Broad and shallow gold appears to be the trend at Xanadu Mines’ Mongolian Red Mountain play

Tue 27 Sep 22, 10:58am (AEDT)
A statue of Genghis Khan located in Mongolia-s capital Ulaanbaatar
Source: Unsplash

Key Points

  • Xanadu is in receipt of the first 1,1750m of its 6,500m trenching exploration campaign at Red Mountain
  • Initial prospect of interest, ‘Target 33,’ provided evidence of broad gold mineralisation at shallow depths
  • Significant intercepts show low-mid grade gold in significant thickness at less than 60m from surface

Xanadu Mines (ASX:XAM) is today reporting its geotech team’s discovery of broad gold mineralisation relatively shallow to the surface at its Red Mountain copper-gold project in Mongolia’s Dornogovi Province, some 420km southeast of capital Ulaanbaatar. 

The project landed on the radar of Chinese mining giant Zijin, which now holds a 10% stake in the project. In April, the company saw Zijin pick up a 9.98% share in Xanadu through the acquisition of 139m ordinary fully paid shares at 4c for $5.56m. 

Zijin has since moved to pick up more of the company

What helps in Mongolia? A Chinese heavyweight

While a gentle relationship building process remains underway between the relatively new Albanese ALP government, and that of Xi Jinping’s, industrial collaboration between the Australian and Chinese private sectors remains robust as ever through 2022. 

Zijin is pouring millions into the copper-gold project, which boasts a strong ESG focus.

This focus prompted the company to use a novel downstream refining technique requiring less liquid cyanide than usually utilised in gold operations. 

Xanadu notes negotiations surrounding the pending acquisition of a 10% stake remain ongoing. 

What is Xanadu reporting? 

Today’s discovery of broad shallow gold has been evidenced in assay results for the first 1,170m of assay results from a 6,500m trenching program on-site—those assays provide data from a prospect area the team is targeting called ‘Target 33.’ 

Trenching target OUTR109 is highlighted in today’s results, posting the below grade information. 

Note investor information provider Undervalued Equity describes high grade gold as concentrations over 5 grams per tonne of ore (5g/t); many Australian projects at 4g/t are also considered high grade. 

  • 18m @ 0.81g/t gold from 50m depth 

  • 32m @ 0.60g/t gold from 50m depth 

  • 10m @ 1.23g/t gold from 58m depth 

All results come from Trench OUTR109, but each reflects a different drillhole. 

While grades may fall short of high-grade cutoffs published by Undervalued Equity, it’s worth remembering that projects with shallow mid-grade gold can be more profitable than operations with small amounts of high-grade gold at significant depth. 

With that in mind, it’s worth highlighting historical assay data from Red Mountain (outside OUTR109,) which included substantially more eye-catching results in four drill holes: 

  • 6.0m @ 21.57g/t gold from surface (OUDDH040)

  • 6.3m @ 6.67g/t gold from 15m depth (OUDDH035)

  • 9.5m @ 21.06g/t from surface (OUDDH043)

  • 6.0m @ 15.43g/t from surface (OUDDH044)

Solid start: Management

“We are encouraged by this solid start to the Red Mountain program” Xanadu Mines MD Colin Moorhead said. 

“Initial results from T33 outline a zone of strongly anomalous gold at surface, more than 0.2g/t, that extends for 350m along strike and 80m wide.” 

“Within this zone, in turn, is a higher-grade core greater than 1g/t. We look forward to the remaining trenching assays, which will define future drilling.” 

A look at Xanadu's three month charts
A look at Xanadu's three month charts
Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Xanadu Mines was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.


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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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