KWG Resources completes $1.43-million private placement

2009-08-20 16:30 ET - News Release

Mr. Bruce Hodgman reports

KWG ANNOUNCES PRIVATE PLACEMENT CLOSING

KWG Resources Inc. has completed its previously announced non-brokered private placement of 20 million flow-through units and 8.75 million non-flow-through units, for total subscriptions of $1,437,500. The flow-through units and the units were issued at five cents each and comprised one common share of KWG and one common share purchase warrant of KWG, exercisable at a price of 10 cents per warrant to acquire one common share of KWG for a period of five years.

Cliffs Greene B.V., an affiliate of Cliffs Natural Resources Inc., in order to maintain its 19.9-per-cent equity interest in KWG, subscribed for all of the units. Directors and officers of KWG and its subsidiary, Canada Chrome Corporation, subscribed for $622,500 of the flow-through units. The participation of such subscribers in the offering constitutes a related-party transaction under Multilateral Instrument 61-101, but KWG was exempt from both the formal valuation and minority shareholder approval requirements of MI 61-101 in connection with the offering, as neither the fair market value of the securities issued, nor the consideration for such securities, in so far as it involves interested parties, exceeded 25 per cent of KWG's market capitalization as calculated pursuant to MI 61-101. KWG completed each such subscription within 21 days of the date the board of directors approved the offering, as part of the 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 flow-through units will be used for eligible flow-through exploration expenses and will be renounced for the 2009 taxation year.

The securities issued under the offering are subject to a hold period expiring on Dec. 21, 2009.

We seek Safe Harbor.