Xanadu hits new shallow copper-gold deposits

Shallow exploration drilling at Xanadu Mines’ Kharmagtai copper-gold project in Mongolia has uncovered the potential for new discoveries outside its existing mineral resource area.

Management says its new work has validated its belief that Kharmagtai could host undiscovered porphyry deposits.

Xanadu, alongside its joint venture (JV) partner Zijin Mining Group, has now returned results from an initial 3400m of shallow drilling in 15 holes at Kharmagtai, as part of a 10,000m shallow exploration discovery drilling program. The campaign was designed to test several shallow high-potential copper-gold and gold-only targets that sit outside the company’s current mineral resource estimate. 

It has so far intersected high-density stockwork, breccia mineralisation and gold-only mineralisation across three largely-unexplored porphyry clusters.

Xanadu Mines executive vice president exploration Andrew Stewart said: “Initial results from shallow exploration discovery drilling has demonstrated exciting growth potential. Delivering drill intercepts over 3% copper and over 3g/t gold from the first three targets tested is very encouraging. This validates our strong belief in undiscovered porphyry deposits at Kharmagtai.”

The campaign’s best diamond drilling intercepts include 8m grading 1.59 grams per tonne of gold from 289 metres, including 4m at 3.04g/t from 291m and 15m grading 1.26 per cent copper from 127m, including 5.95m at 2.97 per cent from 132.5m.

The ongoing program is targeting additional porphyry copper-gold deposits outside the current mineral resource estimate, which currently stands at 3 million tonnes of copper and 8 million ounces of gold, or 1.98 million tonnes of copper-equivalent in the indicated category and 2.33 million tonnes copper-equivalent inferred.

Xanadu is now pursuing the completion of an upgraded mineral resource estimate, which is targeted for the coming December quarter and is expected to further de-risk and progress the project towards commercial production.

The shallow exploration drilling could also prove helpful down the line in informing decisions around future infrastructure locations if Kharmagtai is developed into a large-scale mining operation.

Separately, extensive parallel infill drilling is also underway and assays have already been returned for 31 drillholes. Several holes delivered grades materially better than that of the current resource, while new higher-grade zones were also identified.

The purpose of the infill drilling is to improve and upgrade the existing indicated mineral resource, deliver a maiden ore reserve and support completion of a prefeasibility study (PFS). Management has confirmed that detailed geometallurgical, geotechnical, open-pit mining and infrastructure studies for its PFS have begun.

An earlier preliminary economic assessment (PEA), or scoping study, delivered a project net present value of US$630 million ($942 million), with a four-year payback period, and a 20 per cent internal rate of return over a 30-year mine life, producing 50,000 tonnes of copper and 110,000 ounces of gold per annum.

The JV aims to make a decision to mine in this year’s final quarter, having applied US$35 million (AU$52.4 million) in funding to discovery exploration and the completion of the PFS.

With many metres more still to drill, Xanadu is expected to provide a steady stream of news as it seeks to upgrade its resource and finalise its PFS, all with a view towards project development and production. 

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