Mr. Colin Moorhead reports

QUARTERLY ACTIVITIES REPORT

Xanadu Mines Ltd. has provided an update on its activities for the quarter ending June 30, 2023.

June 2023 Quarter Highlights

During the quarter ending 30 June 2023 (June Quarter), Xanadu Mines Ltd (Xanadu or the Company) ramped up to full scale the Pre-Feasibility (PFS) programme and Discovery Exploration activities at our flagship Kharmagtai copper-gold project, funded by US$35 million cash from the Joint Venture (JV or Khuiten JV) with Zijin Mining Group Co., Ltd. (Zijin). Significant progress was made in both PFS and Exploration, on schedule and budget, building tangible value at Kharmagtai. The Company released its third annual Sustainability Report for 2022 and held a successful Annual General Meeting (AGM). Importantly Xanadu's share price saw a material positive rerating during the period which the Company considers reflects market recognition of Kharmagtai de-risking, and the significance of the positive steps taken thus far to both enhance the project and to move the project further along the path to production.

PFS Infill Drilling Programme Excellent results delivered from a 4 diamond drill rig program, with grades on the most part better or in line with the 2021 Mineral Resource Estimate (MRE).

Significant extensions to high-grade mineralisation identified at Stockwork Hill.1

New high-grade copper-gold zone (core) emerging at White Hill.2

New >1% CuEq cores at Stockwork Hill and White Hill demonstrate potential to enhance the 2021 MRE (3Mt copper and 8Moz gold [1.98Mt CuEq Indicated, 2.33Mt CuEq Inferred]). 3

Approximately 27,000m of Phase One infill drilling completed (out of 30,000m total) at both the Stockwork Hill and White Hill deposits, putting Xanadu on track for MRE upgrade by Q4 CY2023.

PFS Data Acquisition and Studies

Sulphide (main orebody) metallurgical test-work is rapidly advancing at ALS laboratories in Perth and TruTRC laboratories in Ulaanbaatar; both flotation and comminution testing is well advanced, results expected Q4 CY2023.

Oxide (currently treated as mineralised waste) metallurgical samples delivered to MPS laboratories in Perth for assessment of glycine leach technologies and processing route selection; first results expected Q1 CY2024.

Hydrological drilling programme to commence in Q3 CY2023.

Construction of camp upgrades, core process facility and grid power connection are all proceeding on time and budget, with delivery on-track for Q4 CY2023.

Outcomes from Water Reserve study, Power Supply selection, Tailings Storage Facility (TSF) location and design, and other supporting surface infrastructure requirements expected Q1 CY2024.

Kharmagtai PFS including maiden Ore Reserve are on-track for Q3 CY2024.

Discovery Drilling Programme

Aggressive 18,000m growth-focussed exploration drilling programme (2 diamond drill rigs) underway for New Discoveries at Kharmagtai.

Deep exploration drilling is advancing, targeting high-grade, large-scale mineralisation at depth.

New shallow discoveries made across three largely unexplored porphyry clusters, intersecting both high-density stockwork, breccia mineralisation and gold only mineralisation; follow up drill testing planned.4

Corporate

Kharmagtai PFS and Discovery Exploration funded by US$35M from the Khuiten JV with Zijin Mining Group5; with US$26.8 million in cash on 30 June 2023.

Announced an updated 3-horizon strategy including Horizon 1 PFS, Horizon 2 Discovery, and Horizon 3 Portfolio Growth.6

Third annual Sustainability Report for 2022 released.7

Successful AGM held; all resolutions passing with >90% shareholder support.8

Xanadu is well-funded, with A$5.1 million in cash at 30 June 2023.

Executive Chairman & Managing Director, Colin Moorhead, said:

"The June quarter was an exciting time for getting back to what we do best; de risking and advancing our flagship Kharmagtai project towards Final Investment Decision (FID). Following an official site visit and kick-off with Zijin in March, the Kharmagtai PFS work programme ramped up. It was great to see the PFS infill and exploration drilling start, with six rigs operating in the field, drilled core passing through the shed efficiently and assay samples flowing to the lab in Ulaanbaatar. Pleasingly this was achieved by our site team and contractors without any significant safety or environmental incidents, and on time and budget. As the Quarter progressed, we saw assay results which the Company reported to the Market as in line with our Resource or better than expected. I am particularly encouraged by the emergence of a potential higher-grade zone at White Hill, something we have long suspected but not seen until now. Effective progress was made on metallurgical test-work, geotechnical engineering, hydrology, and other areas, and we look forwarding to sharing those results as they come to hand.

It was also very pleasing to see discovery exploration recommence at Kharmagtai, testing both shallow and deeper targets, with a focus on grade. Our geology team has developed a good set of shallow targets, centred on largely unexplored porphyry clusters, that have potential to host additional open pit material. These need to be ruled in or out to help inform the PFS both as potential Resource and to sterilise potential sites for planned infrastructure. Our deep targets have been modelled on analogues of the deeper deposits seen at Oyu Tolgoi, and we are very excited to be testing these. The success of deeper exploration could be transformational for all stakeholders.

Elsewhere our exploration team continued target generation work at Red Mountain following an extensive trenching exercise there last year. The team are also actively reviewing other project opportunities in Mongolia.

At a Corporate level, the Company held its AGM in May, and I would like to thank our shareholders for their support. We also recently published our third Sustainability Report, documenting ESG performance and our updated Company Strategy; this is a highly relevant document that I recommend to all our stakeholders."

Kharmagtai Copper-Gold Project Update

During the June Quarter, the Company aggressively progressed its PFS Programme including operational site construction upgrade works (see Appendix 1) and Discovery Exploration activities (see Appendix 2) which are funded by US$35 million from the JV with Zijin. Xanadu is operator of the joint venture during the PFS delivery period of 18 months, after which Zijin will become operator for final engineering, construction, and operations delivery.

With the PFS incorporating both the upcoming Resource Upgrade and the upside opportunities discussed in Appendix 1, Xanadu and Zijin have confidence for a real and sustained uplift relative to the Scoping Study economics.

PFS Deliverables & Schedule

During the PFS, Xanadu and its partner Zijin will complete all major project trade-off decisions and refine capital and operating cost estimates to +/-25%, leading to selection of a single go-forward option for final engineering and construction. PFS, Resource and Reserve outcomes will be reported to international requirements consistent with JORC and NI43-101 standards.

The timeline for the PFS is broken into four key stages, followed by FID in Q4 CY2024. Stage 1 - Data Acquisition (Q2-Q3 CY2023) Stage 2 - Trade-Off Studies & Resource Upgrade (Q4 CY2023) Stage 3 - Convergent Study (Q1-Q2 CY2024) Stage 4 - PFS Completion & Maiden Ore Reserve (Q3 CY2024) The current Data Acquisition stage is tracking on time and within budget, recognising this as the primary data collection step for Kharmagtai prior to production. Data Acquisition stage focus areas include the following. Infill Drilling for Resource Upgrade Metallurgical Test-Work focused on the main orebody sulphide material Metallurgical Test-Work focused on oxide material, currently treated as waste Water Reserve Studies and Drilling Tailings Storage location and construction material studies Power Supply studies System Optimisation incorporating mine and process technology scenarios Environmental and socioeconomic baseline studies Waste rock and tailings geochemistry

Infill Drilling & Resource Update Four diamond drill rigs are now in operation at Kharmagtai with a primary strategy to target areas with potential for future Mineral Resource to Ore Reserve conversion. Phase One infill drilling is specifically targeting areas for growing the Indicated Resource. Later phases of infill drilling will be a combination of closing out any further Resource infill knowledge gaps and following up high-grade extensions at Stockwork Hill and the newly identified White Hill high-grade core. An upgraded Resource is expected to be released in Q4 CY2023 once all assays have been received and resource modelling has been completed. This Resource will enable Xanadu to start economic trade-off studies and will be supplemented by subsequent PFS study scheduled for completion during Q4 CY2024. Approximately 27,000m of Phase One diamond drilling has been completed (out of 30,000m total) at both the Stockwork Hill and White Hill deposits, at Kharmagtai. All drill data can be found in Appendix 3. Discovery Exploration Update Results from Phase One Shallow Discovery Exploration drilling have been encouraging and highlight the potential for new deposits and are consequently informing more appropriate infrastructure locations. Follow-up drill testing planned has been planned for high priority targets, and we expect to uncover more as we continue through the planned programme. Phase One Deep Discovery Exploration recently commenced, and we will share material results as they become available. Furthermore, we look forward to sharing a comprehensive progress update on the Deep exploration discovery programme later this year once we've completed a good portion of Phase One drilling.

Corporate Activity

During the Quarter, Xanadu outlined an updated corporate strategy, released its third annual Sustainability Report for 2022 and held its Annual General Meeting. Three Horizon Strategy Xanadu outlined a three-horizon strategy to deliver shareholder value (Figure 1)9 These are described below: Horizon 1 - Kharmagtai PFS Value: Uplift Kharmagtai value by de-risking the project and delivering on project upside opportunities. Horizon 2 - Discovery Value: Deliver significant new discovery via exploration at Kharmagtai and Red Mountain. Horizon 3 - Position for Future: Build a portfolio of future facing metals projects through exploration and acquisition.

Figure 1: Xanadu's Three Horizon Strategy10 Sustainability Report On 4 May 2023, Xanadu issued its third annual Sustainability Report for 2022, highlighting our commitment to responsible and transparent ESG.11 This report further expanded disclosure and continued Xanadu's ESG journey to be a leader in sustainable exploration. Annual General Meeting Xanadu's Annual General Meeting (AGM) was held on 29 May 2023 with resolutions including the following: Re-election of Director, Mr. Ganbayar Lkhagvasuren Re-election of Director, Mr Shaoyang Shen Remuneration Report Ratification of Prior Issue of Shares on 24 January 2023 All resolutions were passed with "For" votes between 90.1% and 99.0%.12 September 2023 Quarter Planned Activities Key activities planned during the quarter ending 30 September 2023 (September Quarter) include: Infill drilling for the Kharmagtai PFS including, Metallurgy and Geotechnical. Kharmagtai Water Reserve Drilling Commencement Investigation of Scoping Study Uplift Scenarios. Substantially complete the construction of new core shed, site accommodation and power grid connections at Kharmagtai. Continued Shallow and Deep Discovery Exploration drilling programmes. Shallow Exploration Drill Assay Results Deep Exploration Drill Assay Results

Financial

Capital Structure On 30 June 2023, the Company had 1,637,824,191 fully paid ordinary shares and 121,860,000 options over ordinary shares on issue and approximately A$5.1 million in cash. The Khuiten JV, which controls the Kharmagtai project, had US$26.8 million in cash available to progress the Kharmagtai PFS and exploration. Share Price Query On 19 June 2023, Xanadu received a query from ASX with regards to significant trading volume and upwards movement of its share price. The Company responded that there was no material information being held and that it was not aware of any explanation for the recent trading other than the response to its drilling results announcement on 7 June and general market conditions and interest in copper related stocks.13 ASX Announcements This June 2023 Quarterly Activities Report contains information reported in accordance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012) in the following announcements. 8 December 2021 - Kharmagtai Resource Grows to 1.1 Billion Tonnes, Containing 3Mt Cu and 8Moz Au 6 April 2022 - Scoping Study - Kharmagtai Copper-Gold Project 20 June 2022 - NI 43-101 Preliminary Economic Assessment Technical Report 29 December 2021 - Investment Deal Signed with Zijin - Pathway to Production 13 April 2023 - Kharmagtai Pre-Feasibility Drilling Off to a Flying Start 27 April 2023 - Notice of Annual General Meeting 4 May 2023 - Sustainability Report 2022 16 May 2023 - RIU Sydney Resources Roundup Presentation 23 May 2023 - High Impact Drilling Programme at Kharmagtai 29 May 2023 - Results of 2023 Annual General Meeting 7 June 2023 - New Higher-Grade Zones Found in Kharmagtai Infill Drilling 19 June 2023 - Response to Price Query 5 July 2023 - Shallow Drilling Confirms Kharmagtai Potential 19 July 2023 - New High-Grade Copper-Gold Zone Emerging at White Hill About Xanadu Mines Xanadu is an ASX and TSX listed Exploration company operating in Mongolia. We give 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 who jointly control a globally significant copper-gold deposit in our flagship Kharmagtai project.

Figure 11: Location of Xanadu Projects in the South Gobi region of Mongolia For information on Xanadu visit: www.xanadumines.com. For further information on Xanadu, please visit: www.xanadumines.com or contact: Colin Moorhead Executive Chairman & Managing Director E: colin.moorhead@xanadumines.com P: +61 2 8280 7497 Spencer Cole Chief Financial & Development Officer E: spencer.cole@xanadumines.com P: +61 2 8280 7497 This Announcement was authorised for release by Xanadu's Board of Directors.

APPENDIX 1: Kharmagtai Project Development Building on a Successful Scoping Study / PEA The 2022 Scoping Study confirmed Kharmagtai as a potential world class, low-cost, long life mine with an estimated 20% IRR (range 16-25%), US$630 million NPV at 8% (range US$ 405-850 million) and 4-year payback (range 4-7 years) over 30-year life of mine. This included first quartile all in sustaining costs and projected production ranges from 30-50ktpa copper and 50-110kozpa gold production during the first five years. It is based on a JORC compliant Mineral Resource of 1.1 billion tonnes containing 3 million tonnes of copper, 8 million tonnes of gold, including 100 million tonnes of higher-grade zones at > 0.8% copper equivalent grade. Geometallurgical Data Acquisition - Building a 'Total Ore Deposit Knowledge Model' Xanadu are using cutting edge technology to acquire accurate and consistent data for the PFS. All drill core is being run through two Boxscan devices that scan the drill core to acquire ultra high-resolution imagery, laser scan topology, short-wave infrared data and magnetic susceptibility. With this dataset, advanced machine learning algorithms are logging the drill core for rock type, alteration, sulphide distribution (size and shape), rock quality data (RQD), vein types and densities, mineralogical composition as well as taking structural measurements. These data are being used to build a consolidated geological, geometallurgical and geotechnical domain model, for input into the PFS and aimed at positioning the future Kharmagtai mine for operational readiness. Metallurgical Test-work & Analysis Previous studies of the Kharmagtai copper gold deposit indicated that a conventional copper porphyry flowsheet is appropriate to process material from the sulphide portion of the Resource.14 A comprehensive set of programmes are currently underway, in parallel with metallurgical evaluation to: Prepare a geometallurgical domain model to support the development of process plant design parameters. Evaluate all key geometallurgical domains to determine optimal process flow sheet and plant design. Perform detailed metallurgical test-work to characterise grind, hardness, flotation, leach and other chemical and physical processing characteristics within each domain. Define concentrate product characteristics from the proposed plant design. Sulphide Program The sulphide metallurgical test-work programme is investigating flotation, comminution, mineralogy, Eriez Hydrofloat, flash flotation and magnetic separation. The sulphide flotation programme comprising 102 samples selected by deposit, alteration and sulphide occurrence, is being conducted at ILAC and ISO9001:2015 certified True TRC laboratory in Ulaanbaatar, Mongolia. It includes three aspects, a) master composite, b) variability samples, and c) miscellaneous other tests. Composite assays, prior to flotation test, have been shown alignment to grades predicted by the Resource database. The sulphide comminution programme comprises 30 samples selected by deposit and alteration, with test-work being conducted by ALS laboratories in Perth. The programme will include Bond ball mill and rod mill work indices, abrasion index and SMC testing. All these results and point load testing will be used to model the future grinding circuit, enable equipment selection and predict key operating costs. Orway Mineral Consultants will undertake further comminution circuit design and optimisation. The sulphide mineralogy programme comprising 97 samples is being conducted by Geo Logic in Tasmania. Its purpose is to better understand the copper speciation by domain, to better inform our stockpiling and processing strategy and associated schedules. Coarse particle (>150 micron) sulphide flotation effectiveness will be investigated via the Eriez Hydrofloat separation technology, using product delivered from the comminution work being completed at ALS. This will provide key information to evaluate coarse particle flotation, one of the upsides identified during the Scoping Study which could add material value to the project. Flash flotation testing of sulphide material will also be undertaken at True TRC, by running six tests at 150 micron, 250 micron and 350 micron grind sizes. If proven appropriate for Kharmagtai ore, this could reduce both overgrinding and recovery loss for liberated free ground minerals. Results will be forwarded to Outotec Pty Ltd for evaluating its feasibility. Magnetic separation testing will also be undertaken at True TRC laboratory in Ulaanbaatar, Mongolia. Purpose of this test-work is primarily aimed to reduce fines and deliver a more optimised concentrate grade. Oxide Programme The oxide programme will follow up on promising, initial sighter test-work conducted at MPS Perth, during the Scoping Study. Programme is aimed at conducting a detailed investigation into the feasibility of glycine-cyanide leach for the recovery of gold and copper from this partially oxidised material, which is not amenable to flotation. The PFS programme will investigate both heap and tank leaching, using a glycine-cyanide reagent blend at MPS laboratories in Perth. Initially, one sample will be selected, and various combinations of reagent schemes will be tested. Once a successful scheme is selected, an additional three samples will be tested, which will determine a preferred approach and appropriate processing design at a PEA level of confidence. A second stage to reach PFS levels of confidence may commence but will not be completed until sometime after Q3 CY2024. Reporting Metallurgical test results will be reported in Q4 CY2023 for sulphide flotation and comminution, and in Q1 CY2024 for leaching of partially oxidised material. Water Reserve Studies A water reserve study and associated exploration drilling are underway in key basins near Kharmagtai. The programme aims to prove up water reserves consistent with the ultimate operating requirements scoped in the 2022 Preliminary Economic Assessment (PEA) of 400 litres per second flowrate following the expansion to 30Mtpa processing throughput in year 5 of operation.15 This work includes benchmarking comparable operations in Mongolia, including Oyu Tolgoi, for achievable water recycle and reviewing options to improve on that for the Kharmagtai design. Both experienced Mongolian and international hydrogeologists have been engaged to develop and help execute these studies and exploration. Initial mobilisation of water drill rigs will take place in August 2023. Water Reserve outcomes will be reported in Q1 CY2024. Tailings Storage Facility Initial location, design concept, and construction material studies will be undertaken by Knight Piesold to understand key infrastructure, construction materials and sterilisation drilling requirements. TSF will be designed to international standards. Knight Piesold are an internationally recognised TSF specialist firm with recent project experience in Mongolia. Initial supporting infrastructure design and layout, including TSF, will be reported in Q1 CY2024. Power Supply Power supply studies will include evaluation of primary supply from the Mongolian power generators, dedicated on-site conventional generation, and purchase of power supplied directly from Inner Mongolia, China. The study will also evaluate the appropriate usage of dedicated renewable power and battery storage that will maximise the use of green energy for the project while ensuring operational stability. Power supply study outcomes will be reported in Q1 CY2024. System Optimisation During the current phase of study, Whittle Consulting is undertaking analysis to determine the potential impacts on the PEA model for the following factors: Up-to-date grade, recovery and material characteristics by domain, to refine and optimise the mine plan and stockpiling requirements; Mining technology scenarios including trolley assist with diesel-electric trucks, full electrification, semi-mobile in pit crush and convey (IPCC) and automated haulage systems, to reduce cost and increase productivity; and Processing technology scenarios incorporating PEA level assumptions to understand the system-wide impact of coarse particle flotation and grind size to reduce unit power consumption.

With this information, Xanadu will determine the potential scale and impact of the PEA uplift scenarios and whether modified infill drilling, metallurgical testing and sterilisation drilling may be necessary to enable those uplifts during the PFS.

Once the updated Resource and new metallurgical test-work is delivered, a second cycle of System Optimisation will be undertaken. This will also support Trade-Off Studies decisions, optimise pit shapes and support process flow sheet design for the Convergent Study.

Initial optimisation results will be reported during Q3 CY2023, with final optimisation results during Q1 CY2024.

Environmental and Socio-Economic Baseline Studies

The Environmental baseline studies scope is designed to assess the current environmental conditions and potential impacts of the project throughout the project lifecycle. The programme includes comprehensive literature review of existing information, as well as field surveys to gather primary data on flora, fauna, water quality, soil sampling and air quality monitoring.

Post data acquisition, environmental experts will analyse and evaluate potential impacts on both short-term and long-term basis.

Waste Rock and Tailings Geochemical Characterisation

Waste rock and tailings geochemical test-work and characterisation will evaluate the environmental impacts of potential acid mine drainage for the project. This scope involves a comprehensive assessment of the geochemical properties of waste rock and tailings. The test-work focuses on understanding the composition and potential risks associated with waste by-products from the minerals extraction process and appropriate disposal methods.

The tailings geochemical test-work and characterisation scope involves collecting representative samples of tailings and analysis to assess the potential for acid generation and metal leaching from the tailings. This will enable a Tailings Management Facility design that eliminates detrimental environmental impacts. Characterisation will also involve evaluating the physical properties, such as grain size distribution and compaction, to determine the appropriate methods for tailings storage and management. Additionally, the geochemical test-work may assist in understanding the potential for reprocessing or reclamation of valuable metals from the tailings, contributing to the economic evaluation of the mining project.

Stage 2 - Trade-Off Studies

All major design decisions are made during the PFS to select a single go-forward design. Key areas that will require option evaluation, include:

Mining Design & Engineering - includes scale and sequencing of the pits and stockpiling requirements based on the new Resource, mining technology, mining rate and equipment selection.

Process Design & Engineering - includes flow sheet selection, process technology, processing rates and scale, and alternate process streams such as oxide leaching.

Tailings Storage Facility - includes location, shape, construction materials, and water recovery technology.

Non-Process Infrastructure - includes location of all facilities, power supply source and mix, water supply and mix, and alignment to business operating strategy, concentrate logistics including use of nearby rail.

Environmental Studies & Permitting - includes baseline studies and reports to progress toward environmental impact assessments and other approvals.

Trade-Off Studies will be largely complete and reported to the market in Q1 CY2024.

Stage 3 - Convergent Engineering

Once a single go-forward design is selected, sufficient engineering will be undertaken to reach +/-25% confidence level for capital and operating costs, with appropriate levels of contingency for each area, enabling a Qualified Person to sign off on each major project area. This process will include both internal peer reviews and full independent expert reviews, the latter of which are provided directly to the Khuiten JV Board to ensure study findings are at PFS standard with no potential fatal flaws.

Convergent Engineering will be completed by the end of Q2 CY2024.

Stage 4 - PFS Completion

Key outputs of the PFS will include reports and Ore Reserves stated to both JORC and NI43-101 standards. These reports will be published in Q3 CY2024. Upon completion of the PFS, the Khuiten Metals Joint Venture Board, comprising members from both Xanadu and Zijin, will consider findings and make a Financial Investment Decision (FID). This is also referred to as "Decision to Mine" or "Decision to Construct". A 'yes' decision at this stage confirms intention to fund, complete final Feasibility Engineering, undertake long lead time orders, and commence construction.

Kharmagtai Operational Upgrades

During the Quarter, Xanadu commenced operational upgrades at Kharmagtai to further modernise its core processing, power supply and employee work environment (Figure 2). These upgrades are proceeding on time and budget, with delivery on track for Q4 CY2023. They include:

Grid Power - 35kV connection to support studies, ongoing exploration and construction;

Core Processing Facility - upgrade and replace old facility for use through life of mine;

Accommodation - addition of ~30 beds in a modern facility;

Greenhouse - employs locals to provide long term, locally sourced food for employees; and

Water Filtration - enables site to reduce use of bottled water and creation of plastic waste.

Figure 2. Clockwise from Top Left - Core Processing Facility, Greenhouse, Drinking Water Filtration System, 35kV Grid Power Supply

APPENDIX 2: High-Impact Discovery Exploration Program at Kharmagtai

Aggressive 18,000m growth and discovery drill discovery programme underway. Discovery exploration program includes two additional diamond drill rigs.

1x diamond rig will drill 8,000m in Phase 1 of deep exploration program targeting high-grade, large-scale mineralisation at depth in an analogue to Oyu Tolgoi. Additional 6,000m in Phase 2 is pending Phase 1 results.

1x diamond rig will drill 10,000m of shallow holes, targeting open pit style resources in five unexplored porphyry clusters within the wider Kharmagtai district

Large-Scale Exploration Programme at Depth

Existing geochemical, geological, and geophysical datasets point to known mineralisation at Kharmagtai (1.1Bt containing 3Mt Cu & 8Moz Au)16 which represents a shallow surface expression of a much larger porphyry system at depth (Figures 3 and 4).

Figure 3: Long Sections through the Oyu Tolgoi Porphyry System and The Kharmagtai Porphyry System. Deep high-grade exploration drill program geochemical zonation points to much larger system beneath Kharmagtai.17

Figure 4: Kharmagtai copper-gold district showing currently defined mineral deposits and planned deep exploration holes.18

Shallow Exploration Drilling

Shallow exploration drilling at Kharmagtai is targeting additional porphyry copper-gold deposits outside the currently defined MRE volume. This programme also serves to inform future infrastructure location decisions associated with the potential development of the Kharmagtai Project into a large-scale mining operation. Approximately 3,400m (of 10,000m planned) has been completed to date in fifteen holes, with several new shallow discoveries made across three largely unexplored porphyry clusters (Figure 5).

Figure 5: Kharmagtai copper-gold district showing currently defined mineral deposits and planned and completed shallow exploration drill holes. Blue outlines are 2021 scoping study open pit designs and white dashed outlines define porphyry cluster target areas.19

At Cluster One (Figure 5), drilling targeted surface copper anomalism and outcropping porphyry veining. Drill Hole KHDDH589 intercepted a broad zone of low-grade porphyry mineralisation from surface, suggesting the hole has passed over and to the north of a potential shallow porphyry. Drill hole KHDDH589 returned:20

Drilling is planned to test behind this intercept for higher-grade material at Cluster One.

Drilling at Cluster Two (Figure 5) targeted previous shallow porphyry stockwork mineralisation and was prioritised 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 mineralisation with an additional high-grade gold intercept near end of hole (EOH).

The copper gold ratio of these intercepts and nature of mineralisation is similar to 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, mineralised porphyry.

A total 4 diamond drill holes were completed at Cluster 4 with no significant results returned.

APPENDIX 3: Kharmagtai Infill Drilling

Drill collars and assay results for infill drilling are outlined in Figure 6 and Appendix 4.

Figure 6: Kharmagtai copper-gold district showing currently defined mineral deposits and planned Phase One Resource infill drill holes.21

Significantly, drill hole KHDDH594, drilled into the central portion of Stockwork Hill, has encountered higher-grade zones of tourmaline breccia mineralisation (Figure 7, Table 1) adding vertical extension to known higher grade zones. Principally, drilling intercepted a highly encouraging zone grading 34m @ 1.10% Cu and 0.10g/t Au (1.15% CuEq) from 285m, significantly exceeding the 2021 MRE block model prediction for 0.3% CuEq mineralisation. This intercept is approximately 120m above the closest high-grade tourmaline breccia drilled in this area, highlighting 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.

Figure 7: Cross section through the Stockwork Hill deposit showing drill hole KHDDH594.22 Table 1: Several holes encountered materially better grade relative to resource grade. Significant drill intersections from Stockwork Hill, include:

Several drill holes have encountered materially better grade relative to the White Hill MRE resource grade. Drill hole KHDDH638, located on the southern margin of the White Hill deposit, targeted a mineralised and resource controlling fault, intersecting a significantly higher-grade zone of copper and gold mineralisation that is located below the current optimised pit design (Table 2).

MINERAL RESOURCES AND ORE RESERVES REPORTING REQUIREMENTS

The JORC Code, 2012 sets out minimum standards, recommendations and guidelines for Public Reporting in Australasia of Exploration Results, Mineral Resources and Ore Reserves. The Information contained in this Announcement has been presented in accordance with the JORC Code, 2012.

MINERAL RESOURCES AND ORE RESERVES

Previously reported Mineral Resource Estimates for Kharmagtai have not changed. There are no reported Ore Reserves.

MINING ACTIVITIES

There were no mine production or development activities during the June 2023 Quarter.

LIST OF TENEMENTS

Xanadu held licenses for the following tenements during the June 2023 Quarter. No new farm-in or farm-out agreements were entered into during the quarter.

Project Name Tenement Name Beneficial Ownership Start of Quarter Beneficial Ownership End of Quarter Location Red Mountain Red Mountain 100% 100% Mongolia, Dornogobi province, Saikhandulaan soum Kharmagtai Kharmagtai 38.25%24 38.25% Mongolia, Umnugobi province, Tsogttsetsii soum

COMPETENT PERSON STATEMENTS

The information in this announcement that relates to Mineral Resources is based on information compiled by Mr Robert Spiers, who is responsible for the Mineral Resource Estimate. Mr Spiers is a full time Principal Geologist employed by Spiers Geological Consultants (SGC) and is a Member of the Australian Institute of Geoscientists. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as the Qualified Person as defined in the CIM 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 announcement that relates to exploration results is based on information compiled by Dr Andrew Stewart, who is responsible for the exploration data, comments on exploration target sizes, QA/QC and geological interpretation and information. Dr Stewart, who is an employee of Xanadu and is a Member of the Australasian Institute of Geoscientists, has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as the Competent Person as defined in the JORC Code, 2012 and the National Instrument 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.

RELATED PARTIES

As set out in section 6.1 of the attached Appendix 5B, Mining exploration entity or oil and gas exploration entity quarterly cash flow report, payments made to related parties and their associates was approx. $435,000 in the June 2023 Quarter. The amounts relate to salary, superannuation and bonus payments to Directors; legal fees paid to HopgoodGanim Lawyers (a company associated with Xanadu Non-Executive Director Michele Muscillo) for legal services; rent paid to Xanadu Executive Director Ganbayar Lkhagvasuren in relation to Xanadu's Ulaanbaatar office; and rent fees paid to Colin Moorhead & Associates (a company associated with Xanadu's Executive Chairman and Managing Director, Colin Moorhead) in relation to a share of Xanadu's Melbourne office.

We seek Safe Harbor.