Breaking News

KWG announces non-brokered private placement

15:50 EDT Tuesday, August 04, 2009

    <<
    Symbol on TSX-Venture Exchange: KWG
    Shares issued and outstanding: 374,718,877
    >>

MONTRÉAL, Aug. 4 /CNW/ - KWG Resources Inc. (TSX-V: KWG) ("KWG" or the "Company") announces a proposed non-brokered private placement (the "Private Placement") of a maximum of $1,437,500 of units of securities of the Company comprised of (a) up to 20,000,000 "flow-through" units (each, an "FT Unit") at a price of $0.05 per FT Unit, with each FT Unit comprised of one common share of KWG (each, a "Common Share") to be issued on a "flow-through" basis and one Common Share purchase warrant (each, a "Warrant") exercisable at a price of $0.10 per Warrant to acquire one Common Share for a period of 5 years from the date of the issuance the Warrant (the "FT Offering"); and (b) up to 8,750,000 non-"flow-through" units (each, a "Unit") at a price of $0.05 per Unit, with each Unit comprised of one Common Share and one Warrant (the "Unit Offering").

The net proceeds of the proposed Private Placement will be used to finance the exploration work on the Freewest Option in the Ring of Fire and for working capital. The proceeds from the FT Offering will be used for eligible flow-through exploration expenses and will be renounced for the 2009 taxation year. Two directors of the Company have indicated they will each subscribe for 5 million FT Units with the balance of the FT Offering to be subscribed by non-insiders of the Company. It is expected that the Unit Offering will be subscribed by Cliffs Greene B.V. ("Cliffs"), an affiliate of Cliffs Natural Resources Inc. (NYSX: CLF) (Paris: CLF), in order to maintain its 19.9% equity interest in KWG following the Private Placement and KWG's recent acquisition of a royalty interest. The expected participation of Cliffs and the two directors in the Private Placement will constitute a "related party transaction" under Multilateral Instrument 61-101 -Protection of Minority Security Holders in Special Transactions ("MI 61-101"). However, the Company expects that it will be exempt from both the formal valuation and minority shareholder approval requirements of MI 61-601 in connection with the Private Placement because neither the fair market value of the securities to be issued, nor the consideration for such securities, is expected to exceed 25% of the Company's market capitalization as calculated in accordance with MI 61-601.

The Private Placement remains subject to the approval of the TSX Venture Exchange.