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MINING | Xanadu Mines
XANADU
Unlocking Mongolia’s under
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U MINES
rexplored copper-gold belts
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During a challenging five-year spell up to 2018, global mining markets can be consigned under the classification ‘bearish’, according to Xanadu Mines managing director and CEO Andrew Stewart. At the start of this period, prices for minerals and metals plunged across the board and since then miners have had to slash budgets and focus on repaying debt, which has ravaged the exploration space. While spot prices have generally recovered over the last 18 months, the downturn in the sector has created a market starved of new discoveries, particularly in the copper-gold industry. However, responding to this need for pipeline development stage projects is Xanadu after establishing a strong presence in Mongolia – The home of several vast, underexplored copper-belts that are rife for exploration. “The objective was to go to Mongolia because we could have the ability to get on the ground, says Stewart. “We could have the potential for tier one discoveries and our strategy was get in at the bottom of the market.” Stewart is an exploration geologist with a considerable background in the copper-gold
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Resource Global Network space, working in central Asia and Eastern Europe over a 15-year span. Therefore, this combination of mineral-specific expertise and geographic experience means he possesses all the necessary credentials to lead Xanadu’s venture into Mongolia. The ASX-listed company’s primary aim is to unearth a string of major copper-gold discoveries across the highly-mineralised and underexplored South Gobi Poprhyry belt, within the vast Gobi Desert that straddles Mongolia to the North and China to the South. As a junior explorer, getting in at the bottom of the market has been crucial to Xanadu’s fortunes. With prices dropping to a new nadir over the last five years, major competition also withered away which allowed Xanadu to establish a large-scale land package in the South Gobi region at an attractive price. “It was really interesting that people were very talkative of how bad the market has been in recent times, but this is the opportunity we’ve been waiting for a long time. “After all you often see that major discoveries happen when there are seismic shifts in the market and we’ve seen that in the last 10 years, so there is an opportunity for junior companies to get in and pick up projects.”
Mongolia – A new mining frontier? Mongolia is one of the most mineral rich
MINING | Xanadu Mines
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countries in the world with enormous
more than 80% of exports in Mongolia, they
reserves of coal (10% of the world’s known
have the potential to significantly improve its
reserves) and several major copper-gold
economic prospects.
districts, but until recently these valuable industries were taped off to international
Xanadu has three district scale projects in
investors.
all of Mongolia’s major copper belts but will focus its efforts on two projects in the South
However, in 2017 the Mongolian government
Gobi in the short and mid term. The Oyut
moved to open up a fifth of the country for
Ulaan (Red Mountain) project and its flagship
exploration, annulled a preventative banking
Kharmagtai project are located in the same
law that dictated companies to funnel all
belt as the Oyu Tolgoi copper-gold mine, one
revenues from projects through Mongolian
of the biggest mining projects in Mongolia’s
banks and agreed to work with the IMF to
history.
review tax settings for the mining sector. One of the reasons why Xanadu is particularly It is hoped that these enabling measures will
fond of Mongolia is because its copper
herald the dawn of a new boom era in the
porphyry belts have more of a gold flavour
nation’s mining history and given that mining
and that has been reflected in the company’s
accounts for around a quarter of GDP and
progress so far at the two projects, according to Stewart.
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Australian Resource Business Global Network “Kharmagtai has a demonstrable scale in terms of it having about 30-40km² of mineralisation, it was outcropping and what separates it from a lot of copper systems globally is that the copper is associated with gold, which is an important component when you go into a development stage. “When your by-product is gold it certainly makes the economics a lot more attractive,” he adds. Now, with an increasingly mining-friendly jurisdiction lending support to outside companies, exploration opportunities should proliferate across Mongolia’s untapped copper-gold mineralised zones. “Mongolia is god’s gift to explorers. It’s the most sparsely populated country in the world and it has the potential for non-stop exploring across these mineralised zones,” Stewart declares. Rio Tinto has had a home in Mongolia’s mining industry for close to a decade since taking on Oyu Tolgoi and recently announced it would be opening an exploration office in the country, which is another encouraging sign for the nation’s mineral resources sector. Working against the backdrop of Oyu Tolgoi is also working in Xanadu’s favour, with lots of important infrastructure already developed as a result of the large-scale development which is located just 120km North of Kharmagtai.
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MINING | Xanadu Mines “That’s the beauty of having a major project already built nearby and as a junior company we are benefitting from the work done by others. That makes life easier for us, because the infrastructure comes with world-class developments like Oyu Tolgoi.” Kharmagtai is close to sealed roads within 70km of the project and is within eyesight of an existing powerline, meanwhile a power plant is being planned for a nearby coal mine along with rail lines heading in the direction of the Chinese border.
Kharmagtai The results of recent drill programmes have confirmed high grade extensions at the Kharmagtai project within three deposits; White Hill (850m @ 0.32% Cu and 0.2g/t (0.45% eCu) from surface, including 282m @ 0.44% Cu and 0.17g/t Au from 560m), Stockwork Hill (252.2m @ 0.34% Cu and 0.49g/t Au from 632.2m) and Copper Hill (329.5m @ 0.42% Cu and 0.46g/t Au from 2.5m). “We had a very successful programme through the winter months and I think we need to carefully have a look at what we have found. We have almost doubled and in some cases tripled some of the resources we put out earlier in March last year. “Now we will probably look at getting the blueprints in for a starter project looking at how much mineralisation we have in the shallow and really working towards some of the studies on a shallow starter project.”
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“MONGOLIA IS GO POPULATED COUNTR NON-STOP A Elsewhere, the company has formed a plan
quantities during the manufacturing process
for the Red Mountain project that will focus
(each EV reportedly requires 160kg of
on some of the shallow high grade gold
copper), but also due to all the related power
mineralisation there, along with some of the
infrastructure (ie charging stations) that
high grade copper occurring at the project.
needs to be built to support the electrification
Global copper markets
of automobiles.
The slowly enveloping EV story is becoming a Therefore, demand for copper is growing major factor in the development of the global in tandem with the EV story, but the lack of mining sector, with energy metals such as
new discoveries in recent years is a cause for
lithium and cobalt taking centre stage in key
concern, particularly as grades coming out
supply and demand discussions within this
of Chile are getting lower as major deposits
disruptive industry.
become depleted in the world’s largest copper producing nation.
However, copper is also going to play a key role in the development of the EV industry,
“I think if you believe in the battery story then
not just as copper is needed in great
the demand for copper is certainly there
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OD’S GIFT TO EXPLORERS. IT’S THE MOST SPARSELY RY IN THE WORLD AND IT HAS THE POTENTIAL FOR P EXPLORING ACROSS THESE MINERALISED ZONES” ANDREW STEWART, MANAGING DIRECTOR AND CEO and we see it on the ground. But, we are not
“We have a lot of majors knocking on our
seeing any of these copper projects come
door but for us it would be nice to initiate
along and they are often quite expensive to
that starter economic project and produce
build and take a bit of time too.
something that will support a mine life of 10 years with good grades, good capex, good
“What we haven’t found today won’t be ready
MPV and a good IRR,” concludes Stewart.
in ten years,” warns Stewart. This is why Mongolia is becoming one of the globe’s most
The pathway to production in South Gobi
significant underexplored copper regions,
is long and challenges may lie ahead but
and Xanadu is set to become one of the first
Xanadu has the high-quality management
international companies to bring copper from
team and regional expertise required to
South Gobi to the global market.
unlock Mongolia’s copper-gold belts.
ar
Published by Anderson Murray Media Ltd
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