Quarterly Activities Report
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 QuarterDuring 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:
Xanadu entered into an exclusivity period with Zijin Mining Group Co. Ltd. (Zijin) on 7 April 2025 to discuss a range of potential corporate transactions. The exclusivity period expired on 5 May 2025 without the finalisation of a control transaction.2,3
Xanadu entered into a Bid Implementation Agreement (BIA) with Bastion on 19 May 2025, with the Board recommending an off-market takeover bid to acquire all full paid, ordinary shares in Xanadu at a price of A$0.08 cash per Xanadu Share (Offer).4
The Offer represented a 57% premium to Xanadu's closing price of A$0.051 per share on 16 May 2025 and a 52% premium to Xanadu's 90-day Volume Weighted Average Price (VWAP) up to 16 May 2025.
To provide interim funding, Bastion and Xanadu entered into a share subscription agreement, under which Bastion subscribed to 286,829,633 Xanadu shares at an issue price of A$0.06 per share, raising A$17.2 million.
Xanadu withdrew on 26 May 2025 the shareholder resolutions to execute a put option under the Kharmagtai Joint Venture Shareholders Agreement with Zijin.5
Bastion declared the takeover offer unconditional on 24 June, after reaching more than 50% shareholding in Xanadu.6 The Board reiterated its recommendation for shareholders to accept the offer as soon as practicable.7
Xanadu held A$18.532 million in cash on 30 June 2025.
Subsequent to the quarter, on 25 July 2025, Bastion published a Notice of Compulsory Acquisition, having acquired a relevant interest of greater than 90% of Xanadu shares.8
Subsequent to the quarter, Bastion extended the Offer to close at 7:00pm (Sydney time) on 5 August 2025, unless further extended or withdrawn.9
Subsequent to the quarter and following sale of Zijin shares into the Offer, Zijin's nominee Shaoyang Shen resigned from the Board of Xanadu.10 Note that Zijin retains its 50% shareholding in the Khuiten Metals Pte Ltd, the entity which controls Kharmagtai.
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 TransactionOn 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.
OperationsDuring 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
Results of Operations
Quarter Ended
30 Jun 2025
31 Mar2025
31 Dec2024
30 Sep2024
30 Jun2024
$'000
$'000
$'000
$'000
$'000
JV: Gross Exploration Expenditure a
Kharmagtai
-
-
-
-
4,209
Drill metres b,c
-
-
-
-
601
Gross Exploration Expenditure
Red Mountain
23
30
42
97
929
Drill metres b,c
-
-
-
-
3,726
Sant Tolgoi
2
97
331
181
-
Drill metres
-
-
-
-
-
Exploration expenditures capitalised d
25
127
373
278
929
Corporate general and administration e
6,844
1,020
2,104
1,175
1,466
Less JV Operator Overhead recovery f
( - )
( - )
( - )
(933)
(1,036)
Net Corporate general and administration
6,844
1,020
2,104
242
430
a.
Includes all forms of exploration such as diamond drilling, trenching, hydrology drilling, geophysics, assays and related costs.
b.
Reflects invoiced metres paid during the quarter under drilling contract. Physical metres drilled during the quarter may vary due to invoice timing.
c.
Excludes metres related to horizontal trenching, hydrological drilling, and shallow geotechnical investigation.
d.
Excludes Kharmagtai (Khuiten JV) Gross exploration expenditure no longer consolidated in the Company's results.
e.
Includes expenses accrued for June Qtr for Jefferies fees of $3.6M and Bacchus Capital Advisors of $1M in relation to the takeover offer announced by Bastion. Includes tranche 1 of success fee of AUD$753k paid to Jeffries in April 2023 and following tranche 2 AUD$750 accrued Dec 2023, paid April 2024 in relation to completion of Khuiten JV with Zijin.
f.
As operator of Khuiten JV, the operator overheads are recoverable in accordance with the Shareholders Joint Venture Agreement.
Financial and Corporate
Capital StructureOn 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 ArrangementsTo 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 MeetingsAn 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 ResignationSubsequent 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 AnnouncementsThis 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 MinesXanadu 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:
Colin Moorhead Executive Chairman & Managing Director E: P: +61 2 8280 7497
Spencer Cole Chief Financial & Development Officer E: P: +61 2 8280 7497
This Announcement was authorised for release by Xanadu's Board of Directors.
APPENDIX 1: STATEMENTS AND DISCLAIMERS
MINERAL RESOURCES AND ORE RESERVES REPORTING REQUIREMENTSThe 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 RESERVESMineral 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 ACTIVITIESThere were no mine production or development activities during the June 2025 Quarter.
LIST OF TENEMENTSXanadu 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.
Project Name
Tenement Name
Beneficial Ownership Start of Quarter
Beneficial Ownership End of Quarter
Location
Sant Tolgoi
Sant Tolgoi
0%
0%33,34
Mongolia, Zavkhan Province
Red Mountain
Red Mountain
100%
100%
Mongolia, Dornogobi province, Saikhandulaan soum
Kharmagtai
Kharmagtai
