The San Dieguito de Arriba ("SDA") plant is located in Nayarit, Western Mexico and consists of a flotation plant which also includes a precious metals leach circuit - Merrill Crowe system and associated assets, licenses and agreements. The SDA plant has a ten year operating history at 100 tonnes per day but can be expanded to process mined material at a rate of up to 200 tonnes per day. Historically, its operation has been based on sales of flotation concentrates to smelters, and payment for precious metals content. The SDA plant lies within the rich Sierra Madre Occidental mineralized belt, which historically has yielded millions of ounces of precious metals and offers multiple high grade gold and silver epithermal vein opportunities.
The mill was operational from 2007 (by Minerales Vane S.A. de C.V.) until April 2017, processing material from various operations in the region on a both a profit sharing and toll basis. The toll materials were tested prior to processing to estimate recoveries and concentrate grades. Typical reported recoveries were in the range 85 to 92% for gold and 72 to 77% for silver. The mill operated as recently as February 2019 by Magellan Acquisitions Corp., for processing of a bulk sample of approximately 600 tonnes.
In December 2023, Xali Gold entered into a Rent to Purchase Agreement with a local Mexican company, Grupo Minero WIYA ("WIYA") to operate the SDA Plant. The first payment of US$150,000 was received in full on December 14, 2023. WIYA has completed all the required repairs to get the SDA Plant operational and are conducting bulk sample testing. Operation of the SDA Plant was temporarily put on hold in March 2024, as WIYA was unable to supply sufficient mineralized material to the plant to sell concentrates, receive a study income and make payments to the Company. Therefore, temporary modifications to the Rent to Purchase Agreement were made, whereby WIYA agrees to:
- pay US$45,000 within 15 days of the plant restarting
- pay US$30/ton for each ton processed with bi-weekly minimum payments of US$30,000. Processing is expected to be between 2,700 - 3,000 tons/month
- maintain a minimum of 1,500 tons of mineral at the SDA Plant
The rest of the general terms remain in force and can be found in the December 8, 2023 news release.