Manuka Resources Plans 42 Million Share Issue at $0.06 Exercise Price

Underwriting Agreement Secures Capital Raise

Manuka Resources Limited (ASX:MKR) has arranged an underwriting agreement with Claymore Capital Pty Ltd to cover the exercise of up to 11,335,995 unexercised MKRAZ options at an exercise price of $0.06 each. This move aims to raise approximately $2.5 million through the issuance of about 42 million new shares, assuming all options are exercised by the 15 May 2026 expiry date.

The underwriting agreement ensures that Claymore Capital will subscribe for any options not exercised by holders before expiry, effectively guaranteeing the capital injection. Notably, the underwriter will not receive any fees for this service, a detail that may appeal to shareholders wary of dilution costs. The company expects to complete the share issuance by 22 May 2026.

Sub-Underwriting and Investor Participation

Claymore Capital has also established sub-underwriting arrangements with a number of sophisticated and professional investors, none of whom are related parties to Manuka. This structure allows the underwriter to allocate the exercise of options among these investors, potentially broadening the shareholder base and spreading the dilution impact.

This capital raising follows Manuka's recent operational updates, including the ongoing drilling campaign at Pipeline Ridge and insights from Mt Boppy, where the company is targeting a maiden gold resource amid low-grade results. The fresh funds could support these exploration efforts and the planned production restart at Wonawinta, aligning with the company’s strategic priorities as reported in earlier updates Pipeline Ridge drilling underway.

Risks and Termination Conditions in the Agreement

The underwriting agreement contains several termination clauses that introduce uncertainty to the capital raise. These include the potential withdrawal or qualification of ASX approval for the new shares, material defaults by the company, and significant market downturns such as a 10% drop in the S&P/ASX 200 Index between signing and share issuance.

Geopolitical risks are also factored in, with provisions allowing termination if there is an outbreak or escalation of hostilities involving key nations including Australia, the US, China, and others. This reflects a cautious approach given the volatile global environment.

While these safeguards protect the underwriter, they also mean that the completion of the $2.5 million capital raise is contingent on stable market and regulatory conditions, highlighting the importance of monitoring developments closely in the coming weeks.