KWG reports two independent valuation opinions

MONTRÉAL, Jun 30, 2010 (Canada NewsWire via COMTEX News Network) --

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<< Symbol on TSX Venture Exchange: KWG Shares issued and outstanding: 589,549,206 >>

KWG Resources Inc. ("KWG") intends to file on its SEDAR disclosure record two independent valuations with respect to its assets and common shares.

Cormark Securities Inc. ("Cormark") values the KWG common shares within a range of C$0.22 to C$0.30, as explained below. Broad Oak Associates ("Broad Oak") values the potential cash flow from KWG's interest in the Big Daddy Chromite Deposit at C$0.27 per KWG common share, as explained below.

On June 2nd, 2010, at the request of Cliffs Natural Resources Inc. ("Cliffs"), KWG retained Cormark to provide an independent valuation (as required under Multilateral Instrument 61-101) in connection with a potential take-over bid by Cliffs (that would constitute an "insider bid"). The valuation was required in order for Cliffs to be permitted to commence the bid for KWG. After Cliffs indicated that it no longer required the valuation, KWG requested that Cormark complete the valuation (the "Cormark Valuation") in order to provide shareholders with a professional independent third party assessment of the value of KWG and its key assets, in particular the Big Daddy Deposit. In addition, KWG had retained Broad Oak to prepare a discounted cash flow ("DCF") valuation of its Big Daddy interests alone (the "Broad Oak Valuation").

The Cormark Valuation

    <<
    Cormark's approach to the determination of value included:

    Big Daddy Chromite Deposit

    -  An assessment of the chrome market and drivers impacting demand and
       pricing therein
    -  A net present value ("NPV") analysis of the Big Daddy Chromite Deposit
       using both lump chromite and ferrochrome production scenarios with
       -  Discount rate of 12.5%
       -  P/NPV of 0.5 - 0.8x
    -  NPV analysis was compared to precedent transaction multiples and
       current comparable trading multiples
    -  Incorporates balance of required expenditure to earn 30% interest

    Other Mineral Claims (Debuts Diamonds)

    -  Compared to current market capitalizations of comparable stage diamond
       focussed companies

    Claims to Railway Right of Way (Canada Chrome Corporation)

    -  Valued based on 10% of the potential cost savings from the
       contemplated route versus an alternative route

    Net Smelter Royalty Interest

    -  risk-adjusted NPV of the NSR under both lump chromite and ferrochrome
       scenarios
    -  balance of NSR purchase price incorporated

    Based upon and subject to the assumptions made, and the matters
considered, in the Cormark Valuation, Cormark reached the following summary
conclusions:

    -  The value of the KWG common shares is between US$172 - US$240 million
       on an aggregate basis or C$0.22 - C$0.30 per share (based on
       829 million fully diluted shares and a US$/C$ exchange rate of 0.95)
    -  The value of a 30% interest in the Big Daddy Chromite Deposit is
       between US$105 - US$150 million (US$100-US$145 million after
       accounting for the remaining expenditures required to earn the
       remaining 3.5% under KWG's option having been incurred)
    -  The value of Debuts Diamonds mineral claims is between US$10 -
       US$15 million
    -  The value of the Railway Right of Way is between US$25 - US$40 million
    -  The value of the NSR interest is between US$8 - US$10 million (US$7 -
       US$9 million after accounting for the remaining payment due to Richard
       Nemis having been made)
    -  Cormark also accounted for working capital of US$3.1 million (based on
       KWG's March 31, 2010 balance sheet, adjusted for subsequent financing
       transactions) and US$27 million in cash proceeds, assuming exercise of
       all in-the-money options and warrants
    >>

In rendering the Cormark Valuation, Cormark relied, without independent verification, on financial and other information that was obtained by Cormark from public sources or that was provided to Cormark by KWG and its affiliates, associates, advisors or otherwise. Cormark assumed that this information was complete and accurate and did not omit to state any material fact or any fact necessary to be stated to make that information not misleading. The Cormark Valuation has been provided for the use of the special committee and the board of directors of KWG and is not intended to be, and does not constitute, a recommendation that shareholders of KWG invest in, hold, divest of common shares of KWG, or to vote for or against any specific transaction involving KWG. The Cormark Valuation may not be used by any other person or relied upon by any other person other than the special committee and the board of directors of KWG without the express prior written consent of Cormark. The Cormark Valuation is rendered as of June 28, 2010, on the basis of securities markets, economic and general business and financial conditions prevailing on that date and the condition and prospects, financial and otherwise, of KWG and its subsidiaries and affiliates as they were reflected in the information provided by KWG to Cormark. Any changes therein may affect the Cormark Valuation and, although Cormark reserves the right to change or withdraw the Cormark Valuation in such event, it disclaims any undertaking or obligation to advise any person of any such change that may come to its attention, or update the Cormark Valuation after such date. The full text of the Cormark Valuation, which sets forth the assumptions made, general procedures followed, matters considered and limitations on the review undertaken by Cormark, will be available on SEDAR. This summary of the Cormark Valuation is qualified in its entirety by reference to the full text of the Cormark Valuation. Cormark believes that the analysis and related conclusions expressed in the Cormark Valuation must be considered as a whole and that it is not appropriate to give consideration to select portions of the Cormark Valuation without giving weight to all the factors and analysis that went into its formulation of such valuation.

Value of Combined Company resulting from the Proposed Business Combination

KWG believes that the Cormark Valuation has implications for the proposed business combination involving Spider Resources Inc ("Spider") pursuant to the combination agreement among KWG, its wholly-owned subsidiary, 7569076 Canada Inc. and Spider, as amended by the terms of KWG's offer accepted by Spider on June 25, 2010 (the "Proposed Business Combination") (see the joint press release of KWG and Spider dated June 25, 2010). In connection with the Proposed Business Combination, Spider's 30% interest in the Big Daddy Chromite Deposit (and its interests in other claims, primarily interests in the Debuts Diamonds assets) worth between US$110 - US$160 million, as well as net working capital of an estimated US$18 million after exercise of all Spider options and warrants, would be contributed to the combined company, which will have a value of between US$300 - US$418 million (C$315 - C$440 million, based on a US$/C$ exchange rate of 0.95) following completion of the Proposed Business Combination. The completion of the Proposed Business Combination implies a value to Spider shareholders of between C$160 - C$223 million, or C$0.24 - C$0.34 per Spider share (based on Spider's fully diluted ownership of the combined company).

The Cormark Valuation does not incorporate a typical industry premium for operating control of an economic mineral deposit.

The Broad Oak Valuation

The Broad Oak Valuation was of the potential cash flow from the Big Daddy Chromite Deposit and determined that a 30% interest in the indicated and inferred resources presently identified at the Big Daddy deposit, if mined as a pit and sold into export markets as lump ore, has a NPV of between US$140.7 million and US$300.1 million based on a discount rate of 8% at lump ore prices of US$300/tonne and US$350/tonne, with the mid-range of US$325/tonne yielding a US$220 million NPV. The significant cost assumption incorporated in Broad Oak's DCF model is that the entire US$1.7 billion projected cost of construction of a railroad to ship lump ores to export market ports is borne by the mining of only the presently identified and assumed open-pittable resources providing a life-of-mine of 15 years. KWG believes that this railroad will serve a new mining district expected to develop at its northern terminus and thus have a useful life that would permit its cost to be amortized over very many decades. Nevertheless, the Broad Oak Valuation indicates that the Big Daddy interest alone has a net present value, calculated on this basis, of from US$0.17 to US$0.36 per KWG share, with the mid-range yielding US$0.27 per share.

In rendering the Broad Oak Valuation, Broad Oak has had access to all and any data requested of KWG that was available. An officer of KWG has provided Broad Oak with a Certificate of Representation indicating that to the best of his knowledge the data provided was accurate. Broad Oak has therefore assumed that all the information and documents provided to Broad Oak were accurate and complete in all material aspects. Broad Oak reserves the right, but will not be obligated, to revise its report and conclusions if additional information, especially any that may have a material effect on the valuation conclusions, becomes known to it subsequent to the date of the Broad Oak Valuation.

Broad Oak believes that the analysis and related conclusions expressed in the Broad Oak Valuation must be considered as a whole and that it is not appropriate to give consideration to select portions of the Broad Oak Valuation without giving weight to all the factors and analysis that went into its formulation of such valuation.

The Broad Oak Valuation uses only the NPV method (which is the only valuation method available for the purposes of a valuation of potential cash flows from the Big Daddy Chromite Deposit). However, a range of values was derived by varying some of the inputs used to generate the NPV.

SEDAR Filing

Both the Cormark Valuation and the Broad Oak Valuation are expected to be available for review under KWG's profile on SEDAR within 24 to 48 hours.

Qualified Person

M. J. (Moe) Lavigne, Vice President - Exploration and Development of KWG is a qualified person as such term is defined in National Instrument 43-101.