OWNERSHIP:

• 100% St. Elias Mines

PROPERTY OPTION AGREEMENT:

• The Project is not available for option or joint venture

MINERALIZATION:

• Mesothermal vein hosted Au mineralization
• Disseminated Au mineralization

TECHNICAL REPORTS (43-101):

• Technical Report Update on the Tesoro Gold Property, Department of Caravelo, District of Acari, Southwest, Peru, by: Paul D. Gray P.Geo, dated September 30, 2010. 43-101 Technical Report

THE PROPERTY
The Tesoro Property (the “Property”) is located in the Department of Arequipa, Province of Caraveli, District of Acari in Southwest Peru, South America. The mineral claims comprising the Property are centered roughly at PSAD 56 UTM Zone 18, 562600N.; 8321100E. (15o 11’ 16” S. Latitude; 74o 25’ 16” W. Longitude), and situated on the Jaqui 1:250,000 scale map sheet 31ñ. The Property is directly accessible via a paved highway, which originates at Chaviña, (approx. 100km south of Nazca), which is on the Pan-American Highway and a network of secondary and tertiary gravel roads.
The Property consists of one claim group, the Tesoro Claim Group, made up of nine (9) mineral claims the Chance 1, Chance 2, Chance 5, and Chance A-F mineral claims. Together the Tesoro Claim Group consists of 7,056 hectares (17,436 acres). St. Elias Mines Ltd. owns a 100% interest in the Tesoro Project without any underlying royalties or additional obligations.
PROPERTY HIGHLIGHTS
St. Elias has identified:
- main mineralized structure 6.5km (4.0 miles) long;
- parallel mineralized structure 7.0km (4.3 miles) long;
- five mineralized (gold) zones;
- over 50 quartz veins with a combined length of 9km (5.6 miles); and
- that the veins and disseminated areas are mesothermal;

St. Elias has also:
- emplaced 1,300m of underground workings on three veins;
- shipped 1,157 tons of underground material to adjoining processing mill
- recovered 1,076 ounces of gold (avg. grade 0.93 oz/t) from underground bulk sampling program;
- determined that the gold is free milling and is over 90% recoverable;
- completed 27 lines (64.8km) of Quantec Titan24 geophysical survey;
- identified two large anomalies that correlate with known gold mineralization. One anomaly is approximately 1,800m long x 1,700m wide and 1,300m thick. The other is approximately 800m long, 1,000m wide and 300m thick. The larger anomaly is open to depth; and
- commenced diamond drilling to test of the 55 geophysical targets identified by Titan24.
GEOLOGY AND GEOLOGICAL SETTING
The Tesoro Project lies within the Nazca-Ocoña metallogenic province a 300 kilometre by 30 kilometre geological belt adjacent to and paralleling the Pacific coast of south-western Peru. Within this province more than 70 gold (± copper) deposits have been discovered and exploited since the 17th century, most of which are quartz-vein hosted gold deposits within the Coastal Batholith Complex, mainly within tonalitic to granodioritic phases of the Tiabaya Superunit (66 to 80 Ma) and Incahuasi Superunit (94 Ma).
The auriferous (gold-bearing) quartz veins of the Nazca-Ocoña Gold Belt and at Tesoro are mesothermal vein systems related to brittle structures and analogous to structurally controlled mesothermal veins in Archean rocks. These are classic gold quartz vein deposit, comparable in geological aspects to major gold deposits such as those in the well-known Bralorne-Pioneer (BC), Timmins (ON), Kirkland Lake (ON), Red Lake (ON), Yellowknife (NT), Motherlode (CA), Kalgoorlie (AUS) districts as well as the Kolar Gold Fields in India.
The mesothermal vein systems in the region which have been historically exploited tend to be long, narrow (typically less than 1.5 meters wide), deep, and unrelated to epithermal-suite elements such as mercury, antimony, bismuth, molybdenum. These deposits are commonly deeper than they are long, and gold mineralization more extensive down plunge than along strike.
These veins tend to follow two structural trends; south of latitude 15o45´ veins strike 040o to 080o and north of latitude 15o45´ trend 115o to 160o. The San Juan de Chorunga vein near Ocoña is a two-km-long structure that has been worked for a vertical distance of 1,000m (3,280 ft) and has produced in excess of 700,000 ounces of gold since the early 1970’s. The Acari Gold Mine property, owned by Dynacor Gold Mines Inc., adjoins the Tesoro to the northwest is developed by a series of levels and has a reported vein width of 2 to 3m. The reported inferred resource for the Acari Gold Mine property is 606,611 ounces of gold.
The gold bearing veins in the district tend to be typically less than 1.5 meters wide, and extend along strike and at depth for much greater distances with subvertical dips. These veins generally follow two main structural trends; 040o to 080o and 115o to 160o. The two main structural trends intersect each other at numerous points within the Property. Traditionally intersections of gold bearing structures can cause bonanza grade gold as well as “blow-outs”, which are larger volumes of quartz that fill voids created by the colliding intersecting structures.
The Tesoro Property is predominantly underlain by coarse-grained granodiorite to diorite of the Cretaceous Tiabaya Superunit of the Coastal Batholith Complex. These intrusives are cut by <1% aplite and pegmatite (felsic) dykes which are in turn incised by <1% hypabyssal andesite dykes. Andesite dykes are related to both the gold bearing and none gold bearing quartz veins on the Property, as they commonly form the footwall or hanging wall of these veins, which also generally trend north-northwest or east-west and are steep dipping. Quartz veins (gold and non-gold bearing) on the Property are seldom more than one (1) meter wide and average 10 cm to 40 cm wide at surface.
The style of mineralization represents a mesothermal vein exploration target. Mesothermal-vein style gold mineralization on the Property has been confirmed both on surface and to depths of over 100 metres. Within the Tesoro Project gold occurs as free gold and electrum in pyrite-arsenopyrite microfractures and as free gold and electrum encapsulated by quartz.
The Property is permissive for the expansion of known gold mineralized zones both on strike and to depth as well as the discovery of additional gold mineralization. The company is utilizing both traditional and cutting edge mesothermal gold exploration techniques too systematically (scientifically) advance the Project. These exploration techniques include; advanced Quantec advanced 3D-Titan24 geophysical surveys, sampling, underground development, systematic trenching, and diamond drilling to test the depth extent of all targets within the Property. All of the data generated from exploration is constantly being entered into advanced geological and geo-statistical software.
The Tesoro Property can be classified as an advanced stage gold exploration target that hosts numerous historic gold showings and gold workings.
EXPLORATION HIGHLIGHTS
Upon the acquisition of the Property, St. Elias embarked on a property wide reconnaissance geological mapping and sampling program. This program objective was to identify and prioritize areas of gold mineralization.
The exploration program was extremely successful having identified over 50 quartz veins with a combined length of 9km (5.6 miles). These gold bearing veins occur within granodiorite. The majority of the veins occur within a 6.5km long fault structure which have been traced for a strike length of 6.5km within the Property. This structure, referred to as the “Main Corridor”, is comprised of echelon veins across a structural corridor up to 400m wide. Gold occurs as free gold and electrum in pyrite-arsenopyrite microfractures and as free gold and electrum encapsulated by quartz.
The exploration program has identified four main mineralized zones that occur along the Main Vein. Typically, these are east-west trending splays associated with the Main Corridor. From north to south the zones are: Zona Canchete, Zona Central, Zona Sur and Zona Incognito. In addition, four other zones (Zona Este and three unnamed zones) have also been identified.
At Zona Canchete there are five principle veins measuring up to 200 meters long within a 400m by 400m area. Two of these veins strike north-northwest and three strike east-west. All veins are steep dipping. The veins are narrow at surface, generally less than 20cm, but widen at depth. Samples from these veins generally assay more than 16.0g/t (0.5 oz/T) gold. The veins at the bottom of the deep piques in this area are reported to be 60-80cm (2 ft – 2.5 ft) in width.
At Zona Central there are five principle veins measuring 250 to 600 meters long within a 400m by 1000m area. All veins strike north-northwest and are steep dipping. The main vein is 600 meters long and averages about 30cm (1 ft) wide on surface. Six samples taken from this structure average 15g/t (0.5 oz/T) gold. There are parallel vein zones that give higher gold assays of up to 85g/t (2.5 oz/T) gold across 11cm. There are eight main veins (or vein swarms) with an aggregate length of about 3,000m within an area measuring 1000m X 1200m in Zona Central.
At Zona Sur there seven principle veins measuring 200-250 meters long within a 1200m by 200m area. Five of these veins strike north-northwest and two strike east-west. All veins are steep dipping. North-northwest striking veins are generally 20-35cm wide and assay on average 8g/t (0.25 oz/T) gold. One two-meter-wide sample of the footwall and hanging wall also gave 8g/t (0.25 oz/T) gold, suggesting that more sampling of wall rocks is warranted. East-west veins tend to be narrower and have grades of up to 1.0 ounce gold.
At Zona Incognito, there is one principle north-northwest-striking vein exposed for a strike length of 700m. It is 30-60cm wide and gives variable assays of 0.03 to 0.5 ounces gold. The presence of a deep pique on this structure indicates that there are higher-grade zones. There is also another narrower east-west-trending vein, possibly 350m long, assaying up to 1.5 ounces gold across 10cm.
Four additional zones (concentration of gold mineralization and historic workings) have also been identified. These occur in a northwest trending pattern, approximately 1,000m northeast of and running parallel to the Main Corridor.
To date, all the development and the bulk of exploration on the Tesoro Gold Property has been focused within the main corridor, with only limited surficial sampling outside of this zone.
The recently identified North Corridor (approximately 7km or 4.3mile long) lies approximately 2 kilometres northeast of the Main Corridor and is defined by a series of coincident geophysical/remote sensing lineaments, by numerous pits excavated in the past by “informale” miners and by two previously identified mineralized zones (Zona Este and the I-3 Vein at Zona Incognito.)
UNDERGROUND EXPLORATION, DEVELOPMENT AND BULK SAMPLING
St. Elias initiated an exploration plan of underground exploration and development with the objective of offsetting the cost of blocking out gold mineralization in order to do a gold resource calculation. This endeavour turned out extremely successfully.
This plan was first implemented at the C1 Vein in Zona Canchette and later at the A4 Vein within Zona Central and the C2 Vein within Zona Canchette. Since the implementation of the plan more than 1,300m of underground development has been completed to a maximum depth of approximately 100m. Two head-frames and hoists were also installed to assist in the underground development. Gold bearing development material was shipped to the Dynacor Mill, which is a custom milling facility, for processing. To date, St. Elias has shipped a total of 1,157 tons of bulk sample material extracted from underground exploration development has been shipped to Dynacor Mill for processing. St. Elias has recovered 1,076 ounces of gold from this material shipped. The average grade of the material is 0.93 oz/t gold. The breakdown of this operation is:

• 643 tons averaging 0.77 oz/t gold from the A4 Vein;
• 451 tons averaging 0.99 oz/t gold from the C1 Vein; and
• 63 tons averaging 2.04 oz/t gold from the C2 Vein.

C1 Vein, Zona Canchete
The shaft on the C1 Vein has been deepened to the 100m level. A cross cut is currently being driven to intersect the veins to the north of the shaft. In addition, the length of the C1 Vein has been extended by additional drifting on the 60m and 40m levels. On the 60m level, the vein has been traced for approximately 170 meters, with consistently good grades (average 0.8 oz/t gold in 67 face samples) in the easternmost 120 meters of the vein. On the 40m level, the vein has been traced for 110 meters with consistently good grades throughout (average 1.2 oz/t gold in 57 face samples). Near the east end of the drift on the 40m level, one face sample returned a robust assay of 11.0 oz/t gold across 12.0cm.
The C1 Vein has yielded consistently high assay results for a strike length of over 100 meters and for a vertical depth of 100 meters. To date, face-sample assays and bulk-sample assays have averaged approximately 1.0 oz/t gold and a total of 451 tons of bulk sample material averaging 0.99 oz/t gold has been extracted from ongoing underground exploration development.
The C1 Vein is only one gold-bearing quartz vein located at Zona Canchete within the northern area of the Property. There are eight main veins with an aggregate length of about 920 meters within an area measuring 350m X 480m in Zona Canchete.
A4 Vein, Zona Central
The A4 Vein System has completely different characteristics from the C1 Vein in that the gold grades are moderate with pockets or pods of multi-ounce material occurring. Results have been sporadically spectacular (up to 11 oz/t gold in a 4-tonne bulk sample) with gold grades between the “bonanza” pods generally in the 2 to 7g/t range. To date, a total of 643 tons of bulk sample material averaging 0.77 oz/t gold has been extracted from the A4 Vein.
In the underground workings on the A4 Vein, it appears that there is more mineralization than is apparent from assay results of systematic face sampling at 2m intervals. For example, between 12 meters and 20 meters south of the shaft on the 42m level, six face samples yielded moderate assays that ranged between 0.60 and 6.63g/t gold (average grade is 0.1 oz/t). However, four face samples from a stope immediately below this low-grade interval gave assays of 8.0 to 90g/t gold (0.23 to 2.6 oz/t) with an average grade of approximately 1.0 oz/t. Similarly, 12 to 16 meters north of the shaft on the 42m level, three face samples average 4.18g/t gold, while a face sample immediately above this returned an assay of 60g/t gold (1.75 oz/t).
TRENCHING
Upon receipt of Stage 1 preliminary Titan24 geophysical sections generated in the field, a small trench-sampling program was completed across a geophysical anomaly corresponding to the “structural corridor” in the vicinity of the A4 Vein in Zona Central. Twenty-two 3m-long bulk samples weighing about 30kg each were collected from 3 trenches testing a 100m strike length of the low-resistivity geophysical response. The trenches were aligned perpendicular to the long axis of one distinct low-resistivity anomaly and returned 50 to 1130ppb (1.13g/t) gold across an alteration zone up to 45 meters wide, including economically significant assays of 553 ppb gold across 9 meters (3 samples). The zone tested by trenching is 100 meters long, and further work is required to evaluate the much longer strike length indicated by geophysical responses.
Distinct alteration consisting of mm to cm-wide stockwork calcite veinlets with associated clay, chalcedony and quartz micro-veinlets was encountered in the trenches. Due to alteration, rock from the trenches is friable and most of the trench material naturally crumbles to less than 2 cm upon sampling.
Geochemically anomalous gold (50 to 1130 ppb, average 249 ppb) was detected in all samples of the alteration zone corresponding to the geophysical anomaly. Assays of potential economic significance (> 200 ppb gold) were obtained from all three trenches, including 9 meters of 553 ppb gold and 6 meters of 360 ppb gold in the longest trench, which spans 45 meters of alteration. In addition, laboratory tests indicate that 78% of the gold can be extracted by cyanide leach.
Recent trenching and sampling has shown that there is a subtle and previously unappreciated halo of carbonate alteration up to 40 meters wide associated with the low-resistivity geophysical anomaly adjacent to the C5 Vein at Zona Canchete and adjacent to the A4 Vein at Zona Central, which are separated by a distance of ±700 meters. Halos of carbonate alteration are common in mesothermal gold veins (Atlas of Alteration, G.AC., 1996). Samples of the carbonate-alteration zone (35 three-meter-long channel samples collected to date) are all gold-anomalous (>50 ppb gold), and include intervals (for example, 9 meters of >500 ppb) that are higher grade than the cut-off grade of oxide ore at Yanacocha (Newmont, 2008 year-end annual report).
A second program of trenching, utilizing Stage 1 and 2 Titan24 geophysical and remote sensing data, was initiated in the spring of 2011. As at May 31, 2011, 15 trenches totalling 1,200 linear metres have been completed with 215 samples collected over 5m sample intervals from the trenches at the Tesoro Project. The trenches were completed by a backhoe and a track-mounted excavator at Zona Central (Main Structural Corridor) and Zona Este (Parallel Structural Corridor).
QUANTEC TITAN24 GEOPHYSICAL SURVEYS
Quantec Geoscience Ltd. of Toronto, Ontario (“Quantec”) completed two Titan24 Direct Current Resistivity Induced Polarization (“IP”) and Audio Magnetotelluric surveys and associated interpretation over the Property in the fall of 2009 and May 2010. The Titan 24 Geophysical Survey provides a means to see deep targets in highly prospective terrain where the targets can be fully incorporated into sophisticated three-dimensional models. Three dimensional subsurface earth models significantly increase the chances for drilling success. St. Elias has taken Titan 24 results together with historical data and compiled them into one up-to-date 3D model that allows for decisive decisions for drill targets as well as other exploration techniques.
The Titan24 surveys at Tesoro successfully identified at least nineteen (19) first priority geophysical anomalies highlighting areas with potential for gold mineralization from near surface to >400m (1,312 ft) depth. These anomalies closely correlate with known gold mineralization on surface, and represent high priority targets for vein hosted gold, disseminated and feeder systems that are currently being testing by diamond drilling. Quantec recommended a total of 52 drill holes to test the first and second priority targets interpreted in the property. Of them, 26 drill holes are recommended to test the first priority anomalous zones and 26 drill holes are proposed to test the second priority target zones.
3D data and images generated from results of the Stage 1 and Stage 2 Titan 24 Geophysical Surveys conducted by Quantec Geoscience Limited at the Property shows two large anomalies that correlate to areas of known mineralization, particularly in the “Tesoro Structural Corridor”.
The 3D Model was derived from the results of a Titan 24 Survey which was conducted in two stages: Stage 1 of the survey consisted of nine lines covering approximately 21.6 line kilometres; and Stage 2 consisted of 18 Titan lines totalling 43.2 line kilometres infilling the area within the lines from the
Stage 1 survey. The completion of the Stage 2 program resulted in the entire Tesoro Project (at that time) being covered by Titan 24 survey.
Zona Central IP Anomaly
The chargeability anomaly below Zona Central measures >16 milliradians. The anomaly is bowl-shaped and is approximately 1,800 metres by 1,700 metres and is 1,300 metres thick. There are northwest-southeast lineation’s (faults or structures) associated with this anomaly which are coincident with the known mineralized structural trends on the Tesoro property. Within the large IP anomaly there is an area of higher chargeability at >18.5 milliradians, which is oriented in a north-south trend. The centre of the southern end of the >18.5 milliradians chargeability anomaly is 600 metres below the surface.
The anomaly is located at the centre of a number of cross-cutting structures and may be the source of the near-surface gold mineralization found in the Zona Canchete, Zona Este and Zona Central. The anomaly shows the full extent of a chargeability anomaly beneath Zona Central that was 1,450m long x 400m wide (open to the south) and between 300 – 500m thick. This anomaly was referred to as the “Ovoid”.
Zona Sur IP Anomaly
The chargeability anomaly below Zona Sur measures >16 milliradians. The anomaly is flat in shape and measures approximately 800 metres by 1000 metres and is 300 metres thick. As with the Zona Central IP anomaly, there are northwest-southeast lineation’s associated with this anomaly.
About 3D Geological Modelling
The Titan 24 Geophysical Survey has provided a means to see deep targets in highly prospective terrain where the targets can be fully incorporated into sophisticated three-dimensional models. 3D subsurface earth models significantly increase the chances for drill success. Quantec and the Company can take Titan24 results together with historical data and compile them into one up-to-date 3D model that allows for quick and decisive decisions about what to do next.
The Titan24 technology is being utilized on a regular basis by advanced explorers such as Barrick, Newmont, Freeport MacMoRan, Goldcorp Inc. and FNX Mining. Mining companies can choose the most prospective areas by integrating all spatial data into one common shared model of the earth. Communication of subtle details in all data sets ensures that the decision-making process is optimized and better justified. One of the most significant benefits is the ability to use both historic and new data to accurately extend and predict new reserves and resources. Juniors can now explore with the same sophistication of the seniors, in part thanks to the investment of seniors like Barrick and Noranda Inc. that went into developing much of the Titan24 technology.
Every new advancement in technology, particularly geophysical, has aided in new discoveries. The likelihood of making new discoveries at depths of greater than 200 meters is increasing as a result of the ability of the latest geophysical subsurface imaging capabilities. James Moffett, Chairman of Freeport McMoRan Copper & Gold, was quoted at stating “the next major world-class discovery will not be found by digging a trench.”
DRILLING
St. Elias is currently drilling at the Property, having retained the Peruvian subsidiary of Energold Drilling Corp. (TSX-EGD) to conduct the initial phase of the Company’s 10,000-metre drilling program at Tesoro. Energold has a strong international presence with over 100 drill rigs providing surface, underground and conventional drilling services. Energold operates in 20 countries worldwide in South America, Africa and Asia.
Initial drill targets have been prioritized and laid out and are being drilling on a priority basis. The targets are subject to final adjustment as additional geological information is received and compiled from the ongoing drilling and mechanical trenching programs currently underway on the Tesoro Gold Project.
Quantec Geoscience Ltd., through detailed analysis of its Titan 24 data, has recommended a total of 52 drill holes to test the first and second priority targets interpreted in the Property. Of these, 26 drill holes are recommended to test the first priority anomalous zones, and 26 drill holes are proposed to test the second priority target zones.
Additional interpretation of the Quantec geophysical data by in-house exploration personnel and McElhanney Engineering Group continues and results from these studies are being utilized to maximize exploration data and guide the drilling program.
RECOMMENDATIONS
A budget of $2,502,800 has been outlined to complete systematic exploration consisting of re-processing (3D inversion) of the Quantec Titan-24 geophysical data, a detailed Property-wide data compilation and a series of mineral exploration programs culminating in the diamond drill testing of high priority geological and geophysical targets has been recommended by Paul D. Gray, P.Geo in his September 2010 43-101 Property report.

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