(Source: PRNewswire-FirstCall)
MONTREAL, July 22 /PRNewswire-FirstCall/ -- KWG Resources Inc (TSX: KWG) has completed the purchase of a 1% net smelter royalty in the Black Thor, Black Label and Big Daddy chrome discoveries in the James Bay Lowlands for $635,000 and a further $1 million payable within one year plus 15 million common shares and 15 million common share purchase warrants, each warrant entitling the holder to purchase a common share at a price of $0.10 for a period of 5 years. KWG's principal shareholder Cliffs Natural Resources (Paris: CLF) supports the acquisition as it believes the deposits can be economically developed to supply both North American and some external markets. As 15 million KWG shares were issued to the vendor, Cliffs intends to subscribe for a further 3 million shares in order to maintain its equity interest.
The discovery of nickel in the MacFaulds Lake area in September 2007 started KWG along a development path which KWG expects may now accelerate. Funds raised as a result of the new discovery enabled KWG and joint-venturer Spider Resources, to complete the acquisition of a combined 50% interest in a nearby property optioned from Freewest Resources. A drilling program there was undertaken to follow up the joint-venture's 2006 discovery of a high-grade chrome occurrence. This source of ferro-chrome for steel alloying is a principal ingredient in all grades of stainless steel, at a ratio of some 18% or more.
Metallurgical testing of samples recovered from the discovery in early 2008 indicated that a uniquely large and high-grade deposit of ferro-chrome-yielding chromitite had been found, which might supply steel-making markets in North America and beyond. Under the terms of the option agreement, KWG and Spider may earn a 60% interest in the property optioned from Freewest Resources by completing a feasibility study and thereafter, an additional 5% by sourcing construction financing, for which KWG approached Cliffs Natural Resources.
Cliffs Natural Resources is an international mining and natural resources company. The company is the largest producer of iron ore pellets in North America, a major supplier of direct-shipping lump and fines iron ore out of Australia and a significant producer of metallurgical coal. For almost two centuries Cliffs has been the dominant mine operator and supplier of iron ore for integrated steel production in North America and continues to be the principal operator on the Minnesota and Michigan Iron Ranges, two of the hemisphere's chief sources of iron. As such, the company has built and operated railroads, plants, terminals and loading facilities of all description.
