Manuka Targets Q1 2026 Restart with A$18.9M Capex and A$101M NPV Project

Financing Milestone for Restart

Manuka Resources Limited (ASX, MKR) has taken a significant step towards resuming silver and gold production at its Wonawinta Processing Plant in the Cobar Basin, New South Wales. The company announced it has received a binding offer for a new debt facility from an Australian non-bank lender. This facility is intended to refinance the existing senior debt and provide the necessary capital to restart operations at the 1 million tonnes per annum (Mtpa) processing plant.

The company aims to finalize the financing arrangements and execute binding agreements in the coming quarter, with production restart targeted for the first quarter of 2026. This timeline aligns with Manuka’s strategy to capitalise on the current favourable market conditions for precious metals.

Robust Economics Back Restart

The restart requires an estimated capital expenditure of A$18.9 million. At an assumed silver price of A$50 per ounce and an all-in sustaining cost of A$35 per ounce, the project is forecast to deliver an average annual EBITDA of A$22 million. The internal rate of return (IRR) is an impressive 109%, with a net present value (NPV) of A$101 million, underscoring the financial attractiveness of the restart.

Importantly, silver prices are currently trading around A$68 per ounce, approximately 36% above the assumed price used in the company’s sensitivity analysis. This price uplift could increase the project’s NPV by roughly A$43 million for every 10% increase above the base assumption, indicating substantial upside potential.

Substantial Resource Base and Infrastructure

Manuka’s Cobar Basin assets include the shallow Wonawinta silver resource, which contains an estimated 51 million ounces of silver at an average grade of 41.3 grams per tonne. The deposit remains open along strike and at depth, with previous drilling intersecting base metal sulphides, suggesting further exploration upside.

The site is well-equipped with existing infrastructure, including the processing plant, camp accommodation, an airstrip, administration offices, and a tailings storage facility. This infrastructure supports a fast-tracked production restart, reducing lead times and capital intensity.

Complementary Gold Assets Enhance Value

In addition to silver, Manuka owns 100% of the Mt Boppy gold project, located approximately 151 kilometres by road from Wonawinta. The company recently announced a maiden open pit probable gold reserve of 290,000 tonnes at 4.2 grams per tonne, containing around 39,000 ounces of gold. This reserve adds an estimated NPV of A$43.2 million at an assumed gold price of A$5,000 per ounce. With gold currently trading near A$5,700 per ounce, this asset further strengthens Manuka’s project economics.

Debt Facility Assignment and Refinancing Progress

To facilitate the refinancing, Manuka’s existing senior debt facility of approximately US$12.4 million has been assigned from TransAsia Private Capital to a Unit Trust comprising significant existing shareholders. The maturity date of this facility has been extended by six months to March 2026, providing sufficient time to complete the refinancing process. The company will pay market-related fees and expenses to the Unit Trust for this extension.

Manuka’s Executive Chairman, Dennis Karp, expressed optimism about the progress, highlighting the alignment of shareholder interests and the opportunity presented by historic precious metal prices. The company is advised by BurnVoir Corporate Finance on the restart financing.

Overall, Manuka Resources is positioning itself to swiftly resume production and capitalise on strong commodity prices, supported by a robust resource base and existing infrastructure. The coming months will be critical as financing negotiations conclude and operational plans advance.