic statements that are so

vague, so lacking in specificity, or so clearly constituting the opinions of the speaker, that no

reasonable investor could find them important.” Omnicare I, 583 F.3d at 944.

Here, Plaintiff repeatedly cites puffing language describing the Bloom Lake site and

infrastructure. See, e.g., AC ¶¶ 11, 75, 189, 259, 261 (“premium asset”); id. ¶¶ 110, 312

(“fantastic property”); id. ¶¶ 112, 144, 313, 315 (“fantastic concentrator”); id. ¶¶ 113, 314 (“the

operations did a fantastic job in getting the silica levels down”); id. ¶¶ 112, 313, 315 (rail and

port facilities “working quite well”). No reasonable investor would attribute importance to such

routinely optimistic descriptions. See, e.g., In re Ford, 381 F.3d at 570 (“All public companies

praise their products and their objectives”); In re Yahoo! Inc. Sec. Litig., 2012 WL 3282819, at

*18 (N.D. Cal. Aug. 10, 2012) (“adjectives such as ‘fantastic’ . . . [are not] actionable when

taken as a general statement of enthusiasm by the company’s executives”).

Plaintiff also cites Defendants’ generic optimism about growth and progress at Bloom

Lake,26 but such expressions of growing a company’s business are properly deemed immaterial

puffery. See, e.g., Charal, 1995 WL 490131, at *3; Raab v. General Physics Corp., 4 F.3d 286,

288 (4th Cir. 1993) (a company was “poised to carry the growth and success of 1991 well into

the future,” and “expected an annual growth rate of 10% to 30% over the next several years”).27

26 E.g., AC ¶ 277 (“plan in place to optimally run and expand its operation”), 284 (Phase II “progressing well”); id. ¶ 316 (“construction is going very well”); id. ¶¶ 172, 328 (“continue to make progress” and “are still on track”); id. ¶ 331 (“we remain focused on the Phase II expansion”). 27 See also In re Huffy Corp. Sec. Litig., 577 F. Supp. 2d 968, 1014 (S.D. Ohio 2008) (“the term ‘solid growth’ is the type of non-specific statements of corporate optimism, properly described as mere puffery,


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Plaintiff likewise complains about vague predictions of rosy cash flows,28 but the Sixth Circuit

rejects such claims based on immateriality as well. See Omnicare I, 583 F.3d at 944.29

V. Plaintiff’s Section 20(a) Claims Fail

Where, as here, “[P]laintiff[] do[es] not state a claim for a primary securities law

violation under Rule 10b–5, dismissal of a ‘control person’ liability claim under 15 U.S.C.

§ 78t(a) [Section 20(a)] is also proper.” Dailey, 551 F. App’x at 849.

CONCLUSION

Plaintiff’s Complaint is based on the utterly implausible theory that Defendants bought a

multibillion dollar mine property and adopted plans to upgrade it with significant expenditures of

capital and greatly increased the Company’s dividend, all the while knowing that these

endeavors would quickly fail. Plaintiff’s theory is nothing more than fraud by hindsight. The

Complaint’s conclusory allegations, based largely on unreliable and speculative statements by

anonymous sources, do not come close to adequately pleading that Defendants’ statements were

made with fraudulent intent. In addition, Defendants’ statements are not actionable.

Accordingly, this Court should dismiss the Complaint in its entirety, with prejudice.

which is not actionable’”) (citation omitted); IBEW, 788 F. Supp. 2d at 633 (statement that “investments undertaken by the company would support future growth” was puffery). 28 See, e.g., AC ¶ 260 (“cash flow generation will allow us to increasingly return large amounts of capital to our shareholders”); id. ¶¶ 286, 304, 334 (“belief in our ability to generate future cash flow”); id. ¶ 300 (“a significant cash generation outlook”). 29 Plaintiff also references management’s optimistic forward-looking statements about maintaining the dividend, e.g., AC ¶¶ 8, 77-81, 299, which Plaintiff admits were subject to authorization by Cliffs’ Board. See, e.g., id. ¶¶ 77, 205, 265, 286. Such statements are nonactionable. Cf. Kowal v. IBM Corp., 163 F.3d 102, 107 (2d Cir. 1998) (dividend commitment statement nonactionable because “IBM’s management lacked the actual or apparent authority to guarantee the dividend, and it would be unreasonable for the market to have interpreted the statements” as anything other than an individual’s prediction). See Lasker v. N.Y. St. Elec. & Gas Corp., 85 F.3d 55, 59 (2d Cir. 1996) (commitments to maintain dividends are “precisely the type of ‘puffery’ that this and other circuits have consistently held to be inactionable”).


Dated:

October 221, 2014

Respec

s/ GregGREGOMARTRYAN GILLIACADWOne WNew Y(212) 5(212) 4greg.mamartin.ryan.angillian.b /s/ ChriCHRISKIMBEERIC SCALFEThe Ca1405 EClevela(216) 6(216) 2cwilliamkmosesezell@ CounseJoseph and Da

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LOCAL RULE 7.1 CERTIFICATION

Pursuant to Local Civil Rule 7.1(f), I hereby certify that this case has not been assigned to

any track, but that by order of the Court dated October 6, 2014, the page limitation for this

memorandum is thirty (30) pages. I hereby further certify that the foregoing Memorandum

adheres to this limitation and is a total of 30 pages in length.

Dated: October 21, 2014 /s/ Gregory A. Markel One of the Attorneys for Defendants


APPENDIX ABASES FOR DISCOUNTING EACH CONFIDENTIAL WITNESS ALLEGATION

Confidential

Witness

Paragraph #

Topic of Statement

Lack of Personal Knowledge/Rumor

Vague & Conclusory

Statements Not Connected to Defendants

Departed Before or During Class Period

Background Statements Unrelated to Claims

48 Bloom Lake Acquisition X X X X130 Shutdowns at Bloom Lake X X151 Management and Staffing at Bloom Lake X X X242 Oversight of Bloom Lake X X245 Visits to Bloom Lake X X X

49 Bloom Lake Acquisition X X X71 Dividend X X132 Shutdowns at Bloom Lake X X X133 Production Goals X X X134 Production Goals X X X213 Viability of Phase 2 and 3 Expansion X X X214 Management at Bloom Lake X X X245 Visits to Bloom Lake X X X251 Management at Bloom Lake X X X

50 Bloom Lake Acquisition X X X X X

50 Bloom Lake Acquisition X X X X

50 Bloom Lake Acquisition X X X X X153 Management and Staffing at Bloom Lake X X X181 Viability of Phase 2 and 3 Expansion X X X X

67 Iron Ore Prices X X X X

70 Testing and Sustainability of the Dividend X X X210 Testing and Sustainability of the Dividend X X X253 Policies Unrelated to Bloom Lake X X X X254 Production Goals X X X255 Testing and Sustainability of the Dividend X X X256 Testing and Sustainability of the Dividend X269, 287, 306, 321, 335

Testing and Sustainability of the DividendX X X

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Confidential

Witness

Paragraph #

Topic of Statement


Vague & Conclusory




73 Testing and Sustainability of the Dividend X X X X215 Testing and Sustainability of the Dividend X X X X

129 Shutdowns at Bloom Lake X X X

131 Shutdowns at Bloom Lake X X X X212 Viability of Phase 2 and 3 Expansion X X X X243 Due Diligence at Bloom Lake X X X X246-47 Shutdowns at Bloom Lake X X X

136 Silica Levels X X X145 Concentrator Related Issues X X146 Concentrator Related Issues X X

141 Silica Levels X X X X147 Concentrator Related Issues X X X X

142 Concentrator Related Issues X X [1] X144 Concentrator Related Issues X X

147 Concentrator Related Issues X X X X X

148 Concentrator Related Issues X X [2] X

152 Management and Staffing at Bloom Lake X X X X164 Transportation Systems X X X X X179 Viability of Phase 2 and 3 Expansion X X X180 Viability of Phase 2 and 3 Expansion X X X182 Viability of Phase 2 and 3 Expansion X X X X183 Viability of Phase 2 and 3 Expansion X X X X186 Viability of Phase 2 and 3 Expansion X X X X211 Viability of Phase 2 and 3 Expansion X X X245 Visits to Bloom Lake X X X339 Viability of Phase 2 and 3 Expansion X X X X X

[1] Not a Cliffs’ employee; employed by CLM Consultants. Appendix to AC. [2] Not a Cliffs’ employee; employed by CIMA+. Appendix to AC.

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Confidential

Witness

Paragraph #

Topic of Statement


Vague & Conclusory




154 Management and Staffing at Bloom Lake X X X155 Management and Staffing at Bloom Lake X X X242 Oversight of Bloom Lake X X X243 Due Diligence at Bloom Lake X X X249 Costs at Bloom Lake X X X250 Management and Staffing at Bloom Lake X X251 Management and Staffing at Bloom Lake X X X

158 Transportation System X X X248 Silica Levels & Transportation System X X X

160 Transportation System X X X

161 Transportation System X X X X162 Transportation System X X X X

163 Transportation System X X X X

178 Viability of Phase 2 and 3 Expansion X X X

181 Viability of Phase 2 and 3 Expansion X X

209 Testing and Sustainability of the Dividend X X

242 Oversight of Bloom Lake X X244 Visits to Bloom Lake X X X

245 Visits to Bloom Lake X X X

252 Profitability of Bloom Lake X X X

253 Status of Bloom Lake X X X X

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APPENDIX B

Cautionary Language Directly Related To Alleged Forward-Looking Statements

Row Cautionary Language Directly Related To Alleged Forward-Looking Statements1

Related Risk Factors in

Cliffs’ 2011 Form 10-K

Alleged Forward-Looking Statements

1 “Although the Company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties relating to Cliffs’ operations and business environment that are difficult to predict and may be beyond Cliffs’ control.”

p. 25 AC ¶¶ 77, 265, 76, 166, 262, 78, 263, 266, 92, 277, 93, 278, 95, 279, 168, 283, 190, 285, 286, 294, 192, 300, 196, 302, 197, 303, 304-05, 110, 309, 112, 312, 313, 170, 316, 199, 318-19, 201, 330, 118, 326, 202, 203, 332, 204, 333, 331, 334, 216, 396, 125, 219, 400, 217

2 “[U]ncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements for a variety of reasons including:

p. 93

3 weakness in the global economic and/or market conditions… p. 25, 93 AC ¶¶ 117, 324, 382, 202, 331, 174, 216, 396, 217

4 the ability to successfully integrate acquired companies and achieve post-acquisition synergies, including without limitation Consolidated Thompson…

p. 32, 34-35, 93 AC ¶¶ 72, 166, 75, 89, 76, 166, 262, 80, 268, 260, 93, 278, 94, 276, 168, 283, 107, 297, 194, 299, 304-05, 111, 311, 320, 382, 118, 326, 172, 328, 203, 332, 204, 333, 120, 390, 174, 216, 396, 125, 219, 400, 217, 220, 401


2

5 events or circumstances that could impair or adversely impact the viability of a mine and the carrying value of associated assets…

p. 26, 93 AC ¶¶ 168, 283

6 changes in sales volume or mix… p. 26-27, 93 AC ¶¶ 293, 104, 295, 305, 331

7 the ability to achieve planned production rates or levels…2 p. 33-34, 35 AC ¶¶ 72, 166, 75, 89, 76, 166, 262, 78, 263, 266, 91, 366, 92, 277, 93, 278, 94, 276, 95, 279, 374, 105, 294, 305, 110, 309, 11, 311, 170, 316, 117, 324, 382, 118, 326, 172, 328, 120, 390, 174, 216, 396, 125, 219, 400, 220, 401

8 the ability to maintain adequate liquidity… p. 27, 93 AC ¶¶ 192, 300, 194, 299, 197, 303, 305, 202, 331, 216, 396, 217

9 potential existence of significant deficiencies or material weakness in our internal control over financial reporting…3

p. 93 AC ¶¶ 78, 263, 266, 79, 189, 80, 268, 260, 190, 285, 286, 194, 299, 195, 300, 304-05, 199, 318-19, 320, 201, 330, 118, 326, 203, 332, 204, 333, 334, 216, 396, 125, 219, 400

10 problems or uncertainties with productivity, third-party contractors, unanticipated geological conditions, weather conditions, natural disasters, tons mined, changes in cost factors, the supply or price of energy, equipment failures, transportation . . . and other risks of the mining industry…

p. 29-30, 35, 93 AC ¶¶ 91, 366, 92, 277, 93, 278, 168, 283, 103, 374, 196, 302, 111, 311, 112, 312, 313, 320, 201, 330, 202, 216, 396, 125, 219, 400, 217

11 The information contained herein speaks as of the date of this release and may be superseded by subsequent events.”

p. 92 AC ¶¶ 77, 265, 95, 279, 168, 283, 197, 303, 111, 311, 170, 316, 201, 330, 118, 326, 202, 204, 333, 216, 396, 125, 219, 400


3

1 This cautionary language is taken from Cliffs’ March 13, 2012 press release cited by the Complaint. Substantially identical language is included (unless otherwise noted) in all press releases in which the Plaintiff alleges forward-looking statements, including those dated March 13, April 25, July 25, October 23, and November 19 of 2012, and February 12, 2013. Each of these also incorporated by reference the cautionary language “set forth in the Company’s most recently filed reports with the Securities Exchange Commission.” Excerpts from each press release are attached to the Markel Declaration, with the full text available at http://ir.cliffsnaturalresources.com/English/investors/news-releases/default.aspx. Substantially identical cautionary language was also included (unless otherwise noted) in all of Cliffs’ Form 10-Q filings in which the Plaintiff alleges forward-looking statements, including those dated April 26 (p. 54-55, 57), July 26 (p. 62-63, 65-66), and October 25 of 2012 (p. 66-67, 68-69). Cliffs’ Form 10-K for 2011, filed February 16, 2012, in which Plaintiff alleges additional forward-looking statements, addresses substantially these and other risk factors in great detail. Cliffs’ SEC filings are available on its website or from the SEC at http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000764065&owner=exclude&count=40&hidefilings=0. At each teleconference cited in the Complaint, Cliffs urged investors to review the cautionary statements contained its SEC filings and press releases. The transcripts of such calls were generally available online to investors and contained additional cautionary language. 2 This risk factor appears in each cited Cliffs’ Form 10-Q (including those dated April 26 (p. 54-55), July 26 (p. 62-63), and October 25 of 2012 (p. 66-67)) and each press release except the press release dated April 25, 2012. 3 This risk factor appears in each cited press release and Cliff’s Form 10-Q dated October 25, 2012 (p. 66-67).


EXHIBIT A 2-15-12 Press Release


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EXHIBIT B Excerpts of the 2011 Form 10-K


10-K 1 d257049d10k.htm 10-K

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

� ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

OR

� TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

For the transition period from to .

Commission File Number: 1-8944

CLIFFS NATURAL RESOURCES INC.(Exact Name of Registrant as Specified in Its Charter)

Ohio 34-1464672(State or Other Jurisdiction ofIncorporation or Organization)

(I.R.S. EmployerIdentification No.)

200 Public Square, Cleveland, Ohio 44114-2315(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (216) 694-5700

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange on Which RegisteredCommon Shares, par value $0.125 per share

New York Stock Exchange and Professional Segment ofNYSE Euronext Paris

Securities registered pursuant to Section 12(g) of the Act:NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct. YES � NO �

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of theAct. YES � NO �

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirements for the past 90 days. YES � NO �

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, everyInteractive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). YES � NO �

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) isnot contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. �


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Terrance M. Paradie has served as Senior Vice President, Corporate Controller and Chief Accounting Officer since January2011 and served as Vice President, Corporate Controller and Chief Accounting Officer of Cliffs from July 2009 to January 2011.Mr. Paradie served as Cliffs’ Vice President — Corporate Controller from October 2007 through July 2009. Prior to joiningCliffs, Mr. Paradie worked for international accounting and consulting firm KPMG LLP since 1992 in a variety of roles, mostrecently as an audit partner.

Steven M. Raguz has served as Senior Vice President, Corporate Strategy and Treasurer since January 2011. Mr. Raguzserved as Vice President, Corporate Strategy and Treasurer from August 2010 to January 2011 and as Vice President, CorporatePlanning and Treasurer from October 2007 to August 2010, and Vice President, Financial Planning and Strategy Analysis fromMarch 2007 to October 2007. Prior to joining Cliffs, Mr. Raguz was Senior Director, Financial Planning and Analysis of STERISCorporation.

Duke D. Vetor has served as Senior Vice President, Global Operations Services since July 2011. From November 2007 toJuly 2011, he served as Senior Vice President, North American Coal of Cliffs and from July 2006 to November 2007, he servedas Vice President — Operations — North American Iron Ore of Cliffs. Mr. Vetor was General Manager of Safety and OperationsImprovement of Cliffs from December 2005 to July 2006. From 2003 to November 2005, Mr. Vetor served as Vice President —Operations of Diavik Diamond Mines, a subsidiary of Rio Tinto plc, an international mining group.

David Webb has served as Senior Vice President, Global Coal since joining Cliffs in July 2011. Prior to joining Cliffs,Mr. Webb served as Vice President and General Manager of Mid-West Operations for Patriot Coal Corp., a producer of thermaland metallurgical coal, from 2007 to June 2011. Mr. Webb also previously served in director-level positions for Peabody Energyand Freeman United Corp., both coal companies.

Item 1A. Risk Factors.

Uncertainty or weaknesses in global economic conditions and reduced economic growth in China could adversely affectour business.

The world prices of iron ore and coal are influenced strongly by international demand and global economic conditions.Uncertainties or weaknesses in global economic conditions, including the ongoing sovereign debt crisis in Europe, couldadversely affect our business and negatively impact our financial results. In addition, the current level of international demand forraw materials used in steel production is driven largely by rapid industrial growth in China. If the economic growth rate in Chinaslows for an extended period of time, less steel would be used in construction and manufacturing. If the economic growth rate inChina slows for an extended period of time, or if another global economic downturn were to occur, we would likely see decreaseddemand for our products and decreased prices, resulting in lower revenue levels and decreasing margins. We are not able topredict whether the global economic conditions will continue or worsen and the impact it may have on our operations and theindustry in general going forward.

Negative economic conditions may adversely impact the ability of our customers to meet their obligations to us on a timelybasis or at all.

Although we have contractual commitments for sales in our U.S. Iron Ore and Eastern Canadian Iron Ore business for 2012and beyond, the uncertainty in global economic conditions may adversely impact the ability of our customers to meet theirobligations. As a result of economic and pricing volatility, we are in continual discussions with our customers regarding oursupply agreements. These discussions may result in the modification of our supply agreements. Any modifications to our supplyagreements could adversely impact our sales, margins, profitability and cash flows. These discussions or actions by our customerscould also result in contractual disputes, which could ultimately require arbitration or litigation, either of which could be timeconsuming and costly. Any such disputes could adversely impact our sales, margins, profitability and cash flows.

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A substantial majority of our sales are made under term supply agreements to a limited number of customers that aresubject to changing international pricing conditions and that could negatively affect the stability and profitability of ouroperations.

In 2011, a majority of our U.S. Iron Ore and Eastern Canadian Iron Ore sales, the majority of our North American Coalsales, and virtually all of our Asia Pacific Iron Ore sales were made under term supply agreements to a limited number ofcustomers. In 2011, five customers together accounted for approximately 64 percent of our U.S. Iron Ore, Eastern Canadian IronOre and North America coal sales revenues (representing more than 48 percent of our consolidated revenues). For NorthAmerican Coal, prices are typically agreed upon for a twelve-month period and are typically adjusted each year. Our Asia PacificIron Ore contracts expire in 2012. Our U.S. Iron Ore and Eastern Canadian Iron Ore contracts have an average remainingduration of four years. We cannot be certain that we will be able to renew or replace existing term supply agreements at the samevolume levels, prices or with similar profit margins when they expire. A loss of sales to our existing customers could have asubstantial negative impact on our sales, margins and profitability.

Our U.S. Iron Ore term supply agreements contain a number of price adjustment provisions, or price escalators, includingadjustments based on general industrial inflation rates, the price of steel and the international price of iron ore pellets, amongother factors, that allow us to adjust the prices under those agreements generally on an annual basis. Several of our EasternCanadian Iron Ore customers have multi-year pricing arrangements that contain pricing adjustments that reference certainpublished market prices for iron ore. During the first quarter of 2010, the world’s largest iron ore producers moved away from theannual international benchmark pricing mechanism in favor of a shorter-term, more flexible pricing system. The change in theinternational pricing system has, in most instances, required that our sales contracts be modified to take into account the newinternational pricing methodology. We finalized shorter-term pricing arrangements with our Asia Pacific Iron Ore customers. Wereached final pricing settlements with a majority of our U.S. Iron Ore customers through the end of 2011 for the 2011 contractyear. However, in some cases we are still working to revise components of the pricing calculations referenced within our supplyagreements to incorporate new pricing mechanisms as a result of the changes to historical benchmark pricing.

Any defects in title of leasehold interests in our properties could limit our ability to mine these properties or could resultin significant unanticipated costs.

We conduct a significant part of our mining operations on properties that we lease. These leases were entered into over aperiod of many years by certain of our predecessors and title to our leased properties and mineral rights may not be thoroughlyverified until a permit to mine the property is obtained. Our right to mine some of our proven and probable ore reserves may bematerially adversely affected if there were defects in title or boundaries. In order to obtain leases or mining contracts to conductour mining operations on property where these defects exist, we may in the future have to incur unanticipated costs, which couldadversely affect our profitability.

Coal mining is complex due to geological characteristics of the region.

The geological characteristics of coal reserves, such as depth of overburden and coal seam thickness, make them complexand costly to mine. As mines become depleted, replacement reserves may not be available when required or, if available, may notbe capable of being mined at costs comparable to those characteristic of the depleting mines, and in turn, decisions to defer minedevelopment activities may adversely impact our ability to substantially increase future coal production. These factors couldmaterially adversely affect our mining operations and cost structures, which could adversely affect our sales, profitability andcash flows.

Capacity expansions within the mining industry could lead to lower global iron ore and coal prices or impact ourproduction.

The increased demand for iron ore and coal, particularly from China, has resulted in the major iron ore and metallurgicalcoal suppliers announcing plans to increase their capacity. In the current economic environment,

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any increase in our competitors’ capacity could result in excess supply of iron ore and coal, resulting in increased downwardpressure on prices. A decrease in pricing due to this issue would impact adversely our sales, margins and profitability.

If steelmakers use methods other than blast furnace production to produce steel, or if their blast furnaces shut down orotherwise reduce production, the demand for our iron ore and coal products may decrease.

Demand for our iron ore and coal products is determined by the operating rates for the blast furnaces of steel companies.However, not all finished steel is produced by blast furnaces; finished steel also may be produced by other methods that do notrequire iron ore products. For example, steel mini-mills, which are steel recyclers, generally primarily produce steel by usingscrap steel and other iron products, not iron ore pellets, in their electric furnaces. Production of steel by steel mini-mills wasapproximately 60 percent of North American total finished steel production in 2011. North American steel producers also canproduce steel using imported iron ore or semi-finished steel products, which eliminates the need for domestic iron ore.Environmental restrictions on the use of blast furnaces also may reduce our customers’ use of their blast furnaces. Maintenance ofblast furnaces may require substantial capital expenditures. Our customers may choose not to maintain, or may not have theresources necessary to maintain, their blast furnaces. If our customers use methods to produce steel that do not use iron ore andcoal products, demand for our iron ore and coal products will decrease, which would affect adversely our sales, margins andprofitability.

The availability of capital for exploration, acquisitions and mine development may be limited.

We expect to grow our business and presence as an international mining company by continuing to expand bothgeographically and through the minerals that we mine and market. To execute on this strategy, we will need to have access to thecapital markets to finance exploration, acquisitions and development of mining properties. During the global economic crisis,access to capital to finance new projects and acquisitions was extremely limited. We cannot predict the general availability oraccessibility of capital to finance such projects in the future. If we are unable to continue to access the capital markets, our abilityto execute on our growth strategy will be impacted negatively.

Our ability to collect payments from our customers depends on their creditworthiness.

Our ability to receive payment for products sold and delivered to our customers depends on the creditworthiness of ourcustomers. With respect to our Asia Pacific and Eastern Canadian Iron Ore business units and North American Coal businessunit, payment typically is received as the products are shipped and much of the product is secured by bank letters of credit.However, in our U.S. Iron Ore business unit, generally, we deliver iron ore products to our customers’ facilities in advance ofpayment for those products. Although title and risk of loss with respect to U.S. Iron Ore products does not pass to the customeruntil payment for the pellets is received, there is typically a period of time in which pellets, for which we have reserved title, arewithin our customers’ control. Consolidations in some of the industries in which our customers operate have created largercustomers. These factors have caused some customers to be less profitable and increased our exposure to credit risk. Currentcredit markets remain highly volatile, and some of our customers are highly leveraged. A significant adverse change in thefinancial and/or credit position of a customer could require us to assume greater credit risk relating to that customer and couldlimit our ability to collect receivables. Failure to receive payment from our customers for products that we have deliveredadversely could affect our results of operations, financial condition and liquidity.

We rely on estimates of our recoverable reserves, which is complex due to geological characteristics of the properties andthe number of assumptions made.

We regularly evaluate our U.S. iron ore, Eastern Canadian iron ore and coal reserves based on revenues and costs andupdate them as required in accordance with SEC Industry Guide 7 and Canada’s National Instrument 43-101. In addition, AsiaPacific Iron Ore and Sonoma have published reserves that follow JORC in Australia and changes have been made to the AsiaPacific Iron Ore and Sonoma reserve values to make them comply with SEC requirements. There are numerous uncertaintiesinherent in estimating quantities of reserves of our mines, including many factors beyond our control.

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Estimates of reserves and future net cash flows necessarily depend upon a number of variable factors and assumptions, suchas production capacity, effects of regulations by governmental agencies, future prices for iron ore and coal, future industryconditions and operating costs, severance and excise taxes, development costs and costs of extraction and reclamation, all ofwhich may in fact vary considerably from actual results. For these reasons, estimates of the economically recoverable quantitiesof mineralized deposits attributable to any particular group of properties, classifications of such reserves based on risk of recoveryand estimates of future net cash flows prepared by different engineers or by the same engineers at different times may varysubstantially as the criteria change. Estimated ore and coal reserves could be affected by future industry conditions, geologicalconditions and ongoing mine planning. Actual production, revenues and expenditures with respect to our reserves will likely varyfrom estimates, and if such variances are material, our sales and profitability adversely could be affected.

We rely on our joint venture partners in our mines to meet their payment obligations and we are subject to risksinvolving the acts or omissions of our joint venture partners when we are not the manager of the joint venture.

We co-own and manage three of our five U.S. iron ore mines and one of our two Eastern Canadian iron ore mines withvarious joint venture partners that are integrated steel producers or their subsidiaries, including ArcelorMittal, U.S. Steel CanadaInc. and WISCO. We also own minority interests in mines located in Brazil and Australia that we do not manage. We rely on ourjoint venture partners to make their required capital contributions and to pay for their share of the iron ore pellets that each jointventure produces. Our U.S. iron ore and Eastern Canadian iron ore joint venture partners are also our customers. If one or more ofour joint venture partners fail to perform their obligations, the remaining joint venturers, including ourselves, may be required toassume additional material obligations, including significant pension and postretirement health and life insurance benefitobligations. The premature closure of a mine due to the failure of a joint venture partner to perform its obligations could result insignificant fixed mine-closure costs, including severance, employment legacy costs and other employment costs, reclamation andother environmental costs, and the costs of terminating long-term obligations, including energy contracts and equipment leases.

We cannot control the actions of our joint venture partners, especially when we have a minority interest in a joint ventureand are not designated as the manager of the joint venture. Further, in spite of performing customary due diligence prior toentering into a joint venture, we cannot guarantee full disclosure of prior acts or omissions of the sellers or those with whom weenter into joint ventures. Such risks could have a material adverse effect on the business, results of operations or financialcondition of our joint venture interests.

Our expenditures for postretirement benefit and pension obligations could be materially higher than we have predicted ifour underlying assumptions prove to be incorrect, there are mine closures or our joint venture partners fail to performtheir obligations that relate to employee pension plans.

We provide defined benefit pension plans and OPEB to eligible union and non-union employees in North America,including our share of expense and funding obligations with respect to unconsolidated ventures. Our pension expense and ourrequired contributions to our pension plans directly are affected by the value of plan assets, the projected and actual rate of returnon plan assets and the actuarial assumptions we use to measure our defined benefit pension plan obligations, including the rate atwhich future obligations are discounted.

We cannot predict whether changing market or economic conditions, regulatory changes or other factors will increase ourpension expenses or our funding obligations, diverting funds we would otherwise apply to other uses.

We have calculated our unfunded pension and OPEB obligations based on a number of assumptions. If our assumptions donot materialize as expected, cash expenditures and costs that we incur could be materially higher. Moreover, we cannot be certainthat regulatory changes will not increase our obligations to provide these or additional benefits. These obligations also mayincrease substantially in the event of adverse medical cost trends or unexpected rates of early retirement, particularly forbargaining unit retirees for whom there is currently no retiree healthcare cost cap. Early retirement rates likely would increasesubstantially in the event of a mine closure.

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Our sales and competitive position depend on the ability to transport our products to our customers at competitive ratesand in a timely manner.

In our U.S. and Eastern Canadian iron ore operations, disruption of the lake and ocean-going freighter and rail transportationservices because of weather-related problems, including ice and winter weather conditions on the Great Lakes or St. LawrenceSeaway, strikes, lock-outs or other events, could impair our ability to supply iron ore pellets to our customers at competitive ratesor in a timely manner and, thus, could adversely affect our sales and profitability. Similarly, our North American coal operationsdepend on international freighter and rail transportation services, as well as the availability of dock capacity, and any disruptionsto those services or the lack of dock capacity could impair our ability to supply coal to our customers at competitive rates or in atimely manner and, thus, could adversely affect our sales and profitability. Further, less dredging, particularly at Great Lakesports, could impact negatively our ability to move our iron ore and coal products because less dredging results in lower waterlevels, which restricts the tonnage that freighters can haul, resulting in higher freight rates.

Our Asia Pacific iron ore and coal operations are also dependent upon rail and port capacity. Disruptions in rail service oravailability of dock capacity could similarly impair our ability to supply iron ore and coal to our customers, thereby adverselyaffecting our sales and profitability. In addition, our Asia Pacific iron ore operations are also in direct competition with the majorworld seaborne exporters of iron ore and our customers face higher transportation costs than most other Australian producers toship our products to the Asian markets because of the location of our major shipping port on the south coast of Australia. Further,increases in transportation costs, decreased availability of ocean vessels or changes in such costs relative to transportation costsincurred by our competitors, could make our products less competitive, restrict our access to certain markets and have an adverseeffect on our sales, margins and profitability.

Our operating expenses could increase significantly if the price of electrical power, fuel or other energy sources increases.

Operating expenses at all of our mining locations are sensitive to changes in electricity prices and fuel prices, includingdiesel fuel and natural gas prices. These items make up approximately 19 percent in the aggregate of our operating costs in ourU.S. Iron Ore and Eastern Canadian Iron Ore locations. Prices for electricity, natural gas and fuel oils can fluctuate widely withavailability and demand levels from other users. During periods of peak usage, supplies of energy may be curtailed and we maynot be able to purchase them at historical rates. While we have some long-term contracts with electrical suppliers, we are exposedto fluctuations in energy costs that can affect our production costs. As an example, our Empire and Tilden mines are subject tochanges in WEPCO’s rates, such as base interim rate changes that WEPCO may self-implement and final rate changes that areapproved by the MPSC in response to an application filed by WEPCO. These procedures have resulted in several rate increasessince 2008, when Empire and Tilden’s special contracts for electric service with WEPCO expired. We enter into forward fixed-price supply contracts for natural gas and diesel fuel for use in our operations. Those contracts are of limited duration and do notcover all of our fuel needs, and price increases in fuel costs could cause our profitability to decrease significantly.

In addition, U.S. public utilities are expected to pass through additional capital and operating cost increases related to newU.S. pending environmental regulations that are expected to require significant capital investment and use of cleaner fuels overthe next five years and may impact U.S. coal-fired generation capacity. We are estimating that power rates for our electricity-intensive operations could increase above 2011 levels by up to 33 percent by 2016, representing an annual power spend increaseof approximately $80 million by 2016.

Natural disasters, weather conditions, disruption of energy, unanticipated geological conditions, equipment failures, andother unexpected events may lead our customers, our suppliers, or our facilities to curtail production or shut downoperations.

Operating levels within the mining industry are subject to unexpected conditions and events that are beyond the industry’scontrol. Those events could cause industry members or their suppliers to curtail production or shut down a portion or all of theiroperations, which could reduce the demand for our iron ore and coal products, and could affect adversely our sales, margins andprofitability.

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Interruptions in production capabilities inevitably will increase our production costs and reduce our profitability. We do nothave meaningful excess capacity for current production needs, and we are not able to quickly increase production at one mine tooffset an interruption in production at another mine.

A portion of our production costs are fixed regardless of current operating levels. As noted, our operating levels are subjectto conditions beyond our control that can delay deliveries or increase the cost of mining at particular mines for varying lengths oftime. These conditions include weather conditions (for example, extreme winter weather, tornados, floods and availability ofprocess water due to drought) and natural disasters, pit wall failures, unanticipated geological conditions, including variations inthe amount of rock and soil overlying the deposits of iron ore and coal, variations in rock and other natural materials andvariations in geologic conditions and ore processing changes. For example, a tornado disrupted certain mining operations inAlabama, where our Oak Grove coal operation has been negatively impacted.

The manufacturing processes that take place in our mining operations, as well as in our processing facilities, depend oncritical pieces of equipment. This equipment may, on occasion, be out of service because of unanticipated failures. In addition,many of our mines and processing facilities have been in operation for several decades, and the equipment is aged. In the future,we may experience additional material plant shutdowns or periods of reduced production because of equipment failures. Further,remediation of any interruption in production capability may require us to make large capital expenditures that could have anegative effect on our profitability and cash flows. Our business interruption insurance would not cover all of the lost revenuesassociated with equipment failures. Longer-term business disruptions could result in a loss of customers, which adversely couldaffect our future sales levels, and therefore our profitability.

Regarding the impact of unexpected events happening to our suppliers, many of our mines are dependent on one source forelectric power and for natural gas. A significant interruption in service from our energy suppliers due to terrorism, weatherconditions, natural disasters or any other cause can result in substantial losses that may not be fully recoverable, either from ourbusiness interruption insurance or responsible third parties.

We are subject to extensive governmental regulation, which imposes, and will continue to impose, significant costs andliabilities on us, and future regulation could increase those costs and liabilities or limit our ability to produce iron ore andcoal products.

We are subject to various federal, provincial, state and local laws and regulations in each jurisdiction in which we haveoperations on matters such as employee health and safety, air quality, water pollution, plant and wildlife protection, reclamationand restoration of mining properties, the discharge of materials into the environment, and the effects that mining has ongroundwater quality and availability. Numerous governmental permits and approvals are required for our operations. We cannotbe certain that we have been or will be at all times in complete compliance with such laws, regulations and permits. If we violateor fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators.

Prior to commencement of mining, we must submit to and obtain approval from the appropriate regulatory authority of plansshowing where and how mining and reclamation operations are to occur. These plans must include information such as thelocation of mining areas, stockpiles, surface waters, haul roads, tailings basins and drainage from mining operations. Allrequirements imposed by any such authority may be costly and time-consuming and may delay commencement or continuation ofexploration or production operations. Specifically, there are several notable proposed or recently enacted rulemakings or activitiesto which we would be subject or that would further regulate and/or tax our customers, namely the North American integratedsteel producer customers that may also require us or our customers to reduce or otherwise change operations significantly or incuradditional costs depending on their ultimate outcome. These proposed rules and regulations include: Climate Change and GHGRegulation, Regional Haze, NO and SO National Ambient Air Quality Standards, various National Emission Standards forHazardous Air Pollutants/Maximum Achievable Control Technologies standards, new water quality standards and the CSAPR, aswell as increased administrative and Legislative Initiatives related to Coal Mining Activities, the Minnesota Mercury TotalMaximum Daily Load Implementation and Selenium Discharge Regulation. Such new legislation, regulations or orders, ifenacted, could have a material adverse effect on our business, results of operations, financial condition or profitability.

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Further, we are subject to a variety of potential liability exposures arising at certain sites where we do not currently conductoperations. These sites include sites where we formerly conducted iron ore mining or processing or other operations, inactivesites that we currently own, predecessor sites, acquired sites, leased land sites and third-party waste disposal sites. We may benamed as a responsible party at other sites in the future and we cannot be certain that the costs associated with these additionalsites will not be material.

We also could be held liable for any and all consequences arising out of human exposure to hazardous substances used,released or disposed of by us or other environmental damage, including damage to natural resources. In particular, we and certainof our subsidiaries are involved in various claims relating to the exposure of asbestos and silica to seamen who sailed on theGreat Lakes vessels formerly owned and operated by certain of our subsidiaries. The full impact of these claims, as well aswhether insurance coverage will be sufficient and whether other defendants named in these claims will be able to fund any costsarising out of these claims, continues to be unknown.

Our North American coal operations are subject to increasing levels of regulatory oversight, making it more difficult toobtain and maintain necessary operating permits.

The current political and regulatory environment in the U.S. is disposed negatively toward coal mining, with particular focuson certain categories of mining such as mountaintop removal techniques. Therefore, our coal mining operations in North Americaare subject to increasing levels of scrutiny. U.S. regulatory efforts targeted at eliminating or minimizing the adverseenvironmental impacts of mountaintop coal mining practices have impacted all types of coal operations. These regulatoryinitiatives could cause material impacts, delays or disruptions to our coal operations due to our inability to obtain new or renewedpermits or modifications to existing permits.

Underground mining is subject to increased safety regulation and may require us to incur additional compliance costs.

Recent mine disasters have led to the enactment and consideration of significant new federal and state laws and regulationsrelating to safety in underground coal mines. These laws and regulations include requirements for constructing and maintainingcaches for the storage of additional self-contained self rescuers throughout underground mines; installing rescue chambers inunderground mines; constant tracking of and communication with personnel in the mines; installing cable lifelines from the mineportal to all sections of the mine to assist in emergency escape; submission and approval of emergency response plans; and newand additional safety training. Additionally, new requirements for the prompt reporting of accidents and increased fines andpenalties for violations of these and existing regulations have been implemented. These new laws and regulations may cause us toincur substantial additional costs, which may impact adversely our results of operations, financial condition or profitability.

Our profitability could be affected negatively if we fail to maintain satisfactory labor relations.

The USW represents all hourly employees at our U.S. Iron Ore and Eastern Canadian Iron Ore operations owned and/ormanaged by Cliffs or its subsidiary companies except for Northshore and Bloom Lake. Effective September 1, 2008, our Empireand Tilden mines in Michigan, and United Taconite and Hibbing mines in Minnesota, entered into four-year labor agreementswith the USW that cover approximately 2,400 USW-represented employees at those mines. Those agreements are effectivethrough August 31, 2012. Effective March 1, 2009, Wabush entered into a five-year labor agreement with the USW that coversapproximately 660 hourly employees, which is effective through February 28, 2014. The UMWA represents approximately 810hourly employees at our Pinnacle location in West Virginia and our Oak Grove location in Alabama. A new five and one-halfyear labor agreement with respect to those mines was entered into with the UMWA effective July 1, 2011 through December 31,2016. Approximately 120 hourly employees at the railroads we own that transport products among our facilities are representedby seven separate rail unions. The moratorium for bargaining as to each of those unions under the Railway Labor Act expired onDecember 31, 2009. Since then five-year agreements have been reached with four of the unions, and the moratorium onbargaining expires as to each on December 31, 2014. Negotiations are actively underway with the remaining three unions and it iscommon for

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bargaining under this Act to last a number of years after the moratorium has expired before a new agreement is reached. Withrespect to Railway Labor Act bargaining, work stoppages cannot occur until the matter has been mediated before a federalmediator. With respect to agreements with the USW, work stoppages are possible if new agreements are not reached before theexisting agreements expire. As is customary, bargaining with the USW as to the Empire, Tilden, United Taconite and Hibbingmines is scheduled for the summer of 2012 prior to August 31, 2012, which is the date through which the agreements areeffective. Four new labor agreements have been negotiated with the USW for those mines since the last work stoppage in 1993. Ifthe collective bargaining agreements relating to the employees at our mines or railroads are not renegotiated successfully prior totheir expiration, we could face work stoppages or labor strikes.

We may encounter labor shortages for critical operational positions, which could affect adversely our ability to produceour products.

We are predicting a long-term shortage of skilled workers for the mining industry and competition for the available workerslimits our ability to attract and retain employees. At our mining locations, many of our mining operational employees areapproaching retirement age. As these experienced employees retire, we may have difficulty replacing them at competitive wages.As a result, wages are increasing to address the turnover.

Our profitability could be affected adversely by the failure of outside contractors to perform.

Asia Pacific Iron Ore, Sonoma and Eastern Canadian Iron Ore, use contractors to handle many of the operational phases oftheir mining and processing operations and therefore are subject to the performance of outside companies on key productionareas.

We may be unable to successfully identify, acquire and integrate strategic acquisition candidates.

Our ability to grow successfully through acquisitions depends upon our ability to identify, negotiate, complete and integratesuitable acquisitions and to obtain necessary financing. It is possible that we will be unable to successfully complete potentialacquisitions. In addition, the costs of acquiring other businesses could increase if competition for acquisition candidates increases.Additionally, the success of an acquisition is subject to other risks and uncertainties, including our ability to realize operatingefficiencies expected from an acquisition, the size or quality of the resource, delays in realizing the benefits of an acquisition,difficulties in retaining key employees, customers or suppliers of the acquired businesses, difficulties in maintaining uniformcontrols, procedures, standards and policies throughout acquired companies, the risks associated with the assumption ofcontingent or undisclosed liabilities of acquisition targets, the impact of changes to our allocation of purchase price, and theability to generate future cash flows or the availability of financing. We cannot provide assurance that we will be able tosuccessfully identify strategic candidates or acquire any such businesses and if we do identify and acquire any such business, wecannot provide assurance that we would be able to successfully integrate such acquired business in a timely manner or at all.

We continually must replace reserves depleted by production. Our exploration activities may not result in additionaldiscoveries.

Our ability to replenish our ore reserves is important to our long-term viability. Depleted ore reserves must be replaced byfurther delineation of existing ore bodies or by locating new deposits in order to maintain production levels over the long term.Resource exploration and development are highly speculative in nature. Our exploration projects involve many risks, requiresubstantial expenditures and may not result in the discovery of sufficient additional mineral deposits that can be mined profitably.Once a site with mineralization is discovered, it may take several years from the initial phases of drilling until production ispossible, during which time the economic feasibility of production may change. Substantial expenditures are required to establishrecoverable proven and probable reserves and to construct mining and processing facilities. As a result, there is no assurance thatcurrent or future exploration programs will be successful. There is a risk that depletion of reserves will not be offset bydiscoveries or acquisitions.

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The proposed Minerals Resource Rent Tax by the Australian Federal Government could affect adversely our results ofoperations in Australia.

In July 2010, the Australian Federal Government announced its intention to introduce a new MRRT applicable to the miningof iron ore and coal. The MRRT is proposed to apply from July 1, 2012 to existing and future projects at an effective tax rate of22.5 percent. In December 2010, the Australian government’s taskforce that was charged with recommending design principlesfor the new taxes delivered its recommendations on the MRRT to the Australian government. The recommendations paperprovided detail about key features of the MRRT and includes industry and public input that assisted in final development of theframework. The first release of the government’s exposure draft legislation came out on June 10, 2011. Upon consideration of thepublic’s comments and recommendations, the second exposure draft was released on September 18, 2011, with a closing date ofOctober 5, 2011 for public consultation. The MRRT bill was introduced into the lower house of Parliament on November 2, 2011where it was passed on November 23, 2011. The MRRT bill is now scheduled for debate by the Senate in early 2012. Thismomentum by the Australian government indicates its aim to pass the bill through both houses of Parliament in time for theproposed July 1, 2012 start date. If implemented as proposed, the MRRT may have a significant impact on our financialstatements. The impacts of the MRRT will be recorded in the financial period during which the legislation is enacted.

Changes in laws or regulations or the manner of their interpretation or enforcement adversely could impact our financialperformance and restrict our ability to operate our business or execute our strategies.

New laws or regulations, or changes in existing laws or regulations, or the manner of their interpretation or enforcement,could increase our cost of doing business and restrict our ability to operate our business or execute our strategies. This includes,among other things, the possible taxation under U.S. law of certain income from foreign operations, compliance costs andenforcement under the Dodd-Frank Act, and costs associated with complying with the PPACA and the Reconciliation Act and theregulations promulgated thereunder. The impact of the U.S. health care reform will be phased in between 2011 and 2014 and willlikely have a significant adverse impact on our costs of providing employee health benefits. In addition, as a result of the healthcare reform legislation that has been passed, our results of operations were negatively impacted by a non-cash income tax chargeof approximately $16.1 million in the first quarter of 2010 to reflect the reduced deductibility of the postretirement prescriptiondrug coverage. As with any significant government action, the provisions of the health care reform legislation are still beingassessed and may have additional financial accounting and reporting ramifications. The impact of any such changes, which wecontinue to evaluate on our business operations and financial statements, remains uncertain.

Mine closures entail substantial costs, and if we close one or more of our mines sooner than anticipated, our results ofoperations and financial condition may be affected significantly and adversely.

If we close any of our mines, our revenues would be reduced unless we were able to increase production at our other mines,which may not be possible. The closure of a mining operation involves significant fixed closure costs, including acceleratedemployment legacy costs, severance-related obligations, reclamation and other environmental costs, and the costs of terminatinglong-term obligations, including energy contracts and equipment leases. We base our assumptions regarding the life of our mineson detailed studies we perform from time to time, but those studies and assumptions are subject to uncertainties and estimates thatmay not be accurate. We recognize the costs of reclaiming open pits and shafts, stockpiles, tailings ponds, roads and other miningsupport areas based on the estimated mining life of our property. If we were to significantly reduce the estimated life of any ofour mines, the mine-closure costs would be applied to a shorter period of production, which would increase production costs perton produced and could significantly and adversely affect our results of operations and financial condition.

A North American mine permanent closure could significantly increase and accelerate employment legacy costs, includingour expense and funding costs for pension and other postretirement benefit obligations. A number of employees would be eligiblefor immediate retirement under special eligibility rules that apply upon a mine closure. All employees eligible for immediateretirement under the pension plans at the time of the permanent mine closure also would be eligible for postretirement health andlife insurance benefits, thereby

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accelerating our obligation to provide these benefits. Certain mine closures would precipitate a pension closure liabilitysignificantly greater than an ongoing operation liability. Finally, a permanent mine closure could trigger severance-relatedobligations, which can equal up to eight weeks of pay per employee, depending on length of service. However, no employeeentitled to an immediate pension upon closure of a mine is entitled to severance. As a result, the closure of one or more of ourmines could adversely affect our financial condition and results of operations.

We are subject to risks involving operations and sales in multiple countries.

We have a strategy to broaden our scope as a supplier of iron ore and other raw materials to the global integrated steelindustry. As we expand beyond our traditional North American base business, we will be subject to additional risks beyond thoserisks relating to our North American operations, such as fluctuations in currency exchange rates; potentially adverse taxconsequences due to overlapping or differing tax structures; burdens to comply with multiple and potentially conflicting foreignlaws and regulations, including export requirements, tariffs and other barriers, environmental health and safety requirements andunexpected changes in any of these laws and regulations; the imposition of duties, tariffs, import and export controls and othertrade barriers impacting the seaborne iron ore and coal markets; difficulties in staffing and managing multi-national operations;political and economic instability and disruptions, including terrorist attacks; disadvantages of competing against companies fromcountries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act; and uncertainties in theenforcement of legal rights and remedies in multiple jurisdictions. If we are unable to manage successfully the risks associatedwith expanding our global business, these risks could have a material adverse effect on our business, results of operations orfinancial condition.

We may have additional tax liabilities if proposed U.S. income tax law changes are adopted.

The Budget Control Act of 2011, which was signed into law by President Obama on August 2, 2011, placed a cap on U.S.Federal Government discretionary spending of $917 billion, raised the debt ceiling and created the Joint Select Committee onDeficit Reduction, the so-called “Supercommittee”. The Supercommittee was to develop a deficit reduction package that wouldbring about $1.2 trillion in savings over ten years. The President, on September 19, 2011, unveiled the Administration’s plan toreduce the U.S. Federal Government deficit by an additional $3 trillion over the next decade, largely through tax and healthcarepolicy changes that include many of the revenue offset proposals included in the Administration’s fiscal year 2012 budgetproposal, such as international tax reform and repeal of the LIFO method of accounting. The President’s plan also proposedrepealing percentage depletion for hard mineral fossil fuels and the ability to claim the domestic manufacturing deduction againstincome derived from the production of coal and other hard mineral fossil fuels. In as much as the Supercommittee failed to meetits deadline, the passage of any legislation as a result of these proposals or any other similar changes in U.S. federal income taxlaws is unclear. However, any changes could eliminate certain tax deductions that are available currently to Cliffs. The loss ofthese tax deductions would affect adversely our taxable income and without a corresponding reduction in the U.S. statutory rate,would generate additional tax liabilities.

We are subject to a variety of market risks.

Market risks include those caused by changes in the value of equity investments, changes in commodity prices, interest ratesand foreign currency exchange rates. We have established policies and procedures to manage such risks; however, certain risksare beyond our control.

Estimates relating to new development projects are uncertain and we may incur higher costs and lower economic returnsthan estimated.

Mine development projects typically require a number of years and significant expenditures during the development phasebefore production is possible. Such projects could experience unexpected problems and delays during development, constructionand mine start-up.

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Our decision to develop a project typically is based on the results of feasibility studies, which estimate the anticipatedeconomic returns of a project. The actual project profitability or economic feasibility may differ from such estimates as a result ofany of the following factors, among others:

• changes in tonnage, grades and metallurgical characteristics of ore to be mined and processed;

• higher input commodity and labor costs;

• the quality of the data on which engineering assumptions were made;

• adverse geotechnical conditions;

• availability of adequate labor force;

• availability and cost of water and power;

• fluctuations in inflation and currency exchange rates;

• availability and terms of financing;

• delays in obtaining environmental or other government permits or changes in the laws and regulations related to thosepermits;

• weather or severe climate impacts; and

• potential delays relating to social and community issues.

Our future development activities may not result in the expansion or replacement of current production with new production,or one or more of these new production sites or facilities may be less profitable than currently anticipated or may not be profitableat all, any of which could have a material adverse effect on our results of operations and financial position. Item 1B. Unresolved Staff Comments.

We have no unresolved comments from the SEC. Item 2. Properties.

The following map shows the locations of our operations:

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Following is a summary of our defined benefit pension and OPEB funding and expense for the years 2009 through 2012:

Pension OPEB Funding Expense Funding Expense 2009 $ 18.5 $ 50.8 $ 35.7 $ 25.5 2010 45.6 45.6 38.5 24.2 2011 70.1 37.8 37.4 26.8 2012 (Estimated) 66.3 54.5 41.2 29.4

Assumptions used in determining the benefit obligations and the value of plan assets for defined benefit pension plans andpostretirement benefit plans (primarily retiree healthcare benefits) that we offer are evaluated periodically by management.Critical assumptions, such as the discount rate used to measure the benefit obligations, the expected long-term rate of return onplan assets, the medical care cost trend, and the rate of compensation increase are reviewed annually.

As of December 31, 2011 and 2010, we used the following assumptions:

Pension and Other

Benefits 2011 2010 U.S. plan discount rate 4.28% 5.11% Canadian pension plan discount rate 4.00 5.00 Canadian OPEB plan discount rate 4.25 5.00 Rate of compensation increase 4.00 4.00 U.S. expected return on plan assets 8.25 8.50 Canadian expected return on plan assets 7.25 7.50

Additionally, on December 31, 2011, we adopted the IRS 2012 prescribed mortality tables (separate pre-retirement andpostretirement) to determine the expected life of our plan participants, replacing the IRS 2011 prescribed mortality tables for ourU.S. plans. The assumed mortality remained the same as the previous year for our Canadian plans, UP 1994 with full projection.

Following are sensitivities of potential further changes in these key assumptions on the estimated 2012 pension and OPEBexpense and the pension and OPEB benefit obligations as of December 31, 2011:

Increase inExpense

(In Millions)

Increase in BenefitObligation(In Millions)

Pension OPEB Pension OPEB Decrease discount rate .25 percent $ 1.9 $ 2.0 $ 32.7 $16.4 Decrease return on assets 1 percent 7.3 2.1 N/A N/A Increase medical trend rate 1 percent N/A 11.0 N/A 60.0

Changes in actuarial assumptions, including discount rates, employee retirement rates, mortality, compensation levels, planasset investment performance and healthcare costs, are determined based on analyses of actual and expected factors. Changes inactuarial assumptions and/or investment performance of plan assets may have a significant impact on our financial condition dueto the magnitude of our retirement obligations. Refer to NOTE 10 — PENSIONS AND OTHER POSTRETIREMENTBENEFITS in Item 8 for further information.

Forward-Looking Statements

This report contains statements that constitute “forward-looking statements” within the meaning of the federal securitieslaws. As a general matter, forward-looking statements relate to anticipated trends and expectations rather than historical matters.These statements speak only as of the date of this report, and we undertake no ongoing obligation, other than that imposed bylaw, to update these statements. These statements

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appear in a number of places in this report and relate to, among other things, our current expectations with respect to: our futurefinancial condition, results of operations or prospects, estimates of our economic iron ore and coal reserves; our business andgrowth strategies; and our financing plans and forecasts. You are cautioned that any such forward-looking statements are notguarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially fromthose contained in or implied by the forward-looking statements made in this report as a result of various factors, including,without limitation:

• the ability to successfully integrate acquired companies into our operations and achieve post-acquisition synergies,including without limitation, Cliffs Quebec Iron Mining Limited (formerly Consolidated Thompson);

• uncertainty or weaknesses in global economic and/or market conditions, including downward pressure on prices;

• trends affecting our financial condition, results of operations or future prospects, particularly any slowing of theeconomic growth rate of China for an extended period;

• the ability to reach agreement with our iron ore customers regarding modifications to sales contract pricing escalationprovisions to reflect a shorter-term or spot-based pricing mechanism;

• the outcome of any contractual disputes with our customers or significant energy, material or service providers or anyother litigation or arbitration;

• changes in sales volume or mix;

• the impact of price-adjustment factors on our sales contracts;

• the ability of our customers to meet their obligations to us on a timely basis or at all;

• our actual economic iron ore and coal reserves or reductions in current resource estimates;

• our ability to successfully identify and consummate any strategic investments;

• events or circumstances that could impair or adversely impact the viability of a mine and the carrying value ofassociated assets;

• the results of pre-feasibility and feasibility studies in relation to projects;

• impacts of increasing governmental regulation, including failure to receive or maintain required environmental permits,approvals, modifications or other authorization of, or from, any governmental or regulatory entity;

• uncertainties associated with unanticipated geological conditions, natural disasters, weather conditions, disruption ofenergy, equipment failures and other unexpected events;

• adverse changes in currency values, currency exchange rates and interest rates;

• our ability to maintain adequate liquidity and successfully implement our financing plans;

• our ability to maintain appropriate relations with unions and employees and renew expiring collective bargainingagreements on satisfactory terms;

• availability of capital equipment and component parts;

• the amount, and timing of, any insurance recovery proceeds with respect to our Oak Grove mine;

• risks related to international operations; and

• the potential existence of significant deficiencies or material weakness in our internal control over financial reporting.

For additional factors affecting the business of Cliffs, refer to Part I — Item 1A. Risk Factors.

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You are urged to carefully consider these risk factors. All forward-looking statements attributable to us expressly arequalified in their entirety by the foregoing cautionary statements. Item 7A. Quantitativeand Qualitative Disclosures About Market Risk.

Information regarding our Market Risk is presented under the caption Market Risk, which is included in Item 7 and isincorporated by reference and made a part hereof.

94


EXHIBIT C Excerpts of the 3/13/12 Press Release


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EXHIBIT D Excerpts of the 4/25/12 Press Release


CLIFFS NATURAL RESOURCES INC. • 200 PUBLIC SQUARE • SUITE 3300 • CLEVELAND, OH 44114-2544

1

NEWS RELEASE –

Cliffs Natural Resources Inc. Reports First-Quarter 2012 Results

Revenue Increases 7% over Last Year to $1.3 Billion; Net Income Attributable to Cliffs’ Shareholders Reported As $376 Million, or $2.63 Per Diluted Share

Global Iron Ore Sales Volume Sets New First-Quarter Record of 8 Million Tons

North American Coal Achieves Record Sales and Production Volumes and Increased Profitability

CLEVELAND—April 25, 2012—Cliffs Natural Resources Inc. (NYSE: CLF) (Paris: CLF) today

reported first-quarter results for the period ended March 31, 2012. Consolidated revenues were

up 7% to a first-quarter record of $1.3 billion, from $1.2 billion in the same quarter last year. The

increase was driven by higher sales volumes ac ross all of the Compan y’s reporting segments,

partially offset by lower year-over-year pricing for the commodities Cliffs sells.

Joseph Carrabba, the Compan y’s chairman, president an d chief executive office r, said, “Our

ability to increase sales volumes across all busi ness segments is the direct result of continue d

execution of the organic growth projects acquired over recent years. We recognize that at times,

this growth presents challenges; however, we are committed to optimizing all of our operations,

both new a nd old, to deliver increased production reliability and scale. As announced last

month, we are shifting our focus from large-scale acquisitions to project management within our

internal pipeline.”

During the quarter, Cliffs’ consolidated sales margin of $304 million wa s unfavorably impacted

by higher cost of g oods sold rates, specifically, higher mining, maintenance and transportation

costs. Cliffs also indicated that the prior year’s first-quarter sales margin of $600 million included

a $179 million favorable impact from negotiated settl ements with two o f the Company’s largest

customers.

Net income attributable to Cliffs’ common shareholders was $376 million, or $2.63 per diluted

share, down from $423 million, or $3.11 per diluted share, in the first quarter o f 2011. The

decrease was primarily driven b y the lower sales margin indicated ab ove and the absence of



10

About Cliffs Natural Resources Inc. Cliffs Natural Resources Inc. is a n international mining and natural resources company. A member of the S&P 500 Index, the Compa ny is a major global iron ore pro ducer and a significant producer of high- and low-volatile met allurgical coal. Cliffs’ strategy is to continually achieve greater scale a nd diversification in the mining industry through a focus on serving the world’s largest and fastest growing steel markets. Driven by the core values of social, environmental and capital stewardship, Cliffs associates across the globe endeavor to provide all stakeholders operating and financial transparency. The Company is organ ized through a global commercial group responsible for sales and delivery of Cliffs products and a global operations group responsible f or the production of the minerals the Company markets. Cliffs operates iron ore an d coal mines in North America and two iron ore mining complexes in Western Austr alia. The Company also has a 45% economic interest in a coking and thermal co al mine in Queensland, Australia. In addition, Cliffs has a major chromite project, in the pre-feasibility stage of development, located in Ontario, Canada. News releases and other information on the Company are available on the Internet at: http://www.cliffsnaturalresources.com Forward-Looking Statements This release contains “forward-looking” statements within the safe ha rbor protections of the fede ral securities laws. Although the Compa ny believes that its forward -looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties relating to Cliffs’ operations and business environment that are difficult to predict and may be beyond Cliffs’ control. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements for a vari ety of reason s including: the un certainty or wea kness in global economic and/or market conditions; trends affecting our financial condition, results of operations or future prospects, particularly any slowing of the eco nomic growth rate in China for an extended period; the ability to succe ssfully integrate acquired companies and achi eve post-acquisition synergies, including without limitation, Consolidated Thompson; the abili ty to reach a greement with our iron o re customers regarding modifications to sales contract pricing escalation provisions to reflect a sho rter-term or spot-based pricing mechanism; the outco me of any contra ctual disputes with our customers, joint ventu re partners or significant energy, materials or services providers, or any other litigation o r arbitration; changes in sales volume or mix; the impact of price-adjustment factors on our sales contracts; our ability to successfully identify and consummate any strategic investments; unanticipated downturns in business relationships with customers or their purchases from us; events or circum stances that could impair or adversely impact the viability of a mine and the carrying value of associated assets; the results of pre-feasibility and feasibility studies in rela tion to proje cts; impacts o f increasing governmental regulation, including failure to receive or maintain required environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity; the ab ility to achieve planned production rates or levels; our actual economic ore reserves or reductions in current resource estimates; adverse changes in currency values, currency exchange rates and interest rates; the ability to maintain adequate liquidity and successfully implement our financing plans; our ability to maintain appropriate relations with unions and employees and renew expiring collective bargaining agreements on satisfactory terms; availability of capital equipment and component parts; the amount and including timing of any insurance recovery proceeds with respect to Oak Grove Mine; risks related to inte rnational operations; potential existence of significant deficiencies or material weakness in our internal control over financial reporting; and problems or uncertainties with productivity, third-party contractors, unanticipated geological conditions, weather conditions, natural disasters, tons mined, changes in cost factors, the supply or price of energy, equipment failures, transportation, mine-closure obligations and employee benefit costs and other risks of the mining indu stry; and other factors and risks that are set fort h in the Com pany’s most recently filed reports with the Secu rities and Exchange Commission. The information contained herein speaks as of the date of th is release and may be superseded by subsequent events. Except as may be required by applicable securities laws, we do not undertake any obligation to revise or update any forward-looking statements contained in this release.


EXHIBIT E Excerpts of the 7/25/12 Press Release


July 25, 2012

Cliffs Natural Resources Inc. Reports Second-Quarter 2012 Results

Company Reports Revenue of $1.6 Billion and Net Income Attributable to Cliffs' Shareholders of $258 Million, or $1.81 Per Diluted ShareYear-to-Date Global Iron Ore Sales Volume Increases 23% to 19 Million TonsRecord Sales Volume Achieved Despite Softer Year-over-Year Market Conditions

CLEVELAND, July 25, 2012 /PRNewswire/ -- Cliffs Natural Resources Inc. (NYSE: CLF) (Paris: CLF) today reported second-quarter results for the period ended June 30, 2012. Consolidated revenues decreased 10% for the second quarter to $1.6 billion, from $1.8 billion in the same quarter last year. The decrease was primarily driven by lower year-over-year pricing for the commodity products the Company markets. Lower revenues and increased cost of goods sold driven by higher labor, mining, and maintenance expenses resulted in a 39% decrease in consolidated sales margin to $449 million compared with the second quarter of 2011. Partially offsetting the sales margin decrease were higher global iron ore sales volumes of 13% driven by incremental volume from Eastern Canadian Iron Ore related to the acquisition of Bloom Lake Mine and the completion of Cliffs' expansion project in Asia Pacific Iron Ore.

(Logo: http://photos.prnewswire.com/prnh/20101104/CLIFFSLOGO )

Joseph A. Carrabba, Cliffs' chairman, president and chief executive officer, said, "While the current pricing environment is softer year over year, the underlying fundamentals supporting Cliffs' long-term strategy remain intact. We will continue to execute our expansion plans at Bloom Lake Mine. Cliffs has the potential to build an iron ore business in Eastern Canada rivaling our legacy U.S. Iron Ore operations in size and scope. This business will also have full access to the seaborne market and developing economies around the world."

Net income attributable to Cliffs' common shareholders was $258 million, or $1.81 per diluted share, down from $409 million, or $2.92 per diluted share in the second quarter of 2011. The decrease was primarily due to lower consolidated sales margin, as indicated above, and the absence of a significant foreign currency hedging gain, which was reported in the second quarter of 2011. Partially offsetting the decrease were lower year-over-year interest expense and a $29 million favorable impact recorded as miscellaneous net, primarily related to foreign currency remeasurements, the sale of investments and receipt of insurance proceeds. Also, during the quarter, the Company recorded a $27 million discrete tax item related to the favorable resolution of a tax position.

U.S. Iron Ore

Three Months Ended Six Months EndedJune 30, June 30,

2012 2011 2012 2011 (1)Volumes - In Thousands of Long Tons

Total sales volume 5,444 5,762 8,823 8,581Cliffs' share of total production volume 5,366 6,161 10,665 11,321

Sales Margin - In Millions Revenues from product sales and services $ 705.0 $ 885.2 $ 1,146.7 $ 1,395.3Cost of goods sold and operating expenses 418.9 444.1 693.8 592.9

Sales margin $ 286.1 $ 441.1 $ 452.9 $ 802.4

Sales Margin - Per Long Ton Revenues from product sales and services* $ 119.51 $ 137.81 $ 118.69 $ 147.19Cash cost** 62.59 57.40 62.03 49.08Depreciation, depletion and amortization 4.37 3.85 5.33 4.60Cost of goods sold and operating expenses* 66.96 61.25 67.36 53.68

Sales margin $ 52.55 $ 76.56 $ 51.33 $ 93.51

* Excludes revenues and expenses related to freight, which are offsetting and have no impact on sales margin.

** Cash cost per ton is defined as cost of goods sold and operating expenses per ton less depreciation, depletion and amortization per ton.

(1) 2011 first-half revenues and cost of goods sold include a benefit of $129 million and $54 million, respectively, related to retroactive adjustments for tons shipped


http://photos.prnewswire.com/prnh/20101104/CLIFFSLOGO

Outlook for Amapa and Sonoma (Metric tons, F.O.B. the port)

Cliffs anticipates the outlook for its interests in Amapa to be consistent with its previously reported full-year 2012 expectations. As previously disclosed, Cliffs' sale of its economic interests in Sonoma is expected to be completed in the fourth quarter of 2012.

SG&A Expenses & Other Expectations

Cliffs is reducing its full-year 2012 SG&A expense expectation to approximately $300 million from its previous expectation of $325 million. The decrease is primarily driven by the timing of spending for certain corporate projects and a continued focus on reducing Company-wide overhead expenses.

Cliffs is also maintaining its full-year cash outflows expectation of approximately $165 million to support future growth. This is comprised of approximately $90 million related to exploration and drilling programs and approximately $75 million related to its chromite project in Ontario, Canada.

For 2012, Cliffs anticipates a full-year effective tax rate of approximately 2%. Excluding the previously disclosed enacted Minerals Resource Rent Tax and other discrete tax items, the Company anticipates its effective tax rate to be approximately 22%. In addition, Cliffs expects its full-year 2012 depreciation, depletion and amortization to be approximately $530 million.

2012 Capital Budget Update and Other Uses of Cash

Due to the Company's revised outlook, Cliffs is decreasing its full-year 2012 cash flow from operations expectation to approximately $1.3 billion, from its previous expectation of $1.7 billion.

Cliffs is maintaining its previously disclosed 2012 capital expenditures budget of approximately $1 billion, comprised of approximately $300 million in sustaining capital and $700 million in growth and productivity-improvement capital.

Cliffs will host a conference call to discuss its second-quarter 2012 results tomorrow, July 26, 2012, at 10 a.m. ET. The call will be broadcast live and archived on Cliffs' website: www.cliffsnaturalresources.com.

About Cliffs Natural Resources Inc.

Cliffs Natural Resources Inc. is an international mining and natural resources company. A member of the S&P 500 Index, the Company is a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. Cliffs' strategy is to continually achieve greater scale and diversification in the mining industry through a focus on serving the world's largest and fastest growing steel markets. Driven by the core values of social, environmental and capital stewardship, Cliffs associates across the globe endeavor to provide all stakeholders operating and financial transparency.

The Company is organized through a global commercial group responsible for sales and delivery of Cliffs products and a global operations group responsible for the production of the minerals the Company markets. Cliffs operates iron ore and coal mines in North America and two iron ore mining complexes in Western Australia. In addition, Cliffs has a major chromite project, in the feasibility stage of development, located in Ontario, Canada.

News releases and other information on the Company are available on the Internet at: http://www.cliffsnaturalresources.com


This release contains forward-looking statements within the meaning of the federal securities laws. Although the Company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties relating to Cliffs' operations and business environment that are difficult to predict and may be beyond Cliffs' control.

per ton $115 - $120 $115 - $120 $130 - $135 $140 - $145 $120 - $125 $140 - $145 $130 - $135 $130 - $135

Cash cost per ton $60 - $65 $60 - $65 $100 - $105 $80 - $85 $65 - $70 $70 - $75 $110 - $115 $105 - $110

DD&A per ton $4 $5 $18 $18 $13 $13 $13 $14

(1) U.S. Iron Ore tons are reported in long tons.

(2) Eastern Canadian lron Ore tons are reported in metric tons, F.O.B. Eastern Canada.

(3) Asia Pacific Iron Ore tons are reported in metric tons, F.O.B. the port.

(4) North American Coal tons are reported in short tons, F.O.B. the mine.


http://www.cleveland-cliffs.com/

http://www.cliffsnaturalresources.com/

Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements for a variety of reasons including without limitation: the uncertainty or weakness in global economic and/or market conditions including downward pressure on prices and reduced market demand; trends affecting our financial condition, results of operations or future prospects, particularly any slowing of the economic growth rate in China for an extended period; the ability to successfully integrate acquired companies and achieve post-acquisition synergies, including without limitation, Consolidated Thompson; the ability to reach agreement with our iron ore customers regarding modifications to sales contract pricing escalation provisions; the outcome of any contractual disputes with our customers, joint venture partners or significant energy, materials or services providers, or any other litigation or arbitration; changes in sales volume or mix; the impact of price-adjustment factors on our sales contracts; our ability to successfully identify and consummate any strategic investments; unanticipated downturns in business relationships with customers or their purchases from us; events or circumstances that could impair or adversely impact the viability of a mine and the carrying value of associated assets; the results of pre-feasibility and feasibility studies in relation to projects; impacts of increasing governmental regulation and related costs, including failure to receive or maintain required environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity; the ability to achieve planned production rates or levels; our actual economic ore reserves or reductions in current resource estimates; adverse changes in currency values, currency exchange rates, interest rates and tax laws; the ability to maintain adequate liquidity and successfully implement our financing plans; our ability to maintain appropriate relations with unions and employees and renew expiring collective bargaining agreements on satisfactory terms; availability of capital equipment and component parts; the amount and timing of any insurance recovery proceeds with respect to Oak Grove Mine; risks related to international operations; potential existence of significant deficiencies or material weakness in our internal control over financial reporting; and problems or uncertainties with productivity, third-party contractors, unanticipated geological conditions, weather conditions, natural disasters, tons mined, changes in cost factors, the supply or price of energy, equipment failures, transportation, mine-closure obligations and employee benefit costs and other risks of the mining industry; and other factors and risks that are set forth in the Company's most recently filed reports with the Securities and Exchange Commission. The information contained herein speaks as of the date of this release and may be superseded by subsequent events. Except as may be required by applicable securities laws, we do not undertake any obligation to revise or update any forward-looking statements contained in this release.

FINANCIAL TABLES FOLLOW

CLIFFS NATURAL RESOURCES INC. AND SUBSIDIARIESSTATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED OPERATIONS

(In Millions, Except Per Share Amounts)Three Months Ended

June 30,Six Months Ended

June 30,2012 2011 2012 2011

REVENUES FROM PRODUCT SALES AND SERVICESProduct $ 1,546.6 $1,705.0 $ 2,747.5 $ 2,838.0Freight and venture partners' cost reimbursements 79.4 100.8 143.2 151.0

1,626.0 1,805.8 2,890.7 2,989.0COST OF GOODS SOLD AND OPERATING EXPENSES (1,176.7) (1,074.2) (2,137.9) (1,657.9)

SALES MARGIN 449.3 731.6 752.8 1,331.1OTHER OPERATING INCOME (EXPENSE)

Selling, general and administrative expenses (83.5) (69.4) (146.5) (115.1)Consolidated Thompson acquisition costs - (18.0) - (22.9)Exploration costs (29.1) (18.2) (47.9) (28.8)Miscellaneous - net 28.6 (8.2) 38.0 (4.4)

(84.0) (113.8) (156.4) (171.2)OPERATING INCOME 365.3 617.8 596.4 1,159.9

OTHER INCOME (EXPENSE)Changes in fair value of foreign currency contracts, net - 50.4 0.3 106.7Interest expense (47.1) (81.3) (94.4) (119.7)Other non-operating income (expense) (0.5) 2.9 3.0 5.9

(47.6) (28.0) (91.1) (7.1)INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

AND EQUITY LOSS FROM VENTURES 317.7 589.8 505.3 1,152.8INCOME TAX (EXPENSE) BENEFIT (42.9) (150.4) 167.9 (292.6)EQUITY LOSS FROM VENTURES (0.5) (11.3) (7.4) (8.3)INCOME FROM CONTINUING OPERATIONS 274.3 428.1 665.8 851.9LOSS FROM DISCONTINUED OPERATIONS, net of tax - (0.7) (0.1) (1.1)NET INCOME 274.3 427.4 665.7 850.8

LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST 16.3 18.3 31.9 18.3

NET INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS $ 258.0 $ 409.1 $ 633.8 $ 832.5


EXHIBIT F Excerpts of the 10/24/12 Press Release


CLIFFS NATURAL RESOURCES INC. • 200 PUBLIC SQUARE • SUITE 3300 • CLEVELAND, OH 44114-2544 1

NEWS RELEASE

Cliffs Natural Resources Inc. Reports Third-Quarter 2012 Results

• Company Reports Revenue of $1.5 Billion and Net Income Attributable to Cliffs’ Shareholders of $85.1 Million, or $0.59 Per Diluted Share

• Seaborne Pricing for Iron Ore Decreases 36% Year Over Year

• Year-to-Date Global Iron Ore Sales Volume Increases 7% to 31 Million Tons

CLEVELAND—Oct. 24, 2012—Cliffs Natural Resources Inc. (NYSE: CLF) (Paris: CLF) today reported

third-quarter results for the period ended Sept. 30, 2012. Consolidated revenues decreased 26% for the

third quarter to $1.5 billion, from $2.1 billion in the same quarter last year. This was primarily driven by a

36% decrease in year-over-year pricing for seaborne iron ore. Reduced revenues, along with increased

labor, mining, and maintenance expenses, resulted in a 76% decrease in consolidated sales margin to

$198 million, compared with the third quarter of 2011.

Joseph A. Carrabba, Cliffs’ chairman, president and chief executive officer, said, "During this volatile

pricing environment, management remains focused on executing the Phase II expansion at Bloom Lake

and maintaining our cash dividend and investment-grade rating. Our U.S. Iron Ore business continues to

deliver consistent performance, generating strong results quarter over quarter. With our diverse customer

base in the U.S. and Asia, we believe the Company is well positioned to manage through this business

cycle."

Net income attributable to Cliffs’ common shareholders was $85 million, or $0.59 per diluted share, down

from $601 million, or $4.15 per diluted share, in the third quarter of 2011. The decrease was primarily

due to lower consolidated sales margin, as indicated above. Primarily driven by lower pricing, the

Company has reduced its anticipated full-year income from continuing operations. As a result, Cliffs

decreased its expected full-year effective tax rate. Also during the quarter, Sonoma Coal was reported as

a discontinued operation and generated a $2.7 million loss, which was included within net income

attributable to Cliffs' common shareholders.


CLIFFS NATURAL RESOURCES INC. • 200 PUBLIC SQUARE • SUITE 3300 • CLEVELAND, OH 44114-2544 11


This release contains forward-looking statements within the meaning of the federal securities laws. Although the Company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties relating to Cliffs' operations and business environment that are difficult to predict and may be beyond Cliffs' control. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements for a variety of reasons including without limitation: the uncertainty or weakness in global economic and/or market conditions, including downward pressure on prices and reduced market demand; trends affecting our financial condition, results of operations or future prospects, particularly any slowing of the economic growth rate in China for an extended period; our ability to successfully integrate acquired companies into our operations and achieve post-acquisition synergies, including without limitation, Cliffs Quebec Iron Mining Limited (formerly Consolidated Thompson); our ability to successfully complete planned divestitures; our ability to reach agreement with our iron ore customers regarding modifications to sales contract pricing escalation provisions to reflect a shorter-term or spot-based pricing mechanism; the outcome of any contractual disputes with our customers, joint venture partners or significant energy, materials or services providers, or any other litigation or arbitration; changes in sales volume or mix; the impact of price-adjustment factors on our sales contracts; the ability of our customers to meet their obligations to us on a timely basis or at all; our actual economic iron ore and coal reserves or reductions in current resource estimates; our ability to successfully identify and consummate any strategic investments; events or circumstances that could impair or adversely impact the viability of a mine and the carrying value of associated assets; the results of pre-feasibility and feasibility studies in relation to projects; impacts of increasing governmental regulation and related costs, including failure to receive or maintain required environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity and costs related to implementing improvements to ensure compliance with regulatory changes; the ability to achieve planned production rates or levels; uncertainties associated with unanticipated geological conditions, natural disasters, weather conditions, supply or price of energy, equipment failures and other unexpected events; adverse changes in currency values, currency exchange rates, interest rates and tax laws; our ability to maintain adequate liquidity and successfully implement our financing plans; our ability to maintain appropriate relations with unions and employees and renew expiring collective bargaining agreements on satisfactory terms; availability of capital equipment and component parts; the amount and timing of any insurance recovery proceeds with respect to Oak Grove mine; risks related to international operations; potential existence of significant deficiencies or material weakness in our internal control over financial reporting; problems or uncertainties with productivity, tons mined, transportation, mine-closure obligations, employee benefit costs and other risks of the mining industry; and other factors and risks that are set forth in the Company's most recently filed reports with the Securities and Exchange Commission. The information contained herein speaks as of the date of this release and may be superseded by subsequent events. Except as may be required by applicable securities laws, we do not undertake any obligation to revise or update any forward-looking statements contained in this release.

SOURCE: Cliffs Natural Resources Inc.

INVESTOR RELATIONS AND GLOBAL COMMUNICATIONS CONTACTS: Jessica Moran Director, Investor Relations (216) 694-6532

Patricia PersicoDirector, Global Communications (216) 694-5316

FINANCIAL TABLES FOLLOW

###


EXHIBIT G Excerpts of the 11/19/12 Press Release


November 19, 2012

Cliffs Natural Resources Inc. Announces Significant Adjustments to 2013 Operating Plan

CLEVELAND, Nov. 19, 2012 /PRNewswire/ -- Cliffs Natural Resources Inc. (NYSE: CLF) (Paris: CLF) announced today a decision to delay portions of its Bloom Lake Mine Phase II expansion in Quebec and idle a portion of its production at two of its U.S. iron ore operations, Northshore Mining in Minnesota and Empire Mine in Michigan. The Company is adjusting its 2013 operating plans for its North American iron ore businesses to align with expected sales volumes. These production decreases are driven by increased iron ore pricing volatility and lower North American steelmaking utilization rates.

(Logo: http://photos.prnewswire.com/prnh/20101104/CLIFFSLOGO )

Joseph A. Carrabba, Cliffs' chairman, president and chief executive officer, said, "Disciplined capital allocation is core to our operating strategy and reducing higher cost production will enhance our financial flexibility in both the short and longer term. Despite today's announcement, we are still committed to our investments in Canada and believe Bloom Lake will deliver significant long-term value over time."

Eastern Canadian Iron OreAt Bloom Lake Mine in Eastern Canada, Cliffs is suspending certain components of the Phase II expansion, including the completion of the concentrator and load out facility. As a result, construction related to these activities will cease and third-party contractors will be demobilized effective immediately. Pre-stripping activities to develop the working faces of Bloom Lake's ore body, supporting both Phase I and Phase II mine development will continue. Also, Cliffs will continue its environmental projects related to completing Bloom Lake's water and tailings management system and ore storage facility. Depending on market conditions, Cliffs expects to complete Phase II construction in early 2014.

The delay of Bloom Lake's Phase II construction decreases Cliffs' Eastern Canadian Iron Ore 2013 sales volumes to 9 - 10 million tons from the previous expectation of 13 - 14 million tons. In 2013, the Company expects to achieve an annualized run rate of approximately 7 million tons for Bloom Lake's Phase I facility.

U.S. Iron OreEffective Jan. 5, 2013, Cliffs will idle two of the four production lines at Northshore Mining in Minnesota. Cliffs will also temporarily idle production at its Empire Mine in Michigan beginning in the second quarter of 2013 in the form of an extended summer shutdown. These production curtailments will impact approximately 125 employees at Northshore and 500 employees at Empire mine, respectively. Full-year 2013 expected sales volumes for U.S. Iron Ore remain unchanged at 19 - 20 million tons as previously disclosed by the Company.

Ms. Laurie Brlas, President Global Operations added, "Unfortunately the U.S. Iron Ore production curtailments will affect many of our employees. However, at this time, we believe it is prudent and necessary to match our production volumes with market demand. We will remain operationally flexible to ramp up production volumes throughout the year if the demand increases."

Cliffs continues to work through its 2013 consolidated business plan and expects to disclose its full-year company-wide assumptions and expectations as part of its fourth-quarter 2012 results. The Company's preliminary 2013 capital expenditures are estimated to be in a range of approximately $700 - $800 million.

About Cliffs Natural Resources Inc.Cliffs Natural Resources Inc. is an international mining and natural resources company. A member of the S&P 500 Index, the Company is a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal. Cliffs' strategy is to continually achieve greater scale and diversification in the mining industry through a focus on serving the world's largest and fastest growing steel markets. Driven by the core values of social, environmental and capital stewardship, Cliffs associates across the globe endeavor to provide all stakeholders operating and financial transparency.

The Company is organized through a global commercial group responsible for sales and delivery of Cliffs products and a global operations group responsible for the production of the minerals the Company markets. Cliffs operates iron ore and coal mines in North America and two iron ore mining complexes in Western Australia. In addition, Cliffs has a major chromite project, in the feasibility stage of development, located in Ontario, Canada.

News releases and other information on the Company are available on the Internet at: http://www.cliffsnaturalresources.com



http://photos.prnewswire.com/prnh/20101104/CLIFFSLOGO

http://www.cliffsnaturalresources.com/

This release contains forward-looking statements within the meaning of the federal securities laws. Although the Company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties relating to Cliffs' operations and business environment that are difficult to predict and may be beyond Cliffs' control. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements for a variety of reasons including without limitation: the uncertainty or weakness in global economic and/or market conditions, including downward pressure on prices and reduced market demand; trends affecting our financial condition, results of operations or future prospects, particularly any slowing of the economic growth rate in China for an extended period; our ability to successfully integrate acquired companies into our operations and achieve post-acquisition synergies, including without limitation, Cliffs Quebec Iron Mining Limited (formerly Consolidated Thompson); our ability to successfully complete planned divestitures; our ability to reach agreement with our iron ore customers regarding modifications to sales contract pricing escalation provisions to reflect a shorter-term or spot-based pricing mechanism; the outcome of any contractual disputes with our customers, joint venture partners or significant energy, materials or services providers, or any other litigation or arbitration; changes in sales volume or mix; the impact of price-adjustment factors on our sales contracts; the ability of our customers to meet their obligations to us on a timely basis or at all; our actual economic iron ore and coal reserves or reductions in current resource estimates; our ability to successfully identify and consummate any strategic investments; events or circumstances that could impair or adversely impact the viability of a mine and the carrying value of associated assets; the results of pre-feasibility and feasibility studies in relation to projects; impacts of increasing governmental regulation and related costs, including failure to receive or maintain required environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity and costs related to implementing improvements to ensure compliance with regulatory changes; the ability to achieve planned production rates or levels; uncertainties associated with unanticipated geological conditions, natural disasters, weather conditions, supply or price of energy, equipment failures and other unexpected events; adverse changes in currency values, currency exchange rates, interest rates and tax laws; our ability to maintain adequate liquidity and successfully implement our financing plans; our ability to maintain appropriate relations with unions and employees and renew expiring collective bargaining agreements on satisfactory terms; availability of capital equipment and component parts; the amount and timing of any insurance recovery proceeds with respect to Oak Grove mine; risks related to international operations; potential existence of significant deficiencies or material weakness in our internal control over financial reporting; problems or uncertainties with productivity, tons mined, transportation, mine-closure obligations, employee benefit costs and other risks of the mining industry; and other factors and risks that are set forth in the Company's most recently filed reports with the Securities and Exchange Commission. The information contained herein speaks as of the date of this release and may be superseded by subsequent events. Except as may be required by applicable securities laws, we do not undertake any obligation to revise or update any forward-looking statements contained in this release.

SOURCE Cliffs Natural Resources Inc.

News Provided by Acquire Media


EXHIBIT H Excerpts of the 2/12/13 Press Release



1

NEWS RELEASE

Cliffs Natural Resources Inc. Announces Public Offering of Common

Shares and Mandatory Convertible Preferred Shares CLEVELAND – Feb. 12, 2013 – Cliffs Natural Resources Inc. (NYSE: CLF) (Paris: CLF) (the

“Company”) today announced that it is offering to sell, subject to market and other conditions,

9,000,000 of its common shares, par value $0.125 per share ("Common Shares") (or up to

10,350,000 Common Shares if the underwriters of such offering exercise their option to

purchase additional Common Shares) (the "Common Shares Offering"), and 20,000,000 of its

depositary shares ("Depositary Shares"), each representing a 1/40th interest in a share of its

new mandatory convertible preferred stock, Class A ("Mandatory Convertible Preferred

Shares"), $1,000 liquidation preference per Mandatory Convertible Preferred Share (equivalent

to $25 per Depositary Share) (or up to 23,000,000 Depositary Shares if the underwriters of such

offering exercise their over-allotment option in full) (the "Mandatory Convertible Preferred

Shares Offering") in separate registered public offerings.

The Depositary Shares entitle the holders, through the bank depositary, to a p roportional

fractional interest in the rights and preferences of the Mandatory Convertible Preferred Shares

underlying the Depositary Shares, including conversion, dividend, liquidation and voting rights,

subject to certain limited exceptions. Unless converted earlier at the option of the holders, each

Mandatory Convertible Preferred Share (and, correspondingly, each Depositary Share) will

automatically convert into a variable number of Common Shares on or around Feb. 15, 2016.

The conversion rates, dividend rate and ot her terms of the Mandatory Convertible Preferred

Shares will be determined by negotiations between the Company and the underwriters of the

Mandatory Convertible Preferred Shares Offering.

The Company intends to use the net proceeds from the Common Shares Offering and the

Mandatory Convertible Preferred Shares Offering to repay borrowings outstanding under its

term loan facility. Any remaining net proceeds will be used for general corporate purposes.

The Common Shares Offering is not contingent upon t he successful completion of the

Mandatory Convertible Preferred Shares Offering and t he Mandatory Convertible Preferred



3

The Company is organized through a g lobal commercial group responsible for sales and delivery of Cliffs' products and a global operations group responsible for the production of the minerals the Company markets. Cliffs operates iron ore and coal mines in North America and an iron ore mining complex in Western Australia. In addition, Cliffs has a major chromite project, in the feasibility stage of development, located in Ontario, Canada.

Forward-Looking Statements This release contains forward-looking statements within the meaning of the federal securities laws. Although the Company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties relating to Cliffs' operations and business environment that are difficult to predict and may be bey ond Cliffs' control. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements for a variety of reasons including without limitation: uncertainty or weaknesses in global economic conditions, including downward pressure on pr ices, reduced market demand and any slowing of the economic growth rate in China; trends affecting our financial condition, results of operations or future prospects, particularly the continued volatility of iron ore and coal prices; our ability to successfully integrate acquired companies into our operations and achieve post-acquisition synergies, including without limitation, Cliffs Quebec Iron Mining Limited (formerly Consolidated Thompson Iron Mining Limited); our ability to successfully identify and consummate any strategic investments and complete planned divestitures; the outcome of any contractual disputes with our customers, joint venture partners or significant energy, material or service providers or any other litigation or arbitration; the ability of our customers and joint venture partners to meet their obligations to us on a timely basis or at all; our ability to reach agreement with our iron ore customers regarding modifications to sales contract pricing escalation provisions to reflect a shorter-term or spot-based pricing mechanism; the impact of price-adjustment factors on our sales contracts; changes in sales volume or mix; our actual economic iron ore and coal reserves or reductions in current mineral estimates, including whether any mineralized material qualifies as a reserve; the impact of our customers using other methods to produce steel or reducing their steel production; events or circumstances that could impair or adversely impact the viability of a mine and the carrying value of associated assets; the results of prefeasibility and feasibility studies in relation to projects; impacts of existing and increasing governmental regulation and related costs and liabilities, including failure to receive or maintain required operating and environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity and costs related to implementing improvements to ensure compliance with regulatory changes; our ability to cost effectively achieve planned production rates or levels; uncertainties associated with natural disasters, weather conditions, unanticipated geological conditions, supply or price of energy, equipment failures and other unexpected events; adverse changes in currency values, currency exchange rates, interest rates and t ax laws; availability of capital and our ability to maintain adequate liquidity and s uccessfully implement our financing plans; our ability to maintain appropriate relations with unions and employees and ent er into or renew collective bargaining agreements on satisfactory terms; risks related to international operations; availability of capital equipment and c omponent parts; the potential existence of significant deficiencies or material weakness in our internal control over financial reporting; problems or uncertainties with productivity, tons mined, transportation, mine-closure obligations, environmental liabilities, employee-benefit costs and o ther risks of the mining industry; and other factors and risks that are set forth in the Company's most recently filed reports with the Securities and Exchange Commission. The information contained herein speaks as of the date of this release and may be superseded by subsequent events. Except as may be required by applicable securities laws, we do not undertake any obligation to revise or update any forward-looking statements contained in this release.


EXHIBIT I Excerpts of

3/14/12 Conference Call Transcript


11 of 14 DOCUMENTS

Copyright 2012 CQ-Roll Call, Inc.All Rights Reserved

Copyright 2012 CCBN, Inc.FD (Fair Disclosure) Wire

March 14, 2012 Wednesday

TRANSCRIPT: 031412a4794635.735

LENGTH: 7009 words

HEADLINE: Cliffs Natural Resources Inc To Discuss Capital Allocation Strategy Conference Call - Final

BODY:

Corporate Participants

* Steve Baisden

Cliffs Natural Resources Inc. - Director IR & Corporate Communications

* Joe Carrabba

Cliffs Natural Resources Inc. - Chairman, CEO, President

* Laurie Brlas

Cliffs Natural Resources Inc. - EVP, CFO

Conference Call Participants

* Timna Tanners

BofA Merrill Lynch - Analyst

* Mitesh Thakkar

FBR & Co. - Analyst

* Tony Robson

BMO Capital Markets - Analyst

Page 1


* Kuni Chen

CRT Capital Group - Analyst

* Michael Gambardella

JPMorgan Chase & Co. - Analyst

* Arnold Schmeidler

A.R. Schmeidler - Analyst

* Chelsea Bolton

Goldman Sachs - Analyst

* Tim Hayes

Davenport & Company - Analyst

* Paul Massoud

Stifel Nicolaus - Analyst

* Luke MacFarlane

Macquarie - Analyst

* Jessica Fong

Bank of Montreal - Analyst

* David Stevens

Decade Capital Management, LLC - Analyst

Presentation

OPERATOR: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Cliffs NaturalResources conference call. (Operator Instructions). And as a reminder, this conference is being recorded.

I would now like to introduce our host for today, Mr. Steve Baisden, Cliffs Vice president of investor relations andcommunications. Sir, please go ahead.

STEVE BAISDEN, DIRECTOR IR & CORPORATE COMMUNICATIONS, CLIFFS NATURALRESOURCES INC.: Thank you, Karen.

Before we get started, let me remind you that certain comments made on today's call will include predictivestatements that are intended to be made as forward-looking within the Safe Harbor protections of the Private SecuritiesLitigation Reform Act of 1995. Although the Company believes its forward-looking statements are based on reasonableassumptions, such statements are subject to risks and uncertainties that could cause the actual results to differmaterially. Important factors that could cause results to differ materially are set forth in reports on forms 10-K and 10-Qand news releases filed with the SEC, which are available on our website.

Page 2Cliffs Natural Resources Inc To Discuss Capital Allocation Strategy Conference Call - Final FD (Fair Disclosure) Wire



hoping to be able to raise the payout each year, just to clarify, are you referring to the actual payout or just the nominalamount of the dividend?

LAURIE BRLAS: We're referring to the nominal amount of the dividend. As I have said, we feel very comfortablewith this level through the cycle and we will continue each year to evaluate what we foresee for the five-year period oftime and look at what we can do with the dividend, but not on a strict payout of cash flow or net income basis.

STEVE BAISDEN: Great. Karen, if that's it for questions, we will -- why don't we go ahead and wrap the call up? Iwill be available for the rest of the day if any of the financial community members have additional follow-up questions.

We thank everyone for their time today and interest in Cliffs Natural Resources, and we look forward tocontinuing to report on our progress.

JOE CARRABBA: Thank you all very much.

LAURIE BRLAS: Thanks.

OPERATOR: Ladies and gentlemen, thank you for your participation in today's conference. This does conclude theprogram and you may now disconnect. Everyone, have a good day.

[Thomson Financial reserves the right to make changes to documents, content, or other information on this web sitewithout obligation to notify any person of such changes.

In the conference calls upon which Event Transcripts are based, companies may make projections or otherforward-looking statements regarding a variety of items. Such forward-looking statements are based upon currentexpectations and involve risks and uncertainties. Actual results may differ materially from those stated in anyforward-looking statement based on a number of important factors and risks, which are more specifically identified inthe companies' most recent SEC filings. Although the companies may indicate and believe that the assumptionsunderlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrectand, therefore, there can be no assurance that the results contemplated in the forward-looking statements will berealized.

THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OFTHE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE ANACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES INTHE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES THOMSONFINANCIAL OR THE APPLICABLE COMPANY OR THE APPLICABLE COMPANY ASSUME ANYRESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THEINFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISEDTO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLECOMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.]

LOAD-DATE: April 27, 2012

Page 14Cliffs Natural Resources Inc To Discuss Capital Allocation Strategy Conference Call - Final FD (Fair Disclosure) Wire



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EXHIBIT N Excerpts of



THOMSON REUTERS STREETEVENTS

EDITED TRANSCRIPTCLF - Q4 2012 Cliffs Natural Resources Inc Earnings Conference Call

EVENT DATE/TIME: FEBRUARY 13, 2013 / 1:00PM GMT

OVERVIEW:

CLF reported full-year 2012 revenue of $5.9b and adjusted net income attributed

to CLF shareholders of $493m or $3.45 per diluted share.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

©2013 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without

the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated

companies.


C O R P O R A T E P A R T I C I P A N T S

Jessica Moran Cliffs Natural Resources Inc. - Director, IR

Joseph Carrabba Cliffs Natural Resources Inc - Chairman, CEO, President

Terry Paradie Cliffs Natural Resources Inc. - SVP and CFO

C O N F E R E N C E C A L L P A R T I C I P A N T S

Mitesh Thakkar FBR & Co. - Analyst

Timna Tanners BofA Merrill Lynch - Analyst

Evan Kurtz Morgan Stanley - Analyst

Brian Yu Citigroup - Analyst

Sal Tharani Goldman Sachs - Analyst

Kuni Chen CRT Capital Group - Analyst

Aldo Mazzaferro Macquarie Research - Analyst

Tony Rizzuto Dahlman Rose - Analyst

P R E S E N T A T I O N

Operator

Good morning, my name is Mimi and I'm your conference facilitator today. I would like to welcome everyone to Cliffs Natural Resources 2012fourth-quarter conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be aquestion-and-answer session. At this time, I would like to introduce Jessica Moran, Director, Investor Relations. Ms. Moran?

Jessica Moran - Cliffs Natural Resources Inc. - Director, IR

Thanks, Mimi.

I'd like to welcome everyone to this morning's call. In addition to announcing our fourth-quarter and full-year 2012 results, last night, we alsoannounced the details of our common and mandatory convertible preferred share offerings. As a result of this announcement and the legalconstraints of the process, the prepared remarks and discussion on today's call will be necessarily limited to our 2012 results and 2013 outlook. Ifyou have additional questions related to the filing, I would refer you to the respective supplements related to the offerings filed with the SEC.

Before I turn the call over, let me remind you that certain comments made on today's call will include predictive statements that are intended tobe made as forward-looking within the Safe Harbor protections of the Private Securities Litigation Reform Act of 1995. Although the Companybelieves that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties thatcould cause actual results to differ materially. Important factors that could cause results to differ materially are set forth in reports on forms 10-Kand 10-Q and news releases filed with the SEC, which are available on our website. Today's conference call is also available and being broadcastat cliffsnaturalresources.com.

At the conclusion of the call, it will be archived on the website and available for replay. We will also discuss our results, excluding certain specialitems which are non-GAAP financial measure. Our reconciliations for Regulation G purposes can be found in our earnings release, which is postedon our website at cliffsnaturalresources.com. Joining me today are Cliffs' Chairman, President and Chief Executive Officer, Joseph Carrabba; andSenior Vice President and Chief Financial Officer, Terry Paradie.

2




companies.

FEBRUARY 13, 2013 / 1:00PM, CLF - Q4 2012 Cliffs Natural Resources Inc Earnings Conference Call


Jessica Moran - Cliffs Natural Resources Inc. - Director, IR

To be respectful of everyone's time today, that concludes our prepared remarks. I will be available throughout the rest of the day to answer anyfinal questions. You can please give me a call or e-mail me. That would be great. Thanks a lot.

Joseph Carrabba - Cliffs Natural Resources Inc - Chairman, CEO, President

Thank you all very much.

Terry Paradie - Cliffs Natural Resources Inc. - SVP and CFO

Thank you.

Operator

Thank you. Ladies and Gentlemen, that concludes our conference for today. You may all disconnect and have a wonderful day.

D I S C L A I M E R

Thomson Reuters reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes.

In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based uponcurrent expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are morespecifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of theassumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized.

THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION,THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUMEANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLECOMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

©2013, Thomson Reuters. All Rights Reserved. 4995878-2013-02-13T20:22:36.073

18




companies.

FEBRUARY 13, 2013 / 1:00PM, CLF - Q4 2012 Cliffs Natural Resources Inc Earnings Conference Call


EXHIBIT O Excerpts of the 4/26/12 Form 10-Q


Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2012

OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934 For the transition period from to .

Commission File Number: 1-8944

CLIFFS NATURAL RESOURCES INC. (Exact Name of Registrant as Specified in Its Charter)

Registrant’s Telephone Number, Including Area Code: (216) 694-5700

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ¨ NO x

The number of shares outstanding of the registrant’s Common Shares, par value $0.125 per share, was 142,479,076 as of April 23, 2012.

Ohio 34-1464672 (State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

200 Public Square, Cleveland, Ohio 44114-2315 (Address of Principal Executive Offices) (Zip Code)


Table of Contents

For 2012, we anticipate a full-year effective tax rate of approximately 5 percent, down from our previous expectation of 25 percent. Excluding the previously mentioned newly enacted MRRT and other discrete tax items, we anticipate our effective tax rate to be approximately 23 percent. In addition, we expect our full-year 2012 depreciation, depletion and amortization to be approximately $585 million.

2012 Capital Budget Update and Other Uses of Cash Primarily driven by adjustments to our outlook discussed above, we are decreasing our full-year 2012

cash flow from operations expectation to approximately $1.7 billion, from our previous expectation of $1.9 billion.

We are also maintaining our previously disclosed 2012 capital expenditures budget of approximately $1 billion, comprised of approximately $300 million in sustaining capital and $700 million in growth and productivity-improvement capital.

Recently Issued Accounting Pronouncements

Refer to NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES of the unaudited condensed consolidated financial statements for a description of recent accounting pronouncements, including the respective dates of adoption and effects on results of operations and financial condition.


This report contains statements that constitute “forward-looking statements” within the meaning of the federal securities laws. As a general matter, forward-looking statements relate to anticipated trends and expectations rather than historical matters. These statements speak only as of the date of this report, and we undertake no ongoing obligation, other than that imposed by law, to update these statements. These statements appear in a number of places in this report and relate to, among other things, our current expectations with respect to: our future financial condition, results of operations or prospects, estimates of our economic iron ore and coal reserves; our business and growth strategies; and our financing plans and forecasts. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those contained in or implied by the forward-looking statements made in this report as a result of various factors, including, without limitation:

54

• the ability to successfully integrate acquired companies into our operations and achieve post-

acquisition synergies, including without limitation, Cliffs Quebec Iron Mining Limited (formerly Consolidated Thompson);

• uncertainty or weaknesses in global economic and/or market conditions, including downward

pressure on prices;

• trends affecting our financial condition, results of operations or future prospects, particularly any

slowing of the economic growth rate of China for an extended period;

• the ability to reach agreement with our iron ore customers regarding modifications to sales contract

pricing escalation provisions to reflect a shorter-term or spot-based pricing mechanism;

• the outcome of any contractual disputes with our customers, joint venture partners or significant

energy, material or service providers or any other litigation or arbitration; • changes in sales volume or mix; • the impact of price-adjustment factors on our sales contracts;


Table of Contents

For additional factors affecting the business of Cliffs, refer to Part II – Item 1A. Risk Factors. You are urged to carefully consider these risk factors.

Information regarding our Market Risk is presented under the caption Market Risk , which is included in our Annual Report on Form 10-K for the year ended December 31, 2011 and in the Management’s Discussion and Analysis section of this report.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based solely on the definition of “disclosure controls and procedures” in Rule 13a-15(e) promulgated under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and

55

• the ability of our customers to meet their obligations to us on a timely basis or at all; • our actual economic iron ore and coal reserves or reductions in current resource estimates; • our ability to successfully identify and consummate any strategic investments;

• events or circumstances that could impair or adversely impact the viability of a mine and the carrying

value of associated assets; • the results of pre-feasibility and feasibility studies in relation to projects;

• impacts of increasing governmental regulation, including failure to receive or maintain required

environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity;

• uncertainties associated with unanticipated geological conditions, natural disasters, weather

conditions, disruption of energy, equipment failures and other unexpected events; • adverse changes in currency values, currency exchange rates and interest rates; • our ability to maintain adequate liquidity and successfully implement our financing plans;

• our ability to maintain appropriate relations with unions and employees and renew expiring collective

bargaining agreements on satisfactory terms; • availability of capital equipment and component parts; • the amount, and timing of, any insurance recovery proceeds with respect to our Oak Grove mine; • risks related to international operations;

• the potential existence of significant deficiencies or material weakness in our internal control over

financial reporting; and

• the risk factors identified in Part 1 – Item 1A of our Annual Report on Form 10-K for the year ended

December 31, 2011.

Item 3. Quantitative

and Qualitative Disclosures About Market Risk.

Item 4. Controls

and Procedures.


Table of Contents

Our Annual Report on Form 10-K for the year ended December 31, 2011 includes a detailed discussion of our risk factors. The information presented below amends, updates and should be read in conjunction with the risk factors and information disclosed in that Form 10-K.

The Minerals Resource Rent Tax by the Australian federal government will affect the results of our financial statements.

In July 2010, the Australian federal government announced its intention to introduce a new MRRT applicable to the mining of iron ore and coal in Australia. The MRRT legislation was passed by the Australian Senate on March 19, 2012 and received Royal Assent on March 29, 2012, thereby enacting the law. The MRRT commencement date is July 1, 2012 and broadly aims to tax existing and future iron ore and coal projects at an effective tax rate of 22.5 percent. Based on valuations and modeling carried out on each of our Australian projects, we will be liable to pay MRRT over the course of the Koolyanobbing mine life, but not for the Cockatoo Island or Sonoma operations. The valuation performed to determine the MRRT depreciable starting base was calculated using the same assumptions and methodologies that we have consistently and broadly adopted for all strategic and financial activities including corporate transactions, pricing analysis, impairment testing and corporate strategic planning. This calculation of market value results in a larger future tax benefit than would be calculated using analyst pricing, which historically tends to revert to the mean. The calculation, and ultimately the future benefit, is subject to review and approval by the ATO. Should the ATO disagree with our assumptions in the calculation, there could be a material negative impact to the financial statements in the form of a higher effective and cash tax rate.

ISSUER PURCHASES OF EQUITY SECURITIES

57

Item 1A. Risk Factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Pursuant to our VNQDC Plan, we sold a total of 9,057 of our common shares on January 3, 2012 for an aggregate consideration of $603,287 to the Trustee of the Trust maintained under the VNQDC Plan. These sales were made in reliance on Rule 506 of Regulation D under the Securities Act of 1933 pursuant to an election made by nine officers and two managers under the VNQDC Plan.

(b) The table below sets forth information regarding repurchases by the Company of its Common Shares during the periods indicated.

Period

Total Number of Shares (or

Units) Purchased

Average Price Paid per Share (or Unit)

$

Total Number of Shares (or

Units) Purchased as

Part of Publicly

Announced Plans or

Programs

Maximum Number (or

Approximate Dollar Value) of

Shares (or Units)

that May Yet be Purchased

Under the Plans or Programs

January 1 - 31, 2012 12,464(1)(2) 65.85 - - February 1 - 29, 2012 184,109(3) 71.89 - - March 1 - 31, 2012 - - - -

Total 196,573 - -


EXHIBIT P Excerpts of the 7/26/12 Form 10-Q


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FOR THE NORTHERN DISTRICT OF OHIO EASTERN DIVISION THE ... · 6/30/2016 · [email protected] [email protected] [email protected] Counsel for Defendants Cliffs Natural Resources,