Xanadu triggers Mongolian copper-gold sale vote as | Australian Markets

In a dramatic flip that would reshape the possession trajectory of one of Mongolia’s largest copper-gold performs, Xanadu Mines has allowed its exclusivity settlement with Chinese mining heavyweight and three way partnership associate Zijin Mining Group to lapse after failing to seal a control transaction deal.

The transfer ends a tense wait since April when Zijin tabled a non-binding proposal that Xanadu’s board judged superior to exercising its present 25 per cent put option with Zijin.

After weeks of wrangling, Zijin has been unable to make a choice on such a tight timeline and has been pulled up short of signing on the dotted line.

Notably, Zijin has elected to not withdraw its authentic offer.

With the clock ticking and no firm dedication from its three way partnership associate, Xanadu’s unbiased board committee has reactivated its backup plan by triggering shareholder approval for a put option.

An extraordinary basic assembly has been scheduled for June 4, the place buyers will vote on whether or not to promote the remaining 25 per cent stake in its flagship Kharmagtai project to Zijin.

If green-lit, the deal would cement Xanadu’s exit from future money obligations for the world-class project, turning Kharmagtai into a long-term, zero-capex asset within the company’s portfolio.

If the put option vote fails and a higher deal doesn’t show its face, the company will transfer onto plan B, chasing alternate funding sources to hold it ahead as a 50 per cent associate with Zijin till the ultimate investment choice is made.

While we had anticipated a more fast course of, given Zijin’s now intensive expertise in Mongolia, we are going to proceed to work with our JV associate in direction of a funding consequence required to progress the Kharmagtai project. We will now additionally recommence discussions with third events who’ve expressed curiosity in Kharmagtai.

The Kharmagtai project, held in a 50:50 partnership with Zijin, is a globally vital copper-gold useful resource.

The project packs some critical punch, with a mammoth 730-million-tonnes locked in as reserves, together with 1.6Mt copper and 4M ounces gold. The actual kicker is a 100Mt high-grade core grading 0.8 per cent copper equal, which may very well be simply the tonic for Xanadu as a juicy early-stage money generator to catapult the project into world producer standing.

A latest feasibility examine pegged Kharmagtai’s web current worth at a hefty US$930M (A$1.44B) on a US$890M (A$1.3B) capex, producing an eye-watering US$293M (A$455M) annual EBITDA. With output tipped to hit 80,000t copper and 170,000 ounces of gold a 12 months – at a modest value of 70 cents per pound copper – the mine is set to repay in 4 years and pump money for almost three many years.

Xanadu’s choice to permit its exclusivity deal with Zijin to elapse has opened the door to third-party suitors, reigniting competitors for a stake in a single of Asia’s most promising development-stage deposits.

In the meantime, the company says the unbiased board committee will proceed to chat with Zijin about a attainable extension of the put option train period. However, Xanadu says there’s no certainty a deal will emerge.

With the countdown to the June 4 vote underway, Xanadu is back within the driver’s seat, fielding contemporary curiosity, weighing its strategic choices and holding all its playing cards on the desk.

Whether it’s a full exit, three way partnership or alternate funding, one factor is evident from Zijin’s ongoing curiosity: Kharmagtai seems to be a world-class useful resource and doubtlessly a hotly contested prize, leaving Xanadu primed to play it for optimum worth.

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