Cleveland-Cliffs and Alpha Natural Resources to Merge, Creating Cliffs Natural Resources, a Leading Diversified Mining and Natural Resources Company

Business Wire,  July 16, 2008  

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* Dramatically Increased Size and Scale

* Equity Purchase Price of Approximately $10 Billion or $128 Per Alpha Share

* Pro Forma Enterprise Value of Over $22 Billion

CLEVELAND & ABINGDON, Va. -- Cleveland-Cliffs Inc (NYSE: CLF) and Alpha Natural Resources, Inc. (NYSE: ANR) today announced that each company's Board of Directors has approved a definitive merger agreement under which Cleveland-Cliffs will acquire all outstanding shares of Alpha in a cash and stock transaction valued at approximately $10 billion.

Under the terms of the agreement, for each share of Alpha common stock, Alpha stockholders would receive 0.95 Cleveland-Cliffs common shares and $22.23 in cash. Based on Cleveland-Cliffs' closing stock price on July 15, 2008, Alpha stockholders would receive $128.12 per share, which represents a premium of 35% to Alpha's closing stock price on July 15, 2008.

The combined company, which will be renamed Cliffs Natural Resources, will become one of the largest U.S. mining companies and be positioned as a leading diversified mining and natural resources company. Cliffs Natural Resources' mine portfolio will include nine iron ore facilities and more than 60 coal mines located across North America, South America and Australia. The company's significant position in both iron ore and metallurgical coal will make it a major supplier to the global steel industry, as well as provide a platform for further diversification both geographically and in terms of the mineral and resource products it sells.

Upon the transaction's close, Cliffs Natural Resources would have estimated combined pro forma 2008 revenue of nearly $6.5 billion and EBITDA of $1.9 billion. The company's estimated 2009 revenue would reach $10 billion with estimated EBITDA of $4.7 billion.

Joseph A. Carrabba, Cleveland-Cliffs' chairman, president and chief executive officer, said, "Today's announcement represents a significant strategic milestone for both companies. Cliffs Natural Resources will be positioned as a diversified natural resources company with significant holdings in a variety of important minerals. By combining our companies' complementary operations and management capabilities, we will be well positioned to meet the world's increasing demand for raw materials. Since its inception in 2002, Alpha has been highly respected for its industry leading expertise around both the operation and acquisition/integration of coal properties, and we are confident our two management teams and more than 8,900 employees will achieve great things together."

Michael J. Quillen, Alpha's chairman and chief executive officer, said, "Together, Alpha and Cleveland-Cliffs will have the size, the management depth and the mining expertise to compete on the global stage as demand for raw materials continues to increase around the world. This transaction is financially compelling for Alpha's stockholders, who will benefit from enhanced value today alongside growth opportunities in the future. We look forward to working together with Joe Carrabba and the Cleveland-Cliffs management team to realize the substantial opportunities that this combination presents."

STRATEGIC AND FINANCIAL BENEFITS OF THE COMBINATION

* Enhanced size and scale. The combined company's enhanced size and scale will enable it to efficiently offer a broad portfolio of various iron ore and metallurgical coal types to meet the growing needs of world steel producers. Cliffs Natural Resources will have a reserve base of approximately one billion tons of iron ore and approximately one billion tons of metallurgical and thermal coal. The company anticipates having an annual sales volume in excess of 30 million tons of iron ore and nearly 18 million tons of metallurgical coal, making it one of the largest suppliers to the world's steel industry.

* Robust platform for growth and diverse business mix. The combined company will have a more diverse revenue stream and will be well-positioned to continue its aggressive growth. In addition to leading positions in iron ore and metallurgical coal, the company will also ship approximately 17 million tons of thermal coal, which is used primarily for electricity generation by utility companies.

* Shared cultural commitment to integrity, safety and the environment. Both Cleveland-Cliffs and Alpha share the same core values of protecting the occupational health and welfare of every employee by designing and implementing best-in-class safety standards and practices in the workplace. Equally importantly, both companies recognize that the processing of the earth's mineral resources must be accomplished in a socially responsible manner.

* Strong financial position. The combined company is expected to have a strong credit profile. Year-end 2008 pro forma leverage is expected to be 1.2x EBITDA. The company expects to generate substantial free cash flow, enabling significant debt reduction and supporting future growth. In 2009, the transaction is expected to be accretive to current analyst expectations for Cleveland-Cliffs.