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

With exploration programs ongoing at three properties near New Gold‘s (NGD-T) multimillion-ounce Blackwater gold project in north-central British Columbia and at 17 properties near Kinross Gold‘s (K-T, KGC-N) White Gold deposit in the Yukon, Silver Quest Resources (SQI-V) has decided to shore up more cash early on in the 2011 exploration season.

Despite already boasting over $8 million in its treasury as at 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 of that will be put 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 approximately 20,000 metres of diamond drilling, metallurgical testwork, engineering studies and environmental baseline studies. Located adjacent to the Blackwater project, approximately 110 km southwest of Vanderhoof, B.C., Davidson currently hosts inferred resources totalling 46.2 million tonnes grading 0.92 gram gold per tonne, or 1.36 million oz. of contained gold.

Silver Quest has also started a $500,000 exploration program on its 3Ts gold-silver project about 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 15.4 metres grading 8.88 grams gold and 393.6 grams silver, with Silver Quest now planning on testing three known veins and one new target using the drill bit.

Finally, at the larger Capoose gold-silver-zinc project, about 15 km west of Davidson near the border of the Entiako Provincial Park, Silver Quest plans more sampling and prospecting followed by a diamond drill program later in the 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 and 443,000 oz. gold respectively (31 million tonnes grading 0.38 gram gold indicated and 37 million tonnes grading 0.37 gram gold inferred).

As for its work programs in the Yukon, Silver Quest has roughly 4,000 mineral claims to explore covering over 85,000 hectares in the promising White Gold district. (It claims to be one of the largest landholders in the area, with 17 properties.)

The company is now busily collecting over 20,000 soil samples over all the properties while completing geological mapping, airborne geophysical surveying and roughly 15,000 metres of diamond drilling in a work 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, Yukon, 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 about 135 km south of Dawson City and 35 km south of Kinross’s Golden Saddle deposit. Even better, 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 about 1.5 km of the trend but parts of the rest will be completed this summer and fall.

Currently trading near its 5-year high, Silver Quest closed down 8¢ to 99¢ following the June 28 private placement announcement. The company has 92 million shares outstanding (105 million fully diluted) and has a 52-week range of 37¢-$1.13.