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Xanadu Mines upbeat about strong copper market fundamentals

The Kharmagtai project in southern Mongolia is “marching towards” being a Tier 1 discovery.
Proactive CEO Session
Managing director and CEO Andrew Stewart is welcomed to the CEO Session in Melbourne

Xanadu Mines Ltd (ASX:XAM) is upbeat about the market fundamentals for copper with its Kharmagtai project in Mongolia set to take advantage of a looming supply crunch.

Managing director and CEO Andrew Stewart told last week’s Proactive CEO Sessions in Sydney and Melbourne that an annual shortage of up to 10 million tonnes was forecast by 2027.

He said that the company was well placed with the Kharmagtai project “marching towards” being a Tier 1 discovery.

READ: Xanadu Mines in prime position with Mongolian copper project iced with gold

Ongoing drilling is returning broad, high-grade results which look certain to add to the existing resource.

The project has an open cut resource estimate of 598 million tonnes containing 1.9 million tonnes of copper and 4.3 million ounces of gold.

Within this is a shallow open pittable high-grade resource of 54 million tonnes at 0.86% copper equivalent for 317,000 tonnes of copper and 1.13 million ounces of gold.

READ: Xanadu Mines retains speculative buy recommendation from Bell Potter; price target raised

Stewart said that this position had been recognised in a recent Bell Potter Securities report in which the broker retained a ‘speculative buy’ rating and raised the diluted NPV-related valuation by 6% to 55 cents.

This followed a scoping study for the open pit development which confirmed the viability of near-surface copper and gold mineralisation as well as the company’s strategy to explore for high-value large copper porphyry systems in the area.

Positive scoping study

The study 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.

Bell Potter believes the positive study is only an interim one with more significant findings expected to progressively enhance Kharmagtai’s standing and advantages over its peers.

Stewart told investors that it was primarily a copper project in a premier copper belt within southern Mongolia which hosts the nearby major Oyu Tolgoi project and close to the world’s largest copper consumer, China.

He said that the gold-rich cap to the deposit had the potential to act as a hedge for the project.

READ: Xanadu Mines chairman shows faith in copper-gold strategy with on-market transaction

Also attending the CEO Sessions was company executive chairman Darryl Clark who recently demonstrated his confidence in the company’s copper-gold strategy by acquiring shares on-market.

Clark acquired 100,000 shares valued at $10,000 on May 1 and now holds more than 2.021 million in an indirect interest.

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