You do not have to tender SPQ shares. However, as Snug put it, what will happen is beyond anyone's guess here. The KWG release made me chuckle - KWG might not be able to do much to Cliffs, but at least they're getting a little dig in.
As I see it, KWG will be very interesting for the next several months. I believe that they are effectively in a race. They know that they have value in the ground, but that until an N43-101 comes out, they can't use that for an official valuation. They know that they can do more drilling, to increase this unofficial valuation. They know that they can complete an official N43-101, to make things official. Once all of that happens, we're looking at at value of possibly anywhere from 25 to 50 cents per share.
Cliffs can sit back right now and watch KWG prove up the resource. At any time, Cliffs can start the process of buying out KWG. They really should, in all probability, buy KWG before an N43-101 becomes available to the public, or it's going to cost them far more. After seeing what happen to SPQ, I'm pretty certain that KWG could be had for less than 20 cents a share. The float is a lot bigger, but look at the numbers - KWG already has almost 20%. If they throw out an offer right now for 18 or 19 cents, there is no doubt in my mind that they'd get another 30% to put them over the 50% mark. Some people might scream and say that this is impossible - Spider went for 19 cents, and KWG is worth more because it has the railway and the NSR. Well, the actual dollar value of those two assets is not significant compared with the share of Big Daddy, although the railroad is certainly worth more as a trump card than its actual market value.
Take the 19 cents for Spider, and lower to to reflect the fully-diluted shares outstanding. I don't have the exact numbers in front of me, but I'm guessing that it would bring that down to about 14 to 15 cents, since I think KWG had at least a third more. Add a few cents for the NSR and a few cents for the railroad rights, and you're back up to around 18 or 19 cents.
They may want to wait for a few weeks to digest Spider, and see what their exact situation is after July 16th. They may also assume that the markets might go down a bit in that time, which would lower the SP of KWG. But I don't think it would be smart for them to wait for months and months, and risk having KWG get to the point of putting out the N43-101.
With the stock trading at 12 cents right now, they could put out an offer at a 25% premium (15 cents), as per their usual modus operandi, and then raise that to 19 or 20 eventually. Boom, there goes KWG for a fraction of its value, and there is nothing that any of us can do about it.
I hate to be negative, but the writing is on the wall. There is no way that they should just pretend to ignore KWG and go hunting for other properties. They may as well take KWG out now while they can get it for bargain basement prices. In my opinion, there are almost certainly enough investors/speculators who would surrender their shares at 18-20 cents to give Cliffs 100% control of Big Daddy.
