Xanadu Mines (ASX: XAM) has confirmed it is in the final stages of completing a prefeasibility study (PFS) on its Kharmagtai copper-gold project that sits in Mongolia’s South Gobi region.
The company recently handpassed operational duties for the massive near-term project to joint venture (JV) partner, Shanghai-Hong Kong Stock-Exchange listed Chinese behemoth Zijin Mining, which has a market capitalisation estimated at US$56.8 billion (AU$84 billion).
The transition to Zijin began on September 10 as per the JV agreement previously agreed upon by both parties. The two firms have an evenly-split JV through Khuiten Metals, which controls 76.5 per cent of the project. Effectively, it provides Xanadu with a 38.25 per cent interest in the potentially-mammoth future operation, where the aim is to begin concentrate production in late 2027, or early in 2028.
Management says the PFS is in the final stages of technical review and evaluation and it has taken additional time to finalise both the mine design and independent reviews to ensure a higher standard. The PFS is expected to be revealed in about a fortnight.
Xanadu says it maintains a responsibility to deliver the PFS, which is fully-funded by Zijin’s initial US$35 million (AU$50.6 million) investment into the bulk-scale project, to Australian and Canadian standards.
Planning is now underway for a bankable feasibility study (BFS) and management is in discussions with potential funding sources, in addition to other interested parties via its advisers, to maintain a healthy stake in the project. The goal for the project, subject to approval and funding, to launch into the final stages of pre-construction approvals and permitting next year.
The Kharmagtai PFS is coming together and will demonstrate its potential as a large-scale, high-value copper-gold mine. We have taken additional time to ensure final work and technical reviews are at our expected standard, which is not unusual for major projects of this scale and complexity.
Xanadu Mines Executive Chairman and Managing Director Colin Moorhead
The company recently revealed that its metallurgical testwork highlighted impressive recovery levels of 80 per cent from sulphide feed and a high-grade concentrate with low impurities. The potentially-saleable concentrate shows grades of up to 25 per cent copper and 25 grams per tonne gold from the porphyry deposits within its ground.
The testwork results, which will be included in the soon-to-be-released PFS, build upon previous testing used for a 2022 scoping study.
Xanadu says the key objectives of the program included ore hardness and comminution attributes, optimal grind sizing, gravity gold recoveries and copper-gold recoveries by froth flotation. It says that its significant PFS data set provides the basis for product quality, overall recovery levels and process engineering design.
The combined process plant is expected to deliver average recoveries of about 81 per cent copper and 80 per cent gold from sulphide feed, which will be made up of gravity gold recoveries of 10 per cent and simple flotation recovery of 81 per cent copper and 63 per cent gold. Carbon-in-leach (CIL) recovery adds a further 7 per cent gold.
Management added that using the LCT method with the addition of sodium cyanide lifted the copper concentrate grade to 26.3 per cent and recovery levels remained the same.
The Kharmagtai project has an existing mineral resource estimate of 3.8 million tonnes of copper and 9.3 million ounces of gold. It is anticipated to initially be a bulk-scale open-pit operation with a 30-year mine life.
The operation has a mining licence across a 40-square-kilometre district and more than 280km of drilling has been completed at the project, with a big portion of the resource sitting in the indicated category.
The renowned Rio Tinto-Mongolian Government’s jointly-owned Oyu Tolgoi mine also sits within the South Gobi Desert and is considered one of the world’s biggest copper-gold deposits. Xanadu says Kharmagtai’s open-pit potential is similar to Oyu Tolgoi, albeit without the huge underground development.
Xanadu holds a sizeable stake in Kharmagtai’s colossal copper-gold deposit. With copper prices up more than 26 per cent this year and starting to show signs of perhaps joining gold on a withering price run, it may just prove to be a great mining investment.
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