Hi All,

Looks like all is not so quiet on the Western front these days. After a spectacular NR release late in the day last Friday by Noront, it looks like Cliffs, oops, I mean FWR, has returned fire.

I have spent some time reviewing the points of the NR and wanted to provide my comments. As the FWR/Cliffs people seem to be crying to every regulartory body at each turn, I will add that my comments below are my opinion only and not necessarily those of the participants in these bids, and that these are without prejudice. My comments below are in bold:

From the FWR NR dated December 7, 2009:

"--Cliffs and Freewest petitioning AMF to investigate Noront's public statements and potential trading irregularities in Noront stock "

This is itself if humerous. It could be seen as risky if the AMF was to come back and agree with Noront's statements, but as most people can guess with any regulatory body, know, it many weeks and sometimes months for these matters to be fully investigated, reviewed, appealed, and decisions rendered. As the FWR drama is set to end next week, this may be moot unless the takeover bid goes to court. Still, the petition was likely intended to make Noront look guilty before they have a chance to prove their innocence before responding to the petition in time for the tender decisions. Low blow.

"Cliffs Natural Resources Inc. (NYSE: CLF) (Paris: CLF) is urging shareholders of Freewest Resources Canada Inc. (TSX-V: FWR) to disregard false and misleading statements being made by Noront Resources Ltd. in support of its increasingly desperate take-over bid for Freewest."

- Now this is a risk. This statement implies that Noront is lying. Should Noront lose the bid but the statements in the Noront NRs be shown to not be false, then I can see a anti-trust or corporate defamation lawsuit or regulartory investigation being made against FWR and Cliffs. Like most guns being quickly loaded, they can often backfire.

"Counter to what Noront promotes:

-- Noront's chromite deposits are smaller, thinner and deeper than Freewest's, are unlikely to be developed for decades and, as a result, there are no synergies in consolidating Noront's and Freewest's chromite deposits;"

Really. How did Cliffs get a chance to see the official resource estimate before the NOT shareholders and before it was posted to SEDAR? And especially given the fact that FWR has not released an official resource estimate. The key word here is "are". They did not say "likely" or "probable". They said "are". Should Noront's deposits be shown to be larger, wider, and shallower than FWRs, then statements like these are falsehoods issued within an official company release in the midst of a competitive bidding situation. Falsehoods during bidding, especially when it comes to shareholders money expose the FWR BOD to massive exposure during the lawsuits that could arise.

"-- Noront has grossly overstated the value of its bid by, among other things, using inappropriately aggressive assumptions to value the warrant component of its offer, an indisputable fact based on market trading;"

No comment as I have not done the math on the value of the warrants at this point, but I believe others on here have taken good steps in this direction.

"-- There are no significant tax savings from Noront's offer, only a tax deferral if a shareholder does not sell the Noront shares."

Now this is an area where I know the accountants and tax advisors will be busy. Cliff's statement is based on an understanding of the US tax system. In the US, you pay capital gains on investments whether you have sold the asset or not. For instance, if you buy a share at $1 and it goes to $3 in the same year, you are deemed to have made $2 though you have not sold the share and actually received the additional $2. This is why many Canadians cash out their RRSP at a one time tax rate of 25% before moving to the US. Any gain in portfoilio value made tax free in Canada after they become a resident of the US for tax purposes is taxable each year in the U.S. I know this as I was tempted to move to the US when our dollar was trading at .60 cents to their many years back.

This is not simply a tax deferral. The move from Canadian shares to US shares has capital gains tax implications and tax writeoff implications. For capital gains preferential treatment, Canadian taxpayers must invest in Canadian corporations or small businesses, regardless of what markets they trade on. Cliffs is not a Canadian organization. FreeWest is. To say there is no significant tax savings may apply to institutions and professional investors who pay income tax on their profits in these shares, but likely does not apply to non professionals who in Canada pay only income tax on 50% of the capital gains made on Canadian companies. As well, a future loss on Cliff shares should Cliffs share price decline cannot be offset as a capital loss against past (three years) or future capital gains given it is not a Canadian company. I am no tax accountant but as a retail investor know enough about paying capital gain taxes to know that there is a large difference when investing in US and Canadian companies for non-professional investor.

There may be other tax implications as well that I am not fully aware of as the Quebec government (where Freewest has properties) has different tax treatment for professional investors depending on whether PP share issued in the past are flow through or non flow through. I am not sure what happens to these during a share tender, but based on Irwin's comments at the FWR special meeting my guess is some of these are lost. I will leave this comment to others more qualified to comment.

"Cliffs and Freewest are petitioning the Quebec Autorite des marches financiers to investigate Noront's public statements, deficiencies in its regulatory filings and potential irregularities in the trading of Noront stock, and to take appropriate action."

Irregular trading of Noront stock?

HAHAHAHAHAHAAHAHAHAHAHAHAHAAHAHAHAHAHAHAHAHAH!!!!!!!!!!!!!!

While you are at it, please go back three years to present and verify daily trading to see if there are any irregularities. Noront has actually traded in extremely normal ranges compared to its 52 week high and even with all of this buyout talk, has only seen a rise in shareprice of less than 50% (given a share price of $1.60) compared to the 400% FWR has seen based on Cliff's no-risk (due to termination clauses and direct private placement) bids. If Noront was higher than its recent PP (at $2.80), then I could see the start of the argument, but this statement given Noront's recent share price is laughable and desperate.

"Noront is exaggerating the value of its bid as well as the potential for synergies between Freewest's and Noront's chromite assets," said Joseph Carrabba, president, chairman and CEO of Cliffs. "We believe only one mine will be developed. It will be a surface operation on one of the Freewest properties rather than an underground mine on Noront's deeper, thinner and discontinuous deposit. The simple fact is that the scale and quality of Freewest's massive 2.5 km long chromite deposits render the Noront chromite properties completely irrelevant in the Ring of Fire."

Is Cliff's so focussed on the Chromite they fail to see that Noront has more to offer than just Chromite? I for one have alway been skeptical of the value of these Chromite finds (do not bash me for this, it is just a personal opinion based on how much Chromite actually exists in the world (a very large amount) and the low cost producing countries the majority of this Chromite exists in (IE South Africa). "Yes, North American chromite will have value but I would be hesitent to put all my eggs in one basket when it comes to this one metal. How can one say that the bid is exaggerated when the only company to produce a resource estimate within the ROF is Noront. Noront has spent good money defining its Nickel, copper, and PGM values at Eagle One and is working to review these based on new drilling. They have done an economic feasibility study. They are working with Stantech to perform an overall area development plan. And they are working on a resource estimate for Eagler 2 and the Blackbird Chromite find. What has FWR provided in this regard? Zippo!! NADA!! ZILCH!! One can only accuse somebody of exaggerating a bid when one compares apples with apples, or in this case, known resource estimates established using industry best practices and regulations. To fly a helicopter over Noront's Blackbird and guess that it has less value is likely the amount of due diligence Cliffs has done when it comes to Noront. The statement they provide above better be able to be defended in court.

"Based on a year of technical work by Cliffs, we can say with confidence that Freewest's deposits are readily developable and more than sufficient to meet market demand for the foreseeable future. Consequently, we believe it is highly unlikely that Noront's inferior properties will be developed. This underscores the risk to Freewest shareholders of owning Noront shares. It explains why Noront wants to acquire Freewest. And it is why Cliffs has no interest in acquiring Noront or its chromium deposits. Freewest shareholders should not be taken in by Noront's false and misleading claims," Mr. Carrabba added."

Inferior properties? Did they say that? Eagle One is inferior? Did they look at the resource estimate? Have they seen the drill results? Risk of owning Noront shares?

The words at this point are a lawyers dream. "False and misleading claims". Again, Noront is the only company to have issued a filed resource estimate. These estimates are backed by qualified geo opinions, have been issued as offical documents with the regulatory bodies, and are a starting point for company valuation. Freewest has not provided the same for their shareholders though they have been in the area longer than Noront and have had more than enough opportunity to. Who is misleading who?

"Cliffs urges Freewest shareholders to consider the following facts.

-- Noront's offer includes a fraction of a warrant for each Freewest share that has a much lower value than advertised and which ultimately may prove to be of zero value to Freewest shareholders. Noront promoted a value for that fractional warrant of $0.22 per Freewest share. Traditional valuation methods -- and the market trading activity on the date of that announcement -- indicate the actual value of the warrant is less than half that amount. Only inappropriately aggressive assumptions can be used to arrive at the warrant valuation claimed by Noront. We believe Noront did this deliberately to mislead investors who are not experts in valuing such complex and speculative securities. Based on Noront's valuation, the fractional warrant represents 26% of the consideration it has offered to Freewest shareholders."

At least they are offering a warrant. If they consider it as worthless, than please give it to me. I will take $4 warrants (exercisable over five years) all day when I see what is up for road with Noront and what it shares were trading at when the price of Nickel was higher that it is during this recession.

"-- Excluding the fractional warrant, Noront's offer had an implied value of just $0.64 per Freewest share upon its announcement on November 30, and has traded as low as $0.55 within the past 21 days. While Noront's share price has increased since then, it appears to have done so on the basis of false and misleading statements. At $0.64 per Freewest share, the announced value of Noront's increased share consideration represents a 29% discount to the fixed and certain value of $0.90 per share being offered by Cliffs."

Certain value until the day after the shares are tendered. After that FWR shareholders are relying on Cliffs to increase in value, which it likely will. But like most large organizations with double digit share prices, the 20% someone might make a year at Cliffs will be a lot less than what Noront will see when it is partially or fully sold to a major in the future.

"-- Noront has made bold pronouncements about the value of its offer in press releases that it has chosen not to include in filings with securities regulators, which must be certified by officers or directors of Noront. These omissions violate applicable securities law and are a strong indication that Noront knows its public statements are misleading."

Anyone check into this?

"-- Noront's CEO Wes Hanson has publicly stated that Noront believes that Cliffs is inexperienced in mine development, and inferred that Noront is more capable of developing these properties and associated infrastructure. This is an absurd statement. Cliffs has 160 years of mine development and operating experience and is the largest producer of iron ore pellets to the North American steel industry. The steel industry is the ultimate customer for the products of a new chromite operation in the Ring of Fire. Cliffs has a market capitalization in excess of US$6 billion and has the capability to finance the development of Freewest's chromite deposits. Noront is an exploration company with no track record of bringing mines into production and working capital at July 31, 2009 of only $15.4 million."

I cannot find this public statement. I wish they would provide a link next time to the source. Cliffs is a good developer, no doubt. If Wes did say this than I would be disappointed. But I have yet to see the statement. He is correct that Noront is an exploration company and it is my opinion they will never develop this. But that is not to say Noront and its blue sky potential are still not there. The money made at Voisey Bay was not in the development as much as the share appreciation from being sold to a major. The same will go for Noront. It is the circle of life. Junior investors take risk and one in a thousand hit the motherlode. These investors are rewarded handsomely for taking that risk. Big business buys up the known resources to ensure their own investors continue to make their 10 to 15% a year in dividends. Since they have billions, it does not take long for a Barrick, Tec, or XStrata, to spend the 100s of millions to develop the area. It is the circle of mining life and it does not in anyway reduce the value that is in the ground on the Noront ROF properties.

"-- Current and future Noront shareholders are at risk of significant dilution that could depress the value of Noront shares. Noront currently contemplates diluting its existing shareholders by 39% without requesting its shareholders' approval. Cliffs estimates that development of Freewest's deposits would require up to $800 million in capital. With a market capitalization range of $250 to $400 million over the last 21 days, Noront's shares would be subject to significant dilution -- also without shareholder approval -- should Noront attempt to develop a chromite mine or attract a strategic partner."

If Noront is sold to a major (see previous point), then dilution is not a factor. If Noront JVs with major, as long as the end game is bigger than the present, all shareholders are still winners.

"-- Contrary to false claims by Noront, the tax treatment for Freewest's Canadian resident shareholders receiving Cliffs shares is equivalent to the tax treatment of receiving cash. In general, any taxes resulting from the Cliffs transaction will not be payable by individual Freewest shareholders resident in Canada until April 2011. Noront has compared the after-tax value of receiving Cliffs shares by a hypothetical Freewest shareholder having a low cost base to the pre-tax value of receiving Noront's shares and warrants. This is deliberately misleading to Freewest shareholders and exaggerates the tax benefits of Noront's offer. Freewest shareholders that tender to Noront's bid and receive Noront shares and warrants as consideration will not save any tax, but merely defer the payment of taxes for so long as they continue to hold the Noront shares and warrants. Cliffs believes the comparison of pre-tax and after-tax values is blatantly inappropriate and advises Freewest shareholders to seek independent tax advice rather than rely on Noront's misleading claims."

Again, a look at capital gains tax in Canada and the Canadian investment requirement will shed more light as to why Noront is closer to the truth, at least for the impact to Canadian investors.

"-- In considering the value of Noront shares, Freewest shareholders also should be aware of the recent timing and questionable disclosure of certain Noront press releases. Before market open on Thursday, November 19, 2009, Noront released its very first public statement of "mineralized material" at its Eagle's Nest property, quoting both estimated tonnage and grades. None of these statements were supported by National Instrument 43-101, which governs how public companies disclose scientific and technical information about mineral projects in Canada. The timing and disclosure were in Cliffs' view meant to manipulate the Noront share price and impact the perceived value of its bid for Freewest. After aggressively marketing these statements to investors throughout the day, resulting in an 39% increase in Noront's share price, Noront released a "clarification" of its earlier press release at 3:27pm ET that afternoon stating that its earlier release had not followed the requirements of NI 43-101. Those requirements include disclosing that their results were conceptual in nature, there has been insufficient exploration to define a mineral resource, and that it is uncertain whether further exploration will result in discovery of a mineral resource. The requirements of NI 43-101 are well understood by Noront and its legal and financial advisors. Cliffs does not believe the omission of the above cautionary language was made in error."

I am still waiting for the NI 43-101 from FreeWest. Where is it? Is it sitting on Cliff's corporate desk? When is it coming? What hypocrisy!

"-- Freewest's Board of Directors continues to unanimously recommend Cliffs' offer, which has also received strong support from the vast majority of Freewest shareholders canvassed to date."

The proof is in the actual tally, not the pre election polls. Ask any Canadian politician that.

"-- Moreover, when Cliffs and Freewest entered into a definitive arrangement agreement on November 23, 2009, Freewest's senior management agreed to reduce the change of control payments due to them from $6.5 million to $2.5 million. Management did so because they believe Cliffs' offer is in the best interests of Freewest and its shareholders."

How generous.. Why not waive your termination fee of 8 million + should the bid by Cliffs not get accepted? Noront has not because it cannot demand such a termination clause. It is the only one bidding in good faith in my opinion. Without the pork barrels called direct private placements and terminations clauses. Does Cliffs really believe FWR investors, both retail and institutional are so daft? When the elephant takes a dump on the living room the blind man may not see it, but everyone can smell it. Time to clean it up.

M1.