Otjozondu ("Otjo") Manganese Project, Nambia

See also our Otjozondu Project Flyer

Overview

Shaw River has purchased 75.5% of the Otjozondu Manganese Project ("Otjo") in Namibia. The Otjo Project is located 150km North- East of the Namibian capital of Windhoek and lies in a historical manganese field which has produced in aggregate approximately 550,000 tonnes of high grade (~48%) manganese since the 1950's. Recent production at Otjo was by way of a shallow free dig and drill-and- blast surface mining methods, utilising a basic crushing and jigging circuit to produce saleable ore.

Shaw River is planning the introduction of modern technology, mine planning practices and processing expertise to allow production to re-commence in 2012. This would involve the use of a jig or dense media separation plant, which would produce manganese lump and fines products.

Shaw River proposes to use a combination of existing road and rail infrastructure to transport product 538km to the Walvis Bay port where it will be loaded onto Handymax-sized vessels of up to 25,000 tonnes, for export to predominately Asian markets.

The favourable geology, shallow open- pittable mineralisation and the availability of existing infrastructure are expected to underpin low operating costs and attractive margins, using conservative long term manganese pricing.

A Scoping Study has indicated strong economics from a proposed mining operation from 2012 targeting producing a high- grade, high-quality product using simple beneficiation methods. The manganese product grade is estimated at 38-40%Mn.

A feasibility study to extend and confirm the Scoping Study has commenced with final results expected in early 2012. Further resource definition and upgrade drilling has been undertaken as part of this study and is expected to guide development for an open cut mining operation, targeting production of manganese product commencing in 2012.

Manganese Exploration

Extensive road, rail and port infrastructure elements are available for Otjo, including the bulk commodity port facilities at Walvis Bay, which are controlled by Grindrod, the owners of Otjo's minority (24.5%) partner, Oreport.

Shaw River holds exploration and mining licences over 1,700km2 covering 144km of the known strike of the Otjozondu manganese field. The project currently has Inferred JORC resources of 6.8 million tonnes at 23.1%Mn1. The current resources are based on 33,000m of historical drilling (22,000m of diamond drilling and 11,000m of RC drilling).

The Company has just completed an additional drill programme of 1,600m of diamond drilling and 5,000m of RC drilling at Bosrand, Labusrus and North Bosrand deposits. The PQ diamond core will be used for beneficiation test purposes and ore characterisation on three Inferred Resource prospect areas within the current mining licence.

The NQ diamond core will be used to improve resource quality within conceptual pit outlines and improve the resource delineation.

All of these prospect areas host Inferred JORC resources and lie within a granted Mining Lease.

Results for this drill programme will be assessed for a potential review of the site JORC resource and underpin the feasibility study works.

Ongoing RC drilling will target the excellent brownfield prospects within the 5 granted EPLs, including the Uitkomst and Ouparakane prospects, that surround the mining licence.

Namibia is a politically stable country with a modern system of mineral tenement management. In addition, the Namibian mining industry and government is very supportive of foreign investment in the country. Paladin Energy Ltd and Rio Tinto have been successfully operating in Namibia for a number of years.

Historical Bulk Exploration and Trial Mining

Otjo has been periodically open pit mined since 2008, however, previous mining and processing has been based on very limited mine and infrastructure planning and limited laboratory scale metallurgical testwork to refine manganese recovery.

Recently, the Otjo project has produced manganese on a trial mining basis at the relatively limited rate of approximately 25,000 tonnes per year grading approximately 38% manganese. Shaw River's technical due diligence to date has confirmed that the Otjo project's operating costs, scale and product quality delivery can be vastly improved with adequate planning, testwork, capital investment and best practice operations management.

The introduction of modern technology, mine planning practices and processing expertise could see production commence in early 2012.

Otjo Scoping and Feasibility Study

A feasibility study, primarily focussing on suitable execution strategies, has been commenced following completion of the Scoping Study. The Scoping Study indicates Otjo's potential to generate strong cash flows that are significantly leveraged to the manganese price, from a relatively low capital cost of development.

Favourable geology, shallow open-pittable mineralisation and the availability of significant existing infrastructure are expected to underpin low operating costs delivering ore by road and rail to Walvis Bay port, for export to predominantly Asian markets.

The existing logistics infrastructure will greatly reduce the Otjo up-front fixed capital requirements and aid a speedy start up and capacity expansion.

The cost modelling study arising from the Scoping Study was undertaken at a project level. Life of mine and production level considerations were based on the maiden Inferred Resource of 6.8 million tonnes at 23.1%Mn1, which will underpin at least the first five years of production from a new gravity separation plant. Further drilling in 2011 in known areas of mineralisation targeted a resource upgrade to a 10+ years of mine life.

There is significant potential for further growth in the existing mineral inventory given the maiden resource covers only 7km of the identified 144km of strike within the manganese field (just 5%). Shaw River is targeting to at least double this 6.8Mt1 maiden resource by early 2012 and currently has an Exploration Target1 at Otjo of 35-50 million tonnes grading 23-27%Mn. In addition, drilling will be targeting the conversion of a significant portion of its resource to reserve status.

Future Operations

The Company's principal operating goals into 2012 are;

  • The completion of a feasibility study currently underway to commence manganese production in 2012.
  • Increasing the existing 6.8 million tonnes at 23.1%Mn JORC Inferred Resource1 to support a long life (+10 years) mining operation.
  • Funding and construction of a new processing plant and commencement of production in 2012.
  • Upgrade of site support infrastructure.
  • Training and development of onsite employees.
  • Construction of onsite accommodation facilities.

1 Refer to the Mineral Resource Summary and the Competent Person Statement in Shaw's 2011 Annual Report.