Xanadu Mines has entered into a binding term sheet to earn up to 80 per cent of the Sant Tolgoi project in Mongolia which hosts multiple shallow copper-nickel targets over several kilometres of strike.

The deal adds to the company’s already significant presence in Mongolia which is home to its flagship Kharmagtai copper-gold project and its highly prospective Red Mountain operation.

Management says Sant Tolgoi includes numerous advanced exploration targets with a real opportunity for the discovery of magmatic copper and nickel mineralisation. It says there are signs of several systems in both historical and recent drilling.

The latest agreement with Mongolian-based company STSM covers the Oyut and Sant Tolgoi exploration licences. Xanadu can elect to proceed to the first stage of the deal once the minimum commitment has been met and can earn 51 per cent interest in the project by spending US$1 million (AU$1.5 million) on exploration over 24 months.

Once the first stage of the arrangement is complete, STSM can elect to end the farm-in agreement and form a joint venture (JV), with Xanadu to become the manager of the project with 51 per cent, while STSM holds the remaining 49 per cent.

Xanadu can earn a further 29 per cent in the project by sole funding a another US$10 million (AU$15.1 million) on exploration prior to transferring the exploration licence into a mining lease.

Management says a detailed mapping, geochemistry and geophysics campaign is already planned for Sant Tolgoi which is expected to kick off in March.

Just last month the company tabled a staggering resource estimate upgrade for its Kharmagtai copper-gold project in Mongolia, jumping to 1.3 billion tonnes with 3.4 million tonnes of contained copper and 8.5 million gold ounces. The updated estimate represents a 12 per cent increase in tonnes, a 15 per cent surge in contained copper and a 9 per cent jump in contained gold.

Last year Xanadu completed two phases of its strategic partnership with Chinese copper giant Zijin Mining, giving it access to funding for its current round of exploration.

The deal saw Zijin invest US$35 million (AU$52 million) which will also be used to complete the Kharmagtai prefeasibility study. A 50-50 joint venture has been created between the two partners at a project level, with Xanadu the operator on the ground.

The partnership has allocated 18 months to knock over its PFS, while an earlier scoping study identified several upside opportunities that could materially upgrade the economics of the project.

Xanadu has previously expressed its interest in adding projects to its Mongolian holdings as part of its plans to build a portfolio of future-facing metals projects.

While Kharmagtai continues to be the major focus of the company, the market will no doubt be keeping a close eye on what the future holds at both Red Mountain and Sant Tolgoi.

(source: The West Australian)