Xali Gold to Acquire Pico Machay Gold Project in Peru

On October 24, 2025, Xali Gold announced it has entered into a share purchase agreement to acquire Minera Calipuy S.A.C., the owner of the Pico Machay Gold Project in central Peru.

The total consideration for the acquisition is US$17.5 million, payable in stages: - US$500,000 on closing. - US$1,500,000 on the 1st anniversary. - US$1,500,000 on the 2nd anniversary. - US$4,000,000 on the 3rd anniversary. - US$3,000,000 on the 4th anniversary. - US$4,500,000 on the 5th anniversary. - A final milestone payment of US$2,500,000 upon delineating a minimum of 1.25 million ounces of gold.

The Pico Machay project has a historical (non-NI 43-101 compliant) resource estimate of 264,600 oz gold in the measured and indicated category (10.6M tonnes @ 0.78 g/t Au) and 446,000 oz gold in the inferred category (23.9M tonnes @ 0.58 g/t Au). The company cautions that a qualified person has not done sufficient work to classify these historical estimates as current mineral resources.

This acquisition is a pivotal, "bet-the-company" move for Xali Gold. It represents the culmination of a strategic shift away from Mexico towards South America, a move clearly telegraphed in news releases from July, August, and September 2025. The company was facing significant headwinds in Mexico, including "unlawfully" cancelled mining concessions and the termination of the Sarape project option. This pivot to the Pico Machay project in Peru provides the company with a new flagship asset and a clear path forward, which is a material positive.

However, the positive nature of the acquisition is severely tempered by the company's dire financial situation. The staggered payment structure, totaling US$17.5 million, is an enormous liability for a company with a market capitalization of approximately CAD$5.7 million and a working capital deficiency of over $3.1 million as of June 30, 2025. As of its last audited financials (March 31, 2025), the company had only $38,293 in cash.

To meet even the initial US$500,000 closing payment, Xali Gold must secure immediate and significant financing. This will inevitably lead to massive shareholder dilution at or near the current depressed share price. The entire viability of this transaction and, by extension, the company, hinges on its ability to access capital markets.

Tracing the historical news reveals a company in survival mode: - July/August 2025: The company disclosed major issues with its Mexican El Oro concessions being unlawfully cancelled, leading to a Cease Trade Order for late filings. - September 16, 2025: The company clarified its plan to address a $3.15 million working capital deficiency through shares-for-debt settlements and planned financings, while simultaneously dropping the Sarape project option and formally announcing its focus on South America. - October 23, 2025: Trading was halted pending this acquisition news.

While the acquisition provides a compelling new story built around a historical resource, the market will remain skeptical until a concrete financing plan is announced. The deal structure transfers immense financial risk to Xali Gold and its shareholders. The news is positive in that it provides a new direction, but the associated financial burden is a critical, near-term risk.

Xali Gold Corp. is a junior mineral exploration company. Historically, its focus was the El Oro gold-silver district in Mexico, where it aimed to generate near-term cash flow via royalty agreements with partners reprocessing old mine tailings (KCA) and working historic underground areas (Remedioambiente). Due to significant jurisdictional challenges in Mexico, the company has pivoted its strategy.

The new flagship asset is the Pico Machay Gold Project in Peru. It is an exploration-stage, high-sulphidation epithermal gold deposit with a large, non-compliant historical resource. The project is royalty-free upon completion of the acquisition payments.