Spider says Cliffs will raise its offer in a bid to gain control of Ring of Fire chromite discovery.

Cliffs Natural Resources Inc. (NYSE: CLF , Stock Forum ) is prepared to sweeten its bid for Spider Resources Inc. (TSX: V.SPQ , Stock Forum ) as long as the junior agrees to terminate a deal to merge with KWG Resources Inc. (TSX: V.KWG , Stock Forum ), Spider said Monday

Spider said it has been notified by Cliffs that the Cleveland, Ohio-based company is prepared to offer 16.5 cents per share in cash for all of the outstanding shares of the junior exploration firm. That marks a 27% increase on an existing offer of 13 cents a share.

Cliffs is aiming for control of a rich chromite find in northern Ontario as part of a long term strategy to add stainless steel to its roster of commodities, sources say.

The latest offer, which came after the close of trading on Monday, values Spider at $109 million. Spider shares had earlier closed at 14 cents, up 3.70% from Friday’s close.

Cliffs is upping its bid after KWG said Monday it had signed a definitive agreement regarding a previously announced plan to merge with Spider.

Together, KWG and Spider would control a 53% stake in the Big Daddy chromite discovery, which is located in the Ring of Fire region of northern Ontario. The two companies hold the right to increase their interest in 60%.

The other 47% of Big Daddy is held by Cliffs, which also holds a 100% interest in two chromite discoveries located nearby.

Spider said the Cliffs’ proposal is subject to limited confirmatory due diligence and the termination of all agreements between the company and KWG concerning the proposed amalgamation of Spider and KWG.

Spider says its board of directors has determined that the latest offer from Cliffs is superior to what has been offered by KWG.

It has now given KWG five business days (until June 21) to match the offer from Cliffs. During that period, Spider says it will consider an offer from Cliffs to enter into a support agreement related to the latest offer.

Cliffs has previously said it intends to launch a takeover bid for KWG, but is currently awaiting the results of an independent evaluation that was required because of Cliffs’ 19.4% stake in KWG.