The 29-year-old's current deal is due to expire in June, but with Arsenal rumoured to be interested, the German club are keen for the Dutchman to re-commit his future to the Veltins-Arena.
Huntelaar's representative has met with Schalke supervisory board chairman Clemens Tonnies, but negotiations are still some way from completion, with the striker hoping for a three-year extension and Schalke only offering two.
Tonnies said: "I have offered a certain compromise, but I also said Klaas-Jan has to quickly decide in favour of Schalke, otherwise we would do better to end those talks."
Huntelaar, who is in line for a pay rise from £4.8m to £5.7m per year, was more tight-lipped on the progress of the discussions.
He said: "It is true, Arnold [Oosterver, Huntelaar's agent] was at Veltins-Arena lately. An important meeting has taken place. However, I am not able to say more on it right now."
Huntelaar joined the German side from AC Milan in a £10.5m deal in August 2010 and has scored nine times so far this season.
His potential availability on a free transfer at the end of the season had attracted the interest of Arsenal boss Arsene Wenger.
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