SOURCE: Silver Dragon Resources Inc.

July 11, 2006 08:00 ET

Silver Dragon Receives High-Grade Assay Results From First Drill Hole at Cerro Las Minitas Project, Mexico

DURANGO, MEXICO -- (MARKET WIRE) -- July 11, 2006 -- Silver Dragon Resources Inc. (OTCBB: SDRG) is pleased to announce the receipt of assays from its first drill hole, Drill Hole LM-01, at its Cerro Las Minitas Project in Durango, Mexico.

Drill Results from Drill Hole LM-01

Drill Hole LM-01 was drilled to a depth of 405.4 meters at an angle of -65° to intercept the Puro Corazón structures 100 meters below the deepest exploration there to date. Eleven mineralized intercepts were cut in the hole and six of the eleven intercepts returned grades of economic interest. Intercepts are summarized in the Table below. Reported intervals are measured core lengths and the true widths of the zones reported have yet to be determined.

Highlights from the reported drill hole LM-01 are:

--  @ 261.2 metres downhole:  2.80 metres grading 185 g/t (5.94 oz/ton)
    silver, 6.58% lead, 8.21% zinc, and 1.23% copper
--  @ 311.1 metres downhole:  2.60 metres grading 133 g/t (4.28 oz/ton)
    silver, 5.48% lead, 13.54% zinc, and 0.65% copper
--  @ 361.1 metres downhole:  3.70 metres grading 179 g/t (5.76 oz/ton)
    silver, 0.35% lead, 12.28% zinc, and 2.35% copper
Weighted Average (Composite) Assay Values for Intercepts cut in Drill Hole LM-01
Interval     From(m)  To(m)  Length(m)  Ag(g/ton)  Pb(%)  Zn(%)  Cu(%)
----------   ------  ------  ---------  ---------  -----  -----  -----
LM-01-1        86.0    94.0       8.00         10   0.54   0.33   0.02
 including     92.0    94.0       2.00         26   1.54   0.55   0.07
LM-01-2       120.0  125.85       5.85         27   0.75   0.71   0.11
 including   123.65  124.55       0.90         92   0.77   0.84   0.15
LM-01-3       261.2   264.0       2.80        185   6.58   8.21   1.23
 including    261.2  261.75       0.55        277   9.81   18.3   3.37
  and         262.1  262.55       0.45        215   8.53   12.8   1.84
  and         263.0   264.0       1.00        207   6.87   4.29   0.25
LM-01-4       270.6   278.1       7.50         28   1.26   1.23   0.13
 including    270.6  271.05       0.45        129   6.20   4.76   0.24
  and         276.6   278.1       1.50         90   4.27   4.25   0.30
LM-01-5      290.55  291.00       0.45        275   11.2    9.6   2.23
LM-01-6      308.00  308.55       0.55        147   3.91    5.3   0.18
LM-01-7       311.1   313.7       2.60        133   5.48  13.54   0.65
 including    311.1  311.65       0.55        208   10.3   29.2   1.29
  and        312.55  313.00       0.45        238   11.0    >30   1.58
  and        313.35  313.70       0.35        288   7.59   13.4   0.56
LM-01-8       318.6  320.95       2.35         68   1.51   2.15   0.05
LM-01-9       327.6  329.45       1.85        121   3.54   3.62   0.38
 including   328.80  328.45       0.65        177   6.32    4.7   0.76
LM-01-10      361.1   364.8       3.70        179   0.35  12.28   2.35
 including    361.7   362.1       0.40        402   0.77    >30   7.71
  and         362.1   363.1       1.00        205   0.33  10.60   2.44
LM-01-11      366.5   368.8       2.30        117   0.43   4.65   0.70
 including    366.5   366.8       0.30        259   0.66   12.0   1.98
Interpretation of Drill Results

Drill Hole LM-01 is the first of a series of holes to be drilled into the Puro Corazón structures. Grades and thicknesses of mineralization intersected in the hole are very encouraging and indicate that mineralization in the Puro Corazón structures does indeed continue at depth below the present workings. When data from more holes has been returned, we will be able to make additional observations on grade, continuity and production potential of these discoveries.

Intercepts cut in the lower portions of Drill Hole LM-01 represent two distinct types of mineralization and a third type of mineralization may have been cut in oxides in the upper portion of the hole. Geochemical and geologic studies are underway to determine more clearly the nature of each.

Intercepts LM-01-1 and LM-01-2 represent a chemically distinct type of mineralization that we have not seen previously at Cerro Las Minitas. Those intercepts were made in the oxide zone in the upper portions of Hole LM-01 and are severely leached, as is common in near-surface rocks at Cerro Las Minitas. The residual metal values in those two intercepts are indicative of mineralization below that has not been encountered previously. Geologic investigations underway in that area are designed to define targets at depth.

Intercepts LM-01-3 through LM-01-9 represent mixed skarn-type and manto-type mineralization, seen to be mixed in various proportions in different intercepts. The relationships seen in the hole are complex and still under study.

Intercepts LM-01-10 and LM-01-11 represent predominantly skarn-type mineralization in the lower reaches of the Puro Corazón structures. These intercepts were made at vertical depths of 305 and 335 meters below surface respectively, about 100 meters below the deepest existing underground access. They confirm that mineralization in the Puro Corazón structures continues to that depth.

New Discoveries

Of considerable interest, Drill Hole LM-01 has shown a number of previously unrecognized features of the mineralization at Cerro Las Minitas. Two types of mineralization are present. We have confirmed the existence of skarn-type mineralization at depth. The skarn mineralization is found at or near the contact of the Cuesta del Cura Limestones and the intrusive porphyry that forms the core of the mineralized system. This style of mineralization was known previously and has been the focus of all exploration and mining activity on the property to date.

Drill Hole LM-01 has shown that previously unrecognized Pb-Zn-Ag manto mineralization also exists on the property. The manto-style mineralization we have intersected is a replacement of limestone beds with massive to semi-massive sulfides of Pb and Zn. Where we have cut manto-style of mineralization in Hole LM-01, those intercepts appear to be leakage from manto bodies at some distance from the intrusive. No exploration has been done at any appreciable distance from the intrusive contact to date, but information from Drill Hole LM-01 suggests very strongly that manto bodies do exist in the unexplored areas. Data from many Ag-Pb-Zn mantos known around the world indicates that individual deposits average about a million tons each, grading tens to hundreds of grams/ton Ag and approximately 5 - 20% combined Pb and Zn. The Santa Eulalia district in Chihuahua, Mexico has produced about 24 million tons in this century, grading about 300 gr/ton Ag, 8% Pb and 9% Zn. Geologic data now in hand suggest that multiple manto bodies may exist in the unexplored areas of the Cerro Las Mintas district. Exploration operations are being re-configured to explore for the manto bodies as well as continue the exploration and definition of the skarn-type mineralization.

Drill Holes LM-02 and LM-03 have been completed, but assays have not yet been returned for either hole. Results will be announced as soon as assays are received and a preliminary analysis of results has been completed.

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 1394 Hectares. It is located in 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 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 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: (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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