Special Report: Explorer’s success in defining a major copper-gold system in Mongolia has been recognised in a widely read stockbroking report.

Xanadu Mines has earned a special mention in the annual Best Undeveloped Projects report prepared by Perth-based stockbroker Argonaut Securities’ mining and metals research team.

Argonaut analyst Matthew Keane identified Xanadu’s (ASX: XAM) Kharmagtai copper-gold project in Mongolia’s South Gobi Desert as one to watch, noting the company’s success in identifying copper-gold porphyries on the Kharmagtai landholding.

“To date, XAM has defined at least eight mineralised porphyry centres, demonstrating an outstanding strike rate on the 19 prospective targets identified on the project,” Keane said.

“Importantly, these porphyry systems are intact and mineralised from surface which could facilitate cheap open pit starter pits followed by bulk underground mining.”

Porphyry systems host many of the world’s largest copper and copper-gold deposits and account for 50-60% of the world’s copper production.

Mongolia's copper belts. Map: Xanadu
Mongolia’s copper belts. Map: Xanadu

Recent progress

In early November, Xanadu announced a resource update for Kharmagtai that lifted the project’s contained metal to 1.9 million tonnes of copper and 4.3 million ounces of gold.

Keane noted that the company planned to release another resource update in early 2019 that will take in the new Zaraa discovery, where drilling has returned a number of impressive intercepts including 139 metres at 0.51% copper and 0.48 g/t gold and 442 metres at 0.35% copper and 0.35 g/t gold.

He said Kharmagtai had now attained the critical mass to warrant development studies, with Xanadu due to deliver a pre-feasibility study on a shallow, high-grade starter project later this year or early next.

Corporate interest in the project was also a possibility.

“We believe Kharmagtai has the footprint to attract the interest of major miners looking for large-scale, bulk mining copper projects,” Keane said.

Argonaut has a speculative buy recommendation on Xanadu.

Xanadu shares closed at 11.5c on Tuesday, capitalising the company at $74.5 million.

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