Shaw River Manganese Ltd January 2012 Update Vincent Algar - Managing Director
Disclaimer This presentation has been prepared by Shaw River Manganese Limited ( Shaw River or the Company ). It should not be considered as an offer or invitation to subscribe for or purchase any securities in the Company or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for securities in the Company will be entered into on the basis of this presentation or any information, opinions or conclusions expressed in the course of this presentation. This presentation is not a prospectus, product disclosure document or other offering document under Australian law or under any other law. It has been prepared for information purposes only. This presentation contains general summary information and does not take into account the investment objectives, financial situation and particular needs of any individual investor. It is not financial product advice and investors should obtain their own independent advice from qualified financial advisors having regarding to their objectives, financial situation and needs. Shaw River nor any of their related bodies corporate is licensed to provide financial product advice. This presentation and information, opinions or conclusions expressed in the course of this presentation contains forecasts and forward looking information. Such forecasts, projections and information are not a guarantee of future performance, involve unknown risks and uncertainties. Actual results and developments will almost certainly differ materially from those expressed or implied. There are a number of risks, both specific to Shaw River, and of a general nature which may affect the future operating and financial performance of Shaw River, and the value of an investment in any of those entities including and not limited to economic conditions, stock market fluctuations, manganese demand and price movements, timing of access to infrastructure, timing of environmental approvals, regulatory risks, operational risks, reliance on key personnel, reserve and resource estimations, native title and title risks, foreign currency fluctuations, and mining development, construction and commissioning risk. You should not act or refrain from acting in reliance on this presentation, or any information, opinions or conclusions expressed in the course of this presentation. This presentation does not purport to be all inclusive or to contain all information which its recipients may require in order to make an informed assessment of the prospects of Shaw River. You should conduct your own investigation and perform your own analysis in order to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this presentation before making any investment decision. No representation or warranty, express or implied, is made in relation to the fairness, accuracy or completeness of the information, opinions and conclusions expressed in the course of this presentation. To the maximum extent permitted by law, each of Shaw River and their respective officers, employees, agents and advisors expressly disclaim any responsibility or liability for any direct, indirect or consequential loss or damages suffered by any person, as a result of or in connection with this presentation or any action taken by you on the basis of the information, opinions or conclusions expressed in the course of this presentation. All references to future production and production targets and port access made in relation to Shaw River are subject to the completion of all necessary feasibility studies, permitting, construction, financing arrangements port access and execution of infrastructure-related agreements. Where such a reference are made, it should be read subject to this paragraph and in conjunction with further information about the Mineral Resources, as well as the Competent Persons' Statement and the Disclosures. This presentation and information, opinions or conclusions expressed in the course of this presentation should be read in conjunction with Shaw River's other periodic and continuous disclosure announcements lodged with the ASX, which are available on the Shaw River website. Some statements in this presentation regarding future events are forward-looking statements. They involve risk and uncertainties that could cause actual results to differ from estimated results. Forward-looking statements include, but are not limited to, statements concerning the Company s exploration programme, outlook, target sizes, resource and mineralised material estimates. They include statements preceded by words such as potential, target, scheduled, planned, estimate, possible, future, prospective and similar expressions. The terms Direct Shipping Ore (DSO), Target and Exploration Target, where used in this presentation, should not be misunderstood or misconstrued as an estimate of Mineral Resources and Reserves as defined by the JORC Code (2004), and therefore the terms have not been used in this context. The potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. 2
Disclosures 1 Competent Persons Statement The information in this presentation that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Vincent Algar of Shaw River Manganese Limited and Mr Adriaan du Toit of Aemco Pty Ltd who are members of the Australasian Institute of Mining and Metallurgy. Mr Vincent Algar is a full-time employee of the Company and Mr Adriaan du Toit, an independent consultant, have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Vincent Algar and Mr Adriaan du Toit consent to the inclusion in the report of the matters based on their information in the form and context in which it appears. 3
Corporate Overview 4 Capital Structure (ASX: SRR) Shares on Issue Options on Issue (Av. Ex. Price ~20.5 cents) Market Capitalisation @ 6.6cents Cash (as at 31 December 2011) Enterprise Value 451.6 million 69.0 million $30.7 million $5.0million $25.7million Shareholders Atlas Iron Ltd (ASX: AGO) 45.4% OM Holdings Ltd (ASX: OMH) 8.02% Top 40 74.67%
Board & Management Directors Tony Walsh Chairman & Non Exec Director Vincent Algar Managing Director Ken Brinsden Non- Executive Director Management Rob Morrow Chief Operating Officer Chris Parkinson Chief Financial Officer Sean Richardson Operations Manager Noel O Brien Group Metallurgist Ashley Jones Namibia Country Manager Adriaan Du Toit Exploration Manager 5
Key Milestones for Shaw River in 2012 Complete Namibia Resource Update including resource category upgrade Complete Feasibility Study at Otjo Commence drilling and exploration in Namibia in Q1 Additional resource tons Commence additional drilling in Ghana in Q2 Commence hand sorting and fines stockpile re-processing Namibia Finalise Port and Rail Access Agreements Namibia Complete customer analysis and negotiate Manganese ore marketing agreements Complete Pilbara resource estimation and beneficiation test results Pilbara drilling, bulk sampling and economic studies to commence Subject to feasibility result and Mn markets commence construction of plant and mining, ore production at Otjo 6
Progressing to Production A number of key activities are underway at Shaw River, which is actively advancing its manganese strategy; Finalisation of the resource estimation process, including an upgrade of resource category and expected increase in the resource base at Otjo; 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; Beneficiation test sampling characterisation at both Otjo and Baramine; Completion of detailed mine cost modelling at Otjo; Commencement of a regional soil sampling and exploration mapping program on the 1,300km 2 lease area at Otjo; and Commencement of hand sorting of ore stockpiles at Otjo. Commencement of resource estimation and additional beneficiation testwork at the Baramine Project in the Pilbara region of Western Australia; Completion of soil sampling programs at Baramine and 701 Mile in the Pilbara region 7
Otjo Project Overview Developing a Namibian Manganese Project 8
Otjo Project - Namibia 75.5% owned manganese Project in Namibia Current JORC resource 6.8 Mt grading 23.1% Mn 1 Licences covering 1,367sqkm with granted mining leases in place Extensive road, rail and port infrastructure in place, with capacity to expand production rate World class Exploration Target of 30Mt 50Mt grading 23% 27% Mn Feasibility study ongoing, assessing 250 500ktpa production 2 potential The potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. See see Disclaimer disclaimer 9
Infrastructure & Logistics 10
Regional Exploration Targets 11
Manganese Resources and Prospects 12
Latest Drill Results 13 1,718m of diamond drilling and 6,205m of RC drilling completed at four existing resource areas and two new prospect areas Strong drilling results received from first batch of assay results received from recently completed 8,000m drilling program at the Otjo Project, Namibia, including: Labusrus Deposit 7.29m @ 27.75% Mn from 7.2m incl 1.81m @ 45.35% Mn from 12.68m in LABDH0003A 8.31m @ 28.23% Mn from 2.69m incl 3.19m @ 29.87% Mn from 3.19m and 1.35m@ 44.38% Mn from 9.15m in LABDH0005 8.25m @28.53% Mn from 8.42m incl 2.28m @ 31.7% Mn from 8.72m and 1.67m @ 42.89% Mn in LABDH0001 9m @ 25.74% Mn from 2m incl 2m @ 45.13% Mn in LAB_RC_102 9m @ 26.85% Mn from 30m incl 4m @ 31.18% Mn in LAB_RC_084 Bosrand Deposit 3.55m @37.2% Mn from 0.35m in BOSDH0002 11.9m @ 27.89% Mn from 33.57m incl 4.62m @ 35.6% Mn from 34.04m in BOSDH0005 7m @ 30.6% Mn from 12m incl 4m @ 35.3% Mn from 13m in BOS_RC_020 14m @ 28.78% Mn from 25m incl 3m@37.21% Mn from 26m in BOS_RC_018 7m @ 32.6% Mn from 35m in BOS_RC_008 12m @ 25.14% Mn from 4m incl 5m @ 34.72% Mn from 4m in BOS_RC_004 North Bosrand Deposit 13m @ 25.09% Mn from 25m incl 3m @ 35.08% Mn from 25m in NBR_RC_048 10m @ 28.96% Mn from 35m incl 6m @ 30.78% Mn from 38m in NBR_RC_048 28m @ 21.05% Mn from 14m in NBR_RC_066 12m @ 28.43% Mn from surface in NBR_RC_050 Results are consistent with the extensive outcrop and previous drilling (33,000m) conducted at Otjo and will underpin further upgrades to the resource base JORC Inferred Resources currently stand at 6.8Mt at 23% Mn 1 with an Exploration Target of 35-50Mt grading 23-27% Mn
Bosrand Drilling 14
Labusrus Drilling 15
Resource Growth and Production Potential Current JORC resource 6.8 Mt grading 23.1% Mn 1 from 4 of 7 historically drilled prospects Resource calculated on only 5% of the field s known strike length Otjozondu Manganese Field extends over 144km of strike, with only 15% drill tested Manganese orebodies are hosted in folded units of manganese oxide and silicate Recent production history World class Exploration Target of 30Mt 50 Mt grading 23% to 27% Mn Summary Scoping Study Parameters (100%) Study Level Production profile Life of Mine Projection Targeted average manganese product grade Internal, Project 250ktpa of manganese product, expanding to 500ktpa within 4 years 2 11 years Target year for first production 2012 Estimated capital cost Estimated sales price for manganese Product* Estimated manganese operating cash costs 38% Mn - 40% Mn A$37 million, plus additional A$22million A$171/t FOB Walvis (US$4.50/dmtu) A$125/t FOB Walvis Scoping study indicates strong cashflows Estimated average operating margins A$46/t FOB Walvis Results from recent drilling imminent with resource upgrade to follow Estimated average operating cashflow at 500ktpa A$23M per annum The potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. 2 Production Targets see slide 24 * Mn Pricing as per Scoping Study April 2011 See Disclaimer * Deposit lies entirely within granted Mining Lease 16
Otjozondu Mine Site 17
Australian and Ghanaian Manganese Projects 18
19 Butre Ghanaian Manganese Project located close to world class Nsuta Manganese Project in production since 1920 s Excellent road infrastructure to bulk container port at Takoradi Increasing demand for West African Manganese projects due to low contaminants and ideal location 2011 drilling highlights: 27m at 20.5% Mn 4m at 22.9% Mn 9m at 21% Mn 17m at 19% Mn Gold potential to be assessed, with 2010 drilling returning a high grade gold intersection of 2m @ 34.4g/t from 24m
Pilbara Project Locations 20
Baramine East Pilbara Manganese Located only 80km northeast of the Woodie Woodie Manganese Mine Exploration target of 10Mt 15 Mt grading 18% to 25% Mn Potential for direct shipping grade discovery Simple gravity beneficiation testing indicates: Grade of 43% Mn achieved from 20% Mn feed to DMS Iron of 10%, low contaminants, including P<0.04% 10,000m drill program completed in Sept 2011 New results up to 46% Mn 4km mineralised structure to be focus of follow up work for resource definition The potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. See Disclaimer 21
Manganese Market & Summary
Why Manganese? 23 Most used metal after Iron, Aluminum and Copper Critical component in modern steelmaking Increases hardness, toughness, stiffness and wear resistance as an alloying element No satisfactory substitute Annual Global Manganese Ore Production 54 Million Tonnes
World Manganese Markets 24
Summary Shaw River is advancing towards development at Otjo Project in Namibia Existing 6.8Mt @ 23.1% Mn 1 resource defined at Otjo from only 5% of the field s known strike and is expected to grow considerably Feasibility studies at Otjo assessing the potential for 250,000 500,000tpa manganese production 2 Strong pipeline of exploration projects in Australia and Ghana Focused projects offer significant leverage to a strengthening manganese price Support of largest shareholder, Atlas Iron Limited Board and management team capable of delivering exploration and production outcomes 2 Production Targets see slide 24 25
2 Production Targets Shaw River s production target of initially 250,000tpa increasing to 500,000tpa, is based entirely on an assessment of the potential to convert Inferred Mineral Resources to Indicated or Measured Mineral Resources. An Inferred Mineral Resource indicates that it is part of a Mineral Resource for which the tonnage, grade and mineral content can be estimated with a low level of confidence. As such, there remains at present insufficient certainty with respect to whether economically mineable mineralisation exists to realise the production target. The Company s ability to realise its production target is subject to further drilling and completion of feasibility studies to increase the confidence in the tonnage, grade and mineral content of the Mineral Resource and further qualify the economic operating parameters to realise the production target. DEPOSIT ORE TYPE NO DRILL HOLES TOTAL METERS DRILLED STRIKE LENGTH DRILLED AVERAGE WIDTH OF MINERALISED INTERSECTIONS DEPTH OF INTERSECTIONS ORE BULK DENSITY JORC INFERRED RESOURCE JORC INFERRED GRADE (Mn%) CONVERSION FACTOR To RESERVES PRODUCTION TARGET (RESOURCE) LABUSRUS Stratiform 90 4342 1700 4-10m surface to 100m 3.7 890,000 25.9 0.41 364,900 NORTH BOSRAND Stratiform 67 3842 880 4-15m surface to 90m 3.7 1,330,000 22.9 0.41 545,300 BOSRAND Stratiform 209 12361 2600 5-15m surface to 100m 3.7 2,750,000 22.6 0.41 1,127,500 UITKOMST Stratiform 54 5218 2000 4-10m surface to 80m 3.7 1,840,000 22.7 0.41 754,400 TOTAL 420 25763 7180 6,810,000 2,792,100 Table. Current Resource Inventory, Otjo Project, Namibia, showing key parameters. Definitions on slide 25. ASSUMPTIONS Resources Mining Metallurgical Economic Legal Environmental Social Government 15% Mn Cutoff used for Resource envelopes; 41% conversion estimated from resources to mineable tonnage (Whittle optimisation analysis) Inferred tonnages only as at 8 December 2011. Resource Upgrade underway. 20%Mn cut-off, 1:3 stripping ratio Main Mn mineral is Braunite (manganese silicate). Magnetic Jacobsite constitutes less than 10% of mineralisation. All material will be beneficiated through a jig plant. A lump and fine product are planned. Annual world manganese demand remains in line with iron ore demand. Current project modelling based on $5.75 CIF/dmtu Walvis Bay Logistics costs (road, rail and port) cost represent approx 50% of op cost. Remains in line with with project modelling Project capital cost estimates remain in line with project modelling No actions against Shaw or OM. Conversion of Exploration Licences into Mining Licences will expand mining area. Granted Mining Licence and approved EIA. Unionised Workforce. No labour unrest or history thereof. Affirmative Action policy in place Current authorisation to mine up to 2022 remains in place. 27
2 Production Targets DEFINITIONS: Ore type No Drill Holes Total Meters Drilled Strike Length Drilled Stratiform manganese beds associated with Rapitan type iron deposits Total number of exploration holes (Diamond and RC) drilled in the target area Total exploration meters drilled in the target area The surface lateral extent along strike of the ore body where outcrop is found ore drill holes intersected manganese Average Width of Mineralised Intersections Average width of manganese mineralisation intersected during drilling or found on surface Depth of Intersections Ore Bulk Density The projected vertical depth where manganese mineralisation was found during drilling The specific gravity of ore product produced JORC Inferred Resource JORC Inferred Grade The current JORC compliant resource for the target areas The current JORC compliant average grade for the ore bodies for which an inferred resource is known Conversion Factor Production Target A numerical factor by which the known resource is discounted to become a viable production reserve (based on Whittle Pit Optimisation modelling) The estimated economically viable proportion of the current resource - calculated by mutiplying the resource tonnage by the conversion factor 28
Ground Floor, 1205 Hay Street, West Perth WA 6005 P.O.BOX 1259, West Perth 6872 Phone +61(0)8 9226 4455 Fax +61(0)8 9226 4255 Email info@shawriver.com.au Web www.shawriver.com.au A.C.N. 121 511 886