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Xanadu Mines technical review backs major resource update


The now validated data and mineral resource update will be used in an upcoming scoping study.

Drilling activity at Kharmagtai Copper-Gold Project in Mongolia

Quick facts: Xanadu Mines Ltd

Price: 0.041 AUD

Market: ASX
Market Cap: $38.91 m

Xanadu Mines Ltd (ASX:XAM) (TSE:XAM) (FRA:02X) contractor CSA Global visited the tri-listed company’s majority-owned Kharmagtai Copper-Gold Project area in Mongolia during September 2018, finding last month the data was acceptable to use for a mineral resource update.

Site visitor, CSA principal geologist Warren Potma, co-authored a technical report shared with the market with CSA resource manager and principal geologist Dmitry Pertel and AGP Mining Consultants Inc partner and principal process engineer Andy Holloway.

READ: Xanadu Mines reveals major resource upgrade for Kharmagtai

The CSA report dated December 2018 found, “Review and analysis of both the historical and recent quality assurance, quality control (QAQC) data, procedures and protocols indicate that the quality of data is acceptable to allow a mineral resource to be reported in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) guidelines.

“The risk associated with the quality of the data is believed to be low.”

In late October 2018, the company released an interim resource update to use in the underway open-pit scoping study it is preparing for a starter project.

The update increased copper tonnages by 400% and gold by 249% at Kharmagtai in the South Gobi region.

The interim upgrade to the Kharmagtai resource estimate results in a total of 1.936 million tonnes of copper and 4.311 million ounces of gold.

CSA’s report backed the October update, with each author writing their sections “fairly and accurately” supported by the company’s October 31, 2018 news release.

Xanadu’s managing director & CEO Dr Andrew Stewart was pleased with the finding, saying in December 2018, “We are extremely pleased to release the technical report supporting our recent mineral resource upgrade for Kharmagtai.

“This resource upgrade and report represents another step forward for our flagship project Kharmagtai.”

Xanadu’s mineral resources at Kharmagtai in Mongolia

Xanadu’s mineral resources at Kharmagtai in Mongolia

Stewart said at the time of the release, “With a 400% increase in contained copper, we are confident that the upcoming scoping study will show a financially robust open-pit starter project that will pave the way for Kharmagtai to develop into another high-quality Mongolian mining operation.

“With the discovery of Zaraa and mineralisation intersected down to 1,200 vertical metres and still open, we believe there is an opportunity for a very large-scale system.”

Stewart highlighted the company’s discovery costs for copper was 1 cent a pound, rather than the global average of about 4-7 cents a pound.

READ: Xanadu Mines to list today on the Toronto Stock Exchange

Xanadu listed on the Toronto Stock Exchange in October 2018, with its reporting now to follow Ontario Securities Commission, Toronto Stock Exchange and CIM Canadian reporting parameters.

CSA’ technical report, shared with the market last month, takes this into account.

The report which used Micromine pit optimisation modelling featured optimal pit shells and a pit optimisation base case with ore mining and waste mining costs of $2.49 a tonne.

CSA viewed the ‘optimal’ discounted pit shell for the base case was “2,370 metres-long and 1,600-metres wide and approximately 940-metres deep for the combined Altan Tolgoi and Tsagaan Sudal deposits, and it was 630-metres long and 410-metres wide and approximately 240-metres deep for the Zesen Uul deposit.”

The pit shell was used to code a block model so the mineral resources could be divided for open pit and underground mining methods.

Ultimate and optimal pit shells for Kharmagtai, looking north, from CSA’s report

Ultimate and optimal pit shells for Kharmagtai, looking north, from CSA’s report 

The base case elements prices were $1,320 an ounce for gold and $6,834 a tonne for copper while the corresponding selling costs were $1,030 an ounce for gold and $4 a tonne for copper.

READ: Xanadu Mines commences drilling to boost project economics

CSA wrote, “The QP (qualified person Dmitry Pertel) deems that there are reasonable prospects for eventual economic extraction on the following basis: all mineralisation is exposed at surface and therefore amenable to lower cost open pit mining; preliminary metallurgical test work confirmed that Kharmagtai mineralisation is amenable to flotation processes.

“(And) the cut-off grades adopted for reporting — 0.3% copper equivalent (CuEq) for open pit and 0.5% for underground mining methods — are considered reasonable given the mineral resource is likely to be exploited mainly by open cut mining methods, possibly followed by underground methods and processed using flotation techniques.”

Gold recovery was 70% while copper was 85%, with the relative recovery of gold to copper being 82.35%.

READ: Xanadu Mines’ drill result brings Zaraa copper-gold deposit closer to open pit range

The company previously shared that drill results from the Zaraa copper-gold discovery at Kharmagtai put it closer to open pit range.

Zaraa is within 330 metres vertically of surface.

A hole at the discovery returned a near continuous intercept of more than 920 metres of copper and gold mineralisation and ended in porphyry mineralisation at 1,399.5 metres in results reported in July 2018.

READ: Xanadu Mines attracts $10 million for copper-gold project in Mongolia

The company attracted $10 million in funding in June 2018 from domestic and international institutional and sophisticated investors, buoyed by results at the flagship project.

These included 30.4 metres at 0.95% copper and 0.80 g/t gold at Zaraa and a discovery hole that intersected 928.4 metres at 0.30% copper and 0.27 g/t gold from 458 metres.

Xanadu has previously expressed its desire to beef up its copper resources to prepare for increased copper demand as drivers get behind the wheel of electric cars.

An ordinary car is built with about 18 to 49 pounds of copper, while hybrid electric vehicles (HEV) contain about 85 pounds, plug-in hybrid electric vehicles (PHEV) use 132 pounds, battery electric vehicles (BEVs) 183 pounds, hybrid electric buses 196 pounds and battery electric buses 814 pounds.

High-grade copper futures closed at US$2.6695 a pound on Friday, with gold closing at US$1,288.40 an ounce.


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