I certainly cannot say that I am a long time holder of SPQ. I purchased my first shares in March of 2008 and since that time I have been frustrated at the SP but have never lost faith or my long term vision. My DD has been through attending conferences and communicating with people in the mining industry with much more knowledge then myself. What I am about to say is meant to provoke discussion and nothing more. I have no inside information rather I am simply looking at the eventual sale of SPQ and possibly KWG in a logical manner.
Timing, why is the SP rising at this time? Spider has been the operator of this joint venture for the last two years. Normally Spider and KWG rotate this responsibility on a yearly basis and it is my understanding that KWG should have been the operator last year. Is it a coincidence that Spider has just finished as the operator of the drill program and is now handing the keys over the KWG? Considering Cliffs relationship with KWG what better time for Cliffs to make there move. I suspect that the reason for the SP rise in both KWG and SPQ was in large part due to Cliffs accumulating. They may be doing this indirectly but none the less I believe that Cliffs is on the move. They need alot of shares in hand to ensure they will be successful. Cliffs has to do this in a reasonable manner as they don't want to push the SP too high too fast. As with the takeover of Freewest, Cliffs will need some help from a few friendly institutions that will in turn make a healthy profit.
Why should Cliffs waite for a 43-101? Cliffs is already privy to what is in the ground as they are sitting on the KWG board and thus are in the know. Just as it was in Cliffs best interest to purchase FWR before the announcement of the 43-101 the same can be said in this case. People will say that Noront pushed Cliffs into action, however I suspect Cliffs was going to take out FWR with or without the push from Noront. Cliffs just didn't expect to act when they did and remember that FWR was not going to release their 43-101 until 2010. Everything was hastened due to NOT's actions.
Why should Cliffs let KWG and SPQ drill more on their joint property? It makes no sense for Cliffs to want to continue with the drill program. If Nickel/Copper/or PG's are hit it will only complicate the eventual sale and thus cost Cliffs more money then they would like to spend. As it stands now KWG is the operator and Cliffs has a big say in what KWG will do and, more importantly, not do in the future. Even if Mr. Novak wants to continue with the drill program he needs the consent of both KWG and Cliffs. I doubt that will happen.
Competition for the Chromite? I sincerely doubt that another company, such as Xstrata, would be interested in owning 1/3rd of a deposit. If such company was truely interested in purchasing the chromite they would have made a bid for Freewest. As Khareema noted the sale of SPQ will be much different then that of FWR. As shareholders we will have to rely on Mr. Novak and the board to either advise to reject or accept Cliffs offer. Then it will up to the shareholder. But as we all learned with FWR the retail shareholder is at a huge disadvantage.
Takeover of Cliffs? Others have mentioned this in the past and I think that this is a real possibility. Chromite is strategic and there are only a few companies that run the show. The eventual mining of the JBL chromite is going to affect the market and take some of the negotiating power away from companies such as Xstrata. For example, China needs chromite but until now they have not had many options on who or where they are going to purchase it from. With the eventual mining of the JBL this will all change. Maybe a company such as Xstrata is just waiting for Cliffs to consolidate the area and build the rail road. Only time will tell.
Thank you to the many posters who make this site both enjoyable and informative. Snug, Kelsee, Khareema, and Donypee (mostly from his posts on the FWR board) are but a few posters that I have learned allot from over the past 2 years. It looks like this is the year we have been waiting for in the ROF.
Good luck to all SPQ SH's
Sitler27
