Xali to acquire Pico Machay project from Pan American

Executive Summary

• Xali Gold Corp. entered into a share purchase agreement to acquire 100% of Minera Calipuy SAC (Calipuy), the owner of the Pico Machay gold project in central Peru, from Pan American Silver Corp. and Aquiline Resources Inc.
• The Pico Machay project is a high-sulphidation gold deposit with a historic measured and indicated resource of 264,600 ounces of gold and an inferred resource of 446,000 ounces of gold.
• The acquisition includes cash payments structured over time, subject to customary closing conditions including TSX Venture Exchange approval.

Key Details

• Transaction Structure: Share Purchase Agreement (SPA) to acquire 100% of Calipuy, which wholly owns the Pico Machay gold project.
• Sellers: Pan American Silver Corp. and its subsidiary, Aquiline Resources Inc.
• Target Asset: Pico Machay gold project, located in the district of Santa Ana, province of Castrovirreyna, department of Huancavelica, Peru.
• Historic Resource Estimates:
  • Measured and Indicated: 264,600 ounces of gold from 10.6 million tonnes grading 0.78 g/t gold.
  • Inferred: 446,000 ounces of gold from 23.9 million tonnes grading 0.58 g/t gold.
• Resource Estimation Details:
  • Based on historical drilling (up to 2004) and current drilling (2004–2008), including holes up to ABS-246.
  • Estimated using Micromine software (Version 11.0.4) in accordance with CIM Standards.
  • Average specific gravity used: 2.31.
  • Measured/Indicated blocks identified manually based on drill intercept spacing of 27m and 20m, respectively.
  • Inferred blocks defined via search ellipse parameters with a range of 40m.
• Financial Terms: Cash payments are structured as shown in an attached table (not provided in text), with Pan American retaining security interests over Calipuy until deferred payments are completed.
• Closing Conditions: Subject to customary conditions, specifically TSX Venture Exchange approval.
• Strategic Context: The original resource was calculated using a long-term gold price of $700/oz. Xali Gold aims to update resource estimates and engineering studies with a near-term production goal and evaluate exploration targets for expansion.
• Qualified Persons: David G. Thomas, PGeo (Independent) and Joanne C. Freeze, PGeo (President and CEO of Xali Gold).

Notable Quotes

• "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.
• "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."