Manuka Resources plans ASX debut to advance central NSW gold and silver projects

Manuka Resources ASX IPO MKR NSW gold silver projects Cobar Basin
Manuka Resources has raise $7 million in an oversubscribed IPO to fund infill drilling and exploration programs at its Mt Boppy gold and Wonawinta silver projects.

Precious metals producer Manuka Resources is planning to join the ASX next month in a bid to advance exploration at its gold and silver projects in central New South Wales.

The company wholly owns two projects in the mineral-rich Cobar Basin, the 52-million-ounce Wonawinta silver project, which includes an on-site processing facility that began production last month, and the Mt Boppy gold project.

The projects are located among other tenement packages held by some of Australia’s major mining and exploration companies. Nearby operations include Aurelia Metals’ (ASX: AMI) Peak gold and Hera-Nymagee gold-copper mines, as well as Glencore’s CSA copper mine.

Manuka has raised $7 million in a heavily oversubscribed IPO through the issue of 35 million shares at $0.20 each.

This offer indicates a market capitalisation of about $50 million.

The offer opened on Tuesday and was set to close on 23 June, however closed today due to overwhelming demand.

The company is slated to start trading under the ASX ticker code ‘MKR’ in July.

Manuka executive chairman Dennis Karp said the company is pleased to launch its initial public offering (IPO) shortly after pouring first gold at Wonawinta and with the outlook for precious metals “looking very favourable”.

Gold and silver assets

The Wonawinta silver project was acquired by Manuka in 2016 and includes one mining lease and seven exploration licences.

It has a JORC-compliant silver resource of 38.8 million tonnes at 42 grams per tonne of silver for 52.4Moz silver and the lease package contains a processing plant with an annual production capacity of about 850,000 tonnes, a recently expanded tailings storage facility and two operational mine camps.

The processing plant was recently refurbished and upgraded by Manuka and more than 800oz of gold (in carbon) was produced in April.

The company is also currently in the process of commissioning a modular elution circuit, which will facilitate the production of gold dore at the Wonawinta facility.

Manuka Resources ASX IPO MKR Wonawinta processing plant
The 850,000 tonnes per annum Wonawinta processing plant.

Manuka’s other asset is the Mt Boppy gold project, which comprised seven mining titles and one exploration licence. This project was acquired last June through the purchase of Mt Boppy Resources and includes an open pit gold mine that has operated sporadically since 1895.

Mt Boppy contains a JORC-compliant resource of 320,000t grading at 3g/t of gold for 31,000oz gold.

In April, Manuka began stockpiling Mt Boppy gold ore at the Wonawinta processing plant. Gold-loaded carbon is currently being processed by an off-site third-party facility, but this is expected to move to Wonawinta upon the commissioning of the company’s modular elution circuit.

“Between Mt Boppy and Wonawinta, there has been more than $120 million invested in plant and associated infrastructure by previous owners and Manuka is now poised to take advantage of all this,” Mr Karp said.

“The ramp-up of the Wonawinta plant, which has been comprehensively refurbished and upgraded by Manuka, has to date been a very smooth process and has instilled us with confidence that our immediate production goals are readily achievable,” he added.

Manuka is aiming to recover 22-24,000oz from stockpiles and mined ore at Mt Boppy over the next 12 months, then will shift its production focus to the processing of silver-based stockpiles at Wonawinta.

Following this, the company expects to move onto new silver ores from additional pits after a planned resource infill drilling program – to be funded by the IPO proceeds – has been completed.

Use of funds

Manuka said the funds raised through the IPO will be primarily used for infill drilling and exploration programs at both the Mt Boppy and Wonawinta projects.

At least $1.7 million of the funds have been earmarked for this, or up to $3.58 million if the IPO is oversubscribed and raises $7 million.

In addition to the general public offer, Manuka is making a conversion share offer to each eligible individual holder of the company’s convertible notes.

A portion of the IPO funds will be allocated to repaying interest on these convertible notes, which will be converted into ordinary shares in Manuka as part of the IPO process.

The company has also budgeted for working capital purposes and to pay the costs of the offer.

Planned work programs

In its prospectus, Manuka has outlined three phases of activity planned for the short to medium-term at its projects.

The company is currently in the first phase, which involves the processing of stockpiled and mined Mt Boppy gold ore. This work is expected to continue for the next 12 months with a processing target of about 22-24,000oz gold.

Concurrent with this first phase, Manuka has planned to undertake an infill drilling program at Wonawinta and conduct mine planning studies on the existing shallow oxide resource, that lies less than 60m below surface.

It also intends to drill certain “high conviction” targets at the Mt Boppy gold project including areas comprising “a number of underexplored brownfield opportunities”, such as the Birthday, Canbelego King and Reid Rankin deposits which all have a history of gold production dating back to the early 1900s.

Another key area of focus for the exploration campaign is a review of two reverse circulation holes at Golden Cross, which in 2004 returned high-grade assays of up to 39.8g/t gold.

Other exploration targets include the Boppy South (south of the Mt Boppy gold mine) and Native Dog prospects.

Manuka’s second phase of activity, processing silver oxide stockpiles at Wonawinta, is anticipated to start in the second quarter of 2021.

The third phase involves the mining and processing of the shallow silver oxide resource that was the subject of the mine planning studies in phase one. This phase is scheduled to start in the first quarter of 2022.

Board strengths

Manuka’s board includes executive chairman Dennis Karp, a former commodities trader with precious and base metals investment experience, and non-executive director Anthony McPaul, the former general manager of Newcrest Mining’s (ASX: NCM) Cadia Valley operations in NSW.

Another non-executive director, Dr Nick Lindsay, has held various technical and commercial roles with major and mid-tier mining companies and is a member of the

Dr Lindsay is also an esteemed academic with a PhD in Metallurgy and Materials Engineering and a Master of Business Administration.

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