Mr. Colin Moorhead reports

UPDATE TO ZIJIN PUT OPTION AND EXCLUSIVITY ARRANGEMENTS

Xanadu Mines Ltd. refers to its announcement dated April 7, 2025, in relation to the extension of the Zijin put option and exclusivity arrangements with its major shareholder and joint venture partner, Zijin Mining Group Co. Ltd.

Following substantive discussions with Zijin, the parties have been unable to finalize a control transaction within the agreed exclusivity period. Correspondingly, Xanadu's exclusivity commitment to Zijin has expired and the independent board committee (IBC) is now reviewing all other opportunities, including, but not limited to, the exercise of the 25-per-cent put option.

The extension of the term of the 25-per-cent put option and grant of exclusivity to Zijin followed receipt of a non-binding indicative (NBIO) offer from Zijin in respect of a change-of-control transaction, which the IBC judged to be superior to the put option at that time. Unfortunately, despite the IBC's best endeavours, Zijin has advised that it will not be in a position to agree on final transaction documentation within the required time frame. Xanadu remains in discussions with Zijin with respect to further extending the 25-per-cent put option exercise period.

With insufficient certainty on Zijin's commitment to a control transaction or extension to the put option exercise period, the Xanadu board has reinitiated the shareholder approval process to give Xanadu sufficient time to exercise the 25-per-cent put option (if approved) prior to the expiry date. An extraordinary general meeting (EGM) has been scheduled for June 4, 2025, whereby Xanadu shareholders will be invited to consider and, if thought fit, approve the exercise of the 25-per-cent put option. Please refer to the notice of meeting for details including the Xanadu board's recommendation and advice from the company's independent expert.

In the interim, the Xanadu IBC will continue discussions with Zijin and also recommence discussions with other interested parties. Xanadu will keep the market informed of any material developments in accordance with continuous disclosure requirements. Until then, there is no need for Xanadu shareholders to take any action.

Executive chairman and managing director Colin Moorhead said: "While we are disappointed that we were not able to finalize a corporate transaction during the exclusivity period, Xanadu remains optimistic about the future for both the company and the Kharmagtai project. While we had expected a more rapid process, given Zijin's now-extensive experience in Mongolia, we will continue to work with our JV partner towards a funding outcome required to progress the Kharmagtai project. We will now also recommence discussions with third parties who have expressed interest in Kharmagtai.

"In parallel, and in the absence of a superior transaction, the board has an obligation to give our shareholders an opportunity to vote on the 25-per-cent put option with Zijin. Should the put option go ahead, that will solidify Kharmagtai as a long-term value investment within the Xanadu portfolio, with no further cash outlay required for the project. If the put option does not proceed and if there is no superior transaction, then we will proceed with alternate funding options to carry forward as 50-per-cent JV partners through to FID [final investment decision].

"In all scenarios, Xanadu has plans established and is ready to do the work required to deliver shareholder value from the Kharmagtai project."

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 controls a globally significant copper-gold deposit in its flagship Kharmagtai project together with its 50/50 JV partner, Zijin Mining Group.

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