Mr. Colin Moorhead reports

COPPER-NICKEL FOCUSED EXPLORATION ADVANCING AT SANT TOLGOI PROJECT

Xanadu Mines Ltd. has made good progress at its field operations at the highly prospective Sant Tolgoi copper-nickel (Cu-Ni) project, located in Zavkhan province of western Mongolia. Sant Tolgoi is considered highly prospective for the discovery of new magmatic intrusion-related copper-nickel systems. The objective of this exploration program is to collect the data required to identify high-grade sulphide mineralization within the large Sant Tolgoi intrusive complex.

Highlights:

• Field exploration program is well under way at the Sant Tolgoi copper-nickel project, representing Xanadu's first detailed activities at these highly encouraging district-scale magmatic targets;
• Detailed geological mapping and geochemical sampling in progress;
• Acquisition of high-resolution magnetic, gravity and CSAMT (controlled-source audio-frequency magneto-tellurics) is complete, with modelling under way;
• Multiple shallow copper-nickel sulphide targets are being identified over several kilometres of strike;
• Early geochemical and geophysical results expected in Q4 (fourth quarter) 2024.

Xanadu's vice-president of exploration, Dr. Andrew Stewart, said: "We are very pleased to have commenced and making excellent exploration progress at the Sant Tolgoi copper-nickel project. This project represents an exciting greenfields opportunity. We believe this is potentially a new Magmatic Cu-Ni district in an underexplored mineral province of western Mongolia and is an extension of fertile magmatic activity hosting a significant number of Ni-Cu-PGE deposits in the central Asian orogenic belt. Sant Tolgoi lies on the western extension of the deep-seated Khangai fault systems. Encouragingly surface mapping has identified widespread mineralization, primarily consisting of copper oxides, either as fracture fillings or disseminated mineralization in coarse- to medium-grained gabbro, validating our generative strategy."

About Sant Tolgoi

The Sant Tolgoi project covers two exploration licences, XV-17774 (Oyut) and XV-21887 (Sant Tolgoi), in the Zavchan province of western Mongolia with a combined area of over 40 square kilometres, collectively referred to as the Sant Tolgoi project or Sant Tolgoi Cu-Ni project. The tenement portfolio includes numerous advanced exploration targets with real prospectivity for the discovery of significant magmatic copper and nickel mineralization. In the Zavchan region of Mongolia, the Sant Tolgoi project lies on the western extension to the of the deep-seated Khangai fault systems, a metalliferous fault network that hosts several significant mafic and ultramafic intrusions that are highly encouraging for intrusion-hosted copper and nickel discoveries. Early signs of several copper-nickel systems have been encountered in both historical drilling.

Agreement terms

The company has executed a binding agreement with STSM LLC granting the right to earn up to an 80-per-cent interest in two exploration licences XV-17774 (Oyut) and XV-21887 (Sant Tolgoi), located in the Zavchan province of western Mongolia.

Key terms of the agreement

Stage 1 farm-in

Xanadu may elect to proceed to stage 1 once the minimum commitment has been met and can earn a 51-per-cent interest in the project by spending $1-million (U.S.) on exploration over a period of 24 months.

At the completion of the stage 1 farm-in, Xanadu will have earned the right to a 51-per-cent equity in the projects.

Formation of joint venture

Once Xanadu has earned a 51-per-cent interest in the projects, STSM can elect to end the farm-in and form a joint venture (JV), with Xanadu holding 51 per cent and STSM 49 per cent, and each contributing pro rata to their share in the JV, with Xanadu being the manager of the JV. The JV agreement will be on standard commercial terms.

Stage 2 farm-in after formation of joint venture

If STSM will not finance its pro rata, the JV would be formed.

Xanadu may earn a further 29-per-cent interest in the projects by sole financing a further $10-million (U.S.) on exploration prior transferring the exploration licence to mining lease from the completion of the minimum commitment (stage 2 farm-in). At this stage, Xanadu will hold an 80-per-cent interest in the projects and STSM will hold 20 per cent.

Stage 3 farm-in after transferring exploration licence to mining leases

At the completion of the stage 2 farm-in, Xanadu will hold an 80-per-cent interest in the projects and STSM will hold 20 per cent. At this point, STSM shall contribute the pro rata to the further exploration expenditures. Xanadu may be given a loan with certain interest (more than 10 per cent) to its 20-per-cent pro rata. STSM shall have an obligation pay back this loan, including interest from its gross revenue royalty, payable on product sold from the projects.

Competent person statement

The information in this news release 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 (quality assurance/quality control), and geological interpretation and information. Dr. Stewart, who is an employee of Xanadu and is a member of the Australasian Institute of Geoscientists, has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity he is undertaking to qualify as the competent person as defined in the 2012 edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves, and 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.

About Xanadu Mines Ltd.

Xanadu is an Australian Securities Exchange- and Toronto Stock Exchange-listed exploration company operating in Mongolia. The company gives 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 that jointly control a globally significant copper-gold deposit in the flagship Kharmagtai project. Xanadu is the operator of a 50-50 JV with Zijin Mining Group in Khuiten Metals Pte. Ltd., which controls 76.5 per cent of the Kharmagtai project.

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