The property is owned 100 percent by St. Elias Mines, while Intigold Mines (CVE:IGD) has an option to acquire a 60 percent interest in the asset, in exchange for payments in cash and shares and incurring $1.5 million in exploration costs over a three-year period.
The companies have begun field studies in the Cueva Blanca area in preparation for diamond drilling, they said, and at this time, it is anticipated that "very little" field work will be required prior to mobilizing equipment and crews.
The initial drilling targets include the Cruz vein, the Cruz breccia bodies as well as the Bi-Hg quartz manto zone. The economic targets at the property are gold and silver, St. Elias said.
The companies also said that they have been approached recently by Compania de Minas Buenaventura to conduct a review of the property, and are taking this into consideration.
The property covers approximately 5,000 hectares and is located in the Lambayeque department in northwestern Peru, within the Northern Peru Miocene metallogenic belt.
This belt is defined by a large number of gold and copper-gold deposits of similar age, including Yanacocha, Lagunas Norte, and Pierina and porphyry deposits such as Rio Blanco, Canariaco, La Granja, Cerro Corona, and Antamina.
St. Elias said the property lies within the northern member of a pair of profound east-west tectonic warps that cross northern Peru. Within the southernmost of these tectonic features is the multi-million ounce Yanacocha gold mine, and several copper-gold porphyry deposits.
The Cueva Blanca property, as well as the Canariaco and Rio Blanco copper-gold porphyries, appear to be with the northern tectonic flexure.
The project has been explored in the past. Historical exploration work on the Cruz vein system, which included 91 trenches and 18 drill holes totalling 1,860 metres, proved that the quartz veins consistently contain gold and silver.
Historical results of gold assays from the Cruz vein drill program included 6.0 metres of 2.31 grams per tonne, 6.0 metres of 2.96 grams per tonne (including 1.75 metres of 7.45 grams per tonne), and 1.5 metres of 22.68 grams per tonne. The vein system is open along strike to the southeast and northwest, and to depth.
St. Elias said that previously announced confirmation exploration work, conducted in 2011, consisted of sampling of outcrops and trenches at the Cruz Vein portion of the property.
Assay results indicated a weighted average grade of 2.84 g/t gold across an average width of 4.3 metres, and along a strike length of 850 metres in the Cruz Vein system.
Under the terms of its deal with St. Elias, Intigold has the right to purchase one-half of the 1.5% net smelter royalty from St. Elias for $1.5 million.
Earlier this month, St. Elias said that exploration on the Chance E mineral concession that adjoins the company's wholly-owned Tesoro gold project in south-western Peru will be starting in the upcoming weeks.