Xali Gold Corp.'s Profile

Xali Gold is creating a growth strategy encompassing its Mexican assets to build a cash flowing business. Recent acquisition of the SDA Plant and the El Dorado Mine is the first step. El Oro is the flagship asset, and an integral part of the overall growth strategy; a district scale gold project encompassing a prolific high-grade gold-silver epithermal vein system in Mexico.
Xali Gold Corp.
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Xali Gold Corp.'s Bulletin

Xali Gold Corp. (TSXV:XGC) ("Xali Gold” and/or the “Company”) is pleased to advise that the company has signed a new Exploration and Production Agreement (“EPA”) with Ingenieros Mineros, S.A. de C.V. (“IMSA”) on the El Dorado Gold-Silver Project, located in Nayarit State, Mexico. The EPA gives Xali Gold the right to explore and produce gold, silver and other metals for life of mine. Under the EPA, Xali Gold has the obligation to pay IMSA the following (all amounts are in US$): $30,000 per year until the commencement of commercial production, maximum of 5 years; A minimum of US$60,000 per year after 5 years or upon commencement of production; During commercial production a net smelter royalty (“NSR”) of: 3.5% until payments reach an aggregate amount of $350,000; of which $200,000 is payable in cash and $150,000 in XGC shares (using a 30 day VWAP (volume weighted average share price)) 3.0% to an aggregate of $600,000 2.5% to an aggregate of $850,000 1.0% through the Life of Mine/Operations All annual payments are to be credited towards the NSR payments Once in production, mineralization is planned to be processed in the nearby SDA plant under acquisition from Magellan Acquisitions. In preparation for production, Xali Gold is actively preparing the requisite permit applications as well as those required to conduct precursor exploration activities. Planned exploration activities will include re-establishing underground access for mapping, rock chip and bulk sampling with a goal of defining high grade zones. The EPA replaces Xali Gold’s right to assume the rights and obligations of a previous Lease Agreement between Magellan Acquisitions and IMSA which had a fixed 5 year term and a 3.5% NSR payable for all years to IMSA. Ongoing and Completed Activities 3D ModellingA 3D geological model has been constructed in Leapfrog to assist in drill planning. The model has identified high grade mineralization occurring in multiple parallel veins at a spacing close enough to potentially access several veins via common development workings. This could significantly reduce costs of development work. Drilling along with underground sampling is planned to test potential lateral extensions to the high-grade zones and to better define plunging mineralization shoots. Please see https://xaligold.com/projects/mexico/western-mexico/el-dorado-western-mexico/overview-1/ to view the model. PermittingDrill Permit applications are in progress and are expected to take 3 to 4 months to receive from the date of submission. Permit applications are also being prepared for the reopening of the historical El Hundido Mine and should take 6 to 10 months from the date of submission to receive. With the signing of the EPA, we look forward to re-establishing surface rights agreements to complete the permitting process. Planned Activities Underground Rehabilitation, Mapping and SamplingWith the EPA in place and renewal of surface rights agreements forthcoming, Xali Gold will now be able to re-establish access to old workings in the historic El Hundido and El Dorado Mines for the purposes of mapping, sampling and eventual operations. The planning and implementation of this work has been augmented by the company’s development of a Leapfrog model which will allow for a more targeted approach to defining high grade zones underground. Sampling results will then be integrated back into the implicit Leapfrog model which will seamlessly update according to the new data and form the basis for drill planning. The El Dorado Property Location, Geology and MineralizationThe El Dorado Gold-Silver Project is located in the Pacific Coastal Plain, State of Nayarit, 50 km south of the SDA Plant, which Xali Gold has an option to purchase from Magellan Acquisition Corp., 70 km north-northwest of Tepic, the state capital, and 180 km southeast of Mazatlan, Sinaloa. The project has excellent road and rail infrastructure. The El Hundido and El Dorado mines occur within The El Dorado vein trend which extends over a strike length of 3.5 km with widths exceeding tens of meters containing numerous parallel veins and vein breccias. In addition, high level silicification and argillic alteration on surface indicate depth potential to the mineralizing system. For these reasons, exploration potential outside of the area of historical mining and Prospero Silver Corp.’s (“Prospero”) (previous operator) drilling is believed to be excellent. (“Magellan Gold Corporation, Form 10-K Annual Report US SEC dated Dec 31, 2018, File No. 333-174287”) Available in https://xaligold.com/site/assets/files/5806/sda-plant-and-el-dorado-annual-report-magellan-copy.pdf Both the north-easterly striking as well as east-west striking splits of the main structure exhibit structural complexity and potential for multi-meter wide precious metal mineralization. Anomalous base metal assays (100's to 1000's of parts per million lead, zinc and copper) are ubiquitous as evidenced by the common occurrence of visible galena, sphalerite and chalcopyrite in outcrop and dumps. The El Dorado vein system has a history of small-scale mining from two veins in the El Hundido and El Dorado mines (see News Release April 28, 2020 https://xaligold.com/news-releases/candente-gold-announces-new-growth-strategy-2632/) but four veins with parallel high-grade zones have been delineated in the new Leapfrog model. Additionally, several vein targets have been identified along trend for follow-up exploration. Historical Work Prospero explored the El Dorado property between 2010 and 2011. Their drilling intersected multiple steeply-dipping silicified mineralized zones extending from near-surface to the 180 metre (“m”) drilled depth and over a strike length of 440m. Prospero intersected grades ranging from 3 to 40 grams per tonne (“gpt”) gold and 57 to 500 gpt silver over true widths ranging from 0.52 to 11.2 m. (https://xaligold.com/site/assets/files/5802/sedardoc4391012.pdf) Significant results reported by Prospero on Dec 10, 2010 included:16.17m grading 4.03 g/t gold, 204 g/t silver, 4.0% lead, and 1.75% zinc; and 2.32m grading 6.04 g/t gold and 140 g/t silver in hole DOR-10-11. (https://xaligold.com/site/assets/files/5805/prospero-nr--december-10--2010.pdf) Mineralization in the El Hundido historical mine area was reported to range from 1.45 to 11.22m (true widths) and given economics at the time (1900 to 1983) grades mined are assumed to have exceeded 10 gpt gold. Drill intersections near the edges of the mined areas show grades of 49.8 gpt gold over 3m; 13.9 gpt gold over 1.45m and 8.6 over 2.3m. The following longitudinal section by Prospero shows the drilling pattern along the El Dorado vein in the area of the Hundido and El Dorado mines, along with summary drill hole intersection grades and widths. (Prospero News Release dated June 22, 2011 https://xaligold.com/site/assets/files/5804/prospero-nr-june-22--2011.pdf). Figure 1 is available at https://xaligold.com/site/assets/files/5494/el-dorado-vein_long-section.pdf About Xali Gold Xali Gold has launched a comprehensive growth strategy to build a cash flowing business platform and gain access to properties with near surface exploration potential while maintaining El Oro as its flagship asset and an integral part of the overall growth strategy. The acquisition of the SDA Plant, the El Dorado historic mines and the Cocula Project signify important initial steps. The Company is currently evaluating other properties that are complementary to the SDA plant, El Dorado and the Cocula Project. Joanne C. Freeze, P.Geo., President, CEO and Director and Matthew Melnyk, CPG., Director Operations and Director are Qualified Persons as defined by National Instrument 43-101 for the projects discussed above, however, they have not been able to visit the El Dorado Project nor the SDA Plant recently due to COVID virus travel restrictions. The work discussed in the News Release is either historical and documented by public records or conducted by Mexican professionals with qualifications similar to those of QP’s registered in Canada. Ms. Freeze and Mr. Melnyk have reviewed and approved the contents of this release. Neither the TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release. Xali Gold is dedicated to being a responsible Community partner.
After several large gold purchases by Poland and Hungary, the Central and Eastern Europe region now accounts for 17% of total global central bank gold purchases over the last three years, according to the World Gold Council. "Decisions to purchase gold were strategic in nature, taking into account the rapid structural changes in the global economy, such as shifts in the international financial system and global consequences of the pandemic," said Tatiana Fic, director of Central Banks and Public Policy at the World Gold Council. In March, Hungary's central bank tripled its gold reserves to a historic high of 94.5 tonnes. This comes after the country's 10-fold increase in gold holdings in Q4 of 2018. The next on WGC's list is Poland, which also increased its gold holdings dramatically over the last three years. The National Bank of Poland bought 25.7 tonnes in the second half of 2018, and then another 100 tonnes in the second quarter of 2019. The latter purchase is still the largest global single gold purchase of the last decade, noted Fic. "The strategic decision by the NBP to more than double its reserves was driven by the bank's objective to diversify the geopolitical risk and strengthen the buffer protecting the country's financial stability," she wrote on Monday. Serbia has also made headlines with its more gradual gold accumulation, as it added around 0.2 tonnes of gold per quarter since 2011. In 2019, the pace of purchases accelerated with a 9.2 tonnes acquisition in Q3 of 2019 and then another 3.5 tonnes in Q4 of 2020. "The key driver behind these purchases was to shore up the stability of the Serbian financial system during a time of uncertainty and to guard against the heightened risk of a global crisis," Fic said. She added that the increased interest in gold from the Central and Eastern Europe region would not end here. "NBP Governor Glapinski has recently announced that Poland may buy another 100 tonnes of gold over the next couple of years. Serbia, if it continues its policy of gradual acquisition of gold, may also continue adding small amounts of gold to its reserves. Thus, the CEE region may continue to be an important center for central bank gold activity in coming years." The COVID-19 pandemic will continue to be an important trigger for wanting more exposure to gold as the Central and Eastern European central banks look for protection. "The unprecedented response of monetary and fiscal policies to the pandemic has resulted in sharp increases in government debts and rising inflationary pressures, bringing to the fore the role of gold as a safe haven and a long-term store of value," Fic explained. source: https://www.kitco.com/news/2021-04-20/Central-and-Eastern-European-central-banks-are-buying-up-gold-citing-rapid-structural-changes-in-the-global-economy-WGC.html
Recent Corrective Action Ignores the Fundamentals Since gold’s intraday August 7, 2020, high of $2,075 per ounce, the metal has retreated 21.49% to $1,708 as of March 31, 2021. Precious metals mining equities declined 23.56% over the same period. Eight months of corrective action has occurred despite solid and visible strengthening fundamentals for gold, leaving proponents of gold to wonder what they are missing. "Which snowflake triggers an avalanche? What you need to know is that the massive buildup of systemic risk since 2008 is largely underappreciated." Missing, in our opinion, are the yet unseen consequences from extreme financial asset valuations supported by the rapid expansion of new public and private sector debt. Economic nirvana, founded on path-dependent monetary and fiscal policy, is impossible. The punchbowl cannot be taken away without wrecking the economy and the markets. Public servants are unwilling and incapable of doing so. Intoxicants will most likely disappear for unforeseen reasons. We believe that gold senses adverse outcomes long before they have been articulated. Four familiar refrains explain gold’s recent correction: 1. Rising interest rates. Gold has been battered by the gale of microscopic advancements in U.S. 10-year Treasury yields and the expectation of higher yields to come. Rate increases are viewed as a “healthy” sign that all is well with the economic recovery. Scant consideration is given to systemic risks stemming from indigestion of the oversupply of new U.S. Treasuries relative to the lack of buying interest from traditional investors. Little thought seems to be given to the possibility that higher interest rates could short circuit the economic recovery. As noted by MacroMavens (3/22/2021), economic sensitivity to “rate increases move alongside the total level of debt. If debt levels double, for example, the interest rate required to precipitate a crisis should be around half of what it was previously. As it turns out, total non-financial debt in the U.S. today is roughly double what it was at the end of 2006 ($61 trillion vs. $30 trillion when the housing bubble began to deflate). It goes without saying that the reason why financial and economic crises have been occurring at successively lower and lower levels of interest rates is that we, as an economy, have been taking on ever-increasing amounts of debt.“ Rate increases, as minuscule as they may be, may have little room to rise before triggering another financial crisis. 2. Exposure to gold could dilute strong returns achievable in financial assets. Secular bull markets in equities and bonds dull investor interest in risk mitigation. As noted by Simon Mikhailovich of TBR (The Bullion Reserve, 3/1/2021), “gold is behaving exactly like insurance should behave — rising and falling with confidence and catastrophic risk perceptions.” The 2020 peak in gold was driven by acute concern over potential damage from the COVID-19 global pandemic. News of vaccine efficacy opened the door for projections of robust economic growth in 2021. Risk perceptions retreated along with the gold price. However, equity and fixed income valuations stand at all-time highs, with many metrics ranking at 100% of historical experience. As noted by David Rosenberg (Rosenberg Research, 3/29/2021): “proliferation of IPOs [initial public offerings], retail participation, leverage, liquidity and SPACs [special purpose acquisition companies] should be a concern with anyone who has a keen sense of the history of what speculative-driven markets look like.” At moments of maximum valuation, risk is highest and perception of it is lowest. According to the March 18 SentimenTrader (quoted in The Belkin Report, 3/22/2021): “By the end of last week, nearly 100% of traders were in a risk-on mode. A risk-on mentality has been so strong that the 50-day average of the aggregate indicator has climbed to 90.5%....Our backtest engine shows that when the 50-day average has been this high, future returns have been poor.” As famously noted by Bob Farrell,* markets are mean reverting. Upside overshoots in valuation lead to overshoots on the downside. (See Bob Farrell's 10 Rules.) 3. Bitcoin is the new gold. Bitcoin has diverted money flows from gold. Perhaps the 2020 August peak in gold would have been $200-$300 ounces higher without speculation that Bitcoin will displace gold. A persuasive Grant’s Interest Rate Observer essay, "Bitcoin Goes to Wall Street," suggests otherwise: “There will be a crash as Bitcoin is a bubble…Stripped of its monetary pretensions, Bitcoin will revert to its legacy role as a crypto version of a Western Union International wire transfer.”2 Bitcoin is internet dependent. If Australia was able to silence Facebook for incurring government displeasure, what are the implications for digital currency payments that escape the tax collector? Bitcoin price behavior is indicative of epic speculation. Little difference can be seen in Figure 1 which overlays the price patterns of Bitcoin and Tesla. The movement towards digital currencies is inexorable and will tighten the government’s grip on taxpayers. Gold is physical property. It stands alone as an off-the-grid store of value with minimal counterparty risk. Gold's usefulness in transactions was written out of the script for a century. Few proponents would argue that the metal's value depends on utility for routine day-to-day payments. On the other hand, blockchain technology holds favorable implications for gold. Digitization of almost anything is possible. Digital gold tokens for those who wish to transact in the metal already exist and could come into wide use by the end of this decade. More important, blockchain will connect lenders and borrowers, allowing owners to earn interest on their physical holdings. Figure 1. Price Patterns of Bitcoin and Tesla (2018-2021) Source: Bloomberg. Data as of 3/31/2021. 4. Strong economic growth will significantly reduce and possibly negate systemic risk concerns implied by unprecedented public and private sector leverage. Consensus is united on this — typical is the quote from Cornerstone Macro: “The March U.S. Markit Services PMI added 0.2 percentage points to 60.0%, its highest level since July 2014, with the future output index jumping 5.2 percentage points to 72.7%, its highest-ever level. Strength was broad based: employment (+2.0 percentage points), new orders (+0.6 percentage points ). Note: services include travel & tourism, the sectors hardest hit by the outbreak. February’s pullback represents a temporary — likely supply-chain driven — pause in the long-term manufacturing rebound. Manufacturing will continue to be an important driver of activity this cycle. And it’s not just high-profile auto demand — it’s a healthy U.S. domestic CAPEX cycle and an improving trend in exports, supported by China’s ongoing recovery. And tailwinds from the U.S. Manufacturing Renaissance/onshoring theme will continue. They have a long way to run.” Central to this view is faith that monetary and fiscal policy support extends as far as the eye can see. Referring back to Farrell, “When all the experts and forecasts agree, something else is going to happen.” The time to be bullish was exactly one year ago when fear was pervasive. Bullish arguments like the one above are long in the tooth. Data that falls short of consensus is brushed aside, for example, harsh weather, a colossal ship aground in the Suez Canal, seasonality or a shortage of semiconductors leading to disappointing car sales. Surging economic strength is old news, priced into sky-high valuations and in our opinion likely to prove short lived. The Chinese PMI (purchasing managers index) is rolling over, emerging market economies are sputtering, Europe remains in pandemic semi-lockdown and the bloom of the “commodity supercycle” is fading. The Market Bubble Will End Badly Our contrarian view is that the market bubble will end badly. “Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways (Farrell's Rule #4). Well chronicled are the risks implied by record valuations ("Bubble Deniers Abound to Dismiss Valuation Metrics," Bloomberg, March 27, 2021). In our opinion, a bear market is the single most critical catalyst missing to revive interest in gold. The multi-billion Archegos Capital Management margin call exemplifies the reckless use of leverage likely seen only as markets top. The episode is most likely not an isolated event. There is never just one cockroach. Losses to hedge funds and their prime brokers will get little political sympathy, but a wipeout of small investors will attract close scrutiny from Washington D.C. Bear markets progress in three stages (Farrell's Rule #8) — a sharp drop, an oversold bounce and a protracted grind lower as fundamentals deteriorate. The last grinding bear market took place in the 1970s. Few active investors today recollect the experience of a decade-long march lower in prices that led to a sea of change in attitudes, expectations and psychology. Sharp selloffs since the 1970s have been short circuited by monetary interventions and caused any potential bear market to be still born. The “buy the dip” mentality has been programmed into investor reflexes. Repeated reliance on easy money to quell market selloffs has neutered public policy. The Fed has become “path dependent,” both arsonist and firefighter, as explained from time to time in Grant’s Interest Rate Observer.3 Faith in central banker omnipotence is the cornerstone of the financial asset super bubble. For the time being, the Fed tolerates rising rates on Treasuries because it believes the baton has been passed along to fiscal policy. The Biden administration obliges. Expectations for economic growth based on dramatic increases in government spending seem boundless. As noted by Andy Kessler (The Wall Street Journal, 12/6/2020): “Expect more multiplier mumbo jumbo as the Biden administration begins its tax-and-spend fiesta….Multipliers are a canard, a Keynesian conceit.” The economy is bouncing back from the pandemic-induced recession, as it tends to always bounce back from a downturn. But there is good reason to think that this post-recession bounce is sustainable. The marginal utility of debt stimulus is subject to the law of diminishing returns. Odds are strong that the bounce will fizzle and open the door to even greater debt creation that the market cannot digest at submarket interest rates. Inflation or Deflation? Gold Performs Well Either Way Either inflation or deflation seems possible at this moment. A strong case can be made for both. Gold exposure wins out either way. We are quite confident that if central bankers achieve their desired 2% inflation, it will not be transitory or easily dispatched. “I can tell you that we have the tools to deal with that risk (inflation) if it materializes,” said Janet Yellen, U.S. Secretary of the Treasury. Policymakers are omniscient and all powerful, Yellen would have us believe. Credulous markets swallow this nonsense for now. As noted by Joseph C. Sternberg (The Wall Street Journal, "What Inflation Debates Miss: Inflation," February 11, 2021): “Inflation in the academic and policy jargon has come to mean a specific event: a rapid run-up in consumer prices.” In Sternberg’s view, the too narrow CPI (consumer price index) goalposts do not capture the essence of inflation, including deep social, political, and psychological aspects. “Malfunctioning price signals (read: inflation) make it impossible for a society to allocate its resources with any rationality or fairness.” Tame CPI (consumer price index) readings are blind to the “phenomenal bid-up in prices for financial assets,” which “wreck the value of and income from” the savings of investors. The seeds of inflation have already taken root. Indices designed and maintained by high IQ government bureaucrats (such as CPI, PCE (personal consumption expenditures), Core PCE, WPI (wholesale price index), etc.) will sound the alarm too late for the Federal Reserve to gently tap the brakes. The deflation case rests on the idea that overreliance on debt issuance for economic stimulation causes inescapable economic lassitude. According to Lacy Hunt of Hoisington Investment Management Company, “public and private debt in the United States rose last year to 405.9% of GDP [gross domestic product], up from 365.9% in 2019.” Overuse of debt becomes a “persistent drag” on economic activity because of ever-increasing amounts of resources that must be consumed for debt service. Hunt believes that government stimulus has become counterproductive to economic growth. That view seems to pass the test of common sense and extensive historical data supports Hunt's view. Gold and gold mining shares performed well in the inflationary 1970s and the deflationary 1930s. Monetary disorder leading to capital destruction was the common thread. The Deflationary 1930s The 1930s deflation was characterized by an extended severe economic contraction (The Great Depression). The famous market crash was preceded by the rash speculation, unchecked optimism of the 1920s and excessive leverage. The Fed tightened monetary policy during the downturn to make matters worse. The fall in the general price level does not capture the essence of deflation. The essence was a general collapse in confidence leading to cascading credit defaults. Loss of confidence in financial conventions led to sweeping political change and monetary debasement in the form of dollar devaluation vs. gold. Interest rates crashed while gold appreciated 70% and gold stocks became market favorites. The Inflationary 1970s The inflationary 1970s were set off by the Vietnam War and amped up social spending deficits abetted by easy money policies of a politically pressured Federal Reserve. Monetary debasement took the form of consumer price inflation which destroyed capital, particularly for debt investors. Interest rates soared and gold rose nearly 24 fold4 in nominal terms. Capital losses in real terms were disguised by a rise in the general price level. Gold stocks became market favorites. Prolonged austerity forced a rise in savings and was the cure in both historical cases. World War II imposed a moratorium on consumer spending resulting in the buildup of savings, pent-up consumer demand and a post-war boom. The Volcker prescription of ultra-tight monetary policies triggered a politically unpopular protracted recession during which savings increased and savers were rewarded by high real interest rates. A secular bull market followed. Which Snowflake Triggers an Avalanche? What will trigger the next financial crisis? Which snowflake triggers an avalanche? What you need to know is that the massive buildup of systemic risk since 2008 is largely underappreciated. From "Fixed-Income Powder Keg" (Grant’s Interest Rate Observer, 3/19/2021)5: “When you suppress one market artificially, as they have the rate market, the volatility that is normally expressed there — goes somewhere else.” The origin of the next financial crisis, whatever it turns out to be, will be sourced in financial dementia. As noted by economist John Kenneth Galbraith, “there can be few fields of endeavor where history counts for so little as in the world of finance....The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version. All financial innovation involves, in one form or another, the creation of debt secured in greater or lesser adequacy, by real assets.” (A Short History of Financial Euphoria, 1994). Gold is the Obvious Answer Defensive investment strategies are few and far between. Fixed income, debased by artificially low rates, no longer passes muster. Selling volatility to generate income seems like a form of insanity. Gold is the obvious answer. Whether in physical form or precious metals mining shares sporting good dividend yields and trading at depressed valuations, we believe this unwanted investment strategy will prove seaworthy for all conditions. Bob Farrell’s 10 Rules for Investing Bob Farrell, the legendary Merrill Lynch market strategist, compiled 10 Rules for Investing which offer timeless and timely advice for today’s markets.1 Markets tend to return to the mean over time. Excesses in one direction will lead to an opposite excess in the other direction. There are no new eras — excesses are never permanent. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways. The public buys the most at the top and the least at the bottom. Fear and greed are stronger than long-term resolve. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names. Bear markets have three stages — sharp down, reflexive rebound and a drawn-out fundamental downtrend. When all the experts and forecasts agree — something else is going to happen. Bull markets are more fun than bear markets. Source: Bob Farrell’s 10 Rules. SOURCE: https://sprott.com/insights/sprott-gold-report-the-gold-investment-thesis-revisited/#
Xali Gold Corp. (TSXV:XGC) ("Xali Gold” and/or the “Company”) is pleased to advise that permit applications have been submitted for the Mexico Mines Tailings Project in El Oro, Mexico. The permits are to allow both the transportation and re-processing of the Mexico Mine tailings at a new plant site located just 5 kilometers from the current location. Sun River Gold “SRG” and their Mexican subsidiary, Remediacion Rio Sol “RRS”, will be conducting all of the work on the tailings as part of an option agreement to acquire the Tailings Project and Xali Gold's subsidiary, Minera CCM El Oro Jales. A land package comprising 25 hectares has been purchased for the new plant site and the re-processing plant is expected to be operational within 12 months from receiving permits. Extensive laboratory testing has been performed, which was critical in completing design work for the plant and preparing detailed planning documents. “We are very excited with the work that SRG has completed to advance the Tailings Project,” says Joanne Freeze, President and CEO of Xali Gold. “There have been some delays due to government closures during the COVID pandemic, but the project is now moving forward and we are very excited to the re-processing getting into operation.” In addition to laboratory test work, SRG has also completed the following work in preparation for the operation: Design of the plant site Mine plan of tailings indicating extraction levels over the years Developed a contour map demonstrating resulting topography of municipal land once tailings are removed Engaged power contractor to upgrade and extend power lines to site Secured access across private land for roads and power lines Secured access to water from local sources Xali Gold's subsidiary, CCM El Oro Jales, has an agreement with the municipality of El Oro which provides the Company the right to recover all available gold and silver from the Mexico Mines tailings deposit and pay to the Municipality of El Oro an 8% Net Profits Interest ("NPI"). Xali Gold will also retain the first US$1.5M from the 8% NPI payable to the Municipality. SRG has the option to acquire 100% of the Tailings Project by making staged payments totalling US$500,000 (paid), bringing the tailings into commercial production within 36 months of the effective date of the option agreement, and granting to the Company a 5% NPI, Life of Mine royalty as well as the Municipalities 8% NPI on production from the properties. The 36 month term has been extended for 6 months providing that SRG demonstrates sufficient progress during each 3 month period. The Mexico Mine Tailings contain an Inferred Resource* of 1,267,400 Tonnes grading 2.94 Au g/t, 75.12 Ag g/t containing 119,900 ounces of gold and 3,061,200 ounces of silver. *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, P.Geo. and Allan Reeves, P.Geo., dated August 25, 2014 with an effective date of July 8, 2014 (the “Technical Report”) available at www.sedar.com and http://www.candentegold.com/i/pdf/reports/CDG_NI43-101-Inferred-Mineral-Resource-Mexico%20Mine-Tail.pdf. About Xali Gold Xali Gold has launched a comprehensive growth strategy to build a cash flowing business platform and gain access to properties with near surface exploration potential while maintaining El Oro as its flagship asset and an integral part of the overall growth strategy. The acquisition of the SDA Plant, the El Dorado historic mines and the Cocula Project signify important initial steps. The Company is currently evaluating other properties that are complementary to the SDA plant, El Dorado and the Cocula Project. Joanne C. Freeze, P.Geo., President, CEO and Director and Matthew Melnyk, CPG., Director Operations and Director are Qualified Persons as defined by National Instrument 43-101 for the El Oro project. Ms. Freeze and Mr. Melnyk have reviewed and approved the contents of this release. Neither the TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release. Xali Gold is dedicated to being a responsible Community partner. Forward-looking Information This news release may contain forward-looking information (as such term is defined under Canadian securities laws) including but not limited to the mineral resource estimate for the Mexico Mine Tailings and information regarding references to historical resource estimates, the potential for discovery on the El Dorado Property and in the El Oro district and other statements that are not historical facts. While such forward-looking information is expressed by Xali Gold in good faith and believed by Xali Gold to have a reasonable basis, they address future events and conditions and are therefore subject to inherent risks and uncertainties including those set out in Xali Gold’s MD&A. Factors that cause the actual results to differ materially from those in forward-looking information include, without limitation, gold prices, results of exploration and development activities, regulatory changes, defects in title, availability of materials and equipment, timeliness of government approvals, potential environmental issues, availability of capital and financing and general economic, market or business conditions. Xali Gold expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. On behalf of the Board of Xali Gold Corp. “Joanne Freeze” P.Geo.President, CEO and Director For further information please contact:Joanne FreezePresident & CEOTel: + 1 (604) 689-1957info@xaligold.com