CEO.CA Chairman's Briefing

TORONTO, March 06, 2024 (GLOBE NEWSWIRE) -- Xanadu Mines Ltd (ASX: XAM, TSX: XAM) (Xanadu, XAM or the Company) is pleased to update on metallurgical testwork for the Kharmagtai Project in Mongolia, being developed with the Company’s joint venture partner Zijin Mining Group Co., Ltd. (Zijin). Oxide leach recovery results demonstrate material progress towards one of the multiple uplift scenarios defined in the Kharmagtai Scoping Study¹, with value add likely; reducing mining strip and generating earlier operating cashflows for the Kharmagtai Pre-Feasibility Study (PFS), in addition to sulphide flotation processing of the main mineralised orebody. Upscaled column leach tests, as well as heap leach engineering design work are in progress.

Highlights

• Recent column leaching tests completed on the mineralised oxide portion of the Kharmagtai Mineral Resource Estimate (MRE) delivered promising metallurgical extraction, peaking at 93% copper and 46% gold. Successful extraction occurred over 8-week leach duration, using sample head grade of 0.29% Cu and 0.42g/t Au, at a coarse 6mm particle size.
• MRE totalling approximately 1.3Bt includes 52Mt oxide material, primarily in the top 20m from surface. Additional surface oxide material sits outside the 2023 MRE, representing upside for future leach operations.
• The 2022 PEA concentrated solely on sulphide material processing, with oxide material classified as pre-stripped waste and ascribed negative value.
• The PFS, firmly tracking to budget and schedule, is investigating the transformation of all or part of this PEA liability into an asset, through leaching.
• Oxide processing flow sheet anticipates three stages of leaching, using proprietary, commercially proven techniques used in global operations including Australia, and licensed through Draslovka Mining Process Solutions (DMPS). It comprises acid leach to recover and remove cyanide soluble copper, followed by GlyCat^TM, which involves a glycine leach to neutralise acid, followed by cyanide leach to recover gold and silver.
• Internal review of these results has given good confidence to proceed with next commercialisation phase of large-scale column leach testing. This will enable delivery of the final leach process and engineering design, to PFS confidence level. Next results expected between June and July 2024.

Xanadu’s Executive Chairman & Managing Director, Colin Moorhead said:

“We talked about oxide leaching as a major uplift opportunity in our Scoping Study, and these results have made significant inroads to proving up its viability for commercialised processing, to generate significant early cash. Decision to accelerate this is also made possible given it is surface material that will need to be excavated prior to accessing the main mineralised sulphide deposits. Instead of turning left to the waste dump, our goal is to turn right and place it on a leach pad, where it can turn a negative into a net positive during the early years of Kharmagtai operations; a double benefit for project economics. With continued successful leaching testwork, along with process and engineering design, we expect to deliver oxide heap leaching into the PFS base case and drive real value uplift for all stakeholders.”

Oxide Metallurgical Program

Assays for Selected Samples

Four samples representative of the Kharmagtai oxide zones were sent to DMPS for a preliminary column leach and reactor leach test program, to evaluate gold and copper extraction. These are referenced as follows:

• GE (Golden Eagle Oxide), plus
• several composite samples collected from White Hill, Stockwork Hill and Copper Hill deposits, and classified as follows: GOX (Green Oxide), SOX (Strong Oxide) and ROX (Red Oxide).

Assayed head grade for the four samples are shown in Table 1.

Table 1: Assayed Head Grade for Metallurgical Samples

Testwork Results

Initial testwork focused on the GOX sample which recorded a 49.7% gold extraction on a high cyanide diagnostic leach and a 69.7% acid soluble copper value. A range of alternative lixiviants were then tested for GOX to assess leach recoveries, including glycine via DMPS’s GlyCat^TM and GlyLeach^TM processes, as shown in Table 2.

GlyCat^TM and GlyLeach^TM are environmentally benign, hydrometallurgical processes that can leach copper from oxide, mixed oxide and supergene ores, as well as leach gold under the right conditions.

Glycine is the simplest amino acid and widely available as a bulk reagent. Its unique properties can offer substantial advantages over conventional lixiviants in mineralogical processing:

• Environment/safety: Glycine is stable, water soluble and non-toxic to humans as well as wildlife

• Selectivity: Glycine will solubilise base and precious metals, while iron, magnesium, manganese, silicates, and carbonates remain in the solid phase
• Alkalinity: Leach conditions are at high pH, allowing simple and inexpensive materials for construction
• Low consumption: Glycine is non-volatile (unlike cyanide, ammonia, and hydrochloric acid) and stable under process conditions
• Recycle: Glycine is not chemically consumed in the overall process. It is easily recovered and recycled, and process losses minimised
  

Low cyanide addition, coupled with a glycine-dominant lixiviant, has many beneficial properties, particularly for leaching of precious metals with elevated copper content. This occurs due to copper preferentially bonding to glycine rather than cyanide, thus freeing the cyanide to leach gold.

Table 2: Preliminary Column Leach Test Results

Results indicate that a combination of acid and GlyCat^TM could extract a similar amount of gold and copper as the diagnostic leaches, with column test #6 extracting 49.1% Au and 64.3% Cu, over 10 weeks.

Follow up testwork was then conducted (Figure 1); this involved crushing to three different particle sizes of 3mm, 6mm and 12mm. Results after 8 weeks are shown in Table 3, with the switch from one lixiviant to the other occurring after week 6.

Figure 1. Oxide Column Leach at DMPS Labs

Tests are expected to extend for a further 4 weeks, out to a total 12-week period. Results to date indicate that leaching is accelerated at a finer crush size, and gold and copper extractions are tracking better than expected. It should be noted that extractions presented are based on the assay of leach solutions, as compared to the assay head grades. When a column leach is terminated, the residue solids are sampled and then a precise extraction is calculated based on the assays of the residue.

Table 3: 8-Week Column Leach Test Results Modifying Crushing and Lixiviants

Based on findings from the GOX tests, each of the other three composite samples are undergoing column leach tests at a crush size of 6mm, followed by sequential lixiviant combination of acid and GlyCat^TM. Further tests are expected to run over 12 weeks; full results will be released at completion.

Test Program Scope

There is up to 52Mt of partially oxidised material at Kharmagtai, with the majority located near surface at Stockwork Hill, White Hill and Golden Eagle (see Figure 2). If this material was processed as ore rather than pre-stripping, it could reduce waste rock production by approximately 10% in the early years of the project and generate net revenue rather than net costs.

Sample Selection and Preparation

Samples were selected from three oxide zones GOX, ROX and SOX from White Hill, Copper Hill, Stockwork Hill and Golden Eagle. The geometallurgical domains are defined as follows:

GOX – Green and blue copper oxide products present

SOX – Strongly oxidised, yellow to light brown material with sooty chalcocite and tenorite

ROX – Bright red, strongly oxidised material with chalcocite, tenorite and neotocite present

GEX – Golden Eagle higher grade gold zone. Single Oxide domain.

Figure 2. Oxide Layer Over White Hill & Stockwork Hill – Cross Section Looking West

Samples were collected from core drilled at Stockwork Hill, White Hill, Copper Hill and Golden Eagle deposits at the Kharmagtai project, as being representative of each of these zones. Sample preparation consisted of homogenising and splitting samples “as received” into their respective composites and labelling by sample number (between 1 and 12), followed by crushing and grinding to particle sizes ranging between 3mm and 12mm. Each split was rotary split and homogenised for head analysis and sub-samples taken for testwork. Head assays for Au, Silver (Ag) & Cu were conducted by fire assay for each sample. Prior to leach testwork, samples were cured in 10kg/t sulfuric acid for 24 hours to improve copper extraction.

Metallurgical composite sample head assay grades are detailed in Table 1. Drill hole sample details for composites are outlined in Appendix 1, Table 1, and collar locations for drill holes sampled are outlined in both Figure 3 and Appendix 1, Table 2.

Figure 3: Collar locations for drill holes sampled in metallurgical testwork

Oxide Mineral Resource

The 2023 Mineral Resource Estimate² (MRE) included a 52Mt subset of partially oxidised material at grades comparable to the underlying sulphide deposit, which could be amenable to heap leach rather than being treated as waste. The oxide subset of the 2023 MRE is shown in Tables 5 and 6.

Table 5. Kharmagtai Oxide MRE 2023

Table 6: Kharmagtai Oxide MRE 2023 – by Deposit & Resource classification

• Figure may not sum due to rounding.
• Significant figures do not imply an added level of precision.
• CuEq accounts for Au value and CuEqKt must not be totalled to Au ounces.
• Resource constrained by 0.1%CuEqRec reporting solid in-line with geological analysis by XAM.
• Resource constrained by open cut above nominated mRL level by deposit as follows SH>=720mRL, WH>=915mRL, CH>=1100mRL, ZA>=920mRL, ZE>=945mRL and GE>=845mRL.
• CuEqRec equation (CuEqRec=Cu+Au*0.60049*0.86667) where Au at USD$1400/oz and Cu at USD$3.4/lb was employed according to the Clients' (XAM) direction.
• Au recovery is relative with Cu rec=90% and Au rec=78% (rel Au rec=78/90=86.667% with number according to the Clients' (XM) direction.
• The above reported estimates have taken into account all earlier assumptions including but not limited to, updated long term metal price, foreign exchange and cost assumptions, and mining and metallurgy performance to inform cut-off grades and physical mining parameters used in the estimates in-line with the Clients analysis and direction to SGC.
• Reported at a 0.2% CuEq cut-off grade and inside reporting solid 0.1%CuEq above nominated mRL by deposit area - Resources as at 6 December 2023.
  

Future Testwork

Glycat^TM (using glycine and cyanide as lixiviants) is proving effective in leaching gold, with very little interference on extraction of copper. The next step in testwork is to deliver PFS level results for pilot-scale 2m high columns, testing crushed particle sizes of 20mm, 12mm and 6mm. Results will become available between June and July 2024.

In parallel, an indicative leach process flow sheet and engineering design will be developed, which will be upgraded to PFS level when final column leach test results are delivered.

About Xanadu Mines

Xanadu is an ASX and TSX listed Exploration company operating in Mongolia. We give investors exposure to globally significant, large-scale copper-gold discoveries and low-cost inventory growth. Xanadu maintains a portfolio of exploration projects and remains one of the few junior explorers on the ASX or TSX who jointly control a globally significant copper-gold deposit in our flagship Kharmagtai project. Xanadu is the Operator of a 50-50 JV with Zijin Mining Group in Khuiten Metals Pte Ltd, which controls 76.5% of the Kharmagtai project.

For further information on Xanadu, please visit: www.xanadumines.com or contact:

Colin Moorhead
Executive Chairman & Managing Director
E: colin.moorhead@xanadumines.com 
P: +61 2 8280 7497

This Announcement was authorised for release by Xanadu’s Executive Chair & Managing Director.

Appendix 1: Metallurgical Sample Composition & Location

Table 1: Metallurgical sample details for partially oxidised testwork program

Table 2: Drill hole sample details for oxide leach testwork

Appendix 2: Statements and Disclaimers

Competent Person Statements

The information in this announcement that relates to Mineral Resources is based on information compiled by Mr Robert Spiers, who is responsible for the Mineral Resource estimate. Mr Spiers is a full time Principal Geologist employed by Spiers Geological Consultants (SGC) and is a Member of the Australian Institute of Geoscientists. He 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 Qualified Person as defined in the CIM Guidelines and National Instrument 43-101 and as a Competent Person under JORC Code 2012. Mr Spiers consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

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.

The information in this Announcement that relates to metallurgy and metallurgical testwork has been reviewed by Graham Brock, BSc (Eng), ARSM. Mr Brock is not an employee of the Company but is employed as a contract consultant. Mr Brock is a Fellow of the Australasian Institute of Mining and Metallurgy; he has sufficient experience with the style of processing response and type of deposit under consideration, and to the activities undertaken, to qualify as a competent 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. Mr Brock consents to the inclusion in this report of the contained technical information in the form and context as it appears.

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.

The information in this Announcement relates to the exploration results previously reported in ASX Announcements which are available on the Xanadu website at:

https://www.xanadumines.com/site/investor-centre/asx-announcements 

The Company is not aware of any new, material information or data that is not included in those market announcements.

Copper Equivalent Calculations

The copper equivalent (CuEq) 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.

Copper equivalent (CuEq) grade values were calculated using the formula: CuEq = Cu + Au * 0.60049 * 0.86667.

Where Cu - copper grade (%); Au - gold grade (g/t); 0.60049 - conversion factor (gold to copper); 0.86667 - relative recovery of gold to copper (86.67%).

The copper equivalent formula was based on the following parameters (prices are in USD): Copper price 3.4 $/lb; Gold price 1400 $/oz; Copper recovery 90%; Gold recovery 78%; Relative recovery of gold to copper = 78% / 90% = 86.67%.

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 8 December 2023.

JORC TABLE 1 - SECTION 1 - SAMPLING TECHNIQUES AND DATA

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

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

Mineral Resources are not reported so this is not applicable to this Announcement. Please refer to the Company’s ASX Announcement dated 8 December 2023 for Xanadu’s most recent reported Mineral Resource Estimate and applicable Table 1, Section 3.

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

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

¹ ASX/TSX Announcement 8 April 2022 – Scoping Study Kharmagtai Copper-Gold Project
² ASX/TSX Announcement 8 December 2023 - Kharmagtai Mineral Resource grows by 13% CuEq; including >25% increase in higher-grade core

Photos accompanying this announcement are available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/733f25b0-9b23-4a07-b3d7-739e7ac67a45
https://www.globenewswire.com/NewsRoom/AttachmentNg/fb8df46b-508d-4011-a3a2-4d4c78778999
https://www.globenewswire.com/NewsRoom/AttachmentNg/9b2752e4-b51c-4a22-9ec8-1c9529ea759d

Figure 1

Oxide Column Leach at DMPS Labs

Figure 2

Oxide Layer Over White Hill & Stockwork Hill – Cross Section Looking West

Figure 3

Collar locations for drill holes sampled in metallurgical testwork