Ring of fire chromite play could be worth even more than latest offer, say posters
Freewest Resources Canada (TSX: T.FWR, Stock Forum) shares jumped 9% to 96 cents on Thursday after one of its suitors raised its offer price for the mineral explorer.
The tussle over the resource company heated up on Thursday after Cliffs Natural Resources (NYSE: CLF, Stock Forum) boosted its offer for Freewest to $1 per share from 90 cents per share. This move follows closely on the heel of a release from Noront Resources (TSX: V.NOT, Stock Forum), which alleged that Cliffs made misleading statements to Freemont shareholders.
The Freewest Board on December 8 had urged shareholders to reject an all-share offer from Noront. The latter company, which currently trades at $2.32, had proposed to exchange each Freewest share for 0.2857 of a Noront common share, plus 0.1429 of a Noront warrant exercisable for five years at an exercise price of $4.00.
Freewest has conducted ongoing exploratory drilling at a property adjacent to Noront Resources, but has not yet issued a mineral resources estimate. On December 7, Freewest reported that drilling at its Big Daddy chromite prospect showed chromite mineralization in six of the seven holes drilled.
Posters appeared to be caught in the middle. Those posting to the Freewest Bullboard entreated fellow shareholders to hold onto their shares, and wait for a better offer from both companies. Some posters even suggested that $5 was a more appropriate price for their stock.
They dissected the reasoning supplied by both firms for their buyout offers. Digby8 pointed out that results at AT12 appear to indicate the presence of nickel-copper sulphides. “I guess that this is the real reason why NOT wants FWR so badly. I believe that, to NOT, chromite is a just a secondary consideration because, after all, their chromite really doesn't measure up. By acquiring FWR, NOT could potentially get another Eagle's Nest with all the associated Ni, CU and PGEs, as well as acquire millions of tons of chromite, with their own Blackbird chromite a small resource for development in future years.”
Incredible said that he hoped Noront would quickly raise its offer after it became clear it was deeply unpopular, and urged others to hold on to their shares at least until they see Freewest’s National Instrument 43-101 mineral resource report. “If Cliffs wins this lottery at 1.00 a share we are certainly going to take it on the chin in more ways than one. If YOU keep your Cliff shares and you live in Canada I am told that you will pay those taxes I referred to in another post in 2011 no matter if you sell the shares or keep them. For some that may make it impossible to even keep the Cliff shares.”
Goldcat007 reprinted a report from the Cleveland Ohio Business News, which said that the acquisition of Freewest would give Cliffs Natural Resources a 42% revenue boost, stemming from chrome reserves it hoped to acquire in Ontario.
Noront apparently holds as much as 12.5% of Freewest shares, and so at least one poster was paying close attention to the talk on that company’s Bullboard. Tarquin wrote: “there seems to be a note of capitulation on the NOT pumper board: CLF wins but what will NOT do with its FWR shares? That's the big question now.”
