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 Mexico Mine tailings deposit 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 Mexico Mine Tailings Project at El Oro, 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.
Sun River Gold (“Sun River”) has the option to acquire 100% of the Tailings Project from Xali Gold by making staged payments totalling US$300,000 (paid), bringing the tailings into commercial production by October 31, 2021, and granting to the Company a 10% NPI, Life of Mine royalty as well as the Municipality’s 8% NPI on production from the properties. Sun River reduced the NPI payable to the Company to 5% by paying an additional US$200,000 to Xali Gold. Sun River must make all agreed to NPI payments to the Municipality.
Sun River is a private Arizona based corporation managed by an experienced team of mining professionals with a combined 80 years of mining experience in Mexico, including specific experience in the reprocessing of old gold and silver tailings. Sun River has advised the Company that it has completed a preliminary internal engineering study (“Internal Study”) for the Mexico Mine Tailings Project, and that it intends to continue development of the project with the objective to enter commercial production.
*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.