Silvercorp Metals Inc.

Silvercorp Metals Inc.

November 08, 2006 09:00 ET

Silvercorp Acquires the Third Mining Permit, The NZ Gold-Silver Mine, Henan Province, China

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 8, 2006) - Silvercorp Metals Inc. ("Silvercorp") (TSX:SVM) is pleased to announce that its 77.5% owned subsidiary company, Henan Found Mining Co. Ltd ("Henan Found"), has agreed to acquire a 100% interest in the NZ Gold-Silver project, through acquisition of a private Chinese company by paying the private owner approximately US$1,080,000. The first payment of US$380,000 has been made. The sole asset of the private company is a gold mining permit covering the NZ Gold-Silver project - an area of 3 kilometers (km) long by 0.8 km wide or 2.4 square km in size, approximately 135 km southeast of the Ying Silver Project. The agreement is subject to final approvals by relevant Chinese government agencies.

With this acquisition, Silvercorp will have a total of three mining permits in Henan Province, China: the Ying, HPG, and NZ Mining Permits, enabling Silvercorp to produce gold (Au), silver (Ag), lead (Pb) and zinc (Zn).

Limited underground mining operation on the NZ property from 1995 to 2004 produced a reported total 39,000 tonnes of ore grading about 6 grams per tonne (g/t) Au. The ores were custom milled to recover gold only. Other metal contents found in the ore were not recorded. Currently the mine is not in operation due to lack of development capital and skill.

The NZ Gold-Silver project is located in Nanzhao County of Henan province. Geologically, the project area is situated in the east extension of the Qinling Mountain Belt near the margin of the Northern China Craton, underlain by late Proterozoic metamorphic rocks that were intruded by Mesozoic quartz-feldspar porphyry. Surface mapping and trenching and limited tunnel mining carried out by the Henan Bureau of Geological and Mineral Resources ("HBGMR") and the previous owner's mining operations have defined three sub-parallel Au-Ag-Pb-Zn veins that extend east-westerly and dip steeply. The three veins were developed for nearly 3,000 metres (m) along a 200 to 300 m wide ductile shear zone that extends outside the mining permit boundary. These three veins are also intersected by several northwesterly trending parallel structures, where high grade Au-Ag-Pb-Zn zones were found.

The mineralized ore shoots within the three east-west veins were found to range between 0.7 to 2.7 m in true width and from 400 to 1,360 m in strike length. The best ore shoot, NZ1, in one of the veins is about 650 m in strike length and 1.1 to 2.7 m in true width averaging 11.02 grams per tonne (g/t) Au, 106 g/t Ag, 5.19% Pb, and 16.37% Zn as reported by the HBGMR.

No systematic sampling program was done by the previous owner. The following table lists the gold assay results for channel samples collected by HBGMR in 2002, as reported in a geological report filed with the Chinese government:

Ore Length True
shoot # (m) Trench/Tunnel Width (m) Au (g/t)
NZ1 650 PD11 2.45 6.09
CK20 1.90 7.30
NZ2 1360 CK8 2.70 13.40
PD3 1.90 8.75
TC26 1.10 8.05
PD4 2.00 11.03
TC32 1.80 11.38
TC31 0.80 15.00
NZ3 520 TC64 0.70 17.41
CK47 1.30 2.88

Prior to acquiring this project, Henan Found's geologists visited the NZ property and collected several continuous chip and grab samples that returned the following results:

Ore True
shoot # Tunnels Width (m) Au(g/t) Ag(g/t) Pb(%) Zn(%)
NZ1 XJ1 0.80 15.18 65 0.27 9.17
NZ2 PD2 0.52 0.33 40 2.64 5.21
PD3 0.80 4.63 80.7 3.7 5.84
grab Sample 5.9 98.3 1.37 2.57
grab Sample 2.18 25.2 0.35 1.75

Most of the assay results are from samples taken at or near the surface, which tend to yield lower grade due to surface leaching, as experienced at the Ying project. Once the acquisition is completed and the NZ project has been taken over, a thorough and systematic underground tunnelling and drilling program will be conducted on the property, which will lead to mining production, as the current mining permit is in good standing.

Quality Control

Myles Gao, P.Geo, is the Company's Qualified Person on the project under NI 43-101. The Company's Quality Control/Quality Assurance Program is disclosed in the January 4, 2006 Press Release.

Silvercorp Metals Inc. is engaged in the acquisition, exploration, and mining of precious and base metal mineral properties in China. Currently, Silvercorp's main mining operations are the Ying Ag-Pb-Zn mine, owned through a 77.5% Chinese subsidiary company and the HPG Ag-Pb-Zn mine, owned through a 60% Chinese subsidiary company.

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.

Contact Information

  • Silvercorp Metals Inc.
    Rui Feng
    Chairman & CEO
    (604) 669-9397
    Silvercorp Metals Inc.
    Cathy Fong
    (604) 669-9397
    (604) 669-9387 (FAX)