Mongolia-based Xanadu Mines signs non-binding gas offtake with ASX-listed Jade Gas

Mongolian-based copper-gold explorer and future mine developer Xanadu Mines (ASX:XAM) on Thursday executed a non-binding Memorandum of Understanding (MOU) for up to 120MW of gas offtake from nearby peer Jade Gas (ASX:JGH).

That 120MW capacity is intended to power Xanadu’s upcoming Kharmagtai copper-gold project also located in Mongolia’s South Gobi desert region. 

While the contract is non-binding, its general intention is for Jade’s future TTCBM natural gas project, located some 80km south-west, to provide fuel to the Kharmagtai Project. 

The Kharmagtai Project is expected to boast a 30 year mine life. 

On Wednesday, it was further supported by Chinese mining giant Zijin to the tune of $35m, a Chinese publicly listed company with a market cap of $58bn. 

The interest of the Chinese heavyweight is a recurring theme for ASX smallcaps operating in South Gobi.

 Zijin’s interest is similar to that of PetroChina’s interest in TMK Energy’s (ASX:TMK) Gurvantes XXXV natural gas play. 

MOU terms 

Under the current MOU, Xanadu has a non-exclusive option for gas supply from Jade’s future TTCBM gas play. 

However, Xanadu Mines notes the two companies are now entering negotiations to work towards a legally binding MOU offtake agreement which will lock in future energy supply as an operational certainty. 

Xanadu Mines expects to see that binding agreement published after Jade launches its TTCBM pilot plant production program at some point in 2023. 

Natural gas better than coal 

“The Kharmagtai Copper-Gold Project in the South Gobi desert will be Mongolia’s next world class copper mine which will be designed to specifically minimise scope one emissions,” Xanadu Mines boss Colin Moorhead said. 

Scope one emissions, in ESG vernacular, are emissions created directly at the location of a project. 

“This forms a critical part of our renewable future, and we are determined to source our energy from within Mongolia,” Moorhead added. 

“Subject to the outcomes of the pre-feasibility study, we look forward to working with the Jade team to put in place a long-term gas contract.” 

Jade Gas boss Chris Jamieson echoed Moorhead’s sentiments. 

“The MOU with Xanadu demonstrates the clear demand for new and cleaner sources of energy on our doorstep,” he said. 

A look at Xanadu Mines' six month charts

Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Xanadu 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.