Xanadu Mines has hit a purple patch with its copper-gold exploration efforts in Mongolia. 

Over the course of the past two days, stellar drilling results have been delivered from each of the company’s two main assets, the Kharmagtai copper-gold project and the Red Mountain joint venture with Japan’s JOGMEC in the South Gobi Desert.

On Wednesday, Xanadu (ASX: XAM) reported it had intersected another broad zone of high-grade gold-rich chalcopyrite and bornite mineralisation beneath the Stockwork Hill deposit at Kharmagtai.

Drill hole KHDDH563 returned an assay of 181.4m at 0.68% Cu and 1.78g/t Au (1.59% CuEq) from 648.6m including 92m at 1.06% Cu and 3.23 g/t Au (2.71% CuEq) from 686m.

KHDDH563 was designed as a scissor hole to hole KHDDH559B, which delivered an intercept of 226.2m at 0.68% copper and 1.43 g/t Au (1.41% CuEq) from 611.8m in mid-February.

“The current drilling continues to deliver to our expectations with drill hole KHDDH563 successfully demonstrating a clear extension of high-grade, gold-rich mineralisation along strike and at depth outside the current resource model,” Xanadu CEO Andrew Stewart said.

“It provides a clear indication of the growth potential that exists through the extension of the high-grade Stockwork Hill resource.”

Hole KHDDH563 has extended the mineralisation 70m south and up-dip of the intercept reported in KHDDH559B.

Xanadu
Caption: Selected images of drill core from KHDDH563

Xanadu is currently drilling another deep diamond hole, KHDDH564, as a step-out 400m to the south where structural information taken from recent drilling suggests there is potential for a repeat of the high-grade bornite mineralisation seen in KHDDH559B and KHDDH563.

The company said on Wednesday that the hole had reached a depth of around 1200m and had entered visible sulphide mineralisation within the predicted target zone at around the 1180m mark.

KHDDH564 also passed through a zone of tourmaline breccia (the main host rock for copper and gold mineralisation) between 570m and 740m.

“Interestingly, this zone of breccia terminated against a fault, indicating it had been offset,” Stewart said.

“Structural work is underway to understand the offset of this fault and determine the location of potentially copper-bearing tourmaline breccia.”

Red Mountain delivers too

The latest news out of Kharmagtai followed a day after Xanadu reported the best drill result to date from Red Mountain, where JOGMEC is spending up to US$7.2 million over four years to earn a 51% interest in the project.

Diamond hole OUDDH100 drilled at the Stairy target intersected  4m at 15.85% Cu from 55m within 16m at 4.09% Cu from 54m.

Xanadu
Caption: Cross-section of the Stairy target at Red Mountain

“We are very encouraged by the intersection of bornite-rich massive sulphide mienralisation associated with the upper part of a porphyry system,” Stewart said.

“This drill hole supports Xanadu’s interpretation that the district has potential to harbour a combination of deposit styles including large-scale porphyries, gold-rich skarns and shallow high-grade massive sulphide/vein-hosted mineralisation.”

The latter may provide options for early development ahead of pursuing potential porphyry systems at depth.

Xanadu has completed the 4,400m stage two drilling program at Red Mountain and the JV partners are awaiting further results before commencing follow-up drilling either this quarter or the September quarter.

Stairy is one of several similar targets within the Red Mountain project area.

The Xanadu team is also in the process of designing follow-up drilling to further test the high-grade bornite zone beneath Stockwork Hill at Kharmagtai.

Building a Tier One asset

Kharmagtai is already one of the largest undeveloped copper-gold deposits owned by an ASX company – the resource currently stands at 600Mt at 0.49% CuEq for 2.9Mt CuEq in contained metal – and one of the few large porphyry systems not controlled by a major.

But the consensus appears to be that it needs to get bigger still to guarantee its future development.

Xanadu chairman Colin Moorhead wants to see at least 1 billion tonnes at a grade of at least 0.5% CuEq (5Mt CuEq of contained metal), while Argonaut analyst George Ross speculated in his recent initiation report on the company that 4-5Mt CuEq metal might be enough to attract a partner with deep pockets to help fund Kharmagtai’s development.

An updated resource estimate for the project is expected to be released shortly before the commencement of a phase two drilling program that will feature a more surgical focus on priority targets that are likely to improve overall grade.

 

This story was developed in collaboration with Xanadu Mines, a Stockhead advertiser at the time of publishing.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.