Xali Gold Submits FTA Application and Selects Drill Contractor for Pico Machay

Xali Gold is set to begin a 3,000-metre drill program at Pico Machay, Peru in weeks.

What the company is saying

Xali Gold Corp. has submitted its Ficha Técnica Ambiental application to Peru’s Ministry of Energy and Mines, completing the last regulatory step needed before drilling at the Pico Machay Gold Project. The company has signed a contract with Geologia Estudios Medio Ambientales Drilling & Construction S.R.L. (GEMA) for an initial 3,000-metre diamond drilling program, with two rigs ready and individual holes planned to reach depths of 150 to 300 metres. Joanne Freeze, President and CEO, frames the immediate priority as obtaining geological and assay data to support an updated mineral resource estimate, which will underpin a preliminary economic assessment. The announcement emphasizes the scale of the broader program—up to 20,000 metres from 20 platforms—and highlights GEMA’s experience at high-altitude Peruvian projects. The company projects confidence in the upside potential at Pico Machay, referencing historical engineering studies based on a $700/oz gold price and several untested targets. The tone is optimistic and operationally focused, with forward-looking statements about near-term drilling and future resource updates.

What the data suggests

The FTA application has been submitted, following the October 7, 2026 public information workshop, and a 10-day review and approval period is anticipated. The contract with GEMA covers an initial 3,000-metre diamond drilling program at Pico Machay, with two rigs ready and holes planned to 150–300 metres depth. Of the initial program, 2,000 metres will twin 10% of historical reverse circulation holes to verify prior results. The FTA application allows for a broader program of up to 20,000 metres from 20 platforms, but only the initial 3,000 metres is currently contracted. The company targets drilling commencement in early November 2026, pending permit approval. Historical engineering studies at Pico Machay, completed through 2009, evaluated open-pit heap-leach potential using a $700/oz gold price, but no new resource or economic data are provided. The operational disclosures are specific, but no financial figures, cost estimates, or updated technical results are included. The evidence supports imminent field activity, but value creation depends on future assay results and resource updates.

Analysis

The announcement is generally positive in tone, highlighting the submission of the FTA application and the signing of a drilling contract, both of which are realised milestones. However, several key claims—such as the anticipated permit approval, the start of drilling, and the eventual resource update and PEA—are forward-looking and contingent on regulatory review and successful execution. The language around 'significant upside potential' and the benefits of the project is aspirational, as no new geological, assay, or economic data are disclosed. The capital intensity is flagged due to the scale of the planned drilling (up to 20,000 metres), but immediate financial returns are not expected, and no funding or cost details are provided. The gap between narrative and evidence is moderate: operational steps are underway, but the most material value drivers (resource update, PEA, development decision) remain unquantified and in the future.

Risk flags

• ●Regulatory risk remains as drilling cannot commence until the FTA is approved by Peru’s Ministry of Energy and Mines; any delay or request for additional information could push back the timeline.
• ●Operational risk is present given the scale of the planned program (up to 20,000 metres) and the challenging terrain, though GEMA’s experience at high-altitude projects mitigates some execution concerns.
• ●There is technical risk as the initial 3,000-metre program aims to verify historical results; if twinned holes do not confirm previous data, the resource base and project economics could be negatively impacted.
• ●Financial risk is implied by the absence of cost estimates, funding details for the full program, or current resource/economic figures—investors lack visibility on capital requirements and project viability at this stage.
• ●Forward-looking statements about significant upside potential and future economic studies are not yet supported by new technical results, leaving the investment case contingent on outcomes still months away.

Bottom line

Xali Gold has cleared the final procedural hurdle to start drilling at Pico Machay, with a contract in place for an initial 3,000 metres and two rigs ready to mobilize as soon as permits are granted—likely within weeks. The operational plan is specific, with 2,000 metres dedicated to twinning 10% of historical holes to validate past results, and the broader FTA covers up to 20,000 metres of future drilling. No new assay, resource, or economic data are disclosed, and the last engineering studies date to 2009 using a $700/oz gold price, so the project's current economics remain untested. The company’s confidence in upside potential is based on historical studies and untested targets, but value realization depends on successful drilling and subsequent technical updates. Investors should watch for the actual permit approval and the start of drilling in early November, followed by the release of assay results and a resource update. The most important takeaway is that Xali Gold is moving from permitting to imminent field activity, but the investment case will hinge on technical results still to come.

Announcement summary

(TSXV:XGC) Xali Gold Corp. has submitted its Ficha Técnica Ambiental (FTA) application to Peru’s Ministry of Energy and Mines (MINEM) for resource confirmation and exploration drilling at the Pico Machay Gold Project in Huancavelica, Peru. The company has signed a contract with Geologia Estudios Medio Ambientales Drilling & Construction S.R.L. (GEMA) to conduct an initial 3,000-metre diamond drilling program. The FTA submission follows receipt of MINEM’s documentation regarding attendance at the October 7, 2026, public information workshop, which was the final outstanding item for the application announced as completed on October 21, 2026. Xali Gold anticipates a review and approval period of approximately 10 days following submission, subject to regulatory review and any requests for additional information. Joanne Freeze, President and CEO of Xali Gold, stated that the immediate priority is to obtain geological and assay data to support an updated mineral resource estimate, which will underpin a preliminary economic assessment (PEA) for evaluating development options and project economics. GEMA’s team has experience in exploration and geotechnical diamond drilling across Peru, including projects at elevations of 4,600 – 4,950 masl and above 4,000 masl, and has worked at several major mines. GEMA has two diamond drill rigs ready for the initial 3,000 m program at Pico Machay, with HQ-diameter core and individual holes planned to reach depths of approximately 150 to 300 m. Approximately 2,000 m of the initial 3,000 m program will twin 10% of the historical reverse circulation holes within the historical resource area to help verify previous results and improve understanding of gold mineralization controls. The FTA application covers a broader program totaling up to 20,000 m from 20 platforms, allowing for additional resource definition and exploration drilling beyond the initial program. The company is targeting commencement of drilling in early November 2026, subject to receipt of the required permits. 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 were completed through 2009 and 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. Joanne C. Freeze, P.Geo., President, CEO and Director, is the Qualified Person as defined by National Instrument 43-101 and has reviewed and approved the contents of this release.

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