Manuka to grow coffers by $7m to chase bigger high-grade gold resource at Mt Boppy
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Special Report: Manuka Resources will boost its cash pile to $10m after finding out last week it could have a much bigger high-grade gold resource than it initially thought.
The placement, which is being led by Bell Potter, for 17.5 million shares at 40c each attracted strong interest from sophisticated, professional and institutional investors, with the company receiving firm commitments for the full $7m.
The capital raising comes very close on the heels of extremely positive news that Manuka (ASX:MKR) has uncovered more high-grade gold beneath the existing pit at its Mt Boppy mine in NSW’s Cobar Basin, increasing the potential of a resource extension and longer mine life.
Post raising, Manuka will be fully funded to support accelerated exploration and resource drilling activities at the Mt Boppy gold and Wonawinta silver and base metals projects.
“Demand for the placement was very strong from both existing and new investors,” executive chairman Dennis Karp said.
“This funding provides Manuka with a strong balance sheet to accelerate drilling at Mt Boppy and Wonawinta.”
“In addition to the placement, the company has agreed to convert the unsecured capital loans, which total approximately $1m, to equity at the same price as the placement. This is a strong sign of support and further enhances the company’s balance sheet.”
Recent in-pit grade control drilling at Mt Boppy, which is now completed, returned high-grade gold intercepts from ~10-35m below the current planned pit floor.
Manuka’s plan was initially just to mine and process the existing reserve at Mt Boppy, which will continue through to the second quarter of 2021 and generate strong earnings.
But the potential for an extension to the resource at Mt Boppy is too good to ignore and something the company is now very focused on understanding further.
“Drilling at Mt Boppy will follow-up the recent assays which identified high-grade gold mineralisation outside the current pit shell,” Karp said.
“We are focused on unlocking the potential for further resource extension at Mt Boppy and drilling will seek to extend the current resource on the company’s current mining leases as well as exploration drilling on the Geweroo target.”
Mt Boppy is just one of several revenue streams that could be serious money-makers for the company.
Once Manuka has finished gold mining and production at Mt Boppy, the company plans to move to silver production at the Wonawinta mine, also in the Cobar Basin of NSW.
Diamond drilling started last week at Wonawinta, as a precursor to a long-awaited deeper drilling program beginning in early January 2021.
Manuka’s plan is to start by processing the silver stockpiles and then move onto the mining of the higher-grade oxides currently in the company’s resource model, which will sustain production for another four years.
The company only lit up the ASX boards in mid-July but has already completed nearly 25,000m of exploration, in-fill and grade control drilling across both its Mt Boppy and Wonawinta mines.
“The company has completed over 10,000m of drilling at Wonawinta and includes an underexplored mineralised zone between the Manuka and Boundary pits called Tweens,” Karp noted.
“We are excited to commence an exploration diamond drilling program at Wonawinta Deeps to test the potential for silver and base metal sulphides below the oxide silver resource.”
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.