Dr. Andrew Stewart reports

SHALLOW DRILLING CONFIRMS KHARMAGTAI DISCOVERY POTENTIAL

Xanadu Mines Ltd. and its joint venture partner Zijin Mining Group Co. Ltd. have released results from the first 3,400-metre shallow exploration discovery drilling at Kharmagtai (of 10,000 m planned), targeting additional copper-gold deposits outside the current mineral resource estimate (MRE).

Highlights:

• New shallow discovery drilling intersects both high-density stockwork, breccia mineralization and gold-only mineralization across three largely unexplored porphyry clusters.
• Best diamond drilling intercepts at cluster two and cluster three:
  • KHDDH590 -- eight m at 1.59 grams per tonne gold from 289 m;
    • Including four m at 3.04 g/t Au from 291 m;
  • KHDDH622 -- 15 m at 1.26 per cent Cu from 127 m;
    • Including 5.95 m at 2.97 per cent Cu from 132.5 m.
• Extensive infill and exploration program under way with regular news flow to continue throughout 2023, as exploration drilling for additional porphyry copper deposits and mineral resource estimate expansion continues.

Xanadu's executive vice-president, exploration, Dr. Andrew Stewart, said: "Initial results from shallow exploration discovery drilling has demonstrated exciting growth potential. We set out to test several shallow (within 200 m from surface) high-potential copper-gold and gold-only targets outside the currently defined mineral resource volume, looking for both high-grade, gold-rich stockwork mineralization and tourmaline breccia mineralization.

"Delivering drill intercepts over 3 per cent copper and over three g/t gold from the first three targets tested is very encouraging. This validates our strong belief in undiscovered porphyry deposits at Kharmagtai. We look forward to updating the market and results will be released in logical groups of drill holes."

About the shallow exploration drilling

Shallow exploration drilling at Kharmagtai is targeting additional porphyry copper-gold deposits outside the currently defined MRE volume. This program also serves to inform future infrastructure location decisions associated with the potential development of the Kharmagtai project into a large-scale mining operation. Approximately 3,400 m (of 10,000 m planned) have been completed to date in 15 holes.

Shallow drilling results to date

At cluster one, drilling targeted surface copper anomalism and outcropping porphyry veining. Drill hole KHDDH589 intercepted a broad zone of low-grade porphyry mineralization from surface, suggesting the hole has passed over and to the north of a potential shallow porphyry.

Drilling is planned to test behind this intercept for higher-grade material at cluster one.

Drilling at cluster two targeted previous shallow porphyry stockwork mineralization and was prioritized given the area is adjacent to existing planned open pits and planned infrastructure. Drill hole KHDDH590 targeted a previous porphyry intercept and encountered a broad zone of low-grade porphyry mineralization with an additional high-grade gold intercept near end of hole (EOH).

The copper-gold ratio of these intercepts and nature of mineralization are like the nearby Southern Stockwork zone at Stockwork Hill, with additional drilling to be planned as this appears to be on the edge of a potentially shallow, mineralized porphyry.

A total of four diamond drill holes were completed at cluster four with no significant results returned.

At cluster three, drilling is targeting previous broad porphyry intercepts in trenching and drilling, along with key structural features characterizing existing deposits at Kharmagtai. Three drill holes at cluster three have returned significant results to date, which are encouraging for a potential shallow high-grade core to be identified.

Drill hole KHDDH622 targeted a structure in the west of the cluster and returned high-grade copper intercepts. This intercept is significant in its width and grade, and additional drilling is planned to test along strike, up and down dip.

Drill hole KHDDH625 targeted surface copper in the south of cluster three. This hole encountered several broad zones of low-grade porphyry mineralization and a shallower moderate-grade intercept.

Drill hole KHDDH630 also targets surface copper anomalism and has returned a broad interval of low-grade copper porphyry mineralization. This drilling all points to cluster three having the potential for a large-scale shallow copper porphyry with a high-grade core. Additional drilling is being planned to follow up on these results.

About Xanadu Mines Ltd.

Xanadu is an Australian Securities Exchange- and Toronto Stock Exchange-listed exploration company operating in Mongolia. It 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 ASX or TSX that jointly control 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.

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