From my evil twin on Stockhouse.....

Hey Oreelse,

IMHO the news of a "possible" deal or even moreso a "confirmed" deal on the RR, will have a double "whammee" on Cliffs for the following reasons:

1. A state owned and controlled transport corridor/RR will turn Cliffs into "just another" customer at the trough; maybe they save on capital costs but they will not control costs or accessibility. They will have to pay the going rate and will be limited by a continually reducing capacity due to the new mines coming on-line; they would also be totally dependant on this transport capability at a time where their overall earnings are significantly compromised due to world Iron ore prices as well as operationnal difficulties in their other divisions;

2. The anticipated and "much speculated upon" secret documents currently in front of the mining commissionner, may reveal that, much like the Preliminary Economic Assessment (PEA) (which priced KWG stock at $2.95 to $4.78 per share conditionnal upon RR, mine and smelter being in place) the completion of a RR deal + plan for construction, would obligate Cliffs to develop Big Daddy first (by itself or in concert with Black Thor); this would force Cliffs to pay 30% to KWG when BD is operating or take-over KWG at the current valuation (official) which they can't afford at their current market cap.

Conclusion = Cliffs greed has painted them into a very difficult corner, from which they will be lucky to survive.

Consider the following:

a. if their stock price plunges down to ($25 to $30) in the next few months (6 to 18) and Xstrata is taken over by Glencore, then Cliffs could be a buy-out at a premium ($40 to $45);

b. Glencore would have the financial capability to open the mine and smelter as well as become a partner on the RR or take-over KWG's BD assets at a fair NAV.

I do think though...if news of the RR deal comes before the Cliffs decline and before a take-over move by Glencore, then Cliffs SP would benefit and rise back to the $40 to $50 range purely on anticipation of eventual revenues from the ROF chromite assets. I also think to your point oreelse, that the Fed gov has just recently realized how much contol they can have over Canadian natural resources, which are being coveted by the world's shopping list. I am sure that we are in for some very significant and historically important news in the next few months.

Good luck to all KWG longs.....Pear3

I happen to agree with him, but I also see the possibility of M&A between some of smaller players in the ROF.

Best of luck to all

Le Penseur