* Deal worth about about C$150 mln
* Freewest board unanimously supports offer
* Freewest shares up 18 percent
TORONTO, Nov 23 (Reuters) - U.S.-based mining company Cliffs Natural Resources Inc (CLF.N) said on Monday it has agreed to buy Canada’s Freewest Resources FWR.V for roughly C$150 million, to gain control of the exploration company’s chromite properties in Ontario.
Montreal-based Freewest has been fending off a C$90 million ($85 million) hostile bid from Canadian rival Noront Resources (NOT.V) since October, describing it as “highly opportunistic.” [ID:nBNG508368]
Freewest said its board unanimously supports the offer from Cliffs, North America’s largest producer of iron ore pellets, and has recommended that all Freewest shareholders accept it.
Under the terms of the agreement, Cliffs will acquire all of Freewest’s chromite interests and spin off the other assets into a “new” Freewest, which will exist independently and continue to trade on the TSX Venture Exchange.
Chromite is an essential raw material for the production of chromium, which is used in the production of stainless steel.
Upon closing, for each Freewest share tendered, holders will receive Cliffs stock worth 55 Canadian cents a share and one share of the new Freewest, valued at 15 Canadian cents.
Based on Cliffs’ closing price on Nov. 20, this would imply an exchange ratio of 0.0119 of a Cliffs share for each Freewest share.
The deal will result in the issue of roughly 2.4 million Cliffs shares and is expected to close in the first quarter of 2010.
As Cliffs has provided a floating exchange ratio which guarantees 55 Canadian cents per share on closing, the value of Cliffs’ proposal is far less volatile than Noront’s hostile bid, Freewest said in a statement.
Freewest shares rose 10 Canadian cents to 65 Canadian cents on the TSX Venture Exchange on Monday morning. While Cliffs rose 3.6 percent to $44.57 on the New York Stock Exchange.
$1=$1.05 Canadian Reporting by Euan Rocha; editing by Rob Wilson email@example.com; +1 416 941 8185; Reuters Messaging: firstname.lastname@example.org