Shaw River Resources Limited announced that it has taken another step towards joining the ranks of manganese producers after completing a scoping study on its recently acquired Otjozondu Manganese Project in Namibia.

The scoping study indicates the Otjo Project's potential to generate strong cash flows that are significantly leveraged to the manganese price from a relatively low capital cost development.

A key conclusion of the scoping study (drawn from the extensive due diligence information gathered by the Shaw River team during and after the acquisition process) was that the Otjo Project has the potential to generate strong operating cash flows from an initial 250,000 tonnes per annum operation commencing in 2012, targeting 500,000 tonnes per annum within four years.

Favorable geology, shallow open pittable mineralisation and the availability of 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. Unit cash operating costs are forecast in the range of AUD 110 to AUD 140 per tonne, enabling the operation to potentially generate strong operating margins using a conservative manganese price of USD 4.50 per dmtu FOB Walvis Bay.

At a manganese price of USD 6 per dmtu FOB Walvis Bay, operating margins will almost double, demonstrating the Otjo Project's significant leverage to the manganese price. The existing infrastructure has greatly reduced the Otjo Project's up front fixed capital requirements, with estimated capital expenditure for the initial 250,000 tonnes per annum operation totaling AUD 37 million and an additional USD 22 million required to expand production to 500,000 tonnes per annum.

Mr Vincent Algar MD of Shaw River said that "We are delighted with the results from our Scoping Study, which provides an additional level of encouragement for Shaw River in the potential of the Otjo Project to become a globally significant manganese producer. The Project is robust and our internal studies show that it is also significantly leveraged to a rising manganese price environment. Shaw River is one of the few listed companies globally that can offer investors this type of exposure to manganese a metal which is a key ingredient in the steel production that is so essential to global economic growth."

He added that "We are looking forward to updating the market regularly with drilling updates and releasing full results of the Feasibility Study by the end of 2011."

(Sourced from www.reuters.com)