JOHANNESBURG (miningweekly.com) – Canadian junior Spider Resources has terminated its merger agreement with KWG Resources and has agreed to support US-based Cliffs Natural Resources’ takeover offer.

KWG and Cliffs have been battling it out in recent weeks to gain Spider’s interest in the joint-venture Big Daddy chromite project, in the Ring of Fire mineral district, in northern Ontario.

KWG Resources on Friday confirmed that the merger deal had been terminated and that Spider had paid it a breakage fee of C$2,3-million.

Cliffs also announced that it and Spider Resources had signed a definitive support agreement, in terms of which the junior miner would back the US miner’s C$0,19 a share offer.

“We have agreed to give our full support to Cliffs because Cliffs' all-cash offer is clearly in the best interest of Spider's shareholders. All directors and officers of Spider have agreed to tender their shares under Cliffs' all-cash offer, and we strongly recommend that all other Spider shareholders tender as well,” Spider Resources president and CEO Neil Novak said in a statement.

Cliffs Ferroalloys president William Boor further encouraged Spider shareholders to take up the offer, stating that Cliffs’ offer provided immediate value, liquidity and certainty for the shareholders.

Independent proxy advisory firm RiskMetrics, last week also advised Spider shareholders to take up the Cliffs offer rather than the KWG offer, saying that the deal provided value certainty for the shareholders.

This was despite protests by KWG that its merger offer was superior to the Cliffs offer.

Cliffs owns a 47% stake in the Big Daddy project and was hoping to gain control of the project by acquiring Spider, which holds a 26,5% stake in the project. If successful, it wanted to integrate the project with its Black Thor and Black Label chromite deposits in the Ring of Fire district.

KWG holds the remaining 26,5% interest in the Big Daddy project.

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