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Xanadu Mines scoping study confirms potential of Kharmagtai Copper-Gold Project in Mongolia

Metallurgial test work is now in progress to refine the recoveries of copper and gold reporting to concentrate.
Map of project site
Kharmagtai is 100 kilometres northwest of the massive Oyu Tolgoi Copper-Gold Project

Xanadu Mines Ltd (ASX:XAM) has completed an open pit scoping study at the Kharmagtai Copper-Gold Project in Mongolia, which confirmed the viability of near-surface copper and gold mineralisation.

The study confirms the company’s strategy to explore for high-value large copper porphyry systems in the area.

It has identified opportunities for further upside from extending the life of the planned open pit mine, assessing higher-grade underground options and evaluating oxide gold potential near-surface at several locations.

READ: Xanadu Mines makes board changes to reflect renewed Australian market focus

Xanadu's managing director and CEO Andrew Stewart said the open pit study clearly demonstrated that the Kharmagtai Copper-Gold Project was one of the leading development assets globally today.

 Location of the Kharmagtai project in the South Gobi porphyry copper belt.

He said: “The scoping study indicates the potential to develop a low strip ratio open pit mining operation in an accelerated time frame, with rapid payback of the life-of-mine infrastructure for future open pit and underground mining operations.

“Whatever lens you look through, whether it is value, strip ratio, cost, mine life, production profile or scalability we believe Kharmagtai has the potential to be an outstanding project.

“The study identifies many opportunities for further upside that will improve project economics both from extending the life of the open pit mine and targeting the high-grade Stockwork Hill and Copper Hill underground resources which represent a clear and compelling path to value creation and the ability to expand into a larger resource.”

The scoping study focuses on three zones of mineralisation – the Stockwork Hill, White Hill and Copper Hill deposits on which the upgraded resource estimate for Kharmagtai was based.

The mineral resource is unchanged from October 31, 2018, and demonstrates the mineralisation is robust and continuous with over 22% of the resource classified in the indicated category.

Summary of resources presented in the October 31, 2018, mineral resource report.

Optimisation of the mineral resource block model was completed using the Lerch-Grossman algorithm within Midnight Software – the optimised pits were then scheduled and pit designs were applied resulting in four phases of mining at While Hill, two phases at Stockwork Hill and a single phase at Copper Hill.

The study recommends that mining begins at Copper Hill targeting high-grade material, while the pre-strip is initiated for the White Hill and Stock Work Hill areas.

When the pre-strip is complete mining will proceed in phases assessing mineralisation from all three deposits.

Additional drilling planned

Based on the results, the company will progress additional drilling at the project and proceed with more advanced mining studies.

Underground mining targeting the high-grade Stockwork Hill and Copper Hill deposits has not been considered in this study but represents a compelling path to further value creation and the ability to expand into a larger project within the current and any future mineral resource upgrade.

READ: Xanadu Mines measures up to 92.5% gold recoveries at Golden Eagle target

Stewart said: "Excellent oxide gold recoveries at Golden Eagle complement the existing copper-gold resources and represent the opportunity for a low cost, high-value gold leach operation which could be run early in the development life of Kharmagtai, injecting significant cash into the project to offset the cost of developing a large-scale copper-gold deposit.

"Whilst the current resource provides an excellent platform for the company to join the ranks of copper producers in the coming years, we believe that the exploration potential holds significant value for shareholders.

"We are excited with recent drilling below the Stockwork Hill deposit which has demonstrated the existence of a significant new zone of bornite gold-rich porphyry mineralisation along strike and at depth of the current open pit resource.

"In addition, we are having success with our mineral resource evaluation drilling at the new Zaara discovery and Golden Eagle oxide gold prospect.

"We are very confident that these results will provide the basis for a significant increase in the size and grade of the overall Kharmagtai deposit and have a positive impact on ongoing economic studies.”

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