Cueva Blanca Gold Project, Peru

Ownership:

• 100% St. Elias Mines

Property Option Agreement:

• On June 1, 2011 Intigold Mines ltd. (“IntiGold”) signed an option agreement with St. Elias Mines Ltd., has the right to earn a 60% interest (subject to a 1.5% NSR in favour of St. Elias) in the Cueva Blanca Project.  The remaining 40% interest in the Cueva Blanca Project is a carried interest to production.

Mineralization:

• Epithermal vein hosted Au-Ag mineralization
• Epithermal disseminated Au-Ag mineralization

Technical Reports (43-101):

• There is not a current 43-101 report on the property.

The Property:

The Cueva Blanca Project covers a large epithermal alteration system developed in Tertiary volcanic rocks.  The principal features of the alteration system are the two alteration zones, which are large bodies of pyritized, clay-altered, and silicified hydrothermal breccia, volcanic breccia, and lithic and lapilli tuff, and the Cruz vein system, a gold-silver bearing quartz-carbonate complex with a strike length of over 3 km.

The alteration zones, two of which are nearly 1 km² in area, have central or core zones of angular silicified volcanic fragments in an aphanitic silica-pyrite matrix.  These intensely silicified zones are interpreted to be diatremes or pipes which served as flues or conduits for hydrothermal fluids.  They are enclosed within larger bodies of clay-silica altered rock, with breccia textures, which are interpreted to have been altered by vertically and laterally migrating hydrothermal solutions emanating at least in part from the diatremes.  Most of the breccia bodies on the property are considered to be the products of explosive, cyclical hydrothermal eruptions and belong to the phreatic-hydromagmatic class as defined by Sillitoe (1985).  No sinter has been found on the property, indicating that the present erosional surface is everywhere lower than the paleosurface existing at the time of breccia formation.

The Cruz quartz vein/stockwork system contains individual quartz-calcite veins up to 6.5m wide, although most of the exposures in the system consist of narrower veins forming sheeted zones over widths up to several tens of metres.  The vein system is generally poorly exposed, and only the zones with thick, resistant individual veins form strong outcrops.  The individual veins are formed of milky white to greyish-white quartz, with and without iron oxides.  Typical open-space filling epithermal textures, including drusy cavities and colloform banding, are characteristic of the individual veins.

Initial exploration program consisted of reconnaissance geological mapping, prospecting, and rock, soil, and stream sediment geochemical sampling.  The work identified widespread erratically distributed gold and arsenic anomalies in the breccia bodies, and consistent gold values in the Cruz vein system.  The highest gold grade obtained from breccia was 1260 ppb, but most anomalous samples are in the 20-60 ppb range.   Arsenic ranges up to 1638 ppm, but most anomalous sample values are in the range of 40-100 ppm.   Gold in stream sediments ranges up to 56 ppb; multiple anomalies occur in the two major streams draining the property.   The most interesting of these are in streams draining the slope of Cerro Hualtaco, 1-2 km southwest of the Cruz vein area.  The bedrock source of these anomalies has yet to be discovered.

Chip samples from natural vein outcrops of the Cruz vein system returned consistent gold values in the 1.0-2.0 g/t range across widths up to 8.0m.  The best assay received from the initial sampling was 3.82 g/t gold with 12.0 g/t silver across 5.0m.  Near the southeast end of the exposed section of the vein system, a series of samples of veinlet stockworks and altered volcanic wallrocks returned gold values of 52 ppb to 610 ppb, indicating a zone up to 130m wide in the hangingwall of the main vein containing anomalous gold.  The vein system is generally not well exposed so little information from the vein hangingwall and footwall was obtained during the initial exploration work.

A more detailed program, consisting of detailed geological mapping, hand trenching and trench sampling, and diamond drilling was conducted between August 1996 and June 1997.  This was focused on the Cruz vein system; 91 trenches and eighteen drill holes, totalling 1860.1m, were completed.  The trench and drill results confirm that the Cruz vein system is a classic epithermal gold-silver deposit.

Gold assays from the Cruz vein drill program include 6.0m of 2.31 g/t from hole CB-01, 6.0m of 2.96 g/t, including 1.75m of 7.45 g/t from CB-03, 1.5m of 22.68 g/t from CB-05, 9.5m of 8.09 g/t, including 1.5m of 35.84 g/t from CB-17, 10.8m of 2.4 g/t from CB-21, and 1.2m of 6.95 g/t from CB-22.  The vein intersections contain virtually no sulfides.  The vein system is open along strike to the SE and NW, and to depth, to the SE.

The Ventana-Cotetoro alteration zones, which outcrop along a northwesterly trend 2 km NE of the Cruz vein system, contain scattered weakly anomalous gold and arsenic values.  The fluid conduits are likely to have subvertical geometry and should be directly associated with the surface exposures of silica-pyrite hydrothermal breccia on Cerro Ventana and Cerro Cotetoro.  Epithermal models developed by Buchanan (1981), Berger and Eimon (1982), and others predict that precious metals will occur within a vertically restricted interval below hydrothermal breccias and argillized, silicified rocks close to or at the paleosurface.  The writer proposes a model for Cueva Blanca that incorporates the Cruz vein system, the Ventana-Cotetoro and Hualtaco breccias, and the classic epithermal work by Buchanan et al, and predicts  that sheeted or stockwork vein systems, breccias, and silicified wallrock zones containing precious metals may be present at depth in the breccia systems and the associated alteration zones.

Recomendation:

Recommendations for further work at Cueva Blanca include an airborne geophysical survey, 3D IP/Resistivity geophysical survey, geological mapping and sampling, trenching and diamond drilling.

Terms of Property Option Agreement:

• IntiGold Mines Inc. has the right to earn up to a 60% interest in the Cueva Blanca Project (the “Property”) from St. Elias by paying $200,000, issuing 1,000,000 common shares of IntiGold to St. Elias and incurring $1,500,000 in Property exploration expenditures over a three-year period.   The remaining 40% interest in the Cueva Blanca Project is a carried interest to production.

In addition, Intigold shall have the right to purchase one-half of the 1.5-per-cent NSR from St. Elias for the sum of $1.5-million, thereby reducing the NSR payable from 1.5 per cent to 0.75 per cent.