Copper-Gold Mineralisation Expands at Kharmagtai

TORONTO, Dec. 07, 2020 - Xanadu Mines Ltd. (ASX: XAM | TSX: XAM) (Xanadu or the Company) is pleased to announce a significant expansion to mineralisation at the Company’s Kharmagtai copper and gold Project, located within the South Gobi, Mongolia. Kharmagtai is an emerging copper and gold project, within the highly prospective South Gobi Desert, which the Company believes has the potential to be a globally significant, gold rich copper project.

Highlights

• Phase 1 program has completed 17,000 metres out of a 23,000 metre plan, resulting in significant expansion to the mineralised system at Kharmagtai, with ~9,800 metres of assays still pending.
• Includes drilling at the Zaraa Prospect which intersected extensive zones of anomalous copper and gold mineralisation, more than doubling the size of the immediate target zone.
• Also includes drilling at Stockwork Hill which has identified a potential structural repeat of mineralisation below the currently defined Mineral Resource.
• Discovery drilling nearby at the Pechko target area has also identified a large scale, potentially mineralised tourmaline breccia system.
• The Kharmagtai Mineral Resource is currently estimated to contain 1.9 million tonnes of copper and 4.3 million ounces of gold (as announced to ASX on 31 October 2018). An updated Mineral Resource Estimate is planned in H1 CY2021. An updated “Mining Options Study” is also planned.
• Increased news flow from Phase 1 drilling results expected through Q1 CY21 to support a planned Resource Update.

Xanadu’s Chief Executive Officer, Dr Andrew Stewart, said “Kharmagtai is an emerging, globally significant, gold rich porphyry copper system. It contains large zones of relatively higher-grade mineralisation that may represent opportunities to unlock real value. Our exploration strategy remains focused on defining these higher grade zones whilst growing the Mineral Resource through extensions to known deposits such as Stockwork Hill and discovery of new deposits such as Zaraa and potentially Pechko.”

Execution – Phase 1 Underway

The Kharmagtai exploration strategy is constructed in two components, with Phase 1 designed to understand the scale of the mineralised system through extensional drilling with several large step-outs from known zones, following broad geological and geochemical trends. Phase 2 will use the outcomes from Phase 1 to design and execute a more surgical drill program to better define higher-grade zones.

Phase 1 commenced in August 2020 as a program of approximately 23,000 metre diamond core drilling. New geophysical data (see ASX/TSX announcement dated April 15, 2020) revealed that the mineral system is disrupted by a series post-mineral faults that displace higher-grade zones. The resulting structural interpretation was successfully incorporated into the Phase 1 targeting (Figures 1 to 3). Specific objectives were to do the following.

• Test extensions to the known mineralised envelope;
• Find new, internal high-grade zones within that envelope; and
• Test other known copper-gold mineralisation and co-incident geophysical and geochemical anomalies within the Kharmagtai Mining License.

Figure 1. Kharmagtai Mining Lease Plan View with existing, current, and target drilling areas is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/17438e23-a682-45b1-a9f0-10b5428c802b

Figure 2 Kharmagtai Mining Lease Long Section with existing, current, and target drilling areas is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/f0776109-8658-43cd-8349-f220d369c275

Figure 3 Long Section through Copper Hill, White Hill & Stockwork Hill showing target zones is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/9f140ce4-80c1-4001-919f-767b2f55f9d2

Since August 2020, approximately 17,000 metres of the 23,000 metre Phase 1 program have been drilled (Table 1).

Table 1. Phase 1 Exploration Program Status

Stockwork Hill

Four diamond drill holes have been drilled at Stockwork Hill totalling 4,100m. Three drill holes have targeted along strike of the higher grade bornite zone. These holes have encountered several low angle structures that have offset mineralisation and have identified the potential offset to the northern Stockwork Zone at depth. This suggests the higher-grade zone has been shifted to beneath White Hill. Geological models are being updated to incorporate these results. Assays for two holes have been returned (Tables 2 and 3) and assays for the remaining holes are awaited. Once these results are returned final models will be developed and additional drill planned.

Zaraa Prospect

Recent drilling at the Zaraa prospect has been designed to test the dimensions and extensions to the large, mineralised envelope as well as any internal high-grade zones. This mineralised zone is not currently included in the Kharmagtai Mineral Resource Estimate and has the potential to add significant value to the project.

The current drill program has made significant progress in these objectives, with five holes completed. Zaraa mineralisation has been expanded 200m to the south, 200m to the north and 150m to the west. New modelling of these results show that Zaraa is now 700m long, 300m wide and 650m deep and remains open along strike and at depth (Figure 4). This has approximately doubled the size of the Zaraa system. Assay results have been returned for KHDDH534, 534a (previously reported) and partial results for KHDDH542 and KHDDH543 (Table 2). Assays are pending for the remaining holes.

Detailed structural observations made during this program have provided a structural framework which indicates additional extensions may be found (Figure 4). When this structural framework is layered with the existing 3D IP data, a clear offset target is identified. The current drilling identified two large structures. The offset on these structures can be clearly seen in the geology and geochemistry and when the 3D Induced Polarization data is shown a significant target to expand Zaraa is observed.

Additional drilling is currently being planned for Zaraa and will target the offset IP chargeability anomaly in Figure 4 to confirm the location of the large offset zone of interpreted mineralisation.

Figure 4 The Zaraa region showing Zaraa, Sandstorm, Zephyr and Golden Eagle is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/ab514b3c-3bc8-43b3-a90a-04f481eeec27

Discovery Drilling

Pechko

Four diamond drill holes have been drilled at Pechko for a total of 1,900m of drilling. Drill hole KHDDH537 was collared targeting a surface geochemical and sub-surface geophysical target and encountered over 225m of sulphide bearing tourmaline breccia. A 150m step back hole KHDDH538 was drilled to test for higher grade copper beneath KHDDH537 and showed a zonation of increasing copper down plunge. A scissor hole was drilled (KHDDH540) to test the depth continuity of mineralisation. Partial assays have been returned for KHDDH537 and KHDDH538 (Tables 2 and 3), remaining assays are awaited. These results will be combined, and collated and geological models created to vector towards a possible higher-grade core of the tourmaline breccia system.

Camarillo

Two diamond drill holes totalling 1,700m have been collared at Camarillo targeting a new porphyry centre. Drill hole KHDDH539 encountered over 200m of porphyry style veining towards the end of the hole and represents a near miss to a porphyry system. Assay results have been returned for KHDDH539 (Tables 2 and 3) and assays are pending for the second drill hole KHDDH546.

Copper Hill

Two diamond drill holes totalling 770m have been collared at Copper Hill targeting offset extensions. Both holes encountered porphyry veining but only weak mineralisation. Assays are pending for both holes.

Target 10

Two diamond drill holes totalling 800m have been collared at Target 10 targeting a Copper Hill style magnetic feature associated with surface copper and gold anomalism. Both holes encountered porphyry veining but only weak mineralisation. Assays have been returned for KHDDH533 and are pending for KHDDH548 (Tables 2 and 3).

Geological Modelling

The drilling results are continually used to update the >0.2g/t eCu cut-off model. This indicates a there are two large clusters of mineralisation, one (western) surrounding Stockwork Hill, White Hill and Copper HiIl and one (eastern) surrounding Zaraa, Sandstorm, Zephyr and Golden Eagle (Figure 1). The Western Cluster displays copper-gold mineralisation of over 2,000m north-south strike length, 2,000m wide and more than 800m vertically. The Eastern Cluster displays copper-gold mineralisation of over 1,000m north-south strike length, 1,000m wide and more than 800m vertically Drilling continues to expand the footprint of Kharmagtai and remains open to the northwest, south and at depth and confirms Kharmagtai is shaping up to be a large, tier one gold-copper porphyry project.

Red Mountain

Two diamond drill holes have been started at Red Mountain in the past month totalling 193m. The program has been temporarily suspended due a small cluster of COVID-19 cases in a nearby town. Drilling is anticipated to recommence in early January 2021.

Upcoming News Flow

The Company plans to provide several drilling and operational updates over the coming weeks following strong advancement across multiple work streams at Kharmagtai, including the following:

• Drilling Program Phase 1 Results (Q1 CY21)
• Exploration Target Review and Mining Concepts Study (Q1 CY21)
• Resource Update (H1 CY21)
• Drilling Program Phase 2 Results (Q1 to Q3 CY21)
• Updated Concept Study and Gating Decision (Q4 CY21 to Q1 CY22)
  

COVID in Mongolia

On 11 November 2020, the Government of Mongolia announced measures to halt community transmission of COVID-19, following positive tests outside of quarantine in Ulaanbaatar. This includes an initial lockdown across the country, currently scheduled to finish on 11 December 2020.

The Government of Mongolia has taken a conservative approach to managing COVID-19, closing its borders early in the year, and to date the Mongolian economy has remained largely open. The action announced by the Government is consistent with this conservative approach.

Mining and exploration facilities have been able to continue operation through this period, however a temporary reduction in assay lab capacity in Ulaanbaatar will likely delay drilling results and news flow. The Kharmagtai operation continues its exploration activities, currently operating two diamond drill rigs. The Red Mountain exploration program is anticipated to commence in the January quarter.

Extraordinary General Meeting

Xanadu has scheduled an Extraordinary General Meeting (EGM) on 23 December 2020 to request shareholder approval to add a share price vesting condition to option grants for Executive Directors. Please refer to the Notice of Meeting available on the Xanadu website. These share price vesting conditions will also apply to Executives under the Employee Share Option Plan. Xanadu recognises the timing of this EGM just prior to the holiday break and encourages all shareholders to vote their proxies prior to the meeting.

About Xanadu Mines

Xanadu is an ASX and TSX listed Exploration company that discovers and defines globally significant porphyry copper-gold assets in Mongolia. We give investors exposure to large scale copper-gold discoveries and low-cost inventory growth, and we create liquidity events for shareholders at peak value points in the mining life cycle. Xanadu maintains a portfolio of exploration projects and remains one of the few junior explorers on the ASX or TSX who control an emerging Tier 1 copper-gold deposit in our flagship Kharmagtai project. For information on Xanadu visit: www.xanadumines.com.

Andrew Stewart
CEO
Xanadu Mines Ltd.
Andrew.stewart@xanadumines.com
+61 409 819 922

This Announcement was authorised for release by Xanadu’s Board of Directors.

Appendix 1: Drilling Results

Table 2: Recent Drill hole details (KH prefix = Kharmagtai, OU prefix = Red Mountain)

Table 3: Kharmagtai significant drill results

Appendix 2: Statements and Disclaimers

Mineral Resources and Ore Reserves Reporting Requirements

The 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code 2012) sets out minimum standards, recommendations and guidelines for Public Reporting in Australasia of Exploration Results, Mineral Resources and Ore Reserves. The Information contained in this Announcement has been presented in accordance with the JORC Code 2012.

Competent Person Statement

The information in this announcement that relates to exploration results is based on information compiled by Dr Andrew Stewart, who is responsible for the exploration data, comments on exploration target sizes, QA/QC and geological interpretation and information. Dr Stewart, who is an employee of Xanadu and is a Member of the Australasian Institute of Geoscientists, has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as the “Competent Person” as defined in the 2012 Edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves and the National Instrument 43-101. Dr Stewart consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

Copper Equivalent Calculations

The copper equivalent (eCu) calculation represents the total metal value for each metal, multiplied by the conversion factor, summed and expressed in equivalent copper percentage with a metallurgical recovery factor applied. The copper equivalent calculation used is based off the eCu calculation defined by CSA in the 2018 Mineral Resource Upgrade.

Copper equivalent (eCu) grade values were calculated using the following formula:

Forward-Looking Statements

Certain statements contained in this Announcement, including information as to the future financial or operating performance of Xanadu and its projects may also include statements which are ‘forward‐looking statements’ that may include, amongst other things, statements regarding targets, estimates and assumptions in respect of mineral reserves and mineral resources and anticipated grades and recovery rates, production and prices, recovery costs and results, capital expenditures and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions. These ‘forward-looking statements’ are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Xanadu, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies and involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward‐looking statements.

Xanadu disclaims any intent or obligation to update publicly or release any revisions to any forward‐looking statements, whether as a result of new information, future events, circumstances or results or otherwise after the date of this Announcement or to reflect the occurrence of unanticipated events, other than required by the Corporations Act 2001 (Cth) and the Listing Rules of the Australian Securities Exchange (ASX) and Toronto Stock Exchange (TSX). The words ‘believe’, ‘expect’, ‘anticipate’, ‘indicate’, ‘contemplate’, ‘target’, ‘plan’, ‘intends’, ‘continue’, ‘budget’, ‘estimate’, ‘may’, ‘will’, ‘schedule’ and similar expressions identify forward‐looking statements.

All ‘forward‐looking statements’ made in this Announcement are qualified by the foregoing cautionary statements. Investors are cautioned that ‘forward‐looking statements’ are not guarantee of future performance and accordingly investors are cautioned not to put undue reliance on ‘forward‐looking statements’ due to the inherent uncertainty therein.

For further information please visit the Xanadu Mines’ Website at www.xanadumines.com.

Appendix 3: Kharmagtai Table 1 (JORC 2012)

Set out below is Section 1 and Section 2 of Table 1 under the JORC Code, 2012 Edition for the Kharmagtai project. Data provided by Xanadu. This Table 1 updates the JORC Table 1 disclosure dated 11 April 2019.

JORC TABLE 1 - SECTION 1 - SAMPLING TECHNIQUES AND DATA

JORC TABLE 1 - SECTION 2 - REPORTING OF EXPLORATION RESULTS

(Criteria in this section apply to all succeeding sections).

JORC TABLE 1 - SECTION 3 - ESTIMATION AND REPORTING OF MINERAL RESOURCES

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)

JORC TABLE 1 - SECTION 4 - ESTIMATION AND REPORTING OF ORE RESERVES

Ore Reserves are not reported so this is not applicable to this announcement.