Team in Mongolia. Source: Xanadu Mines
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  • Xanadu Mines (XAM) partners with global mining company, Zijin Mining Group, to progress its Kharmagtai copper-gold project in Mongolia
  • Zijin is investing up to A$11 million through a two-phased placement in exchange for up to a 19.99 per cent stake in Xanadu Mines
  • Zijin is also proposing to inject a further US$35 million (A$47.5 million) into Xanadu’s Kharmagtai project through the establishment of a 50:50 joint venture
  • Xanadu says it’s pleased to have engaged a “highly capable mine developer” who’ll support the development of the project with next steps being a pre-feasibility study
  • Xanadu shares are up 31 per cent to trade at 3.8 cents

Xanadu Mines (XAM) has partnered with Zijin Mining Group to progress its Kharmagtai copper-gold project in the South Gobi region of Mongolia.

Under the agreement, Zijin Mining will invest up to A$11 million into Xanadu and up to a further US$35 million (A$47.5 million) into Xanadu’s Kharmagtai project.

Zijin Mining is one of China’s largest mining companies, specialising in gold, copper, zinc and other mineral resources around the world.

The investments will be in the form of placements commencing with a phase one placement to raise roughly $5.56 million.

Zijin will subscribe for 139 million shares in Xanadu in exchange for a 9.9 per cent shareholding in the company. Each share under this phase will be issued at 4 cents, representing a 38 per cent premium to Xanadu’s last traded price.

Xanadu Mines will pool the funds from the phase one placement with its existing cash resources to be used for working capital during the exclusive negotiation period before commencing a pre-feasibility study (PFS) at the Kharmagtai project.

The companies entered a four-month exclusivity period to negotiate the second and third phases of the placement. The second placement will see Zijin increase its shareholding in Xanadu to 19.99 per cent by subscribing for additional shares at the same issue price.

The phase two placement is subject to approval by the Foreign Investment Review Board, regulatory approvals, and Xanadu shareholder approval.

The third and final stage of the partnership will include the two companies establishing a 50:50 joint venture in Xanadu’s wholly-owned subsidiary, Khuiten Metals, who owns 76.5 per cent of the Kharmagtai project, along with 13.5 per cent holder Ganbayar Lkhagvasuren and QGX who owns the remaining 10 per cent interest in the project.

Zijin will pay US$35 million in cash in exchange for shares equal to 50 per cent of Khuiten by way of a share placement. Xanadu will remain the operator of the joint venture until a decision to construct is made.

“We are delighted to have attracted Zijin, a global top 10 copper producer and highly capable mine developer as our partner, and we look forward to finalising negotiations to move Kharmagtai forward and realise its potential on an accelerated path,” Xanadu Executive Chair and Managing Director Colin Moorhead said.

Following the completion of all phases, the Kharmagtai project will be well-funded for the next phase of development.

Xanadu shares were up 31 per cent to trade at 3.8 cents at 3:59 pm AEST.

XAM by the numbers
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