All KWG Longs,

Recall from goodheart-r:

"If the 300 share block had to be put together with the existing shares the 1 share price would go up as big entities bought them to make a 300 share which they then could margin or buy by law. In the circular proposal they will not have to buy existing shares to make a 300 share because kwg wants to create new unlimited 300 shares they can sell to the big corporations. This new 300 share unlimited offering will cause without doubt dilution. The 300 share could be brought to reality not by creating unlimited new 300 shares but by allowing big funds to gather existing 1 shares to make a 300 share. No dilution in this way only raising the 1 share price as the big funds gather the 1 shares to make a 300 share. As for juniors with REAL ore bodies whose share prices have risen dramatically without this circular kind of unlimited shares that will cause dilution just check MOUNTAIN PROVINCE DIAMONDS whose shares were in the teens and when the big boys came to buy their shares went from pennies to over SIX DOLLARS. MPV also got a 49% partnership out of the deal. Their mine life for profit is a far cry from kwg's 100 year+ probability. As for credibilities check background checks through the Security And Exchange Commission and TSX exchange. Due your own due dilligence. How we go forward here is up to the existing share holders now, not when the big funds get their hooks into kwg."

Response From Keep Digging:

The statement above is an inaccurate assessment of the KWG’s Notice of Meeting and Management Information Circular and is entirely false. The proposed Multiple Voting Shares can only be bought and sold in blocks of 300 existing common shares of KWG. Under the proposed Capital Reorganization, NO NEW NET SHARES are being created and therefore will not and cannot present any increased risk for dilution. The management of a publicly traded company can issue new shares at any time and KWG is no different: they can issue new shares right now and they can issue new shares whether the proposed Capital Reorganization is approved or defeated by shareholders. KWG Management is trying to gain access to your ‘big boy” investors to raise additional capital for the mine and processing facility. If our plan is properly marketed to the ‘big boys’, it will create demand for our Multiple Voting Shares (it will satisfy their internal controls barring them from trading penny stocks) and we will all enjoy the corresponding appreciation in the common share price.

I direct all KWG Longs to page 13-14 of the Management Information Circular under the heading “Subordinate Voting Share and Multiple Voting Share Convertibility and Exchange Rates”. The last sentence of this section reads:

“Accordingly, if the Capital Reorganization is completed and NO Subordinate Voting Shares (the common shares that you and I own) are converted into or exchanged for Multiple Voting Shares, the Subordinate Voting Shares (the common shares that you and I own) will represent 100% of the voting interest in the Corporation”.

It is there in plain English and could not be clearer. If NO common shares are converted or exchanged for the new Multiple Voting Shares, then the common shares will be 100% of the voting shares for KWG. If management could create these new unlimited multiple voting shares for the ‘big boys’, and sell as many as they please, then how could this condition hold? It is a zero sum scenario because NO NEW NET SHARES ARE BEING CREATED. Any purchase of the Multiple Voting Shares by the ‘big boys’ MUST cause a corresponding reduction in the number of common shares and therefore would actually DECREASE DILUTION of the common share class of shares.

To the point about Mountain Province Diamonds, sadly, diamonds and chromite could not be more different: diamonds are easier to locate, require less drilling, have one of the best value to weight ratios of any substance, do not require infrastructure to ship (they are just bagged and picked up by a helicopter) and are refined (cut and polished) anywhere in the world. These are vastly different commodities that require entirely different capital structures and allocations.

Above you allege that “MOUNTAIN PROVINCE DIAMONDS whose shares were in the teens and when the big boys came to buy their shares went from pennies to over SIX DOLLARS.” Well, the proposed Capital Reorganization is a creative and effective way to attract these ‘big boys’ to KWG. If the ‘big boys’ buy the Multiple Voting Shares, it will take large chunks of float out of the common share class of shares (the ones that you and I own) and cause corresponding upward pressure on the KWG share price hopefully not unlike MOUNTAIN PROVINCE DIAMONDS.

My Best to all KWG Longs,

Keep Digging