Trading Halt for Xanadu today for a capital raise. Placement to be complete they believe for trading on 19th. You'll remember that XAM are the 75% owners (about to be somewhat diluted!) of the prospective Kharmagtai copper mine in Mongolia which is has significant potential as a world class, low cost, long life mine. Broad economics in previous straws.

Disc: Held in SMSF

Disc: held in SMSF

XAM closed up 27% today to $0.037 on the announcement of a partnership and placement deal with Zijin Mining Group to develop next phases for Kharmagtai. Previous straws have talked to the potential of Kharmagtai. This deal is a significant step forward and may well reduce some of the geo-political risk associated with the Mongolian asset.

Highlights from the announcement:

Under the Agreement, Zijin will invest in both the Xanadu corporate level and the Kharmagtai project level through a series of transactions commencing with the subscription of 139 million fully paid ordinary shares in Xanadu (New Shares) to provide Zijin with a 9.9% shareholding in the Company (Phase 1 Placement). The Phase 1 Placement will be conducted at an issue price of A$0.04 per share, representing approximately a 38% premium to Xanadu’s last traded price of A$0.029, and will raise approximately A$5.56 million.

Two subsequent phases are then proposed (subject to formal documentation) including a second placement of ordinary shares at A$0.04 per share to increase Zijin’s total shareholding in the Company to 19.99% (Phase 2 Placement) and the creation of a 50/50 Joint Venture in Khuiten Metals Pte. Ltd., the entity currently 100% owned by Xanadu that holds a 76.5% effective interest in Kharmagtai (Phase 3 JV)1, for a cash payment of US$35 million.

"Zijin is a multinational mining group dedicated to exploration and development of gold, copper, zinc and other mineral resources globally, as well as associated refining, processing, trading and other businesses. Its operations include projects and operations in 14 provinces in the People’s Republic of China (PRC) as well as 13 overseas countries across Europe, Central Asia, Africa, Oceania and South America. It is one of the largest Chinese mining companies distinguished by its significant domestic and international copper and gold resource, reserves and production."

... and we're back to where we started... rapid flash up 20% in hours and a slightly slower settling back down 20%. But, in between the actual scoping study for the Kharmagtai Copper-Gold Project was released. The XAM Board has endorsed this Study, and subject to funding, has approved progression to Pre-Feasibility (PFS) Stage. From the announcement...

"This Study confirms the potential of Kharmagtai as a globally significant, long life, low cost, low-risk future copper-gold mine. It is based on conventional, low risk open pit mining and sulphide flotation, with low environmental, social and governance (ESG) risk, and supported by nearby rail, road and power links providing the potential for rapid development. Kharmagtai is well positioned to help fill the looming copper global supply gap driven by growing demand for an increasingly electrified economy.

Highlights

Presented in 100% Terms (Xanadu share 76.5%)

• Confirms Kharmagtai as a potential world class, low cost, long life mine
• Estimated 20% IRR (range 16-25%), US$630 million NPV @ 8% (range US$ 405-850 million) and 4 year payback
• (range 4-7 years) over 30 year mine life
• Projected production ranges from 30-50ktpa copper and 5-110kozpa gold production during the first five years
• First quartile all-in sustaining (C1) costs of US$1.02/lb Cu for first five years, net of by-product credits
• Conventional, low technical complexity open pit and process plant with low 0.9:1 strip ratio for first five years
• Located in sparsely populated, flat terrain, with nearby established rail, power and water links
• Pre-Feasibility Study expected to commence in Q3 CY2022 and complete in Q4 of CY2023"

As we know from the experience of RIO, it's probably a bit much to call any massive mining venture in Mongolia "low-risk". Actually XAM is in my portfolio because it is high risk but that I guess is a semantic quibble at this stage. Picking up on those highlights, some pieces I pulled from the investor webinar this morning.

Timeline and Key Financials

All those Mongolian approvals send tremors through my body for some reason but those potential numbers look compelling. And because of the geology involved there is significantly low cost initial production.

Of course it never goes quite like that but the fact that significant quantity of high grade ore is close to the surface is very good news for a mine like this - so what will the price of Cu and Au be in 2027/2028? It might look something like this...

All of that means I will continue to Hold XAM and at under $0.03 am increasing my holding in my SMSF.

Hold on folks, it looks like the potential in Xanadu might be about to pop (cue Olivia Newton John tunes... anyone else old enough? daggy enough to admit they remember?)

XAM got a speeding ticket today - up 19% before they got the call - on no news as far as I can work out. Their brief response to the ASX query...

In accordance with ASX Listing Rule 17.1, Xanadu provides the following information:

1. (a) Reason for trading halt: the trading halt is requested in response to the Price & Volume - Query issued by the ASX this afternoon, and in order to allow Xanadu to finalise an Announcement on the Scoping Study for its Kharmagtai flagship project in Mongolia (Kharmagtai Scoping Study Announcement).
2. (b) Duration of the trading halt: Xanadu requests that the trading halt continue until the earlier of such time as the Company issues the Kharmagtai Scoping Study Announcement or the commencement of trading on Thursday, 7 April 2022.
3. (c) Termination of the trading halt: Xanadu anticipates that the trading halt will cease upon it making the Kharmagtai Scoping Study Announcement to the market.
4. (d) No reason: Xanadu is not aware of any reason why the trading halt should not be granted by ASX.
5. (e) Further information: Xanadu is not aware of any further information which needs to be disclosed to the market at the time of seeking the trading halt.

Disc: Held in my SMSF