XAU Resources Inc. Announces Letter of Intent to Acquire QS Holdings Inc.

• On April 23, 2026, XAU Resources Inc. announced a non-binding Letter of Intent (LOI) to acquire QS Holdings Inc. for an indicative purchase price of approximately C$70,000,000 in common shares.
• The acquisition targets the Quartzstone Gold Project in Guyana (296 km²), which is subject to a 4.5% NSR royalty and a Government of Guyana royalty.
• Fortuna Mining Corp. holds an earn-in agreement allowing them to acquire up to a 70% interest in the project through drilling and feasibility milestones.
• The transaction is flagged as a related party transaction, as XAU directors Peter Hambro (Chairman) and Gary Bay (CEO) are shareholders in QS Holdings Inc., the seller.
• Trading of XAU shares has been halted pending TSX Venture Exchange review.
• This follows a C$1.0 million private placement closed in December 2025 at $0.25 per unit, intended for exploration and debt repayment.

• Dilution Risk: The proposed C$70M acquisition value is approximately seven times the company's current market capitalization (estimated ~C$10M based on recent price). Issuing shares to fund this deal would result in massive dilution for existing shareholders, significantly altering the capital structure.
• Related Party Conflict: The transaction involves directors selling assets from a private entity (QS Holdings) to their own public company (XAU Resources). This creates a significant conflict of interest where insiders may be monetizing assets at an inflated price using public equity as currency.
• Asset Encumbrances: The target asset is not fully controlled by XAU; Fortuna Mining can earn up to 70% of the project, meaning XAU could end up with a minority stake in the acquired land package despite paying full value for QS Holdings. Additionally, existing royalties (4.5% NSR) reduce net revenue potential.
• Capital Adequacy: The company recently raised only C$1.0 million in cash. Committing to a C$70M share deal suggests a lack of alternative financing options and places immense pressure on the balance sheet if additional capital is needed for Fortuna's earn-in requirements or project development.
• Regulatory Uncertainty: The trading halt indicates regulatory scrutiny, particularly regarding the related party nature and valuation of the transaction. Approval from independent shareholders will likely be required, adding execution risk.

• Company: XAU Resources Inc. is an early-stage gold exploration company focused on Northwest Guyana.
• Strategy: Build a portfolio of high-potential assets by advancing the Noseno Gold Project and acquiring adjacent land packages in the Trans-Guyana gold belt.
• Flagship Asset (Noseno): Located 75 km south of Port Kaituma, covering 152 km². Status is early exploration with no disclosed reserves or resources. Geological setting targets greenstone terranes similar to major deposits like Omai and Toroparu.
• Acquired Asset (Quartzstone): If the LOI closes, XAU would control a 296 km² package in Guyana via QS Holdings. However, this asset is subject to Fortuna Mining's earn-in option and existing royalties.