Xanadu Mines Ltd (
ASX: XAM, TSX: XAM)
(
Xanadu,
XAM or the
Company) is pleased to announce the release of the
Scoping Study (
Study) for its flagship Kharmagtai
Copper-Gold Project, based on an updated 2021 Mineral Resource
Estimate, located in the South Gobi region of Mongolia. The Xanadu
Board has endorsed this Study, and subject to funding, has approved
progression to the Pre-Feasibility (
PFS) Stage.
This Study confirms the potential of Kharmagtai
as a globally significant, long life, low cost, low risk future
copper-gold mine. It is based on conventional, low risk open pit
mining and sulphide flotation, with low environmental, social and
governance (ESG) risk, and supported by nearby
rail, road and power links providing the potential for rapid
development. Kharmagtai is well positioned to help fill the looming
copper global supply gap driven by growing demand for an
increasingly electrified economy.
Highlights
Presented in 100% Terms (Xanadu share
76.5%)
-
Confirms Kharmagtai as a potential world class, low cost, long life
mine
-
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
-
Projected production ranges from 30-50ktpa copper and 5-110kozpa
gold production during the first five years
-
First quartile all-in sustaining (C1) costs of US$1.02/lb Cu for
first five years, net of by-product credits
-
Conventional, low technical complexity open pit and process plant
with low 0.9:1 strip ratio for first five years
-
Located in sparsely populated, flat terrain, with nearby
established rail, power and water links
-
Pre-Feasibility Study expected to commence in Q3 CY2022 and
complete in Q4 of CY2023
-
Robust study outcomes, led by high quality advisory team
Xanadu’s Executive Chairman and Managing
Director, Mr Colin Moorhead, said “This Scoping Study is
the result of years of hard work by the Xanadu team lead by Andrew
Stewart, and confirms Kharmagtai as a world class copper asset,
located in a region of the South Gobi which hosts several
significant deposits, including those at Rio Tinto’s Oyu Tolgoi
mine. The future development of Kharmagtai into a long life, low
cost, mine will provide significant value to our shareholders and
multi-generation employment and economic opportunity for our
stakeholders in Mongolia. The plain truth is that as the global
economy decarbonises, the supply of copper cannot meet forecast
demand. Development of large scale porphyry copper deposits
will be urgently required, and with its competitive time to
production and relatively low ESG risk, Kharmagtai is well
positioned to move forward quickly. We are proud to
demonstrate such a strong Project at Kharmagtai and are excited to
move forward with its next stage of development.”
Scoping Study
The Scoping Study has been filed on SEDAR.
Cautionary Statement
The Study attached to this Announcement has been
undertaken to assess viability of developing the Kharmagtai
Copper-Gold Project by constructing an open cut mine and processing
facility to produce copper concentrate for export. It is a
preliminary technical and economic study of the potential viability
of the Kharmagtai Project. It is based on low level technical and
economic assessments that are not sufficient to support the
estimation of ore reserves. Further exploration and evaluation work
and appropriate studies are required before Xanadu will be in a
position to estimate any ore reserves or to provide any assurance
of an economic development case.
The Study is based on the material assumptions
set out in the attached Scoping Study. These include assumptions
about the availability of funding. While Xanadu considers all of
the material assumptions to be based on reasonable grounds, there
is no certainty that they will prove to be correct or that the
range of outcomes indicated by the Study will be achieved.
To achieve the range of outcomes indicated in
the Study, funding of in the order of US$700 million will likely be
required. Investors should note that there is no certainty that
Xanadu will be able to raise that amount of funding when needed. It
is also possible that such funding may only be available on terms
that may be dilutive to or otherwise affect the value of Xanadu’s
existing shares. It is also possible that Xanadu could pursue other
‘value realisation’ strategies such as a sale, partial sale or
joint venture of the Project. If it does, this could materially
reduce Xanadu’s proportionate ownership of the Project.
Given the uncertainties involved, investors
should not make any investment decisions based solely on the
results of the Study.
There is a low level of geological confidence
associated with inferred mineral resources and there is no
certainty that further exploration work will result in the
determination of indicated mineral resources or that the production
target itself will be realised.
The Study attached to this Announcement is based
on the December 2021 Mineral Resource Estimate1, is based on
low-level technical and economic assessments, and is insufficient
to support estimation of Ore Reserves or to provide assurance of an
economic development case at this stage, or to provide certainty
that the conclusions of the Study will be realised.
The Study has been completed to a level of
accuracy of +/-35% in line with industry standard accuracy for this
stage of development.
The Company has reasonable grounds for
disclosing a Production Target, given that in the first seven years
of production, 100% of the mill feed is scheduled from the
Indicated Resource category, which exceeds the economic payback
period for the Project by three years. Approximately 58% of the
Life of Mine Production Target is in the Indicated Mineral Resource
category, and 42% is in the Inferred Mineral Resource category.
There is a lower level of geological confidence associated with
Inferred Mineral Resources, and while the Company considers all the
material assumptions in this Study to be based on reasonable
grounds, there is no certainty that they will prove to be correct
or that the range of outcomes indicated will be achieved.
The Mineral Resources underpinning the
production target in the Study have been prepared by a Competent
Person in accordance with the requirements of Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves (JORC Code (2012)). The Competent
Person’s Statement is found in the Geology and Resources section of
the Study. For full details of the Mineral Resource Estimate,
please refer to Xanadu’s ASX/TSX Announcement dated 25 February
2022. Xanadu confirms that it is not aware of any new information
or data that materially affects the information included in that
release. All material assumptions and technical parameters
underpinning the estimates in that Announcement continue to apply
and have not materially changed.
Note that unless otherwise stated, all currency
in this Announcement is US dollars.
__________________1 ASX/TSX Announcement 28
February 2022 – Kharmagtai Technical Report
Forward Looking Statements
Certain statements contained in this
Announcement, including information as to the future financial or
operating performance of Xanadu and its projects may also include
statements which are ‘forward‐looking statements’ that may include,
amongst other things, statements regarding targets, estimates and
assumptions in respect of mineral reserves and mineral resources
and anticipated grades and recovery rates, production and prices,
recovery costs and results, capital expenditures and are or may be
based on assumptions and estimates related to future technical,
economic, market, political, social and other conditions. These
‘forward-looking statements’ are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
Xanadu, are inherently subject to significant technical, business,
economic, competitive, political and social uncertainties and
contingencies and involve known and unknown risks and uncertainties
that could cause actual events or results to differ materially from
estimated or anticipated events or results reflected in such
forward‐looking statements.
Xanadu disclaims any intent or obligation to
update publicly or release any revisions to any forward‐looking
statements, whether as a result of new information, future events,
circumstances or results or otherwise after the date of this
Announcement or to reflect the occurrence of unanticipated events,
other than required by the Corporations Act 2001 (Cth) and the
Listing Rules of the Australian Securities Exchange
(ASX) and Toronto Stock Exchange
(TSX). The words ‘believe’, ‘expect’,
‘anticipate’, ‘indicate’, ‘contemplate’, ‘target’, ‘plan’,
‘intends’, ‘continue’, ‘budget’, ‘estimate’, ‘may’, ‘will’,
‘schedule’ and similar expressions identify forward‐looking
statements.
All ‘forward‐looking statements’ made in this
Announcement are qualified by the foregoing cautionary statements.
Investors are cautioned that ‘forward‐looking statements’ are not a
guarantee of future performance and accordingly investors are
cautioned not to put undue reliance on ‘forward‐looking statements’
due to the inherent uncertainty therein.
Xanadu has concluded that it has a reasonable
basis for providing these forward-looking statements and the
forecast financial information included in this Announcement.
To achieve the range of Kharmagtai Copper-Gold
Project outcomes indicated in the 2022 Study, funding of in the
order of an approximately US$700 million will likely be required by
the Company.
Based on current market conditions and the
results of studies undertaken, there are reasonable grounds to
believe the Project can be financed via a combination of equity and
debt, as has been done for numerous comparable projects in Mongolia
and other jurisdictions in Asia in recent years. Debt may be
secured from several sources including Australian banks,
international banks, the high yield bond market, resource credit
funds, and in conjunction with product sales of offtake agreements.
It is also possible the Company may pursue alternative funding
options, including undertaking a corporate transaction, seeking a
joint venture partner or partial asset sale. There is, however, no
certainty that Xanadu will be able to source funding as and when
required.
Whilst no formal funding discussions have
concluded, the Company has engaged with several potential
financiers of the Kharmagtai Copper-Gold Project and these
financial institutions and corporations have expressed an interest
in being involved in funding of the Project.
This ASX Announcement has been prepared in
compliance with the current JORC Code (2012) and the ASX Listing
Rules. All material assumptions, including sufficient progression
of all JORC modifying factors, on which the production target and
forecast financial information are based have been included in this
ASX Announcement.
About Xanadu Mines
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 remains one of the few junior explorers on
the ASX or TSX who control a globally significant copper-gold
deposit in our flagship Kharmagtai Project. For information on
Xanadu visit: www.xanadumines.com.
For further information, please
contact:
Colin
Moorhead |
Spencer
Cole |
Managing Director |
Chief Financial Officer |
E: colin.moorhead@xanadumines.com |
E: spencer.cole@xanadumines.com |
M: +61 2 8280 7497 |
|
This Announcement was authorised for release by
Xanadu’s Board of Directors.
77
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