Xali Gold signs a new exploration and production agreement on El Dorado
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VANCOUVER, British Columbia, May 20, 2021 (GLOBE NEWSWIRE) – Xali Gold Corp. (TSXV: XGC) (“Xali Gold” and / or the “Company”) is pleased to announce that the Company has signed a New Exploration and Production Agreement (“EPA”) with Ingenieros Mineros, SA de CV (“IMSA ”) On the El Dorado Gold-Silver project, located in the state of Nayarit, Mexico. The EPA grants Xali Gold the right to explore and produce gold, silver, and other metals for the life of mine.
Under the EPA, Xali Gold is obligated to pay IMSA the following (all amounts are in US dollars):
- $ 30,000 per year until the start of commercial production, maximum of 5 years;
- A minimum of USD 60,000 per year after 5 years or at the start of production;
- During commercial production, a net smelter royalty (“NSR”) of:
- 3.5% until payments reach a total amount of $ 350,000; of which $ 200,000 payable in cash and $ 150,000 in XGC shares (using a 30-day VWAP (volume-weighted average share price))
- 3.0% for a total of $ 600,000
- 2.5% for a total of $ 850,000
- 1.0% over the life of mine / operations
- All annual payments must be credited to NSR payments
Once in production, the mineralization is expected to be processed at the nearby SDA plant being acquired from Magellan Acquisitions. In preparation for production, Xali Gold is actively preparing the required permit applications as well as those required to conduct precursor exploration activities. Planned exploration activities will include re-establishing underground access for mapping, rock chips and bulk sampling with the goal of defining high grade zones.
EPA replaces Xali Gold’s right to assume the rights and obligations of a previous lease agreement between Magellan Acquisitions and IMSA which had a fixed term of 5 years and an NSR of 3.5% payable for all years to IMSA.
Ongoing and completed activities
3D modelingA 3D geological model was built in Leapfrog to aid in drilling planning. The model identified high-grade mineralization occurring in multiple veins parallel to a spacing close enough to potentially access multiple veins through joint development work. This could significantly reduce the costs of development work. Drilling as well as underground samples are planned to test the potential lateral extensions towards the high-grade zones and to better define the plunging mineralization shoots. Please watch https://xaligold.com/projects/mexico/western-mexico/el-dorado-western-mexico/overview-1/ to display the model.
To permitApplications for drilling permits are pending and are expected to take 3-4 months from the date of submission. Permit applications are also being prepared for the reopening of the historic El Hundido mine and are expected to take 6-10 months from the date of submission. With the signing of the EPA, we look forward to reinstating surface rights agreements to complete the permitting process.
Underground rehabilitation, mapping and samplingWith the EPA in place and the renewal of surface rights agreements pending, Xali Gold will now be able to restore access to the old workings of the historic El Hundido and El Dorado mines for mapping purposes, sampling and possible operations. The planning and implementation of this work has been strengthened by the company’s development of a Leapfrog model that will allow a more targeted approach to defining high grade underground zones. The sampling results will then be fed back into Leapfrog’s implicit model which will transparently update based on the new data and form the basis for drilling planning.
El Dorado property
Location, geology and mineralizationThe El Dorado Gold-Silver project is located in the Pacific Coastal Plain in Nayarit State, 50 km south of the SDA plant, which Xali Gold has an option to purchase from Magellan Acquisition Corp., 70 km north-northwest of Tepic, the state capital, and 180 km south-east of Mazatlan, Sinaloa. The project has excellent road and rail infrastructure.
The El Hundido and El Dorado mines are located in the El Dorado vein which stretches for a length of 3.5 km with widths exceeding tens of meters containing numerous parallel veins and venous breaches. In addition, high level silicification and clay weathering at the surface indicate a depth potential for the mineralization system. For these reasons, exploration potential outside of the historic mining and drilling area of Prospero Silver Corp. (“Prospero”) (former operator) is rated excellent. (“Magellan Gold Corporation, Form 10-K Annual Report US SEC dated December 31, 2018, file number 333-174287”) Available in https://xaligold.com/site/assets/files/5806/sda-plant-and-el-dorado-annual-report-magellan-copy.pdf
The north-east and east-west trending divisions of the main structure exhibit structural complexity and the potential for precious metal mineralization several meters wide. Abnormal base metal dosages (100 to 1000 parts per million of lead, zinc and copper) are ubiquitous, as evidenced by the common occurrence of visible galena, sphalerite and chalcopyrite in outcrops and landfills.
The El Dorado venous system has a history of small-scale mining from two veins of the El Hundido and El Dorado mines (see press release of April 28, 2020 https://xaligold.com/news-releases/candente-gold-announces-new-growth-strategy-2632/) but four veins with parallel high-grade zones have been demarcated in Leapfrog’s new model. In addition, several vein targets have been identified along the trend for follow-up exploration.
Prospero explored the El Dorado property between 2010 and 2011. Their drilling intersected multiple steeply inclined silicified mineralized zones extending from near-surface to the drilled depth of 180 meters (“m”) and over a strike length of 440 mr. Prospero intersected grades ranging from 3 to 40 grams per tonne (“gpt”) of gold and 57 to 500 gpt of silver over actual widths varying from 0.52 to 11.2 m. (https://xaligold.com/site/assets/files/5802/sedardoc4391012.pdf)
Among the significant results reported by Prospero on December 10, 2010: 16.17 m grading 4.03 g / t gold, 204 g / t silver, 4.0% lead and 1.75% zinc; and 2.32 m grading 6.04 g / t gold and 140 g / t silver in hole DOR-10-11. (https://xaligold.com/site/assets/files/5805/prospero-nr–december-10–2010.pdf)
Mineralization in the area of the historic El Hundido mine was between 1.45 and 11.22 m (actual widths) and, according to economic data at the time (1900 to 1983), mined grades exceeded 10 gpt of gold. The drill intersections near the edges of the mined zones show grades of 49.8 gpt gold over 3 m; 13.9 gpt of gold over 1.45 m and 8.6 over 2.3 m.
The following longitudinal section of Prospero shows the drilling pattern along the El Dorado vein in the Hundido and El Dorado mine area, as well as the grades and widths of the rough drill holes. (Prospero press release of June 22, 2011 https://xaligold.com/site/assets/files/5804/prospero-nr-june-22–2011.pdf). Figure 1 is available at https://xaligold.com/site/assets/files/5494/el-dorado-vein_long-section.pdf
About Xali Gold
Xali Gold has embarked on a comprehensive growth strategy to create a cash flow business platform and access properties with near-surface exploration potential while maintaining El Oro as its flagship asset and an integral part of the overall growth strategy. The acquisition of the SDA plant, the historic mines of El Dorado and the Cocula project signify important initial steps.
The Company is currently evaluating other complementary properties at the SDA plant, El Dorado and the Cocula project.
Joanne C. Freeze, P.Geo., President, CEO and Director and Matthew Melnyk, Managing Director, COO and Director are qualified persons within the meaning of NI 43-101 for the projects mentioned above, but they do not ‘have not been able to visit the El Dorado project or the SDA factory recently due to travel restrictions linked to the COVID virus. The work referred to in the press release is either historical and documented in public documents, or carried out by Mexican professionals with similar qualifications to those qualified persons registered in Canada. Ms. Freeze and Mr. Melnyk have reviewed and approved the contents of this press release.
Neither the TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.
Xali Gold is dedicated to being a responsible community partner.
This press release may contain forward-looking information (as that term is defined in Canadian securities laws), including, but not limited to, the mineral resource estimate for Mexico City tailings and information regarding references to historical resource estimates, discovery potential on the El Dorado Property and in the El Oro neighborhood and other statements that are not historical facts. Although such forward-looking information is expressed in good faith by Xali Gold and Xali Gold believes it to have a reasonable basis, it relates to future events and conditions and is therefore subject to inherent risks and uncertainties, including those set forth in Xali Gold’s management report. Factors that cause actual results to differ materially from forward-looking information include, but are not limited to, gold prices, results of exploration and development activities, regulatory changes, title defaults, the availability of materials and equipment, the timeliness of government approvals, the potential for environmental issues, the availability of capital and financing, and general economic, market or business conditions. Xali Gold expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.
On behalf of the Board of Directors of Xali Gold Corp.
“Joanne Freeze” P.Geo.President, CEO and Director
For more information, please contact:Joanne FreezePresidente & CEOTel: + 1 (604) 689-1957[email protected]
Source: Xali Gold Corp.