All KWG Longs,
On October 14, 2016, KWG was halted and subsequently issued a news release announcing that Bold Ventures and KWG Earn Initial Interest in Black Horse Project.
There were some on this Board that seemed somewhat underwhelmed or indifferent toward the news and some questioned the appropriateness of issuing a halt to KWG trading.
Upon further reflection, this news is VERY significant. KWG has satisfied the requirements under their agreement with Fancamp and is now the operator and indeed in control of the Black Horse deposit. This means that there are no looming third party imposed timelines that force management’s hand and distract them from more value-added activities. Further, no further funds need to be spent on the claim which means less need for further financing and possible dilution.
Those are the obvious implications.
Our friends at FSDI have committed to a bankable feasibility study by the end of the year. When this study is ready and presented to the Bank of China – what questions do you think will be asked before $2b (or more) is handed over? Before they pay for a railway to a deposit, they are going to want to ensure that the chromite actually belongs to KWG and that they are the operator and in control of the deposit. This will allow for the building of the railway and the necessary payback in the form of ferrochrome and related off-take agreements.
The chromite actually has to belong to KWG, which it now does.
What’s next? Well, to produce ferrochrome cheaper than any other producer in the world using our patented natural gas reduction method, the Chinese will also want to know about the commercial viability of our patented process. I strongly suspect that KWG is busy working on this and that we should hear something about the time that Frank goes to China to present the bankable feasibility study so he will be able to answer that question.
The only other piece of the puzzle is our First Nations. KWG recently made a very generous offer in the form of a partnership with the affected parties. I know they are currently discussing and considering KWG’s proposal. I suspect that discussions will advance rapidly once KWG has a deal with FSDI and China Rail.
KWG is quickly assembling all the pieces of the puzzle.
Frank is not going to China to discuss a deal. Frank will return from China with a deal.
My best to all KWG Longs.
Keep Digging
