RJ,

I could not disagree with you more.The mysterious forces that have eroded KWG’s share price since 2010 are beyond the efforts of any one single individual or entity.

First, since 2010 commodity prices have steadily fallen and from reports I have read are not set to rebound in 2014 either. Further, with the current oversupply in most commodity categories, a price rebound will require not only a significant shift in demand but also the depletion of the oversupply. With this, share prices of commodity producers have steadily fallen since the brief rebound following the 2008 crash. You don’t have to look too far to see the vast evidence of this. Even our dear Cliffs have fallen victim to this broader macroeconomic force.

Second and probably more importantly for us is the new approach that many investors and investment houses are taking to junior and intermediate exploration companies. They are looking for not only rich and marketable deposits but also infrastructure in order to get their deposits to market – in short, investors are looking for the ability for juniors and intermediates to monetize their assets. Without infrastructure to access, extract and ship to market, a rich deposit in a remote part of the world might as well be on the moon. This is affecting numerous players – even the share price of Barrick Gold has been hit due largely to their difficulties with accessing and monetizing their Pascua Lama deposit.

This brings to me to my third point regarding the share consolidation that you allege KWG proposed earlier this year.This was not a share consolidation and I invite anyone still thinking that to please educate themselves by reading the management circular and conducting your own research and due diligence. To protect my investment, I retained a securities lawyer from a Tier 1 Toronto law firm and was advised that it was a share restructure and not a consolidation. I invite you to compare the share consolidation language from Macdonald Mines’ (BMK – TSXV) recent consolidation to KWG’s share restructure. KWG was simply offering the ability to transfer back and forth (at the will of the investor) between 100 pennies and a dollar. All shareholder holdings and value were to remain unchanged.

To me it is clear that the share restructure was an attempt to create a securities vehicle that would potentially trade on the TSX, gain access to a new cohort of investors and investment houses thereby securing additional sources of capital. What was Frank going to do with the additional capital? He was going to monetize our chromite deposit by building a railway on CCC claims (that he always knew his surface rights were to be upheld on through the Mining Commissioner). See my second paragraph above - I believe if the share restructure was successful our share price would not be in the $0.04-$0.05 range today and I am disappointed in the short-sighted shareholders of KWG for not seeing this and voting this down.

It is clear to me that the management team at KWG is only focused on enhancing the value of our company.Regardless of the announcements, share price appreciation will not occur until there is a meaningful commitment to an infrastructure solution that will allow market access to our deposits. In its purest sense, share price is typically regarded as the current value of expected future cash flow – for KWG, all ROF players and any miner in general, the value of their deposits is near zero if there is no infrastructure to allow for future cash flows. Investment houses have wised up to this principle in recent years and we are seeing the effects of this through the share prices of most juniors and intermediates.

Even if KWG management could suppress the share price of their own company, what exactly would be the motivation? With the millions of shares that Frank, Moe and Bruce hold, why would they suppress their own net worth? Senior management buying more shares at $0.045? I’ve picked up more and I say good for them! They have been around long enough to see that this is the floor. The more they buy and hold the more their personal interests are aligned those of ours and those of the organization. I do several private placements a year and my first step in my due diligence process is to always assess the management team. From this perspective, I feel that KWG is my safest junior investment. I have complete and absolute confidence in Frank, and Moe. Based on my approach, may I humbly suggest that should you harbour any mistrust of the KWG management that you consider divesting of KWG shares.

I wish success to all KWG Longs in 2014.

Keep Digging