Special Report: Manuka Resources has swung into the development fast lane after pocketing $8 million in a Bell Potter and Shaw Capital Partners led capital raise supported by sophisticated investors.
Manuka (ASX:MKR) emerged from a trading halt today with cash to start bringing the Mt Boppy gold mine into production this year.
Golden opportunity
Based on last month’s resource update, Mt Boppy would generate a forecast Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) of approximately $19m per year across an initial 5 year life.
The update also supports the company’s strategy to restart gold production from Q4 2024 by installing an on-site gold processing plant at Mt Boppy that will save more than $8 million per annum in opex.
The $8 million capital raise will fund an on-site plant to initially recover gold from oxidised ore with a flotation circuit for processing sulphide ores to be funded from project cash flows.
Additionally, Manuka tenements in the mineral rich central western region of New South Wales, including the Mt Boppy mining licenses, hold significant exploration upside and once in production at Mt Boppy, Manuka intends to aggressively explore with the aim of increasing annual gold production and extending the life of the mine.
Cash flows from Mt Boppy will also support the potential restart of the Wonawinta mine, 150km south of Mt Boppy, as a dedicated silver operation next year.
Manuka is aiming to release its maiden reserve statement for Wonawinta in the current June quarter.
The updated Mt Boppy resource includes 4.28 million tonnes at 1.19 grams per tonne of gold for 163koz of contained gold.
Importantly, the updated resource includes a 100% increase in the portion of contained gold ounces classified as in the higher confidence indicated category, with the measured and indicated resource categories now comprising 82% of the total.
Dennis Karp, Manuka’s executive chairman, said: “We are delighted to announce this significant capital raising for the company and look forward to launching immediately into the execution of our strategy to establish on-site gold processing capacity at Mt Boppy and potentially commencing gold doré production later this year.
“Bringing a new processing plant at Mt Boppy online represents Stage 1 of the company’s staged self-sustaining growth plan, that is focused initially on production and free cash generation from our Cobar Basin gold and silver projects, and subsequently development of our world-class VTM sands project in New Zealand
“With firm commitments toward this capital raising received and continued strength in the gold and silver markets, it is an exciting time to be a Manuka shareholder.”
Value upside
Under the two-tranche placement approximately 133.3 million new fully paid ordinary shares will be issued at $0.060 per share. The placement price represents a 13% discount to the closing price of Manuka’s shares on 6 May and an 18.1% discount to the 5-day volume weighted average price (VWAP).
Manuka’s portfolio also includes its world-class Taranaki vanadium-rich titanomagnetite (VTM) project in New Zealand.
The Taranaki VTM project has seen investment of over $NZ86m ($80m) so far and received a mining licence in 2014 and environmental consents in 2017. Its anticipated target net present value is >$2.7 billion once it receives approval from the NZ Government.
When in production, the project could produce an iron ore concentrate containing an estimated 10,000 tonnes of vanadium metal. This will make Manuka one of the leading vanadium producers in the world – and New Zealand the third largest producer of the metal after China and Russia.
Taranaki clears hurdles
Last month TTR took a major leap towards its final approvals for Taranaki when it submitted its application for the project to be included in the country’s Fast Track Approvals Bill.
On 7 March 2024 the NZ government introduced the Fast Track Consenting one stop shop consenting legislation bill into parliament (the Bill). The Minister for RMA Reform and Leader of the House Hon Chris Bishop and Minister for Resources Hon Shane Jones on introducing the bill stated: “We are determined to cut through the thicket of red and green tape holding New Zealand back” and “The regime will allow for fast tracking of marine consents under the EEZ Act and will unlock major projects in this country while ensuring the protection of our environment and existing Treaty settlements.”
TTR has now submitted an application to be considered for listing for approval under the Bill. Once the Bill passes into law projects will be referred to an Expert Panel which will apply relevant consent and permit conditions before referring each project and its conditions back to the Ministers.
Ministers will consider the recommendations and have the final say on project approvals.
Vanadium’s green credentials
One strategic opportunity the NZ Government is looking at closely is critical minerals including iron, vanadium and titanium – which are proving to be valuable commodities in the clean energy transition.
Globally VTM titanomagnetite iron sands are in strong demand to make steel and as feed for electric arc furnaces (EAF) to produce low carbon “green steel”.
EAF steelmaking burns 50% less coal, reduces emissions by more than 45% in the steel making process and sets the foundation for meeting net zero goals by 2050.
Vanadium is also rapidly increasing in demand as an electrolyte in vanadium redox flow batteries (VRFB), which are fast becoming the preferred IP for large grid-scale high-capacity battery stations to store renewable energy due to their longevity and fire safety characteristics.
This article was developed in collaboration with Manuka Resources, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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