Before you go cliff-diving on your next vacation, don't forget to test the waters below.

Cliffs Natural Resources (NYSE: CLF) has bided its time, cultivating the right deal to achieve bolt-on capacity expansion of its profitable iron ore operations. This week, the company announced a $5 billion acquisition bid for Canadian iron ore miner Consolidated Thompson, which operates a very large iron ore mining operation in the vicinity of Cliffs' existing Wabush mine in Eastern Canada.

Investors may be rightfully wary of large acquisitions in the commodity space, but this particular pairing has the stuff that strategic dreams are made of.

To be sure, some of the more noteworthy injuries that commodity investors have suffered over recent years involved the more massive debt-fueled acquisitions conducted before the financial crisis struck. In other words, buyers jumped off a cliff seeking growth, and the water drained away while they were airborne. Patient shareholders of Teck Resources (NYSE: TCK) have since recovered from the fall caused by the ill-timed Fording transaction in mid-2008, while Rio Tinto (NYSE: RIO) investors are still waiting for shares to reach pre-crisis levels.

Cliffs will rely substantially upon debt (and likely some equity) to finance this deal, valued at more than 40% of the company's existing market capitalization. But the resulting scaled-up capacity to supply China and other Asian markets with seaborne iron ore will likely supply a soft landing for this daring leap toward growth.

Following a planned doubling of capacity at Thompson's Bloom Lake mine -- to some 16 million tons by 2012 -- the pro forma Cliffs would firmly enter the ranks of the world's top iron ore suppliers. Vale (NYSE: VALE) and BHP Billiton (NYSE: BHP), and Rio Tinto will continue to reign supreme, but Cliffs would boast some 57 million tons of consolidated annual production of iron ore pellets, iron ore concentrates, and iron ore. Furthermore, the proximity of the two companies' operations along shared transportation infrastructure is expected to permit, conservatively, $75 million annually in operational synergies.

When I took in the view from atop Cliffs Natural Resources after the third quarter of 2010, I noted the superior 36% operating margin of its North American iron ore segment relative to its higher-cost coal operations, which were struggling to break even. This transaction moves logically toward Cliffs' more profitable segment, and into an export market hungry for additional volumes. Elsewhere in Canada, an unidentified Chinese company is reportedly rivaling ArcelorMittal's (NYSE: MT) bid to acquire Baffinland Iron Ore Mines. The Thompson Consolidated resource is substantially larger in scale than Baffinland's Mary River project, so Cliffs investors are advised to keep watch for competing bids here as well.

I admire Cliffs' form on this particular dive into growth, and I continue to consider Asia-focused commodity production the surest path to profits for commodity investors.

Want to keep digging for further news on this mighty mining merger? Add Cliffs Natural Resources to My Watchlist.