May 28, 2010 - Cliffs Natural Resources wants a bigger stake in the Ring of Fire.
The Ohio-based iron and coal conglomerate has launched a $186 million cash takeover bid of KWG Resources and Spider Resources to gain full control of the Big Daddy chromite deposit in the James Bay Lowlands.
Cliffs currently owns a 47 per cent interest in Big Daddy. KWG and Spider each own 26.5 per cent of the large McFaulds Lake deposit.
Cliffs plans to acquire KWG for an offer price of $100 million and acquire Spider for $86 million.
In a May 24 news release, Cliffs president William Boor said it would be a satisfactory outcome if either proposed acquisition was successful since it would leave Cliffs as a majority owner and operator of Big Daddy with one junior partner. Cliffs acquired Freewest Resources in January, which held a 50 per cent of the chromite discovery and previously gained a 20 per cent foothold in KWG Resources in 2009.
Cliffs' plans are to develop two other chromite deposits in the Ring first, namely their wholly-owned Black Thor and Black Label, before developing the Big Daddy. Cliffs said their preliminary estimates of Black Thor shows it is larger, wider and more amenable to open pit operations than Big Daddy.
The proposal contains a 'go shop' clause allowing the junior companies to canvass the market looking for a better offer than the one made by Cliffs.
The takeover bid resulted in KWG naming Cynthia Thomas to head up a special committee to look at "strategic alternatives". Thomas, chair of the board of Victory Nickel, is filling a seat on the KWG board vacated by Richard Fink.
The Ohio-based iron and coal conglomerate has launched a $186 million cash takeover bid of KWG Resources and Spider Resources to gain full control of the Big Daddy chromite deposit in the James Bay Lowlands.
Cliffs currently owns a 47 per cent interest in Big Daddy. KWG and Spider each own 26.5 per cent of the large McFaulds Lake deposit.
Cliffs plans to acquire KWG for an offer price of $100 million and acquire Spider for $86 million.
In a May 24 news release, Cliffs president William Boor said it would be a satisfactory outcome if either proposed acquisition was successful since it would leave Cliffs as a majority owner and operator of Big Daddy with one junior partner. Cliffs acquired Freewest Resources in January, which held a 50 per cent of the chromite discovery and previously gained a 20 per cent foothold in KWG Resources in 2009.
Cliffs' plans are to develop two other chromite deposits in the Ring first, namely their wholly-owned Black Thor and Black Label, before developing the Big Daddy. Cliffs said their preliminary estimates of Black Thor shows it is larger, wider and more amenable to open pit operations than Big Daddy.
The proposal contains a 'go shop' clause allowing the junior companies to canvass the market looking for a better offer than the one made by Cliffs.
The takeover bid resulted in KWG naming Cynthia Thomas to head up a special committee to look at "strategic alternatives". Thomas, chair of the board of Victory Nickel, is filling a seat on the KWG board vacated by Richard Fink.
