Cleveland-Cliffs Inc. has reached an agreement in principle with PolyMet Mining Corp. regarding terms for the early exercise of PolyMet's option to acquire certain assets located at Cliffs' Erie site in Hoyt Lakes, Minn.

According to terms of the new agreement, upon closing, Cliffs will receive proceeds of $3.4 million in cash and approximately 6.2 million common shares of PolyMet. In addition, the agreement calls for PolyMet to assume, from Cliffs, certain ongoing site-related environmental and reclamation obligations.

When this transaction closes, Cliffs will hold 7.2 million common shares of PolyMet, representing nearly 8% of the 83.4 million shares currently outstanding and will account for PolyMet's results in minority interest. Cliffs also has anti-dilutive rights allowing pro-rata participation in any future cash equity financings of PolyMet.

Headquartered in Cleveland, Ohio, Cleveland-Cliffs Inc. is the largest producer of iron ore pellets in North America and sells the majority of its pellets to integrated steel companies in the United States and Canada. Cleveland-Cliffs Inc operates a total of six iron ore mines located in Michigan, Minnesota and Eastern Canada. The company is majority owner of Portman Limited, the third-largest iron ore mining company in Australia, serving the Asian iron ore markets with direct-shipping fines and lump ore.