Hey JL,
I recognize the validity of the RR and the Hydro, but I fail to see why the gov would wait until the end of the year to take a position or make an announcement. I know that they have called a conference in Thunday Bay for June to discuss Rail vs road, which I think is a no-brainer in favour of the RR...not only from the cost perspective, which points exponentially in favour the RR, but also from the logistics and environmental perspectives.

As well, if the "bean counters" get together and weigh the development of Black Thor vs Big Daddy, I think they will conclude that starting a chromite mine which requires little to no processing or smelting prior to shipping to its customers, is a much more profitable option than waiting for the government to lower the price of the power...if Cliffs stops playing postering games because they get pressured by their own shareholders, they will have to make a friendly offer to KWG in time to avoid the partnership that automatically becomes reality on 1 April 2012.

The realistic price that "I suspect" could be accepted by the board at KWG would be calculated starting with the economic assesment numbers that were published approx. 10 days ago. In a nutshell here is where the numbers point...PEA said $2.95 - $4.78 per share if a RR, smelter and mine were in place...adjust that down because none of that exists yet, add in the cost of the mine operation and the hardball negotiation from Cliffs and you get a more realistic price of $0.60 - $1.00 per share. I truly beleive that, based on the efforts made by KWG to provide accurate valuation info to its shareholders, that they would not accept any offer lower than this.

Even moreso, the longer Cliffs waits and tries to use downward pressure on the stock to create the perception of low valuation, the higher the risk of missing the deadline of 1 pril 2012. The reason I call it a deadline is simply for the fact that once the JV becomes a partnership, then KWG's share of BD earnings is approx. $400 million for every 1 million tons of extracted ore. This projected revenue sharing (cost) is exponentially greater that any take-over price that blogger is contemplating or discussing at the current time. Every penny that Cliffs tries to save in the take-over price, only represents $6 to $8 million fully diluted, but the cost in revenues, of a permanent partnership is in the billions over the life of the mine. At the current float, 75% of the KWG 30% share of Big Daddy earnings would represent a dividend of $0.50 per share per year for every 1 million tons of ore.

I trully believe that Cliffs backed themselves into a corner, when they:
1. announced they wanted to take-over SPQ, KWG or both and wanted to control the Chrome deposit in the ROF;
2. announced their initial plan which included a road, and a producing mine at Black Thor by 2015;
3. announced later that they weren't interested in KWG anymore.

It is my firm belief that they have used this misinformation in an attempt to drive the KWG SP into the ground which didn't happen because of the savvy strategic moves executed by KWG (Frank Smeenk and his think tank) which precipitated the promulgation of accurate information for all shareholders to read. There still remains a lot to be revealed, but I think that Cliffs, Xstrata, and the ROF companies are all waiting for the Govs RR announcement which may happen in June following the conference. This single piece on the chessboard will most likely move the SP of many ROF companies higher, given that it will nulify the uncertainty associated with transportation, enable them to factor in more accurate project costs and confirm in the minds of the shareholders that this mega project (ROF) is moving forward and will be here for years to come.

A final note...food for thought...if Cliffs takes out KWG?...will it improve their capabilities / relationships with the First Nations as well as the Cdn and Ont Govs, or would it compromize their bargaining position by blurring the optics vs having a Canadian representation in their project negotiation...Is %30 too much to pay for a close/influential association with the Canadian identity and the mining history that is being written.

Good luck to all KWG longs
Pear3

Original post.....

There are two critical concerns, a railway and electricity, which are highly connected to Ontario government. Probably we need wait till a new premier comes out by the end of this year to see the possiblity of addressing these two concerns, and all stocks in Ring of Fire might keep sliding down before then.

Neither cliffs nor KWG or any other mining companies at Ring of Fire is capable of building the railway, which is a must for taking the ore out of the area, therefore the Ontario government must do something to make the railway happen, but the current Premier is obviously in no position to make this call.

Similar is electricity. Without available and competitive electricity, the exploration of chromite at Ring of Fire will not be ecnomically justfied. Cliffs, or KWG, or NOT, can not build their own eclecticity generation stations there. Again, the current Ontario government has talked and talked and talked about developing ROF, but nothing has planned to bring electricity to ROF.

A lot has been argued about First nations, the relationship between Cliffs and KWG, new drillings results, etc, but without real moves by the government to address the railway and electricity, all are empty talk, and the stocks will keep sliding, and Cliffs will not considering buy out KWG