Xanadu Mines Ltd. provided an update on metallurgical testwork for the Kharmagtai Copper-Gold Project (Kharmagtai) in Mongolia, being developed with the Company?s joint venture partner, Zijin Mining Group Co. Ltd. The Eriez HydroFloat test work for evaluating coarse ore flotation has demonstrated excellent results for one of the key uplift scenarios defined in the Kharmagtai Scoping Study. It has effectively improved upfront processing efficiencies, producing a coarse reject of up to ~44% by mass for the main mineralised sulphide orebody.

Highlights: Testwork for assessing coarser grind options (P80 grind sizes ranging between 150 to 450 microns (µm) for Kharmagtai sulphide mineralisation, using HydroFloat achieved compelling results: Up to 94% copper and 92% gold recovered in the HydroFloat stage; Enabling a peak coarse reject of 43.8% by mass, at 450µm; and Rougher recoveries of 91% for copper and 83% for gold, at 250 µm. Coarse ore flotation may offer numerous benefits for Kharmagtai, including: Reduced power and water intensity per tonne of ore processed; Increased mill capacity and overall plant capacity for an increased production rate; Reduction in consumables, such as grinding media and reagents; and Significant improvement in tailings stability with the production of coarser tails, as well as water recycling at the back end of the plant. HydroFloat provides the opportunity for Kharmagtai to recover valuable minerals in the 150 to 200µm range that processing through conventional flotation alone is unable to perform. More than 70 HydroFloat units are commercially used in global operations, including Australia.

The pilot program to date has demonstrated significant potential for HydroFloat, with further mineralogy and pilot tests to be conducted as new samples become available. Coarse Ore Flotation Metallurgical Testwork Program - Summary: The existing conventional flowsheet involves crushing and grinding ore to a P80 size of 150µm for Stage 1 (15Mtpa in Scoping Study) and 212µm for Stage 2 (30Mtpa in Scoping Study). Testwork to investigate coarser grind options was completed at ALS?

laboratory in Perth and was supervised by Eriez Australia using Eriez HydroFloat pilot equipment, returning HydroFloat rougher recoveries of: 91% Cu recovery and 83.2% Au recovery at 250µm; and 88.4% Cu recovery and 77.7% Au recovery at 350µm. Description: Composite samples were prepared from core drilled at each of the Stockwork Hill, White Hill and Copper Hill deposits Kharmagtai. Sample preparation consisted of combining samples ?as received? into a single 200kg composite, crushing to 3.35mm, followed by rotary blending and splitting and then grinding individual samples to 150 (finer), 250, 350 and 450 (coarser) µm. Eriez supplied the CrossFlow classifier (XF), rotary drum and HydroFloat (HF) units used for laboratory testing at the ALS facility.

The Eriez Laboratory CrossFlow is a hydraulic classifier that separates particles according to size, shape, and specific gravity. Samples were classified in the CrossFlow to remove the fines and slimes with a target split size of 90µm and the CrossFlow underflow was used as the feed for the coarse particle flotation into the HydroFloat unit. Prior to that, the HydroFloat feed was polished and conditioned with collector reagent in a rotating drum before being pumped into the HydroFloat.

The entire HydroFloat overflow and HydroFloat underflow streams were collected, split, and sub-sampled before assay analysis for primarily copper and gold. Combined CrossFlow overflow and HydroFloat overflow from the 250 and 350µm tests were tested by flotation to produce a rougher concentrate, after grinding to 75µm. HydroFloat Results: The coarse ore flotation evaluation included head grade analysis and rougher flotation recovery testwork on a composite sample taken from varying deposits, depths, sulphide and alteration types to test coarser grind options. These results demonstrate that the 250 µm HydroFloat test, followed by a 75 µm grind for rougher flotation, produced similar results to a conventional flotation test at 150 µm. Furthermore, improved rougher concentrate grade and recovery were achieved: 5.95% Cu grade and 91.0% recovery for HydroFloat, versus 4.64% Cu grade and 90.1% recovery for conventional flotation.

However, Au grade and recovery are both less favourable for HydroFloat versus conventional flotation. Results indicate that use of Eriez HydroFloat for Kharmagtai ore achieved a high recovery while rejecting coarse, barren ore. Significance to Kharmagtai: The results achieved in these preliminary tests provide sufficient encouragement to conduct further studies.

Since the comminution circuit is the major source of energy consumption, investigating ways to reduce this through a coarser grind warrants further work. This will take the form of mineralogical studies to determine the liberation of sulphides at coarse grinds, followed by further pilot testing on new samples, as they become available. Next Steps: The next step for coarse ore flotation is PFS process flow sheet modelling and engineering design by DRA, the engineering firm leading process design and engineering for the study.

Coarse ore flotation is a subset of the broader Kharmagtai metallurgical testwork program. The comprehensive metallurgy program during the Pre-Feasibility Study includes comminution properties of the mineralisation and alteration styles at Kharmagtai to determine the optimum flowsheet and generate inputs for engineering design. This will also generate data to inform the copper and gold recovery models, and allow operating costs estimates to be calculated.

Concentrate samples will also be generated for marketing studies as part of the broader metallurgy program.