SOURCE: Silver Dragon Resources Inc.

August 22, 2006 08:00 ET

Silver Dragon Announces High-Grade Silver Assay Results, 1,435 Grams per Tonne/46.1 Ounces Silver From Sulphide Intercepts in New Discovery of Ag-Pb-Zn Mantos at Cerro Las Minitas, Mexico

DURANGO, MEXICO -- (MARKET WIRE) -- August 22, 2006 -- Silver Dragon Resources Inc. (OTCBB: SDRG) is pleased to announce the receipt of assays from the third drill hole, Drill Hole LM-03 at its Cerro Las Minitas Project in Durango, Mexico.

Drill Results from Drill Hole LM-03

Drill Hole LM-03 was drilled to a depth of 396.6 meters at an angle of -70° to further test the Puro Corazón structures and additional targets suggested by data from drill hole LM-02. Four of the six intercepts cut in this hole, summarized in the table below, returned grades of economic interest. Reported intervals are measured core lengths, and their true widths have yet to be determined.

Highlights from Drill Hole LM-03 are:

--   @ 238.75 metres downhole:   1.15 metres grading 862 g/t (27.7 oz/ton)
                                 silver, 17.07% lead, 18.97% zinc, and
                                 0.10% copper

                    Including:   0.45 metres grading 683 g/t (21.95 oz/ton)
                                 silver, 12.6% lead,  4.92% zinc, and 0.17%
                                 copper
                          And:   0.70 metres grading 977 g/t (31.4 oz/ton)
                                 silver, 19.95% lead, 28.0% zinc, and 0.09%
                                 copper

--   @ 298.15 metres downhole:   1.50 metres grading 1318 g/t
                                 (42.35 oz/ton) silver, 25.11% lead, 17.27%
                                 zinc, and 0.3% copper

                    Including:   0.80 metres grading 1435 g/t (46.1 oz/ton)
                                 silver, > 30% lead,  21.0% zinc, and 0.11%
                                 copper
                          And:   0.70 metres grading 1185 g/t (38.1 oz/ton)
                                 silver, 18.95% lead, 13.0% zinc, and 0.54%
                                 copper

--   @ 370.9 metres downhole:    0.55 metres grading 330 g/t (10.6 oz/ton)
                                 silver, 0.63% lead, 0.58% zinc, and 0.78%
                                 copper

--   @ 390.1 metres downhole:    0.90 metres grading 333 g/t (10.7 oz/ton)
                                 silver, 0.71% lead, 3.6% zinc, and 0.70%
                                 copper
Weighted Average (Composite) Assay Values for Intercepts cut in Drill Hole LM-03
                               Length     Ag
Interval    From (m)  To (m)    (m)     (g/ton)  Pb (%)   Zn (%)   Cu (%)
            -------- -------- -------- -------- -------- -------- --------

            -------- -------- -------- -------- -------- -------- --------
LM-03-1       238.75   239.90     1.15      862    17.07    18.97     0.10
            -------- -------- -------- -------- -------- -------- --------
including     238.75   239.20     0.45      683    12.60     4.92     0.17
            -------- -------- -------- -------- -------- -------- --------
and           239.20   239.90     0.70      977    19.95    28.00     0.09
            -------- -------- -------- -------- -------- -------- --------

            -------- -------- -------- -------- -------- -------- --------
LM-03-2       298.15   299.65     1.50     1318    25.11    17.27     0.30
            -------- -------- -------- -------- -------- -------- --------
including     298.15   298.95     0.80     1435   >30.00    21.00     0.11
            -------- -------- -------- -------- -------- -------- --------
and           298.95   299.65     0.70     1185    18.95    13.00     0.54
            -------- -------- -------- -------- -------- -------- --------

            -------- -------- -------- -------- -------- -------- --------
LM-03-3       350.35   350.80     0.45      212     0.43     8.06     0.82
            -------- -------- -------- -------- -------- -------- --------

            -------- -------- -------- -------- -------- -------- --------
LM-03-4       368.20   368.75     0.55      123     0.05    11.95     0.41
            -------- -------- -------- -------- -------- -------- --------

            -------- -------- -------- -------- -------- -------- --------
LM-03-5       370.90   371.45     0.55      330     0.63     0.58     0.78
            -------- -------- -------- -------- -------- -------- --------

            -------- -------- -------- -------- -------- -------- --------
LM-03-6       390.10   391.00     0.90      333     0.71     3.60     0.70
            -------- -------- -------- -------- -------- -------- --------
Interpretation of Drill Results

Drill Hole LM-03, designed to test mineralized structures west of Puro Corazón as well as the Puro Corazón itself, is the third of a series of holes drilled into the Puro Corazón. Data acquired from Drill Holes LM-01and LM-02 revealed that newly discovered sulphide zones west of the Puro Corazón structures are Ag-Pb-Zn mantos. High-grade intercepts returned from Drill Hole LM-03 demonstrate those have at least 20 meters of continuity along bedding. The full extent of this continuity is unknown as the mineralization is still open in all directions.

Two distinct mineralized environments were explored by drill hole LM-03. Intercepts LM-03-1 and LM-03-2 explored mineralization in the manto environment where massive to semi-massive sulfides with high silver grades replace certain carbonate beds. The high silver grades returned from intercepts of manto mineralization to date reveal that it is much higher in grade than the skarn mineralization that was mined at Cerro Las Minitas historically.

Intercepts LM-03-3, LM-03-4, LM-03-5 and LM-03-6 were encountered the Zn-Skarn environment of the Puro Corazón structures. These intercepts show that high-grade silver mineralization in the Puro Corazón structures continue to at least 330 meters depth.

Doug Wood, Chief Geologist at Cerro Las Minitas, said, "We are very pleased to find that the Puro Corazón mantos are not only yielding very high grades, but also display the kind of continuity we want to see. We have very recently discovered strong evidence of the presence of more high-grade silver mantos in another part of the Cerro Las Minitas district and are moving the drill to make a first test of them. We are analyzing the results of the first round of drilling in the Puro Corazón area and plan to return to expand the resources we've discovered there. As we are now beginning to understand the controls of mineralization in the district, our rate of discovery is increasing and we expect this to continue. The potential of this district appears to be much larger than previously anticipated."

District Exploration

Exploration of recently rehabilitated workings has shown that high-grade Ag-Pb-Zn mantos also exist in the La Bocona area at Cerro Las Minitas. The upper portions of an enriched oxide Ag-Pb-Zn manto were worked by the Spanish conquistadores. However the mine collapsed on them before they reached the sulfide ores below. The Spaniards abandoned the project after the mine caved in. Later gambusino workings reached a rich manto, and underground exploration now in progress suggests that those miners missed much of the mineralization that may be present there. Drilling is planned for the area as soon as underground information has been compiled and analyzed.

"Our knowledge of Cerro Las Minitas is growing rapidly and we are discovering new opportunities in several areas of the district, most of which have had little previous exploration," said Doug Wood.

Mr. Douglas R. Wood, P. Geo., a "qualified person" within the meaning of NI 43-101, prepared the technical information disclosed in this news release.

About Cerro Las Minitas

Cerro Las Minitas is comprised of 16 concessions covering 1423 Hectares. It is located 68 kilometers northeast of the city of Durango, Mexico and comprises the Cerro Las Minitas mining district, part of the prolific silver belt of the Sierra Madre Occidental. Silver Dragon Resources Inc., through its wholly owned Mexican Subsidiary Silver Dragon Mining de Mexico S.A. De C.V., acquired the exploration and mining rights to the property in March 2006.

About Silver Dragon

Silver Dragon Resources Inc. is a mining and metal company focused on the exploration, acquisition, development and operation of silver mines in proven silver districts globally. Silver Dragon's objective is to acquire silver mining assets that contain promising exploration targets, have highly leveraged, out-of-the-money silver deposits, and/or are producing properties with significant untapped exploration potential. It is management's objective to grow Silver Dragon into a significant silver producer by developing the Cerro las Minitas and the Erbahuo projects in Mexico and China. For more information, please visit the Company's website at: www.silverdragonresources.com (now available in Chinese).

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained herein which are not historical are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, certain delays beyond the company's control with respect to market acceptance of new technologies or products, delays in testing and evaluation of products, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.

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