Will this open the door for Xstrata to make a bid? The Shareholder Rights Plan (also known as a "poison pill") gives the Board of Directors a significant negotiating position when there is a take over bid coming. In other words it says "bidder beware!" it is meant to force a much higher bid by diluting the bidders original share position. Xstrata has had a bad experience with such plans in the past. Note the following:

"A notable Canadian case before the securities regulators in 2006 involved the poison pill of Falconbridge Ltd. which at the time was the subject of a friendly bid from Inco and a hostile bid from Xstrata plc, which was a 20% shareholder of Falconbridge. Xstrata applied to have Falconbridge's pill invalidated, citing among other things that the Falconbridge had had its pill in place without shareholder approval for more than nine months and that the pill stood in the way of Falconbridge shareholders accepting Xstrata's all cash offer for Falconbridge shares. Despite similar facts with previous cases in which securities regulators had promptly taken down pills, the Ontario Securities Commission ruled that Falconbridge's pill could remain in place for a further limited period as it had the effect of sustaining the auction for Falconbridge by preventing Xstrata increasing its ownership and potentially obtaining a blocking position that would prevent other bidders from obtaining 100% of the shares."

Getting rid of the Shareholder Rights Plan - KWG is saying "over here honey!"

Here is the original announcement made in May - basically giving a shot across the bow of CLFS:

MONTRÉAL, May 25 /CNW/ - KWG Resources Inc. ("KWG" or the "Company") announces today that the board of directors of the Corporation has approved the adoption of a shareholder rights plan, effective May 25, 2010. The objective of the rights plan is to ensure, to the extent possible, that all shareholders of the Corporation are treated equally and fairly in connection with any initiative to acquire control of the Corporation.

The rights plan is not intended to and will not prevent a take-over of the Corporation. The purpose of the rights plan is to encourage a potential bidder to make a "Permitted Bid", having terms and conditions designed to meet the objectives of the rights plan, or to negotiate the terms of an offer with the board of directors of the Corporation. A Permitted Bid is a take-over bid that is made to all holders of voting shares of the Corporation (other than the bidder) for all of the voting shares held by them, by way of a take-over bid circular prepared in compliance with applicable securities laws, that remains open for acceptance by shareholders of the Corporation for 60 days (or such shorter period of time as may be approved by the board of directors of the Corporation from time to time), and that satisfies certain other conditions, including the condition that a take-over bid made by an offeror who possesses confidential information concerning the Corporation will not constitute a Permitted Bid unless the offeror has entered into a confidentiality agreement containing a standstill provision with the Corporation within the three months that precedes the commencement of the bid.

The Corporation has been advised that Cliffs Natural Resources Inc. intends to make an offer to acquire all of its outstanding shares.

The rights plan must be confirmed by shareholders within six months of its effective date. The listing of the rights is subject to acceptance by the TSX Venture Exchange.

A complete copy of the rights plan is available upon request. Shareholders wishing to receive a copy of the rights plan should make their request by telephone at (514) 866-6001, by facsimile at (514) 866-6193, by email at lspierre@kwgresources.com or by mail to KWG Resources Inc., 600 de Maisonneuve Boulevard West, Bureau 2750, Montréal, Québec, H3A 3J2, Attention: Ms. Luce L. Saint-Pierre. A copy of the rights plan will be filed on SEDAR at www.sedar.com.

The Company is also pleased to announce that Canaccord Genuity Corp. has been appointed as the financial advisor to the Special Committee of independent directors. Canaccord Genuity Corp. will be assisting the Special Committee in considering various responses and strategic alternatives to the announcement by Cliffs Natural Resources Inc. that it intends to make a take-over bid to acquire all of KWG's common shares.