St. Elias Mines’ Tesoro Project Continues to Show Great Potential

4th May 2010, 11:57 am by Thomas Kavanagh

Having recently concluded a successful private placement worth $2,025,000, and announcing an additional non-brokered private placement worth a further $8,000,000, St. Elias Mines Ltd. (TSX: SLI, FWB: EKL) intends to utilize the funds for exploration purposes on their Tesoro Gold Project in Peru.

All indications so far have shown the Tesoro Project has massive potential for St. Elias, with recent underground sampling results continuing to show good levels of gold mineralization for the project, and with the company suggesting the project’s unique nature allows them to explore and recoup some exploration costs while concurrently proving up NI 43 – 101 resources.

A quick look at mines directly to the north and south of the property allow us some insight into the potential levels the Tesoro project may be looking at. Dynacor for example, who mine the veins to the immediate north of the property, recently published an inferred gold resource of over 600,000 ounces on only three of the ten veins discovered, and the veins to the immediate south of the property have been mined since the 1970’s and have so far produced over 700,000 ounces. In addition to this, the area has seen widespread informale (informal miners) activities due to the high grade nature of the veins, and the Tesoro project itself currently has a number of open pit disseminated gold zones on the surface.

The Tesoro project, which is 100% owned by St. Elias and has no underlying royalties, covers 5,000 acres and is located in the Acari district within the prolific Nazca Ocoña gold belt in South West Peru, which has been known for its gold prospects for thousands of years. The phase 1 exploration program, which consisted of control grid emplacement, reconnaissance geological mapping and prospecting over the entire property, identified five highly prospective clusters of veins, or ‘zones’, expected to total around 50 veins in all, with 9km aggregate length. The study also returned initially assay values form the 143 rock samples collected ranging from 0.01 to 3.12 ounces per ton (oz/t), with an average grade of 0.41oz/t.

Currently as part of phase 2 of the exploration program, the Tesoro project has carried out underground exploration and development work on three of the discovered veins (C1 Vein, C2 Vein, A4 Vein), which are mesothermal veins, indicating the structure may extend to considerable depths. Gold is associated with disseminated to semi-massive sulphides in quartz veins cutting a diorite intrusion, and the continuity of the quartz veins and fractures in the Nazca Ocoña belt is ‘very impressive’ according to geophysical surveys.

Although the veins in the area tend to be narrow, they have a significant grade, extending along strikes for kilometers and up to depths of 1,000 meters. This offers lots of potential discoveries of additional mineralization in the area, with the further potential for new and deeper drill holes never previously done in the gold belt. To this end, the company has planned a diamond drilling program comprising of 5,000 meters to test high priority targets identified from the Stage 1 of a Titan 24 Geophysical Survey, and is now in the process of completing an Environmental Impact Study (EIS) for the Tesoro Project, needed in order to obtain the required permit for the drilling program.

The company recently completed Stage 1 of the Titan 24 Geophysical Survey, which consisted of nine lines covering approximately 21.6 line kilometers over the project area. This successfully identified twelve high priority targets for follow up in the Tesoro Project, as well as eight secondary targets and a an ovoid shaped anomaly beneath the A4 Vein at Zona Central, around 1,450m long, 400m wide and 300-500m thick – indicating a potential deep mineralization area. Stage 2 of the Titan 24 survey will follow up on the results of Stage 1, and is scheduled to start at the beginning of May. This stage will extend the geophysical survey to cover areas between existing Titan 24 lines and will cover 18 survey lines, totaling 43.2 line kilometers.

The latest bulk sampling results from the company’s underground exploration program for the Tesoro Project, mirror this positive outlook for the project. The bulk sample processed 23.9 tons of material from the C2 Vein at Zona Canchete, and returned an average grade for the material of 0.78oz/t gold. This brings the total bulk samples to date from the C2 Vein to 63 tons of material, with an average grade of 2.04oz/t gold. From all three veins currently explored, a total of 1,157 tons of bulk sample material has been extracted, averaging a grade of 0.93oz/t, with A4 vein averaging 0.77oz/t, and C 1Vein averaging 0.99oz/t. St. Elias is now taking a bulk sample form the C3 Vein at Zona Canchete, which is narrow but high grade (grade above 1oz/t gold) and runs parallel to the C1 Vein, and is due to release the results from the milling any time now.

Although choosing to focus primarily on its Tesoro Project, with all the potential it shows, St. Elias has in no way limited itself as far as other operations are concerned. In fact it has already earmarked some of the funds raised through the latest placements for working operations, firming up its balance sheet and giving it a stronger position to operate across the board. Nor are they limited to maintaining their current projects without a view to expansion, and have recently announced their intention to acquire an established Peruvian exploration company, Minera Santa Elisa, as a subsidiary. This will give the company access to properties with gold, copper and iron-oxide mineralization. This comes in addition to St. Elias’ other current prospects, which as well as gold and copper, hold significant silver and molybdenum mineralization, leaving them with rather diverse holdings and to an extent, helping to limit risk associated with the end commodity prices.

That said, the company is taking advantage of the strong prospects that the Tesoro Project holds, focusing resources where they will produce the greatest returns. As confirmation of the EIS comes through, and as deeper and wider exploration through the project highlights new potential mineralization areas, the Tesoro Project looks set to become an ever increasing and beneficial asset for St. Elias Mines.

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