St. Elias hits Gralheira veins at depth

Right on cue, deep drilling at St. Elias Mines‘ (SLI-V) property in northern Portugal has intersected the Gralheira vein system more than 500 metres below surface while testing a geophysical anomaly.

Assay results are pending but investors embraced the news, sending shares up a dime to a 41 — a 34% gain on 15 times the company’s average trading volume.

Situated in the Tras-O-Montes region of Portugal, the Jales/Gralheira property covers 16.8 sq. km and hosts the past-producing Jales mine, as well as the Gralheira gold deposit, some 700 metres north. Before shuttering the operation in 1992, Jales produced 830,000 oz. gold from material grading 12.9 grams gold per tonne.

Crews, targeting one of eight high-priority geophysical targets, intersected three subparallel vein structures in hole K19 which was drilled to a depth of 529 metres. The vein intercepts occurred within metres of where the company’s geologists had predicted — the first vein was hit at 424.5 metres down-hole, the second at 457.7 metres, and the third at 511.4 metres below surface, 270 metres deeper than the deepest intercept in hole K18.

St. Elias Mines President Lori McClenahan says things are looking positive but would not discuss the widths of the vein intercepts or the nature of the mineralization until assay results return from the lab.

Gold mineralization at Jales occurs in a 3-km-long shear zone in subparallel veinlets and veins ranging from 0.5-1.5 metres in width. Both deposits were mined by the Romans: Jales to a depth of roughly 620 metres, whereas Gralheira produced at depths of around 180 metres.

From 1985 to 1990, Rio Tinto (RTP-N) and French government-owned Bureau des recherches gologiques et minires jointly drilled 50 holes on the property, 47 on Gralheira alone. Covering a 1.2-km strike length, 45 of the holes cut the vein structure, with roughly 20% of the intersections returning more than 8 grams gold per tonne.

The partners also drifted a 359-metre adit, thereby exposing the vein system along its length. Assays from samples collected from a 23-metre raise averaged 12.63 grams gold and 52.7 grams silver per tonne across 1.1 metres.

A pre-evaluation study on Gralheira by Cogema in 1997 outlined a historical resource containing some 200,000 oz. gold, while metallurgical testing on bulk samples showed that more than 90% of the gold could be recovered by flotation.

After signing an option deal with Kernow Resources and Developments (KRD-V) in 2002, St. Elias drilled 1,500 metres targeting high-grade zones at Gralheira. St. Elias envisages an underground mine at Gralheira using narrow stoping methods, and an open-pit mine where the two structures coalesce. After initially aiming at high-grade tonnage in an effort to get mining under way, results from a recent geophysical survey by consulting firm Quantec revealed several targets at much greater depths than previously thought.

The survey showed that the Gralheira mineralized system extends 1,250 metres below surface. The survey also suggested that mineralization in the Adit zone extends another 500 metres further east.

Following up on the latest intercepts, hole K19A is a wedge designed to intersect the veins above those found in hole K19, starting from around 250 metres down-hole.

Plans call for continued drilling over the next two months on high-priority targets along the Gralheira system at a cost $400,000, after which St. Elias will have vested its 51% interest. The company must spend another $2.5 million to earn a 75% interest in the project.