December 28, 2011
KWG Resources Inc. (“KWG”) announced the spin-out of the shares of its substantially-owned subsidiary corporation Debut Diamonds Inc. (“Debut”) to its shareholders as a return of capital.KWG has a 28% interest in the Big Daddy chromite deposit in the Ring of Fire area of northern Ontario and is presently earning an additional 2% interest in it under an option agreement to create a joint venture with Cliffs Natural Resources on April 1, 2012. KWG also owns 100% of Canada Chrome Corporation which has staked claims and conducted a surveying and soil testing program for the engineering and construction of a railroad to the Ring of Fire from Exton, Ontario where the Trans Canada line of the Canadian National Railway can be connected.
Debut is a Canadian exploration corporation focused on its diamond bearing kimberlite discoveries in northern Ontario and other potentially diamondiferous exploration properties.
The object of the spin-out transaction was to separate KWG’s base metal exploration properties from Debut’s diamond exploration properties and to allow each corporation to trade as a separate listed company.
Wildeboer Dellelce LLP acted for KWG and Debut and obtained an Advance Income Tax Ruling from the Canada Revenue Agency which essentially allowed the distribution of the Debut shares to the KWG shareholders to be treated as a tax-free return of capital to the KWG shareholders.