The U.S. company that idled Wabush Mines this winter confirms that it is talking with another company about the potential sale of the iron ore operation.

Cliffs Natural Resources has had "constructive dialogue" with MFC Industrial about a purchase of Wabush Mines, which was idled in February when U.S.-based Cliffs determined that costs at the operation had become unsustainably high.

Wabush Mines site

A shareholder of Cliffs Natural Resources wants the U.S. company to sell off Wabush Mines and other Canadian assets. (CBC)

Arlene Beaudin, district manager for public affairs with Cliffs' eastern Canadian operations, said "no definitive agreement" has yet been reached, but added that the company is holding "meetings with major stakeholders in Labrador West and St. John's."

On Sunday, members of the United Steelworkers met for an hour in Wabush, but union officials refused to discuss what was said.

A letter of intent between Cliffs and MFC has been presented  to stakeholders. MFC already has a connection with Cliffs, as it owns the mineral rights tied to the land and receives millions of dollars in royalties each year.

"This is good news," Beaudin told CBC News. "I hope it is a win-win."

Support needed from union 

For a deal to work, there will be need to be support from unionized workers.

MFC, which specializes in turning around troubled and undervalued businesses, has said it is exploring investment options for the mine in Wabush, but is not commenting for now on its plans

Under the proposed arrangement, MFC would effectively "become a client" of Cliffs Natural Resources.

The move comes as an annual shareholders meeting looms for Cliffs Natural Resources on July 29.

The company is under pressure from Casablanca Capital, the activist investing company that is one of the company's largest shareholders, to make a radical change: spinning off the eastern Canadian iron ore operations.

Cliffs calls Casablanca's plan a "fire sale" of assets.

Asked if Cliffs was under pressure to reach a deal before the annual shareholders meeting, Beaudin said no.

"There's no timeline," she said.