I chatted with Neil this morning. He returned my call from yesterday, and we had a very amiable discussion. We discussed the private placement, MICON and future drill plans for Big Daddy, and his discussions with the First Nations peoples.

First off, let me tell you I don't have any nitty-gritty e.g., who's buying into the private placement. In my discussions with Neil, I try to keep things at a "macro level" principally to get a feel for how things are going. Since the discussion is at a higher level, some things are my interpretation. As Neil puts it - "you got to read between the lines."

First some KWG stuff to set the stage for what I want to relate below with regards to SPQ.

Contrary to my previous impressions of Frank Smeenk (CEO - KWG), Neil tells me he gets along well with Frank. They have lunch together quite often. However, it is clear that both men are very different. Neil is clearly a "bog eating" geologist; Frank, a lawyer who likes complicated deals. These two guys negotiate with interested parties e.g., Cliffs et al. in very different ways.

Now it seems that KWG and Frank Smeenk are now interested in chromite. Ergo, the deal with Cliffs Natural Resources. From my discussion with Neil, the money that KWG is raising is for drilling Big Daddy. The implications are then clear with regards to SPQ needing to also drill Big Daddy. Therefore, there is no conspiracy here by Neil Novak. Nothing underhanded.

SPQ's Private Placement

With KWG basically saying "We want to drill Big Daddy", the BOD for SPQ authorized a private placement and the number of shares (78 million) to be sold was set at a share price of 6 cents. So Neil can now go out and drill Big Daddy, too. (I understand that this number of shares basically equates to 19.9% of Spider Resources.)

Unlike KWG, which negotiated directly with Cliffs, Neil has decided to use an agent to go out and get money for SPQ. That agent is IBK. IBK sends out a "spec sheet", and interested parties/corporations bid on the shares. For Neil, doing the deal this way is less complicated. Neil did mention that there has been a favorable response to the private placement - I need to read between the lines - but the pp hasn't closed.

MICON, gravimetric testing, and drill plans

MICON is working hard on getting data for the 43-101 (remember previous flow through money is being used for this purpose). Gravimetric testing (which seems to working exceptionally well in delineating the location of chromite deposits) is ongoing, and it is from this testing that targets are refined, and a drill plan put together.

I asked about nickel and PGEs, and Neil said he's an "explorationist". With the data coming today's sophisticated technology, he can use his geologist's nose (my words) to identify possible non-chromite targets (this is where Crone pulse em technology works).

Neil mentioned that he hopes to sit down with MICON in mid-march and to get up to the FWR Option to start siting drill locations. This is, of course, very tentative.

Who's the Operator for 2009 on the FWR Option?

Neil mentioned that this hasn't been decided. He did mention something about an agreement signed between SPQ and KWG, which was called a "domineering agreement". But I guess as the time approaches when the drill bits will be going into the Big Daddy again, the parties - SPQ, KWG, and FWR - will hammer out who's the Operator for 2009.

First Nations peoples

Neil has an excellent relationship with the chief of the Marten Falls First Nations peoples. It seems that the Marten Falls band has the most entitlement on the Freewest Option lands. This is where their traditional trap lines are found.

At present there are no written agreements with the Marten Falls band. However, negotiations are ongoing to hammer out an early exploration agreement. It will deal with revenue sharing. But it will also deal with a bidding process for work to be done on their lands.

Final Thoughts

My feedback found above is all very cursory. I don't pretend to have an in-depth knowledge of any of the above. However, Neil was again very generous with his time. I know that he will answer any of my questions honestly. And if you get a chance to chat with him at PDAC 2009, he will do the same.

Neil will be at the Noront booth at the PDAC between 10-12 noon. He will be found most often in the afternoon at the Spider Resources booth.

Finally, I sense that there are suitors (big majors) interested in SPQ - but it is very, very early days (i.e., don't plan your retirement right now). Neil also mentioned that there was lots of "corporate things" happening - but I think he was referring to Noront - don't ask me because I'm just guessing - the comment came at a point in the conversation which leads me to think it was a "Noront comment".

And finally, finally, I feel comfortable with my investment in SPQ. In fact, I transferred "in kind" the shares in my BMO investment account to my TFSA's. I'm thinking "big money" - non-taxable money :)

Snug