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A Past Production Gold Play with Future Potential for Much More

Dave Jackson Dave Jackson, Stockhouse
0 Comments| December 21, 2021

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As the gold market continues to heat up, so do the exploration companies on the prowl for the precious metal. Xali Gold Corp.(TSX-V.XGC, OTCMKTS: CGDXF, Forum) is a mineral exploration company engaged in the exploration of mineral right interests in Mexico, Peru and Newfoundland & Labrador. Its projects include El Oro, El Dorado, Cocula, and Tres Marias…along with its Victoria gold project located in central Newfoundland and Labrador.

Stockhouse Media’s Dave Jackson was joined by company President & CEO Joanne (Joey) Freeze to get company shareholders and investors up-to-date on all things Xali Gold.


(CLICK IMAGE TO PLAY VIDEO)

TRANSCRIPT BELOW:

SH: To start off with, can you tell us a little bit about yourself and the history of the company?

JF: Sure. I'm an exploration geologist in the mining business since ‘81, so a few years. I started Candente Resource Corp with a Peruvian geologist to look for gold and silver first in Peru and then to branch out wherever we felt we had an edge and along the way we spun out Candente Resource Corp. We ended up with Candente Copper Corp, Candente Gold, and now we changed the name to Xali Gold.

We had the opportunity to come into Mexico in 2006, when the predecessor of Gold Corp had purchased Luismin for the Tayoltita mine and they didn't like exploration. They [Luismin] had an exploration contest with the juniors and we were chosen to participate. We were then chosen as the one to take on the El Oro Project in Mexico. We’ve still got some projects in Peru and we really liked Peru of course, more for high sulfidation gold whereas in Mexico, our focus is low sulfidation, which is El Oro and a past producer.

We've also worked in Newfoundland over the years. Larry Kornze, one of our directors who has mines named after him and was with Barrick and Newmont, recognized some opportunities in Newfoundland some years ago. Those didn't turn out for us but then more recently some other things came our way. Of course, Newfoundland has had super discoveries lately and it’s a very, very busy place, so we took the opportunity to get back into Newfoundland as well.

SH: Can you update our investor audience and your Xali Gold shareholders on any new company developments?

JF: Well, the most recent would be what we're doing on the Victoria property in Newfoundland. We've taken on an agreement with Windfall Geotek who have what they call artificial intelligence but it's data compilation but at an exponential form because it's computer-generated targets that a geologist wouldn't necessarily think about. Yes, it does use all the geological things that we use, geophysics, geochem, anything that controls mineralization but it has so many reiterations that it comes up with targets for people that they wouldn't necessarily have come up with. We thought it was great for this property because we've got high grade gold in tills from predecessor exploration and we've got gold in bedrock, very similar to other discoveries in Newfoundland. 0.4 grams [gold], which is very interesting but obviously we want to find higher grade and we've done a recent exploration phase there where we found more outcrop than we expected because often you don't have outcrops on these kinds of properties.

We have 20 samples in for assay but in the meantime, we've got Marathon Gold just Northeast of us with 4 million ounces going into production. We've got TRU Precious Metals Southwest of us making lots of news drilling and currently finding gold in drill core. We don't want to miss the opportunity to move this project ahead as fast as possible, yet winter is coming in and although we have 20 outcrops, we still have a lot of the area covered with till. We thought, why not get some extra help to see what would help with the drill targets and potentially raise some flow-through money and drill over the winter. I've seen the Windfall Geotek technology used in other places. I was very interested in it for quite a while and thought let's use it on this property and then we'll probably be using their technology on other properties as well.

SH: Which project are you most excited by…and why?

JF: Well, we always say the catalyst for a big takeover or a big discovery in our company is El Oro. Now, the reason being is it produced 8-million-ounce gold equivalent at the turn of the century and that's only from two veins. One vein alone produced 4 million ounces gold and 44 million ounces of silver over an average of 200 meters vertical. We've drilled up to 500 meters below that and the gold and silver continues at depth. In one particular area, we found three different structures containing high-grade gold over 30 grams gold and over 370 grams silver in three different veins and also overlying lower but very fixed grade, (75 meters of one gram) in the volcanics overlying that area. What we believe we've locked into is that the veins themselves are northwesterly and they're mineralized quite well, but there's higher grades that are controlled by north-easterly structures. What we’d really like to do, is get in there and drill again, because most of our drill holes were parallel and it’s normal to drill perpendicular to your veins. .

Anyway, we've got a huge target area in the San Rafael vein that we'd really like to get back into and we believe it can be a discovery like what MAG Silver made at Juanicipio. The reason being is that Fresnillo had been mining for years and years right next door to the Juanicipio discovery and they made that by drilling much deeper than other people had. Because of what they saw near surface and the presence of a mineral called Buddingtonite, which is indicative of a sinter zone that's normally several hundred meters above your ore, which we've also got on our property, we believe it [El Oro] has all the makings of a discovery.

SH: Speaking of the El Oro project, you just reported that tailings reprocessing should be fully operational there by mid-2022. Can you expand on this initiative for our investor audience, Joey?

JF: Yes. Thank you. Certainly. We acquired tailings from the municipality that we knew had some gold in them from previous work. We did some drilling and a resource calculation on them about five years ago and we came up with 120,000 ounces gold and 3 million ounces of silver. We did quick and dirty leach testing and discovered that it was going to take a bit more work to figure out how to liberate the gold and silver from these tailings. Along came Sun River Gold, four engineers in a private company who have a lot of experience with tailings and with processing. They made a proposal and they optioned it [the tailings] from us. They've paid us $500,000 to date and were supposed to be in production by October this year but given the COVID situation, we gave them a six-month extension.

They have raised six and a half million dollars and they've procured all their equipment. They have told us they expect to be in production, if not by March 2022, then certainly by June and that's very exciting. We have an NPI which is 5%, but we also get one and a half million of an NPI that the municipality has - the first one and a half million dollars. Although it's not 43-101 compliance and I really can't talk about what we expect for cashflow, those numbers I did mention are the numbers I'm allowed to talk about and it's very exciting. We do expect it to be significant to us in that it would give us funds to do all the exploration we want to do.

SH: Your corporate deck states that Xali Gold has “low risk, near surface production and exploration opportunities.” This may be news to many investors. Can you unpack the benefits of it?

JF: Yeah. That's in Western Mexico and the reason we went there is because Matthew Melnyk, our director of operations had worked for Agnico Eagle in Mexico but also VANE Minerals who had a plant and had tapped into a lot of these opportunities. They are properties that are held by private families in Mexico and they have near-term production because they've had past production in most cases. We've locked in the SDA plant and some properties around it with profit sharing. We had lined up enough projects that we could talk about a half million-ounce potential, but we haven't got them all tied up yet - we're in discussions.

Having said that it could be near-term production - again without 43-101 defined resources but there is past production on all of these and they're near surface high-grade, soIt’s the opportunity for getting the mill up and running. When VANE Minerals owned the mill, their revenues were between 1 and 3 million a year and gold wasn't nearly as strong as it is now. There's exploration potential in all these properties as well. The two that we have locked in are El Dorado and then Cocula. Cocula is actually a little bit apart and would be the other Western Mexico near surface opportunity. It's actually a standalone leaching opportunity. So we have exploration opportunities but also some cashflow potential in Western Mexico.

SH: The company also recently closed its first tranche of a non-brokered private placement. Joey, can you walk us through this raise?

JF: It's pretty simple. Mostl participants in the fundraising are current shareholders but we do have some new people. Allan Barry, who's known me for years, has rediscovered Xali Gold and been bringing some of his friends into it and some other people working in Mexico. We're kind of being rediscovered, I would say. It's nice to see new people coming into the financing.

SH: The Company looks set for strong growth in 2022. How are you placed to expand operations to meet demand?

JF: Well, we have a wealth of experience in Mexico,Between Matthew Melnyk, myself and then the people from Magellan who owned the SDA plant and who we're earning in from, we have lots of years of experience in Mexico, lots of contacts. We don't see any problem with coming up with really good personnel to be helping us with all the exploration and development.

SH: What separates Xali Gold from the competition and makes your business model particularly unique?

JF: Well, number one, you would have a very hard time finding any other junior that owns a whole district that has produced 8-million-ounce gold equivalent at high grades especially. Number two is all the other opportunities we have that we're able to jump on very quickly. We've jumped back into Newfoundland very quickly when an opportunity arose because of all the wealth of experience in our company. Larry Kornze, as I mentioned, was with Barrick and Newmont, with many discoveries under his belt. Ian Ward is an engineer with lots of experience internationally as well and then Matthew Melnyk and myself. All the places we’ve worked and all the things we've seen. I'm not going to say we're the best geologists in the world, but we certainly have seen a lot and have been part of many discoveries. We've got some pretty good experience under our belt.

SH: I have to mention your stock has been on a bit of a roller coaster ride over the last 12 months. What can you tell our investor audience regarding the current valuation of your stock and why you think it’s a good buy right now?

JF: Well, as I mentioned we've gotten renewed interest in our story. We were fairly quiet for a while but with that happening, we've traded a lot of shares. So I would say investors who were with us for a while and maybe a little tired, picked up shares at 3 cents, have now sold between 7 and 9 cents and they're probably out of the story. We've got a good base to move up. Our financing was at 6 cents but we've been trading between 7 and 8 cents recently. They all seem like small pennies but it's a good launching pad, I would say for moving upwards.

SH: Can you tell our audience a little bit about your corporate management and board teams, along with the experience and innovative ideas they bring to the gold exploration space?

JF: Yeah, I think to be honest, we've probably touched on it all but I'll summarize. Our board is made up of geologists and engineers who are not young and have many years experience internationally. They have worked on or been very key to major discoveries and developments and so know how to find the gold and silver and what's economic and what's not. That's really key because we found in the early days in the business, people would go off on a tangent because they found something that was interesting with a couple of high grades here and there. But if you can't relate that to the model of a geological deposit that actually hosts millions of ounces at economic grades, such as either bulk samples near surface or high-grade underground, then it’s not really relevant. So that's part of it and Matthew Melnyk as well, all those years at Agnico Eagle and many other companies, he's been part of discoveries in Argentina, Peru, etc. Finally, just our corporate culture of really moving quickly when we see something we like and not spending too much money on earning in on things that we don't see going very far.

SH: And finally, Joey, if there’s anything I’ve overlooked please feel free to elaborate.

JF: I think we've done a good job of covering most things, but there is something: Tres Marias. We've had this property, Tres Marias, for a very long time. It used to be huge but we did hang on to some high-grade veins. I find now we’re surrounded by Barrick and Teck on that property. There could be upcoming news on that one, for sure.

For regular updates, visit xaligold.com.


FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.



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