Mr. Colin Moorhead reports

NEW HIGHER GRADE ZONES FOUND IN KHARMAGTAI INFILL DRILLING

Xanadu Mines Ltd. and its joint venture partner, Zijin Mining Group Co. Ltd., have provided an update for the Kharmagtai prefeasibility study (PFS) infill drilling program under way.

Highlights:

• Approximately 15,000 metres of phase 1 diamond drilling have been completed (out of 30,000 m total) at the Kharmagtai, Stockwork Hill and White Hill deposits.
• Assay results have been returned for 31 drill holes. Exceptional highlights include:
  • Several holes delivered grades materially better than current resource grades for each deposit.
  • Newly identified higher-grade zones demonstrate potential to enhance the 2021 mineral resource estimate (MRE), currently three million tonnes copper and eight million ounces gold (1.98 million tonnes copper equivalent indicated and 2.33 million tonnes CuEq inferred).
• The updated MRE, expected in the fourth quarter of 2023, is expected to deliver improved grade relative to 2021 MRE and to add newly identified higher-grade zones.
• Upgrades to Kharmagtai PFS production and economics are expected after incorporating the updated MRE.
• The parallel, high-impact Kharmagtai discovery exploration drilling program (two rigs) is progressing well. Assay results will soon be reported for shallow holes targeting new resources at five unexplored porphyry clusters.
• The Kharmagtai joint venture is financing ($35-million (U.S.)) PFS completion and discovery exploration, aiming toward a decision to mine in Q4 2024.

Xanadu's executive chairman and managing director, Colin Moorhead, said: "Our extensional and infill drilling program has progressed efficiently and is demonstrating results in line with or materially better than the 2021 mineral resource estimate. Pleasingly, we've intersected new high-grade zones at Stockwork Hill within the existing resource boundary, which will undoubtedly have a positive impact on the PFS. Given we are only halfway through phase 1, we are very excited on the drilling results to come and look forward to providing regular updates as we progress both infill and exploration drilling programs at Kharmagtai."

Infill drilling results to date

Approximately 15,000 m of diamond drilling have completed as part of the 30,000 m phase 1 infill drilling program. Assay results have been returned for 31 drill holes, with results better than, or in line with, 2021 MRE grades.

Several holes encountered materially better grade relative to resource grade. Significant drill intersections from Stockwork Hill are provided in an attached table.

Significant drill intersections from White Hill are provided in an attached table.

Extension of higher-grade zones at Stockwork Hill

Significantly, drill hole KHDDH594, drilled into the central portion of Stockwork Hill, has encountered higher-grade zones of tourmaline breccia mineralization, adding vertical extension to known higher-grade zones. Principally, drilling intercepted a highly encouraging zone grading 34 m at 1.10 per cent Cu and 0.1 gram per tonne gold (1.15 per cent CuEq) from 285 m, significantly exceeding the 2021 MRE block model prediction for 0.3 per cent CuEq mineralization. This intercept is approximately 120 m above the closest high-grade tourmaline breccia drilled in this area, highlighting the potential for significant grade boosts relative to the existing MRE. Additional drilling is now planned to test for further extensions of these higher-grade zones and aimed for inclusion in the upcoming MRE update.

PFS data acquisition

Xanadu is using cutting-edge technology to acquire accurate and consistent data for the PFS. Drill core is being run through two Boxscan devices that scan the drill core to acquire ultrahigh-resolution imagery, laser scan topology, short-wave infrared data and magnetic susceptibility. With this data set, advanced machine learning algorithms are logging the core for rock type, alteration, sulphide distribution (size and shape), rock quality data, vein types and densities, and mineralogical composition, as well as taking structural measurements. These data are being used to build the geological, geometallurgical and geotechnical domain models for input into the PFS and aimed at positioning the future Kharmagtai mine for operational readiness.

About the infill drilling program

Four diamond drill rigs are currently focused on Kharmagtai infill drilling, with an overarching objective to target areas with the potential for future mineral-resource-to-ore-reserve conversion. Totalling approximately 30,000 metres, the infill drilling program is planned to specifically increase the resource confidence category from inferred to indicated. As such, the planned drill holes aim to remove any mineralization knowledge gaps around the edges of existing deposits.

Kharmagtai currently has an inferred and indicated resource of 1.1 billion tonnes containing three million tonnes Cu and eight million ounces Au. As part of the Kharmagtai PFS, the resource will be upgraded to indicated classification, enabling a maiden, JORC-compliant (Joint Ore Reserve Committee) ore reserve to be reported. To achieve this, the infill drilling program is designed to upgrade and extend the strike length of the shallow, open-pit resource areas and select deeper, high-grade zones, including investigation of near-mine, higher-grade extensions.

About Xanadu Mines Ltd.

Xanadu is an exploration company operating in Mongolia. Xanadu gives investors exposure to globally significant, large-scale copper-gold discoveries and low-cost inventory growth. Xanadu maintains a portfolio of exploration projects and remains one of the few junior explorers on the Australian Securities Exchange or Toronto Stock Exchange that jointly controls a globally significant copper-gold deposit in its flagship Kharmagtai project. Xanadu is the operator of a 50/50 joint venture with Zijin Mining Group in Khuiten Metals Pte. Ltd., which controls 76.5 per cent of the Kharmagtai project.

Competent person statement

The information in this release that relates to mineral resources is based on information compiled by Robert Spiers, who is responsible for the mineral resource estimate. Mr. Spiers is a full-time principal geologist employed by Spiers Geological Consultants and is a member of the Australian Institute of Geoscientists. He has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity he is undertaking to qualify as the qualified person, as defined in CIM (Canadian Institute of Mining, Metallurgy and Petroleum) guidelines and National Instrument 43-101, and as a competent person under JORC code 2012. Mr. Spiers consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

The information in this release that relates to exploration results is based on information compiled by Dr. Andrew Stewart, who is responsible for the exploration data and comments on exploration target sizes, quality assurance/quality control, and geological interpretation and information. Dr. Stewart, who is an employee of Xanadu and a member of the Australasian Institute of Geoscientists, has sufficient experience relevant to the style of mineralization 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 NI 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.

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