Xanadu Mines Ltd. announced substantial increase in the Mineral Resource Estimate (Resource, Mineral Resource Estimate or MRE) for its copper-gold project at Kharmagtai, in the South Gobi region of Mongolia, being developed with the Company?s joint venture partner Zijin Mining Group Co. Ltd. (Zijin). The updated Resource materially increases both the tonnes and contained copper equivalent (CuEq) metal.

This includes a 25% increase in the higher-grade component to >125Mt, which is expected to enhance project cashflows in the early years. Kharmagtai?s upgraded Resource cements its position as one of the largest undeveloped gold-rich copper assets globally and supports its rapid advance towards development with a Pre-Feasibility Study (PFS) and Maiden Ore Reserve, followed by and decision to mine in Third Quarter CY2024. Xanadu engaged independent consultants, Spiers Geological Consultants (SGC), to prepare an updated Resource for Kharmagtai.

The Resource has been reported in accordance with the JORC Code 2012 and National Instrument 43-101 (NI 43-101)5, is effective as of 8 December 2021. Drilling results from the past 24 months (including 162 holes for 58k metres of drilling) have been incorporated into an updated JORC 2012 Mineral Resource Estimate (MRE) for the Kharmagtai Copper and Gold Deposit in Mongolia. This Resource is the first update to the Resource announced on the 8th December 2021, with 162 diamond drill holes and 58,259 metres of drilling completed since 2021.

The open pit resources are reported above nominated meters Relative Level (mRL), which is unique to each deposit area. Levels are based on preliminary optimisation analysis and a 0.2% CuEq cut-off grade. The underground Resource is reported below the nominated mRL?s levels based on preliminary optimisation analysis and a 0.3% CuEq cut-off grade, reported with inside a 0.1% CuEq reporting wireframe.

SGC considers that data collection techniques are consistent with industry best practice and are suitable for use in the preparation of a Resource to be reported in accordance with JORC Code 2012. Available quality assurance and quality control (QA/QC) data supports the use of the input data provided by Xanadu. The Resource is considered to have reasonable prospects for eventual economic extraction (RPEEE) on the following basis: the deposit is located in a favourable mining jurisdiction, with no known impediments to land access or tenure status; and the volume, orientation and grade of the Resource is amenable to mining extraction via traditional open-pit and underground methods; The Resource models are well understood and there is substantial upside potential to be realised by better understanding the economics of the deposit.

As demonstrated in the images below, significant volumes of mineralisation have been modelled that fall outside of the constraining pit wireframe. These parts of the model will be targeted for further investigation through economic studies to assess if more of this material can be brought into the Mineral Resource. A step change has occurred in the understanding of the geological controls on mineralisation at Kharmagtai since the 2021 Resource.

Each deposit in the 2023 Resource has been based on an updated detailed 3D geological model to constrain populations of grade with hard or soft boundaries determined using statistical analysis. This approach allows for a much more realistic and accurate estimate. The model is based on a complete re-logging of the 272km of diamond drilling completed at Kharmagtai.

This relogging has standardised the geology across the deposits and many phases of drilling/previous loggers, allowing a high-quality 3D model to be generated. Detailed lithogeochemical analyses and modelling were used to refine the intrusive phase categories and separate out mineralised versus unmineralised phases, allowing for more accurate resource domains to be generated. This model not only forms a robust framework for the Mineral Resource update but allows predictions as to extensions to the deposits to be identified and drilled.

3D geological wireframes were developed for all geological units within the deposits, including country rock, all porphyry phases, andesite dykes and breccia bodies. These wireframes were constrained to within a detailed 3D structural model of each deposit. This structural model was built to define the boundaries between the main populations of grade.

Individual lithology and mineralisation style wireframes were generated for each fault block, and then each solid geology fault block combined into a complete deposit model. The base of oxidation surface was generated using a combination of geological logging and geochemical data. Wireframes were generated for various cut-off grade shells using statistical changes in the grade data.

Separate wireframes were generated for tourmaline breccia mineralisation, both moderately mineralised and high-grade tourmaline breccia bodies. In some areas of the deposit wireframes for high-density veining were used to constrain very high-grade blocks of mineralisation, such as the High-Grade Bornite Zone. The additional drilling since the last Mineral Resource and other exploration and evaluation programs such as - relogging of historical core, detailed short wave infrared data collection, geophysical review and geochemistry studies have delivered superior understanding of the deposit geometry.

This has led to greater confidence in the geological and grade continuity and has infilled several areas of the deposits.