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/EIN News/ -- TORONTO, Feb. 27, 2023 (GLOBE NEWSWIRE) -- Xanadu Mines Ltd (ASX: XAM, TSX: XAM) (Xanadu or the Company) is pleased to announce that Zijin Mining Group Co., Ltd. (Zijin) has advised Xanadu of the receipt of regulatory approvals from the People’s Republic of China (PRC), which completes the final key regulatory approval required to progress Phase 2 and Phase 3 of the Strategic Partnership1 between Xanadu and Zijin. The Strategic Partnership will fully fund the Company’s flagship Kharmagtai Copper-Gold Project (Kharmagtai) through the next phase of project evaluation and exploration, leading to formal Decision to Mine. It will also provide funding to Xanadu for activities outside of Kharmagtai such as our second project at Red Mountain. The Company will now proceed to finalise arrangements with Zijin to progress to completion.
Xanadu’s Executive Chairman & Managing Director, Colin Moorhead said, “After strong support from shareholders at the recent Xanadu Extraordinary General Meeting3, it is pleasing to now have PRC regulatory approval, clearing the final hurdle to launch our partnership with Zijin. We look forward to working with Zijin to add real value to Kharmagtai, which is already a globally significant copper-gold project. The team is ready to go with drill rigs in place and study work ready to start immediately. We expect to provide regular updates and news-flow through the next 18-month PFS period.”
The strategic partnership4 includes three phases of investment. The first phase (Phase 1 Placement) was completed on 27 April 2022, raising A$5.56 million via a subscription by Zijin to 139 million fully paid ordinary shares in Xanadu at A$0.04 per share to provide Zijin with a 9.9% shareholding in the Company. The two subsequent phases (which were subject to further negotiation, entry into formal documentation and the remaining approvals above) include a second placement of ordinary shares at A$0.04 per share to increase Zijin’s total shareholding in the Company to 19.99% (Phase 2 Placement) and the creation of a 50/50 Joint Venture in Khuiten Metals Pte. Ltd., the entity currently 100% owned by Xanadu that holds a 76.5% effective interest in Kharmagtai (Phase 3 JV), for a cash investment of US$35 million.
Following the 18 month PFS, Xanadu has the option to fund its share of construction, sell it’s 50% of the Phase 3 JV to Zijin for US$50 million or sell half of its share of the Phase 3 JV (25%) to Zijin for US$25 million plus a loan carry for Xanadu’s remaining share of costs until commercial production.
PFS to Evaluate Upside in Scoping Study
The 2022 Scoping Study5 confirmed Kharmagtai as a potential world class, low cost, long life mine with an estimated 20% IRR (range 16-25%), US$630 million NPV @ 8% (range US$ 405-850 million) and 4-year payback (range 4-7 years) over 30 year mine life. This included first quartile all in sustaining costs and projected production ranges from 30-50ktpa copper and 50-110kozpa gold production during the first five years.
The Scoping Study outlined a conventional, low technical complexity open pit and process plant with low 0.9:1 strip ratio for the first five years. However, it also identified growth-focussed upside opportunities which could materially upgrade the economics of the project, all of which will be investigated during the PFS:
During the PFS, Xanadu and its partner Zijin will complete all major project trade-off decisions and refine capital and operating cost estimates to +/-15-25%, leading to selection of a single go-forward option for final engineering and construction. With the study and inclusion of upside opportunities above, Xanadu is targeting a real and sustained uplift relative to the Scoping Study economics.
Xanadu is an ASX and TSX listed Exploration company operating in Mongolia. We give investors exposure to globally significant, large-scale copper-gold discoveries and low-cost inventory growth. Xanadu maintains a portfolio of exploration projects and is operator of the globally significant Kharmagtai copper-gold project.
For further information on Xanadu, please visit: www.xanadumines.com or contact:
This Announcement was authorised for release by Xanadu’s Board of Directors.
1 ASX/TSX Announcement 21 December 2022 - Investment Deal Signed with Zijin - Pathway to Production 2 ASX/TSX Announcement 6 April 2022 – Scoping Study – Kharmagtai Copper-Gold Project 3 ASX/TSX Announcement 7 Feb 2023 – Results of Extraordinary General Meeting 4 ASX/TSX Announcement 21 December 2022 - Investment Deal Signed with Zijin - Pathway to Production 5 ASX/TSX Announcement 6 April 2022 – Scoping Study – Kharmagtai Copper-Gold Project
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/729d0626-ac03-47cb-8242-2bced50481c5
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