Xanadu presents $1.4 billion in gold-copper PFS in Mongolia

Xanadu Mines has unveiled a prefeasibility study (PFS) of biblical proportions for its Kharmagtai copper-gold project in Mongolia’s South Gobi Desert, including a pre-tax net present value of US$1.4 billion (AU$2.1 billion) and a mine life of almost three decades.

The study – which confirms the project’s potential as a globally important, low-cost, long-lived mining operation – outlines a robust mine life of 29 years with an internal rate of return (IRR) of 21 percent, marking Kharmagtai as a critical enabler. pillar in bridging the growing global gap between copper supply and demand. It also boasts annual EBITDA of more than US$293.1 million (AU$435 million) for the life of the mine.

Importantly, the 18-month study uses only conservative assumptions about commodity prices, with gold prices at just US$2,100 (AU$3,116) per ounce – significantly lower than rising current highs of US$2,670 (AU$3,962) and copper prices at only US$2100 (AU$3116) per ounce. $4.10 per pound.

With a payback period of four years and initial capital expenditure estimated at US$890 million (A$1.32 billion), the company says the project shows strong financial viability – especially as the use of spot prices for raw materials reduces the IRR to 31 percent and a three-quarter percent increase. annual payback, in addition to a staggering pre-tax net present value of US$2.67 billion (AU3.96 billion).

Management forecasts production of 60,000 tonnes of copper per year, in addition to 170,000 ounces of gold per year for the first eight years, before moving to 80,000 tonnes of copper and 165,000 ounces of gold per year for the final twenty years of production. which is planned as a two-phase expansion of the mine.

The estimated all-in sustaining cost (AISC) for the first eight years is set at $1.25 per pound of copper, putting the project within the world’s lowest cost quartile for production of the red metal. The lowest quartile fundamental costs guarantee the expected economic viability of the project, despite the potential volatility of the raw materials, with the higher priced producers expected to close before Kharmagtai would feel the pressure.

This confirms to an international PFS standard that Kharmagtai is a world-class copper resource, located in a region of South Gobi that is home to several important deposits, including those at Rio Tinto’s Oyu Tolgoi mine. The future development of Kharmagtai into a low-cost, long-lived mine will deliver significant value to our shareholders and provide multi-generational employment and economic opportunities for our stakeholders in Mongolia.

The stunning details of the operation also include a proposed processing capacity of 26 million tonnes per annum (Mtpa) in the first phase, which will double to 52 Mtpa after year eight.

During its life, the project will process 1.27 billion tonnes of ore, producing 2.2 million tonnes of copper and 4.8 million ounces of gold. The project also benefits from a low stripping ratio of 0.6:1 in the first eight years, reducing mining complexity and costs.

Xanadu has simultaneously submitted a mineral resource upgrade and initial ore reserve for the project, lowering the open-mined resource limit to 0.13 percent copper equivalent. It results in a resource estimate increase of about 20 percent, which now stands at 2.2 billion tons at 0.21 percent copper and 0.15 percent gold, for about 4.7 million tons of copper and about 11 million ounces of gold.

The company is now moving to the final pre-construction phase of the Kharmagtai development and expects to complete an international standard bankable feasibility study (BFS) before construction begins in Mongolia in 2026.

The massive development and operational tasks on the project will now be handled by a joint venture partner and Chinese behemoth Zijin Mining, which has a market capitalization estimated at US$63.2 billion (AU93.8 billion).

Xanadu and Zijin have split the joint venture evenly through Khuiten Metals, which controls 76.5 percent of the project. It effectively gives Xanadu a 38.25 percent stake in the giant copper-gold project.

The company has held preliminary financing discussions with several potential financiers, confident that the project’s strong foundations and strategic partnerships, including with Zijin Mining, will help secure the necessary financing.

Kharmagtai is now poised to become a major contributor to global copper supply, especially as the world transitions to a more electrified economy.

With a mine life of nearly three decades, Chinese major partner Zijin will no doubt be keen to progress the mammoth project and gain a foothold in the growing South Gobi copper region – a jurisdiction already home to Rio Tinto’s Oyu Tolgai copper world class. -goldmine.

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