Silver Quest to raise $12M for BC, Yukon exploration

With exploration programs ongoing at three properties near New Gold‘s (NGD-T) multimillion-ounce Blackwater gold project in north-central B.C., and at 17 properties near Kinross Gold‘s (K-T, KGC-N) White Gold deposit in the Yukon, Silver Quest Resources (SQI-V) is shoring up more cash for the 2011 exploration season.

Despite boasting over $8 million in its treasury as of Feb. 28, 2011, Silver Quest has arranged to raise another $12 million through a combination of unit and flow-through financings at $1 a unit, and $1.15 a flow-through share.

Roughly $1.8 million will go toward the company’s share of exploration expenditures on its most advanced gold property, Davidson, in which it holds a 25% participating interest, with New Gold holding the remaining 75% as operator. The joint-venture partners have planned an $8.6-million work program at Davidson for 2011, including 20,000 metres of diamond drilling, metallurgical testwork, engineering studies and environmental baseline studies. Located adjacent to the Blackwater project 110 km southwest of Vanderhoof, B.C., Davidson hosts inferred resources totalling 46.2 million tonnes grading 0.92 gram gold per tonne, or 1.36 million contained oz. gold.

Silver Quest has also started a $500,000 exploration program on its 3Ts gold-silver project 20 km southwest of Davidson. This will include 2,000 metres of diamond drilling, as well as more mapping and prospecting. Historical drilling by previous operators of the property turned up 15 metres grading 8.88 grams gold and 393.6 grams silver. Silver Quest now plans on testing three known veins and one new target using the drill bit. 

At the larger Capoose gold-silver-zinc project, 15 km west of Davidson near the border of the Entiako Provincial Park, Silver Quest plans more sampling and prospecting followed by diamond drilling later this year. The company completed 26 holes at Capoose last year, leading to an updated resource estimate in March 2011 which pegged indicated and inferred resources of 384,000 oz. gold and 443,000 oz. gold, respectively, with 31 million tonnes grading 0.38 gram gold indicated and 37 million tonnes grading 0.37 gram gold inferred.

Silver Quest has 4,000 mineral claims to explore in the Yukon, covering over 850 sq. km in the promising White Gold district. It says it’s one of the largest landholders in the area, with 17 properties.

The company is collecting more than 20,000 soil samples while completing geological mapping, airborne geophysical surveying and 15,000 metres of diamond drilling in a program estimated to cost $5 million. Work will start on the company’s Prospector Mountain and Boulevard projects. 

Prospector Mountain is a gold-copper porphyry prospect believed to also host peripheral epithermal high-grade gold-silver-copper veins on the western side of the property. Located some 90 km northwest of Carmacks, N.W.T., access to the property is via 4×4 vehicles or helicopter. Initial work will test the Bonanza zone, a 1,600-metre-long anomalous trend where samples have returned up to 109 grams gold per tonne, 543 grams silver and 1.63% copper.

The Boulevard project is in a historic placer gold district 135 km south of Dawson City and 35 km south of Kinross’ Golden Saddle deposit. The project adjoins the southwest and northwest borders of Kaminak Gold‘s (KAM-V) latest Yukon gold discovery, the Coffee project. In fieldwork completed at Boulevard last year, Silver Quest identified a 20-km-long geochemical anomaly from soil samples that returned gold, arsenic, antimony and molybdenum. Previous drilling has tested 1.5 km of the trend, with more testing anticipated before 2012.

Trading near its five-year high, Silver Quest fell 8¢ to 99¢ following the June 28 private placement announcement. The company has 92 million shares outstanding and 105 million fully diluted, with a 52-week range of 37¢-$1.13.