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Xanadu starts to paint pretty picture

&A attention has shifted to the copper sector and Xanadu Mines Ltd Stewart said a resource update from Kharmagtai is likely sometime this
M is in the frame. year and hoped to deliver high-grade intervals in the ilk of 181.4m @ 0.68%
“We have a serious project and these recent drill holes show that it has copper and 1.78 g/t gold (1.59% copper equivalent) from 648.6m, including
the grade and when we expand the high-grade at Kharmagtai I think it will 92m @ 1.06% and 3.23 g/t (2.71% copper eq.) from 686m in the meantime.
clearly become a standout project globally,” Xanadu chief executive An- “We have put out some exceptional drill holes since mid-March with
drew Stewart told Paydirt of the company’s flagship in Mongolia. some very high-grade intervals showing what we have got at Kharmagtai
Casting further attention on the company’s prospects in Mongolia will be with the biggest resource on the ASX in terms of contained copper and gold
Rio Tinto Ltd’s negotiations with the national Government over the pathway and now starting to hit some outstanding intervals of high-grade mineralisa-
to completing underground development of the massive Oyu Tolgoi project. tion,” Stewart said.
Last month, Oyu Tolgoi – Mongolian Government-owned (34%) in con- “Our focus is on continuing to flesh out this high-grade zone at Stockwork
junction with Turquoise Hill Resources (66%), which Rio Tinto owns 50.8% Hill to see how big it can be.”
– was subject to a new $2.3 billion funding plan to have the underground Stewart has long known that building a sizeable project at Kharmagtai
completed. was going to be a marathon rather than a sprint and with a system spanning
Under the binding HoA between Rio Tinto and Turquoise, a number of 20km boasting a large open pit resource, if Xanadu can expand the high-
funding arrangements will occur, including the re-profiling of principal debt grade component, the economics of the project may be compelling enough
repayments up to $1.4 billion with lenders under the existing terms to better to attract more external attention.
align with the revised mine plan, project timing and cash flows, Rio Tinto “Ultimately all these stories we need to be partnered with a larger mining
stated. company in the future to develop it. Hopefully, we will see M&A pick up and
“Commencing the re-profiling whilst concurrently listening, engaging and you want to be in the top 3-4 projects globally to be developed,” he said.
resolving the concerns of the Government of Mongolia are critical steps “I think a lot of the mining companies have been caught short with their
to maintaining momentum on the timely delivery of the Oyu Tolgoi under- development projects and they need M&A. There is a real lack of genuine
ground project,” Rio Tinto Copper chief executive Bold Baatar said. projects out there that are ASX or TSX-listed and you can probably count on
Open pit mining at Oyu Tolgoi started in 2011 and ore processing two one hand those that the majors want to buy, so I think M&A has to take off.
years later. When underground operations start, Oyu Tolgoi, South Gobi “When I look at the dynamics of copper at the moment, it is all by destruc-
Desert, will become the world’s fourth largest copper mine, while the con- tion. There is a lot of copper coming from the huge old mines in Chile and
centrator established is the largest industrial complex ever built in Mongolia. we need to replace those. You whack the fundamentals of batteries and so
Oyu Tolgoi is the biggest mining project and incurred the largest amount forth on top of that and the fundamentals look good.”
of funding for a single development in the country. – Mark Andrews
Such an undertaking in a country with little mining experience has meant
a few headaches for all parties concerned along the development pipeline.
Commodity price ups and downs have also stymied progress at Oyu
Tolgoi.
While the outlook for gold and copper are strong for the foreseeable fu-
ture and the prospectivity for both in Mongolia is good, market sentiment
towards companies in the country remains cool.
“Yes, there is still a ‘Mongolian discount’ at the moment, but we are see-
ing some very good news coming out of Rio Tinto and obviously they have
a negotiating team in Mongolia at the moment,” Stewart said.
“Mongolia is looking for a fairer deal at Oyu Tolgoi, Rio Tinto are willing to
do a new deal and hopefully in the next few months we will see a new deal Mining
out of that, and I think that needs to be a deal that benefits both. I don’t think
it is hard.” Finance
Beneficial terms for all parties at Oyu Tolgoi could spark renewed interest
in Mongolia’s mining sector, which is sparsely populated by juniors. Specialists
Xanadu, which raised $10.2 million in April, sees that as a distinct advan-
tage and believes it is in a “golden position” in the country.
Domestic and international institutions supporting the recent placement
are backing Xanadu to deliver resource growth and definition of high-grade Debt Raising & Project Finance
bornite-rich zones at depth at the porphyry copper-gold Kharmagtai project, Corporate & Transaction Support
South Gobi. Financial Modelling
Two diamond drill rigs were in operation at Stockwork Hill at the time Specialists in fund raising for the mining sector
of print, with latest results from the new tourmaline breccia zone in KH- We are currently raising funds for mines across copper, gold,
DDH565, including 159m @ 0.31% copper and 0.21 g/t gold (0.41% copper iron ore and tungsten
equivalent) from 323m. Assisting projects across the complete risk spectrum:
Meanwhile, partial results from KHDDH564 included 31m @ 0.53% from very early stage projects (with no JORC) to operating mines
copper and 0.12 g/t gold (0.59% copper equivalent) from 1,176m, including Large funding network including Private Equity /Mining-specific
18m @ 0.79% and 0.15 g/t (0.86% copper eq) from 1,183m, including 4m funds / Gold loans / Asset finance / Commercial banks / NAIF
@ 1.22% and 0.24 g/t (1.35% copper eq) from 1,183m and 3m @ 1.14 g/t
from 1,052m. Further results are expected in mid-May. Call us today to discuss your funding needs
Resources at Kharmagtai include 2.6mt copper equivalent, containing Emma McPherson, Director
1.9mt copper and 4.3 moz gold, with Xanadu considering beefing up ca- emcpherson@rockfinancial.net
pacity with another two rigs at the project, while JOGMEC takes care of an ph 1300 563 047 or 0408 200 814
equally “aggressive” exploration programme at the nearby Red Mountain Level 19, 10 Eagle Street, Brisbane, 4000
project for Xanadu. www.rockfinancial.net

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