Silver Quest Resources Ltd.
TSX VENTURE : SQI

Silver Quest Resources Ltd.

July 20, 2011 16:22 ET

Silver Quest Closes First Tranche of Private Placement for Gross Proceeds of C$9.8m

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 20, 2011) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Silver Quest Resources Ltd. (TSX VENTURE:SQI) (the "Company") is pleased to announce the closing of the first tranche of its brokered private placement financing (the "Brokered Offering") announced on June 28, 2011 for gross proceeds of C$7,524,694 from the sale of 2,505,000 units (the "Units") at a price of C$1.00 per Unit and 4,364,952 common shares issued as "flow-through" shares for the purposes of the Income Tax Act (Canada) (the "Flow-Through Shares") at a price of C$1.15 per Flow-Through Share. The Brokered Offering was conducted by a syndicate of agents led by Paradigm Capital Inc. that also included Stonecap Securities Inc. and Scotia Capital Inc. (collectively, the "Agents").

The Company also announces the closing of its non-brokered private placement (the "Non-Brokered Offering") for gross proceeds of C$2.3 million from the sale of 2,300,000 Units.

Each Unit consisted of one common share of the Company and one-half of one common share purchase warrant of the Company (each whole warrant being a "Warrant"). Each Warrant entitles the holder thereof to purchase one common share at a price of C$1.30 per share until 18 months from the closing date.

In connection with the Brokered Offering, the Agents received a cash commission equal to 6% of the gross proceeds from sales to subscribers introduced to the Brokered Offering by the Agents and options entitling the Agents to acquire 396,897 common shares of the Company (the "Brokered Compensation Options"). Each Compensation Option entitles the holder to purchase one common share at a price of C$1.15 per share until 18 months from the closing date. The Agents also received a cash commission equal to 3% of the gross proceeds from sales to subscribers included on the Company's president's list other than with respect to 45,000 Units and 10,000 Flow-Through Shares.

In connection with the Non-Brokered Offering and subject to TSX Venture Exchange final approval, the Company will pay to an arm's length third party a finder's fee by issuing 138,000 Units, being 6% of the proceeds raised from the Non-Brokered Offering, and compensation options (the "Non-Brokered Compensation Options") equal to 6% of the number of Units sold pursuant to the Non-Brokered Offering. Each Non-Brokered Compensation Option is exercisable to purchase one common share of the Company at a price of C$1.15 until 18 months from the closing date.

The Agents have placed the remainder of the Units which will fulfill the entire private placement announced on June 28, 2011, however the closing of this tranche requires a separate regulatory waiver, which is anticipated to be received shortly.

The net proceeds from the private placement will be used by the Company for exploration at its BC properties which may include the Davidson, Capoose and 3Ts and exploration at its Yukon properties, which may include Prospector Mountain, Rude Creek, Henderson and Boulevard as well as for general corporate purposes. The gross proceeds received by the Company from the subscribers for the issuance of the Flow-Through Shares will be used, pursuant to the provisions in the Income Tax Act (Canada), to incur Canadian Exploration Expenses which will be renounced in favour of the subscribers for the taxation year ending December 31, 2011. The securities issued in the private placement are subject to a four month hold period in accordance with applicable Canadian securities laws.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to or for the account or benefit of a U.S. person as defined under applicable securities laws unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

SILVER QUEST RESOURCES LTD.

Randy Turner, President

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Silver Quest Resources Ltd.
    Investor Relations
    604-687-3959
    604-687-1448 (FAX)
    info@silverquest.ca