St. Elias Mines Ltd., (the “Company”) owns a 100% interest in the Tesoro Gold Property (the “Property”) located in Peru.  The Property covers approximately 1,700ha (4,250 acres) and is located in the Acari District within the prolific Nazca-Ocoño gold belt of southwestern Peru.  The Nazca-Ocoño gold belt is a 300km (200 mile) x 30km (20 mile) belt paralleling the Pacific coast of southwestern Peru.  Gold is associated with disseminated sulfides that seeped into quartz veins or rock fractures within the intrusive body.  The continuity of the quartz veins and fractures is very impressive in the Nazca-Ocoño belt since these veins are often hosted within fractures and shears that show continuity along several kilometers.  To date, more than 70 gold deposits have been exploited in this region since as early as the 17th century
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The veins located immediately north of the Property are being mined by Dynacor (TSX-DYN) who published an inferred gold resource of 606,611 ounces at 16.4g/t (on only 3 of 10 veins discovered to date).  The veins located immediately south of the Property have been in continuous production since the 1970’s and have produced over 700,000 ounces to date.  These veins have been mined over a 2,000m strike length to a depth of 1,000m.  Barrick has recently acquired claims that adjoin St. Elias’ Property to the south.

Since the Property acquisition in March 2004, the Company has completed a Phase I exploration program and a Phase II exploration program is ongoing.  Prior to these programs, the Property was primarily unexplored.

The Phase I program consisted of control grid emplacement, reconnaissance geological mapping and prospecting over the entire Property, detailed geological mapping and sampling of all identified veins, trenching and sampling of wider structures that flank the veins and underground sampling of the Canchete 1 vein.  The Phase I exploration program:

• identified five main mineralized zones that contain high-grade gold in quartz veins.  The gold in these zones occurs as free gold and electrum in pyrite-arsenopyrite microfractures and as free gold and electrum encapsulated by quartz;
• located more than 300 piques (pits/trenches) of which more than 50 are deeper than 3 meters (10 feet) and several are as deep as 35 meters (110 feet).  The orientation of the veins exposed in these historic workings indicates that there are in the order of 50 separate quartz veins occurring within the Property – the total strike length of the veins encountered to date is in excess of 9.0km; and

• returned assay values from the 143 rock samples collected ranging from 0.03 to 97.1g/t gold (>0.01 to 3.12 ounces) with an average grade of 14.14g/t gold (0.41 oz/Ton) and a mean grade of 14.44g/t gold (0.42 ounces).

Since the completion of the Phase I program, the Company has assessed and prioritized the five main concentrations of gold mineralization (“zones”), as well as, other gold bearing areas within the Property.  To recap the findings of the Phase I program:

• work confirmed that there are multiple epithermal gold-bearing veins occurring within granodiorite have been traced for a strike length of 6.5km on the Property.  This area is referred to as the “Main Vein” or the “Tesoro Structural Corridor” and is comprised of approximately 50 veins across a structural corridor up to 300m wide.  Within this corridor, veins occur as echelon north-northwest trending structures and as conjugate structures trending east-west;

• all veins are steep dipping;

• the aggregate length of the various veins has not been calculated.  It is conservatively estimated that at least 9km veins have been identified, with individual veins varying in length between 100 and 500 meters;

• the vein exposures occurring along the Tesoro Structural Corridor are concentrated in the following four areas (listed from north to south):  Zona Canchete, Zona Central, Zona Sur and Zona Incognito; and

• in addition, a separate concentration of gold-bearing veins known as Zona Este is located, outside of the Corridor, approximately 1,000m northeast of Zona Central.

The Phase II exploration program is ongoing with initial exploration efforts focused on the Zona Canchete Vein #1 (“ZCV#1”).  The ZCV#1 is a first priority target and is one of eight gold-bearing quartz veins located at Zona Canchete.

The Phase II program consists of detailed geological mapping, sampling, development of additional underground workings and the collection and processing of an initial 150-200 tonne bulk sample at the ZCV#1.  This work will assist in determining the horizontal and vertical extent of the vein, as well as, the vein’s physical and gold grade characteristics.

As of January 2006, the Company had completed approximately 102m (335 feet) of new underground development in order to provide access to the vein being bulk-sampled.  The 20m-level has been extended for 43m (141 ft) from the winze (central shaft) to the now completed portal (entrance).  The winze itself has been deepened by 12m (39 ft).  Drifting on the 40m-level has advanced a total of 47.4m (155 ft) which includes 22.6m (74 ft) to the east of the winze and 24.8m (81 ft) to the west of the winze.

Detailed sampling from the existing underground workings confirms that both the gold values and the vein width are getting stronger with depth.  On the 40m-level, the overall grade and continuity of the veins are improving with distance away from the winze both to the east and to the west.  For example, the average grade of the vein between 10.5m east and 22.6m east (a distance of 12.1m or 39 ft) is 3.0 oz/T gold.  The average grade of the vein between 20m west and 24m west is 1.36 oz/T gold over an average vein width of 31.6cm (12.5 inches).

As of January 2006, the Company had recovered 74.4 ounces of gold from an initial 53.7 tonne bulk sample processed at the Dynacor mill.  The grade of the 53.7 tonne sample was 1.56 oz/t gold.  This grade (1.56 oz/t Au) is significantly higher than was anticipated based on systematic face sampling of 40m level which produced an average grade of 1.36 oz/t Au.

For additional information on the Tesoro Gold Property please refer to news releases that pertain to the project.