Manuka Resources Limited (ASX:MKR) is making significant strides in its production strategy for silver and gold in the Cobar Basin. The company is focused on the restart of its existing 1Mtpa Wonawinta processing plant, and recent developments indicate a promising future for its operations.
Key Highlights
Manuka has recently completed independent technical and legal due diligence, which has been provided to prospective financiers. This step is crucial as it lays the groundwork for securing funding to refinance existing debt and support the restart of the Wonawinta Silver Mine. The company has received term sheets from multiple parties, indicating strong interest in financing options.
The current market conditions are favorable, with silver and gold prices remaining robust. The spot prices have positively impacted the Net Present Value (NPV) of the Cobar Basin Production Plan, which now stands at A$153 million. Additionally, Manuka is exploring the feasibility of a cut-back at the Mt Boppy open pit, which holds a mineral resource of 0.4Mt at 4.23g/t Au, potentially adding significant value to the overall production plan.
Background on Cobar Basin Production Strategy
Manuka recently unveiled a comprehensive 10-year production plan based on its 100% owned silver and gold assets in the Cobar Basin. This ambitious plan involves mining and processing 10.7 million tonnes, which contains an impressive 19.2 million ounces of silver along with gold credits. Notably, 61% of this production target is underpinned by proven reserves.
To bring the Wonawinta processing plant back into operation by Q1 2026, the estimated capital expenditure is A$18.9 million. With an assumed silver price of A$50 per ounce and an average All-In Sustaining Cost of A$35 per ounce, the project is projected to deliver an average EBITDA of A$22 million annually, boasting an Internal Rate of Return (IRR) of 109% and an NPV8 of A$101 million.
Financing Progress
Manuka is actively engaging with financiers to secure funding for the refinancing of existing debt and to facilitate the restart of the Wonawinta processing plant. The company has provided independent technical and legal due diligence reports to potential financiers, which have led to the receipt of multiple term sheets currently under consideration. Manuka aims to finalize binding terms on a financing facility early in the third quarter.
In a notable development, Antanas Guoga, a prominent investor and existing shareholder, has purchased the security shares held by GAM Company Pty Ltd, extinguishing the associated convertible notes. This move strengthens the company’s financial position and investor confidence.
Mt Boppy Gold Mine: Open Pit Cut Back
The Mt Boppy Gold Mine, located 50 km east of Cobar and 151 km by road from the Wonawinta processing plant, presents an exciting opportunity for Manuka. The mine features an existing open pit with a resource of 0.4 million tonnes at 4.23g/t Au, along with mineralized rock dumps and tailings totaling 2.2 million tonnes at 0.84g/t Au. Approximately 0.2 million tonnes from these rock dumps and tailings are included in the Cobar Basin production plan.
Historically, Mt Boppy has been one of New South Wales’ richest gold mines, producing around 500,000 ounces of gold at an impressive average grade of 15g/t Au. The last mining activity at Mt Boppy occurred in 2021, when ore grading over 4g/t Au was extracted and transported to the Wonawinta plant for processing. Production was halted due to severe weather conditions that caused flooding and instability in the pit walls.
Currently, Manuka is reassessing the open pit designs to evaluate the feasibility of recovering approximately 53.5koz of gold contained in the existing In Ground Resource. The resource remains open at depth and along strike, indicating potential for further mineralization.
Executive Insights
MKR Executive Chairman expressed optimism regarding the company’s future:
“Following the release of our updated Cobar Basin production plan, we have moved rapidly to enter into productive discussions with a number of prospective funders for our development strategy. With technical and legal due diligence reports now complete, we are confident of securing a financing facility in the upcoming quarter and bringing Wonawinta back into production in the new year.”
He further emphasized the potential of the Mt Boppy Gold Mine, stating that the open pit cut back opportunity presents a high-margin gold operation that will significantly enhance the Cobar Basin production plan.
Conclusion
Manuka Resources Limited is positioned for a promising future as it advances its Cobar Basin production strategy and prepares to restart the Wonawinta processing plant. With favorable market conditions, strong financing interest, and the potential for additional gold production from the Mt Boppy Gold Mine, the company is on track to deliver substantial value to its stakeholders.
For further details, you can access the full ASX release here.
This article includes content from Manuka Resources, licensed for publication on Investing News Australia. It does not constitute financial product advice. Please perform due diligence before acting on any information provided.
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