Xanadu Mines Ltd (ASX:XAM, TSX-V:XAM) has grown the resource of its flagship Kharmagtai copper-gold camp in Mongolia to 1.1 billion tonnes thanks to a mineral resource update.
The precious and base metals asset in the North Asian country's mineral-rich South Gobi region is now reported to host 3 million tonnes of copper and 8 million ounces of gold.
That update represents a more than 50% upgrade on the contained copper estimates and upwards of an 80% spike in gold ounces.
Ultimately, the bolstered resource positions Kharmagtai as one of the largest undeveloped copper assets held by a listed junior globally.
Delivering on aspirational targets
Speaking to the update, Xanadu CEO Dr Andrew Stewart said: “This is a major milestone for Xanadu and positions Kharmagtai as one of the largest undeveloped copper and gold resources on the ASX, and one of the biggest globally.
“Importantly, we have now successfully delivered our medium-term aspirational targets for Kharmagtai with total resource growth to more than 1 billion tonnes, including the higher-grade component of more than 100 million tonnes.
“The higher-grade zones (upwards of 0.8% copper equivalent) have grown from roughly 58 million tonnes in the previous estimate to just on 100 million tonnes with this update.
“This could be a real game-changer for project economics, with better defined and larger high-grade zones, setting the project apart from similarly sized orebodies, with the higher-grade component potentially unlocking project scenarios that could pave the way to put Kharmagtai into production.
Copper-gold increase
The updated Kharmagtai resource sits within the indicated and inferred categories, constrained within open-pit mineralisation from the surface.
Since it completed the 2018 resource update, Xanadu has executed 120 diamond drill holes, covering just under 70,000 metres.
On average, that means the company has grown the resource by 11 million tonnes of copper equivalent a month.
Still, strong exploration upside remains, with the camp’s mineralisation open to the north and at depth.
What’s more, the updated resource covers just 30% of the 8-kilometre-long Kharmagtai Intrusive Complex.
Stewart continued: “A significant increase in gold to copper ratios has resulted in a greater than 80% increase in contained gold, which means higher by-product credits that will be reflected in lower all-in sustaining costs.
“The high-grade core and high gold to copper ratios of the Kharmagtai system are likely to be very important to future project economics, as they provide a degree of optionality for mine development that is not often seen in mining projects of this nature."
Scoping study
With the resource upgrade under its wing, Xanadu is moving towards a scoping study for the Kharmagtai asset.
The key assessment will consider many factors, among them:
- How cohesive, higher-grade zones could drive an early payback of initial capital and bolster the project’s economics;
- Whether lower relative capital intensity can be driven by low-altitude, flat topography, easy access and good nearby infrastructure including water, power, road and rail transport;
- Whether Xanadu can move on very competitive timeframe to first production due to low population density, strong community relations and favourable environmental, social and governance (ESG); and
- How the company can generate a likely high-quality copper concentrate product with strong gold credits and no deleterious elements (including arsenic) based on test-work to date.
Commenting on a future development, Stewart explained: “Many of the largest copper projects worldwide, peers to Kharmagtai, have logistical and social challenges, leading to significant delays and increased capital costs.
“Some projects have been stuck in red tape for so long that their impact on future copper supply is now in doubt.
“By comparison, Kharmagtai has advantages in both areas.
“Logistically, the South Gobi is flat terrain with ready access to industrial water, nearby power, rail and road infrastructure, and proximity to the largest consumers of copper in Asia.
“Socially, Xanadu has a strong social licence to operate and Kharmagtai is in a very low population area.
“Further, the Mongolian regulators support mining development; it’s important to remember that the Oyu Tolgoi pit was able to move from discovery to production in roughly five years, an incredible outcome given the time it takes large mining projects to get off the ground elsewhere."
Next steps
Thanks to the upgrade and move towards the scoping study, Xanadu is one step closer to realising Kharmagtai’s potential as a producing copper-gold play.
Concluding today’s announcement, the Xanadu CEO said the discovery journey was not yet over, owing to the project’s mineralised potential.
“The known deposit is open to the north and at depth, and recent drilling has already intersected high-grade bornite outside the resource,” he explained.
“Step-out drilling continues down-plunge.
“Given the scale of the system, gold credits, infrastructure, logistics and social advantages, Kharmagtai clearly has the potential to become a leading global supplier of copper and a part of the solution to the looming global copper shortage, as the world electrifies and moves towards a carbon neutral future.”