TrueCanuck:

It is my feeling that Neil Novak and Spider Resources has had its future defined through its JVs. Those who have followed SPQ know its history. At one time it had the largest land holding in the ROF, and had identified eight very interesting VMS. What happened?

For one thing, Spider Resources had its 'falling out' with KWG in 2006. They differed on how to spend money and explore the JBL. Their lawyers worked out a deal that made everything 50-50, and Spider decided it would focus on metals (eight VMS strikes) and KWG decided to focus on diamonds. However, everything they did up on the JBL/ROF was tainted with complicated JV terminology. Who knew what each other was getting in the way of percentages for the different JVs. It was/is complicated.

For a second thing, Noront found Eagle One in the Fall of 2007. Neil Novak helped Richard Nemis and John Harvey build the initial excitement at NOT. It was the time of 'Many JVs'. SPQ, KWG, and Freewest set up a JV to drill the Freewest Option, and some exciting stuff (PGEs) was found around what is now called Big Daddy.

For a third thing, SPQ and KWG are now tied into a JV with UC Resources to drill everything else that SPQ-KWG have in the way of claims.

For a fourth thing, KWG has changed its spots. It's spinning off the diamond business into Debut Diamonds, and is now focusing on chromite: Something which Spider Resources has been doing all along. So the JV landscape evolved significantly with this 'spot changing'. Remember though, everything is 50-50 with KWG. Good or bad?

For a fifth thing, even with all of the initial excitement and confusion around the discovery of huge chromite deposits, the rest of the world was not interested. Spider-KWG is sitting on a pile of chromite at Big Daddy.

Some are of the opinion that this JV strategy has been exactly the wrong strategy. It may be; but it is what it is. SPQ was basically out of money with a rock bottom share price and couldn't attract deep-pocketed investors. Its retail investors didn't want a reverse split, which would have made the share price more attractive. So any private placement causes a huge addition of shares to the 'outstanding shares'. A 'catch 22'.

So is all lost? IMHO I don't think so. Ironically the JV strategy might be the savior of Spider Resources. Freewest and KWG have jumped into bed with Cliffs Natural Resources. From my research Cliffs has a solid game plan for the ROF chromite. This includes a railway and a mill. It's investment in KWG and FWR is minor at this point; but has to get bigger. By default, SPQ is part of this Cliffs' investment.

Spider Resources has demurred with respect to any direct investment by Cliffs. SPQ has found flowthrough money via IBK Capital. IBK believes that Spider has the goods. But its ability to invest in SPQ (IMHO) is far less than Cliffs. However, in a weird and wonderful sense SPQ has the best (sort of) of both worlds at this time: Cliffs is a suitor and IBK is finding investment money. SPQ is something like a fickle young woman.

I will chat with Neil again shortly. I assume that since he now has investment money for drilling to complement his day-to-day operating capital, he will begin to put the drill bit in the ground. The MICON 43-101 provides the game plan going forward for the SKF JV.

Within twelve months we all should know whether we can stay at the Ritz Carleton when on holidays.

All IMHO.

Snug