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manuka resources gold mining australia small cap asx stock

Australia’s newest gold producer, Manuka Resources (MKR), will commence trading on the ASX on 14 July after raising $7M (35m shares @ 20c) in an IPO that was 100% oversubscribed.

Post the raising 249m shares will be on issue, implying a market cap of almost $50M with consolidated debts of $24.66M.

The 249m shares on issue includes 21.3 million shares that will be issued to convertible note holders, representing 8.5% of the total capital on issue, immediately post completion of the offer. These shares will be issued at 15.19 cents a share and are not subject to escrow. This may see some loose stock come on the market post-listing and may be the only opportunity to acquire a reasonable line of stock at a price close to the IPO issue price of 20 cents. 

11m options exercisable at 25 cents have been issued to directors and 10 million options to the underwriter. These options are exercisable in 3 years at 25c a share.

So what has got investors so excited about this gold miner?                     

The company owns the Wonawinta silver project and the Mt Boppy gold project. Both projects are on the central NSW coast.  Boppy and Wonawinta projects are fully compliant with statutory requirements and hold the necessary consents, authorities and licences for carrying out the mining activities in the relevant area. This is an important and valuable concession.

The Wonawinta project was bought from the Receivers of Black Oak in 2016 after an extensive due diligence and the Mt Boppy project was bought in 2019.

The Wonawinta plant has a capacity of more than 850,000t pa and is the only plant in the region with excess capacity. Original construction cost over A$120M. Replacement cost is significantly higher.

It is accessed from Cobar by the sealed Kidman Way highway and with power and water available, it also has extensive project infrastructure, including a processing mill, an operational mining camp, an airstrip, as well as a tailings storage facility and waste rock disposal areas. The mineral processing plant was recently refurbished in December 2019. 

The Mt Boppy gold project is in production with stockpiled ore to be processed for the next 12 months with the intention of recovering up to 24000 oz of gold.

Since 1859, Mt Boppy has produced 500,000oz of gold at an average grade of 15g/t. Exploration will continue on the Mt Boppy project mining leases and adjacent exploration licences, with the intention of increasing the Mineral Resources attributable to the Mt Boppy gold project.

Although historically Boppy has produced more than 500,000oz of gold at 15 g/t., drilling has not exceeded 120 metres depth and there has since been minimal subsequent exploration drilling. There exists a strong belief among geologists who have previously assessed the potential of the site under previous management, of the existence of a deeper resource of similar grade and scale.

Manuka is also a silver producer. Silver oxide stockpiles (500,000 t) will be processed at the Wonawinta project, from June this year. Further drilling activity is planned for this site and the mining and processing of the shallow oxide material will commence in the first half of 2022.

The Cobar Basin is one of Australia’s most prolific areas of precious metals production, with an endowment of more than 140m oz of silver and 6m oz of gold. Gaining exposure to the Basin is difficult for new entrants, as ground is tightly held by incumbents.

Peel Mining, Anchor Resources and Sandfire Resources have significant ground positions in the Basin and recent drilling success in the region has the market excited about Manuka.

Manuka Resources has assembled an experienced and impressive board and management team. Their experience encompasses a broad range of mining, project development, financing and technical skills in the precious metals and resources industry. The chairman holds approximately 90 million shares and directors’ fees are set at a reasonable $45000 pa.

Given that production is underway, and project infrastructure has recently been refurbished, the strong support for this IPO should see the stock list at a premium to the 20c issue price.

Given the strong production history of the area, with little exploratory drilling undertaken in recent decades, planned exploration activity appears highly prospective.

Manuka Resources is an aspiring junior gold and silver producer that has the hallmarks of a successful miner set to follow in the footsteps of several Australian miners who have enjoyed significant success in the Cobar basin.

One Response to Small Cap Watch: MANUKA RESOURCES

  1. Ernest C Sandral says:

    Very well worthwhile commentary on Manuka I shall have a much closer look.

    Thank you


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