Ms. Joanne Freeze reports

XALI GOLD AGREES TO TRANSFER THE EL ORO TAILINGS PROJECT IN MEXICO TO KAPPES, CASSIDAY

Xali Gold Corp. and Kappes, Cassiday and Associates (KCA) have agreed to finalize a definitive agreement whereby Xali Gold will transfer all of its rights related to the Mexican mine tailings in El Oro, Mexico, to KCA. The terms of the definitive agreement will be consistent with the terms in the binding letter of intent (LOI) announced on April 15, 2024.

"KCA has made substantial progress on the El Oro tailings project with a drill program that successfully confirmed the tonnage, grade and metallurgical behaviour of the ore," said Joanne Freeze, president and chief executive officer of Xali Gold. "Additionally, they have developed a comprehensive engineering design package to support the construction of a processing plant to treat the tailings with recoveries estimated to be 78 per cent for gold and 86 per cent for silver. We are confident that KCA is the ideal partner to responsibly develop and operate the tailings reprocessing facility, delivering benefits for all stakeholders involved."

Xali Gold initially acquired the rights to reprocess the tailings in El Oro from the municipality of El Oro in 2013. Since then, the company has conducted numerous studies, both independently and in collaboration with partners, to determine the most effective gold recovery process and believes that KCA has successfully achieved this.

Xali Gold's agreement with KCA gives KCA the right to process and sell all gold and silver recovered from the tailings in return for a gross royalty equal to 4 per cent of the sales income (net smelter return), less any royalties due and payable to others, especially the Municipality of El Oro, but not less than 3-per-cent gross royalty. KCA maintains the right to purchase 1 per cent of the royalty from Xali Gold for $1-million (U.S.) at any time, in which case the 4-per-cent gross royalty owed to the company will be reduced to 3 per cent (or the 3-per-cent royalty reduced to 2 per cent). Payments or taxes related to the tailings will be assumed by KCA and will no longer be the responsibility of Xali Gold.

The LOI signed in April, 2024, also provides for staged payments totalling $150,000 within six months of signing. Subsequently and continuing until production commences, a minimum royalty payment of $50,000 (U.S.) is to be paid every six months. KCA has paid Xali Gold $200,000 to date.

The transfer will include Xali Gold transferring its Mexican subsidiary, Minera CCM Jales SA de CV, to KCA as it entered into the various agreements with the Municipality of El Oro and holds the permits required to move the tailings. KCA will manage all negotiations with local government and cover all associated legal costs. KCA will also be responsible for all legal costs related to the definitive agreement.

El Oro tailings project details

The tailings are estimated to contain 1.27 million tonnes at a grade of 2.94 grams per tonne gold and 75.12 grams per tonne silver (3.85 grams per tonne gold equivalent) containing 119,900 ounces of gold and 3,061,200 ounces of silver as per an inferred mineral resource estimate National Instrument 43-101 resource study in 2014.

KCA completed a drilling and metallurgical testing program earlier this year to provide samples for metallurgical evaluation and testing of the tailings and to increase the level of confidence in the resource estimate completed by Xali Gold in 2014. Please refer to Feb. 12, 2025, news release for complete details on the program.

The assay results of the drilling program indicated the gold and silver content of the tailings was very uniform both laterally and vertically to depth and slightly higher than previously estimated by Xali Gold.

KCA also reported that the drilling and metallurgical results indicate a potential 10-to-15-per-cent increase in the size of the resource as well as a small increase to both the gold and silver grades and recoveries. KCA estimates that the methods recommended could give recoveries of up to 82 per cent for gold and 86 per cent for silver; however, for economic calculations, it will use 78-per-cent recovery for gold and 86-per-cent recovery for silver. These are slightly higher than the average overall recovery of 75 per cent previously considered by KCA.

Note: Mineral resources are not mineral reserves and do not have demonstrated economic viability. All figures have been rounded to reflect the accuracy of the estimate. For more information, see "National Instrument 43-101 Technical Report on the Inferred Mineral Resource Estimate of the Mexico Mine Tailings" prepared by Nadia Caira, PGeo, and Allan Reeves, PGeo, dated Aug. 25, 2014, with an effective date of July 8, 2014, available on SEDAR+.

Xali Gold is dedicated to being a responsible community partner.

Joanne C. Freeze, PGeo, president and chief executive officer, is the qualified person as defined by NI 43-101 for the project discussed above. Ms. Freeze has reviewed and approved the contents of this release.

We seek Safe Harbor.