KWG issues Cliff 21.13 million units on debt conversion

2009-04-15 16:04 ET - News Release

Mr. Bruce Hodgman reports

KWG RESOURCES INC. OBTAINS SHAREHOLDER APPROVAL TO ISSUANCE OF ADDITIONAL UNITS IN CONNECTION WITH PREVIOUSLY ANNOUNCED PRIVATE PLACEMENT WITH CLIFFS NATURAL RESOURCES INC.

Further to KWG Resources Inc.'s news release in Stockwatch dated March 16, 2009, announcing that Cliffs Natural Resources Inc. (NYSE: CLF) an Ohio corporation, through its Dutch affiliate, Cliffs Greene B.V., acquired, on a non-brokered private placement basis, certain securities of KWG in the total amount of $3.5-million (U.S.), KWG is pleased to announce that it has obtained the requisite approval of its shareholders at the company's annual and special meeting held today to the issuance of additional units of KWG upon the conversion of the secured convertible debenture purchased by Cliffs on March 16, 2009, in the principal amount of $1,033,398 (U.S.).

As a result of the shareholder approval being obtained, the principal amount of the Debenture has been converted automatically into units at the rate of US$0.048894 per unit resulting in a further issuance to Cliffs of 21,135,069 units comprised of 21,135,069 KWG common shares (the "Common Shares") and 9,310,839 Common Share purchase warrants (the "Warrants"). As previously disclosed in the press release dated March 16, 2009, in addition to the purchase of the Debenture, Cliffs acquired 50,448,987 units comprised of 50,448,987 Common Shares and 22,224,784 Warrants representing 14.9% of the issued and outstanding Common Shares on a fully diluted basis.

As a result of the conversion of the Debenture, Cliffs now holds an aggregate of 71,584,056 Common Shares and 31,535,623 Warrants representing 19.9% of the issued and outstanding Common Shares on a fully diluted basis. Each Warrant entitles Cliffs to purchase one (1) Common Share at US$0.05 until March 16, 2010 and US$0.10 thereafter (subject to the undertaking of KWG to reduce such price to US$0.05 upon regulatory approval) and is exercisable for 20 business days following the issuance by KWG of 5 Common Shares upon the exercise of any of the warrants, options and other rights to purchase or obligations of KWG to issue Common Shares outstanding as at January 20, 2009. To the extent not previously exercised the Warrants will expire on March 16, 2014, at the latest.

The hold period of the securities issued today expires on July 17, 2009. In accordance with the terms of the shareholder agreement entered into between Cliffs and KWG, Mr. Richard P. Fink, Cliffs' nominee to KWG's board of directors has been elected to the board effective today. Mr. Fink is the General Manager, Acquisitions and Development of Cliffs Natural Resources Inc.