IMO/DYORResource Valuation:Ore Reserve: The project boasts a...

IMO/DYOR

Resource Valuation:

• Ore Reserve: The project boasts a maiden ore reserve of 4.8 Mt at 54 g/t Ag, containing 8.4 Moz of silver. This is based on shallow (<40m) oxide material, with 0.8 Mt classified as proved and 4.1 Mt as probable. The overall Wonawinta resource is significantly larger, comprising 38.3 Mt at 41.3 g/t Ag for 51 Moz of silver (as of April 1, 2021).
• Silver Price Sensitivity: The project's economics are highly sensitive to silver prices. A 10% increase in the silver price translates to a 32% increase in operating cash flow. This highlights the importance of accurate silver price forecasting for project viability.
• Base Metal Potential: The deposit exhibits characteristics of a Mississippi Valley-type (MVT) deposit, suggesting potential for significant lead and zinc mineralization beyond the current silver focus. Exploration results indicate encouraging intervals of galena and sphalerite.

Significance:

• Strategic Location: The project is strategically located within the prolific Cobar Basin in NSW, Australia, which already has existing mining infrastructure and operations, potentially reducing capital expenditures and streamlining operations. This improves the project's strategic value and optionality.
• Existing Infrastructure: The presence of a fully constructed 1 Mtpa CIL processing plant, kept in good condition, significantly reduces capital expenditure for restarting operations. It adds considerable flexibility.
• Dual Precious Metals Stream: The combination of the Wonawinta silver project and the nearby Mt Boppy Gold Mine offers a dual precious metal revenue stream, potentially hedging against fluctuations in individual metal markets.

Economic and Strategic Value:

• Operating Cash Flow: Based on current silver prices and operating costs, the mine plan is projected to generate ~A$100M in operating cash flow from the ore reserve alone.
• Capital Costs: Estimated capital costs for restarting operations are A$3.7M (plus pre-strip mining at A$12.4M), which is a relatively low figure compared to building a new mine from the ground up.
• Optionality: The existing processing plant adds operational flexibility. It could potentially be upgraded to process base metal concentrates from other sources within or near the Cobar Basin.
• Growth Potential: The ore reserve represents only 13% of the overall Wonawinta mineral resource, suggesting significant potential for resource expansion through further exploration and infill drilling.

Limitations and Uncertainties:

• Resource Conversion: Only a fraction of the Wonawinta mineral resource has been converted to ore reserves. Further exploration and infill drilling are needed to convert more of the inferred resource to reserves, affecting the ultimate project size and profitability.
• Metallurgical Recoveries: Metallurgical test work suggests variability in silver recoveries due to the presence of fine-grained, clay-locked silver, potentially affecting overall project economics. Further testing and optimization will be needed.
• Market Risk: The project's economic viability is heavily dependent on silver prices. Price volatility presents a significant risk that needs to be managed through strategies such as hedging.
• Permitting and Approvals: Although existing approvals are in place, minor approvals are still needed to restart operations, introducing potential delays.
• Implementation Plan: The implementation plan includes assumptions on a range of factors including mining rates, costs, and recovery. Accuracy of these assumptions is critical to the success of the project.

Inconsistencies:

There are no apparent inconsistencies noted in the provided document regarding the resource estimates, however, it does highlight some challenges associated with resource estimation and metallurgical recoveries. Further investigation and analysis of data may be needed to fully resolve any potential inconsistencies.

Conclusion:

The Manuka Resources Wonawinta Silver Mine project presents a potentially significant opportunity due to its maiden ore reserve, existing processing infrastructure, strategic location, and potential for base metal production. However, the project’s economic viability is heavily reliant on silver prices and the successful conversion of inferred resources to reserves. Significant risks and uncertainties exist, particularly related to metallurgical recoveries and the potential impact of fine-grained material. Further exploration, metallurgical optimization, and detailed financial modeling are necessary before a final investment decision can be made. The available information, however, does suggest a potentially attractive project with strong potential for success given favorable conditions.