UPDATE 1-Cleveland Cliffs' third-quarter profit falls

(Updates with revenue, production figures, CEO quotes)

NEW YORK, Nov 1 (Reuters) - Cleveland-Cliffs Inc (CLF.N), a producer of iron ore pellets, said on Thursday its third-quarter profit fell, partly due to increased iron ore costs in the Asia-Pacific region.

Net income was $56.9 million, or $1.08 per share, compared with $89.1 million, or $1.68 per share, a year ago, the Cleveland-based company said.

Consolidated third-quarter revenues rose 7 percent to $619.6 million, driven partly by $33.9 million in sales generated by PinnOak Resources, LLC -- the metallurgical coal producer Cleveland Cliffs acquired in July.

Operating income decreased 31 percent to $81.9 million from $119.5 million in the 2006 third quarter, the company said. The decline was primarily due to losses at PinnOak and increased Asia-Pacific iron ore costs related to the weakening U.S. dollar.

"As sometimes occurs in mining, unanticipated geology at our Pinnacle Mine negatively impacted short-term, quarterly results," said Chairman, President and Chief Executive Officer Joseph Carrabba.

"However, the combined iron ore and metallurgical coal assets in Cliffs' existing mine portfolio position the company well to take advantage of the expected and much-publicized 2008 increases in iron ore and metallurgical coal pricing."

(Reporting by Steve James)