(RTTNews) - Iron ore pellets and metallurgical coal supplier Cliffs Natural Resources Inc. (CLF: News ) announced Monday that it entered into an arrangement agreement with Montreal-based Freewest Resources Canada Inc. (FWR.V) to acquire all shares of Freewest in a Board-supported transaction with a total estimated value of C$150.6 million, or C$0.70 per Freewest share.

As per the deal terms, each Freewest shareholder will receive a fraction of a Cliffs share representing a fixed value of C$0.55, and one share of a new company, Freewest Resources Inc., which is estimated to have a value of C$0.15 per share.

Of the total transaction value of C$150.6 million, C$118.3 million is attributable to the shares of Cliffs while an estimated C$32.3 million is attributable to the shares of New Freewest to be distributed to Freewest shareholders.

The transaction will provide a premium of 122.2% to the closing price of Freewest's shares on the TSX Venture Exchange on October 2, 2009, immediately prior to the unsolicited bid by Noront Resources Ltd. for Freewest's shares, and a premium of 27.3% to Freewest's closing price on November 20, 2009.

The newly formed company, Freewest Resources Inc., or New Freewest, will own Freewest's current portfolio of non-chromite exploration properties and will be managed by the current Freewest Board and management. Following the spin-off transaction, New Freewest would exist independently and its common stock would continue to trade on the TSX Venture Exchange.
New Freewest will have C$2.0 million in cash, Freewest's shares of Quest Uranium Corporation (QUC.V), and a portfolio of exploration assets that include the high-grade Clarence Stream gold property in New Brunswick, Canada, which currently contains Indicated Resources of 235,000 ounces of gold grading 8.99 g/t and Inferred Resources of 156,000 ounces of gold grading 7.35 g/t.

Mackenzie Watson, President and Chief Executive Officer of Freewest, said, "We believe this transaction is clearly superior to the proposal put forward by Noront. It will provide Freewest shareholders with highly-liquid shares in a company with a market capitalization in excess of US$5 billion, while allowing New Freewest to continue as a well-financed exploration company focused on the high-grade Clarence Stream gold property and an attractive suite of early-stage exploration properties."

The whole transaction will be effected by way of Plan of Arrangement, the companies noted.

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