Xanadu Mines Ltd (ASX: XAM, TSX: XAM) (Xanadu, XAM or the Company) is pleased to provide an update on deep and shallow exploration drilling currently underway at the Kharmagtai Project in Mongolia, being undertaken with the Company's joint venture partner Zijin Mining Group Co., Ltd. (Zijin).

Xanadu's experienced exploration team is currently operating three (3) diamond drill rigs which are focused on delivering new discoveries outside the current Mineral Resource Estimate (MRE) at the Kharmagtai copper and gold project.

Highlights

New discovery drilling intersects mineralisation across multiple largely unexplored porphyry clusters, including high-density stockwork, breccia and gold only mineralisation.

The first of four planned deep diamond drillholes targeting mineralisation below White Hill, the largest deposit delineated to date at Kharmagtai, expands the mineralised system by over 600m;

KHDDH648 - 1080m at 0.21% eCu from 491m.

Shallow drilling at Cluster 2 extends mineralisation 800m along strike from the current MRE limit. Given proximity to the high-grade Stockwork Hill deposit it could represent a mineralised porphyry stockwork offset.

KHDDH786 - 144m at 0.34% eCu from 117m; Including 12m @ 0.63% eCu from 144m, and Including 12.3m @ 0.54% eCu from 168m.

Multiple new broad zones of gold-rich tourmaline breccia mineralisation delivered over a 2km strike, at Cluster 5.

Extensive discovery drilling continues with regular news flow to continue throughout 2023, focussed on extensions to known deposits and new porphyry copper gold systems.

Xanadu's Executive Vice President Exploration, Dr Andrew Stewart, said, 'Following the completion of more than 52,000 metres of infill and extensional drilling at Kharmagtai, our focus has shifted to the very exciting deep and shallow discovery drilling; aimed at making new economic discoveries outside the current MRE. Following successful delivery of higher-grade mineralisation from the infill and extensional drilling program, this purposeful program represents our most significant exploration pursuit in recent years.

The first of four currently planned deep drill holes, KHDDH648 intercepted an impressive (>1km) porphyry zone, expanding the White Hill mineralised system more than 600m down dip. Importantly this hole has provided important vectors required to target higher-grade mineralisation at depth; 3D geological modelling is underway to refine these vectors, in anticipation for high priority drilling.

These deep drill holes could prove to be a major Kharmagtai value driver; as they are designed to test for high-grade, large-scale systems at depth as seen at the nearby Olu Tolgoi Mine.

Discovery of shallow, broad intercepts of mineralisation along strike from the Stockwork Hill deposit is also very encouraging with drill hole KHDDH786 intersecting a strong and wide (144m) mineralised zone approximately 800m west of Stockwork Hill. Importantly this intercept includes a coherent zone of greater than 0.6% eCu, providing optimism towards discovering another high-grade deposit similar to Copper Hill and Stockwork Hill.

The good strike rate of significant intercepts in these holes provides us confidence that more shallow, high-grade deposits will be discovered at Kharmagtai. As drilling progresses, we look forward to providing additional updates advancing our important exploration activities at our flagship Kharmagtai Project.'

About the Shallow Exploration Drilling

Shallow exploration drilling at Kharmagtai is targeting additional porphyry copper-gold deposits outside the currently defined MRE. This programme also serves to inform future infrastructure location decisions associated with the potential development of the Kharmagtai Project into a large-scale mining operation.

An additional 9,000m of diamond drilling has been conducted in forty-one shallow (200m) diamond drill holes since the last update (ASX/TSX Press Release 'Shallow Drilling Confirms Kharmagtai Discovery Potential, 5th July 2023'). Twenty-four of the forty-one new drill holes have returned significant intercepts, with two holes assays pending.

Competent Person Statement

The information in this announcement that relates to Mineral Resources is based on information compiled by Mr Robert Spiers, who is responsible for the Mineral Resource estimate. Mr Spiers is a full time Principal Geologist employed by Spiers Geological Consultants (SGC) and is a Member of the Australian Institute of Geoscientists. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as the Qualified Person as defined in the CIM Guidelines and National Instrument 43-101 and as a Competent Person under JORC Code 2012. Mr Spiers consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

The information in this announcement 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 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 mineralisation 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 the 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.

Mineral Resources and Ore Reserves Reporting Requirements

The 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the 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.

The information in this Announcement relates to the exploration results previously reported in ASX Announcements which are available on the Xanadu website at: https://www.xanadumines.com/site/investor-centre/asx-announcements

The Company is not aware of any new, material information or data that is not included in those market announcements.

Copper Equivalent Calculations

The copper equivalent (CuEq) calculation represents the total metal value for each metal, multiplied by the conversion factor, summed and expressed in equivalent copper percentage with a metallurgical recovery factor applied.

Copper equivalent (CuEq) grade values were calculated using the formula: CuEq = Cu + Au 0.60049 0.86667.

Where Cu - copper grade (%); Au - gold grade (g/t); 0.60049 - conversion factor (gold to copper); 0.86667 - relative recovery of gold to copper (86.67%).

The copper equivalent formula was based on the following parameters (prices are in USD): Copper price 3.4 $/lb; Gold price 1400 $/oz; Copper recovery 90%; Gold recovery 78%; Relative recovery of gold to copper = 78% / 90% = 86.67%.

Forward-Looking Statements

Certain statements contained in this Announcement, including information as to the future financial or operating performance of Xanadu and its projects may also include statements which are 'forward-looking statements' that may include, amongst other things, statements regarding targets, estimates and assumptions in respect of mineral reserves and mineral resources and anticipated grades and recovery rates, production and prices, recovery costs and results, capital expenditures and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions. These 'forward-looking statements' are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Xanadu, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies and involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements.

Xanadu disclaims any intent or obligation to update publicly or release any revisions to any forward-looking statements, whether as a result of new information, future events, circumstances or results or otherwise after the date of this Announcement or to reflect the occurrence of unanticipated events, other than required by the Corporations Act 2001 (Cth) and the Listing Rules of the Australian Securities Exchange (ASX) and Toronto Stock Exchange (TSX). The words 'believe', 'expect', 'anticipate', 'indicate', 'contemplate', 'target', 'plan', 'intends', 'continue', 'budget', 'estimate', 'may', 'will', 'schedule' and similar expressions identify forward-looking statements.

All 'forward-looking statements' made in this Announcement are qualified by the foregoing cautionary statements. Investors are cautioned that 'forward-looking statements' are not guarantee of future performance and accordingly investors are cautioned not to put undue reliance on 'forward-looking statements' due to the inherent uncertainty therein.

Contact:

Tel: +61 2 8280 7497

Email: moc.senimudanax@ofni

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