West Perth-based Shaw River Manganese has become the third manganese miner to announce fallout from depressed ore prices, with the company entering voluntary administration this morning.
West Perth-based Shaw River Manganese has become the third manganese miner to announce fallout from depressed ore prices, with the company entering voluntary administration this morning.
Shaw River said a credit line with its major shareholder, Bryve Resources, hadn’t been exhausted, however it was informed late last year that Bryve was limited in its capacity to advance further funding.
Bryve is a private company owned by Brent Stanton, who formerly owned and operated Oztran, which specialised in the bulk haulage of manganese ore in the Pilbara.
Its core clients included Consolidated Minerals’ Woodie Woodie manganese mine, which is about to be shut down.
Bryve acquired Atlas Iron’s 53 per cent stake in Shaw River in 2014 and mid 2015 in exchange for the provision of $8 million in debt facilities.
Shaw River, which owns the Otjozondu project in Namibia, also undertook a share purchase plan in December in order to secure funds from shareholders to reduce its debt obligations, but it didn’t attract enough support.
“The company also entered discussions with various parties with the intention of raising short-term and longer-term funding,” Shaw River said in a statement.
“Unfortunately the company has not received any assurance from a third party that it is possible to raise funds in the short term for a company such as Shaw River that operates in the resources sector, or more particularly in the manganese sector, particularly while the stock markets are volatile.”
In an effort to conserve cash, Shaw River managers and directors haven’t received fees for several months.
Shaw River had 33 employees as of June 30 last year.
“Despite all its efforts at cost reduction and fund raising, management and the board have formed the view that it should appoint an administrator to assist in formal restructuring of the Shaw River group of companies with a view to resuming trading when the market recovers,” it said.
“Demand is expected to improve after Chinese New Year, and this improvement should provide an opportunity for restructuring of Shaw River and its subsidiaries.”
Its collapse comes one week after Perth-based Consolidated Minerals said its Woodie Woodie mine would be put on care and maintenance next month, with up to 380 employees to be made redundant.
Companies likely to be affected by the closure include QUBE Holdings, which paid $25.1 million for the Oztran trucking business in July 2014.
The third collapse in the sector was Perth-based OM Holdings, which early this month appointed James Thackray of The Headquarters Corporate Advisory as administrator of the company, after suspending mining operations at its Bootu Creek manganese project in the Northern Territory in December.
Shaw River shares have been frozen since Christmas Eve, last trading at 0.9 cents each.
