Xali Gold clarifies El Oro deal, drops Sarape option

Executive Summary

• Xali Gold clarified its agreement with Remedioambiente SA de CV on the El Oro property, granting Remedioambiente a 3 % NSR on gold and silver recovered above 2,400 m masl while Xali retains 100 % of exploration upside below that depth.
• The company terminated its option on the Sarape project (Advanced Lithium Corp.) as of Aug 31 2025, with no financial or liability impact.
• Xali disclosed a $3.15 M capital working deficiency and outlined a multi‑step plan to reduce it through third‑party payments, share‑for‑debt issuances, and anticipated financings in late 2025 and 2026.

Key Details

• Remedioambiente Agreement (El Oro):
• Right to recover gold & silver from historic mine workings on five concessions; pays up to 3 % NSR on all metal extracted above 2,400 m masl.
• Xali retains 100 % of exploration potential below 2,400 m masl.
• Remedioambiente must keep mineral‑rights fees current; once past‑due fees reach a minimum of $50,000, they may be converted into Xali shares (subject to TSX‑V acceptance).

• Right to appoint a mining engineer to Xali’s board and, if it acquires >20 % of Xali’s outstanding shares within five years, an additional chairperson (appointments require current board approval).

• Cancelled Mexican Concessions:

• Nine El Oro concessions were unlawfully cancelled by the Mexican Mines Bureau (MMB) without the required 60‑day notice.
• Two of the five concessions under Remedioambiente’s option are among those cancelled.

• No other party may acquire these areas while Xali pursues legal reversal.

• Termination of Sarape Option:

• Letter of intent with Advanced Lithium Corp. expired Aug 31 2025; no definitive agreement was signed.

• No funds were advanced, no residual liabilities or guarantees remain, and treasury (share) structure is unchanged.

• Capital Working Deficiency ($3,150,354 as of Jun 30 2025):

• Mining fees $1,248,226: to be eliminated via payments from Remedioambiente/third parties.
• Third‑party debt $646,470: up to 50 % may be settled by issuing shares; remainder funded by a planned 2026 financing.
• Directors/officers owed $594,450: up to 50 % to be converted to shares; balance payable when cash is available.

• Trade payables $542,393: up to 40 % from a fall‑2025 financing, up to 25 % via share issuance, remainder from a second 2026 financing.

• Related Loans from Ridley Rocks Inc.:

• Prior loan of $124,300 (interest‑free, payable Mar 31 2026).
• Additional loan of $150,000 (3 % annual interest compounded, payable Sept 30 2026).

• Both rely on MI 61‑101 exemptions for valuation (<25 % market cap) and minority shareholder approval.

• Regulatory & Qualified Person Statement:

• Joanne C. Freeze, P.Geo., is the qualified person under NI 43‑101 for all projects discussed; she has reviewed and approved this release.

Notable Quotes

“The increasing costs of maintaining properties in Mexico and the lack of clarity with permitting… came as a complete surprise… we are very pleased to have Remedioambiente’s expertise to manage and advance the upper portions of key parts of the El Oro property while we continue to hold potential upside…” – Joanne Freeze, President & CEO

Safe harbor statements included in the original release have been omitted for brevity.