The main thing is Vince Algar is still in play and still running...

The main thing is Vince Algar is still in play and still running the show! and he will make SRR suceed!

Broker report from 2 years ago!

Main points are

- starting production in 2012 (pending)
- upgrade in resources (done)


Shaw River Resources Limited
Otjozondu Acquisition to Fast Track Production
Shaw River Resources Limited (“Shaw River”, “SRR”, “Company”) has entered into an agreement to purchase 75.5% of the Otjozondu Manganese Project (“Otjo”) in Namibia. The project is located 150km north-east of the Namibian capital of Windhoek and has been in production up until recent times. Consideration for the acquisition is ~US$31m, to be funded by a mixture of shares, cash, options and production royalties. Of this, ~US$18.5m is to be paid up front. Following a period of drilling and development studies, we understand Shaw River plans to commence production at Otjo in 2012 at an initial rate of 250ktpa - 300ktpa.
We see Otjo as a potentially company making project, fast tracking Shaw River to producer status and strong cashflow within 2 years. The potential to modernise and upscale the existing operations should see economies of scale and efficiency savings, which should enable the Company to generate excellent margins and free cashflow. If the Company can achieve ~US$100/t margins, implied operating cashflow would be in the order of US$25 - 30m per annum. In addition, Otjo appears to have substantial exploration upside that may deliver a long mine life and possible production increases.
Project details
The project covers 1,367km2 and has historic production of ~500kt since the 1950’s. Recent trial mining has been at up to 10kt per month producing a +38% Mn product. Mining has been via shallow open pits using typical drill and blast techniques, with ore crushed and processed on a jig to produce a saleable product. We understand that the project has its own water bores, and benefits from nearby rail, roads and access to a bulk commodities port. The projects 24.5% joint venture partner, Oreport Namibia, controls the bulk commodities port facilities at Walvis Bay, Namibia’s largest port.
Work Plan
On the completion of the acquisition, Shaw River plans to undertake a feasibility study on recommencing production using shallow open pit mining methods and exporting through Walvis Bay. The Company plans to undertake a detailed drill program with a view to having an initial resource out in 1H CY2011. The Company believes that the project is relatively underexplored as historic RC & diamond drilling (~33,000m) only covered 24% of the 44km of prospective strike. Whilst seven deposits were identified, most drilling did not go below 85m depth and the mineralisation remains open at depth. Shaw River has an exploration target for the project of 35 – 50Mt grading 23% - 27%Mn.
The Company is targeting the production of a high grade lump and fines manganese product grading 38 – 42% Mn following beneficiation. We understand that the product is a high quality low phosphorous ore, with iron grades of 13 – 15%, and ideal for blending with lower value high phosphorous ores. The Company believes that the recent production will benefit significantly from investment in mine planning, drilling and more sophisticated mining practices enabling the much higher production rates.