Two diamond drill rigs are drilling scissor holes following the discovery hit of 928m grading 0.3% copper and 0.27 grams per tonne gold (equating to 0.47% copper equivalent) from 458m.
Both holes are currently said to be in mineralisation, with step-out holes planned.
The discovery hole was terminated in mineralisation because the company assessed the drilling was "very slowly passing out of the system".
Xanadu said the discovery hole was "the largest intercept of continuous mineralisation drilled at Kharmagtai and the best intercept drilled outside the existing resources to date".
Xanadu is looking to add tones and grade to its existing Kharmatai resources at Copper Hill, White Hill and Stockwork Hill.
The current quarter shapes as critical one for the next phase of Xanadu's corporate life, with the company budgeting to spend nearly half of the A$5.1 million cash in its treasury at the start of the April.
Shares in Xanadu were unchanged at 20c in early trade, capitalising the company at $118 million.
The stock hit a 12-month high of 34c in October, with $15.4 million raised in September 2017 when new shares were issued at a price of 20c each.
As well as funding Xanadu's exploration, US$2.76 million of that raising went towards repaying a loan to Noble Resources International.
