Xali Gold sonic drilling El Oro tailings project, Mexico

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Xali Gold Corp. [TSXV-XGC] has commenced a 20-hole sonic drill program on its Mexican mine tailings reprocessing project at El Oro, Mexico. Drilling is being carried out by Major Drilling Group International for the purpose of taking a representative sample, which will be used in metallurgical test work to confirm the process flowsheet.

The company has signed a Letter of Intent to enter a Purchase Agreement with Kappes, Cassiday & Associates (KCA), who have teamed up with Starcore International Mines Ltd. to put into production Xali Gold’s environmental rehabilitation project to clean up the Mexico Mines Tailings in El Oro.

Once production begins on the El Oro Tailings Project, KCA will pay Xali Gold a gross royalty equal to 4% of the sales income received from all gold and silver produced, less any royalties due and payable to others (the Municipality of El Oro), but in no case less than a 3% gross royalty.

Starcore has joined forces with KCA to launch an environmental rehabilitation project to clean up mine tailings from the municipality of El Oro in Mexico. The two groups have agreed to form a joint venture, with KCA contributing its expertise and services for the project aimed at rehabilitating the environment, while Starcore assumes the role of Operator and Financier for the joint venture.

“We are very pleased that significant work has commenced so quickly on the El Oro Tailings Project,” says Joanne Freeze, President and CEO of Xali Gold. “The fact that KCA is using Starcore’s already permitted mine plant site nearby for the reprocessing, has potential to allow us to get the El Oro Tailings Project running sooner than expected.”

The tailings were the subject of a NI 43-101 Resource Study in 2014 which reported that the tailings contain an Inferred Mineral Resource Estimate of 1.27M tonnes grading 2.94 g/t gold and 75.12 g/t silver (3.85 g/t gold equivalent) containing 119,900 ounces of gold and 3,061,200 ounces of silver.

KCA’s recent work has resulted in an estimated recovery of over 75% of the gold and silver. These results are on composites which did not access the full depth of the tailings. While the data indicates that the tailings are mineralogically uniform, the new drill program is designed to provide samples to confirm this assumption. The Mexico Mine tailings are situated on land owned by the Municipality of El Oro. El Oro is one of the towns designated as “Pueblo Magico” near Mexico City. Cleanup of these tailings will eliminate potential environmental risks while releasing a large block of land which the Municipality can use for further development.

Xali Gold has gold and silver projects in Peru and Mexico. The company’s flagship project El Oro is a district scale gold project encompassing a well-known prolific high-grade gold dominant gold-silver epithermal vein system in Mexico. The project covers 20 veins with past production and more than 57 veins in total, from which approximately 6.4 million ounces of gold and 74 million ounces of silver were reported to have been produced from just two of these veins.

Modern understanding of epithermal vein systems indicates that several of the El Oro district’s veins hold excellent discovery potential, particularly below and adjacent to the historic workings of the San Rafael Vein, which was mined to an average depth of only 200m.

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