Xali Gold Corp. has commenced engineering studies to update the Feasibility Study for its Pico Machay Gold Project originally completed in 2009. Adam Johnston, FAusIMM, CP(Met), of Transmin Metallurgical Consultants has been engaged to help assemble the engineering team and oversee mineral processing, metallurgical testing and recovery optimization, which are key components for the updated Feasibility Study.
Work will begin with an updated Mineral Resource Estimate followed by revised capital and operational cost estimates and economic analysis based on long-term gold and silver prices to be presented in a Preliminary Economic Assessment. Initiating these studies at this stage, allows the Company to commence the EIA-d (?Detailed Environmental Impact Assessment?), which is the longest lead-time component for permitting any mining operation in Peru, typically requiring 12 to 24 months. Concurrently, additional metallurgical testwork will be undertaken to support the Feasibility Study.
The Company will further refine exploration targets for drilling once permits are secured. The Company is assembling an Experienced Peruvian Engineering and Operations team to support the efficient advancement and de-risking of the Project to bring Pico Machay into production in a timely and responsible manner. The Company is also announcing that Phase I of the systematic relogging of historical reverse-circulation drill cuttings, documenting lithologies, alteration and mineralization, as well as a detailed review of all assays, descriptive data and interpretations, key work required to update the resource and improve the understanding of controls on mineralization, is complete.
The work commenced in January 2026 and will allow the Company to refine the geological model, better define controls on mineralization, and support mine planning and economic studies as the Project advances through the next stages of technical evaluation. Located within the Southern Peru Epithermal Gold-Silver Belt, Pico Machay sits in a historically productive mining district in the Western Cordillera Andes. The Project benefits from existing infrastructure and a mining-friendly community eager to partner on sustainable development.
Pico Machay hosts a Historical Measured and Indicated Resource of 264,600 ounces of gold (10.6 million tonnes grading 0.78 grams per tonne gold) and an additional Historical Inferred Resource of 446,000 ounces of gold (23.9 million tonnes grading 0.58 grams per tonne gold). A total of 154 reverse circulation holes drilled prior to 2009, were relied upon to delineate the Historical Resource. All of these holes were drilled in a central zone while nine additional high-potential exploration targets remain untested.
Various historical engineering studies at Pico Machay targeted an open pit heap-leach operation, which was expected to be low-cost and with a low strip ratio. Given that those studies were based on a long-term gold price of $700/oz and several exploration targets remain untested, Xali Gold considers the upside potential to be very strong. Information regarding the historical resource at Pico Machay is outlined in the technical report titled: ?Amended Technical Report on the Pico Machay Gold Deposit in Huancavelica Province, Peru?
prepared by David G. Thomas, P.Geo. for Xali Gold dated December 16th, 2025 and filed on www.sedarplus.ca as well as the report titled: ?Independent Technical Report and Resource Estimate Pico Machay Gold Deposit? prepared by Caracle Creek International Consulting Inc. for Aquiline Resources Inc. (purchased by Pan American Silver) on November 25th, 2009.
All resource estimates have used the same categories in accordance with CIM Standards on Mineral Resources and Reserves. All resource estimates for Pico Machay are considered historical in nature and are based on prior data and reports prepared by previous property owners. A qualified person (?QP?) has not done sufficient work yet to classify the historical estimates as current resources in accordance with current CIM categories and the Company is not treating the historical estimates as current resources.
The QP considers the historical estimates to be relevant as they were prepared using industry-standard estimation methodologies, reporting categories, and technical practices commonly relied upon by mining companies and other issuers for comparable mineral projects. Significant data compilation, redrilling, resampling and data verification may be required by a qualified person before the historical estimates on the project can be classified as a current resource. There can be no assurance that any of the historical mineral resources, in whole or in part, will ever become economically viable.
In addition, mineral resources are not mineral reserves and do not have demonstrated economic viability. Even if classified as a current resource, there is no certainty as to whether further exploration will result in any inferred mineral resources being upgraded to an indicated or measured resource category. Resources were estimated using historical drilling (up to 2004) and current drilling (drilled between 2004 and 2008).
The resource estimate includes holes up to Hole ABS-246, drilled in 2008. Micromine software (Version 11.0.4) was used to facilitate the resource estimating process and the estimate was prepared in accordance with CIM Standards on Mineral Resources and Reserves. Mineralized zones were outlined to enforce geological control during block modelling.
The geological continuity of the broader mineralized zones, especially for the main zone, was quite good and could be readily followed from hole-to-hole and section-to-section. An average specific gravity (rock density) value, based on eleven samples, of 2.31 was used. A block model was created, constrained by the zone wireframes.
Blocks in the Inferred category were defined based on search ellipse parameters with a range of 40m. Blocks in the Indicated and Measured categories were identified manually, based on drill intercepts spacing values of 27 and 20m, respectively. Ordinary block kriging was used to estimate block grades.
