St. Elias Mines to start 10,000 metre drill program at Cueva Blanca

St. Elias Mines (CVE:SLI) saw its stock pop nearly 12 percent Wednesday after reporting a Phase 1 exploration program will start at its Peruvian Cueva Blanca gold property.

Shares of St. Elias spiked gained 2.5 cents to reach 24 cents each on the TSX Venture Exchange on Wednesday afternoon.

The diamond drill program, which has a $2.5 million budget, will drill about 10,000 metres and start after the required permits are obtained by St. Elias and Intigold (CVE:IGD).

Initial drill targets include the Cruz vein, the Cruz breccias bodies and a stratiform silicified zone that   has anomalous bismuth-mercury geochemistry. St. Elias and Intigold have initiated field studies in the Cueva Blanca area in preparation for diamond drilling.

Presently, it is expected very little fieldwork will be needed prior to mobilizing drilling equipment and crews to the site.

The main drill target will be the gold-silver bearing Cruz vein system. St. Elias said the target areas are along strike and down dip from the previously drilled area of the vein.

Meanwhile, infill and confirmation holes will also be completed in some sections of the prior drilled areas of the systems.

"In these areas, detailed information is lacking because rough terrain prevented construction of drill platforms at the desired 50-metre spacing along strike," St. Elias said in a statement. 

The planned program will use man-portable drills that can be sited almost anywhere, whereas the previous drilling used a Longyear LF-70 skid-mounted drill that required road access.

Cueva Blanca covers about 5,000-hectares and is located in the Lambayeque department in northwest Peru, within the Peru Miocene metallogenic belt.

The Cueva Blanca property is bordered to the south and southeast by mineral concessions of Vale S.A., and Barrick Gold holds extensive mineral concessions four kilometres to the north.

Intigold acquired an option to earn a 60 percent stake in the property, and subject to 1.5 percent net smelter return royalty.

Intigold will make cash payments of $200,000 to St. Elias over two years, and issue one million shares and also incur $1.5 million in exploration costs over a three-year period. 

Additionally, Intigold can buy one-half of the net smelter royalty from St. Elias for $1.5 million and cut the royalty down to 0.75 percent.