08:51 AM EDT, 07/22/2024 (MT Newswires) -- Xali Gold ( CGDXF ) said Monday that it signed a letter of intent to work with Rio Verde Resources on exploring five mining concessions within the El Oro mining district in Mexico.

Under the terms, Rio Verde secured an exclusive right to explore and extract gold, silver and any other economic minerals that may be found above the 2,400-meter level in the historic workings covered by the concessions. In exchange, Xali will receive a 3% net smelter return on the project.

The agreement is for five years and can be extended for an additional five years if Xali is receiving benefits totaling $1 million per year.

"This new partnership will allow us to keep all the exploration upside we have demonstrated by our previous drilling underneath the historic workings, while we work together with Rio Verde to test exploration concepts and get underground access for future drilling as well as pay back our debts on the mineral rights," Xali President and CEO Joanne Freeze said.

Rio Verde was also granted the right to appoint an additional member to Xali's board and to the position of board chair when Rio Verde holds greater than 20% of outstanding shares in Xali.

Xali's share price slumped 11% last Friday to $0.04 on the TSXV.