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XANA MIN
Tier 1 porphyry copper-g
ADU NES
gold projects in Mongolia
MINING | XANADU MINES
During a recent Mines and Money virtual networking event, it was suggested to managing director and CEO of Xanadu Mines Andrew Stewart that there is no better place for an exploration project to be located than Mongolia during a global pandemic. Speaking to RGN shortly after, Stewart reiterates the minimal impact COVID-19 has had on life in Mongolia – the vast and sparsely populated central Asian country where Xanadu is advancing three district scale copper exploration projects in the South Gobi Desert. “I was in Mongolia in January on a site visit with our new chairman [Colin Moorhead] and not long after that we started to see some cases reported out of Wuhan in China. Mongolia quickly closed its borders in response to the outbreak,” says Xanadu’s boss. Mongolia has reported just 140 cases of COVID-19 and 0 deaths at the time of writing in late May, and is one of the only places in the world where society has functioned almost as normal since March, bar the closure of schools.
Getting ahead of the game
its second tier Red Mountain
As a result of Mongolia’s swift
having signed an earn-in
response and subsequent
agreement with the Japan
containment of the virus,
Oil, Gas and Metals National
Xanadu has been able to
Corporation (JOGMEC) for
continue its operations while
the project’s development in
other mining companies
March.
porphyry copper-gold project,
around the world have been forced to step back due to
While on-ground exploration
government-directed lockdown
activities have commenced
orders of varying length and
at the highly prospective Red
severity.
Mountain project, Xanadu has also strived to comply
In particular, the company
with stringent health and
has been very active of late at
safety procedures to reduce
MINING | XANADU MINES
the potential of the virus
The first half of 2020 included
and definition, Xanadu
spreading on site.
a strategic refresh and
creates liquidity events for
a corporate restructure,
its shareholders and exits
“Our number one priority
providing a laser focus for a
those projects, refreshing its
is health and safety for our
company that has in the past
exploration portfolio to do it
employees and contractors in
been criticised for getting
all over again.
the communities we work in,
distracted from its core
so we have implemented a few
business.
health and safety programmes
Linked to this refresh, nonessential activities in 2020 have
in light of COVID-19. In
Xanadu’s strategy is now
been cancelled or deferred
addition, while ensuring the
clearly that of an exploration
by Xanadu’s leadership
operational integrity of the
company, described as looking
and several cross-control
business, we’ve also been
for globally significant copper-
procedures relating to cash
proactive in making corporate
gold porphyry orebodies in
flow management have also
decisions.”
Mongolia. Following discovery
been implemented. One of the
Andrew Stewart, Xanadu Mines managing director and CEO
targets set by the refreshed
globally, so it’s important we
metals’, according to Stewart –
board of directors was a 35%
put that plan into action,”
in delivering long-term carbon
reduction in administration
Stewart stresses.
emission reductions in line
costs in 2020, which would
with the Paris Climate goals.
of US$1.3 million on the same
The king of all metals
outlay in 2019.
One unintended effect of
in a range of green energy
the COVID-19 outbreak
applications - from electric
“However, there is still
has been the portrayal of a
vehicles and the lithium-ion
considerable uncertainty in
rapidly decarbonising world
batteries powering them to
the near term environment
following the onset of wide-
wind turbines and solar panels
and we don’t fully understand
scale economic lockdowns in
- has been well documented
what the magnitudes of the
March, and this has further
in recent years, but Stewart is
forward capital investment
highlighted the importance
keen to stress the effectiveness
decisions are going to be
of copper – ‘the king of all
of copper in medical
equate to considerable savings
The importance of copper
MINING | XANADU MINES
applications, particularly
surgical equipment in my
in preventing the spread of
view.”
deadly bacteria and viruses like COVID-19.
In addition, an early-stage US
X ANADU M INES
AT A G L A N C E
Government-funded study “Another thing the virus has
showed that the virus that
shown us is that we should be
causes COVID-19 remained
moving towards copper in all
viable for up to two to three
medical equipment. Stainless
days on plastic and stainless
steel is often used in medical
steel surfaces, compared to
settings but the material has
just four hours on copper.
many holes that bacteria and superbugs can hide in. Copper
With governments around
just doesn’t have that structure
the world responding to
so it’s a better material for
the economic threat posed
STOCK TICKER ASX:XAM
MARKET CAPITALISATION
US$19.5 million (as of May 22, 2020)
aj
MINING | XANADU MINES
by the COVID-19 pandemic with debt-laden stimulus packages, Xanadu is aiming to position itself strongly for an uptick in the copper market, particularly with its flagship Kharmagtai copper-gold project.
Marching on at Kharmagtai The company delivered a 400% increase in contained copper and a 249% increase in contained gold within the open cut resource at Kharmagtai between 2015 and 2018, with the current mineral resource estimate standing at 598 million tonnes (Mt) containing 1.9 Mt of copper and 4.3 million ounces (Moz) of gold, with a high grade core of 54 Mt at 0.86% copper equivalent. Recent drilling in Q1 further demonstrates the existence of extensive high-grade sections at Kharmagtai, after a pivotal drill intercept at Stockwork Hill revealed that the higher grade zone extends to the East and remains open in that direction.
MINING | XANADU MINES
is the Tier 1 nature of the
Mongolian drilling excellence
project. We can demonstrate
Since it started exploration
the scale and we have that
drilling in South Gobi,
but continuing to grow the
Xanadu has spent time
high-grade is a focus for
building a local supply chain
us because that’s the early
and the company has been
payback from that material.
vindicated in its decision to
It shows that there’s not only
work with Mongolian drilling
material coming to surface
contractors, not least because
and the open cut pit is going to
it has been able to continue
drive the underground in the
operating during the time that
future.”
Mongolia closed its borders
“One thing we are demonstrating at Kharmagtai
in response to the COVID-19 Mineralisation at Kharmagtai
outbreak.
is hosted by very old terrain that has been dismembered
“We have capacity with a team
by faults, which has meant
in Mongolia and a company
that Xanadu has had to piece
called Litho. They’ve been
the geological puzzle back
able to drill holes down to
together in order to build out
1,500 metres with no issues.
the resource in recent years.
In 25 years of experience I haven’t experienced crews that
However, Stewart says the
are more talented and have
geological team has now built
the skill levels to drill some
up what the business calls
of these holes. They’ve been
‘brownfields knowledge’ at
amazing and provided very
Kharmagtai. “This means the
cost-effective exploration.”
risk of drill holes is reduced, so we can be a lot more predictive
Xanadu completed a scoping
with our drill holes. That then
study for the open pit segment
feeds into very low discovery
of the Kharmagtai project
costs.”
Spotlight on
Andrew Stewart
Dr Andrew Stewart is an exploration geologist with over 15 years’ experience in mineral exploration, primarily focused on project generation, project evaluation and exploration strategy development throughout Asia and Eastern Europe. Andrew has particular expertise in porphyry copper-gold and epithermal gold deposits, but has worked across a diverse range of commodities. He holds a BSc (Hons) from Macquarie University and a PhD from the Centre of Ore Deposits and Exploration Studies at the University of Tasmania. During his time at Ivanhoe Mines and Vale, Andrew held various technical and management positions in Mongolia and Indonesia and has been involved in several greenfields discoveries. After providing technical and programme management for Vale in Indonesia and Mongolia, Andrew joined Xanadu Mines as chief geologist leading the gold and base metals project generation and evaluation team in Mongolia. Andrew is now managing director and CEO of Xanadu Mines and chairman of the safety, health and environment committee.
in April 2019, which was an important step in depicting a viable 10-year open cut project with a low strip ratio, along with a healthy NPV and IRR. This undertaking will provide the basis for something special, according to Stewart. “The rationale of the scoping study was purely to show that we already have a project and now can take on a lot more risk as we try to make this into a Tier 1 asset. At the time of the study, the resource was only a quarter drilled, so the scoping study has essentially de-risked our expansion drilling.� Throughout the rest of the year, Xanadu will continue to progress and fund exploration drilling at Kharmagtai, which is located approximately 265 km West of the Red Mountain project. In midMay, the company reported that exploration activities had commenced at Red Mountain in conjunction with JOGMEC.
MINING | XANADU MINES
Teaming up with JOGMEC
expenditure over the next four
situation that requires a
years.
funding solution to help us
The on-ground programme
through and working with a
has been designed to collect
“While Kharmagtai is the
great group like JOGMEC is a
baseline data over the large
engine room for our growth,
way of doing this.”
district to prepare drill targets,
this JV will allow us to
in anticipation of the discovery
progress Red Mountain in the
As an investment destination
of another Tier 1 copper-gold
background at the same time
Mongolia has had a storied
porphyry deposit.
while protecting dilution of the
history down the years,
company,” Stewart says.
but its reputation has been
Meanwhile, the JV itself will
unequivocally enhanced by
allow JOGMEC to earn up to
“We’re a small company
Rio Tinto’s construction of the
a 51% beneficial interest in
and have our hands on two
world-class Oyu Tolgoi copper-
the project by funding up to
potential Tier 1 assets in the
gold mine in record time.
$7.2 million in exploration
South Gobi. This is a rare
MINING | XANADU MINES
Oyu Tolgoi was a landmark
change as more mining
in a cornerstone investor for
development that helped
projects go through. We are
Kharmagtai within the next 18
Mongolian authorities
happy working with Mongolian months.
grasp the potential of its
stakeholders to develop these
underexplored copper belts in
projects and I personally feel
“However, there is a lot of
generating strong tax revenues
that working here is easy.”
exploration to do in the
through further mining
meantime and our idea is to
projects. “I think mining is
The next stage
now a dominant part of the
Overall, Stewart is very pleased
a Tier 1 asset, and we have a
economy here and Mongolia
with Xanadu’s progress in
clear and concise strategy to
relies on it.
advancing the Kharmagtai
do that. It’s about putting the
and Red Mountain projects
funding in place now.”
“There is still a slight
during the last 12 months and
perception issue associated
feels that the next stage for the
with Mongolia but this will
company will involve bringing
really advance Kharmagtai to
Published by Anderson Murray Media Ltd
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