Spider Resources

From the June 19 Cliffs I.C:, a liltle long but worth reading. Enlightening!

BACKGROUND TO THIS SOLICITATION

Between January 2009 and May 2009, Cliffs and Spider established a dialogue between the companies contemplating execution of a confidentiality agreement and a Cliffs subscription for Common Shares by way of private placement. The companies were unable to come to agreement on both the terms of the confidentiality agreement and the terms of the private placement.

On May 27, 2009 and on December 16, 2009, representatives from Cliffs and Spider attended Big Daddy Joint Venture Technical and Management Meetings.

On April 22, 2010, Mr. Neil D. Novak, Spider’s President & Chief Executive Officer, met with Mr. William C. Boor, then Cliffs’ Senior VP, Business Development. At the meeting, Mr. Boor indicated that Cliffs hada strong interest in securing majority ownership of the Big Daddy chromite deposit and that Cliffs would be indifferent between an acquisition of KWG or Spider to achieve that goal. During that discussion, Mr. Novak indicated an interest in further discussions regarding a potential sale of Spider to Cliffs. Mr. Novak stated that Spider’s strategy was clearly that of an exploration company and that he had no intention to develop projects beyond exploration.

On May 21, 2010, Cliffs retained BMO Capital Markets as its financial advisor in connection with the Cliffs Spider Offer. Pursuant to an engagement letter dated August 10, 2009, BMO Capital Markets also advised Cliffs on its acquisition of all of the outstanding common shares of Freewest pursuant to an arrangement agreement dated as of November 23, 2009 between Cliffs and Freewest, as amended on December 3, 2009 and on December 9, 2009, which closed on January 27, 2010 (the “Freewest Acquisition”), and has worked with Cliffs in an advisory capacity since then in reviewing opportunities in the “Ring of Fire” exploration area.

On May 23, 2010, Mr. Boor contacted Mr. Novak and expressed Cliffs’ interest in entering into an

exclusivity agreement to negotiate the sale of Spider to Cliffs. Mr. Boor explained that Cliffs required a response the next day because Cliffs was not willing to have its proposal outstanding when trading on the TSX-V resumed on May 25, 2010. Mr. Boor referenced his previous discussion with Mr. Novak and explained that Spider had the opportunity to secure an attractive deal for Spider shareholders as Cliffs was seeking to buy either KWG or Spider.

Following that call and consistent with the discussion, Cliffs delivered a letter proposal to the Spider board of directors for the acquisition of Common Shares not already owned by Cliffs or its affiliates as of such date at a price of $0.13 per Common Share payable in cash, representing a premium of approximately 62.5% over the closing price of the Common Shares on the TSX-V on May 21, 2010, the last trading day prior to Cliffs’ delivery of such letter.

Cliffs’ proposal was subject to a customary confirmatory due diligence review over a 15-day period and the execution of a definitive agreement containing mutually satisfactory terms and conditions. The proposal contained a “go shop” clause providing Spider with the opportunity to proactively canvass the market for a third party offer at a price superior to that proposed by Cliffs, allowing Spider to verify for its shareholders that Cliffs’ proposal was fairly priced.

Later on May 23, 2010, Mr. Novak contacted Mr. Boor and explained that the Spider board of directors viewed Cliffs’ proposed price of $0.13 per Common Share payable in cash as too low. Mr. Novak suggested a higher price, but as the discussion continued he indicated that a lower price was possible. Mr. Boor explained the comparison of the lower price relative to the Freewest Acquisition, which was the result of a highly contested competitive process. Because the price suggested by Mr. Novak was significantly higher than the comparable view of the Freewest Acquisition and any previous trading level for Spider Common Shares, Mr. Boor asked Mr. Novak

to reconsider and they jointly agreed to talk the next day.

On May 24, 2010, in a call between Mr. Novak and Mr. Boor, Mr. Novak advised that Spider had been unable to give notice of and convene a full meeting of its board of directors, but that those of its directors as had been available had met and had considered the price referenced in Cliffs’ proposal to be quite low; acknowledged the gap between Spider’s expectations and Cliffs’ valuation; and indicated that Spider was willing to discuss and negotiate this gap. In the course of these discussions Mr. Boor reiterated that Cliffs believed the price being offered to Spider was highly attractive and implied a value for the Big Daddy chromite deposit well in excess of that implied by the fully-valued Freewest Acquisition. Following the discussion, Mr. Novak emailed Mr. Boor, expressing Spider’s view that Cliffs’ proposal was too low and that the board of directors could not agree to the offer within Cliffs’ timeline.

On May 24, 2010, Cliffs issued a press release stating that it intended to make the Cliffs Spider Offer and the Cliffs Potential KWG Offer.

On May 25, 2010, KWG announced the appointment of a financial advisor. Later on May 25, 2010, only two days following Cliffs’ expression of interest to Spider, Spider and KWG

announced that they had entered into the Binding Letter Agreement pursuant to which Spider intended to amalgamate with a newly-incorporated, wholly-owned Canada Business Corporations Act formed subsidiary of KWG, to become a wholly-owned subsidiary of KWG, leaving the shareholders of each of the two companies with 50% of the outstanding shares of the ongoing public corporation.

The Proposed Merger was announced contingent upon approval of Spider shareholders, but not upon that of KWG shareholders. The Proposed Merger contemplates distribution of all of the outstanding common shares of Debuts, a wholly-owned subsidiary of KWG, to shareholders

of KWG (but not the shareholders of Spider), following the transfer of certain valuable assets to Debuts.

On May 28, 2010, each of Spider and KWG filed on SEDAR a notice of meeting and record date for a special meeting of its securityholders to be held on July 8, 2010 with a record date for voting of June 4, 2010.

On May 31, 2010, the Cliffs Spider Offer was formally made to Spider shareholders pursuant to a take-over bid circular.

On June 3, 2010, Cliffs announced that it had acquired, through its wholly-owned subsidiary Cliffs Greene B.V., 7,792,000 Common Shares by way of public market purchases. Following completion of such purchases Cliffs Greene B.V. held and continues to hold 27,434,500 Common Shares, with those Common Shares having been purchased at a weighted average price of $0.1077, representing approximately 5.1% of the 539,620,343 Common Shares outstanding as at the Record Date.

On June 7, 2010, Cliffs announced that it was continuing to review its options with respect to making a formal Cliffs Potential KWG Offer and may not make such an offer in light of the Proposed Merger.

On June 10, 2010, Spider announced the appointment of a financial advisor to provide financial advisory services to Spider’s Special Committee with respect to an evaluation of the Proposed Merger and the Cliffs Spider Offer.

On June 11, 2010, Spider, KWG and a subsidiary of KWG entered into a definitive combination agreement (“Combination Agreement”) in respect of the Proposed Merger. The Combination Agreement supersedes the Binding Letter Agreement.

On June 12, 2010, Mr. Boor contacted Mr. Novak and indicated that Cliffs was prepared to increase the offer price under the Cliffs Spider Offer to $0.16 per Common Share on the basis that the increased offer was supported by Spider and upon completion of limited confirmatory due diligence. Following that call, on June 13, 2010 Cliffs delivered a letter to Spider’s Board of Directors proposing to increase the Cliffs Spider Offer to $0.16 per Common Share.

Spider did not indicate to Cliffs that its proposal to increase the Cliffs Spider Offer to $0.16 per Common Share was a “Spider Superior Proposal” under the Combination Agreement.

Consequently, on June 14, 2010, Cliffs delivered to Spider a revised proposal letter proposing to increase the Cliffs Spider Offer to $0.165 per Common Share (the “Cliffs Superior Proposal”), subject to entering into a definitive support agreement with Spider (the “Support Agreement”), Spider terminating all agreements with KWG concerning the Proposed Merger and the completion of limited confirmatory due diligence.

The Cliffs Superior Proposal represents a 27% increase over the original Cliffs Spider Offer and a 106% premium over the closing price of the Common Shares on the TSX-V onMay 21, 2010, the last trading day prior to Cliffs announcing its intention to make the Cliffs Spider Offer. The Cliffs

Superior Proposal implies a total equity value for Spider on a fully-diluted basis of $109 million.

On June 14, 2010, Spider's board of directors advised Cliffs and KWG that Cliffs Superior Proposal is a “Spider Superior Proposal” as defined in the Combination Agreement, representing an offer more favourable, from a financial point of view, to Spider shareholders.

On June 16, 2010, Cliffs modified the terms of the Cliffs Superior Proposal to take into account the terms of the Combination Agreement, which it received a copy of after it was publicly filed by Spider on June 15, 2010.

The Cliffs Superior Proposal continues to provide for an offer price of $0.165 in cash per Common Share.

On June 16, 2010, Mr. Novak sent an e-mail message to Mr. Boor acknowledging receipt of the Cliffs Superior Proposal and confirming on behalf of Spider that such proposal constitutes a “Spider Superior Proposal” as defined in the Combination Agreement. Under the Combination Agreement, KWG has a five business day period, expiring on June 24, 2010 at 12:01 a.m. (Eastern time), during which it has the right to match the Cliffs Superior Proposal.

The proposed Support Agreement between Cliffs and Spider provides for a number of conditions to be met or waived by Cliffs in order for Cliffs to be obliged to take up and pay for Common Shares tendered under the Cliffs Superior Proposal. Such conditions include, but are not limited to:

· at least 50.1% of Common Shares (including those held by Cliffs directly or indirectly and on a fullydiluted basis) shall have been validly tendered and not have been withdrawn at the expiry time of the bid;

· obtaining applicable governmental, regulatory and stock exchange approvals, exemptions and consents for

the Cliffs Spider Offer;

· no material litigation or material adverse effect on the business of Spider;

· Cliffs being satisfied with its treatment under Spider's shareholder rights plan;

· the continuation of the Support Agreement in full force and effect;

· none of the lock up agreements required by Cliffs to be entered into by directors and officers of Spider requiring them to tender to the Cliffs Spider Offer shall have been terminated; and

· all options and warrants to acquire Common Shares of Spider outstanding at the expiry time of the Cliffs Spider Offer shall have been cancelled or otherwise dealt with on terms satisfactory to Cliffs acting in its reasonable judgment.

If the Support Agreement is signed by Spider, Cliffs will vary the terms of the Cliffs Spider Offer to increase the offer price to $0.165 per Common Share and the Combination Agreement will be terminated.

On June 16, 2010, Cliffs also announced that it has advised KWG to stop work on a valuation of KWG because the valuation is no longer necessary. Cliffs, which owns approximately 19.3% of the common shares of KWG on a fully-diluted basis, originally requested the valuation on May 24, 2010. At that time, Cliffs had indicated its intention to bid for KWG common shares, and the valuation was required because Cliffs was an insider of KWG.

GLTA.

BaBe.