Pan American Silver Exits Pico Machay: Xali Gold Acquires Peru Gold Project with 710,600 oz Historic Resource and $17.5M Deal
Xali Gold’s Bold Step: Securing a Historic Resource in Peru’s Gold Belt
Xali Gold Corp. has struck a significant deal to acquire the Pico Machay Gold Project in Peru from Pan American Silver and its subsidiary, Aquiline Resources, marking a notable transition for both companies. The agreement involves a $17.5 million payment structure, transferring a gold project that holds a historic measured, indicated, and inferred resource totaling over 710,600 ounces.
Pico Machay sits at the northern end of the prolific Southern Peru Epithermal Gold-Silver Belt—a region known for hosting some of the world's largest epithermal gold deposits. The area’s history, infrastructure, and remaining exploration potential provide a compelling rationale for Xali Gold’s acquisition and future investment plans.
Key Acquisition Terms: $17.5 Million in Staged Payments
The deal is structured with milestone payments extending over five years, plus a resource-based contingency. Xali Gold will take over Minera Calipuy S.A.C., the company holding all rights to Pico Machay. Notably, Pan American will retain certain security interests in Calipuy until all deferred payments are made. Closing is subject to standard conditions, including TSX Venture Exchange approval.
| Time Period | Cash Payments (US$M) |
|---|---|
| Closing | 0.5 |
| 1st Year Anniversary | 1.5 |
| 2nd Year Anniversary | 1.5 |
| 3rd Year Anniversary | 4.0 |
| 4th Year Anniversary | 3.0 |
| 5th Year Anniversary | 4.5 |
| Upon delineating at least 1.25M oz Au | 2.5 |
| Total | 17.5 |
Pico Machay’s Historic Resource Points to Potential Upside
The historic gold resource, estimated from drilling through 2008, forms the foundation for Xali Gold’s planned value creation. The last resource model used a gold price of $700/oz—much lower than today’s levels—suggesting considerable room for upside if modern economics are applied.
| Resource Category | Tonnes (M) | Gold Grade (gpt) | Contained Gold (oz) |
|---|---|---|---|
| Measured | 4.7 | 0.91 | 137,500 |
| Indicated | 5.9 | 0.67 | 127,100 |
| M & I | 10.6 | 0.78 | 264,600 |
| Inferred | 23.9 | 0.58 | 446,000 |
| Total | 34.5 | 0.62 | 710,600 |
Why Pico Machay’s Potential Attracts Xali Gold: Updated Resource and Regional Expansion
With several untested exploration targets nearby, Xali Gold is planning both a resource update and a fresh review of previous engineering studies, targeting a near-term production pathway. Pico Machay’s logistical advantages—a location near other mines and well-established infrastructure—strengthen the likelihood of development success. Moreover, rising gold prices improve the economic profile of previously marginal deposits, providing additional levers for project enhancement and future growth.
Xali Gold’s team cites their experience in the Peruvian mining sector as a critical asset. As President and CEO Joanne Freeze notes, “With three decades of experience in Peru’s mining sector...we are confident that our team of South American and gold experts combined with the strengths of local partnerships and the country’s exceptional mineral potential, uniquely positions us to unlock the full value of this opportunity.”
Risks and Considerations: What’s Next for the Deal?
While the agreement brings clear upside for Xali Gold, the usual mining project risks remain: successful completion of the acquisition, updating historical resources to current standards, obtaining regulatory approvals, community partnerships, and future financing. Pan American will retain security interests in Calipuy until the payment schedule is complete. The final closing of the deal is still pending standard regulatory and exchange approvals.
Bottom Line: Watch for Resource Updates and Exploration News
Xali Gold’s acquisition of Pico Machay from Pan American Silver opens a new chapter for both firms. Investors and market watchers will want to keep an eye on forthcoming resource updates, production feasibility, and potential new discoveries. With a historic gold resource already outlined and regional potential still on the table, Pico Machay stands out as a story to follow as the deal moves through its final steps and development gets underway.
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