Manuka takes gold for record monthly Mt Boppy production

Like the Aussie swimmers at the recent Tokyo Olympics, Manuka is bringing home the gold, and more than expected.

July has been the best month by far for Manuka Resources (ASX:MKR), with the company banking a cool $1.8m from the sale of 2,378oz of gold and 2,061oz of silver from its Mt Boppy mine in NSW’s Cobar Basin.

This kicks off a strong start to the September quarter production, with Manuka expecting the momentum to continue through to the end of the year.

Manuka now expects to produce 10,000oz more gold than its original forecast at the time of its IPO thanks to increased grades and mining and haulage efficiency gains.

“This is a very strong operational and financial performance, demonstrating the dual impact on gold production and profitability of steady state production coupled with good grades,” executive chairman Dennis Karp said.

“As outlined previously, we increased our trucking fleet during July which has increased the size of the gold ore stockpile at our Wonawinta plant. This provides greater certainty around steady monthly production.

“We expect all of the remaining five months of gold production to be of similar profitability.”

This sets Manuka up nicely as it prepares to transition to silver production at its Wonawinta mine and realise its ambition of becoming Australia’s largest primary silver producer.

Because of the strong gold production performance, Manuka now plans to switch to silver production from the 515,000 tonnes of Wonawinta stockpiled ore, which has a high grade of 70g/t and is not included in the company’s resource estimate, in early 2022.

This will be followed by the processing of a further 200,000 tonnes of stockpiles that are also close to the plant.

The added bonus for Manuka is that there is no mining cost associated with the stockpiles because they are already out of the ground and on the ROM pad.

Once all the stockpiles have been processed, Manuka expects to start mining its existing silver resource.

Exploration at Mt Boppy is also continuing while production is underway. Manuka plans to start a geophysics program in August which will be followed by the drilling of identified targets in mid-September.

More share price upside to come

MST Access believes Manuka is undervalued and the company’s shares should be trading at well above what they currently are.

Analyst Michael Bentley has valued Manuka at 99c a share – a 247% increase on the 28.5c shares are currently fetching on market.

The 99c price target is a 5c increase from earlier valuations due to increased confidence in the Wonawinta silver project and higher forecast gold grades expected from an extension to the Mt Boppy mine.

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.