KWG COMPLETES RING OF FIRE ROYALTY PURCHASE

MONTREAL, July 22 /CNW/ - KWG Resources Inc (TSX: KWG) has completed the purchase of a 1% net smelter royalty in the Black Thor, Black Label and Big Daddy chrome discoveries in the James Bay Lowlands for $635,000 and a further $1 million payable within one year plus 15 million common shares and 15 million common share purchase warrants, each warrant entitling the holder to purchase a common share at a price of $0.10 for a period of 5 years. KWG's principal shareholder Cliffs Natural Resources (NYSE: CLF) (Paris: CLF) supports the acquisition as it believes the deposits can be economically developed to supply both North American and some external markets. As 15 million KWG shares were issued to the vendor, Cliffs intends to subscribe for a further 3 million shares in order to maintain its equity interest.

The discovery of nickel in the MacFaulds Lake area in September 2007 started KWG along a development path which KWG expects may now accelerate. Funds raised as a result of the new discovery enabled KWG and joint-venturer Spider Resources, to complete the acquisition of a combined 50% interest in a nearby property optioned from Freewest Resources. A drilling program there was undertaken to follow up the joint-venture's 2006 discovery of a high-grade chrome occurrence. This source of ferro-chrome for steel alloying is a principal ingredient in all grades of stainless steel, at a ratio of some 18% or more.

Metallurgical testing of samples recovered from the discovery in early 2008 indicated that a uniquely large and high-grade deposit of ferro-chrome-yielding chromitite had been found, which might supply steel-making markets in North America and beyond. Under the terms of the option agreement, KWG and Spider may earn a 60% interest in the property optioned from Freewest Resources by completing a feasibility study and thereafter, an additional 5% by sourcing construction financing, for which KWG approached Cliffs Natural Resources.

Cliffs Natural Resources is an international mining and natural resources company. The company is the largest producer of iron ore pellets in North America, a major supplier of direct-shipping lump and fines iron ore out of Australia and a significant producer of metallurgical coal. For almost two centuries Cliffs has been the dominant mine operator and supplier of iron ore for integrated steel production in North America and continues to be the principal operator on the Minnesota and Michigan Iron Ranges, two of the hemisphere's chief sources of iron. As such, the company has built and operated railroads, plants, terminals and loading facilities of all description.

Cliffs accepted KWG's invitation to become a principal investor in order to participate in its development initiatives. Cliffs sought and was given KWG Board representation coincident with acquiring an equity interest of slightly less than 20%, plus an ongoing option to increase or maintain that interest through further investment.

KWG has now acquired half of the royalty underlying its property and the adjoining property of Freewest after an independent economic analysis based on conceptual planning and market forecasts undertaken by Cliffs. The royalty is expected to yield a substantial monthly cash flow to KWG if production ensues. The North American market alone might absorb ore production of up to 4,000 tons per day. That quantity of material will require construction of a railroad to transport the partly treated ore to a ferro-chrome refinery ideally located near transportation to markets and to electricity supply for the electric-arc furnaces used in the process. KWG is examining a number of location alternatives as well as the available furnace technology options.

KWG has also had preliminary discussions with The Ontario Northland Railroad to examine collaboration in the construction and operation of the railroad from the deposits to Nakina, where it can connect to existing rail lines. ChromeCana Inc has been created as a wholly-owned KWG subsidiary for the purpose of development of the mines and railroad and is undertaking pre-engineering assessment of a proposed right-of-way for the railroad.

Initial indications continue to confirm the capital cost assumptions considered by Cliffs in its preliminary market sensitivity analyses, undertaken prior to the KWG investment. This analysis has been provided to the Toronto Stock Exchange for its review of KWG's application to graduate its share listing from the TSX Venture Exchange, on the basis of its interests in the deposits.

Forward Looking Information:

This press release contains certain "forward-looking statements". All statements, other than statements of historical fact, that address activities, events or developments that KWG believes, expects or anticipates will or may occur in the future (including, without limitation, statements relating to the economic development of the subject deposits, the expected cash flow to KWG associated with the purchase of the royalty interest if ore production ensues, the supply of ore production to North American markets and/or other markets and the construction of the requisite railroad to transport ore to refineries) are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of KWG based on information currently available to KWG. Forward-looking statements are subject to a number of significant risks and uncertainties and other factors that may cause the actual results of KWG to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on KWG.

Factors that could cause actual results or events to differ materially from current expectations include, but are not limited to: the failure to economically develop the subject deposits; delays associated in the development of the subject deposits; the failure to enter into the requisite agreements for the development and operation of the subject deposits on favourable terms or at all; the inability to market ore production, if achieved, to North American markets and/or other markets; volatility of and sensitivity to market prices for chromitite; changes in anticipated demand for chromitite by the steel-making industry; environmental risks; the grade, quality and recovery of ferro-chrome yielding chromitite varying from expectations; the lack of funding for the development of the subject deposits and the requisite railroad; changes in equity and debt markets; the failure to develop and construct the requisite railroad for the transportation of ore to be refined in a timely manner or at all; insufficient or sub-optimal transportation capacity; the failure to complete a feasibility study; or other factors (including development and operating risks)

Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, KWG disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although KWG believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guaranteed of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

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