Shares in Xanadu Mines (ASX:XAM) have spiked after the company bolstered the mineral resource of its flagship Kharmagtai copper-gold project in Mongolia ahead of a planned 2024 Pre-Feasibility Study (PFS).
The project’s resource now sits at 1.3 billion tonnes containing 3.4 million tonnes (Mt) of copper and 8.5 million ounces of gold — representing a 15% increase in contained copper and a 9% increase in contained gold compared to the last resource published in 2021.
Further, the new resource showcases a ‘material’ 25% increase in the higher-grade ore from 100Mt @ 0.76% copper equivalent (CuEq) to 125Mt @ 0.75% CuEq at a 0.55% CuEq cut-off. Xanadu says this is an ‘important driver’ of early payback in Kharmagtai’s project economics.
Xanadu says 62% of the updated resource is now classified in the higher-confidence ‘indicated’ category, highlighting the ‘robust’ nature of the deposit.
Kharmagtai lies in Mongolia’s South Gobi region and is being developed in a joint venture partnership between Xanadu and China-based Zijin Mining Group (SHA:601899).
Shares in Xanadu Mines closed 10.2% higher at $0.054 on Friday 8 December. The company has an $83.34 million market capitalisation.
Xanadu Mines Executive Chairman and Managing Director Colin Moorhead says the new resource reinforces Kharmagtai as one of the largest undeveloped copper and gold resources on the planet.
“The result is in line with our expectations for both the tonnes and the grade, and it is materially better where it matters.
With 63% of the Mineral Resource Estimate now classified as ‘indicated’ and holding together at rigorous cut-off grades, we have confidence in its ability to underpin a long-life, profitable mine operation across a wide range of metals prices.”
“The result is in line with our expectations for both the tonnes and the grade, and it is materially better where it matters”
He adds that the ‘discovery journey’ at Kharmagtai is not over yet, with the resource remaining open to the east, west, south, and at depth.
In this vein, Xanadu is continuing step-out drilling in the Kharmagtai area, with recent work having intercepted ‘high-grade’ bornite outside of the resource area.
The company says all 6 deposits within the updated resource zone are open and require additional drilling.
Of these, the White Hill deposit demonstrates the ‘most significant expansion potential’. It remains completely open to the south and west and at depth, and drilling to date in the lower portions of the deposit is reportedly broad enough to allow numerous blocks of ‘unknown high-grade material’ to exist, according to Xanadu.
The company is planning for its resource definition and expansion drilling work to culminate in a Kharmagtai PFS in Q3 2024, with a decision to mine and final engineering and construction slated for Q4 2024.
Xanadu’s 2022 Scoping Study for the project suggested an estimated 20% internal rate of return (IRR), US$630 million net present value (NPV) at 8%, and a 4-year payback over a 30-year mine life for Kharmagtai. The upcoming PFS will build on these metrics.
“Our next step is enterprise optimisation, using the new resource model to maximise value from the increase in higher-grade zone material and to build in technology uplift in the form of electrification and advanced haulage,” Moorhead says.
“The optimised scheduling will then inform design & engineering works for both our mine and process plant, on track to deliver a Maiden Ore Reserve and completed PFS in Q3 CY2024.”
Xanadu Mines ended the September quarter with $4.76 million cash and cash equivalents at hand, according to its latest quarterly report, and the company completed a $4.3 million share placement in November.
Write to Joshua Smith at Mining.com.au