Mr. Colin Moorhead reports

ENCOURAGING OXIDE LEACH RECOVERY FOR COPPER & GOLD AT KHARMAGTAI

Xanadu Mines Ltd. has provided an update on metallurgical test work for the Kharmagtai project in Mongolia, being developed with the company's joint venture partner, Zijin Mining Group Co. Ltd. Oxide leach recovery results demonstrate material progress towards one of the multiple uplift scenarios defined in the Kharmagtai scoping study, with value add likely, reducing mining strip and generating earlier operating cash flows for the Kharmagtai prefeasibility study (PFS), in addition to sulphide flotation processing of the main mineralized orebody. Upscaled column leach tests as well as heap leach engineering design work are in progress.

Highlights:

• Recent column leaching tests completed on the mineralized oxide portion of the Kharmagtai mineral resource estimate (MRE) delivered promising metallurgical extraction, peaking at 93 per cent copper and 46 per cent gold. Successful extraction occurred over eight-week leach duration, using a sample head grade of 0.29 per cent copper and 0.42 gram per tonne gold, at a coarse six-millimetre particle size.
• The MRE, totalling approximately 1.3 billon tonnes, includes 52 million tonnes oxide material, primarily in the top 20 metres from surface. Additional surface oxide material sits outside the 2023 MRE, representing upside for future leach operations.
• The 2022 PEA concentrated solely on sulphide material processing, with oxide material classified as prestripped waste and ascribed negative value.
• The PFS, firmly tracking to budget and schedule, is investigating the transformation of all or part of this PEA liability into an asset through leaching.
• Oxide processing flow sheet anticipates three stages of leaching, using proprietary, commercially proven techniques used in global operations, including Australia, and licensed through Draslovka Mining Process Solutions (DMPS). It comprises acid leach to recover and remove cyanide-soluble copper, followed by GlyCat, which involves a glycine leach to neutralize acid, followed by cyanide leach to recover gold and silver.
• Internal review of these results has given good confidence to proceed with next commercialization phase of large-scale column leach testing. This will enable delivery of the final leach process and engineering design to PFS confidence level. Next results are expected between June, 2024, and July, 2024.

Colin Moorhead, Xanadu's executive chairman and managing director, said: "We talked about oxide leaching as a major uplift opportunity in our scoping study, and these results have made significant inroads to proving up its viability for commercialized processing, to generate significant early cash. Decision to accelerate this is also made possible given it is surface material that will need to be excavated prior to accessing the main mineralized sulphide deposits. Instead of turning left to the waste dump, our goal is to turn right and place it on a leach pad, where it can turn a negative into a net positive during the early years of Kharmagtai operations; a double benefit for project economics. With continued successful leaching test work, along with process and engineering design, we expect to deliver oxide heap leaching into the PFS base case and drive real value uplift for all stakeholders."

Oxide metallurgical program

Assays for selected samples

Four samples representative of the Kharmagtai oxide zones were sent to DMPS for a preliminary column leach and reactor leach test program to evaluate gold and copper extraction. These are referenced as follows:

• GE (Golden Eagle oxide);
• Plus several composite samples collected from White Hill, Stockwork Hill and Copper Hill deposits and classified as follows: GOX (green oxide), SOX (strong oxide) and ROX (red oxide).

Assayed head grades for the four samples are shown in an attached table.

Test work results

Initial test work focused on the GOX sample, which recorded a 49.7-per-cent gold extraction on a high-cyanide diagnostic leach and a 69.7-per-cent acid-soluble copper value. A range of alternative lixiviants were then tested for GOX to assess leach recoveries, including glycine through DMPS's GlyCat and GlyLeach processes, as shown in an attached table.

GlyCat and GlyLeach are environmentally benign, hydrometallurgical processes that can leach copper from oxide, mixed oxide and supergene ores as well as leach gold under the right conditions.

Glycine is the simplest amino acid and widely available as a bulk reagent. Its unique properties can offer substantial advantages over conventional lixiviants in mineralogical processing:

• Environment/safety: Glycine is stable, water soluble and non-toxic to humans as well as wildlife.
• Selectivity: Glycine will solubilize base metals and precious metals while iron, magnesium, manganese, silicates and carbonates remain in the solid phase.
• Alkalinity: Leach conditions are at high pH, allowing simple and inexpensive materials for construction.
• Low consumption: Glycine is non-volatile (unlike cyanide, ammonia and hydrochloric acid) and stable under process conditions.
• Recycle: Glycine is not chemically consumed in the overall process. It is easily recovered and recycled and process losses are minimized.

Low cyanide addition, coupled with a glycine-dominant lixiviant, has many beneficial properties, particularly for leaching of precious metals with elevated copper content. This occurs due to copper preferentially bonding to glycine rather than cyanide, thus freeing the cyanide to leach gold.

Results indicate that a combination of acid and GlyCat could extract a similar amount of gold and copper as the diagnostic leaches, with column test No. 6 extracting 49.1 per cent Au and 64.3 per cent Cu over 10 weeks.

Follow-up test work was then conducted; this involved crushing to three different particle sizes of three millimetres, six millimetres and 12 millimetres. Results after eight weeks are shown in an attached table, with the switch from one lixiviant to the other occurring after week 6.

Based on findings from the GOX tests, each of the other three composite samples are undergoing column leach tests at a crush size of six millimetres, followed by sequential lixiviant combination of acid and GlyCat. Further tests are expected to run over 12 weeks; full results will be released at completion.

Test program scope

There are up to 52 million tonnes of partially oxidized material at Kharmagtai, with the majority located near surface at Stockwork Hill, White Hill and Golden Eagle. If this material was processed as ore rather than prestripping, it could reduce waste rock production by approximately 10 per cent in the early years of the project and generate net revenue rather than net costs.

Sample selection and preparation

Samples were selected from three oxide zones (GOX, ROX and SOX) from White Hill, Copper Hill, Stockwork Hill and Golden Eagle. The geometallurgical domains are defined as follows:

• GOX -- green and blue copper oxide products present;
• SOX -- strongly oxidized, yellow to light brown material with sooty chalcocite and tenorite;
• ROX -- bright red, strongly oxidized material with chalcocite, tenorite and neotocite present;
• GEX -- Golden Eagle higher-grade gold zone; single oxide domain.

Samples were collected from core drilled at Stockwork Hill, White Hill, Copper Hill and Golden Eagle deposits at the Kharmagtai project, as being representative of each of these zones. Sample preparation consisted of homogenizing and splitting samples as received into their respective composites and labelling by sample number (between one and 12), followed by crushing and grinding to particle sizes ranging between three millimetres and 12 millimetres. Each split was rotary split and homogenized for head analysis and subsamples taken for test work. Head assays for gold, silver and copper were conducted by fire assay for each sample. Prior to leach test work, samples were cured in 10-kilogram-per-tonne sulphuric acid for 24 hours to improve copper extraction.

Oxide mineral resource

The 2023 mineral resource estimate (MRE) included a 52-million-tonne subset of partially oxidized material at grades comparable with the underlying sulphide deposit, which could be amenable to heap leach rather than being treated as waste. The oxide subset of the 2023 MRE is shown in the attached tables.

Future test work

GlyCat (using glycine and cyanide as lixiviants) is proving effective in leaching gold, with very little interference on extraction of copper. The next step in test work is to deliver PFS-level results for pilot-scale two-metre-high columns, testing crushed particle sizes of 20 millimetres, 12 millimetres and six millimetres. Results will become available between June, 2024, and July, 2024.

In parallel, an indicative leach process flow sheet and engineering design will be developed, which will be upgraded to PFS level when final column leach test results are delivered.

About Xanadu Mines Ltd.

Xanadu is an Australian Securities Exchange and Toronto Stock Exchange listed exploration company operating in Mongolia. The company 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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