Xanadu Mines to acquire advanced copper-gold project in Mongolia

Xanadu Mines (ASX: XAM) and its joint venture company Mongol Metals have agreed to acquire a 90% interest in the Kharmagtai advanced porphyry copper-gold exploration project in Mongolia for US$14 million from Turquoise Hill Resources.

Previous exploration exploration had identified significant shallow high-grade porphyry copper-gold mineralisation, including 245 metres (from 3m) grading 0.75% copper & 2.48g/t gold.

But this wasn't isolated by any means and the project looks to have scale and offer promise.

Xanadu will be funded into the deal with a US$4.0 million, 3-year loan agreement with the Noble Group and US$4.0 million equity in Mongol Metals from its joint venture partner as initial consideration.

The acquisition is subject to by approval by Xanadu’s shareholders.

So there is some form about the Kharmagtai project, located within the South Gobi porphyry copper province which hosts most of the known porphyry deposits in the South Gobi region of Mongolia, including the giant Oyu Tolgoi copper-gold operation.

Mongol Metals will pay initial consideration of US$4 million with deferred consideration of US$10 million to be paid over 18 months.

Xanadu has committed to spending around US$900,000 up to completion (about US$700,000 to date including US$250,000 of an initial US$500,000 deposit) to earn a circa 18% interest in Mongol Metals.

The company has the right to earn at least 85% of the Mongol Metals joint venture company through funding exploration and acquisition costs.

It had in early January completed the acquisition of Oyut Ulaan for US$600,000 and 5 million Xanadu shares.

This is value accretive for Xanadu given the geological setting and previous exploration results.

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