Xali Gold’s subsidiary, CCM El Oro Jales, has an agreement with the municipality of El Oro, Mexico which provides the Company the right to recover all available gold and silver from the El Oro Mexico Mine tailings deposit ("El Oro Tailings Project") and pay to the Municipality of El Oro an 8% Net Profits Interest (“NPI”). Xali Gold also retains the first US$1.5M from the 8% NPI payable to the Municipality. Xali Gold also has a right of first refusal on three other tailings deposits held by the El Oro Municipality.
The El Oro Tailings Project has an Inferred Resource* estimated to comprise 1,267,400 Tonnes grading 2.94 grams per tonne (“g/t”) gold and 75.12 g/t silver containing 119,900 ounces of gold and 3,061,200 ounces of silver.
In April 2024, Xali Gold signed a Letter of Intent to enter a Purchase Agreement with Kappes, Cassiday & Associates ("KCA") on the El Oro Tailings Project. In order to earn 100% interest in the El Oro Tailings Project, subject to royalty payments outlined below, KCA has agreed to:
- pay US$25,000 upon signing (paid)
- pay an additional US%25,000 three months after signing
- pay US$100,000 six months after signing
Terms of the Royalty Payment are as follows:
- once production begins, KCA will pay Xali Gold a gross royalty equal to 4% of the sales income ("NSR") received from the gold and silver produced, less any royalties due to others (the Municipality of El Oro), but in no case less than a 3% gross royalty
- KCA has the right to buy a 1% royalty for US$1,000,000
- KCA will make minimum royalty payments of US$50,000 every six months commencing six months from signing the LOI agreement, until a total royalty payment of US$1,000,000 has been paid, but royalty payments on production will continue pas that point
- KCA will also be obligated to pay the Municipality of El Oro an 8% NPI on production
- Xali Gold has the right to receive the first US$1.5M from the Municipality's 8% NPI
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About KCA
Since 1972, KCA has provided process metallurgical services to the international mining industry. KCA specializes in all aspects of heap leaching, cyanide processing, laboratory testing, project feasibility studies, engineering design, construction and operations management. KCA has worked in Mexico for many years and maintains an office in Chihuahua to serve its Mexican consulting clients. While the El Oro Tailings Project will be KCA's first entrepreneurial mining venture in Mexico, KCA owns a gold mining project in neighboring Guatemala and looks forward to making a success of the El Oro Tailings Project.
*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 available at www.sedar.com.