KWG cancels second tranche of financing, plans drilling

2008-02-19 17:31 ET - News Release

Mr. Frank Smeenk reports

KWG PROVIDES UPDATE, WILL DRILL FREEWEST OPTION WITH SPIDER

KWG Resources Inc. will not proceed with the second tranche of the $3-million private placement, as announced in December. The company closed $2.1-million of this placement at the end of 2007.

KWG and its joint venture partner, Spider Resources Inc., have budgeted $2.2-million to drill the targets identified in the claims optioned from Freewest Resources Canada Inc. in an initial program this winter. Drilling is expected to commence there within the next two weeks when line cutting and on-ground geophysical definition of the targets are completed. KWG and Spider have an equal interest in the option, under which they may together earn up to a 65-per-cent interest in the property. Both companies also have equivalent interests in various other joint ventures between them, including the extensive McFaulds Lake properties optioned to UC Resources Inc.

"It is important that the investing public understands how KWG and Spider are completely equal in their interests that are adjacent to the recent Noront discovery in the so-called ring of fire," said KWG president, Frank Smeenk.

As also previously announced, three 100-ton bulk samples of the MacFadyen kimberlites are planned for this winter season. Pursuant to the MacFadyen KWG-Spider joint venture, KWG may dilute the interest of Spider to 33 per cent. The company has initiated steps to transfer the property to subsidiary Debuts Diamonds Inc. KWG plans to distribute the shares of Debuts Diamonds as a return-of-capital dividend to shareholders of record at a future date to be announced.