March 29, 2024 9:43 AM

Magnificence and beauty all wrapped up in a mining stock–Xanadu

Here are several reasons why Xanadu Mines Ltd. is a good addition to your stock portfolio.

/ Published 5 years ago

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Where is Xanadu? Reading through lists of stock options that name gets noticed. Known as a place of magnificence and beauty pairing it with the topic mining may seem like an oxymoron. A closer look shows with Xanadu Mines Ltd (TSX:XAM) stock, an investor gets both the profit side and the aesthetic side on several levels.

Location and relationship

Xanadu mines reside in the region of Mongolia South Gobi in Omnogovi Province near Kharmagtai. Known as a porphyry copper-gold frontier in mid-October it became listed on the Toronto Stock Exchange (TSX). Grasslands and desert dunes contained by a set of old mountains known for dinosaur eggs and skeletons now reveal its mineral-rich treasures to the world.

What lies beneath makes it a desired kingdom that an investor can have a part of. Canadians know well what grassland and the ice deserts do so Mongolia makes a good fit for a business relationship. Canadians and Asians have been developing good relationships for some time now especially in real estate markets. So, a natural extension of that would become mining the real estate. Canadians have the know-how, technology, and mindset for a long-term venture in Mongolia.

Assessment

In August 2018 the firm started a daring upgrade with a higher-grade open pit starter project to show the possible profitability of the venture. It scheduled infill drilling programs for completion in October. Sampling involved obtaining a 2-meter sample from the 1/2HQ diamond core. Trench and drill samples went tothe ledger for mineralization, lithology, and geotechnical aspect using a standardized ledger system. They recorded the estimated volume percents visually. Drill cores after being logged in by a geologist became photographed. ALS Mongolia LLC carried out sample preparation and analysis.  Other details of core sample preparation can be found here.

On time

With drilling programs completed in October as scheduled right after entering the TSX exchange the company announced it had increased estimates of copper tonnage by 400 percent with gold increasing to 249 percent. Estimates became derived from data starting at 2015 as a result of drilling 27 holes. Now an open pit scoping study has begun with a completion date set in December. The study will assess the economic viability of the mines there. The company has moved into an awareness campaign of their venture to get the needed backing for the long term. A video presentation displays some of the samples for viewing and puts a human face on the venture.

copper
Xanadu announced that is increased its copper tonnage estimate by 400 percent. (Source)

The risk

Though promising, Xanadu Mines Ltd (TSX: XAM) has not reached the realm of a sure thing. It has done many things well.  After all, the name says it, a venture of magnificence and beauty and like all relationships, it carries calculated risk. Will magnificence and beauty consummate the relationship fully or will all be left hanging? Because of the timing of an investor’s birth, one could not participate in the initial gold rushes everyone reads about. Here stands a chance to have that experience. Fraught with risk, with daily ups and downs in a remote region with humans challenging land and weather daily. Investors simply have to watch from their seats and decide. Risks to become aware of:

  •       Stand-alone power systems.

In remote regions as a project scales up can they minimize fuel price, ensure supply for continuous operation.

  •       Regulation

It operates in Mongolia. So how does the regulation work there?

  •       Digitization

Can it put in the necessary digital processes to ensure profits by well-managed data outputs that in turn implement strategic policies to get profits to investors?

  •       Capital

Once in operation can it compete with other mining operations as far as competitive shareholder returns.

  •       Market Anticipation

Precious metals and mineral markets have volatility. Do they have a backup plan for when prices fall or have enough resources to weather a storm?

Investing

As alluring as precious metals beckon investors to need to buy into whole sectors. Many industries use nickel, tin, aluminum, magnesium and copper. Known as base metals the profitability margins over the long term may be more in line with what an investor needs. An investor with a desire for mining stock might want to consider exchange-traded funds (ETF). Holding a basket of securities with an ETF managed by a brokerage firm till the mining company becomes fully operational with long-term policies can ease the stress of risky ventures. ETFs have some flexibility. The reality remains mining in foreign countries can become impacted by a regime change. What shareholder returns a mining company can give depends on many factors.

Playing with Xanadu comes at a price. As an investor determine what the price will be so that one can fully enjoy its magnificence and beauty while spending the gifts it gives one.

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