MERGER: Cliffs up offer for Spider Resources

CLEVELAND and MONTREAL - Last week Cliffs Natural Resources upped its all-cash offer for Spider Resources to $0.19/share from the $0.13 it originally offered on May 31. The American iron ore producer wants control of the Big Daddy chromite deposit in Ontario's Ring of Fire. Cliffs already holds 47% of the project by virtue of its takeover of Noront Resources earlier this year.

The other owners, KWG Resources (26.5%) and Spider Resources (26.5%) have proposed an amalgamation to retain control of Big Daddy. The boards of both companies have approved a deal that values Spider shares at $0.165 each, and a special meeting of shareholders was scheduled for July 8. Cliffs owns 19.9% of KWG and 4% of Spider.

KWG believes its share offer remains superior to Cliffs cash offer. Early on June 30 the Canadian company circulated a press release saying that has two independent valuations to support its assertion. The valuations reflect share prices of $0.22-$0.30 (Cormark Securities) and $0.27 (Broad Oak Associates). Shortly after lunch a second news release arrived with the announcement that KWG was retracting both independent valuations. The company said this was not the appropriate time to file the information with regulatory authorities, and therefore the numbers are not to be relied upon.

Goodness knows who will come out on top with control of the Big Daddy deposit.