Xanadu Mines Ltd (ASX: XAM) (TSX: XAM) is pleased to announce that it has entered into an earn-in agreement with Japan Oil, Gas and Metals National Corporation to sole fund up to $USD7.2 million in exploration expenditure at the Company’s Red Mountain copper-gold Project located in the South Gobi region of Mongolia (Figures 1 and 2). Exploration objectives of the earn-in deal are to discover Mongolia’s next world-class copper-porphyry deposit.

HIGHLIGHTS

• Xanadu and JOGMEC enter into a new earn-in agreement in Mongolia
• JOGMEC to sole fund up to $USD7.2 million over 4 years in exploration expenditure to earn a 51% interest in Red Mountain
• Red Mountain comprises a large and underexplored porphyry district in the highly prospective South Gobi porphyry belt
• Exploration objectives is discovery of a Tier-1 copper-gold porphyry deposit
• Builds upon Xanadu’s other active exploration program at Kharmagtai in the South Gobi

Xanadu’s Chief Executive Officer, Dr Andrew Stewart, said “Xanadu is honoured that JOGMEC has seen fit to embark on a new collaboration at our Red Mountain copper-gold Project. The Red Mountain Project is a highly prospective, porphyry copper-gold district with enormous potential for a new Tier-1 discovery. This partnership and increased exploration funding allow a focussed and accelerated exploration program at Red Mountain, thereby maximising the chances of success while minimising shareholder dilution. Previous drilling at the project has returned numerous high-grade copper-gold intercepts from a broad range of mineralisation styles. Deploying a suite of new exploration methodologies in 2020 will provide a whole new perspective on the mineral potential at Red Mountain. We look forward to kicking-off this exciting partnership with JOGMEC to refine and test several large-scale copper-gold targets in 2Q 2020. Both parties perceive the Red Mountain area to have high potential for discovery of a globally significant copper-gold deposit and look forward to demonstrating the value of this new relationship”.

Xanadu will continue to progress and fund exploration at its flagship Kharmagtai copper-gold project, located approximately 265km west of Red Mountain. Kharmagtai has emerged as one of the most globally promising porphyry copper-gold projects, where recent drilling has intersected a significant new zone of high-grade copper and gold mineralisation outside the defined resources containing 1.9Mt Cu and 4.3Moz Au.”

ABOUT RED MOUNTAIN

Xanadu Mines is copper and gold exploration company with several advanced exploration projects in Mongolia’s highly mineralised and vastly underexplored south Gobi region. Xanadu controls one of the most promising porphyry copper-gold projects in Asia with Kharmagtai and has an expanding portfolio of exploration projects including Red Mountain and Yellow Mountain (Figure 1).

Xanadu’s Red Mountain porphyry copper-gold Project is located within the Dornogovi Province of southern Mongolia, approximately 420km southeast of Ulaanbaatar (Figure 2), and 70km west from the provincial centre of Sainshand. The project has a granted 30-year mining licence and comprises an underexplored porphyry district (covering approximately 57km²) consisting of multiple co-genetic porphyry copper-gold centres, mineralised tourmaline breccia pipes copper-gold/base metal magnetite skarns and epithermal gold vein.

The porphyry mineralisation at Red Mountain is associated with late-stage monzonite and quartz diorite porphyry dykes and stocks emplaced on the flanks of the Red Mountain Intrusive Complex (RMIC; Figure 2). Alteration and mineralisation at Red Mountain are characterised by multiple co-genetic copper-gold porphyry centres, tourmaline breccia pipes and copper-gold/base metal magnetite skarns.

Previous exploration at Red Mountain has defined several broad zones of strong quartz stockwork veining and associated high-grade gold and copper mineralisation (typically around 0.5g/t to >5 g/t gold and 0.3% to 1.5% copper). The geology, strength of alteration and style of mineralisation also suggest that the mineralisation will extend at depth. The true opportunity at Red Mountain is seen in the large-scale porphyry potential. Highly anomalous geochemistry that corresponds to broad zones of porphyry mineralisation from trenching, zoned porphyry alteration, overlapping with large-scale magnetic and gravity anomalies, paints a compelling picture of a string of very large porphyry targets over 6km in strike (Figure 2). Initial deeper drilling in 2017 encountered 200-300m wide zones of porphyry style mineralisation at Target 10. Detailed geological work, 3D geophysical and geochemical modelling is currently underway to aid targeting for large scale porphyry deposits at Red Mountain.

RED MOUNTAIN EARN-IN AGREEMENT

Xanadu and JOGMEC have entered into a new exploration earn-in agreement over Xanadu’s Red Mountain project, located in the south Gobi region of Mongolia (Figures 1 and 2). Exploration objectives are discovery of a Tier-1 porphyry copper-gold discovery.

The key terms of the earn-in and joint venture agreement are as follows:

• JOGMEC may earn a 51% interest in the project by sole funding $USD7.2 million of expenditure over four years;
• during the earn-in, Xanadu will be the Manager of the Project;
• upon JOGMEC completing the earn-in, a joint venture will be formed, and the parties must contribute funds based on their percentage interest to maintain their respective interests; and 
• standard dilution clauses will apply to the parties’ interests. Should a party’s interest dilute to below 10%, it shall automatically convert to a net smelter royalty.

NEXT STEPS

A significant exploration program is intended for the remainder of 2020 and expected to include additional geophysics and further application of geochemistry followed by reverse circulation and/or diamond drilling.

Exploration activity at Red Mountain is scheduled to recommence in April/May 2020 and continue through to November 2020. The scheduling of the exploration activity will be determined in conjunction with JOGMEC in the coming months, with updates provided as specific exploration programs commence.

Figure 1 is available at

https://www.globenewswire.com/NewsRoom/AttachmentNg/b7f48ae3-4460-45ad-841c-68e96ffee3ad

Figure 2 is available at

https://www.globenewswire.com/NewsRoom/AttachmentNg/2c9a7702-aa0f-4f98-a56c-45fb77e410b8

COMPETENT-QUALIFIED PERSON STATEMENT

The information in this announcement that relates to exploration results is based on information compiled by Dr Andrew Stewart, who is responsible for the exploration data, comments on exploration target sizes, QA/QC and geological interpretation and information.  Dr Stewart, who is an employee of Xanadu and is a Member of the Australasian Institute of Geoscientists, has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as the “Competent Person” as defined in the 2012 Edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves and the National Instrument 43-101.  Dr Stewart consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.