Massive Black Horse Chromite Discovery

Black Horse deposit has an Inferred Resource Now 85.9 Million Tonnes @ 34.5%

Free
Message: Re: Valuation
8
rj
Jul 11, 2010 01:19PM
10
Jul 11, 2010 01:43PM

Many think that it was a scary tactic, but Cliffs said that they are no more interested in KWG, their goal of having gained control over Big Daddy being achieved. We were used to know Cliffs during the last year, and they are not the kind of bluffing player. They say, they do. Straight forward, like it or not.

From the June 25 Cliffs NR (highlighted portion is from Cliffs):

" Cliffs’ Objective

Cliffs’ strategic objective is to gain control of the Big Daddy chromite project located in the McFaulds Lake area of Northern Ontario. Cliffs currently owns a 47% interest in the project, while Spider and KWG each own 26.5% and have the option to earn-in up to 30% each through additional spending on feasibility studies to establish the project’s economic viability.

Cliffs Also Determines Not to Bid for KWG

When Cliffs announced its original intention to bid for Spider on May 24, 2010, Cliffs also said it intended to make an offer for KWG. However, after KWG entered into a binding letter agreement to merge with Spider, Cliffs cautioned that it may not proceed with a bid for KWG. Cliffs has now determined that it will not bid for KWG assuming Cliffs’ bid for Spider is successful. In addition, Cliffs may reduce its ownership position in KWG by selling shares into the market from time to time. Cliffs currently owns approximately 19.3% of the issued and outstanding KWG shares on a fully-diluted basis."

KWG actual strategy of positioning itself as a Dissenting Shareholder has only one goal: to have an official determination of the true value of Big Daddy, since no other bidder is in the game to fix this real value tru a battle for the property. Cormacks valued Big Daddy between 105-150MM$, and the Broad Oak valued the property at around 230MM$.
.
If a dissenting Spider shareholder (KWG or anyone else) shows up, and ask Spider to buy back his shares at fair value, a judge may have to fix that fair value. The advantage that a Spider shareholder has is that he does have independant valuations to lean upon, so the usual fear that one may have that the court might value the shares at a lower price than the one offered is minimal, if not inexistant. On the contrary, chances are that the court will base its determination on independant valuations like the Cormack's and Broad Oak's. (Section 190 CBC Act allows the court to hire such appraisers).
.
KWG is working for his shareholders, and has a real opportunity to have its real value recognized and publicised. But at the same time, those who still have Spider shares in hand may tag-along during the process and maybe get extra $$$ for their shares. Do your own DD.
Also, KWG strategy may results in Cliffs strategy change: bidding on them to shut them up! We'll see...
.
GLTA.
.
BaBe.
7
Jul 11, 2010 03:17PM
10
Jul 11, 2010 04:39PM
Share
New Message
Please login to post a reply