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Very well put LP.

This game theory thing can certainly be applied to many stakeholders, one-on-one or among multiple players: KWG, CLF, the Fed, Ontario, the FN, and us (making our presence known with our share count to earn a seat at the table as a player in this game). Companies can make all kinds of noises in public, but they do bargain in the back room…it’s just the normal way of doing business. It's always nice to kiss and make up in the end!

Ontario appears to do zip for the RoF, but in the back rooms it would not be a surprise to see all kinds of discussions (with CLF, etc) with the aim to create a win-win situation for the development of the Far North. The Fed seems to have an interest on this as well to earn some brownie points with the FN folks in addition to improve the economy of Canada, job for Canadians and money flowing in from mining our resources. My take is that in the end (not too far in the future) everything will be sorted out with a reasonable outcome for us minority shareholders. A few things are worth re-stating here:

- - CLF has the money ready to be committed for an excellent short-term return, but it’s surrounded by others such as, PRB, FNC, KWG, NOT. It was trying to break out to the east by purchasing UC (but KWG still has a stake in that land and NOT real estate is also blocking the way. It’s really the real estate game, since the deposits, especially BD are just plenty for CLF and there is no need to explore for chromite or anything else.

- - CLF has a good chunk of KWG (less than 20%) but KWG has 30% of BD and the transportation claims. These two are KWG’s bargaining chips for the cash call.

- - One option is for Baosteel (via NOT, or direct investment) to make a move on KWG for a toe hold on the 30%of BD. Baosteel would have no problems having a minority stake in BD for some initial DSO and future commitmentfrom CLF.

- - The smelter will probably be built, but later, to please Ontario and the local FN communities …CLF can fund the smelter from the cash flow from the DSO. Baosteel can offer the cash call for KWG and contribute some funds for the building of RR along with CLF, Ontario, the Fed, and the local communities (who can offer contribution in kinds with a commitment to repay from the profits of an attractive transportation maintenance contract. The transportation corridor would also include the RR and an all-season road (my bet).

- - NOT would benefit from all this to transport Ni and other stuff out…and supplies in (for all companies and the FN communities).

- - PRB’s BC will be knocked off either by CLF or NOT (the BC deposit used to belong to NOT, and traded for PRB’s real estate around the Eagle deposits). FNC real estate will most like be acquired by NOT for the proximity reasons…to get some elbow room and to consolidate potential deposits on FNC side. CLF will not be left isolated in this game. So as a peace offering, a transportation corridor through FNC land to the staging area in the south would be granted to CLF, in return for something else. But, KWG has two claims back-stopping the south end of FNC, and containing the Koper Lake landing strip, through a re-staking exercise. This is another bargaining chip for KWG to throw in the transportation game (i.e. CLF will need to be nice to KWG).

It would seem that this is a tangled web/mess, but for the big boys, it’s not that complicated to unravel, as long as the key stakeholders are playing the Nash equilibrium game.

CLF is a $10B company and it has the money (billions of dollars in its treasury) but its Achilles’ heel would be transportation access. It can dig up the stuff, but how to get it out to sell to the outside world is key.

Two options for CLF:

(a) Cash purchase of the remaining (say 80%) of KWG@1.00/share for the sake of doing a simple math (this number can be adjusted to suit your taste): 80% x 650M shares x $1.00 = $520M. It can certainly pony up the cash for a TO of KWG and contribute another $500M or so, along with others to build the RR.

(b) A share swap may be more attractive for CLF, $520M/($73/s) = 7.1M CLF shares which is about 5% dilution of CLF OS. This a drop in the bucket and about the same as CLF share price fluctuation during the last few days (for more sensational fluctuations just look at CLF price chart: a drop from $100 to $50 during the period July-Oct 2011… and the rise from 50 to 75 from Oct 11 to Feb 12).

Personally, I would go with either option. $1.00/s would be a good number to consider swallowing our pride to tender the shares. More is better, but one has to be cooperative to keep the balance in this Nash thing. Just my own opinion. Yours?

goldhunter