What probability does one small Canadian resource company have becoming the first major North American chromite miner?

Can it really replace electric SAF ferrochrome production with natural gas chromite reduction to supply both a new Canadian and world's stainless steel industry?

"A very high probability", according to KWG Resources Inc. (TSX-V: KWG), the little engine that could!

The forward looking company has been actively working towards building a brand new stainless steel paradigm for Canadians and Ontarians, "billet by billet".

Today, the junior resource company announced the filing of an international patent application for it's invention of a new natural gas chromite reduction method. The process directly produces reduced iron (DRI) and chromium (Cr) into a new alloy using natural gas. It reduces the oxides of both chromium and iron contained within the chromite ore (FeCr2O4 also written as FeO.Cr2O3). The FeO can be substituted by MgO and the Cr2O3 can be substituted by Fe2O3 and Al2O3.

Black Horse chromite has been metallised into chrome and iron alloy and blended with suitable solid carbon reductant and was reduced in the solid state at atmospheric pressure in the presence of reformed natural gas to produce the alloy.

Earlier in the year, KWG Resources announced that it had entered into a limited partnership agreement to acquire fifty-percent of the ownership rights in the two United States provisional patent applications which include a fifty-percent interest in any of the vendor’s associated intellectual property or 'Chromium IP'. The vendor has agreed to assign its fifty-percent interest in the Chromium IP (to be held by the LP) in exchange for 25 million units of KWG (each, a “Unit”), with each Unit comprising one common share of KWG and one common share purchase warrant of KWG exercisable at a price of $0.10 for 5 years from closing date of the Chromium IP Transaction.

KWG will have the option to acquire a further 25% interest in the Chromium IP from the vendor (held through the LP) in exchange for the issuance of an additional 12.5 million Units to the vendor at any time within one year from closing (the “First Option”). If the First Option is exercised, KWG will have an additional option to acquire the vendor's remaining 25% interest in the Chromium IP (held through the LP) in exchange for the issuance of a further 12.5 million Units to the vendor at any time within one year after the exercise of the First Option (the “Second Option”), thereby acquiring 100% of the LP.

The gas super reducer, (GSR) has significant world wide benefits over those of a traditional SAF;

• New GSR facilitates the progress of the reduction reactions to such an extent as replacing the entire need for an electric concentrator
• The lab tested GSR uses extremely less energy, with overall direct energy costs to process one tonne of concentrate into metallized ferrochrome alloy being less than half those required for conventional technology
• The carbon content of the reduced chromite is much lower than the ferro alloys produced in a SAF
• Reactions commenced at 900°C when a suitable accelerant was used to enhance the reactions - substantially lower than is usual for chromite ores
• The GSR produces metalized levels of chromium and iron of 80% or more
• Time required for the reductants to convert the oxide ore to alloy was substantially less than one hour - much faster than established direct reduction methods have produced
• Future technical advancements in the reduction method will increase metalization levels even further
• Canada's large long term supply of natural gas offers attractive and stable energy costs
• Economies of scale for natural gas contracts extend to mine and supplemental GSR equipment, and liquefied natural gas to power ROF RR locomotives
• Capital costs are estimated to be significantly lower than those for conventional processes utilizing electrical energy
• No special exemptions to its domestic electricity price needed
• the GSR process has a considerably lower greenhouse gas emission footprint and greatly reduced impact on the environment
• No ministerial exemptions to export unprocessed mineral resources needed
• The GSR chromium/iron alloy pellets can form part of the charge of a conventional SAF furnace producing ferro chrome, as batch or continuously charged components of the steel making and pellets can be preheated

To quantify the precise cost advantages of a GSR over electric SAF's requires advanced analysis of the difference in energy requirements between the two processes combined with ongoing technical advancements in the reduction method, something that is being expertised by Glencore's XPS Consulting and Testwork Services.

The Sankey diagram of an example distribution of supplied heat flow via electrical energy consumption in typical submerged arc furnace. It shows how the supplied heat is being utilized in the system. It can be seen that in submerged arc furnace operation, in this case, almost 40% (~1200 kWh) of the input energy is utilized towards heating of the charge. This indicates that there is a significant opportunity to substitute this heat by an alternative energy source.



KWG Resources, the little engine that could!