08:21 AM EST, 01/29/2025 (MT Newswires) -- Xali Gold ( CGDXF ) said Wednesday that it reached a definitive agreement allowing Remedioambiente to start underground test work at the El Oro project in Mexico.

Xali said initial work will focus on identifying the most effective recovery methods for gold and silver, as well as establishing the best underground access.

The company said it will receive a net smelter return of about 3% on all gold and silver recovered by Remedioambiente from the historic workings above the 2,400-meter level.

"The Remedioambiente team has an impressive track record of achieving production rapidly, delivering strong profits, and uncovering valuable mineral deposits," said Joanne Freeze, Xali's president and CEO.

"Our agreement with them not only preserves the exploration potential we've identified below the historic workings but also paves the way for collaborative testing of exploration concepts, underground access for drilling our previously defined high-grade targets under the historic workings, and the opportunity to get up to date on mineral rights fees," Freeze added.

Xali's share price slumped 12.5% on Tuesday to $0.035 on the TSXV.