Lori McClenahan, President of St. Elias Mines Ltd. (the “Company”), is pleased to provide the

following report regarding the exploration and development of the Tesoro Gold Project (the

“Project”) located in southwestern Peru.

Based on exploration results to date, management believes that the Tesoro Gold Project offers St.

Elias the opportunity to become a small scale gold producer that would generate a profit which

could fund exploration activities while concurrently defining resources or reserves. The

following news release sets out the plan of action the Company has developed to provide St.

Elias with a path forward to guide the exploration and development of the Project through to

small scale gold production.

The Tesoro Gold Project is situated in a highland desert plateau in southwestern Peru. The

Project is 100% owned by the Company with no underlying royalties. The Project is located

within the prolific Nazca-Ocoño Gold Belt within which there are at least 70 known gold

deposits comprising narrow but generally high-grade auriferous quartz veins. Although the

veins are narrow, typically <1.0 metres wide, mineralized structures tend to extend along strike

for kilometres and at depth for up to 1,000 metres.

Work on the Project began in 2004 with a “first pass” grassroots exploration program consisting

of reconnaissance mapping and prospecting over the entire property, detailed geological

mapping and sampling of vein exposures and alteration zones. To date, the Company has

identified five mineralized zones with more than 50 quartz veins (having a total combined length

of 9km) and has confirmed consistent high-grade gold mineralization of the Zona Canchete #1

Vein (“ZCV#1 Vein”). The ZCV#1 Vein is only one of eight gold bearing quartz veins located

at Zona Canchete.

Underground exploration and development of the ZCV#1 Vein began in June 2005. The

character of the ZCV#1 Vein is that of a strong, persistent quartz vein that varies from a few

centimeters to 30 or more centimeters in thickness and is consistently well-mineralized with

gold. The ZCV#1 Vein has been traced along strike for approximately 100m and to a depth

approaching 60m - mineralization is consistent both along strike and to depth.

To date, the Company has completed a total of approximately 282.4 (926 feet) of underground

development including: 94.4 meters (310 feet) of winzes and raises to a depth of 60 metres

below surface; and 188 meters (617 feet) of drifting on the 20m and 40m levels. Even though it

is not wide, the ZCV#1 Vein is consistently mineralized with high-grade gold.

In addition, the Company has completed two shipments (totalling approx. 120 tonnes) of a bulk

sample from the ZCV#1 Vein. The bulk samples were shipped and processed at the milling

facilities of Toronto-listed Dynacor Mines Incorporated, located approximately 15km north of

the Tesoro Project. The first bulk sample of 53.7 tonnes returned a grade of 1.56 opt gold and

the second bulk sample of 66.1 tonnes returned a grade of 0.874 opt gold. The average gold

grade of both of these bulk samples was 1.18 opt and 90% gold recovery was reported by the

mill.

During the past year, the Company has continued with its underground development and bulk

sampling program at the ZCV#1 Vein, having decided that superior exploration information

would result from drifting than from drilling. A portion of the Company’s exploration

expenditures has been recouped by the Company by selling its gold-bearing vein material to the

Dynacor mill.

Based on underground exploration results to date, the Company is convinced that the ZCV#1

Vein is sufficiently consistent in three dimensions and that a more concerted effort is warranted

for a second stage of exploration, which is to demonstrate that, on the ZCV#1 Vein alone, the

scale of operations can be upgraded to recoup all investment costs and to demonstrate

profitability.

The Company plans to develop the Project by incrementally expanding the operation from

artisanal levels of production through to a profitable production level while concurrently

defining resources or reserves. The expansion, for the most part, can be funded from production

revenue, however some cash infusion will be needed at the onset.

Once profitability is demonstrated on the ZCV#1 Vein, the Company plans to bring other veins

at Zona Canchete on line, and eventually move to exploit gold-bearing quartz veins in other

zones within the Property. To date, there are four gold-bearing quartz veins within 100 meters of

the ZCV#1 Vein which could be exploited from the current site of operations.

Based on exploration results to date and the development plan, management has set the

following goals:

The Company plans to develop the Project by incrementally expanding the operation from

artisanal levels of production through to a profitable production level while concurrently

defining resources or reserves.

Lori McClenahan, President of the Company, states “This is not a novel approach to

underground exploration and mining. This methodology has been used by well-known mining

companies for generations. Essentially drifting instead of drilling provides you with superior

exploration information and revenue from milling vein material.”

All technical work is being supervised by, and the technical information contained in this news

release has been verified by, John Brophy, P.Geo., a Canadian geologist residing in Peru, who is

Lori McClenahan,