St. Elias (a "Junior with Gusto") in Peru (a "Land of Elephants")
St. Elias owns two properties, and has an option to acquire an interest in a third property, in Peru, all of which lie along the "Spine of the Andes", a geological belt of Tertiary rocks that hosts numerous multi-million ounce gold deposits (e.g. Yanacocha, Lagunas Norte, Pierina.)
Peru is one of the most mineralized regions of the world with a long, rich mining history spanning thousands of years. The country's government is mining friendly, has a relatively quick approval cycle and high environmental standards for mining projects.
Peru - Overview
Peru is a land of intriguing contrasts: on one hand, it is an ancient Incan wonderland of majestic, breathtaking ruins; and on the other hand, a developing country abounding in mineral resources and economic opportunity.
Peru's main industries are mining of minerals, steel, metal fabrication, petroleum, natural gas, fishing, textiles, clothing and food processing. Agricultural products are asparagus, coffee, cotton, sugarcane, rice, potatoes, corn, plantains, grapes, oranges, coca, poultry, beef, dairy products, fish and guinea pigs.
Peru's population is estimated at 29.2 million and it is the 3rd largest country in South America at 1.3 million square kilometres (slightly smaller than Alaska and approximately twice the size of Alberta.) Over 27 percent of the country's population resides in Lima, the capital of Peru, which has a population of approximately 8 million.
Geographically, Peru is a country of amazing biodiversity. The Andes Mountains run parallel to the Pacific Ocean, dividing the country into three distinct geographic regions. The costa (coast), to the west, is a narrow plain, extremely arid except for valleys created by seasonal rivers. This narrow coastal belt is mainly desert and contains Peru's major cities and its best highway, the Pan-American, which runs the entire length of the country. Lima is basically located in a huge oasis in the dry coastal area. The sierra (highlands) is the region of the Andes Mountains with its massive peaks, steep canyons, and extraordinary pre Columbian archaeological sites. The third region is the selva (jungle), a wide expanse of flat terrain covered by the Amazon rainforest that extends east. Almost 60% of the country's area is located within this region.
Historically, Peru encompasses a past of over 10,000 years in the most harsh and inhospitable, if spectacular, environments in the world - the high Andes of South America. Civilization has been long equated with the Incas; Peru is often referred to as the "Land of the Incas." The architectural achievements of the Incas are inevitably compared to the feats of the Romans. In the 15th century, the Incas emerged as a powerful state which, in the span of a century, formed the largest empire in pre-Columbian America. At the zenith of the Inca's influence in 1532, the Spanish conquistadors arrived in their quest for gold and other riches. They executed the proud but over-matched indigenous Indians and their leaders like ants, captured their cities and in a brief period of time this innovative and powerful culture was scattered to the wind and all but destroyed. For almost 300 years Peru functioned as a Spanish colony, but in the early 19th century native discontent and colonist revolts brought calls of independence, localized uprisings, and then, civil war in 1821, with the Spanish finally defeated.
Government
The constitution of Peru that was formed on December 31, 1993 established the present form of Peru Government which is constitutional republic form of government. The President of Peru, officially the President of the Republic (Presidente de la Rep�blica), is the chief of state of Peru and represents the republic in official international matters. The presidential term is five years; incumbents cannot be re-elected for a second consecutive term. The current president is Alan Garcia who was elected in 2006.
The existing government of Peru is pro-mining and actively supports mineral exploration and development. In addition, Peru has recently signed free trade agreement with both the US and Canada.
In 1991, the mining law was simplified and now provides an attractive framework for exploration and development of mineral projects. There are few limitations on holding mineral concessions in Peru. Concessions can be held 100% by national or foreign companies indefinitely provided that an annual fee per hectare per year is paid to the government as a land tax. The same concession title is valid for exploration and for mining, hence there is no complicated "conversion" procedure. Peru's clear and simple mining law and excellent geological potential has helped the country to attract one of the largest budgets for mineral exploration and development in the world.
In November 2008, Peru's government approved a law that changed how mining royalties are distributed. Under the new legislation, royalties will be worked out according to how much mineral wealth a mine produces. The previous system measured the amount of earth a mine moved. This new law effectively reduces the taxes paid by mining companies.
Mining in Peru
Peru is one of the most extensively mineralized regions of the world and has a long history of mining activities dating back to pre-Columbian times. The regulatory environment is favorable and the labor force is experienced and well-qualified. Mining taxation is competitive by world standards.
Peru is the largest producer of gold in South America and ranks fifth for global production of gold. In addition, Peru is the world's largest producer of silver and is third for global production of both copper and zinc. Gold and copper are the country's top two exports. In 2006, the country had gold exports worth over 4 billion dollars US and copper exports worth over 6 billion dollars US.
Peru plays host to some of the largest and lowest cost precious and base-metal mines in the world, including:
� Yanacocha - 30 Million+ oz. gold
� Lagunas Norte - 11 Million+ oz. gold
� Pierina - 8 Million+ oz. gold
� Antamina - 15.6 Billion lb. copper and 2.2 Billion oz. silver
Currently, less than 10% of the country's natural resources are being exploited. There are millions of metric tonnes of gold, copper, silver and other metals still in the ground waiting to be discovered. Virtually all the mining majors, as well as, many juniors, are present on Peruvian soil. To avoid missing out on Peru's mining bonanza, major mining companies are now active in exploration the job of which tends to be left to the juniors.
Many countries, including Canada, play an important role in mining worldwide, however, the junior exploration market is something very typically Canadian. Canadian companies have been present in Peru for more than 50 years. Grassroots exploration in Peru offers such potential that geologists often describe Peru as "paradise." Peru has become one of the world's most sought after gold targets. Canada's mining tradition coupled with Peru's geological potential make the two countries inevitable partners.
ST. ELIAS' PROPERTIES IN PERU
Tesoro Gold Project
The Tesoro Gold Property is 100% owned by the Company with no underlying royalties. The Tesoro Gold Project covers approximately 1,800 hectares and is part of the gold-bearing Nazca-Ocona belt in southwestern Peru.
The Nazca-Ocona gold belt has a long mining history dating back to pre-Incan time. Gold has been extracted from this belt for not only years, decades and centuries, but millenia. The gold of the area is said to be known by the Incas and some of the gold obtained by the Spanish conquistadors is said to have been mined by the Incas in this area.
The Nazca-Ocona gold belt is approximately 300km X 30km and at least 70 known gold deposits have been exploited to date. Gold is associated to disseminated sulfides than seeped into quartz veins or rock fractures. The continuity of the quartz veins and fractures is very impressive in the Nazca-Ocona belt. It is not uncommon to find veins with lengths of several kilometers. The veins are mesothermal veins and are narrow, typically 1.0 metre or less wide, but are very high grade and tend to extend at depth for up to 1,000 metres (as known so far.)
St. Elias has been conducting an underground exploration and development program at Tesoro to define resources or reserves compliant with National Instrument 43-101. To date, the ongoing program has followed the veins utilizing an economical method of exploration with access adits, crosscuts, drifts and chimneys or raises, rather than a series of drill holes. As part of this program over 811 tonnes of bulk sample material from the Tesoro Project has been processed and returned gold grades ranging from 0.24 oz./t (7.46 g/t) to 11.22 oz./t (348.98 g/t) with an average gold grade of 0.88 oz/t (27.37 g/t.) Proceeds from the sale of this development material (bulk samples) have substantially reduced the costs of this program.
The Tesoro Property has never been evaluated to depth, or to its full strike potential. This leaves a large potential for the discovery of additional mineralization.
Cueva Blanca Property
The Cueva Blanca Property, comprising three contiguous mineral concessions totalling 1,200 hectares, is located in the Lambayeque Department in northwestern Peru. The property is underlain by Tertiary volcanics of the Callipuy Formation. Elsewhere in northwestern Peru, the Callipuy volcanics host the most important gold mines in the country, including the Yanacocha, Pierina and Lagunas Norte, all of which are world-class examples of epithermal-type mineralization, each containing multi-million ounces of gold as well as substantial credits for silver.
The property covers a large epithermal alteration system developed in Tertiary volcanic rocks. The principal features of the alteration system are large bodies of clay-altered and pyritic, silicified breccia and a gold-silver bearing epithermal quartz vein system with a strike length of over 3km. The breccia bodies, two of which are nearly 1km2 in area, have core zones, interpreted to be conduits for hydrothermal fluids. Further exploration work and drilling of the breccia bodies is recommended. The quartz vein system ("Cruz Vein System") has been tested with 91 trenches and 18 Diamond drill holes totalling 1,860 meters. The Cruz Vein System is open to depth and along strike to the northwest and southeast. The trench and drill results confirmed that the Cruz Vein System is a classic epithermal gold/silver deposit.
Exploration results to date indicate that the Cueva Blanca Property is a unique type of epithermal deposit that formed in a specific geological environment akin to other world-class discoveries (i.e. El Pinon in Chile and the Midas and Sleeper Mines in Northern in Nevada) where gold and silver mineralization occurs in a similar geological setting. The property has ample "room" for expansion of gold/silver mineralization in the Cruz Vein System and offers scope for additional discoveries, particularly in the breccia bodies.
Vilcoro Gold Property
St. Elias has an option to acquire a 95% interest in the Vilcoro Gold Property comprising 1,600 hectares. The Property is primarily underlain by Tertiary Calipuy volcanics similar to those that host 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 in the Alto Chicama mining district of central Peru. In addition to Lagunas Norte, there are four important gold deposits within 14 to 24km of the Vilcoro Gold Property: 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). The Company has granted an option to earn a 66% interest in the Property to Geneva Resources Inc.
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