To all KWG Longs,

From good heart-r:

1. If there were no 300 to 1 share then any large entity would have to go to the open market to buy forcing the existing shares up making a profit for the shareholders now. Selling new 300 to 1 shares on the open market WILL cause dilution immediately. It might be better if no new block was sold by kwg but allowed to be created by joing existing shareholder shares to make a new 300 share.

From Keep Digging:

If there is no 300:1 capital reorganization, then NO LARGE ENTITY WILL BE BUYING ANY KWG SHARES ON THE OPEN MARKET. This is the whole crux of the issue that Frank is trying to explain to shareholders in his cover memo. Almost all large trading and investment organizations have restrictions barring their investors from investing in penny stock companies. These new multiple voting shares comprised of 300 common shares will be for institutional investors which at $9 will satisfy internal controls allowing them to acquire shares thus creating demand and upward pressure on both the multiple voting shares and common shares.

THE PROPOSED CAPITAL REORGANIZATION WILL NOT RESULT IN DILUTION. NO NEW NET SHARES ARE BEING CREATED UNDER THIS PROPOSAL. Management always retains the right to issue additional shares thus creating dilution. This is a second class of shares that are bought and sold and are comprised of blocks of 300 of the existing common shares that you and I own and that Frank can sell to large institutional investors to raise the necessary capital to build the mine and the ferrochrome processing facility. THE PROPOSED CAPITAL REORGANIZATION WILL NOT RESULT IN DILUTION.

From goodheart-r:

2. Why does KWG need to do this now? The rail will be built by Chinese funding to secure and be paid for by chromite. Like a mortgage but paid back over 70 or 80 years. The Chinese will also want an off-take agreement or partnership to secure the chromite. Once this is in place along with the railroad reality the banks and financiers will be falling all over themselves to lend KWG money for a mine (maybe even the Chinese themselves). As for the ferrochrome facility don't forget that the Chinese want the gas patent big time!. The Chinese will have to deal to get that. Maybe they will finance the ferochrome facility to get the use of it in thier own country. Why not because they will then maintain their status of being the cheapest steel makers in the world with the gas patent. Not being able to use the gas patent will put them at a disadvantage in pricing in making steel worldwide. With a rail and a mine financing the facility will be sought after by all banks and lenders.

From Keep Digging:

The proposed Capital Reorganization is required to create a second class of shares that would trade at a price that would satisfy the internal regulations and controls of large investment organizations and allow some entities to purchase these shares on margin. With the new class of multiple voting shares satisfying these thresholds, KWG has access to new capital to finance the mine and ferrochrome processing facility. I don’t believe for one second that “…the banks and financiers will be falling all over themselves to lend KWG money for a mine.” This is a post 2008 Financial Crisis world and capital is scarcer and risk adverse. What are the pension funds buying? Airports, large toll roads in Mexico, ports…all large projects that are already operational and revenue generating. The only other source of capital of this scale would be government and that sent Cliffs packing as they were looking for all sorts of incentives, subsidies and other government transfers to get Capreol up and running…enough said there as they are too busy ‘getting it right’.

From goodheart-r:

3. As Frank said in the cover letter funding is hard to come by for MOST juniors. KWG is not MOST. Kwg has MAJOR ore bodies. Those are the juniors that are getting funding from many financial sources that do not create a new share structure that WILL create DILUTION. Large institutions find a way to invest without the 300 to 1 share. EX: rcf, franco nevada, beaousteel with Noront. Hudbay with Macdonald mines. They found one of the many other ways that kept the small shareholder safe. By not having to buy existing shares but given the option to buy 300 to 1 unlimited shares there will be dilution.

From Keep Digging:

I hate to be the bearer of bad news but KWG is just another junior. Maybe not to you and I but definitely to large institutional investors that are barred from buying penny stocks despite world-class ore bodies. Great that we have a large ore body, but its 500 kms from nowhere and is under a swamp. It may as well be on the moon. An ore body (even of the magnitude and richness as KWG’s) is worthless to investors if it is inaccessible and requires a processing facility. WE NEED CAPITAL TO GET THIS ORE BODY TO MARKET. I wouldn’t compare us to those mentioned above. Noront is going nowhere without and continues to wait for a government road and just needed another PP and round of financing from RCF. RCF and Bao only got involved to have a foot in the door and access to chromite if things took off. Macdonald Mines did a massive share consolidation about a year ago, destroyed shareholder value, is trading at $0.005 and I think is on the verge of bankruptcy. Hudbay is a different animal altogether and has enjoyed access to infrastructure and product that requires less refining/closer to market and had projects closer to production. I firmly believe KWG is acting in our best interest with the proposed Capital Reorganization, as there will be no new net shares created and no dilution. The only other option available to Frank is a share consolidation. We will all lose out on that one.

From goodheart-r:

4. From Frank's memo large shareholders might want to margin. Well I own over 11 million shares and warrants and I don't want to margin I want the existing share price to go up so I can realize a profit.

From Keep Digging:

Me too. That’s why I bought KWG. That’s why I support management. That’s why I’m supporting the proposed Capital Reorganization so that I can give the KWG management team the tools they are asking me for and need to finish the job and secure my return on investment.

From goodheart-r:

5. Management trust. That is where due diligence comes in. Frank has done a super job so far but that is why the law says this kind of forward motion versus another is to be voted on especially after a large discussion on just what kind of forward planning has been contemplated. That's what these blogs are for to be able to discuss different ideas and opinions.

From Keep Digging:

I completely agree and appreciate and consider all the different ideas and opinions. Management trust follows from due diligence. I never support blind trust of any management team. But Frank has a track record and it has been exemplary. We trusted Frank to secure infrastructure when government failed. We trusted Frank when government failed to secure First Nations time and attention. We trusted Frank to develop ferrochrome-processing technology to avoid costly electricity. He has or is in the process of delivering. There is a track record here that demonstrates his commitment, drive and that he is ALL IN on this. Are you all in?

From goodheart-r:

6. When investing I also look at how many shares management has but I also look at how they acquired them. Did they buy them on the open market? Did they get them over the years by having them given to them by management yearly as appreciation? (At least 5% of outstanding share count can be given out to management this way every year). Many ways. I find it comforting to myself when management has put hard dollars from their own pockets when acquiring their shares.

From Keep Digging:

Regardless of how they were acquired. Frank is a massive shareholder and his fortunes are tied to mine. All of his options are underwater (5 and 10 cents) so he won’t benefit unless he performs. Yes, some shares have been outright given to him, but they were in lieu of salary. As well, he has participated in many of the private placements that KWG has undertaken. All told, I am completely comfortable that his personal interests are aligned with yours and mine.

From goodheart-r:

7. In order to gain access to institutional investors we need to get the share price far higher. There are many ways to do this. I believe another way with the Chinese on board and the government road announcement immunity will generate so much attraction that the share price higher will become a reality like so many other juniors that found a large lucrative ore body. Those are the ones found funding without 300 to 1 shares. For instance Mountain Province Diamonds was 15 cents but now is over 6 dollars. Good profit for the shareholders there!

From Keep Digging:

I don’t think there are many ways to get share prices higher. If this were so, we’d all be filthy rich. Regardless of Chinese involvement and even a government road (likely east-west), we are likely to see modest gains in the share price. A share price reflects likely near future earnings. Even with a road and the Chinese on board for a railway, we still need a mine and a processing facility to be closer to market and in a state of revenue generation. This is what will cause an immediate and sustainable rise in the share price and we cannot do it without access to institutional capital.

From goodheart-r:

Do your own due diligence. Take your circular to your OWN LAWYER and ask him whom you trust for advice. I and my over 11 million shares and warrants will be voting note this forward motion on this circular. Read it through and get trusted advice. It could mean that your profit is at stake.

From Keep Digging:

I completely agree. Do your own due diligence, retain a lawyer for anything in the circular that you do not understand. Ask questions. Your investment and profit is at stake.

My best to all KWG Longs,

Keep Digging