The gloves have come off in the battle for Freewest Resources Canada Inc. and its promising chromite deposits in the Northern Ontario mining camp known as the Ring of Fire.
After weeks of being slammed in press releases and statements made by junior miner Noront Resources Ltd., c, the head of Cliffs Natural Resources Inc., is hitting back.
The chairman and chief executive officer of the U.S. iron and coal giant is accusing Noront of making "false and misleading" claims regarding the two companies' competing offers for Freewest.
"It is not our character, generally, to come out with as strong and aggressive a release as you saw today, but quite frankly, we could only sit back and take so much," Mr. Carrabba said in an interview.
Cleveland-based Cliffs has even gone to Quebec's securities regulator, petitioning it to investigate Noront's "public statements, deficiencies in its regulatory filings and potential irregularities in the trading of Noront stock."
The aggressive tactics and allegations mark an unprecedented level of discord in the David-and-Goliath battle for Freewest and its shareholders that has pitted the hulking Cliffs, with a market value of about $6-billion (U.S.), against the junior miner Noront, whose market cap is about $400-million (Canadian).
"Everything that has value, such as we think the Freewest chromite deposits do, is worth the battle," Mr. Carrabba said.
Its diminutive stature has not dissuaded Toronto-based Noront from taking shots at its rival and heralding what it claims is a superior bid. Noront has said its stock-and-warrant offer, if accepted, would give Freewest shareholders continued exposure to the Ring of Fire exploration region and unlock synergies by combining Noront's chromite deposits with Freewest's.
Cliffs fired back yesterday, saying Noront's deposits are "smaller, thinner and deeper" than Montreal-based Freewest's and are unlikely to be developed for decades.
Cliffs has said it plans to spend about $800-million (U.S.) to build a mine and facilities to process the Freewest ore that could annually produce between 400,000 and 800,000 tonnes of ferrochrome, a key ingredient in stainless steel.
An improved all-stock offer from Cliffs last week values Freewest at 90 cents (Canadian) a share. Noront said its offer, consisting of two Noront shares for every seven Freewest shares held, plus a five-year warrant with a strike price of $4 a share, was worth 86 cents a share when it was announced Nov. 30.
Cliffs said yesterday Noront is inflating the value of the warrant and is not using traditional valuations when promoting the value of its offer.
"Noront has made bold pronouncements about the value of its offer in press releases that is has chosen not to include in filings with securities regulators, which must be certified by officers or directors of Noront. These omissions violate applicable securities law and are a strong indication that Noront knows its public statements are misleading," Cliffs said in a press release.
Wes Hanson, Noront's CEO, said his company's offer is focused on the upside of continued exposure to the Ring of Fire region, which he describes as "one of the most exciting and vibrant exploration plays in Canadian history."
As for the Cliffs accusations, "they are pretty serious allegations. Our legal counsel is reviewing our response."