Silver Quest Announces Amended Terms to Tsacha Agreement, 3Ts Project, BC
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 05/12/11 -- Silver Quest Resources (TSX VENTURE: SQI) ('Silver Quest' or 'the Company') is pleased to announce that an agreement has been reached with Teck Resources Limited ('Teck') to amend the terms of a property option agreement dated April 2, 2002. Pursuant to that agreement Teck granted the Company the sole and exclusive right and option to acquire an undivided 100% right, title and interest in and to five mineral tenures located in the Omineca Mining Division of British Columbia (the 'Tsacha Property'). Silver Quest's acquisition of Teck's interest in the Tsacha Property was subject to a two-tier net smelter return ('NSR') royalty (which at present gold prices, range from a minimum of 4.0% to a maximum of 4.5% payable on all metals produced) as well as a back-in right reserved to Teck on the Tsacha Property and adjacent lands held by the Company.
The Tsacha Property and adjacent lands now held by the Company are commonly referred to as the '3Ts Project'. Silver Quest has completed all of its obligations under the April 2, 2002 option agreement and holds a 100% interest in the Tsacha Property, subject to the terms of the amended property option agreement.
Pursuant to the amendment, following acceptance of the transaction by the TSX Venture Exchange, the NSR royalty payable on gold and other metals produced from the 3Ts project will be reduced from the previous range of 4.0% to 4.5% to a flat 2.0% and the back-in right will be extinguished.
As consideration for Teck agreeing to the amendments referred to above, Silver Quest will: (i) issue one million of its common shares to Teck; (ii) make a one-time payment to Teck upon the project achieving commercial production of an amount equal to $5.00 per ounce of gold multiplied by the number of ounces of gold in the reserve and resource categories reported in the feasibility study used to make the decision to place the project into commercial production; (iii) pay a flat 2% NSR royalty on gold and all other metals produced from the project; and (iv) if before December 31, 2013, Silver Quest sells, leases or options the property to a third party, Silver Quest will pay to Teck 10% of the gross proceeds received by Silver Quest from such sale, lease or option.
The shares issuable following acceptance by the TSX Venture Exchange will be subject to a hold period of four months and one day from the date of issuance. Following acceptance, Silver Quest intends to implement an exploration program on the 3Ts project involving an expenditure of approximately $550,000 during the 2011 field season.
The 3Ts project covers an epithermal quartz-carbonate vein system within which 12 individual mineralized veins have been identified to date, ranging from 80 metres to 650 metres in strike length. A number of high grade drill intercepts have been encountered to date. On the Ted Vein, the best intersection reported to date is 8.88 grams/tonne ('g/t') gold and 393.6 g/t silver over 15.4 metres (true width) and on the Tommy Vein 8.83 g/t gold and 62.6 g/t silver over 8.07 metres (true width). A National Instrument 43-101 compliant resource estimate was completed on a portion of the Ted and Tommy veins, reporting 942,600 tonnes @ 4.89 g/t gold and 77 g/t silver or 148,100 ounces of gold and 2.36 million ounces of silver.
A minimum 2,000 metre drilling program is proposed for the 2011 field season to test several of the veins at depth and along strike. Drilling will also be carried out to delineate the source of a cluster of large boulders, referred to as the Ringer Zone. The mineralized quartz-carbonate vein boulders at the Ringer Zone are up to two metres in maximum dimension and eight of these boulders returned an average of 19 g/t gold and 140 g/t silver (see the Company's news release of September 24, 2003). The exploration program also includes prospecting and mapping.
The 3Ts project consists of four contiguous properties - the Tsacha, Tam, Taken and Tommy Lakes properties located in the Nechako Plateau region of central British Columbia, approximately 120 kilometres southwest of Vanderhoof. Collectively, the project consists of nine mineral claims totaling 2,853 hectares.
David Pawliuk, P.Geo., Vice President Exploration for Silver Quest is the Qualified Person, as defined by National Instrument 43-101, for the 3Ts Project and supervised the preparation of the technical information in this release.
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.
Contacts:
Silver Quest Resources Ltd.
Investor Relations
604-687-3959
604-687-1448 (FAX)
info@silverquest.ca