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KWG Resources AGM adjourned to consider special resolutions

KWG Resources AGM adjourned to consider special resolutions

Photo by KWG Resources

2nd July 2014

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Ring of Fire- (RoF-) focused project developer KWG Resources’ annual general meeting was adjourned on Monday to the end of July, when shareholders would vote on adopting sensitive special resolutions.

KWG said the meeting was adjourned to July 30, when shareholders would consider special resolutions to amend the company's articles to authorise it to issue preferred shares and to allow shareholders wishing to do so to consolidate shares for a new multiple-voting share at a ratio of 50:1.

However, shareholder Cliffs Natural Resources had served prior notice that it would ask KWG to repurchase its shares if either of these special resolutions was approved and adopted.

KWG reported that Cliffs had similarly required that its shares be repurchased should the company act on the shareholders resolution adopted at their last meeting to approve a change of jurisdiction so that the law governing KWG’s constitution would be the federal Canada Business Corporations Act, instead of Ontario. KWG had not yet acted on the approved resolution.

Meanwhile, Cliffs had not yet nominated a director to KWG’s board. Under the terms of a March 2009 shareholder agreement, Cliffs had the right to appoint one nominee to KWG’s board as long as it held at least a 10% interest in KWG.

Active shareholders on Monday elected Cynthia Thomas, Douglas Flett, Thomas Pladsen, Donald Sheldon and company president Frank Smeenk as directors. The shareholders also appointed McGovern, Hurley, Cunningham Chartered Accountants as the company’s auditors.

TRANSPORT PLAN VALIDATION

Meanwhile, the Northern Policy Institute earlier this month released a report that broadly echoed and validated KWG’s proposed infrastructure-development plan for the RoF.

The report, authored by Canada's former Deputy Minister of Transport, Nick Mulder, concluded that an authority model similar to the ‘Airport/Port Transportation Authority’ model would be a more effective model in developing the RoF than a traditional ‘Crown Corporation’ model.

The report made a case that the Transportation Authority model could be more effective than a traditional Crown Corporation to meet the infrastructure needs for the RoF mineral development in Northern Ontario.

“It would place the onus and risks on all the stakeholders and not just the provincial government and taxpayers. The buck would stop with all the stakeholders, not Queen’s Park,” Mulder said.

The report reverberated with KWG’s plan, which suggested the RoF should be developed under the Port/Airport Authority model – more specifically, under a reconstituted Crown-owned Ontario Northland Transportation Commission.

Mulder said the advantage of a Port Authority model was that it would reduce financial risk for the provincial government. Under the Northern Policy Institute's proposal, a new port authority would issue bonds to raise funds for infrastructure development.

At the time, Smeenk said the Northland Development Corporation Bill, which KWG had proposed to all candidates who recently sought election to the Ontario Legislature, was fashioned after the governance model of a Port/Airport Authority model.

“We originally concluded that the federal government might be the better sponsor of such a corporation, because the Ontario government had then declared its intention to dispose of the assets of the Ontario Northland Transportation Commission. These are legacy assets that can assist the RoF deposits to achieve very long-term economic viability in a highly competitive global market for stainless steel inputs.

“If our Bill is adopted by Ontario's newly-elected Parliament, it would effectively create a provincial transportation authority on the model of the many such very successful federal agencies across Canada,” Smeenk said.

He added that down the line, the Bill could as easily become the charter of a federally incorporated transportation authority and so benefit from the sponsorship of the governments of both Canada and Ontario. “As both governments have pledged their support for development of the RoF, this might be a most elegant means for their collaboration,” Smeenk stated.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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