Quarterly Activities Report

Hamilton Spectator

30-07-2025

for the three months ended 30 June 2025
(figures are unaudited and in A$ except where stated)
TORONTO, July 29, 2025 (GLOBE NEWSWIRE) —
June 2025 Quarter
During the Quarter ending 30 June 2025 (June Quarter), Xanadu Mines Ltd (Xanadu or the Company) focused on strategic funding options to progress the Kharmagtai Copper and Gold Project (Kharmagtai). This resulted in an off-market takeover bid from Bastion Mining Pty Ltd (Bastion), which the Board recommended to shareholders. At the time of this report, Bastion has acquired a relevant interest exceeding 90% of Xanadu shares and issued a Notice of Compulsory Acquisition for all remaining shares outstanding1.
Key Highlights:
Executive Chairman & Managing Director, Colin Moorhead, said:
'The transaction with Bastion is an important milestone on the journey for both the Kharmagtai Project and for Xanadu. This event also successfully concludes the company strategy to deliver a liquidity event for Xanadu shareholders to unlock value from the Kharmagtai discovery. Given the scale and complexity of the project, the challenging jurisdiction, and the added complexity of a 50:50 JV with a Chinese partner, I am very proud of this achievement and thank the team for their efforts, and shareholders for their support.
Looking forward, I expect Kharmagtai to be the next major mine to be built in Mongolia and an important producer of copper to the world. We wish Bastion and Zijin both success in moving this project rapidly to production.'
Corporate Transaction
On 7 April 2025, the Company undertook an exclusivity arrangement with its major shareholder and joint venture partner Zijin Mining Group Co. Ltd (Zijin), to allow the parties to discuss a range of potential corporate transactions11. This arrangement also extended the term of the potential option to allow the Company to dispose of a 25% interest in Khuiten Metals Pte Ltd (25% Put Option). Following substantive discussions with Zijin, on 5 May 2025 Xanadu reported that the parties had been unable to finalise a control transaction within the exclusivity period and that the Company would recommence discussions with other interested parties12. The 25% Put Option was subsequently withdrawn from the resolutions at the proposed Extraordinary General Meeting (EGM) scheduled for 4 June 2025 and the meeting was cancelled13.
On 19 May 2025, the Company announced that it had entered into a Bid Implementation Agreement with Bastion Mining Pte Ltd (Bastion) under which Bastion made an off-market takeover offer to acquire all the fully paid, ordinary shares issued in Xanadu (Xanadu Shares) which Bastion did not already own, at a price of A$0.08 cash per Xanadu Share (Offer) 14 15 16 17 18 19.
The Offer was made by Bastion, which represents a consortium of Boroo Pte Ltd (Boroo) and Xanadu Director Ganbayar Lkhagvasuren (together, the Bid Sponsors). Boroo is a private Singapore-incorporated entity which invests in major gold projects internationally. Boroo key assets include Lagunas Norte, a producing gold mine in Peru and a portfolio of development-stage projects in South America. Boroo has guaranteed Bastion's obligations as bidder under the Bid Implementation Agreement.
In the Bastion Bidders Statement20, the bidder cited the significant premium to historic market prices for Xanadu shares and the substantial value of the offer at A$160 million for Xanadu Mines, at the high end of the valuation prepared by BDO. The Bidders Statement also noted the removal of exposure to risks associated to being invested in a Company with a non-operating minority join partner, and associated development risks.
Xanadu's Takeover Board Committee21, together with Xanadu's legal and financial advisers, carefully considered the Offer. The Takeover Board Committee Directors unanimously recommended that Xanadu shareholders ACCEPT the Offer in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Offer is fair and reasonable.
The Board noted in its Target's Statement22 that Bastion's Offer has been made following the hard work and success of the Xanadu team in advancing the Kharmagtai Copper-Gold Project (Kharmagtai) over the last 5 years. The release of the Pre-Feasibility Study (PFS) in October 2024 and declaration of a maiden ore reserve was a significant milestone for the Company and confirmed the potential of Kharmagtai as a globally significant, long life, low cost and low risk future copper-gold mine.
As the next step for Xanadu, through its Bidder's Statement, Bastion indicated an intent to delist Xanadu from both ASX and TSX exchanges should it reach a relevant interest of more than 75%. Bastion further indicated its intent to acquire all remaining shares in Xanadu via compulsory acquisition, should it reach an interest of more than 90%.
As the next phase for Kharmagtai is to secure the project's permitting and Mongolian investment agreement pathway. In that regard, Boroo's considerable in-country experience will be invaluable for driving the engagement process, making Bastion a natural choice as the new owner of Xanadu and partner to Zijin Mining Group Co. Ltd (Zijin). With Zijin now responsible for the operatorship of Kharmagtai and, recognising Xanadu's profile as an exploration-focused company with limited balance sheet strength to fund its share of the very significant capital required to progress development of the project, the Takeover Board Committee noted that it considers that now is the appropriate time to provide a liquidity event for Xanadu Shareholders.
Subsequent to the quarter, Bastion gave notice that it had extended its Offer23 to now close at 7pm Sydney time on 5 August 2025 (unless further extended or withdrawn). The Takeover Board Committee reiterated its unanimous recommendation that Xanadu Shareholders ACCEPT the Offer as soon as practicable (in the absence of a superior proposal and subject to the Independent Expert continuing to conclude that the Offer is fair and reasonable). This recommendation outlined the potential risks to liquidity and value of shares held if the Offer closes and Bastion is not entitled to proceed to the compulsory acquisition.
On 25 July, Bastion announced that following acceptances of its Offer to date, it held relevant interest greater than 90% of Xanadu shares and issued a Notice of Compulsory Acquisition for the remaining shares outstanding24.
Operations
During the quarter, Xanadu maintained its three projects at operational care & maintenance status, which included Kharmagtai (operated by Zijin), the Red Mountain Copper-Gold Project, and the Sant Tolgoi Copper-Nickel Project. At Kharmagtai, technical discussions continued in preparation for the Bankable Feasibility Study (BFS), and both local community and regulatory engagement programs continued as planned. No exploration activity was undertaken during the quarter.
Figure 1: Location of Xanadu Projects in Mongolia
Financial and Corporate
Capital Structure
On 30 June 2025, the Company had 2,291,211,189 fully paid ordinary shares on issue and approximately A$18.532 million in cash.
During the Quarter, the Company advised that 92,184,000 fully paid ordinary shares were issued to exercising option holders or their nominees following a Change of Control event which resulted in the waiving of all Vesting and Restriction conditions in accordance with the terms of the options issue25.
Equity Funding Arrangements
To assist Xanadu in meeting its corporate and joint venture funding obligations during the Offer period, Bastion and Xanadu entered into a share subscription agreement under which Bastion agreed to subscribe for 286,829,633 Xanadu Shares at an issue price of A$0.06 per share.26
The issue of the Subscription Shares took place on 26 May 2025 and were issued under Xanadu's available placement capacity pursuant to ASX Listing Rule 7.1.27 Xanadu received a cash sum of A$17.2 million for the Subscription Shares; and immediately following settlement, Bastion held a relevant interest in 13.04% of Xanadu Shares.
Shareholder Meetings
An Extraordinary General Meeting (EGM) was scheduled for 11 April 2025 to vote on the exercise of the 25% put option in respect of Khuiten Metals Pte Ltd and to ratify prior issue of shares. The put option resolution was withdrawn after announcement of exclusivity arrangements with Zijin and extension of the put option exercise period.28
The Annual General Meeting (AGM) was held on 22 May 2025, with all resolutions approved by shareholders.29
A second EGM was scheduled for 4 June 2025 to vote on the 25% put option, after conclusion of the exclusivity period with Zijin. This resolution was withdrawn and the EGM was cancelled after completion of the equity placement to Bastion and commencement of the off-market takeover bid period.30
Director Resignation
Subsequent to the Quarter and following sale of Zijin shares into the Offer, Zijin's nominee Shaoyang Shen resigned from the Board of Xanadu.31 Note that Zijin retains its 50% shareholding in the Khuiten Metals Pte Ltd, the entity which controls Kharmagtai.
ASX Announcements
This June 2025 Quarterly Activities Report does not contain any 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).
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.
For further information on Xanadu, please visit:
www.xanadumines.com
or contact:
This Announcement was authorised for release by Xanadu's Board of Directors.
APPENDIX 1: STATEMENTS AND DISCLAIMERS
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
Mineral Resource Estimates for Kharmagtai were updated during the September 2024 Quarter – please refer to the relevant ASX/TSX Announcement for details32 A Maiden Ore Reserve Estimate was reported in the same Announcement.
MINING ACTIVITIES
There were no mine production or development activities during the June 2025 Quarter.
LIST OF TENEMENTS
Xanadu held licenses for the following tenements during the June 2025 Quarter. No new farm-in or farm-out agreements were entered into during the quarter.
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. Australasian Institute of Geoscientists 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. $844,173 in the June 2025 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 including support to the merger & acquisition activity; 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.
COPPER EQUIVALENT CALCULATIONS
The copper equivalent (eCu, CuEq) calculation represents the total metal value for each metal, multiplied by the conversion factor, summed and expressed in equivalent copper percentage with a metallurgical recovery factor applied.
Copper equivalent grade values were calculated using the formula: CuEq = Cu + Au * 0.60049 * 0.86667.
Where Cu - copper grade (%); Au - gold grade (g/t); 0.60049 - conversion factor (gold to copper); 0.86667 - relative recovery of gold to copper (86.67%).
The copper equivalent formula was based on the following parameters (prices are in USD): Copper price 3.4 $/lb; Gold price 1400 $/oz; Copper recovery 90%; Gold recovery 78%; Relative recovery of gold to copper = 78% / 90% = 86.67%.
FORWARD‐LOOKING STATEMENTS
Certain statements contained in this Announcement, including information as to the future financial or operating performance of Xanadu and its projects may also include statements which are 'forward‐looking statements' that may include, amongst other things, statements regarding targets, estimates and assumptions in respect of mineral reserves and mineral resources and anticipated grades and recovery rates, production and prices, recovery costs and results, capital expenditures and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions. These 'forward-looking statements' are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Xanadu, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies and involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward‐looking statements.
Xanadu disclaims any intent or obligation to update publicly or release any revisions to any forward‐looking statements, whether a result of new information, future events, circumstances or results or otherwise after the date of this Announcement or to reflect the occurrence of unanticipated events, other than required by the
Corporations Act 2001
(Cth) and the Listing Rules of the Australian Securities Exchange (ASX) and Toronto Stock Exchange (TSX). The words 'believe', 'expect', 'anticipate', 'indicate', 'contemplate', 'target', 'plan', 'intends', 'continue', 'budget', 'estimate', 'may', 'will', 'schedule' and similar expressions identify forward‐looking statements.
All 'forward‐looking statements' made in this Announcement are qualified by the foregoing cautionary statements. Investors are cautioned that 'forward‐looking statements' are not guarantee of future performance and accordingly investors are cautioned not to put undue reliance on 'forward‐looking statements' due to the inherent uncertainty therein.
For further information, please visit the Xanadu Mines web site
www.xanadumines.com
.
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Compliance statement
1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Date: 29 July 2025
Authorised by the Board
(Name of body or officer authorising release – see note 4)
1 ASX/TSX Announcement 25 July 2025 – Notice of Compulsory Acquisition
2 ASX/TSX Announcement 7 April 2025 – EGM Update, Exclusivity Arrangements with Zijin
3 ASX/TSX Announcement 5 May 2025 – Update to Zijin Put Option and Exclusivity Arrangements
4 ASX/TSX Announcement 19 May 2025 – Recommended A$0.08 Per Share Cash Offer
5 ASX/TSX Announcement 26 May 2025 – Withdrawal of Put Option and Cancellation of EGM
6 ASX/TSX Announcement 24 June 2025 – Takeover Offer for Xanadu Declared Unconditional
7 ASX/TSX Announcement 8 July 2025 – Acceptance Update
8 ASX/TSX Announcement 25 July 2025 – Notice of Compulsory Acquisition
9 ASX/TSX Announcement 24 July 2025 – Takeover Offer for Xanadu – Extension of the Offer Period
10 ASX/TSX Announcement 11 July 2025 – Non-Executive Director Resignation Shaoyang Shen
11 ASX/TSX Announcement 7 April 2025 – EGM Update – Exclusivity Arrangements with Zijin
12 ASX/TSX Announcement 5 May 2025 – Update to Zijin Put Option and Exclusivity Arrangements
13 ASX/TSX Announcement 26 May 2025 - Withdrawal of Put Option Resolution and Cancellation of EGM
14 ASX/TSX Announcement 19 May 2025 – Recommended A$0.08 Per Share Cash Offer
15 ASX/TSX Announcement 27 May 2025 – Bidder's Statement – Bastion Mining Pte Ltd
16 ASX/TSX Announcement 27 May 2025 – Target's Statement – Accept Bastion Takeover Offer
17 ASX/TSX Announcement 17 June 2025 – Material Update on Off-Market Takeover Offer – Acceptance by Zijin Mining Group
18 ASX/TSX Announcement 24 June 2025 – Takeover Offer for Xanadu declared Unconditional
19 ASX/TSX Announcement 24 June 2025 – Supplementary Target's Statement
20 ASX/TSX Announcement 27 May 2025 – Bidder's Statement – Bstion Mining Pte Ltd
21 The Takeover Board Committee comprises all Xanadu Directors as at the date of this announcement other than Ganbayar Lkhagvasuren and Zijin's representative, Shaoyang Shen.
22 ASX/TSX Announcement 27 May 2025 – Target's Statement – Accept Bastion Takeover Offer
23 ASX/TSX Announcement 24 July 2025 – Takeover Offer for Xanadu – Extension of the Offer Period
24 ASX/TSX Announcement 25 July 2025 – Notice of Compulsory Acquisition
25 ASX/TSX Announcement 20 May 2025 – Cleansing Notice
26 ASX/TSX Announcement 19 May 2025 – Recommended A$0.08 per share cash offer
27 ASX/TSX Announcement 26 May 2025 – Application for Quotation of Securities
28 ASX/TSX Announcement 7 April 2025 – Update on Extraordinary General Meeting – Extension of Zijin Put Option and Exclusivity Arrangements
29 ASX/TSX Announcement 22 May 2025 – Results of Annual General Meeting
30 ASX/TSX Announcement 26 May 2025 – Withdrawal of Put Option Resolution and Cancellation of EGM
31 ASX/TSX Announcement 11 July 2025 – Non-Executive Director Resignation Shaoyang Shen
32 ASX/TSX Announcement 14 October 2024 – Kharmagtai Maiden Ore Reserve, Updated Mineral Resource
33 Currently earning into 51% equity in Sant Tolgoi project by spending US$1M over 24 months commencing 22 January 2024
34 ASX/TSX Announcement 22 January 2024 – Xanadu Enters into New Magmatic Copper and Nickel Sulphide Project
35 38.25% represents 50% of Khuiten Metals via the Khuiten JV with Zijin. Khuiten Metals controls Kharmagtai and holds 76.5% of the Kharmagtai mining lease.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/13df4dea-a0af-4443-8a46-5606262196c6
.