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St. Elias starts diamond drilling at Tesoro, to raise $4.5m in private placement

St. Elias Mines (CVE:SLI) announced Wednesday it has started a 10,000-metre drill campaign on its Tesoro gold project in Peru.

The drill program is designed to test the near-surface and deep-seated geophysical anomalies identified by earlier surveys, with the first series of drill holes testing high-priority targets, including a down-dip extension, in the Zona Central region, of known gold mineralization.

At Zona Central, St. Elias said there are northwest-southeast faults associated with IP an anomaly, which are consistent with known mineralization trends on the property.

The project covers a 6,974 hectare area on the prolific Nazca-OcoƱa gold belt in southwestern Peru.

To date, St. Elias has identified five mineralized zones with over 50 quartz veins, with a total depth of nine kilometres. Underground exploration and development work has so far been carried out on three of these veins.

Still, the Vancouver, B.C.-based company said the property has not been evaluated to depth, or along the full strike length, leaving strong potential for the discovery of additional mineralization.

In separate news, St. Elias said it has negotiated a non-brokered private placement of up to 2.5 million units at $1.801 per unit, for total gross proceeds of $4.5 million.

Each unit will consist of one common share of St. Elias common stock, and one common share purchase warrant, which may be exercised for a single common share of the company at a price of $2.10 per share, for one year following closing.

The private placement, which is subject to regulatory approval, will help the company fund its exploration expenses for the Tesoro property.

St. Elias' stock on the TSX-Venture rose 0.97% today, trading at $2.09 per share as of 3:31 pm EDT.