MACIG Connect Series
Peter Cunningham (PC): Shaw River had a settlement agreement that positioned the company as the sole owner of the Otjozondu project in 2014. The previous minority shareholder (12.5%) was reluctant to make any further contributions to the project. Shaw River has discovered 17 million metric tons (mt) in the project and is now positioning itself to produce. We hope to be in the market before the end of 2014, as a small step towards full-scale production. Shaw River anticipates that from January 2015 onwards, it will produce at first pass full capacity. The company will commission a plant through January and will produce about 12,000 mt to 15,000 mt of product per month. We retain the capacity to triple that with the equipment that we will have on site.
What is the importance of the Otjozondu project to Shaw River globally?
PC: The Otjozondu project is Shaw River’s main focus at the moment. Shaw River has secured financing from Bryve Resources to develop the project further. The financing arrangement commenced in August and is subject to Namibian regulatory approval and by Shaw shareholders, which is scheduled for 14 October 2014. Subject to these approvals, Bryve can take about 54% of Shaw River’s stock and control the company as an individual investor. There is a $2 million convertible loan in place, of which $1.4 will flow straight into the company. There is also a $6 million working facility. Shaw River will not need all that money to get this project going, but it wants to upscale the project faster than what was anticipated. 40% of the project’s positive cash flow will be used to repay the existing Atlas loan and Bryve’s facility.
At what stage is Shaw River in the permitting process?
PC: Shaw River has secured a mining license for most of the area to be exploited and we are in a position to commence production. There are still 144 kilometers (km) within the Roper Line of Lode to be explored, but at this stage Shaw River is not looking to expand the resource and intends to focus on production. Further exploration will be funded from cash flow.
Is Shaw River looking at other resources in Namibia aside from manganese?
PC: Shaw River is always interested in adding value through new opportunities that come our way. Currently, we have relinquished acquisitions in Australia, as we are focusing on our business in Africa. Shaw River has a number of leads to expand our business in Africa. Shaw River has the Butre project in Ghana, and we are looking at other countries for mature projects that offer logical opportunity.
What are the criteria that Shaw River uses in order to start exploring at an asset?
PC: The outlook for the commodity must be reasonable. Secondly, it must be in a jurisdiction that is stable and that we think we can operate in safely. Shaw River also analyzes if the project can be developed profitably. It is unlikely that Shaw River will enter into anything that is early-stage exploration, as we are looking for something that is more mature and advanced.
Can you elaborate on the infrastructure surrounding the Otjozondu Project?
PC: The project is reasonably remote, as we are about 250 km from Windhoek. There is rail available 150 km from site, which terminates in the port of Walvis Bay. The 150 km to the railhead is unsealed for the first 130 km and sealed for the balance. Road maintenance is an issue that we are currently addressing. Infrastructure networks need some improvement and the agencies responsible are aware and working on the issues. Shaw River has found willingness for progress in working with the government and the Chamber of Mines. The shortage of skilled labor has not been apparent on our side, but we are still in the exploration phase. Shaw River will be entering the next phase of operation soon and intends to prioritize filling positions locally.
Where would you like to see the Otjozondu project in two to three years?
PC: Shaw River would like to see a strengthening in the market, more developed infrastructure, and an expansion of the scale of the project that is more representative of the resource that we have. The company would also want to spread into two or three select mining operations that will add value to companies based there.
This interview was part of research being conducted by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2015. To participate in this report, please contact Sharon Saylor at email@example.com.