Mr. Colin Moorhead reports

XANADU ENTERS INTO NEW MAGMATIC COPPER AND NICKEL SULPHIDE PROJECT

Xanadu Mines Ltd. has agreed a binding term sheet with STSM LLC granting the right to earn up to 80-per-cent interest in two exploration licences -- XV-17774 (Oyut) and XV-21887 (Sant Tolgoi) -- located in the Zavkhan province of Western Mongolia. These two licences make up the Sant Tolgoi project, which is considered highly prospective for discovery of new magmatic-intrusion-related copper-nickel systems.

Highlights:

• Xanadu agrees binding term sheet for Sant Tolgoi, a prospective district-scale magmatic copper-nickel project;
• Sant Tolgoi project hosts multiple shallow copper-nickel targets over several kilometres of strike;
• Acquisition aligned to Xanadu Horizon 3 strategy to build a portfolio of future-facing metals projects;
• Detailed mapping, geochemistry and geophysics planned to start in March, 2024.

Colin Moorhead, Xanadu's executive chairman and managing director, said: "We are delighted to have agreed a deal with STSM to acquire an extensive and highly strategic magmatic copper-nickel exploration project in Western Mongolia. Xanadu has been a first mover in several of Mongolia's premier exploration terranes. We believe this asset has outstanding potential to yield a world-class discovery, and we look forward to getting on the ground in the spring to start testing the targets identified through our due-diligence process."

Project overview

The agreement covers two granted exploration licences -- XV-17774 (Oyut) and XV-21887 (Sant Tolgoi) -- located in the Zavchan province of Western Mongolia, with a combined area of over 40 square kilometres, collectively referred to as the Sant Tolgoi project or Sant Tolgoi Cu-Ni (copper-nickel) project. The tenement portfolio includes numerous advanced exploration targets with real opportunity for the discovery of significant magmatic copper and nickel mineralization.

In the Zavchan region of Mongolia, the Sant Tolgoi project lies on the western extension to the of the deep-seated Khangai fault systems, a metalliferous fault network which hosts several significant mafic and ultramafic intrusions that are highly encouraging for high-grade intrusion-hosted copper and nickel discoveries. Early signs of several copper-nickel systems have been encountered in both historical and recent drilling.

Detailed mapping, geochemistry and geophysics planned to start in March, 2024.

Agreement terms

The company has executed a binding term sheet with STSM granting the right to earn up to 80-per-cent interest in two exploration licences, XV-17774 (Oyut) and XV-21887 (Sant Tolgoi), located in the Zavchan province of Western Mongolia.

Whilst binding in nature, the term sheet is intended to be replaced by a formal agreement governing the full terms and conditions of the farm-in transaction, which will be negotiated between the parties. The term sheet is expressed to be conditional on such formal agreement being entered into.

Key terms of the agreement are:

• Stage 1 farm-in:
  • Xanadu may elect to proceed to stage 1 once the minimum commitment has been met and can earn a 51-per-cent interest in the project by spending $1-million (U.S.) on exploration over a period of 24 months.
  • At the completion of the stage 1 farm-in, Xanadu will have earned the right to 51-per-cent equity in the projects.
• Formation of joint venture:
  • Once Xanadu has earned a 51-per-cent interest in the projects, STSM LLC can elect to end the farm-in and form a joint venture (JV), with Xanadu holding 51 per cent and STSM 49 per cent, and each contributing pro rata to their share in the JV, with Xanadu being the manager of the JV. The JV agreement will be on standard commercial terms.
• Stage 2 farm-in after formation of joint venture:
  • If STSM does not finance their pro rata portion, the JV would be formed.
  • Xanadu may earn a further 29-per-cent interest in the projects by sole financing a further $10-million (U.S.) on exploration prior transferring the exploration licence to mining lease from the completion of the minimum commitment (stage 2 farm-in). At this stage, Xanadu will hold an 80-per-cent interest in the projects and STSM LLC 20 per cent.
• Stage 3 farm-in after transferring exploration licence to mining leases:
  • At the completion of the stage 2 farm-in, Xanadu will hold an 80-per-cent interest in the projects and STSM LLC 20 per cent. At this point, STSM LLC shall contribute the pro rata to the further exploration expenditures. STSM may give notice to trigger a negotiated loan from Xanadu with certain interest (greater than or equal to 10 per cent) to their 20 per cent pro rata. In the event of such a loan, STSM shall have an obligation pay back this loan, including interest, from their gross revenue royalty payable on product sold from the projects.

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.

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