Hello Flyby,

Let's speculate a bit on your new offer, 1 NOT for 5 KWG.

- NOT OS= 230Ms @ $0.37/s

- KWG OS= 671Ms@ $0.06/s = 671M/5 = 134M NOT shares

- Total OS= 230+134= 364 NOT shares

Total Market Cap = $85.2/NOT + $40.2/FNC = $125.4M (assuming no drop or increase in the new NOT shares for this conversion...$125.4M/364M = 0.34/s (close enough to $0.37/s). Let take NOT share @ $0.37/s in a subsequent calculation.

What is KWG SP value for this conversion? Take $0.37/5 = $0.07/s (this is consistent with RJ value, ofless than $0.01 using 1 NOT for 50 KWG).

Unless I made some fatal math errors along the way, this offer of $0.07 for each KWG share is way too low and would even get off the ground. Remember we had 2 valuation reports that say something in the range of $0.30/s? And this was before the improvements KWG has done to its holdings. Hence I would say anything at that level would not be looked at by KWG BoD.

Let's try 2 NOT for 1 KWG (say $0.70 level) for size...Now that may get some warmer reception. The market cap for KWG @ $0.70/s would be 671M x0.70 = only about $470M (cheap cheap for all the holdings).

The idea of NOT courting KWG is a good one though, since it would be a repeat of NOT/FWR situation when NOT lost FWR to CLF (but pocketed a pile cool cash). This overture could (would?) trigger a counter offer from CLF... and we would have an interesting fight. This time NOT would have Baosteel in the cheering section.

A potential scenario: NOT quietly buy up a whole chunk of KWG, say 20% of KWG, and then offer 2 NOT for 1 KWG ($0.70) as starting bid, then for sure CLF would jump in... with 1 CLF for 40 KWG ($40/40 = $1.00) as the initial counter-bid? CLF may even try 1 CLF for 50 KWG, but this be matched very quickly by NOT with the backing of Baosteel. CLF and Baosteel may work out some scheme that would benefit everyone, e.g.CLF would sell 70% BD to NOT/Baosteel for some RR priviledge?

The rest of the story will be found in the history book.

Enough speculation for the day. Time to fire up the BBQ.

goldhunter