May 5, 2021

Mesabi Metallics Company, LLC

17113 County Road 58, P.O. Box 25
Nashwauk, MN 55769

Sent via hand-delivery, certified mail and email

RE: Notice of Lease Termination

Dear Mesabi Metallics Company, LLC:

I am writing to notify Mesabi Metallics Company, LLC (“Mesabi”) that the Minnesota
Department of Natural Resources (“DNR”) is exercising its rights to terminate each of the State
leases listed on attached Schedule 1. These leases consist of Taconite Iron Ore Mining Leases
3109-N through 3126-N, 3155-N through 3156-N, T-5081-N through T-5089-N, and T-5101-N
through T-5103-N (together, the “Mineral Leases”).

As DNR indicated in a separate letter dated May 5, 2021, the 2020 Master Lease Amendment
(“2020 Amendment”) between Mesabi and its affiliates and DNR, dated December 4, 2020, is
not effective. For that reason, Mesabi is subject to the terms of the leases as they existed prior
to the 2020 Amendment and to Section 23 of the 2020 Amendment, and Mesabi is in default
under those terms. Mesabi has defaulted under the leases as follows:

• Failure to mine at least 1.6 million tons of taconite crude ore from State Properties in
at least two quarters prior to January 1, 2021 (See Section 19 of the Master Lease
Amendment Agreement dated June 19, 2017 (“2017 Amendment”));
• Failure to complete construction of the Pellet Plant by December 31, 2019 (See
Sections 13 and 19 of the 2017 Amendment and Section 23 of the 2020 Amendment);
and
• Failure to ship three million tons of pellets from the completed Pellet Plant in a single
calendar year by December 31, 2020 (See Sections 13 and 19 of the 2017
Amendment).

This letter notifies you that the DNR is terminating the Mineral Leases for failure to meet the
above performance requirements. According to the terms of the leases, Mesabi has 20 days
from the date of this letter to cure the above defaults. Absent a full cure of the above defaults
by May 25, 2021, the termination will become effective.

Minnesota Department of Natural Resources | Commissioner’s Office Equal Opportunity Employer

500 Lafayette Road North, St. Paul, Minnesota 55155 This material is available in alternate formats.
www.dnr.state.mn.us
 Mesabi Metallics
May 5, 2021
Page 2 of 3

In addition, with the failure of the 2020 Amendment to become effective, Mesabi has an
immediate obligation to pay the minimum royalties owed for 2020 under the 2017
Amendment, and post the required security for royalty payments moving forward. In
particular:

• Under Sections 11 and 20 of the 2017 Amendment, Mesabi owes the State a minimum
royalty payment for 2020 of $18 million.

• Under Section 9 of the 2017 Amendment, Mesabi must post a bond or letter of credit
sufficient to cover at least one calendar quarter of expected payments under the
leases. For 2021, this would be $5,913,689.

DNR hereby provides Mesabi with notice and the opportunity to cure these defaults, pursuant
to the terms of the leases and 2017 Amendment.

DNR will follow up by separate letter with the amount of rent owed by Mesabi on the Mineral
Leases up to the termination date.

Sincerely,

Jess Richards
Assistant Commissioner
Minnesota Department of Natural Resources

cc. Oliver Larson, Assistant Attorney General

Sherry Enzler, DNR General Counsel
Joe Henderson, DNR Lands and Minerals Director
 Mesabi Metallics
May 5, 2021
Page 3 of 3

Schedule 1

Leases

The Taconite Iron Ore Mining Leases with the State of Minnesota concerning the following parcels (as and
to the extent amended by the First Amendment to Taconite Iron Ore Mining Leases Numbered 3109-N
Through 3126-N and T-5081-N Through T-5089-N dated October 1, 2009, that certain Letter Agreement
dated January 9, 2012, the Second Amendment to Taconite Iron Ore Mining Lease Numbered T-5081-N
dated June 7, 2012 and that certain Letter Agreement dated March 25, 2015):

A. 3109-N
B. 3110-N
C. 3111-N
D. 3112-N
E. 3113-N
F. 3114-N
G. 3115-N
H. 3116-N
I. 3117-N
J. 3118-N
K. 3119-N
L. 3120-N
M. 3121-N
N. 3122-N
O. 3123-N
P. 3124-N
Q. 3125-N
R. 3126-N
S. 3155-N
T. 3156-N
U. T-5081-N
V. T-5082-N
W. T-5083-N
X. T-5084-N
Y. T-5085-N
Z. T-5086-N
AA. T-5087-N
BB. T-5088-N
CC. T-5089-N
DD. T-5101-N
EE. T-5102-N
FF. T-5103-N.