KWG drives hard bargain with Cliffs for Big Daddy deposit

KWG Resources expects to be paid "fair value" for its shares in Spider Resources after its takeover by Cliffs Natural Resources.

After a failed merger bid with Spider to retain control of the Big Daddy chromite deposit in the James Bay Lowlands, the Montreal junior miner said it won't tender its shares in Spider until Cliffs comes forward with a new offer.

"At that time, KWG will have the statutory right to dissent and to demand to be paid...the fair value of its Spider shares, which KWG believes will exceed the $0.19 per share being offered by Cliffs," said the company in a July 9 statement.

KWG Resources owns 26.5 per cent of the deposit.

Cliffs won the struggle for majority ownership for the McFaulds Lake deposit after its offer of 19 cents a share, or $125 million, was deemed by Spider's directors as being superior to a merger with KWG.

If all of Spider's shareholders accept Cliffs' offer, it will give the Ohio miner 73.5 per cent control of the Big Daddy deposit. The offer expires July 16.

Cliffs already owns 47 per cent of the deposit and it would pick up Spider's 26.5 per cent.

Cliffs already has big plans for almost $2 billion in mine and railway development by 2016.