I just got off the phone with a rep at KWG regarding their news release. It was a very informative discussion, and expanded on the NR.
KWG holds a substantial position in SPQ, but they won't reveal at what level. They were incredibly upset with Novak selling out within 45 minutes of being told that KWG was sticking with its merger bid. We all know now that Novak sold out because he was tired, not because he thought they had reached the best possible price.
Last week, KWG sent out their valuation report, which the IIROC demanded to be retracted. The issue was that the valuation was based, in part, on the inferred value in the 43-101. They had no option but to retract the valuation.
The current 43-101 is on a deposit that is open at strike and depth. It is conceivable that the actual tonnages could be increased by up to 400%. Drills and crews will be on site with the intention of further exploring the deposit in August, proceeding through the fall.
However, knowing that the valuation given was discounting any premium on possible expansion of the deposit drilling to 1700m, the valuation is still very conservative.
Since KWG will not be selling or tendering their shares, there will be a necessity of arbitration evaluation. Reports such as those released last week by KWG will be used in such arbitrative evaluations, and we know the value they gave to the Big Daddy deposit for SPQ was roughly 27 cents, basically ignoring the other assets and joint ventures.
If you haven't tendered your shares, it might be worth holding onto them. And if you have tendered, but haven't been paid out by Cliff yet, you can call your broker and revoke the tender.
Something else that I was told is that the RR is far more important that Cliff lets on. KWG has staked the best routes to the railway already, and has 2 years of work completed on the project. If Cliff wants to go an alternate route, they will be starting 2 years late, and without the benefit of being a Canadian company when it comes to negotiating with the various governments and interested parties (First Nations, etc). So any talk of Cliff going with another route for the extraction of their ore will be hot air and red herrings.
Do your own due diligence on this one, it might result in seeing something closer to real value for your SPQ shares.
