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Xanadu Mines kicks off water drilling as Kharmagtai PFS looms

Xanadu Mines has commenced a water drilling program at its Kharmagtai copper-gold project in Mongolia. Credit: File

Xanadu Mines (ASX: XAM) has kicked off a hydrological drill program at its Kharmagtai copper-gold project in Mongolia as it prepares to deliver its upcoming preliminary feasibility study (PFS) into the operation.

Management says data from the program will be compiled into a hydrology database for use in site water balance for the final Kharmagtai PFS design, which is assessing ultimate growth of up to 40 million tonnes per annum processing throughput at the operation.

The hydrological campaign includes using two diamond rigs to drill 18 observation bores for 3700m and another 1350m of drilling to deliver four production bores used in pump testing.

Drilling and other field work will be conducted in the Zagiin Usnii Khudag (ZUK) basin to upgrade and expand the existing ZUK reserve to meet project water requirements to PFS-level confidence.

According to the company’s 2022 scoping study, supply is planned to be sourced from a water resource 8km from Kharmagtai, established by Rio Tinto as part of the project’s mining license application, which was established in 2013. The final PFS water report is expected to be completed in July.

Last year, the company completed two phases of its strategic partnership with China’s giant Zinjin Mining Group, providing access to funding for its recent exploration blitz at the operation. The deal saw Zijin invest US$35 million (AU$52 million), which will also be used to complete the Kharmagtai PFS.

A 50:50 joint venture (JV) has been created between the two partners at a project level, with Xanadu to be the operator on the ground. The partnership has allocated 18 months to knock over the PFS, which is expected to be completed this year, while an earlier scoping study identified several upside opportunities that could materially upgrade the economics of the project.

The company’s flagship Kharmagtai project hosts a massive mineral resource of 1.3 billion tonnes at 0.3 per cent copper and 0.2g/t gold for 3.4 million tonnes of contained copper and 8.5 million gold ounces. The total resource includes 52 million tonnes of oxide material primarily in the top 20m from the surface.

Water is a critical input to the Kharmagtai PFS project, and the study team is aggressively driving this program forward, following a pause during the cold winter months. We are confident in this field program and aim to demonstrate that, to a PFS standard, there is an adequate supply of water for Kharmagtai, to ensure its successful delivery as Mongolia’s next major copper-gold mine in the south Gobi region of Mongolia.
Xanadu Mines executive chairman and managing director Colin Moorhead

Once the PFS is completed, and during the final stage of development, the Kharmagtai project will undertake a comprehensive drill, test and construction program to bring its target water sources to a full production standard, which is required to register a Mongolian Production Reserve for extraction during mine operations.

Management says to ensure the operation is ready to commence pre-stripping and ore mining in early 2027, the reserve is targeted for completion in the first half of next year to support mining permit approvals by the end of 2025.

The hydrological drill campaign is another positive step forward for Xanadu which is making significant progress towards releasing its upcoming PFS into its impressive Kharmagtai project in Mongolia.

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