Xanadu Mines (XAM.TO, XAM.AX), the exploration company focusing on its flagship Kharmagtai copper-gold project in Mongolia’s South Gobi region, released the outcome of an updated resource calculation earlier this month.
The 2021 resource update now contains 487 million tonnes of rock in the indicated resource with an average grade of 0.3% copper and 0.2 g/t gold (for a copper-equivalent grade of 0.4%) with an additional 664 million tonnes at an average grade of 0.2% copper and 0.2 g/t gold in the inferred resource estimate. These grades are lower than in the 2018 resource calculation, but the total tonnage has more than doubled while the total amount of tonnes in the indicated resource has almost quadrupled.
The updated resource now contains in excess of 6.6 billion pounds of copper as well as 8 million ounces of gold (which is substantially larger than the 4.4 billion pounds of copper and just under 4.5 million ounces of gold in the 2018 resource), but the main question is now if the lower grade resource will be sufficient to develop a profitable mine plan. Unfortunately the press release wasn’t very helpful as the grades were rounded to the nearest 0.1% or 0.1 g/t but as Xanadu is a dual-listed company it will have to file a NI43-101 compliant technical report on SEDAR which will have more detailed grades. In any case,t here’s a higher grade zone of 100 million tonnes at an average copper-equivalent grade of 0.8% which would have an undiscounted and pre-recovery gross rock value of almost US$70/t using a copper price of $4/pound.
Xanadu’s Kharmagtai resource update shows a very large but low grade copper-gold zone and it will be interesting to see the economic studies on this project.
Disclosure: The author has no position in Xanadu Mines. Please read our disclaimer.
