Kharmagtai Drilling Highlights Continued Growth Potential

• Representative ½ core samples were split from PQ, HQ & NQ diameter diamond drill core on site using rock saws, on a routine 2m sample interval that also honours lithological/intrusive contacts.
• The orientation of the cut line is controlled using the core orientation line ensuring uniformity of core splitting wherever the core has been successfully oriented.
• Sample intervals are defined and subsequently checked by geologists, and sample tags are attached (stapled) to the plastic core trays for every sample interval.
• Reverse Circulation (RC) chip samples are ¼ splits from one meter (1m) intervals using a 75%:25% riffle splitter to obtain a 3kg sample
• RC samples are uniform 2m samples formed from the combination of two ¼ split 1m samples.

• The Mineral Resource Estimation has been based upon diamond drilling of PQ, HQ and NQ diameters with both standard and triple tube core recovery configurations, RC drilling and surface trenching with channel sampling.
• All drill core drilled by Xanadu has been oriented using the “Reflex Ace” tool.

• Diamond drill core recoveries were assessed using the standard industry (best) practice which involves removing the core from core trays; reassembling multiple core runs in a v-rail; measuring core lengths with a tape measure, assessing recovery against core block depth measurements and recording any measured core loss for each core run.
• Diamond core recoveries average 97% through mineralisation.
• Overall, core quality is good, with minimal core loss. Where there is localised faulting and or fracturing core recoveries decrease, however, this is a very small percentage of the mineralised intersections.
• RC recoveries are measured using whole weight of each 1m intercept measured before splitting
• Analysis of recovery results vs grade shows no significant trends that might indicate sampling bias introduced by variable recovery in fault/fracture zones.

• All drill core is geologically logged by well-trained geologists using a modified “Anaconda-style” logging system methodology. The Anaconda method of logging and mapping is specifically designed for porphyry Cu-Au mineral systems and is entirely appropriate to support Mineral Resource Estimation, mining and metallurgical studies.
• Logging of lithology, alteration and mineralogy is intrinsically qualitative in nature. However, the logging is subsequently supported by 4 Acid ICP-MS (48 element) geochemistry and SWIR spectral mineralogy (facilitating semi-quantitative/calculated mineralogical, lithological and alteration classification) which is integrated with the logging to improve cross section interpretation and 3D geological model development.
• Drill core is also systematically logged for both geotechnical features and geological structures. Where drill core has been successfully oriented, the orientation of structures and geotechnical features are also routinely measured.
• Both wet and dry core photos are taken after core has been logged and marked-up but before drill core has been cut.

• All drill core samples are ½ core splits from either PQ, HQ or NQ diameter cores. A routine 2m sample interval is used, but this is varied locally to honour lithological/intrusive contacts. The minimum allowed sample length is 30cm.
• Core is appropriately split (onsite) using diamond core saws with the cut line routinely located relative to the core orientation line (where present) to provide consistency of sample split selection.
• The diamond saws are regularly flushed with water to minimize potential contamination.
• A field duplicate ¼ core sample is collected every 30^th sample to ensure the “representivity of the in-situ material collected”. The performance of these field duplicates is routinely analysed as part of Xanadu’s sample QC process.
• Routine sample preparation and analyses of DDH samples were carried out by ALS Mongolia LLC (ALS Mongolia), who operates an independent sample preparation and analytical laboratory in Ulaanbaatar.
• All samples were prepared to meet standard quality control procedures as follows: Crushed to 75% passing 2mm, split to 1kg, pulverised to 85% passing 200 mesh (75 microns) and split to 150g sample pulp.
• ALS Mongolia Geochemistry labs quality management system is certified to ISO 9001:2008.
• The sample support (sub-sample mass and comminution) is appropriate for the grainsize and Cu-Au distribution of the porphyry Cu-Au mineralization and associated host rocks.

• All samples were routinely assayed by ALS Mongolia for gold
• Au is determined using a 25g fire assay fusion, cupelled to obtain a bead, and digested with Aqua Regia, followed by an atomic absorption spectroscopy (AAS) finish, with a lower detection (LDL) of 0.01 ppm.
• All samples were also submitted to ALS Mongolia for the 48-element package ME-ICP61 using a four-acid digest (considered to be an effective total digest for the elements relevant to the Mineral Resource Estimate (MRE)). Where copper is over-range (>1% Cu), it is analysed by a second analytical technique (Cu-OG62), which has a higher upper detection limit (UDL) of 5% copper.
• Quality assurance has been managed by insertion of appropriate Standards (1:30 samples – suitable Ore Research Pty Ltd certified standards), Blanks (1:30 samples), Duplicates (1:30 samples – ¼ core duplicate) by XAM.
• Assay results outside the optimal range for methods were re-analysed by appropriate methods.
• Ore Research Pty Ltd certified copper and gold standards have been implemented as a part of QC procedures, as well as coarse and pulp blanks, and certified matrix matched copper-gold standards.
• QC monitoring is an active and ongoing processes on batch by batch basis by which unacceptable results are re-assayed as soon as practicable.
• Prior to 2014: Cu, Ag, Pb, Zn, As and Mo were routinely determined using a three-acid-digestion of a 0.3g sub-sample followed by an AAS finish (AAS21R) at SGS Mongolia. Samples were digested with nitric, hydrochloric and perchloric acids to dryness before leaching with hydrochloric acid to dissolve soluble salts and made to 15ml volume with distilled water. The LDL for copper using this technique was 2ppm. Where copper was over-range (>1% Cu), it was analysed by a second analytical technique (AAS22S), which has a higher upper detection limit (UDL) of 5% copper. Gold analysis method was essentially unchanged.

• All assay data QA/QC is checked prior to loading into XAM’s Geobank data base.
• The data is managed by XAM geologists.
• The data base and geological interpretation is managed by XAM.
• Check assays are submitted to an umpire lab (SGS Mongolia) for duplicate analysis.
• No twinned drill holes exist.
• There have been no adjustments to any of the assay data.

• Diamond drill holes have been surveyed with a differential global positioning system (DGPS) to within 10cm accuracy.
• The grid system used for the project is UTM WGS-84 Zone 48N
• Historically, Eastman Kodak and Flexit electronic multi-shot downhole survey tools have been used at Kharmagtai to collect down hole azimuth and inclination information for the majority of the diamond drill holes. Single shots were typically taken every 30m to 50m during the drilling process, and a multi-shot survey with readings every 3-5m are conducted at the completion of the drill hole. As these tools rely on the earth’s magnetic field to measure azimuth, there is some localised interference/inaccuracy introduced by the presence of magnetite in some parts of the Kharmagtai mineral system. The extent of this interference cannot be quantified on a reading-by-reading basis.
• More recently (since September 2017), a north-seeking gyro has been employed by the drilling crews on site (rented and operated by the drilling contractor), providing accurate downhole orientation measurements unaffected by magnetic effects. Xanadu have a permanent calibration station setup for the gyro tool, which is routinely calibrated every 2 weeks (calibration records are maintained and were sighted)
• The project Digital Terrain Model (DTM) is based on 1m contours from satellite imagery with an accuracy of ±0.1 m.

• Holes spacings range from <50m spacings within the core of mineralization to +500m spacings for exploration drilling. Hole spacings can be determined using the sections and drill plans provided.
• Holes range from vertical to an inclination of -60 degrees depending on the attitude of the target and the drilling method.
• The data spacing and distribution is sufficient to establish anomalism and targeting for porphyry Cu-Au, tourmaline breccia and epithermal target types.
• Holes have been drilled to a maximum of 1,304m vertical depth.
• The data spacing and distribution is sufficient to establish geological and grade continuity, and to support the Mineral Resource classification.

• Drilling is conducted in a predominantly regular grid to allow unbiased interpretation and targeting.
• Scissor drilling, as well as some vertical and oblique drilling, has been used in key mineralised zones to achieve unbiased sampling of interpreted structures and mineralised zones, and in particular to assist in constraining the geometry of the mineralised hydrothermal tourmaline-sulphide breccia domains.

• Samples are delivered from the drill rig to the core shed twice daily and are never left unattended at the rig.
• Samples are dispatched from site in locked boxes transported on XAM company vehicles to ALS lab in Ulaanbaatar.
• Sample shipment receipt is signed off at the Laboratory with additional email confirmation of receipt.
• Samples are then stored at the lab and returned to a locked storage site.

• Internal audits of sampling techniques and data management are undertaken on a regular basis, to ensure industry best practice is employed at all times.
• External reviews and audits have been conducted by the following groups:
• 2012: AMC Consultants Pty Ltd. was engaged to conduct an Independent Technical Report which reviewed drilling and sampling procedures. It was concluded that sampling and data record was to an appropriate standard.
• 2013: Mining Associates Ltd. was engaged to conduct an Independent Technical Report to review drilling, sampling techniques and QAQC. Methods were found to conform to international best practice.
• 2018: CSA Global reviewed the entire drilling, logging, sampling, sample shipping and laboratory processes during the competent persons site visit for the 2018 MRE and found the systems and adherence to protocols to be to an appropriate standard.

• The Project comprises 2 Mining Licences (MV-17129A Oyut Ulaan and (MV-17387A Kharmagtai):
  • Xanadu now owns 90% of Vantage LLC, the 100% owner of the Oyut Ulaan mining licence.
  • The Kharmagtai mining license MV-17387A is 100% owned by Oyut Ulaan LLC. Xanadu has an 85% interest in Mongol Metals LLC, which has 90% interest in Oyut Ulaan LLC. The remaining 10% in Oyut Ulaan LLC is owned by Quincunx (BVI) Ltd (“Quincunx”).
• The Mongolian Minerals Law (2006) and Mongolian Land Law (2002) govern exploration, mining and land use rights for the project.

• Previous exploration at Kharmagtai was conducted by Quincunx Ltd, Ivanhoe Mines Ltd and Turquoise Hill Resources Ltd including extensive drilling, surface geochemistry, geophysics, mapping.
• Previous exploration at Red Mountain (Oyut Ulaan) was conducted by Ivanhoe Mines.

• The mineralisation is characterised as porphyry copper-gold type.
• Porphyry copper-gold deposits are formed from magmatic hydrothermal fluids typically associated with felsic intrusive stocks that have deposited metals as sulphides both within the intrusive and the intruded host rocks. Quartz stockwork veining is typically associated with sulphides occurring both within the quartz veinlets and disseminated thought out the wall rock. Porphyry deposits are typically large tonnage deposits ranging from low to high grade and are generally mined by large scale open pit or underground bulk mining methods. The deposits at Kharmagtai are atypical in that they are associated with intermediate intrusions of diorite to quartz diorite composition; however, the deposits are in terms of contained gold significant, and similar gold-rich porphyry deposits.

• Diamond drill holes are the principal source of geological and grade data for the Project.
• See figures in this ASX/TSX Announcement.

• The CSAMT data was converted into 2D line data using the Zonge CSAMT processing software and then converted into 3D space using a UBC inversion process. Inversion fit was acceptable, and error was generally low.
• A nominal cut-off of 0.1% CuEq is used in copper dominant systems for identification of potentially significant intercepts for reporting purposes. Higher grade cut-offs are 0.3%, 0.6% and 1% CuEq.
• A nominal cut-off of 0.1g/t AuEq is used in gold dominant systems like Golden Eagle for identification of potentially significant intercepts for reporting purposes. Higher grade cut-offs are 0.3g/t, 0.6g/t and 1g/t AuEq.
• Maximum contiguous dilution within each intercept is 9m for 0.1%, 0.3%, 0.6% and 1% CuEq.
• Most of the reported intercepts are shown in sufficient detail, including maxima and subintervals, to allow the reader to make an assessment of the balance of high and low grades in the intercept.
• Informing samples have been composited to two metre lengths honouring the geological domains and adjusted where necessary to ensure that no residual sample lengths have been excluded (best fit).

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. The copper equivalent calculation used is based off the CuEq calculation defined by CSA Global in the 2018 Mineral Resource Upgrade.

Copper equivalent (CuEq) grade values were calculated using the following formula:

CuEq = Cu + Au * 0.62097 * 0.8235,

Gold Equivalent (AuEq) grade values were calculated using the following formula:

AuEq = Au + Cu / 0.62097 * 0.8235.

Where:

Cu – copper grade (%)

Au – gold grade (g/t)

0.62097 – conversion factor (gold to copper)

0.8235 – relative recovery of gold to copper (82.35%)

The copper equivalent formula was based on the following parameters (prices are in USD):

• Copper price – 3.1 $/lb (or 6834 $/t)
• Gold price        – 1320 $/oz
• Copper recovery – 85%
• Gold recovery – 70%
• Relative recovery of gold to copper = 70% / 85% = 82.35%.

• Mineralised structures are variable in orientation, and therefore drill orientations have been adjusted from place to place in order to allow intersection angles as close as possible to true widths.
• Exploration results have been reported as an interval with ‘from’ and ‘to’ stated in tables of significant economic intercepts. Tables clearly indicate that true widths will generally be narrower than those reported.

• See figures in the body of this ASX/TSX Announcement.

• Resources have been reported at a range of cut-off grades, above a minimum suitable for open pit mining, and above a minimum suitable for underground mining.

• Extensive work in this area has been done and is reported separately.

• The mineralisation is open at depth and along strike.
• Current estimates are restricted to those expected to be reasonable for open pit mining. Limited drilling below this depth (-300m RL) shows widths and grades potentially suitable for underground extraction.
• Exploration on going.