KWG Resources Inc. (TSX: V.KWG, Stock Forum) had its wrists slapped by regulators Wednesday after the company released two independent stock valuations, which indicated that the junior‘s shares are worth much more that the current trading value.
After trading in the shares was halted Wednesday, KWG was ordered by the Investment Industry Regulatory Organization of Canada (IIROC) to retract the valuations contained in a June 30 press release.
Prepared by Cormark Securities Inc. and Broad Oak Associates, they indicated that the shares are worth between 22 cents and 30 cents, a big premium on the current trading price of around 11.5 cents.
Before the halt was lifted, KWG released a statement saying that the independent valuations will not be filed on the SEDAR filing system until such time as the forward looking economic information contained in the valuations satisfies the requirement of National Instrument 43-101 standards for mineral project disclosure.
Wednesday’s development is the latest in a saga that began on June 2nd, 2010, when Cleveland, Ohio-based Cliffs Natural Resources Inc. (NYSE: CLF, Stock Forum) asked KWG to retain Cormark to provide the independent evaluation ahead of a potential takeover bid.
Cliffs is eyeing control of the Big Daddy chromite discovery in northern Ontario, which it currently shares with KWG and its partner Spider Resources Inc. (TSX: V.SPQ, Stock Forum).
The U.S. company owns a 47% stake in Big Daddy. Spider and KWG each own 26.5% of the find, but have the option to raise their stake to 30%.
Last Friday, Cliffs said it is willing to pay 19 cents a share in cash for Spider, up from a previous offer worth 13 cents. The U.S. company also said it has not determined that it will bid for KWG.
Cliffs' latest offer for Spider is subject to a number of conditions, including the rejection by Spider shareholders of a proposed merger between Spider and KWG.
Cliffs has said KWG has until just after midnight on July 6th to match its revised offer for Spider.
Meanwhile, Cliffs issued a statement Wednesday saying that proxy advisory firm RiskMetrics Group is recommending to institutional clients that they vote against the proposed merger between Spider and KWG.