Silvercorp Metals Inc.

Silvercorp Metals Inc.

August 08, 2005 09:00 ET

Silvercorp Metals Inc.: Progress Report on Operations at the Ying Silver Project, Henan, China

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 8, 2005) - Silvercorp Metals Inc. ("Silvercorp") (TSX VENTURE:SVM) is pleased to provide a progress report for the first half of 2005 on the operations of our Chinese joint venture company, Henan Found Mining Co. Ltd. ("Found) at the Ying Silver Project.

During the first half of 2005, Found completed:

- 9,159 metres ("m") of exploration and development tunnels through drifting, declines, cross-cuts, raises, stopes, and other development tunnelling (all completed to an average dimension of 2m by 1.8m). A total of 11,944m of tunnels have been completed by Found since taking over the project in August 2004;

- 2,581m of underground drilling for a total of 3,468 m of underground drilling since late August 2004.

This work focused on drifting along the strike extensions of veins S2, S4, S6, S7, S8, S14, S16W, and S16E, and on vertical raises to test continuity of massive galena sheets along the dipping direction at the SGX area and several other veins outside of the SGX area, accessed through 14 main access tunnels. For the month of June 2005 alone, almost 2,000m of underground tunneling has been developed and it is expected that a minimum1,800m of tunneling will be completed each month for the rest of the year. Preparations for sinking three 330m vertical shafts were also completed and work on the shafts is now underway. During the first half year, Found has also constructed about 32,000 square feet of housing for the 400 contract workers on site.

The exploration tunnels completed to date have discovered new veins and expanded existing veins (see August 2nd release), which are expected to add substantial new resources while the development tunnels will prepare the project for earlier production once the mining permit is obtained.

During the first half of 2005 significant revenue was recovered from the sale of high-grade direct-to-smelter vein ore and lower grade materials extracted as by-products of exploration tunneling. Found sold about 994 tonnes of direct-to-smelter silver-lead ores (containing about 48.55% lead and 2,166 grams per tonne silver) and 12 tonnes of direct-to-smelter zinc ores. A further 566.6 tonnes of silver-lead concentrates (containing 57.52% lead and 3,263 g/t silver) and 132 tonnes of zinc concentrates were produced from 4,936 tonnes of diluted, lower grade by-product ores which were custom milled off-site. The average realized value is about US$794 per tonne for direct-to-smelter ores and US$1,058 per tonne for milled silver-lead concentrates at an exchange rate of RMB8.1 Yuan to the dollar. The saleable materials were recovered from exploration tunneling only. No extraneous mining was carried out on ore faces exposed by the tunneling.

Sales of these direct-to-smelter ores and milled concentrates have generated US$1.457 million cash for Found during the first half of 2005. This entirely offsets the US$1.427 million expended during the period for exploration and development activities, plus the one time camp construction and off-site milling costs, therefore the exploration and development program has been self financing during the first half of 2005.

During the period Found also initiated the application process for a mining permit at Ying. This entails preparing a reserve calculation report by independent qualified Chinese agents, preparing a resource utilization plan for Ying by a qualified Chinese engineering firm, and obtaining government approval to start an environmental impact study. The transfer of two key exploration permits covering the SGX area from our Chinese partner to Found, has also been completed with the permits issued by the Ministry of Land and Resources of China. The three remaining permits are in the process of transfer. Found incurred a further US$636,000 for these activities which also included leasing the surface usage right and local community relations.

All the above figures are un-audited and were prepared based on Found's 1st half year financial summary of 2005. Found has established good internal controls as representatives from both parties of the joint venture are jointly working on financial, inventory, and sales auditing and checking process under the direction of the General Manager, Myles Gao.

Exploration on the Ying Project is carried out through Silvercorp's Sino-foreign joint venture company, Found, which holds 100% of the Ying Project and in which Silvercorp is earning a 77.5% interest. Myles Gao, P.Geo, President of Silvercorp, is the General Manager of Found. Mr. Gao is also the Qualified Person on the project under NI 43-101.

Liu-Hei Silver-Gold Project, Gansu Province, China

After additional field visits and due diligence, and in light of the growing importance of the Ying Project, Silvercorp has determined not to pursue the option of the Liu Hei project in Gansu Province that was announced March 1, 2005.

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.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy or this release.

Contact Information

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