Xanadu hands reins for Mongolian project to | Australian Markets

Xanadu Mines has handed over the reins of its flagship Kharmagtai copper-gold project in Mongolia, following the profitable transition of operatorship to its three way partnership accomplice, Chinese language mining giant Zijin Mining.

Zijin will now progress the world-class Kharmagtai project in direction of last development, following a promising prefeasibility research (PFS) delivered by Xanadu late final 12 months.

Xanadu says Kharmagtai’s PFS bolstered its credentials as a globally important copper-gold operation, with the research outlining a 29-year, large-scale, low price and low-complexity mining operation set to supply an average of 165,000 tonnes of copper and 75,000 ounces of gold yearly.

The project has an estimated post-tax web current worth of US$930 million (A$1.49 billion), at very conservative gold and copper costs, and is already progressing in direction of a last investment choice by Zijin.

This choice is anticipated following the completion of a bankable feasibility research based mostly on the PFS. The bankable feasibility research will probably use a determine a lot nearer to in the present day’s US$2725 per ounce gold price than the US$2100 per ounce used within the PFS.

Each firms are scheduled to fulfill in Xiamen, China, in early February to debate the project’s funds, scope and supply schedule.

Xanadu Mines govt chairman Colin Moorhead stated: “Encouraged by an improving regulatory environment, it is reasonable to expect Kharmagtai will be the next large-scale copper mine built in Mongolia. Through the 50:50 joint venture Xanadu shares control with Zijin, each partner currently holds a 38.25 per cent beneficial interest in a project with an estimated post-tax NPV at 8pc discount rate calculated at US$930m.”

Because the project gears up for its subsequent stage, Xanadu is fastidiously reviewing its strategic choices to secure funding whereas sustaining most shareholder worth.

The company has three choices on the desk. It could retain a 50 per cent curiosity within the three way partnership whereas funding its share of project prices till the ultimate investment choice is made. It may partially promote down 25 per cent of its curiosity to Zijin for US$25m (A$40m), with a loan-carry association on the remaining stake, or it may promote its whole 50 per cent curiosity to Zijin for US$50m (A$80m).

Administration has indicated a desire for the partial sell-down option, which would supply quick liquidity whereas preserving a important 25 per cent stake within the project.

Encouragingly for Xanadu, the Mongolian authorities has signalled a more pragmatic and future-facing method to mining investments lately, evidenced by the quantity of international majors now working there and the approval of an investment with French uranium company Orano simply this week.

With a bankable feasibility research on the horizon, water exploration packages underway and ongoing efforts to secure authorities approvals, Kharmagtai is poised to advance to its subsequent main milestone. Because the world’s urge for food for copper intensifies, Xanadu’s flagship project is well-positioned to turn into the subsequent globally important producer with a pivotal position within the international electrification transition.

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