Xali to acquire Pico Machay project from Pan American

Ms. Joanne Freeze reports XALI GOLD TO ACQUIRE PICO MACHAY GOLD PROJECT IN PERU Xali Gold Corp. entered into a share purchase agreement (SPA) on Oct. 23 to acquire the company Minera Calipuy SAC (Calipuy), which wholly owns the Pico Machay gold project in central Peru, from Pan American Silver Corp. and its subsidiary, Aquiline Resources Inc. Pico Machay is a high-sulphidation gold deposit that lies within the northern extent of the southern Peru epithermal gold-silver belt and has a historic measured and indicated resource of 264,600 ounces (oz) of gold (10.6 million (M) tonnes grading 0.78 gram per tonne (gpt) gold) and an additional historic inferred resource of 446,000 oz of gold (23.9 M tonnes grading 0.58 gpt gold) (see Table 1 for resource details). "The Pico Machay acquisition represents a pivotal step for Xali Gold as we expand our presence in one of the world's most prolific epithermal gold-silver countries," said Joanne Freeze, president and chief executive officer of Xali Gold. "With a historic resource already in place and various engineering studies conducted since discovery through 2010, the project offers both immediate value and excellent upside potential. Pico Machay is especially compelling given that the original resource was calculated using a long-term gold price of $700 (U.S.)/oz. The current stronger gold price environment provides us with many opportunities to upgrade the project and evaluate additional production alternatives that may not have been supported by lower gold prices. With three decades of experience in Peru's mining sector, we are confident that our team of South American and gold experts combined with the strengths of local partnerships and the country's exceptional mineral potential, uniquely positions us to unlock the full value of this opportunity. Our focus will be to update the resource estimate and previous engineering studies with a near-term production goal, while also testing exploration targets for potential resource expansion. In addition, there are several other known high-sulphidation prospects in the area which we will evaluate for potential acquisition and exploration to enhance/expand production at Pico Machay." About Pico Machay Pico Machay was discovered in 1997 and explored by several juniors including Aquiline through 2009. Aquiline completed various engineering studies including resource estimations and metallurgical testwork. These studies targeted an open pit heap-leach operation, which was expected to be low-cost and with a low strip ratio. Given that Aquiline's engineering work prior to that company's acquisition by Pan American was based on a long-term gold price of $700/oz and several exploration targets remain untested, Xali Gold believes there is excellent upside potential. Geologically, Pico Machay occurs within the northern extent of the southern Peru epithermal gold-silver belt, which is one of three epithermal gold-silver belts in Peru that are host to world-class gold deposits, including the Yanacocha and Pierina mines. Minera IRL Ltd.'s Corihuarmi mine operates 63 kilometres north of Pico Machay. Logistically, the project lies in the eastern part of Western Cordillera Andes within the district of Santa Ana, province of Castrovirreyna and department of Huancavelica, which is a well-established mining area/district. The Santa Barbara mine and Julcani mine have been operating since 1953 by Compania de Minas Buenaventura S.A. There are also currently several mines within a 45-kilometre radius of Pico Machay including: Lalira, San Genoro, Astohuaraca, El Paloma, Cauduloso, Reliquias and Recuperada. Pico Machay is 35 km southwest of the city of Huancavelica via road, 457 km from Lima or 270 km from Pisco. Huancavelica is also connected to Callao, the port of Lima by a 650-kilometre intermontane rail line. Santa Ana is the nearest town from the project and is 13 km away. Technical information All scientific and technical information in this news release has been prepared by, or approved by David G. Thomas, PGeo, and Joanne C. Freeze, PGeo. Qualified persons as defined by National Instrument 43-101 for the Pico Machay project. Ms. Freeze is the president and chief executive officer of Xali Gold and Mr. Thomas is independent. Resources were estimated using historical drilling (up to 2004) and current drilling (drilled between 2004 and 2008). The resource estimate includes holes up to hole ABS-246, drilled in 2008. Micromine software (Version 11.0.4) was used to facilitate the resource estimating process and the estimate was prepared in accordance with CIM Standards on Mineral Resources and Reserves. Mineralized zones were outlined to enforce geological control during block modelling. The geological continuity of the broader mineralized zones, especially for the main zone, was quite good and could be readily followed from hole to hole and section to section. An average specific gravity (rock density) value, based on 11 samples, of 2.31 was used. A block model was created, constrained by the zone wireframes. Blocks in the inferred category were defined based on search ellipse parameters with a range of 40 m. Blocks in the indicated and measured categories were identified manually, based on drill intercepts spacing values of 27 and 20 m, respectively. Ordinary block kriging was used to estimate block grades. Share purchase agreement terms The terms of the SPA with Pan American and Aquiline to acquire 100 per cent of their collective interest in Calipuy, which owns all rights, title and interest in the Pico Machay gold project, include the cash payments as shown in the attached table (all dollar values are United States dollars). Closing of the transactions under the SPA are subject to customary closing conditions for transactions of this nature, as set out in the SPA, including TSX Venture Exchange approval for Xali Gold. Pan American will retain certain security interests over Calipuy, subject to Xali Gold's completion of the deferred payments under the SPA. Xali Gold is dedicated to being a responsible community partner. Both David G. Thomas, PGeo, and Joanne C. Freeze, PGeo. Qualified persons as defined by National Instrument 43-101 have reviewed and approved the contents of this release. We seek Safe Harbor.