Shaw scores up to $8M

DEVELOPMENT at Shaw River Manganese’s Otjozondu project in Namibia is set to kick up a notch, with Bryve Resources looking to provide up to $A8 million in funding.
Shaw scores up to $8M Shaw scores up to $8M Shaw scores up to $8M Shaw scores up to $8M Shaw scores up to $8M

Andrew Duffy

Under the agreement, funds will be split into a $2 million convertible loan and $6 million contingent working capital facility.

The funding will allow Shaw to undertake an infill drilling program at the 100%-owned Otjozondu manganese project, along with further metallurgical testwork.

It will also allow Shaw to develop a bulk sample for jig test trials over the coming quarter.

Shaw chairman Michael Walters said the company could fast-track development at Otjozondu with the money and the move was in line with its strategy.

"We have conducted a thorough process to evaluate funding options available and believe this transaction is the best possible outcome for all Shaw River shareholders," he said.

"In the past 12 months, Shaw has successfully consolidated 100% ownership of Otjozondu and continued to seek out capital alternatives to bring the project to production as efficiently as possible.

"It has resolved a number of issues to ensure that Otjozondu is now free of all encumbrances."

Under the agreement, Atlas Iron will sell 9.69% of its stake in Shaw to Bryve at 0.35c per share.

Subject to Shaw shareholder approval, Atlas will also grant Bryve a six-month option to acquire its remaining 43.76% stake at the same price.

The sale comes at a discount to Shaw's 0.4-0.9c trading range over the past month.

"Shaw River was spun out of Atlas back in 2006 to focus on realising potential in Atlas' non-iron assets," Atlas managing director Ken Brinsden said.

"With Shaw's activity having progressively evolved towards the development of Otjozondu, the equity investment is no longer consistent with Atlas' iron ore development strategy and we wish Shaw River every success in the future."

In addition to entering the Bryve facility, Shaw also moved to amend the terms of an existing $4.95 million loan with Atlas.

The changes will see the interest rate fall from 11% to 6% per annum, with the repayment period extending a further five years to August 2019.

Other big changes include the resignation of Shaw managing director Peter Benjamin, who will be replaced by Peter Cunningham.

Cunningham has more than 30 years of experience in mine development and operations and is president of Toronto-listed Cadan Resources Corporation and MD of unlisted Auvex Manganese.

He will be retiring from the current directorships to focus on Shaw River.

Looking ahead, Shaw said Bryve's experience would progress development at Otjzondu and help address the project's logistical challenges.

The funding is a significant win for Shaw, which has been capital restrained in recent times.

Bryve is a newly formed private entity, with expertise in bulk haulage and materials movements.

Shaw shares jumped 12.5% to 0.9c this morning.