One research house believes Manuka Resources, which is very close to becoming Australia’s largest primary silver producer, is undervalued and the company’s shares should be trading at well over double the price they currently are.  

MST Access analyst Michael Bentley has valued Manuka Resources (ASX:MKR) at 99c a share – a 141 per cent increase on the 41c shares are currently fetching on market.

Manuka Resources (ASX:MKR) share price chart



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.

Manuka is on track to start producing silver from the Wonawinta mine in August this year. It will ultimately be Australia’s largest primary silver producer.

Bentley said in a recent research report the results from Manuka’s latest drilling campaign had shown the “huge potential of the Mt Boppy gold and Wonawinta silver projects and present additional options to add value to an already strong asset base”.

Drilling at the Wonawinta project has shown the presence of extremely high-grade silver, zinc and lead below the existing open pits.

“The potential for a Cobar-style silver/base metals sulphide deposit exists below the current Wonawinta resource, where there has been minimal drilling below a depth of 60m,” Bentley noted.

Manuka is about halfway through a 20-hole drilling program testing that potential.

“While MKR awaits independent laboratory assays on all holes, preliminary on-site analysis of the first hole has shown exceptional results,” Bentley said.

Preliminary portable XRF spot readings included some significant individual measurements like 43.13 per cent zinc, 12.76 per cent lead and 4270g/t silver at 101.2m and 30.2 per cent zinc, 21.6 per cent lead and 1870g/t silver at 104.7m.

“Significant sulphide mineralisation has the potential to be transformational for MKR adding a potential long mine life extension beyond the current five-year plan,” Bentley said.

Wonawinta already hosts an inferred resource of 52 million oz of silver grading at 42g/t. Manuka has done extensive drilling, including infill drilling to define a higher-grade reserve.

The company plans to release an updated resource for Wonawinta before the end of March.

Silver stockpiles exceed initial expectations

Manuka had originally expected to produce 900,000oz of silver from 500,000 tonnes of stockpiled ore at Wonawinta over six to nine months before moving on to mine the project’s silver oxide resource.

However, Bentley said the high-margin stockpile campaign was now expected to be extended to 10 to 12 months after additional stockpiles from outside the run-of-mine area had been identified at the project.

Meanwhile, drilling at Mt Boppy has culminated in a material increase in the overall gold grade accompanied by a nearly 60 per cent hike in resources, which are expected to grow even further.

“A significant grade control drilling program has established a higher grade in the remaining pit resource,” Bentley explained. “This should lead to substantially higher 2H production.”

High grade hits were returned from ~10-35m below the current planned pit floor.

Top hits included 24m at 6.36 grams per tonne (g/t) gold from 48m, 33m at 4.15g/t from 19m, 11m at 5.27g/t from 44m and 6m at 7.14g/t from 62m.


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.