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SLI News Tesoro Gold Project, Peru - Plan of Development

Based on exploration results to date, management believes that the Tesoro Gold Project offers St. Elias the opportunity to become a small scale gold producer that would generate a profit which could fund exploration activities while concurrently defining resources or reserves. The following news release sets out the plan of action the Company has developed to provide St. Elias with a path forward to guide the exploration and development of the Project through to small scale gold production.

Property

The Tesoro Gold Project is situated in a highland desert plateau in southwestern Peru. The Project is 100% owned by the Company with no underlying royalties. The Project is located within the prolific Nazca-Ocono Gold Belt within which there are at least 70 known gold deposits comprising narrow but generally high-grade auriferous quartz veins. Although the veins are narrow, typically less than 1.0 metres wide, mineralized structures tend to extend along strike for kilometres and at depth for up to 1,000 metres.

Exploration and Development

Work on the Project began in 2004 with a "first pass" grassroots exploration program consisting of reconnaissance mapping and prospecting over the entire property, detailed geological mapping and sampling of vein exposures and alteration zones. To date, the Company has identified five mineralized zones with more than 50 quartz veins (having a total combined length of 9km) and has confirmed consistent high-grade gold mineralization of the Zona Canchete #1 Vein ("ZCV#1 Vein"). The ZCV#1 Vein is only one of eight gold bearing quartz veins located at Zona Canchete.

Underground exploration and development of the ZCV#1 Vein began in June 2005. The character of the ZCV#1 Vein is that of a strong, persistent quartz vein that varies from a few centimeters to 30 or more centimeters in thickness and is consistently well-mineralized with gold. The ZCV#1 Vein has been traced along strike for approximately 100m and to a depth approaching 60m -- mineralization is consistent both along strike and to depth.

To date, the Company has completed a total of approximately 282.4 (926 feet) of underground development including: 94.4 meters (310 feet) of winzes and raises to a depth of 60 metres below surface; and 188 meters (617 feet) of drifting on the 20m and 40m levels. Even though it is not wide, the ZCV#1 Vein is consistently mineralized with high-grade gold.

In addition, the Company has completed two shipments (totaling approx. 120 tonnes) of a bulk sample from the ZCV#1 Vein. The bulk samples were shipped and processed at the milling facilities of Toronto-listed Dynacor Mines Incorporated, located approximately 15km north of the Tesoro Project. The first bulk sample of 53.7 tonnes returned a grade of 1.56 opt gold and the second bulk sample of 66.1 tonnes returned a grade of 0.874 opt gold. The average gold grade of both of these bulk samples was 1.18 opt and 90% gold recovery was reported by the mill.

During the past year, the Company has continued with its underground development and bulk sampling program at the ZCV#1 Vein, having decided that superior exploration information would result from drifting than from drilling. A portion of the Company's exploration expenditures has been recouped by the Company by selling its gold-bearing vein material to the Dynacor mill.

Based on underground exploration results to date, the Company is convinced that the ZCV#1 Vein is sufficiently consistent in three dimensions and that a more concerted effort is warranted for a second stage of exploration, which is to demonstrate that, on the ZCV#1 Vein alone, the scale of operations can be upgraded to recoup all investment costs and to demonstrate profitability.

Plan of Development

The Company plans to develop the Project by incrementally expanding the operation from artisanal levels of production through to a profitable production level while concurrently defining resources or reserves. The expansion, for the most part, can be funded from production revenue, however some cash infusion will be needed at the onset.

It is important to note, at this point in time, that there are no NI-43-101 compliant reserves or resources defined for the Tesoro Project. However, face (or back) sampling of the ZCV#1 Vein along the 40 and 60 metre levels as well as in the raises and shafts, along with closely-spaced shallow drilling, and surveying of these levels is expected to result in the ability to calculate NI-43-101 compliant resources.

An initial capital infusion of US$370,000 is required and will be used to fund the ongoing underground development and bulk sampling program and to fund the expansion of the operations. Skilled labor costs in Peru are low ($12 per day) and conducive to hand cobbing and small scale mining, and the existence of a nearby custom mill bodes well for the Project in that the existing infrastructure greatly reduces the capital costs and environmental liabilities for the Project.

Once profitability is demonstrated on the ZCV#1 Vein, the Company plans to bring other veins at Zona Canchete on line, and eventually move to exploit gold-bearing quartz veins in other zones within the Property. To date, there are four gold-bearing quartz veins within 100 meters of the ZCV#1 Vein which could be exploited from the current site of operations.

Goals

Based on exploration results to date and the development plan, management has set the following goals:

-- Short-Term Goal: produce 200-300 Tonnes Per Month or TPM, within an estimated three to six month time frame (capital expenditure of approx. US$370,000)

-- Long-Term Goal: produce 50-100 Tonnes Per Day or TPD, within an estimated 18 to 24 month time frame (funded from production revenue)

-- Ultimate Goal: substantial "43-101 Proven Mineral Reserves" within an estimated 24 month time frame

Summary

The Company plans to develop the Project by incrementally expanding the operation from artisanal levels of production through to a profitable production level while concurrently defining resources or reserves.

Lori McClenahan, President of the Company, states "This is not a novel approach to underground exploration and mining. This methodology has been used by well-known mining companies for generations. Essentially drifting instead of drilling provides you with superior exploration information and revenue from milling vein material."

All technical work is being supervised by, and the technical information contained in this news release has been verified by, John Brophy, P.Geo., a Canadian geologist residing in Peru, who is an independent qualified person as defined in "National Instrument 43-101, Standards of Disclosure for Mineral Projects."

For additional information on St. Elias and its projects, please visit us at www.steliasmines.com or call 1-888-895-5522 (toll free US and Canada).

ST. ELIAS MINES LTD.

Lori McClenahan, President

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of the contents of this document.

This news release contains forward-looking statements regarding the ongoing and upcoming exploration work and expected geometry of geological formations and structures. Actual results may differ materially from those currently anticipated in such statements.