KWG Resources Files for New Offering

Frank Smeenk, President & CEO, KWG Resources
Frank Smeenk, President & CEO, KWG Resources

Frank Smeenk, President & CEO, KWG Resources
Frank Smeenk, President & CEO, KWG Resources
TORONTO – Business – KWG Resources Inc. (TSX VENTURE:KWG)(FRANKFURT:KW6) (“KWG” or the “Corporation”) is pleased to announce that it has filed a preliminary short form prospectus (the “Preliminary Prospectus”) and has obtained a receipt from the securities regulatory authorities in the provinces of British Columbia, Ontario and Quebec in connection with a marketed offering (the “Offering”) of Units (as defined below) and Flow-Through Shares (as defined below) to be made in the provinces of British Columbia and Ontario.

Pursuant to the Offering, the Corporation is targeting to raise minimum aggregate gross proceeds of $4 million (the “Minimum Offering”) and maximum aggregate gross proceeds of $10 million. The net proceeds of the Offering will be used to: (1) continue the development and commercialization of the new methods of production of chromium iron alloys from chromite ore and of production of low carbon chromium iron alloys (the “New Production Methods”); (2) conduct a drilling program at the Fishtrap Lake project; (3) continue the Corporation’s exploration program at the Koper Lake project; and (4) augment the Corporation’s working capital.

Secutor Capital Management Corporation (the “Agent”) has been appointed as exclusive lead agent for the Offering. The Corporation and the Agent have not yet entered into an agency agreement.

Each unit (a “Unit”) is comprised of three non “flow-through” common shares of KWG (each an “Offered Common Share”) and two non “flow-through” common share purchase warrants (each an “Offered Warrant”) at a price of $0.165 per Unit (the “Unit Offering Price”). Each Offered Warrant will entitle the holder to purchase one non “flow-through” common share of KWG (a “Warrant Share”) until the date that is 24 months following the closing of the Offering at a price of $0.10 per Warrant Share.

In addition, the Offering includes common shares of KWG, which will each qualify as a “flow-through share” (each, a “Flow-Through Share”) within the meaning of the Income Tax Act (Canada) at a price of $0.055 per Flow-Through Share (the “Flow-Through Offering Price”).

In connection with the Offering, the Corporation will grant to the Agent an option (the “Over-Allotment Option”) to sell, as agent, additional Flow-Through Shares (the “Additional Flow-Through Shares”), equal to not more than 15% of the number of Flow-Through Shares sold pursuant to the Maximum Offering, at the Flow-Through Offering Price and to purchase additional Units (the “Additional Units”), equal to not more than 15% of the number of Units sold pursuant to the Maximum Offering, at the Unit Offering Price to cover over-allotments, if any, and for market stabilization purposes. The Over-Allotment Option in respect of the Additional Flow-Through Shares will expire concurrently with the closing of the Offering. The Over-Allotment Option in respect of the Additional Units may be exercised at any time up to 30 days following the closing of the Offering.

Closing of the Offering is subject to certain conditions including, but not limited to, achievement of the Minimum Offering, the execution of a definitive agency agreement between the Corporation and the Agent and the receipt of all necessary approvals, including the approval of the applicable securities regulatory authorities and the TSX Venture Exchange.

The Preliminary Prospectus is still subject to completion or amendment. A copy of the Preliminary Prospectus will be available electronically at www.sedar.com. There will not be any sale of or any acceptance of an offer to buy the securities until a receipt for the (final) prospectus has been issued. The material set forth herein is for informational purposes only and does not constitute an offer of securities for sale in the United States or any other jurisdiction in which such an offer or solicitation is unlawful. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or the laws of any state, and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state laws. No public offering of securities will be made in the United States.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.