All (senior managers) companies are taught to be opportunistic. To look for deals that are best for them so it doesn't surprise me that NOT made the offer it did for FWR. On purely a pre-announcement trading value it looks fair. There will probably be revisions of the offer from NOT to move it along and then eventually the shareholders of FWR will determine whether they accept it. As a NOT shareholder and as a FWR shareholder I am happy to see some action taking place as it indicates that their are bigger things happening behind the scenes then we know about.
What really interests me is why now?
Is it the NR that Cliffs is commissioning a rail study may have triggered NOT to move on FWR so that it isn't left behind on the chromite front? I have no doubt that there will be a large chromite mine on the FWR properties. IF Cliffs commits to developing the FWR and FWR/JV chromite deposits plus the infrastructure to mine it NOT's Chromite would be worth a lot less then it is now. The FWR & FWR JV properties so large that the NOT chromite might not be looked at for decades. The challenge I have with this view is that there isn't anything new here. NOT has know about Cliffs for months and the KWG/SPQ JV partners don't seem to be in play.
The second trigger might be the AT12 area and sniffs on nickel that FWR came up with in their last drill results along the top of their property. If FWR becomes a nickel play they would be much more attractive to NOT then they currently are with just chromite.
That brings up the third potential trigger, the NOT/FWR JV. The last I heard was that drilling was suppose to take place in early fall. I've been curious as to what that pod would yield for over a year now and its possible with all the analysis that has been done over the summer that NOT feels its worth moving on FWR. The chromite eliminates the downside and if the JV hits NOT wins big time.
My reading of the tea leafs is that NOT will drive its price up with a series of news release that drags the deal value up for FWR shareholders to the point where they are seeing $0.7 -$0.8. Similarly FWR is going to be rushing to release assays on all their projects, push for an early completion of the 43-101 and drill as many holes as fast as they possibly can. The result will be lots and lots of news.
I see only good things happening for us retail shareholders (whether NOT or FWR) over the next few weeks. There will be lots of news, lots of awareness, lots of interest and hopefully lots of stock price appreciation as these two companies position themselves and battle things out.
So pretend you are in the island on holidays sipping a cool one on the beach and watch thing develop.
... Been There
