Xanadu Mines has reached agreement with Turquoise Hill Resources to reduce the balance of the deferred acquisition consideration for the advanced Kharmagtai Copper-Gold Project in southern Mongolia by more than US$1 million.
The reduction is subject to the remaining balance of US$2.8 million (A$4 million) of the deferred consideration being paid by March 2016.
Prior to the renegotiation, the outstanding balance of the deferred consideration was US$3.84 million and payable by July 2016. Based on the requirement to reduce the balance by 50% of net capital raise proceeds, Xanadu had budgeted an outflow of A$4.15 million from the recent $A8.3 million capital raising.
The revised agreement with Turquoise Hill allows Xanadu to achieve the important milestone of full repayment of the deferred consideration at less than budget.
Xanadu’s CEO Andrew Stewart said, “We are very pleased to be able to complete the acquisition of the Kharmagtai project and Xanadu is now able to enter 2016 with its main asset fully secured and an improved balance sheet.”
Xanadu and its joint venture company, Mongol Metals LLC, entered an agreement with Turquoise Hill to acquire a 90% interest in the advanced Kharmagtai project in the South Gobi region of Mongolia in early 2014 for US$14 million with US$10 million deferred.
Under the Mongol Metals JV terms, Xanadu has the right to earn an 85% interest in the project, equivalent to a 76.5% effective interest, by funding deferred acquisition and exploration costs.
Since acquisition the company has achieved several significant milestones including completion of a maiden JORC mineral resource estimate of 203 million tonnes containing 1.5 billion pounds of copper and 2.2 million ounces of gold. This resource represents the results of exploration over only a small portion of the porphyry complex.