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St. Elias Mines options 60% of Chance E concession to IntiGold Mines for $1.7 million

St. Elias Mines (CVE:SLI) announced Wednesday it will option up to 60% of its 'Chance E' mineral concession to IntiGold Mines (CVE:NSC) in a cash-and-share deal valued at $1.7 million.

Under the terms of the agreement, St. Elias will provide IntiGold with a 60% interest on its Chance E claim, located in southwestern Peru, subject to a 1.5% net smelter return (NYSE:NSR). 

In return, St. Elias will receive a cash payment of $500,000, and one million common shares of IntiGold, which is also required to spend $1.0 million in exploration expenditures on the property over three years.

St. Elias president and CEO, Lori McClenahan said: "St. Elias continues to negotiate a variety of property deals that we are confident will create additional value for shareholders."

"The optioning of the Chance E Claim not only allows another company to fund initial exploration but will also provide valuable geological information regarding the Tesoro Gold Project area."

The Chance E claim adjoins St. Elias' wholly owned Tesoro gold project in southwestern Peru, which recently began a 10,000-metre drill program 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 an induced polarization anomaly, which are consistent with known mineralization trends on the property.

The project covers a 6,974 hectare area on the prolific Nazca-Ocoña 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.

"The aggressive drill programs at Tesoro for 2011 are aimed at revealing the discovery premiums that we feel are hidden in our substantial portfolio of quality gold properties," McClenahan added.

In the first year of IntiGold's commitment, it must pay $25,000 to St. Elias and incur $200,000 in exploration work.