Xanadu locks in gas supply deal for Mongolian copper project

Xanadu Mines has signed a non-binding gas offtake memorandum of understanding with Jade Gas Holdings for commercial gas sales to power the copper explorer’s Kharmagtai project in Mongolia.

The deal is designed to secure a reliable, low cost and cleaner energy source for Xanadu’s Kharmagtai copper-gold project using gas from Jade’s TTCBM project only 80km away.

Xanadu says the partnership demonstrates a clear pathway to market for gas produced by Jade, with a number of commercial customers on Jade’s doorstep looking to secure future supplies of natural gas

As part of the agreement, Xanadu will receive a non-exclusive option for gas supply from Jade’s project with both companies working towards negotiating commercial terms for a binding gas sales agreement that is expected after the 2023 TTCBM pilot production program.

Jade says it has already established substantial gas field potential over a 45km strike and it is pleased to see commercial customers in the region recognise the important role the gas company can play in providing a cleaner source of energy to deliver on ESG ambitions for sustainable operations.

Xanadu Mines Managing Director, Colin Moorhead said: “This forms a critical part of our renewable future, and we are determined to source our energy from within Mongolia, and Jade’s TTCBM Project is the logical supplier of that energy due to its proximity to Kharmagtai.”

Earlier this week Xanadu executed the formal documentation to finalise its phase two and three investment agreement for its Mongolian projects with Zijin Mining Group.

Once approvals have been met, Xanadu will use Zijin’s investment to continue exploration of its prospective Red Mountain project in addition to making a final investment decision on taking its Kharmagtai project to the construction phase.

The Kharmagtai project has a mineral resource estimate identified at a massive 1.1b tonnes for three million tonnes of contained copper and eight million ounces of gold.

Red Mountain is located within the Dornogovi Province of southern Mongolia, approximately 420km southeast of Ulaanbaatar and 70km west of the provincial centre of Sainshand.

Previous exploration at the prospect has defined several broad zones of strongly mineralised quartz stockwork veining that is associated with high-grade gold and increasing alteration strength, with the mineralisation style suggesting strong potential for depth extensions.

In August Xanadu completed metallurgical recoveries of up to 91 per cent gold and 46 per cent copper from preliminary glycine and cyanide leach testing at its Kharmagtai project.

The tests were performed on partially oxidised material from surface to 30m depth and returned head grades between 0.52 and 2.25 grams per tonne gold and from 0.12 up to 0.67 per cent copper.

Xanadu says the results show a potential treatment path for about 90 million tonnes of oxidised material treated as waste in the company’s scoping study due to low flotation recovery.

With significant agreements for funding and potential gas supply now in place, Xanadu appears to be heading into the new year with a focus on increasing the resources at its Mongolian assets.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au