Here are the rabbits we can still pull out of our hat:

1) Another suitor can bid for KWG and SPQ. I am hopeful that another bidder will appear soon, but unfortunately time is working against us and Cliffs knows it. I am trying to remember my securities laws, but I believe that Cliffs did not have to start the clock over again on their bid because they only changed their bid price and nothing else. If they would have changed any other terms they would have had to extend the buyout offer leaving more time for another suitor to appear. They clearly know that there may be other parties but only Cliffs (because they were an insider (read lawsuit, lawsuit, lawsuit)) could be in such a position to acquire SPQ/KWG with no worries about due diligence and hence timing.

2) Cliffs decides to make this entire process fair and offers both KWG and SPQ a decent (not great but decent) offer. They would do this to avoid potential lawsuits and to ensure that both KWG and SPQ are acquired. What is a decent offer at this point…who knows but maybe $0.23?

3) A combination of lawsuits launched by KWG. As I have discussed previously the LAC/Corona legal arguments could be perfect jurisprudence in this lawsuit. What are the two KWG lawsuits? Firstly, I would sue Cliffs for say $500 million for acquiring Freewest with the sole intent of screwing us out of our joint venture stake in the Big Daddy, while they (1) had inside info garnered from KWG, (2) sat on the Board of KWG and (3) pretended to be our “partner”. I would then launch an injunction against Cliffs, trying to get the court to stop the Cliffs’ acquisition of SPQ, arguing that they would be eliminating the possibility of KWG ever having a controlling interest in the Big Daddy project. Would the court listen? The courts hate awarding injunctions. We may be able to stall the process, hence giving us additional time to get another suitor, but in the end the court would probably say, you have a good case, but you should sue Cliffs (and you will probably win) after they are successful in acquiring control of SPQ.

4) SPQ votes to merge with KWG whether or not the Cliffs’ bid is “superior”. We all know the KWG bid is definitely superior since if we do merge we will be able to get Cliffs to pay up. Why would they pay up--because (1) they know the Big Daddy is the premier chrome mine in the ROF and they don’t want to simply have a minority interest in it and have to deal with some other firm controlling the timing, expenditure, etc. and (2) they would be clearly embarrassed that they bought FWR and have not much to show for it.

In conclusion the easiest and safest rabbit we have is to MERGE.