Xanadu Mines (ASX: XAM) has unearthed four new high-grade copper targets from geological mapping, surface rock-chip sampling and geophysics fieldwork at its Sant Tolgoi copper project in Western Mongolia with surface copper assays hitting up to 2.1 per cent.
The new key drill targets stretch across a four kilometre east-west shear on a western extension of the controlling Khangai Fault system. The data shows up strongly charged geophysical anomalies with deep density contrasts and remnant magnetics, all pointing to potential mineralised intrusions.
The company is now planning a 3000-metre reconnaissance drill program in the first half of next year seeking to test all four targets for massive sulphide copper and nickel.
Management says the exploration program at Sant Tolgoi followed a highly regimented process. Before being included as a potential target, all investigations firstly focused on outcropping mafic intrusions ahead of significant assay results. The company then married up these results with the geochemical survey and finally matched them to any elevated geophysics data that lit up within 100 metres of the surface.
Target one, which measures 500m by 300m, picked up malachite and azurite at surface – copper oxides normally associated with supergene mineralisation - and copper grades of up to one per cent from rock chip samples. The results were highly correlated with the magnetic, gravity, Induced Polarisation (IP) and geochemical test results conducted at site and suggest a conductive zone potentially of massive sulphides, surrounded by a resistive halo.
Target two, the furthest east of all the anomalies, stretches across a 300m by 50m area and shows similar magnetic and gravity signatures to the first target, picking up high-grade copper of 2.1 per cent in rock chip assays, overlaid with strong geochemical markers.
Targets three and four are both considered blind targets as they are under cover, but still carry similar magnetic and gravity features to the other two and measure about the same width and length as target one and two.
Having signed a farm-in agreement in January with United States-based STSM LLC, Xanadu now holds the rights to earn up to 80 per cent of the Sant Tolgoi copper project which spans some 40 square kilometres.
Under the terms of the deal, Xanadu can earn 51 per cent by spending US$1 million (AU$1.5 million) on exploration over 24 months. The company can then increase its interest to 80 per cent by sole-funding a further US$10 million (AU$15 million) on exploration before converting the license to a mining lease.
Xanadu is also rapidly progressing its flagship Kharmagtai copper-gold project, in Mongolia’s South Gobi Desert, having recently tabled a prefeasibility study, that revealed a massive US$1.4 billion (AU$2.14 million) pre-tax net present value for the asset.
The Kharmagtrai project is jointly owned with by Chinese giant Zigin Mining with Xanadu holding a 38.25 per cent stake.
With a four-year payback period and initial capital expenditure estimated at US$890 million (AU$1.32 billion), the mine is projected to spit out an annual EBITDA of US$293.1 million (AU$435 million) for the 29-year mine life, assuming an ultra-conservative gold price of US$2100 (AU$3116) an ounce and a US$4.10 per pound copper price.
The feasibility study also forecast an annual production of 60,000 tonnes of copper and 170,000 ounces of gold for the first eight years, before increasing to 80,000 tonnes of copper and 165,000 ounces of gold annually in the following two decades.
In opening up another exploration front in Mongolia with the Sant Tolgoi project, Xanadu appears to be signalling its intent to remain tightly tethered to the county and the potential mineral treasures it may contain.
And with drilling due to start in the next few months, hopes will be high the company can replicate its earlier huge successes.
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