19.3% ownership prevents them from making a hostile take-over bid but I would also like to propose the following for inputs and discussion...

Cliffs is in a serious delimma........Notwithstanding the indefinite closure of one of their mines down south and the recent dilution of their stock and the rumour that BHP considers them ripe for the picking, Cliffs also has a serious posturing problem and conflict of interest.

If a company (we'll call it The Outsider) wants to take-over KWG they can come in with a hostile bid and accumulate shares on the open market...let's speculate! What price would they come it at in order to convince enough shareholders to sell including Cliffs who currently have approx 125 million shares? What price is high enough to prevent Cliffs' counter bid.....What price is high enough to accumulate 75% of outstanding shares thus enabling the initiation of an official tendering process....so is it safe to say that for the take-over company, they have to take out Cliffs first if they want control of chromite in the ROF.....do they need to eliminate Cliffs' voting power against their take-over bid or would they go high enough to render it a moot point.

For Cliffs the dilemma is that they would have to either posture against such a bid (counter bid including a valuation) or vote against it and as such force the price to go higher. (which becomes a real problem if the Outsider eventually withdraws their offer or has significantly deeper pockets)

If The Outsider goes after Cliffs first, the process will in essence firmly establish the value of the chrome assets, but would at the same time bind The Outsider to the same JV agreement (SPQ, FWR, KWG deadline April1, 2012) as well as impose on them the status of major shareholder of KWG shares. This would then force them to go through a valuation of KWG prior to making a friendly take-over bid.

The collateral benefit following the take-over of Cliffs, would be that The Outsider given its size (market cap) would not depend as much on government resources for the development of the whole project. They probably could accomodate a longer period for their ROI, given their comparative lower initial capital investment (% of market cap) vs the incredible long-term profits associated with this project. Additionally they would be able to make available greater financial resources with relative ease in a shorter timeframe.

Opinions welcomed!!

Best of luck to all KWG longs
Pear3