KWG Resources accepts Cliffs' $0.19-per-share offer for Spider stake

KWG Resources (TSX-V:KWG) said Wednesday it will accept Cliffs Natural Resources' (NYSE:CLF) $0.19 per share offer for the company's stake in Spider Resources, ending KWG's opposition to Cliffs' takeover.

Cliffs is looking to acquire KWG's shares in Spider to gain majority control of the Big Daddy chromite deposit in the James Bay Lowlands area of northern Ontario, with a drill defined resource of 23.2 million tonnes at a grade of 40.66 Cr2O3 in the indicated category, and an additional 16.3 million tonnes at 39.09% Cr2O3 in the inferred category.

Chromite is a critical raw material for the production of chromium, which is used to produce stainless steel.

Cliffs has already acquired 85% of Spider's shares.

“The adjudication of the fair value of Spider shares owned by its shareholders who dissented to the amalgamation, is a long, costly and complex process,” said KWG president Frank Smeenk.

“Not only could our small holding of Spider shares not justify that role, but we are satisfied - after due consideration - that it may well be in the best interests of many such shareholders, from a financial point of view, to accept the Cliffs offer before its expiry on November 19, 2010.

"We did not want our actions in this process to be relied on in a way which might lead other investors to forego the liquidity made available under the offer,” he added.

KWG was up more than 9% on Wednesday, trading at $0.11 as of 12:46pm EST.