Xali Gold Pauses FTA Application Temporarily for Drilling at Pico Machay

Xali Gold pauses Pico Machay permitting, expects drilling before December despite regulatory delays.

What the company is saying

Xali Gold Corp. is temporarily pausing its Ficha Técnica Ambiental (FTA) application for drilling at the Pico Machay Gold Project in Peru to gather additional historical data requested by Peru’s Ministry of Energy and Mines (MINEM). The company emphasizes that this pause is strategic, aiming to streamline the approval process and minimize future delays by proactively addressing regulator concerns. Management, led by President and CEO Joanne Freeze, maintains confidence that drilling will still commence before December, framing the delay as a manageable hurdle rather than a setback. The company highlights its ongoing work on other permitting activities and underscores the project's location in a historically productive mining district with supportive infrastructure and community. Xali Gold stresses the upside potential of Pico Machay, referencing historical engineering studies and untested exploration targets. The announcement relies on positive language and forward-looking statements, with Freeze directly quoted to reinforce the expectation of near-term drilling.

What the data suggests

The only concrete operational development is the temporary pause of the FTA application to address MINEM’s request for more historical data. The company discloses that, once permitted, the resource confirmation drilling program is estimated by contractor GEMA to take approximately six weeks using two drills. No new technical results, resource figures, or economic data are provided; the only financial reference is that historical engineering studies were based on a long-term gold price of $700/oz, with those studies completed through 2009. The company asserts the presence of a historical resource and several untested exploration targets but does not quantify them. The narrative of strong upside potential is not substantiated by new evidence in this update. The operational timeline is forward-looking, with the expectation—but not guarantee—of drilling before December. Overall, the disclosure is process-oriented and lacks current technical or financial metrics.

Analysis

The announcement maintains a positive tone, emphasizing the company's confidence in the project's upside and the expectation that drilling will commence before December. However, most of the key claims are forward-looking, including the anticipated timeline for drilling, the benefits of addressing MINEM's requests, and the project's 'very strong' upside potential. The only realised, measurable progress is the temporary pause of the FTA application and the historical context provided. No new technical results, resource figures, or financial data are disclosed, and the cited historical studies are outdated (from 2009, using a $700/oz gold price). The language around infrastructure, community support, and project potential is promotional but not substantiated with current evidence. While the operational update is factual regarding permitting status, the narrative inflates the signal by projecting imminent progress and strong potential without new supporting data.

Risk flags

• ●Permitting risk is elevated due to the temporary pause in the FTA application and the need to satisfy additional data requests from MINEM. Delays in compiling or submitting the required information could push the drilling timeline beyond the stated target.
• ●Execution risk is present as the company's expectation of drilling before December is not backed by a confirmed permit approval date, making the timeline optimistic rather than certain.
• ●Technical and economic uncertainty remains high because the only project economics referenced are from historical studies based on a $700/oz gold price, completed in 2009. No updated resource, grade, or cost data are disclosed, limiting the ability to assess project viability under current market conditions.

Bottom line

Xali Gold’s update signals a regulatory-driven delay at Pico Machay, with management projecting that drilling can still start before December if MINEM’s data requests are addressed promptly. The operational plan is clear—a six-week, two-rig confirmation drilling program—but all timelines remain subject to permit approval, which is not yet secured. The company’s case for upside is built on historical studies and untested targets, but no new technical or economic data are provided to support these claims. Investors should treat the projected near-term drilling as contingent rather than guaranteed, with regulatory and execution risks still unresolved. The most actionable takeaway is that the next material catalyst will be the resubmission and approval of the FTA application, which will determine if the stated timeline can be met.

Announcement summary

(TSXV:XGC) Xali Gold Corp. has temporarily paused its Ficha Técnica Ambiental (FTA) application for drilling on the Pico Machay Gold Project in Peru to allow additional time to compile further information on historical work at the project, as requested by Peru’s Ministry of Energy and Mines (MINEM). While gathering the requested data, the company will continue advancing other permitting work to minimize delays to the planned drill program. Xali Gold expects that addressing MINEM’s requests before resubmitting the FTA will facilitate a more optimized review process and reduce the likelihood of further clarification rounds or unnecessary approval delays. Joanne Freeze, President and CEO of Xali Gold, stated that the additional data requested by MINEM will be useful for future permitting and that drilling is still expected to commence before December. The company’s drilling contractor, GEMA (Geologia Estudios Medio Ambientales Drilling & Construction S.R.L.), estimates that the resource confirmation drilling program, using two drills, will take approximately six weeks, based on their experience with similar high-sulphidation gold projects in Peru, such as La Arena. Pico Machay is located within the Southern Peru Epithermal Gold-Silver Belt, in a historically productive mining district in the Western Cordillera of the Andes. The project benefits from existing infrastructure and a mining-friendly community. Pico Machay hosts a historical resource and several untested exploration targets. Historical engineering studies at Pico Machay, completed through 2009, evaluated the potential for a low-cost, low strip-ratio, open-pit heap-leach operation, based on a long-term gold price of $700/oz. Xali Gold considers the upside potential at Pico Machay to be very strong due to untested exploration targets and the historical resource. The company is focused on advancing Pico Machay as an advanced exploration-stage gold project in Peru with a near-term production goal. Joanne C. Freeze, P.Geo., President, CEO and Director, is the Qualified Person who has reviewed and approved the contents of this release.

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