Manuka Resources Updates on Mt Boppy Gold Mine Restart
MANUKA RESOURCES LTD. (MKR) Share Update August 2024 Sunday 11th
Manuka Resources Announces Progress on Mt Boppy Gold Mine Restart
Manuka Resources Limited (ASX: MKR) has provided a significant update on the progress of restarting gold doré production at its Mt Boppy gold mine, located in the Cobar Basin, New South Wales. The company is on track to commence production by Q4 2024.
Instant Summary:
- Construction of a fit-for-purpose processing and gold doré production facility at Mt Boppy.
- Relocation of a 400kW ball mill from Wonawinta to Mt Boppy has commenced.
- Acquisition of second-hand processing equipment saved approximately A$850k.
- Mt Boppy forecasted to be a low capex (A$11.6M), high margin (~A$19M EBITDA per annum) operation.
- First gold production targeted for Q4 2024.
Project Execution and Strategy
Manuka Resources is executing a strategy to construct a fit-for-purpose processing and gold doré production facility at its Mt Boppy gold mine. Previously, ore from Mt Boppy was transported 150km to the company's CIL plant at the Wonawinta Silver Mine for processing. This new on-site processing strategy is expected to save around A$7M per annum in transportation costs.
The company has commenced the relocation of a 400kW ball mill from Wonawinta to Mt Boppy. This ball mill is surplus to requirements at Wonawinta, where a larger 1800kW ball mill has been installed. Additionally, Manuka acquired a second-hand Inline Pressure Jig (IPJ) and Intensive Leach Reactor (ILR) at a significant discount, saving approximately A$850k from the original budget.
Financial Projections
Mt Boppy is forecasted to be a low capex operation with an initial capital expenditure of A$11.6M. The project is expected to generate an average EBITDA of approximately A$19M per annum over an initial five-year period. This high-margin operation underscores the potential profitability of the project.
Manuka's Executive Chairman, Dennis Karp, emphasized the company's strategy of leveraging and repurposing existing assets, including the Wonawinta ball mill, diesel generators, accommodation camp, and mobile screening plant. This approach aligns with their low capex strategy and aims to maximize resource utilization.
Future Plans and Additional Workstreams
The company is investigating opportunities to increase milling capacity and accelerate gold production at Mt Boppy. A second round of sonic drilling is planned for Q4 2024 to provide additional grade control for the first two years of mining from the Main Rock Dump. Furthermore, additional metallurgical testwork is being conducted to optimize process operating parameters ahead of production.
Manuka is also exploring the feasibility of adopting a parallel processing stream strategy to increase plant throughput and expedite gold production. Any associated capital expenditure for this increase would be funded via cashflows from the project.
Corporate Update
Manuka is progressing on refinancing its existing TransAsia Private Capital Limited debt facility, originally drawn in 2019. BurnVoir Corporate Finance has been appointed to manage this refinancing process.
The restart of operations at Mt Boppy is a positive development for Manuka Resources. The low capex and high-margin nature of the project are likely to boost investor confidence and positively impact the company's stock price. The cost-saving measures and strategic asset repurposing further enhance the project's attractiveness.
Investor Reaction:
Analysts are likely to view the update favorably, given the significant cost savings and the strategic approach to asset utilization. The forecasted high-margin operation and the potential for increased milling capacity could attract positive investor sentiment.
Conclusion:
Investors should keep an eye on further updates from Manuka Resources as the company progresses towards first gold production at Mt Boppy. The strategic execution and cost-saving measures highlight the company's commitment to maximizing shareholder value.