Ms. Joanne Freeze reports

XALI GOLD ADVANCES PERMITTING AND CONTRACTOR SELECTION FOR DRILLING AT PICO MACHAY

Xali Gold Corp. has provided an update on permitting and preparations for a planned 3,000-metre (m) diamond drill program at the company's Pico Machay gold project in Peru.

Highlights:

• Ficha Tecnica Ambiental drilling permit (FTA) application nearing completion;
• Positive initial feedback received during a meeting with senior representatives of Peru's General Directorate of Mining Environmental Affairs (DGAAM);
• Drill contractors currently conducting site visits to confirm operating requirements and finalize proposals;
• Approximately 3,000 m of diamond drilling planned, including approximately 2,000 m of twin drilling within the historical resource area;
• Subject to receipt of the required permits, drilling targeted to begin by the end of September, 2026.

In support of the FTA application currently being prepared, the company's team recently met with representatives of DGAAM, including the Director General, to seek early feedback on the technical and environmental information being incorporated into the application. The company received positive feedback regarding the permitting process, and a final technical meeting will be conducted in the near future, as required prior to submission.

Based on current expectations and feedback received, the company anticipates that the review process following submission of the completed FTA application should be completed within some weeks. Subject to the timing of regulatory approval and completion of final preparations, Xali Gold is targeting the commencement of drilling near the end of September, 2026. Two drills will be engaged initially to complete the resource confirmation drilling well ahead of December, 2026.

"We are making solid progress towards drilling at Pico Machay," stated Joanne Freeze, president and chief executive officer of Xali Gold. "Early engagement with DGAAM has provided us with constructive feedback to best finalize the FTA application, while drilling contractor site visits are helping us confirm the equipment and operating approach best suited to the project. With permitting and drilling contractor selection advancing in parallel, we are focused on getting drills turning so we can provide an updated and potentially upgraded mineral resource estimate to support our first preliminary economic assessment (PEA) as soon as possible."

Drill program and contractor selection

Representatives from prospective drilling contractors are currently visiting Pico Machay to assess site access, terrain, logistics and ground conditions. These visits will allow contractors to confirm the equipment and operating requirements for the planned program and submit accurate, site-specific proposals. The company expects to select a drilling contractor shortly following completion and review of these proposals.

The planned program will consist of approximately 3,000 m of diamond drilling. Approximately 2,000 m will be dedicated to twinning selected (10 per cent of) historical resource holes required to support the preparation of an updated mineral resource estimate. The extra 1,000 m will allow additional resource drilling to target high-grade controls. Following the resource drilling, the FTA will allow an additional 13,000 to 17,000 m of drilling to test exploration targets identified through the company's recent mapping, surface and underground sampling, and geological modelling programs.

Historical drilling at Pico Machay was completed exclusively using reverse circulation (RC) methods. The upcoming program will use diamond drilling, which produces continuous core and generally provides improved geological and structural information, as well as better sample integrity. Diamond drilling may also provide improved recovery of fine-grained material that can sometimes be lost during RC drilling. Accordingly, the twin-hole program will allow the company to assess whether differences in drilling may have affected historical assay results. There can be no assurance that diamond drilling will return grades that are higher than those reported from the historical RC drilling.

About Pico Machay

Located within the southern Peru epithermal gold-silver belt, Pico Machay sits in a historically productive mining district in the Western Cordillera Andes. The project benefits from existing infrastructure and a mining-friendly community eager to partner on sustainable development.

Xali Gold remains confident in the significant upside potential at Pico Machay, which hosts a historical resource and several untested exploration targets on the project. Various historical engineering studies at Pico Machay were completed up until 2009 which targeted an open-pit heap-leach operation, that was expected to be low-cost and with a low strip ratio. Given that those studies were based on a long-term gold price of $700/ounce and several exploration targets remain untested, Xali Gold considers the upside potential to be very strong.

Share issuances

On Aug. 5, 2026, the company issued 548,684 common shares to ARO Consulting Inc. upon the exercise of restricted share units (RSUs) granted to Sheri Rempel, the company's chief financial officer, in lieu of cash compensation for services provided during 2025. These shares are subject to a four-month hold period and may not be traded until Dec. 6, 2026.

During April and August, 2026, the company issued a total of 455,950 common shares upon the exercise of warrants issued in connection with the private placement completed in December, 2025. The warrants were exercised at a price of 20 cents per share, generating proceeds of $91,190.

About Xali Gold Corp.

Xali Gold is a gold and silver exploration company focused on advancing opportunities in the Americas. The company is focused on the exploration and development of Pico Machay, an advanced exploration-stage gold project in Peru with a near-term production goal. The company's approach to community engagement and responsible development is guided by strong governance principles and Board oversight that support long-term stakeholder relationships.

Joanne C. Freeze, PGeo, is a qualified person as defined by National Instrument 43-101 and has reviewed and approved the contents of this release.

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