Big Daddy JV breakdown
http://www.kwgresources.com/news/2009/index.php?&content_id=190
KWG Resources Inc. Signs Amendment To Option Agreement For Mcfaulds Joint Venture Property With Freewest Resources Canada Inc. And Spider Resources Inc.
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Freewest Grants Options to KWG and Spider to Earn an Aggregate 10% Additional Interest by Incurring $15 Million in Expenditures by March 2012
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KWG and Spider Each Currently Holds a 25% Interest in McFaulds Joint Venture Property
Montreal, Canada - September 14th, 2009 - KWG Resources Inc. (KWG:TSX-V) ("KWG") announces that KWG, Freewest Resources Canada Inc. (FWR:TSX-V) and Spider Resources Inc. (SPQ:TSX-V) have amended their December 2005 Option Agreement with respect to Freewest's McFaulds joint venture property located in Ontario. Each of KWG and Spider has to date earned a 25% interest in the McFaulds joint venture property. "Under the Amended Option Agreement, Freewest has granted additional options to KWG and Spider under which each can earn an additional 5% undivided interest (10% in the aggregate) in the McFaulds joint venture property by incurring an additional $7.5 million in expenditures ($15 million in the aggregate) by March 31, 2012. Each of KWG and Spider can acquire: (i) an additional 1.5% interest in the McFaulds joint venture property by incurring $2.5 million in expenditures by March 31, 2010, which KWG and Spider have committed to spend; (ii) an additional 1.5% interest in the property by incurring an additional $2.5 million in expenditures by March 31, 2011; and (iii) an additional 2% interest in the property by incurring an additional $2.5 million in expenditures by March 31, 2012. If either KWG or Spider elects not to exercise any portion of its option under the Amended Option Agreement, the other has the right to exercise the option in its place."
KWG confirmed, to me, on Friday that Spider and KWG each now have 26.5%
There's been some discussion, of late, questioning where Cliffs will begin mining. Here's what I believe. Cliffs will be expending a huge amount of money ($800 million) in the next 5 years, not to mention an estimated $700 million for the rail link. When companies spend that kind of money, they want to get it back as quickly as possible. Of the 3 deposits (Big Daddy, Black Thor, and Black Label), Big Daddy (though not the largest), is the richest in terms of % chrome and it's close to surface. A ton of 40% chromite ore is considerably more valuable than a ton of 35% chromite ore. It was explained to me, once, that for every 1% increase in the chrome content, it translated to an increase in value per ton of $x dollars. For the life of me, I can't remember what that value was, but maybe one of you geo guys can verify this. Bottom line is you mine your richest ore first to get the fastest return on your investment. To my knowledge, no decision has yet been made on where the first hole in the ground will go, but you can be sure Cliffs is taking a very serious look at Big Daddy.
SRV
