July 5, 2010 - The U.S.-owned Cliffs Natural Resources Inc. Monday won the battle for majority control of the Big Daddy chromite deposit in Northwestern Ontario, though the precise extent of its ownership may not be known till tomorrow or even later.
Cliffs Natural Resources Inc. said Spider Resources Inc. broke off its agreement to merge with KWG Resources Inc. and accepted Cliffs' offer to take over the company.
All three companies are partners in a chromite project in Northern Ontario. Earlier this month, Cliffs raised its bid on Spider 27% to about C$109 million (US$102.6 million), which Spider determined trumped the terms it agreed to when it entered a binding letter of intent to merge with KWG. KWG had about five days to match the offer, which it told Spider earlier Friday that it didn't intend to do.
Neither KWG nor Spider have significant assets outside the chromite project.
Friday, Cliffs said Spider supported its all-cash offer at C$0.19 a share, which it said was a 138% premium. Spider had paid KWG a C$2.3M breakup fee.
Cliffs already owns 47 per cent of the deposit and it would gain Spider's 26.5 per cent for a total of 73.5 per cent. This would leave Montreal's KWG Resources Inc. as Cliff's partner in Big Daddy - it also owns 26.5 per cent.
Cliffs will now control a large part of Northern Ontario's "Ring of Fire" chromite resource as a result of a prior takeover and the Spider deal. It has already outlined plans for development.
Chromite is processed in ferrochrome, a major ingredient of stainless steel.
