MalboroughDog said:

"2. That Cliffs actually DOES go ahead and produce from Black Thor first, and let Big Daddy stagnate. In that scenario, KWG still has the railway as a strength, but their value as a partner in Big Daddy would be locked up for many years. Cliffs would probably buy KWG out for a moderate amount, quietly, several years from now under this scenario."

And Barbu has replied with some fine discussion. Here are a few points to add to the pot.

- Decoy: CLF is very good in saying one thing and would do the opposite. Some examples: (a) CLF was adamant about the road option, but embraced the RR just a few months later; (b) mine Black Thor first with its non-DSO stuff and let KWG (30% BD with the DSO stuff) twist in the snow? So, why are they now drilling BD to get bulk sample and to define the outline of a potential open pit for BD? A strange thing is that this was done in complete agreement with KWG. Have they been holding hands under the table? It would not be too difficult to amend the plan to include BD (and PRB Black Creek as well) and address them as phases. Phase 1, mine the DSO stuff at BD and BC first, because one bright geo in their house just revealed the economic advantage of doing so. Probably they will not need to touch BT in Phase 2. There is too much chromite in the neighbourhood.

- CLF will not let 30% BD twist in the wind. Too much of a risk for it to go to the "wrong hands". Imagine a possible scenario that some entity may buy the 30% BD and want CLF to do just that...let CLF follow through with the threat: leave the good stuff at BD in the ground. The same entity may also buy BC just for the real estate to keep CLF land-locked. There seem to be a competition from NOT which also has some good chromite stuff (the DSO stuff) which can also be mined along with (a more valuable) nickel. Baosteel is always a good entity to keep in your corner. NOT and Baosteel may want to slow CLF down at the starting gate. For NOT Nickel is the (rare) roast beef and other stuff (like Pt, Pd, Au,) is the horseradish...and of course, chromite the (thick) gravy on the top.

- The RR: Now that CLF has embraced the KWG RR proposal which has the buy-in from the FNs and local communities. KWG has applied for fundings from the governments and the potential of saving of say $1B is just too lucrative for CLF to ignore. It would be handy to have a Canadian company with a good working relationship with the FNs and local communities as a 100% subsidiary to rake in the money from the governments.

- CLF would want to gain control of the KWG asap rather than in several years. It is just too risky to dawdle, since KWG may get scooped up by some well-known entity (e.g. Baosteel via NOT).

In summary, I would venture a guess that CLF will do the predictable (i.e. try to line up KWG for the rest of BD and transportation access) despite all the noises, threats and decoys that have been thrown around in its temper tantrums.

The good thing is that KWG is not cash-strapped ($18M+ in treasury) and has the potential support from a small group of retail shareholders (82 out of 6000 shareholders). Our share count is now at 8% FD.

goldhunter