Why the Xanadu Mines (ASX:XAM) share price is rocketing 36% today

The Xanadu Mines (ASX:XAM) share price is rocketing following the company's release of promising gold drilling results. Here's the lowdown.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published February 15, 2021 2:45 pm AEDT

Xanadu Mines Ltd (ASX: XAM) shares are surging today after the company released an update to the market this morning. The update was regarding the results of Xanadu's diamond drilling program in Stock Worth Hill at its Kharmagtai porphyry copper and gold project in Mongolia.

At the time of writing, the Xanadu share price has rocketed 36.36% to 4.5 cents.

miniature rocket breaking out of golden egg representing rocketing share price — Image source: Getty Images

What did Xanadu Mines report?

The Xanadu share price is on a tear today after the company reported a diamond drill test hole had intersected "a broad zone of high-grade bornite mineralisation" south of its Stockwork Hill resource. The results increase the high grade bornite zone beyond the defined resources.

The intersection included promising results for both copper (Cu) and gold (AU):

175m @ 0.84% Cu and 1.83g/t Au (1.78% eCu) from 615m and
61m @ 1.43% Cu and 3.76g/t Au (3.36% eCu) from 651m

Highlighting the potential the company sees in Kharmagtai, it said the mineralisation is similar to what was seen at the high-grade Hugo Dummett deposit within the giant Oyu Tolgoi mine.

Commenting on the drill results, Xanadu's CEO, Andrew Stewart, said:

This is the first time we have seen this density of bornite mineralisation at Kharmagtai. This hole provides a snapshot of what the lower zones of mineralisation at Kharmagtai could look like with increasing gold to copper ratios.

The tenor of gold within the bornite is impressive, containing two to four grams of gold for every percent copper. This hole materially expands the width of the high-grade bornite zone and will help guide drilling for additional high-grade extensions.

Xanadu is currently in the process of arranging follow-up drilling to further test the new target. It will update the market on the planned Phase 2 drilling in subsequent releases. The company also stated it would provide a mineral resource estimate update in March.

Xanadu Mines share price snapshot

Having surged more than 36% today, the Xanadu Mines share price is currently up 50% over the past 12 months. By comparison the All Ordinaries Index (ASX: XAO) is down 1% since this time last year.

Based on today's share price, the company has a market capitalisation of around $35 million.

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