Pico Machay is a high-sulphidation gold deposit that lies within the northern extent of the Southern Peru Epithermal Gold-Silver Belt and has a Historic Measured and Indicated Resource of 264,600 ounces of gold and an additional Historic Inferred Resource of 446,000 ounces of gold (refer to Historic Resource Section for details).  Drilling to date has focused primarily on a central zone, leaving nine additional high-potential exploration targets untested. 

Pico Machay covers 4,700 hectares and was discovered in 1997.  The Project was explored by several juniors including Aquiline Resource Inc ("Aquiline") through 2009, that completed various engineering studies including resource estimations and metallurgical testwork.  These studies targeted an open pit heap-leach operation, which was expected to be low-cost and with a low strip ration.  Given that Aquiline's engineering work prior to that company's acquisition by Pan American was based on a long-term gold price of $700/ounce and several exploration targets remain untested, Xali Gold believes there is excellent upside potential.

Geologically, Pico Machay occurs within the northern extent of the Southern Peru Epithermal Gold-Silver Belt, which is one of three epithermal gold-silver belts in Peru that are host to world-class gold deposits, including the Yanacocha and Pierina mines.  Minera IRL Ltd.'s Corihuarmi Mine operates 63 km north of Pico Machay.

Logistically, the Project lies in the eastern part of Western Cordillera Andes within the District of Santa Ana, Province of Castrovirreyna and Department of Huancavelica which is a well-established mining area/district since 1563. The Santa Barbara Mine and Julcani Mine have been operating since 1953 by Compania de Minas Buenaventura S.A.A.  There are also currently the following mines with a 45km radius of Pico Machay: Dorita, Lalira, San Genoro, Astohuaraca, El Paloma, Cauduloso and Recuperada.