In the 12 months since acquiring its flagship Kharmagtai copper-gold project, located in the South Gobi region of Mongolia, Xanadu Mines has mustered $A15.3 million on the back of a successful and aggressive exploration campaign, which was based on a clear strategy of organic growth through exploration.

This vote of confidence from investors will provide sufficient funds to complete another 10,000-15,000m of planned exploration drilling at the company's flagship Kharmagati project, which occurs within one of the last great exploration frontiers. The South Gobi copper province represents a highly mineralised and vastly underexplored mineral belt known to host large deposits.

With investors increasingly turning to gold and base metals as energy and bulk commodity prices falter, Xanadu finds itself in a secure position for a junior explorer within an emerging mineral belt that is known to host giant copper deposits, such as Oyu Tolgoi.

"When investors see that you actually did what you said you were going to do after 12 months, that builds a reputation," Xanadu chief executive Dr Andrew Stewart told RESOURCESTOCKS from his office in Ulaanbaatar.

"When the Mongolian field seasons finished last year we were able to complete a successful capital raise on the back of a successful exploration program at Kharmagati. We were really able to significantly advance the project and we're going to do the same thing again this year."

Stewart has more than 15 years of copper and gold exploration experience throughout Asia and has been working in Mongolia since 2001 when he filled senior technical and management positions for Ivanhoe Mines. He sees Xanadu's investment advantages in the convergence of improving Mongolian regulations and relatively resilient sentiment for copper and gold markets.

"I think we've got a project that's actually growing some legs based on recent exploration results," he said.

"When you look around at the moment, there are very few good projects that are taking that next step. In Asia, you can almost count them on one hand."

The latest milestone for Kharmagtai has been the establishment in March of a maiden resource of 1.5 billion pounds of copper and 2.2 million ounces of gold. Xanadu sees this achievement as a temporary growth marker as it steps out its expansionary exploration program in the coming months. So far, the new inventory is contained within three deposits, and only a small portion of the highly prospective licence has been explored to date.

"The key understanding with these porphyry copper-gold deposits is they often occur in clusters," Stewart explained.

"And what we see at Kharmagtai is consistent with one of the projects nearest neighbours, the massive Oyu Tolgoi mine, where five deposits follow a lineament boasting 2.6 billion tonnes at 1.2% copper and 0.3gpt gold.

"We've have already discovered three deposits at Kharmagtai and we want to keep going. We feel that another one will turn it into quite a significant project."

One of the most tantalising aspects of Kharmagtai is the fact that the current resource was delivered by an exploration effort over only 30% of the project's perspective area. The rest of the intrusive complex remains under loose sand cover only tens of metres thick. This setting closely mirrors the Oyu Tolgoi property, where a mix of open cut and underground deposits occupy comparable geology of about the same age.

Xanadu is planning to use its detailed geological understanding this year to continue slowly tracing Kharmagtai's mineralisation, with a focus on shallow, high-grade targets to facilitate early mining operations.

"The important thing here is we have a large system that has several shallow higher-grade cores within, which makes moving towards a mining stage a lot easier than having to start off with a large, low-grade system," Stewart said.

"We're getting different styles of mineralisation in different [geological] events, and that's important in these types of systems because you see multiple centres. That's how you build a high-grade system."

About 260km to the east, Xanadu's early stage Oyut Ulaan project has also benefited from the company's recent exploration drive.

Oyut Ulaan is characterised by multiple copper-gold porphyry centres, tourmaline breccia pipes and copper-gold-base metal magnetite skarns. Initial works at the site have defined broad zones of strong quartz stockwork veining and associated mineralisation grading up to 5gpt gold and 1.5% copper. Mineralisation remains open at depth and along strike at the project's two primary prospects.

As with Kharmagtai, the plan is to emulate the development of the region's established giants by probing an extensive landholding around the initial discovery.

"These deposits also occur in clusters, so the chances of continuing to find deposits are highly prospective," Stewart said.

"It's very important when you're in these areas to have quite a significant holding, and we control the whole porphyry district at Kharmagati and Oyut Ulaan."

The discovery of mineralised tourmaline breccia at both Oyut Ulaan and Kharmagtai has been considered a major breakthrough for the Xanadu exploration team, especially in the context of the tough environment for junior mining companies.

As the only expatriate in Xanadu's Mongolia-based personnel, Stewart says local integration and diligence among the company's people have been the keys to successful implementation of development ambitions amid shaky industry sentiment.

"Teams are the most important thing because they're the ones that get projects to move forward," he said.

"There are plenty of people who have discoveries and nothing really happens with them because the team doesn't function well.

"We're well placed with strong Mongolian corporate and exploration credentials and a strong national team here to actually deliver in one of the world's premier copper belts."

*A version of this report, first published in the May-June 2015 edition of RESOURCESTOCKS magazine, was commissioned by Xanadu Mines.