Mr. Gary Bay reports

XAU RESOURCES ENTERS INTO OPTION AGREEMENT TO ACQUIRE 100% INTEREST IN MATTHEWS RIDGE GOLD PROJECT, GUYANA

Xau Resources Inc. has entered into an option agreement dated Aug. 18, 2026, with Consolidated Northwest Resources Inc. (the optionor), pursuant to which Xau has been granted an exclusive option to acquire a 100-per-cent interest in the Matthews Ridge gold project in northwestern Guyana, subject to a 2-per-cent net smelter return royalty (NSR).

The Matthews Ridge property comprises 15 medium-scale mining permits covering approximately 6,097 hectares (60.97 square kilometres) and is located approximately three km south of the town of Matthews Ridge.

Gary Bay, chief executive officer of Xau, commented:

"Matthews Ridge represents another important step in Xau's strategy to expand and strengthen its gold exploration land position in Guyana. As we continue to advance the Quartzstone transaction and our existing Noseno property, Matthews Ridge adds another highly prospective project to our exploration pipeline.

"We believe the property has strong technical merit, with a large historical gold-in-soil anomaly, established exploration targets and significant areas that remain underexplored. The transaction has also been structured to preserve capital upfront while giving Xau the opportunity to systematically evaluate the property and prioritize exploration spending based on results.

"Our objective is to continue building a portfolio of high-quality Guyana gold assets that can be advanced in parallel and create multiple opportunities for discovery and value creation for Xau shareholders."

Terms of the option agreement

Under the option agreement, Xau has been granted the sole and exclusive option to acquire an undivided 100-per-cent legal and beneficial interest in the property.

To maintain the option during the initial four-year option period, Xau is required to make non-refundable cash payments to the optionor as shown in the attached table.

During the initial four-year option period, Xau is required to incur aggregate qualifying work expenditures of not less than $5-million (U.S.) on the property. There is no minimum annual expenditure requirement, and Xau has discretion over the timing, nature and pacing of its exploration activities.

Xau may elect, in its sole discretion, to extend the option for up to two additional one-year periods by making a payment of $500,000 (U.S.) for each one-year extension. If Xau elects one or both extension periods, it will be required to incur an additional aggregate $5-million (U.S.) in qualifying work expenditures by the end of the last extension period elected.

Xau may exercise the option at any time during the option period by paying all option payments then due, satisfying the applicable work commitment and making a US$5-million (U.S.) cash exercise payment to the optionor.

Upon exercise of the option, Xau will acquire a 100-per-cent legal and beneficial interest in the property, subject to a 2-per-cent NSR retained by the optionor.

Xau may purchase all or any portion of the NSR at a price and on terms mutually agreed by the parties. If the optionor proposes to sell, assign or otherwise transfer all or any portion of the NSR to a third party, Xau will have a right of first refusal in respect of the proposed transfer.

The option agreement also provides Xau with the exclusive right to act as operator and conduct exploration and development activities on the property during the option period.

The optionor is an arm's-length party to Xau. The transaction is subject to the acceptance of the TSX Venture Exchange and other regulatory approvals, if and as applicable.

About the Matthews Ridge property

The Matthews Ridge property consists of 15 medium-scale mining permits totalling approximately 6,097 hectares (60.97 square kilometres) located in the Northwest mining district No. 5 of northwestern Guyana. The claims are located 235 km northwest of Georgetown, Guyana's capital, and three km south of the town of Matthews Ridge and its nearby airport. Bosai Minerals Group Matthews Ridge manganese mine is located 14 km to the northeast and Xau Resources' Noseno property is situated 32 km to the south.

The property is readily accessible by roads and trails extending south from Matthews Ridge. Commercial flights operate between Georgetown and Matthews Ridge several times per week, and a 90-minute helicopter charter is also available from Georgetown. Port Kaituma, an inland port located 40 km northeast of Matthews Ridge, provides access for heavy equipment and supplies via roads running through Matthews Ridge to the property.

The Matthews Ridge property is located on the northwestern part of the Guiana Shield and is underlain by rocks of the Barama Group of the Paleoproterozoic Barama-Mazaruni supergroup. Rock types include marine sequence metasediments and metavolcanics, specifically pelitic sediments and pyroclastic tuffs (phyllites) intruded by hornblende granitic gneiss and mafic to ultramafic dikes. The southeastern end of the property borders a large Trans-Amazonian granodiorite pluton with local intrusions of younger dolerite and gabbro.

The Matthews Ridge property was part of a larger land position in northwestern Guyana explored by Petropavlovsk during 2010 to 2012. The property experienced stream sediment sampling, soil sampling, coarse (400-metre line spacing) ground magnetic and radiometric surveying, geological prospecting and rock chip sampling, and limited trenching of targets on the eastern claim block.

A northeast-trending, strike-extensive seven km long Au-in-soil anomaly has been delineated on the eastern claims with multiple samples greater than 500 parts per billion Au to a maximum of 4,105 ppb Au. The soil anomaly was lightly tested by Petropavlovsk with four widely spaced trenches totalling 3.2 km. Trench sampling reportedly returned up to 50.5 m at 0.36 g/t Au including 12.8 m at 0.87 g/t Au. However, the exploration work, methodology and results cannot be verified by the company's qualified person. The historical trenching is considered inconclusive given the wide spacing and uncertainties with respect to sampling and analytical methodology, and it appears that trenching did not test the strongest Au-in-soil anomalism. Reconnaissance rock chip and sap-rock sampling across the property returned several gold assays greater than one g/t Au, and a few samples reportedly returned highly anomalous levels of nickel, copper and cobalt interpreted to have been derived from the weathering of pyroxenite dikes and the accumulation of these elements in the cuirass. Evidence of historical and recent small-scale mining activity across the property also infers the widespread presence of gold on the property.

Historical exploration work at Matthews Ridge is described in an unpublished report "Due Diligence Report on the Matthews Ridge Gold Project of Petropavlovsk" prepared by Micon International Co. Ltd. of Norwich, U.K., November, 2012. The report and some of the historical digital data have been provided to Xau Resources by the property vendor. Neither the historical data nor the report have been independently verified by the company's qualified person.

The Matthews Ridge property covering about 60 square km of greenstone and lesser intrusive rocks near the northwestern end of the Trans-Guyana gold belt is considered prospective for orogenic-type shear-hosted gold mineralization. Indications of gold mineralization from the historical exploration work by Petropavlovsk plus more recent small-scale miners, although unverified, provide encouragement for discovery potential.

Planned exploration

Planned exploration work will include acquiring, compiling and analyzing historical data, including acquisition, reprocessing and interpretation of the legacy geophysics data. The historical soil geochemistry will require validation plus infill and extensions of the sampling grids, and comprehensive geological mapping and prospecting will be conducted. Ranked targets that emerge from these first-pass programs will be evaluated through trenching and drill tests. Exploration may also include auger drilling for geochemical testing, especially over areas of regolith complication, an airborne geophysics and lidar (light detection and ranging) survey at much higher resolution than the legacy geophysics, plus ground induced-polarization geophysical surveys over select areas once targets become more refined.

Qualified person

The scientific and technical information contained in this news release has been reviewed and approved by Kevin Thomson, PGeo, a qualified person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects. Mr. Thomson is a consultant to the company. The qualified person has not independently verified the historical exploration data disclosed in this news release. The company intends to undertake appropriate verification work as part of its planned exploration program.

About Xau Resources Inc.

Xau Resources is a Canadian mineral exploration company focused on the acquisition, exploration and advancement of gold projects in Guyana.

We seek Safe Harbor.