/NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE
Symbol on TSX-Venture Exchange: KWG
Shares issued and outstanding: 288,134,821
MONTREAL, Jan. 21 /CNW/ - KWG Resources Inc. ("KWG" or the "Company")
(TSXV: KWG; OTCBB: KWGBF) is pleased to announce that it has entered into a an
option agreement (the "Option Agreement") with Cliffs Natural Resources Inc.
("Cliffs") (NYSE: CLF) an Ohio Corporation. The Option Agreement grants Cliffs
an irrevocable option (the "Option") to purchase and acquire certain
securities of KWG in the aggregate amount of US$3,500,000.
KWG indicated that Cliffs has expressed interest in KWG's potential
claims to ferro chrome deposits and that the Option Agreement provides that
Cliffs will not participate in any distribution by KWG of the equity of Debuts
Under the Option Agreement, in consideration of Cliff's payment of
US$150,000, Cliffs may subscribe for 50,448,987 units of KWG (each a "Unit"),
such number being equal to 14.9% of the number of outstanding common shares of
KWG (the "Common Shares") as at the date of execution of the Option Agreement
(the "Execution Date") after giving effect to the issuance of the Units, at a
subscription price of US$0.048893 per Unit (the "Subscription Price"). Each
Unit will be comprised of one (1) Common Share and approximately 0.44 of a
non-transferable Common Share purchase warrant of KWG (each such whole common
share purchase warrant, a "Warrant"), such that the total number of Warrants
to be issued will equal 22,224,784 Warrants or 14.9% of the aggregate number
of warrants, options and other rights to purchase or obligations to issue
Common Shares outstanding (the "Outstanding Options") as at the Execution
Date, after giving effect to the issuance of the Units. Each Warrant will
entitle Cliffs to purchase one (1) Common Share at US$0.05 during the first
year after issuance thereof and US$0.10 thereafter and will be exercisable for
an agreed-upon period following the issuance by KWG of 5 Common Shares upon
the exercise of the Outstanding Options, and, in any event, will terminate no
later than the fifth anniversary of the date of issuance of the Warrants.
In the event the Option is exercised, Cliffs will also purchase a secured
convertible debenture of KWG (the "Debenture") in a principal amount of
approximately US$1 million, such amount being equal to the difference between
US$3.5 million and the aggregate Subscription Price payable for the Units
described above. The Debenture will be non-transferable and non-interest
bearing, and will not be convertible unless and until all conditions
prescribed by the TSXV, including the approval of the shareholders of KWG to
the issuance of the Units upon conversion of the Debenture to be obtained in
accordance with the policies of the TSXV (the "Shareholder Approval"), have
been satisfied or waived. In the event that all of such conditions have not
been satisfied or waived on or before April 15, 2009, Cliffs will have the
right to demand repayment thereof, in which event KWG shall also pay to Cliffs
a credit facility termination fee of US$50,000 (the "Termination Fee")
provided, however that if the Shareholder Approval is not obtained, KWG shall
immediately repay, in full, the principal amount of the Debenture and pay to
Cliffs the Termination Fee.
Upon satisfaction or waiver of such conditions, all of the principal
amount of the Debenture will be converted automatically and without any
further action on the part of KWG or Cliffs into Units at the rate of
US$0.048894 per Unit resulting in a further issuance to Cliffs of 21,135,069
Units comprised of 21,135,069 Common Shares and 9,310,839 Warrants. The
security to be granted by KWG will be comprised of cash in an amount equal to
the principal amount of the Debenture plus the amount of the Termination Fee
to be held by a security agent to be mutually selected by KWG and Cliffs.
As a condition to Cliffs' exercise of the Option for the Units and its
purchase of the Debenture, KWG will enter into a subscription agreement and a
In the event the Option is exercised and the conditions set forth above
have been satisfied or waived, the number of Common Shares comprising the
Units and issuable upon the conversion of the Debenture and the exercise of
the Warrants (including the Warrants issuable upon the conversion of the
Debenture) will total 103,119,679 Common Shares.
About Cliffs Natural Resources Inc.
Cliffs Natural Resources is an international mining company, the largest
producer of iron ore pellets in North America and a major supplier of
metallurgical coal to the global steelmaking industry. The Company operates
six iron ore mines in Michigan, Minnesota and Eastern Canada, and three coking
coal mines in West Virginia and Alabama. Cliffs also wholly-owns Portman
Limited, a large iron ore mining company in Australia, serving the Asian iron
ore markets with direct-shipping fines and lump ore. In addition, the Company
has a 30% interest in the Amapa Project, a Brazilian iron ore project, and a
45% economic interest in the Sonoma Project, an Australian coking and thermal
About KWG Resources Inc.
KWG Resources is a mineral exploration company with extensive claim
holdings in the James Bay Lowlands of Northern Ontario, Canada, where
important discoveries of nickel and chrome have been made recently in the
so-called Ring of Fire. KWG has an equal joint venture interest in a large
claim block in the central part of the discovery area, with Spider Resources
Inc. (TSXV: SPQ).
Forward Looking Information:
This press release contains certain "forward-looking statements". All
statements, other than statements of historical fact, that address activities,
events or developments that the Company believes, expects or anticipates will
or may occur in the future (including, without limitation, statements relating
to the exercise of the Option) are forward-looking statements. These
forward-looking statements reflect the current expectations or beliefs of the
Company based on information currently available to the Company.
Forward-looking statements are subject to a number of risks and uncertainties
that may cause the actual results of the Company to differ materially from
those discussed in the forward-looking statements, and even if such actual
results are realized or substantially realized, there can be no assurance that
they will have the expected consequences to, or effects on the Company.
Factors that could cause actual results or events to differ materially from
current expectations include among other things, the failure to enter into the
Option Agreement and delays in obtaining or failures to obtain required TSXV
approval. Any forward-looking statement speaks only as of the date on which it
is made and, except as may be required by applicable securities laws, the
Company disclaims any intent or obligation to update any forward-looking
statement, whether as a result of new information, future events or results or
otherwise. Although the Company believes that the assumptions inherent in the
forward-looking statements are reasonable, forward-looking statements are not
guaranteed of future performance and accordingly undue reliance should not be
put on such statements due to the inherent uncertainty therein.
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
THE ADEQUACY OR ACCURACY OF THIS PRESS RELEASE.
This press release, required by applicable Canadian securities law, is
not for distribution to U.S. news services or for dissemination in the United
States, and does not constitute an offer of the securities described herein.
These securities have not been registered under the United States Securities
Act of 1933, as amended, or any state securities laws, and may not be offered
or sold in the United States or to U.S. persons unless registered or exempt
For further information:
For further information: BRUCE HODGMAN, Communications Director, Direct:
(416) 646-1374, email@example.com; MICHEL COTE, Director, (514) 866-6001
ext. 266; Or visit our website: www.kwgresources.com