Vilcoro Gold Project, Peru

Ownership:

• 100% St. Elias Mines

Property Option Agreement:

• Currently not under option agreement

Mineralization:

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

Technical Reports (43-101):

• Initial Exploration Report on the VIlcoro Gold Property, Santiago de Chuco Area, Northwest Peru, by John A. Brophy, P.Geo. Dated March 15, 2008 and revised June 17, 2008

The Property:

St. Elias has a 100% interest (without any underlying royalties) in the Vilcoro Gold Property located near the town of Santiago de Chuco area, and is within the Alto Chicama mining district of central Peru.  The Vilcoro Gold Property comprises 1,600 hectares (3,800 acres) and lies along the same geological belt of Tertiary rocks that hosts many multi-million-ounce deposits in northern Peru such as Newmont’s Yanacocha Mine (+40 million oz gold) and Barrick’s Pierina deposit (8 million oz. gold).  The Property is favourably located adjacent to the claim block that covers the Lagunas Norte mine (+9 million oz gold) recently put into production by Barrick Gold.

Access to the property is excellent with a well maintained gravel road connecting the region’s main town (Santiago de Chuco) with the Pan-American Highway.  Multiple secondary roads bisect the Vilcoro Gold Property.  The Property can be explored on a year-round basis as it located at a moderate elevation of between 2,500m and 3,250m and a well-maintained all-weather gravel road, originating at Trujillo on the Pan American Highway, passes through the western third of the Property.

There are five important gold deposits within 14 to 24km of the Vilcoro Property.  These are mainly high-suphidation epithermal systems hosted in Tertiary volcanics or in the lowermost formation of the Gollar Group (Chimu quartzites), or in both.  These deposits are:  Lagunas Norte, as mentioned above, (+9million oz gold); Tres Cruces (1.75 million oz); Virgen Deposit (400,000 oz); La Arena (1.99 million oz); and Santa Rosa Mine (currently producing approximately 80,000 oz/Au/year).

Host rocks to mineralization are volcaniclastics of the Tertiary Callipuy Formation, which is the same formation that hosts some of the gold mineralization at Lagunas Norte.  Preliminary geological mapping and sampling indicates the Property hosts a gold-bearing epithermal system.  Anomalous to high-grade gold is present in quartz veins, mantos, breccias and hyrdrothermally altered volcanics, and at least seven historic adits which are drifted on gold-bearing quartz veins with associated silicified alteration zones have been located.

Within one of the adits, two samples of a 1.0m thick manto intersected by a quartz-veined structure returned gold grades of 29.1g/t (0.84 opt) and 56.8g/t (1.65 opt).  The quartz vein itself has yielded multi-ounce gold assays and the pyroclastics adjacent to the mantos have grades that are comparable with ore at Yanacocha and Lagunas Norte.  Widespread argillic alteration occurs throughout the corridor.  Sampling of this material includes 8.0m grading 1.05g/t Au.

Work carried out during St. Elias’ tenure on the property included a Phase I program consisting of geological and alteration mapping together with the collection and assaying/analysis of 727 rock samples and 858 soil samples (107 of the rock samples analyzed using PIMA (portable infrared mineral analysis.)  Rehabilitation, sampling and mapping of approximately 100m of underground workings at the manto zone was also completed.   Anomalous gold is accompanied by anomalous silver (up to 31.8g/t), arsenic (up to 8,480ppm), antimony (up to >10,000ppm), and manganese (up to >10,000ppm).

The Phase I program resulted in outlining a mineralized area (the “Main Trend”), with anomalous gold, that has been traced for 1.8km along strike (up to 400m wide and spanning a vertical extent of 400m).

A phase II program, designed to follow-up the results of the Phase I program, was also completed.  The Phase II program consisted of geophysical surveys (14km of induced polarization, resistivity and magnetometer) and the completion of an Environmental Impact Study.  The Phase II survey results show the “Main Trend” of gold mineralization is cored by a distinct chargeability (IP) anomaly (400m long X 200m wide) beginning approximately 100 meters below surface.  This is considered a top-priority drill target.

Recomendation:

A 4,000m drill program, budgeted at $800,000, is recommended to test the coincident gold in soil/rock and IP Chargeability anomalies within the Main Trend.  The Vilcoro property is fully permitted to carry out this work.