Manuka Resources – Australia’s Next Gold & Silver Producer
Manuka Resources Limited provides precious metal mining services.
|Materials||Metals & Mining||Precious Metal Mining||04/20/2016|
Manuka Resources Ltd owns two, fully permitted, cum production (Mar ‘20) Gold and Silver assets located in the Cobar Basin of NSW, which also includes a ~1mt p.a. plant plus associated infrastructure.
These assets include the Mt Boppy Gold mine and substantial neighbouring tenements which hosts an existing open pit resource of 39,000oz Au grading 3.3g/t (previously in reserve status); and also the Wonawinta Silver project. with mine, processing plant and substantial neighbouring tenements which hosts a 52m oz JORC compliant silver resource grading 42g/t Ag
The Mt Boppy Gold assets are located approximately 560km NW of Sydney (40km east of Cobar) & the Wonawinta Silver project and processing plant is approximately 90km south of Cobar. The Wonawinta plant will process the Mt Boppy Gold ores, followed by the Silver stockpile on-site before mining the existing Silver resource.
The Company is now fully funded to production (expected to occur in Mar ‘20)
All Mining and Exploration licenses are current & in place. Environmental obligations are lodged & secured
Manuka Resources is seeking funding via an IPO to implement an exploration program on its existing tenements and Mining Licenses, and also to provide for contingencies.
- Australia’s next, unhedged, fully permitted Gold & Silver Producer.
- Funded to production with IPO funds for exploration.
- Both Gold & Silver ore on the ROM pad -ready for March ‘20 production.
- 39k oz Au (Mt Boppy) grading 3.3g/t & JORC resource 52m oz Ag grading 42g/t (Wonawinta)
- The Manuka-owned Wonawinta plant has a capacity of ~1mt pa and is the only plant in the region with excess capacity. Original construction cost overA$120M.
- Vast tenure package of over 1,172km2 in the highly prospective area of Cobar, NSW.
- Huge exploration potential. Mt Boppy(Gold) Historically produced >500,000 oz Au @ 15 g/t. Historical drilling limited to circa 120 metres deep. Wonawinta “Deeps” (Silver) hasn’t been drilled below 100 metres in depth.
- 2 x rigs running post IPO for infill & exploration drilling. Lots of continuous news flow.
- Highly profitable.
- Enviable position in the Cobar basin, including plant,
cash flow and large, under explored tenure package with several
highly prospective targets already identified.
Project Locations – Cobar, NSW
Manuka Resources operates in the Cobar Basin region of New South Wales.
Rare exposure to the prolific & tightly-held Cobar Basin
- The Cobar Basin is one of Australia’s most prominent and prolific base and precious metals production regions, with a combined endowment of more than 2.2Mt of copper, 2.4Mt lead, 3.8Mt zinc, 140Moz silver and 6Moz gold.
- Some of Australia’s foremost mining and exploration companies have significant ground positions in the Basin, and significant recent exploration drilling successes have increased attention on the region.
- Gaining exposure to the Basin is difficult as a new entrant, as ground is tightly held by incumbents.
- The landholdings of the Wonawinta and Mount Boppy projects therefore represent rare exposure to the Basin.
Ground holdings in the Cobar Basin Source: S&P Global Market Intelligence
Asset Overview - GOLD
Mt Boppy Gold Project
- The Mt Boppy project is located in the township of Canbelego, 46km east of Cobar and accessed from Cobar by the sealed Barrier Highway and a sealed road to the mine gate
- It hosts an existing open pit resource of circa 40,000 oz (previously in reserve status) grading 3.3g/oz Au, including a 60,000mt stockpile of circa 3.0g/mt Au
- The project contains 4 Gold Leases (GL), 3 Mining Leases (ML), one Mining Purpose Lease (MPL) and 1 Exploration License (EL), for a total of 223km2
- The Mt Boppy deposit was first worked in the early 1890s, with underground mining occurring until 1923
- Historical records note total production of over 500koz gold at an average mining grade of 15g/mt Au
- Power (11kV) and water is available at site, with the project also including a 42-person camp, manager’s quarters / exploration office and ore yard
- Historical drilling limited to circa 120 meters deep.
Mount Boppy site layout
Manager’s quarters / exploration office and core yard
Sealed mine access road
Mount Boppy pit
Tailings storage facility
Regional geology (Mt Boppy)
- The Mount Boppy project is located inthe northern part of the early Devonian Canbelego-Mineral Hill Rift Zone, surrounded by the flanking Kopyje Shelf.
- The Kopyje Shelf geology includes shallow-water siliciclastic sediments and limestone deposited inside the Canbelego-Mineral Hill Rift Zone.
- The Kopyje Shelf existed as a large area of shallow water to the east of the active Cobar Basin margin and west of the Canbelego-Mineral Hill Rift Zone.
- To the south, the Kopyje Basin joins with a northwest trending depression (graben) known as the Barrow Range Basin.
»This basin is characterised by an abundance of outwash fan conglomerate, fossiliferous sandstone and minor felsic volcanics
»The basin margins are faulted
- These rocks are in apparent fault contact with both Girilambone and Devonian rocks and lie outside of the Devonian basin.
»They may represent eroded portions of sub-volcanic feeder zones to the Devonian felsic volcanics
Mineral Resource Estimate
- The Mineral Resource Estimate at Mount Boppy was updated in accordance with the JORC Code (2012) by Mining Associates Pty Ltd in 2016.
Mineral Resources are reported within the volume beneath the current pit floor and above the latest pit floor designed by BOK in November 2015.
Additional stockpiles at the Mount Boppy site measure 60,000 tonnes at an estimated grade of 3 g/t Au (6,000 oz Au)
Historic backfilled stopes are encountered within the Resource
Long section of Mount Boppy coloured by Resource category Blue: measured, Cyan: Indicated, Green: Inferred, Red: unclassified (exploration target). Red line = current pit floor; blue line = design pit floor - Source: Mining Associates Mount Boppy Mineral Resource Estimate September 2016
Mount Boppy in-pit Mineral Gold Resource Estimate
Long section view of Mount Boppy coloured by ounces of contained gold showing current and planned pits. Red line is planned pit, black line is current pit
Source: Mining Associates Mount Boppy Mineral Resource Estimate September 2016
Exploration Upside –Mt Boppy(Gold)
- Mt Boppy(Gold) Substantial Gold exploration potential at Mt Boppy. Historically produced >500,000 oz Au @ 15g/mt. Historical drilling limited to circa 120 metres deep.
- Surprisingly, for a mine of such exceptional historical grade there has been little/no subsequent exploration drilling. Management is targeting an exploration campaign following the mining of the existing remaining resource in the southern section of the existing Mt Boppy Gold mine pit. There was strong conviction from the geologists under previous management of the existence of a deeper resource of similar grade and scale.
- The Boppy South prospect (south of the Mt Boppy Gold Mine) has a resource of circa 9,000 oz Au and needs a fresh approach. Additionally, both the Birthday and Native Dog prospects look very exciting.
Asset Overview - SILVER
Wonawinta Silver Project
The Wonawinta project is located south of Cobar on the south-western margin of the Cobar Basin, and is accessed from Cobar via the sealed Kidman Way highway (circa 70km, followed by shire gravel roads for the final 30km into the site)
The Project hosts a 52 million oz JORC compliant silver resource
The project comprises 1 Mining Lease and 7 Exploration Licences, covering a total of 949km2
Project infrastructure is extensive, with power and water available
Onsite infrastructure includes a processing mill and operational mining camp, a 500,000mt Ag stockpile, an airstrip, a tailings storage facility (“TSF”), and waste rock disposal areas
The refurbishment of the plant commenced in August 2019 and is now complete.
Source: S&P Global Market Intelligence
The Wonawinta processing plant
The Wonawinta processing plant in detail
Regional geology (Wonawinta)
- The Manuka project lies on the western margin of the Cobar Basin within a tectono-stratigraphic unit known as the Winduck Shelf.
- Stratigraphy in the local area comprises early Devonian shallow water sediments of the Winduck Group, which unconformably overlie Silurian Thule Granite and Ordovician metasediments.
- An erosional surface marks the contact between Winduck Group shelf facies sediments and overlying late Devonian fluviatile facies sandstones and conglomerates of the Mulga Downs Group.
- Mulga Downs Group sediments thicken to the west of Manuka within a north-south trending trough (the Yathong Trough) that lies on the eastern margin of the mid-late Devonian Darling Basin.
Source: Mining Associates Manuka Independent Technical Report, March 2018
Mineralisation at Wonawinta
Typical cross section showing oxide and sulphide mineralisation (6431560mN)Source: Mining Associates Manuka Independent Technical Report, March 2018
Two main Pb-Zn-Ag mineralisation styles are developed at the Wonawinta deposits:
Primary sulphide mineralisation, hosted within the Booth Limestone
- Disseminated sulphide mineralisation in black clays immediately overlying limestone –potentially the sulphidic equivalent of black marcasitic clay mineralisation
- Sulphide mineralisation hosted by dolomitic fossiliferous limestone at the top of the Booth Limestone Member
- Sulphide mineralisation is primarily galena (PbS), sphalerite (ZnS) and acanthite (Ag2S)
Secondary oxide mineralisation is developed as a supergene blanket up to 160m wide and 30m thick on and around the contact between the Booth Limestone and overlying clays
- In pale clays mainly associated with anglesite (PbSO4), plumbojarosite (Pb-Fe sulphate)
- In brown Fe-Mn clays associated with cerussite (PbCO3), smithsonite (ZnCO3), pyrolusite (MnO2), goethite (FeO(OH))
- In limestone saprock associated with cerussite, smithsonite, marcasite (FeS2) and goethite
Mineral Resource Estimate (Wonawinta-Silver Project
- The Mineral Resource Estimate at Wonawinta was updated in accordance with the JORC Code (2012) by Mining Associates Pty Ltd in 2016, and subsequently verified by SRK Consulting.
- Additionally, stockpiles at the Wonawinta plant site measure 500kt at an average estimated grade of 75g/t Ag.
- Over 10m oz of the total 52m oz resource grades over 100g/t Ag.
Wonawinta Mineral Silver Estimate
Notes to the Mineral Resource Estimate: 1.Reported at a 20g/t Ag lower cut-off grade 2.Rounding errors may be present
Schematic of Resource classifications at Wonawinta
The Wonawinta Processing Opportunity
The Wonawinta plant has a capacity of ~1mt pa and is the only plant in the region with excess capacity. Original construction cost over A$120M. Replacement cost significantly higher. Manuka has been approached by regional explorers seeking toll treating alternatives for their resources.
Wonawinta Plant photographs
Exploration Upside –Wonawinta(Silver)
- Upgrade Silver oxide resource at Wonawinta; re-establish reserve and increase oxide resource.
- McKinnon (on Wonawinta tenements) –previously a gold mine.
- Deeper drilling at Wonawinta for sulphide deposit –potential for Elura/Endeavour look alike -17.7MT at 4.9% Pb, 8.7% Zn and 69g/t Ag and Reserves 11MT at 4.5% Pb, 7.9% Zn and 66g/t Ag. Confirmed also by the drilling success of neighbour, Peel Mining, (ASX.PEX).
- The Lerida anomalies, as well as Guzzi and Goldwing are extremely prospective, as are the Wonawinta Deeps, which sit on the existing mining licence.
- The Smith Tank Corridor has recently undergone a further geological interpretation, and a RAB program of 17 lines starting south at an average depth of 1,200m per line will commence shortly. Similarly, a diamond drill program of circa 2,000m is planned at the Wonawinta Deep prospects.
- Historical exploration on the Wonawinta properties was halted at depths of circa 60m. This is extremely exciting as the existing oxide resources all ended in sulphide mineralization. The Cobar basin is known as a deep basin (typified by the current mining depths of the Peak, Elura/Endeavour and CSA projects)
Wonawinta(Silver) Exploration Targets
Stage 1 (Q1 2020) Commence production at the Wonawinta Plant
- Commence production at the Wonawinta plant using the 60,000mt Mt Boppy gold ore stockpile
- This will produce circa 6,000 oz Au (commencing Q1 2020)
- Currently crushing and trucking the gold ore from Mt Boppy to Wonawinta(commenced Dec 19)
- Commence mining fresh gold ores at Mt Boppy in March ’20
Stage 2 (Q2 2020 –Q2 2021) Process Mt Boppy ores and use IPO proceeds for exploration campaign
- Achieve steady state production of circa 3,000 oz au/month at Wonawinta processing Mt Boppy gold ores (39kt oz pa)
- Commence exploration program at Wonawinta-high conviction targets as well as in-fill drilling on existing resource
- Commence exploration program at Mt Boppy
- Processing of Mt Boppy gold ores fully repays existing debt facility over 12 –15 month period.
Stage 3 (Q2 2021) Commence processing of silver stockpiles
- 525,000 mt silver ore stockpile on ROM pad at Wonawinta
- Will produce circa 1.0m oz Ag over 6 month processing period
- Continue focus on qualified Wonawinta exploration targets
Stage 4 (Q4 2021 –Q1 2022) Continue silver production at Wonawinta Plant
- Following processing of silver stockpiles, progress to mine and process silver reserve (following in-fill drilling program, will convert part of initial 52m oz Ag resource into reserve)
- Wonawinta plant capacity 1.0m mt per annum
- Currently estimate 5 years silver mining and production producing circa 2m oz Ag/year
Conceptual Mining Schedule
- The Base Case processing schedules includes processing of existing stockpiles at Mt Boppy and Wonawinta.
- The current Mt Boppy mining schedule is based on a schedule produced by BOK prior to placing the operation on C&M in late 2015, and the Mineral Resource Estimate produced by Mining Associates in 2017.
- The Company is currently finalising its own mining schedule to be completed by end-Feb 2020
- The Wonawinta mining inventory and schedule is predicated on mining a high grade portion of the existing Resource and is conceptual in nature
Stockpiles and in-pit mining inventories
Restart Financial Model – Outputs
Note: metal price forecasts are US$1,525/oz Au and US$17.50/oz Ag. AUD:USD fx rate was assumed at 0.6900. Some rounding inconsistencies may be present.
Equity Capital Structure
- Over the last 2 years the company has raised no capital
- Key ”related parties” and “promoters” to have their shares escrowed for 2 years from the date of admission
- Unrelated seed capitalists and others have all held their securities for over 1 year from the date of issue
Current Debt Situation
The Company currently has:
- $2.5m in current liabilities ($1.5M in interest owing to the Con note)
- Con notes of $4.5m –which will convert to equity pre-IPO
- A $19m fully drawn debt facility (TransAsia, HK) payable in tranches from projected gold production; to be paid back from 12 months of cash flow generated at Mt Boppy
Of the funds raised (up to $10m) under the IPO, $1.5m will be used to pay the accrued Con note interest
- Mt Boppy gold production to generate EBITDA ~$24m over initial 12mths of production
- Mt Boppy existing resource repays all Company liabilities over initial 12mths of production
Statutory & Compliance
Mr Dennis Karp – Chairman
- Former physical commodities trader with over 35 years experience (including Head of Trading at HSBC)
- Majority shareholder and MD of Tennant Metals (one of Australia’s oldest and largest physical trading companies) for over 10 years
- Previous involvement in various precious, base and bulk metal project developments
Mr Anthony McPaul – Non-Executive Director
- Highly experienced executive with over 30 years experience in mining operations and processing
- Formerly General Manager for Newcrest Mining’s Cadia Valley Gold Mine in NSW
Mr Nick Lindsay – Non-executive Director
- Highly experienced geologist -over 30 years industry experience (with strong gold & silver focus)
- Experience gained from Anglo American, CBH Resources, Rio Tinto and others
Mr Haydn Lynch – Chief Operating Officer
- Qualifications in mechanical engineering economics & finance, and over 25 years banking expertise
- In country mining experience in Mongolia, & transaction experience in Africa, Asia and Australia
In addition, the Company has recruited a management team of exceptional experience, with a strong regional work focus.