This article is a sponsored feature from Mining.com.au partner Manuka Resources. It is not financial advice. Talk to a registered financial expert before making investment decisions.
The interest generated in Manuka Resources’ (ASX:MKR) recent $15 million capital raise is a strong signal from investors that silver is back on the radar.
In mid-October, the precious metal surged past its previous all-time high – reached in April 2011 – to over US$54 ($82) an ounce, marking a 91% rally since the start of the year.
Manuka revealed last week that it had received firm commitments from institutional investors for about 200 million new Manuka shares.
It is the second strongly supported capital raise the company has undertaken this year, following the completion of an $8 million entitlement offer in August that was fully underwritten by two existing backers of Manuka.
Executive Chairman Dennis Karp tells Mining.com.au Manuka was originally planning to complete the requirements for the restart of its production-ready Wonawinta Silver Project through the debt markets.
“This recent capital raising certainly reduces our future debt burden and also accelerates the restart process,” Karp explains.
“Completing the capital raising provides an acceleration to the restart timetable, while we work towards a completion of the final financing requirements.”
Wonawinta is a large-scale silver project in the Cobar Basin of New South Wales, hosting over 50 million ounces of silver resources.
Manuka owns the land the project sits on and the now 1 million-tonne-per-annum processing plant, which is currently on care and maintenance.
The company is working towards the restart of production around the end of Q1 2026.
Given Wonawinta’s status as a past-producing asset, accompanied by already in-place approvals and an existing processing plant, Manuka estimates it will only require around $18.9 million in capex to restart production, largely focused on the purchase of equipment aiding metallurgical recoveries.
“We are now well progressed meeting our capex requirements from the proceeds of this raise,” Karp notes.
Australia’s only ‘production-ready’ silver reserve
Wonawinta hosts Australia’s only production-ready primary silver reserve, according to East Coast Research.
The research firm earlier in October initiated coverage on Manuka, placing a 12-month fair value estimate of $0.243 per share, indicating over 400% upside to the current share price of just under $0.05.
The valuation also takes into account Manuka’s ownership of the Mt Boppy Gold Project, also located in the Cobar Basin, and one of the largest undeveloped iron sands deposits globally, the 3.2-billion-tonne Taranaki vanadium-titanium-magnetite (VTM) project in New Zealand.
“Our valuation of MKR highlights the company’s substantial upside potential, driven by near-term production of silver and gold, perfectly timed to capitalise on record precious metal prices, alongside transformational growth from the globally significant Taranaki VTM asset,” East Coast Research Senior Equity Analyst Will Cairns says in the research report.
Following the release of the report on 13 October, Manuka’s share price surged over 72% to an intra-day peak, and new 52-week high, of $0.10, from a closing price of $0.058 on the previous Friday (10 October).
Wonawinta historically produced 3.2 million ounces of gold, including 382,000 ounces by Manuka between 2022 and 2023.
The trial processing program undertaken by the company at the time was designed to give Manuka a better understanding of the metallurgical recoveries and develop a process for optimisation.
The program was also aimed at increasing plant capacity from the previous 850,000 tonnes per annum to 1 million tonnes per annum.
“Both were achieved, and work flows undertaken since then will allow us to hit the ground running,” Karp tells this news service.
Wonawinta and Mt Boppy: A powerful duo
Manuka’s production plan is to process silver from Wonawinta and gold from Mt Boppy through the existing plant.
Commissioning and ramp up will be undertaken on silver and gold-bearing run-of-mine stockpiles located adjacent to the Wonawinta processing plant.
Mining will follow in April 2026 from the existing Manuka and Boundary pits as well as the new Belah, Bimble and Pothole pits.
The Wonawinta mine has a current probable reserve of 6.2 million tonnes @ 56.4 grams per tonne for 11.2 million ounces of contained silver, while Mt Boppy’s probable reserve sits at 290,000 tonnes @ 4.2g/t for 39,000 ounces of contained gold.
While the gold price has come back from its all-time high of over US$4,370 an ounce following an extended strong run, the price of the safehaven metal is still up about 52% since the start of 2025 at just under US$4,000 an ounce.
Silver has also given back some of its gains, but is still up nearly 63% since the start of the year.
A sensitivity analysis undertaken by Manuka shows that every 10% increase in the silver price above the $50-an-ounce used in the earlier 10-year mine plan equates to a $43 million increase in the net present value (NPV) of Wonawinta.
“Based on an Australian dollar silver price of $72.50 per ounce, and assuming an Australian dollar gold price of $5,925 per ounce, Manuka forecasts it will achieve an EBITDA of $589 million over our 10-year mine plan. NPV is $349 million over the period,” Karp says.
“Furthermore, every US$1 increase in the silver price adds an additional $20 million to EBITDA.”
Over the 10-year mine life, Manuka anticipates it will produce 13.2 million ounces of payable silver and 35,200 ounces of payable gold at an all-in sustaining cost of $30.10 an ounce.
The revised metrics indicate the combined operation will have a 389% internal rate of return.
Mt Boppy ore to enhance not displace
Karp says the processing flowsheets for the gold and silver ores are largely the same, and the Mt Boppy ore will not displace any of the Wonawinta silver ore but instead provide additional feed.
“The baseload feed will be the Wonawinta silver ores and an additional quantity of between 10,000 and 12,000 tonnes per month will be added from Mt Boppy,” he explains.
“The metal contained value of the Mt Boppy ores will range from between $200 per tonne (for 1g/t gold ores) to over $800 per tonne (for the 4g/t gold ores), which contrasts with the metal contained value of the base Wonawinta feed of $150 per tonne.”
Manuka will use the latest funding injection to progress the processing plant upgrade and the plant and camp refurbishment, as well as to undertake a deeper drilling program at Mt Boppy.
Karp says Mt Boppy was one of the richest gold mines in New South Wales between 1895 and 1925, with historical production of 500,000 ounces of gold at 15g/t.
“This will be our first campaign targeting depths of around 450-500m,” he says.
The drilling at Mt Boppy is set to commence in about five weeks.
Manuka is very bullish on the silver and gold prices for 2026, predicting silver will test $100 an ounce, while gold will test $8,000 an ounce at some point during the year.
“However, Manuka remains very profitable even in the face of a further 20% decline in prices,” Karp says.
A 20% decline in prices from current levels would still deliver a project EBITDA of $425 million.
“Key for Manuka is the fact it has a fully constructed and fully amortised 1-million-tonne-per-year plant,” Karp notes.
As Manuka heads towards 2026 and the restart of the Wonawinta operation, the company will be rolling out a steady stream of news flow.
Karp sees the key catalysts for a potential re-rating in Manuka as being continued progress towards the restart, drilling results from Mt Boppy, meeting internal restart timelines and early evidence of profitable gold and silver production.
Write to Angela East at Mining.com.au
Images: Manuka Resources
