Shares of KWG Resources Inc. (TSX: V.KWG, Stock Forum) tumbled Monday after U.S. company Cliffs Natural Resources Inc. (NYSE: CLF, Stock Forum) said it is reviewing its options with regards to a previously proposed takeover bid for KWG, which owns a big slice of a rich chromite discovery in the Ring of Fire region of northern Ontario.

Cliffs already owns a 47% stake in the Big Daddy chromite deposit, and its ultimate objective is to get control of the find, a company spokesman said.

The balance of the discovery at McFaulds Lake is held by KWG and Spider Resources Inc. (TSX: V.SPQ, Stock Forum), each of which hold a 26.5% stake in Big Daddy as well as the option to increase their interest to 30%.

On May 24, Cliffs said it intended to make takeover bids for both KWG and Spider, adding that it may offer 13 cents a share for each company, or a 62.5% premium on the closing price of the companies’ shares on May 21, the last day of trading before the proposal was announced.

A week later, Cliffs launched a formal offer for Spider. However on Monday, Cliffs said it may not make such an offer for KWG. It attributed its hesitation to the announcement on May 25 that Spider and KWG have agreed to merge in a bid to speed the development of the Big Daddy Find.

Cliffs is seeking to become a leading North American supplier of primary chromite, a key ingredient in the production of stainless steel. But a company spokesman said the company can achieve its control objective without proceeding with a takeover bid for KWG.

Cliffs said it is still firmly committed to its Spider offer, but will provide more information once it has made a decision with respect to KWG.

KWG shares reacted by falling 7% to 12.5 cents Monday, while Spider rose by almost 4% to 14 cents.