Shaw River Manganese (ASX: SRR), formerly Shaw River Resources, is a manganese company with a pipeline of manganese projects. Shaw River’s exploration is targeted at high-grade manganese deposits highlighted by the recent acquisition of the Otjozondu Manganese Project (Otjo) in Namibia.
First production from Otjo is expected in 2012. Projects at Baramine, Pilbara and Butre, Ghana are advancing with drill programs underway or completed.
Shaw River Resources to acquire 75.5% stake in Namibian Manganese Project
Shaw River Resources (ASX: SRR) is set to become a significant manganese producer with the acquisition of a 75.5% interest in the Otjozondu Manganese Project in Namibia.
The deal comprises a combination of shares, cash and options, and builds on Shaw’s Pilbara and Ghana manganese project portfolio. The company aims to double production within five years.
An exploration target of 35 million tonnes to 50 million tonnes at 23% manganese (Mn) to 27% Mn at Otjo has been estimated by the company.
Based primarily on existing diamond drilling (22,000 metres) and reverse circulation drilling (11,000 metres) at the Otjo project, the company expects to report a maiden JORC Inferred Resource estimate from Otjo in the first half of 2011.
With only a 24% portion of the 44km mineralised strike length drill tested so far identifying seven deposits, significant exploration upside exists along strike and at depth.
Included in the acquisition are 5 granted EPL’s, 1 granted Mining Lease over 1,367 km2 and a plant capable of producing up to 10,000t per month of 36% to 42% manganese product from run-of-mine material.
A big positive for the project is the extensive road, rail and port infrastructure elements available for Otjo, including the bulk commodity port facilities at Walvis Bay, which are controlled by the Otjo project’s 24.5% joint venture partner, Oreport Namibia.
Since the 1950s historical production of 500,000t of high grade (+42%Mn) has occurred at Otjo. Recent trial mining and jig processing operations have produced up to 10,000 tonnes per month at 36 to 38% Mn.
The company plans to commence production by early 2012, with feasibility work and additional exploration expanding on the extensive prefeasibility work conducted to date.
Drilling and detailed scoping study will start on completion of the transaction.
The deal is subject to completion of due diligence, shareholder approval and satisfaction of conditions precedent, which under the terms of the acquisition agreement must be completed by 31 March 2011.
Shaw River will acquire the stake in Otjo through the purchase of 100% of Otjozondu Holdings Pty Ltd, a Namibian company that holds a 75.5% stake in Otjo.
Shaw River intends to continue the 20,000 metre drilling program at Baramine in the Pilbara of Western Australia in the first half of 2011.
The company believes economic studies commencing in early 2011 will highlight the value to be realised by bringing Baramine into production.
The drilling program at Shaw River’s Ghana manganese project is also intended to continue as planned.
The terms of the acquisition include:
- The payment of US$5.13 million cash, being A$5,236,831 (deemed exchange rate of US$0.9796=A$1);
- 31,495,417 Shaw River shares issued at a deemed issue price of 13.573 cents per share, valued at US$4.2 million(subject to voluntary escrow for a period of 12 months from completion);
- 2,053,114 Atlas Iron (ASX: AGO) shares at a deemed issue price of $3.08269, valued at US$6.2 million;
- 45 million unlisted Shaw River options exercisable at A$0.20 each and expiring 5 years after the date of issue
(subject to voluntary escrow for a period of 12 months from completion);
Hartleys Limited is Corporate Advisor to Shaw River in respect of the acquisition.
Shaw River’s largest shareholder Atlas Iron (ASX: AGO) will provide an unsecured loan of US$11.3 million comprising US$5.1 million in cash and US$6.2million in Atlas Iron shares to help facilitate this transaction.
The company intends on retiring the loan from Atlas Iron through a capital raising during 2011 facilitated by Hartleys Limited. Evolution Securities Limited introduced the transaction to Shaw River.
