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I agree on 10 cents range for a while. Probably until the end of April if they manage to get the NI 43-101 by that time.
Also (this is just a theory - your comments/corrections are welcome) if you were Cliff, what would you do if you had the following in mind:
1. We want to take over the company (KWG)
2. We do not want to pay more than 20-30 cents per share
3. We see that even before the NI 43-101 the share price went up 2 folds getting close to 15 cents
4. We suspect that we may not be the only company interested
5. We have unexercised warrants @ 10 cents (please someone confirm how many they have)
Again - I am not a pro-trader, but here is what I would do:
1. Put a "wall" somewhere @ 15 cents (5, 10, 15 million shares) - short it at that level. I remember someone posted Level 2 on stockhouse 2 days ago with 5M shares ask @ 15 cents.
2. If it breaks through the wall - I can always exercise warrants @ 10 cents (please confirm the quantity remaining) to cover my short.
2. If it does not - I can scoop the rest with the offer of 0.20-0.30 when the time is right and I get advance info on NI 43-101 (come on guys - we all know they will get advance info on it prior to the public)
Theory, theory, theory ...
Cheers to all of you!!!
Hooligan
Agreed.
Got two recent articles that I found interesting. The one posted here has a "minor" (if not "no") reference to what I posted before about the interest from other big players being potentially interested in gaining control over KWG.
First Nations want say in Ring of Fire project
By ROMINA MAURINO The Canadian Press
Mon. Mar 15 - 4:53 AM
TORONTO — The First Nations communities surrounding a potentially massive chromite deposit in northern Ontario known as the Ring of Fire say it will take more than lip-service from politicians to ensure development goes ahead on the valuable land.
Northern Development Minister Michael Gravelle will be visiting several First Nations communities starting Wednesday to discuss concerns around the Ring of Fire — a mining opportunity that’s been described by Premier Dalton McGuinty as key to economic recovery.
It’s a trip First Nations welcome, but one they say won’t move development along unless their right to provide consent for work on their land is legitimately taken into account.
"It’s nice when a politician comes to our territory and talks to us. It’s a learning experience for them and I hope what they’ll hear us and they’ll take it to heart," said Grand Chief Stan Beardy of the Nishnawbe Aski Nation, which represents 49 First Nations communities.
"But at the end of the day there’s political rhetoric and there’s a legal requirement to fulfil."
In January, a group of First Nations angry about what they consider a lack of consultation set up a blockade on the landing strips at Koper and McFaulds lakes in the Ring of Fire, about 500 kilometres northeast of Thunder Bay.
The action is preventing planes used by mining companies from landing in the area. The group says it will continue the blockade until all parties agree to address community concerns, such as speeding up construction of a new airport and ending the use of frozen lakes as landing strips.
The First Nations aren’t against developing the land, said Beardy, because they know that’s the only way to create economic opportunities. But they want to make sure they too benefit from the development and that they play a key role at all stages.
"There’s an increased interest by third parties. They think that they can just come into our territory and start doing business because the premier mentioned it," he said.
"They like to see how far they can push an issue but we’ve made it very clear that what is a requirement now is consent to do business in our territory, and we will continue to maintain that position."
Chief Cornelius Wabasse of the Webequie First Nation, a community Gravelle will visit Thursday, said he’s looking forward to the chance to bring up environmental and economic issues.
While mining companies have started responding to some of the First Nations’ demands around job creation and consultation, Wabasse said he’s looking for a firm commitment in the form of a memorandum of agreement that both sides can sign and live by.And while the blockade remains in place for now, he feels the tone of the discussions is slowly improving.
"I think they’re gradually getting the message that we want to be part of the process, because in the beginning there was no consultation," he said.
"We didn’t know what was happening in our backyard — we’d see a lot of activity and we began to question that."
Part of the purpose of Gravelle’s trip will be to reassure First Nations that the government is taking those concerns into account — a shift he sought to make clear when Ontario updated its Mining Act.
(Reuters) -Mining companies are cash-rich and positioned to do deals, but highprices and the chance to develop existing properties are slowingconsolidation, executives said at the Reuters Global Mining and SteelSummit this week. Strong demand from emergingcountries has helped base metal prices rebound and supported gold andsilver prices, even as the strengthening dollar pared some gains inprecious metal prices from last year.
Helpedby that relative strength in commodity pricing, metals executives saytheir coffers are full and financing is available to them.
"Ourcompany is situated today with its financial resources and access tocapital to take advantage of an opportunity if it comes to us in anattractive fashion," Freeport-McMoRan Copper & Gold (FCX.N)Chief Executive Richard Adkerson said in New York. "And you can beassured that bankers are lined up at our offices, coming in withopportunities regularly."
ButAdkerson said that Freeport, the world's largest publicly traded coppercompany, is focused on internal growth as opposed to acquisitions.
"Ifyou have to go out and buy properties you have to pay for the currentvalue and pay a premium for it," he said. "So we've found it verydifficult to find acquisitions that can compete economically with ourexisting internal resource base."
Yamana Gold (YRI.TO)CEO Peter Marrone also said his company would be focused on organicgrowth, despite having the financial strength to look outside.
"Ihave never been averse to acquisitions, but what I have been averse tois bad acquisitions that don't deliver value," Marrone said. "We haveorganic opportunities that deliver great value. We believe, at least asthings stand now, that they deliver better value than something thatwould be in the market."
MID-CAP MERGERS
Still, some executives feel it might be the right time for some smaller miners to combine.
"Wethink there are many out there that we can see that have not invested,have not positioned themselves to renew or continue to hold theirresource and reserve base. And as a consequence they will be forced tomerge," said Mark Cutifani, CEO of the world's No. 3 gold producer,AngloGold Ashanti.
He expectsconsolidation among the so-called junior miners to mid-cap sized minersas they look for assets that can boost their production outlook.
Thompson Creek Metals (TCM.TO) is among those actively seeking acquisitions, as it seeks to diversify away from being a pure-play molybdenum miner.
"Theargument can be made that the diversified metals companies get a littleadvantage in the marketplace because of the derisking effect of beingmore diversified. Growing the company in terms of more projects andmore commodities is a valuable long-range business model," ChiefExecutive Officer Kevin Loughrey said.
Andwith coffers full, larger mining companies will inevitably look attakeover targets as they hit the market, even if their organic growthopportunities are strong.
"Fundingis not the issue. And that's how we want to position ourselves, to havethat financial capacity to take advantage of opportunities, if it makessense," said Aaron Regent CEO of the world's largest gold miner,Barrick Gold (ABX.N) said.
If anyone sees any errors in my calculations please correct me:
Price per lb of ferrochrome: US103c/lb
Anticipated production from 2 (Not 3) prospects where KWG has 1% net smelter royalty: 400,000 to 800,000 tones of ferrochrome per year (based on the Cliff's own evaluation) ... lets use 600,000 tones
1 tone = 2,204.62 lb
600,000 tones = 1,322,773,000 lb * US$ 1.03 = US$ 1,362,456,190 ... (yes that's how much Cliff is going to get from their CAD 1.00/share take over of FWR.
KWG's share = 1% of US$ 1,362,456,190 = 13M/year of cash flow
Upside potential:
1. I used 600,000 not 800,000 tones per year & that evaluation includes 2 prospects only
2. Prices are expected to go up (read the article)
=====================================================
References (I do feel like doing a school project in grade 10 now ... lol):
Quote from the article below: "... ferrochrome prices, now at US103c/lb, were expected to rise in 2010, with the Merafe marketing team in Asia at the time of going to press to negotiate second-quarter prices."
http://www.miningweekly.com/article/loss-making-merafe-bullish-on-ferrochromes-prospects-in-2010-2010-03-02
I am not a usual poster on these boards - like reading more than writing (had a C- on essays at school ... you will notice it down below). But to name a few:
KWG holds a 1% net smelter royalty in all three prospects. The planned mine (on other two prospects acquired by Cliff from FWR) is expected to produce 1 million-2 million tones of high-grade chromite ore annually, which will be further processed into 400,000-800,000 tones of ferrochrome. If I am not mistaken the price of ton of chromite ore is between: $215/t (CIF) from South Africa to $360/t CIF from India with Turkey somewhere in the middle. Grades from all three countries are consistent with what's being reported from the drilling @ ROF. KWG gets 1% smelter royalty from anything that gets mined from under the surface. Mind though - ROF is going to be an open pit mining compared to say South African.
Here is a recent article about the ore pricing (March 5th, 2010): http://www.miningweekly.com/article/south-africa-exporting-more-raw-chrome-ore-at-low-prices-2010-03-05)
And here is an article on estimated ore production from two prospects acquired by Cliff as part of the FWR deal: http://www.tradingmarkets.com/print/.site/news/TOP%20STORY/2718168/
As for the price valuation:
1. Now we have: great reports on drilling out on March 5th + Ontario government support + "free" publicity coming up on Global + share prices on the way out of the "penny stock" zone = funds that could not have purchased KWG before because of its "penny stock" status can start buying now.
2. "Someone is hiding in the bushes" factor. FWR was an easy target - no "real" second bidder there - just Cliff (NOT was not a real contender). High volumes in the last 2 (count 3 now) days point to a possible accumulation on behalf of someone big out there. That "big" is "hiding in the bushes" and getting ready to come out of the shade when the offer comes from Cliff to acquire KWG at 0.25-0.30 range. Who this "big" is you may ask? Well - can't tell you for sure but a few names come to mind:
* XSTRATA (huge interests in South Africa) but their biggest customers in North America - sound like a no-brainer to scoop the next possible biggest chromite prospect in the world for pennies
* Chinese state companies - China is the biggest user of chromite ore
And one more thing: National Instrument 43-101 compliant resource estimate was reported to commence on Big Daddy Chromite Deposit. The anticipated date when it is going to become available is: late April - beginning of May 2010. If what we have seen so far from the drilling results translates into a "knock-out" NI 43-101 (or should I rather use "When" instead of "If") we have a new game rules.
And don't forget one more thing: all non-chrome assets will be spin off by Cliff if (when) they get full control over KWG. Yes I am talking about Debut Diamonds.
And ... (sorry for being a pain in you know where) ... did FWR have the rail that is going to be used by each and every company in the ROF? They did not (at least to the best of my knowledge) and KWG does. What's the economic potential - can't tell you for sure - it's not a CN Rail type of operations but I am sure they won't provide free rides to their competitors once the rail is complete.
Thanks for reading this and sorry for taking too much of your time.
Cheers!
Hooligan