Shallow gold could hold the key to unlocking bigger returns for Xanadu
Special Report: Xanadu Mines’ efforts to prove up a source of early cashflow at its flagship Kharmagtai project in Mongolia are off to a strong start, with more shallow gold mineralisation identified in the latest round of drilling.
Since around the start of this financial year, the focus at Kharmagtai has been on defining enough shallow oxide gold to support a start-up heap leach operation, potentially providing early cashflow and presenting alternative financing options for the development of the project’s large copper-gold resource.
In August, Xanadu reported “exceptional” oxide gold results from drilling above the Stockwork Hill copper-gold porphyry, one of three deposits that make up the existing copper-gold resource at Kharmagtai.
The company followed this up on Tuesday with the first results from drilling of the oxide zone at Golden Eagle that also pointed to the potential for a significant shallow gold resource.
The results from the first eight holes assayed from Golden Eagle included 30 metres at 1.34 grams of gold per tonne from a depth of 37 metres including eight metres at 3.34 grams per tonne from 38 metres and six metres at 3.94 grams per tonne from 40 metres and 38.4 metres at 1.25 grams per tonne from 34 metres including 18 metres at 2.12 grams per tonne from 35 metres and 10 metres at 3.02 grams per tonne from 39 metres.
Golden Eagle is the biggest of eight oxide gold targets Xanadu has identified and reviewed within the Kharmagtai tenements.
The company has established an exploration target of 1-1.32 million ounces of recoverable gold for Golden Eagle alone.
“This initial drill program [at Golden Eagle] is designed to expand the system and confirm the continuity of oxide gold mineralisation,” Chief Executive Andrew Stewart said.
“Existing metallurgy from Gold Eagle is extremely encouraging and this zone of mineralisation has returned recoveries of up to 92.56%.”
Assays from the final hole completed as part of the initial nine-hole program at Golden Eagle are expected in coming weeks.
Stewart said the company was encouraged by what it had seen at Stockwork Hill and Golden Eagle and further progression of the oxide gold opportunity would be important in achieving the long-running objective of developing Mongolia’s next large-scale open-pit copper and gold deposit.
“The new results demonstrate clear progress, and given Kharmagtai sits on a granted mining lease with a registered water resource and an established power supply nearby, we have the ability to move quickly on an oxide gold project,” he said.
“Our current strategy of seeking high-return options via an oxide gold project is focused on providing the capital needed to advance that larger scale copper and gold project.”
The larger project at Kharmagtai will potentially come online at around the same time industry forecasters are predicting the emergence of a significant supply gap in the global copper market.
CRU Group anticipates the market moving into deficit in 2022 and a supply shortfall of 270,000 tonnes in 2023, while Wood Mackenzie is predicting a 10 million tonne supply gap by 2027.