Xanadu Mines Advances Kharmagtai with PFS and $7.5M Capital Raise

Kharmagtai Project Milestone

Xanadu Mines Ltd marked a pivotal quarter ending December 31, 2024, with the delivery of a high-value Pre-Feasibility Study (PFS) and Maiden Ore Reserve for its flagship Kharmagtai Copper-Gold Project in Mongolia. The PFS outlines a robust, low-cost, long-life open pit operation with a projected 29-year mine life, producing an average of 75,000 tonnes of copper and 165,000 ounces of gold annually. The study reveals compelling economics, including an internal rate of return (IRR) of 21% and a net present value (NPV) of US$930 million at an 8% discount rate, underscoring Kharmagtai's potential as a world-class asset.

Following the PFS delivery, operatorship of the joint venture was smoothly transitioned to Zijin Mining Group Co. Ltd, Xanadu's JV partner. Zijin is now leading the planning for the upcoming Bankable Feasibility Study (BFS), expected to commence in the March quarter of 2025 and conclude by mid-2026. This transition marks a strategic shift as Zijin prepares to drive the project toward a final investment decision (FID), leveraging its operational expertise and resources.

Funding and Corporate Developments

To support ongoing development and exploration activities, Xanadu completed a well-supported equity placement raising $7.5 million before costs. This placement included 136.5 million new shares issued at $0.055 each, with Zijin subscribing for 26.5 million shares to maintain its pro-rata interest. The funds will underpin exploration at the Red Mountain and Sant Tolgoi projects, advance the Kharmagtai BFS, and provide working capital. As of December 31, 2024, Xanadu held $6.2 million in cash, bolstered by subsequent receipt of $1.46 million from Zijin in early January 2025.

Exploration Progress at Sant Tolgoi

Exploration at the Sant Tolgoi Copper-Nickel Project in western Mongolia yielded encouraging results during the quarter. Reconnaissance rock-chip sampling returned high-grade copper assays up to 2.1% from multiple gossan outcrops. Detailed geological mapping, geophysics, and geochemistry have identified at least four high-priority drill targets along a 4-kilometre splay of the Khangai Fault System. Drilling is planned to commence in the second quarter of 2025, aiming to further delineate these promising targets.

Strategic Outlook and Next Steps

Xanadu is actively reviewing strategic options to secure funding for the Kharmagtai BFS and maximize shareholder value. These include potential transactions with Zijin or third parties, as well as direct funding through debt, equity, or offtake agreements. The company has engaged Bacchus Capital as its Strategic Funding Adviser and Jefferies as its M&A and Defence Adviser to explore these avenues. Notably, Xanadu holds two six-month put options with Zijin, exercisable following the PFS completion, which could facilitate the sale of its JV interest under certain conditions.

Looking ahead, the March quarter will focus on finalizing BFS funding arrangements, commencing the BFS itself, progressing Mongolian regulatory and environmental approvals, and advancing exploration programs at Kharmagtai, Red Mountain, and Sant Tolgoi. Executive Chairman and Managing Director Colin Moorhead highlighted the significance of the quarter's achievements and the company's commitment to advancing Kharmagtai toward production while exploring new growth opportunities.