Provides the Independant Experts' and Valuation Reports for the Kharmagtai Copper-Gold Project in Mongolia
Hong Kong, Mar 31, 2014 AEST (ABN Newswire) - Xanadu Mines Ltd (
ASX:XAM) (XANAF:OTCMKTS) provides the independant experts' and valuation reports for the Kharmagtai copper-gold project in Mongolia.
KHARMAGTAI INDEPENDENT EXPERT'S AND VALUATION REPORTS HIGHLIGHTS
- An Independent Expert's Report and Independent Valuation Report have been finalised to accompany the Notice of Meeting for the Kharmagtai transaction.
- The Independent Expert has concluded the transaction is fair and reasonable to nonassociated shareholders.
- The Independent Valuation Report has estimated a preferred valuation range of US$15.0 to 29.0 million for the Kharmagtai project.
- The Independent Valuation Report notes that three historic mineral resource estimates have been undertaken at Kharmagtai. These historic resource estimates provide support to Xanadu's Exploration Target.
- Xanadu's exploration activities have commenced including core re-logging, magnetic acquisition and alteration analysis.
- Preparations are underway for a diamond drilling campaign to commence upon completion of the Transaction.
INTRODUCTION
Xanadu Mines Ltd ("Xanadu") notes that Xanadu shareholder approval is a condition precedent to completing the acquisition of a 90% interest in Oyut Ulaan LLC ("Oyut Ulaan"), which in turn owns 100% of the Kharmagtai copper-gold project, by Mongol Metals LLC ("Mongol Metals") (the "Transaction"). Xanadu's non-interested directors engaged Grant Thornton Corporate Finance ("Grant Thornton") as an Independent Expert to prepare an Independent Expert's Report to express an opinion the fairness and reasonableness of the related party components of the Transaction. At the request of Grant Thornton, Mining Associates Pty Ltd ("Mining Associates") was commissioned as Independent Technical Expert to prepare an Independent Valuation Report for inclusion in the Independent Expert's Report.
Both the Independent Expert's Report and Independent Valuation Report have been finalised and are attached. These Reports will accompany the Notice of Meeting which is currently being reviewed by the Australian Securities & Investments Commission ("ASIC") for the purposes of the section 218 of the Corporations Act ("Notice"). Subject to the timing of ASIC's approval, Xanadu expects to release the complete Notice during the week beginning 7 April 2014.
INDEPENDENT EXPERT'S REPORT
Grant Thornton has concluded that the Proposed Transaction is fair and reasonable to Xanadu's non-associated shareholders. In preparing their report, Grant Thornton note that the present value of the total consideration to be paid by Mongol Metals falls towards the low end of the valuation range of the Oyut Ulaan shares as set out in the following table:
--------------------------------------------- Valuation Range (US$'000) Low Preferred High---------------------------------------------Oyut Ulaan shares 9,500 15,750 30,000Present value of consideration 12,109 12,109 12,109Difference (2,609) 3,641 17,891---------------------------------------------
Grant Thornton has also concluded that the guarantee of the Mongol Metals' obligations to pay deferred consideration and the free carry of a portion of Lkhagvasuren Ganbayar's interest prior to the decision to mine are fair and reasonable to the non-associated shareholders.
INDEPENDENT VALUATION REPORT
As the Independent Technical Expert, Mining Associates estimated a preferred valuation range of US$15.0 to 29.0 million for the Kharmagtai project as summarised in the link below.
--------------------------------------------- Valuation Range (US$'000) Minimum Maximum---------------------------------------------Market Approach 16,700 19,000Cost Approach 14,000 29,000Empirical Approach 9,000 17,000Preferred Valuation 15,000 29,000---------------------------------------------
The Mining Associates valuation considered Xanadu's exploration target for the Kharmagtai project as set out in the ASX release dated 3 February 2014 which continues to apply and is repeated in the following table ("Exploration Target"):
---------------------------------------------------------- Tonnes (000's) Gold (g/t) Copper (%)----------------------------------------------------------Exploration Target 200,000 to 450,000 0.25 to 0.30 0.25 to 0.30----------------------------------------------------------High-grade Target 50,000 to 80,000 0.60 to 0.80 0.40 to 0.50----------------------------------------------------------
The potential quantity and grade of the Exploration Target is conceptual in nature. There has been insufficient exploration to estimate a Mineral Resource under the JORC 2012 Code and it is uncertain if further exploration will result in the estimation of a Mineral Resource.
In its Report, Mining Associates noted that three historic mineral resource estimates have been undertaken at Kharmagtai, the first in 2005 by Ivanhoe Mines Mongolia Inc ("Ivanhoe"), again in 2007 by Ivanhoe and lastly in 2012 by AMC Consultants Pty Ltd.
None of the estimates were publicly released. The estimates do not comply with the JORC 2012 Code. However, Mining Associates notes that these historic resource estimates provide support to the defined Exploration Target. The later two estimates were prepared in accordance with NI43-101 guidelines and a summary is included below.
---------------------------------------------------------- 2007 Resource Estimate 2012 Resource Estimate tonnes Au Cu tonnes Au Cu (000's) (g/t) (%) (000's) (g/t) (%)----------------------------------------------------------Measured 13,952 0.66 0.45 33,572 0.63 0.48Indicated 23,449 0.35 0.31 17,593 0.46 0.48Inferred 147,686 0.17 0.32 81,933 0.24 0.29Total 185,087 0.23 0.33 133,098 0.37 0.36----------------------------------------------------------
Mining Associates does not directly use the historic mineral resource estimates in its valuation as the estimates do not comply with the JORC 2012 Code. Mining Associates note that the "valuation methodology of mineral properties is exceptionally subjective. If an economic reserve or resource is subsequently identified then this valuation will be dramatically low relative to any later valuations."
EXPLORATION ACTIVITIES
Xanadu has access to the Kharmagtai project campsite during the interim period up to completion of the Transaction. Xanadu has commenced non-invasive exploration activities including visual re-logging, hand-held magnetic acquisition and alteration studies.
Xanadu is preparing for drilling to commence as soon as possible upon completion of the Transaction.
To view the Independent Expert and Valuation Report, please visit:
http://media.abnnewswire.net/media/en/docs/76833-ASX-XAM-790674.pdf
Contact
Xanadu Mines
George A. Lloyd
Managing Director
T: +852-6397-3308
george.lloyd@xanadumines.com
WWW: www.xanadumines.com
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