Silvercorp Metals Inc.
TSX : SVM

Silvercorp Metals Inc.

May 30, 2006 09:00 ET

Silvercorp Metals Inc.: Mineral Resources More Than Doubled in New Report on the Ying Silver Mine, Henan Province, China

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 30, 2006) - Silvercorp Metals Inc. ("Silvercorp) (TSX:SVM) is pleased to report the completion of an update of the mineral resources at the Ying mine. The National Instrument ("NI") 43-101 Technical Update Report (the "Resource Report") dated May 26, 2006 supplements the Scoping Report completed April 18, 2006. This Resource Report almost doubles the Measured + Indicated mineral resources and more than doubles the Inferred mineral resources previously reported.

The Resource Report estimate is summarized below:

The current estimated mineral resources of Silver (Ag), Lead (Pb) and Zinc (Zn) in parts of 14 veins explored to date at the Ying mine in grams per tonne (g/t) and Troy ounces per metric tonne (oz/t) are as follows:

Summary of mineral resource estimates at the Ying mine - 26 May 2006



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Ag
Resource Thickness Ag Ag Pb Zn Equiv(i)
Category (m) Tonnes (g/t) (oz/t) (%) (%) (g/t)
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Measured 0.49 350,765 1,397 44.92 24.34 9.69 2,884
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Indicated 0.37 460,854 1,639 52.70 28.11 7.79 3,195
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Measured +
Indicated 0.42 811,620 1,535 49.34 26.48 8.61 3,061
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Inferred 0.45 1,246,013 1,426 45.86 25.47 9.38 2,946
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Contained Metal Resource
-----------------------------------------
Ag
Resource Equiv(i)
Category Ag (oz) Pb (t) Zn (t) (oz)
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Measured 15,755,537 85,381 34,001 32,524,723
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Indicated 24,288,513 129,557 35,894 47,338,594
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Measured +
Indicated 40,044,051 214,938 69,896 79,863,316
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Inferred 57,143,860 317,362 116,914 118,030,208
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(i) Ag Equivalent is calculated using US$6.50/oz Ag, US$0.40/lb Pb,
and US$0.45/lb Zn
Calculations reflect gross metal content and have not been adjusted
for metallurgical recoveries.


Using the Measured+Indicated Resources in the Resource Report, a 100% dilution factor and 95% mining recovery rate for the high grade resources, a potentially mineable measured plus indicated resource is calculated to be (mineable 2005 Resource estimates in brackets): 1,542,078 tonnes (756,815 tonnes) grading 767 g/t or 24.68 oz/t Ag (696 g/t or 22.3 oz/t Ag); 13.24% Pb (16.36% Pb); and 4.31% Zn (4.99% Zn). Assuming a mining rate of 140,000 tonnes for 2006/2007 fiscal year and 300,000 tonnes per year thereafter, the resources at Ying could sustain mine production for about six years. With geological interpretation and understanding of the Ying property and considering its similarity to the Coeur d'Alene district in Idaho, the aggressive tunneling and drilling program recommended in this report for 2006/2007 could extend the mine life far beyond six years. The Resource Report determined it is reasonable to assume Silvercorp can reach its production goal without incurring substantial capital cost.

Based on after-smelter net metal prices of US$7.50/oz Ag, US$0.38/lb Pb, and US$0.71 lb Zn, and assuming production cost of US$40.94 per tonne mined for the first year and US$36.73 per tonne mined thereafter, with mineral processing recovery rates of 95% for Pb, 90% for Ag, and 75% for Zn, Silvercorp's share (77.5%) of projected net profit is anticipated to be US$26.2 million for the 1st year, US$64.6 million for the 2nd year, and US$54.9 million for each of the 3rd, 4th years, and 5th year, and US$45.2 million for the 6th year. The capital payback period is projected to be zero as all the capital expenditures are projected to be financed from the first year's cash flow. For foreign invested companies such as the joint venture company holding the Ying, income is tax-free for the first two years, taxable at 15% in years 3 to 5, and taxable at 30% thereafter. This projection, however, is based on mineral resources which are not mineral reserves, and therefore do not have demonstrated economic viability.

If revenue from lead and zinc is used to cover production cost, then unit silver production cost adjusted for lead and zinc credit is projected to be negative US$5.02 to negative US$4.72 per ounce. If lead and zinc are treated as free credits and only silver revenue is used to cover the production cost, then the unit silver production cost is projected to be US$1.62 per ounce.

Of 27,574 m of tunnels completed since August 2004, about 17,300 m are mining development tunnels. The mine development is sufficiently advanced so that preliminary production commenced upon receipt of the mining permit. Currently sixteen stopes developed from various elevation levels on seven different veins are under production. An additional four stopes are expected to be mined in three months, reaching a phase one mining capacity of 600 tonnes per day ("tpd").

During the past two-year period, the Ying Project has rapidly expanded the silver-lead-zinc resource. This is due to tunneling along the veins, declines and raises along the veins, and crosscuts intersecting new veins. By continuing a similar level of exploration, the Resource Report concluded that existing veins will likely be expanded and new veins discovered.

The Resource Report is authored by Chris Broili, C.P. Geo., L.P. Geo., Mel Klohn, L.P. Geo., Jasman W. Yee, P.Eng., and Michael A. Petrina, P.Eng., all independent Qualified Persons, and Cathy Shuk Yim Fong, P.Eng., a Qualified Person and V.P. Corporate Development for Silvercorp. Development of the Ying Project is carried out through Silvercorp's 77.5% subsidiary, Henan Found Mining Co. Ltd. ("Found"), a Sino-foreign joint venture company which holds 100% of the Ying Project and operates under a 30-year business license.

Myles Gao, P.Geo., is the Company's Qualified Person on the project under NI 43-101.

Statements in this press release other than purely historical information, including statements relating to the Company's future plans and objectives or expected results, constitute forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in the Company's business, including risks inherent in mineral exploration and development. As a result, actual results may vary materially from those described in the forward-looking statements. Production and revenue projections are based not on mineral reserves but on mineral resources which do not have demonstrated economic viability.

Contact Information

  • Silvercorp Metals Inc.
    Rui Feng
    Chairman & CEO
    (604) 669-9397
    or
    Silvercorp Metals Inc.
    Cathy Fong
    VP Corporate Development
    (604) 669-9397
    (604) 669-9387 (FAX)
    info@silvercorp.ca
    www.silvercorp.ca