Shaw River Manganese to resume trading on settlement of Namibian Legal matter

Shaw River Manganese's (ASX: SRR) shares will resume trading on Friday 9 December 2011 on the settlement of a legal matter that clears the way for development of the Otjozondu Manganese Project in Namibia.

Court action against Shaw River's Namibian subsidiary has been abandoned, and a broad deed of release has been executed in favour of the Shaw River Group.

As a result there will be no significant financial or ongoing negative legal effects on Shaw River or its Otjozondu Project, which forms the backbone of the company's global manganese production strategy.

The voluntary suspension of Shaw River shares on the ASX is expected to be lifted following release of its 2011 Annual Report on 8 December 2011.

Vincent Algar, Shaw River’s managing director, said “the legal issue arose unexpectedly as a result of circumstances that were outside of our control. However, we have been able to resolve it without any significant financial or legal impact on the company, and we are now in a position to move forward with our development plans with confidence and certainty.”

Strong news flow from Shaw River is expected over the coming months as the company progresses the Otjozondu Feasibility Study, delivers a resource upgrade for the Otjozondu Project and a maiden resource for our Baramine Project in the Pilbara, and presses ahead with exploration and development at its Butre Project in Ghana.

Ongoing exploration is continuing to identify new potential Manganese exploration targets at Otjozondu. Investigations into metallurgy, environmental, hydro-geology, mine cost analysis and logistics relating to the infrastructure corridor to Walvis Bay are progressing well.
Shaw River is currently reviewing its targeted timing to commence production, and is likely to establish a new timetable based on commencing production at an initial rate of 250,000 tonnes per annum (tpa).

Investors should note that during 2007/08, the manganese price rose from a low of ~$3.00 per DMTU (Dry Metric Tonne Unit) to ~$18.00 per DMTU over a period of only 18 months.

Shaw River aims to ramp up production  to 500,000tpa of manganese ore, placing the company in a strong position to capitalise on any increase in the manganese price.


The settlement

Having assessed the risks associated with the potential outcomes of the case, Otjozondu Mining (Proprietary) Ltd (OM) and Shaw River decided to engage with the plaintiff to negotiate a settlement.

The settlement amounts payable to the plaintiff by OM (75.5% owned by Shaw River) comprise a cash payment of US$2 million and royalties of a capped amount of NAD20 million (US$2.4 million), which are payable following the commencement of production at the Otjo Project.

These settlement amounts are well below the potential exposure of OM and Shaw River, had the outcome of the court action been unfavourable.

Broad deed of release executed in favour of the Shaw River Group by the plaintiff and its associated or related entities.

The settlement arrangements provide the Shaw River Group and its projects with broad protection from any future action by the plaintiff and its associated or related entities.

Shaw River is seeking to recover the value of the settlement from the vendors of the project and Oreport.


Advancement of projects

Shaw River has continued to work towards progressing the Otjo Project towards production. A number of activities have been considerably advanced since the company’s shares were suspended, including:

- completion of a major resource extension drilling program at Otjo;
- commencement of the resource estimation process, including an upgrade of resource category and expected increase in the resource base at Otjo;
- commencement of resource estimation and additional beneficiation test work at the Baramine Project in the Pilbara region of Western Australia;
- beneficiation test sampling characterisation at both Otjo and Baramine;
- environmental, water, dust and social impact studies for the completion of a revised production plan at Otjo;
- completion of a road condition report and infrastructure studies at Otjo;
- mine cost modelling at Otjo;
- commencement of a regional soil sampling and exploration mapping program on the 1,300km2 lease area at Otjo; and
- completion of soil sampling programs at Baramine and 701 Mile in the Pilbara region.


Article originally published at: http://www.proactiveinvestors.com.au/companies/news/23077/shaw-river-manganese-to-resume-trading-on-settlement-of-namibian-legal-matter--23077.html