Il love Frank Smeenk. Nerver intimidated and provocative!!! GLTA. BaBe.

(From mergermarket.com)

KWG Resources (TSXV:KWG), a Montreal, Quebec-based explorer, will likely be part of a consolidation trend in the McFauld's Lake area of northern Ontario, said President and CEO Frank Smeenk.

He declined to say whether KWG has recently mandated investment bankers for M&A advice, but he predicted potential consolidation among McFauld's Lake companies within 12 to 24 months. As a sign of interest, he cited a recent deal by Chinese steelmaker Baosteel to purchase 9.9% of Noront Resources, another explorer that discovered nickel, copper and chrome at McFauld's Lake. The Baosteel deal is a “harbinger of things to come,” the CEO said.

Potential bidders for KWG could include Noront and Asian companies, he said. A combination of KWG and Noront is “not impossible,” Smeenk said. “Many people have talked about it,” he added. Noront's market capitalization is CAD 157m. KWG’s market capitalization is CAD 60.5m (USD 63.1m). Noront declined comment.

Asian companies could be motivated to acquire KWG because of its 28% ownership interest in the Big Daddy chrome project, the CEO said. Such an acquisition could help them secure their supply of raw material, especially in view of the long-lived nature of the chrome resource, which could last decades, Smeenk said.

KWG's board appointed Canaccord Genuity as financial advisors in May 2010 for a year-long mandate, Smeenk said, related to the previously reported takeover bid by Cliffs Natural Resources, which did not go ahead. KWG also worked with BMO during its unsuccessful bid to merge with Spider Resources last year, according to company documents. KWG ultimately was left out of last year’s deal activity, as Cliffs acquired Spider Resources instead.

KWG's lawyers are Macleod Dixon, and its auditor is PricewaterhouseCoopers. Smeenk was not certain whether Cliffs Natural Resources, the biggest player in the “Ring of Fire” mineral discoveries area of McFauld's Lake, might be motivated to make another attempt at acquiring KWG. Cliffs already owns 17.6% of KWG, he said.

Through its acquisition of Spider Resources, Cliffs accomplished its goal of obtaining a controlling stake in the Big Daddy chromite deposit, meaning it is likely not interested in acquiring KWG, according to a media report. Cliffs now owns 72% of the Big Daddy project, said a KWG spokesperson.

According to a Cliffs document from February, a base case for the development of its chrome assets at McFauld's Lake includes the development of another project named Black Thor. The document does not mention a possible development of Big Daddy. Meanwhile, KWG's wholly owned subsidiary, Canada Chrome, has staked a right-of-way for a potential railway to McFauld's Lake, but Cliffs favors a road to the site, Smeenk said.

KWG might spin off Canada Chrome as a private or public company, the CEO said, declining to provide a timeline for a spinoff. KWG is also looking to raise capital, Smeenk said, without specifying the amount sought.

KWG owns two other projects at McFauld's Lake, where it explores for volcanogenic massive sulphides (VMS) copper and zinc mineralization with UC Resources, Smeenk said. KWG also owns a 1% net smelter return (NSR) royalty in Big Daddy and in two other chrome projects, the CEO said. It also owns other projects elsewhere, he said.

By Ron Mandel in Toronto