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Xanadu bringing ESG focus to Mongolian copper-gold project

Tue 26 Jul 22, 2:02pm (AEST)
Traditional yurts set up on Mongolian grassland
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Key Points

  • Xanadu Mines has published its second sustainability report in the June quarter attached to its 8Moz Kharmagati project
  • Kharmagati is a copper-gold play in Mongolia’s Omnogovi Province, the same area where Rio Tinto projects are based
  • JV agreement with partner Zijin being finalised ahead of exploration plan implementation

Xanadu Mines (ASX:XAM) is partnering up with China’s Zijin Mining Group, a global leading copper producer, to develop the Kharmagati copper-gold project in Mongolia’s Omnogovi Province.

That same province is home to Rio Tinto’s mammoth Oyu Tolgoi mine. 

Xanadu recently published its keystone scoping study backing the project, encouraging the board to move to a pre-feasibility study expected for delivery in early 2024.

Worth noting, Xanadu and Zijin are bringing an ESG bent to the region. Xanadu has published a second sustainability report in the June quarter.

That report has determined a low environmental risk profile attached to the project. 

It further notes the acreage is bolstered by existing and established infrastructure on-site; including rail, power transmission, and available water assets. 

Come get ‘em Kharmagati 

Since 2018, Xanadu has grown Kharmagati's resource to 8Moz of gold and 3Mtn of copper. 

Currently, mineralisation remains open in all directions on-site and ongoing drilling is underway to further define mineral resources. 

A four year payback is expected for the mine with initial capital expenditure valued at US$690m for an open pit development and associated processing infrastructure. 

The internal rate of return for Kharmagati is tipped at 20% after tax across a thirty year mine life. 

Zijin set to pour millions into project 

Xanadu and Zijin formed the project partnership back in April this year. 

Under an initial agreement, Zijin is to invest in Xanadu at the corporate and operational level.

It commenced this in April with the acquisition of 139m shares. Zijin has since picked up a 9.98% shareholding in the company.

Two further placements are slated in the near future, which will see Zijin increase its stake to a 19.99% interest—at the same time the partnership creates a 50/50 JV in Khuiten Metals, currently owned outright by Xanadu. 

Khuiten Metals holds a 76.5% interest in the Kharmagati project; and Zijin will pay Xanadu US$35m for half of Khuiten. 

While not related to Xanadu directly, it's worthwhile getting an idea of Zijin's international footprint. The map above locates all of Zijin's gold and copper projects around the world.
While not related to Xanadu directly, it's worthwhile getting an idea of Zijin's international footprint. The map above locates all of Zijin's gold and copper projects around the world.
Xanadu was a Market Index client at the time of publishing. All coverage contains factual information only and should not be interpreted as opinion of 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. Email Jon at [email protected].

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