VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 1, 2007) - Silvercorp Metals Inc. ("Silvercorp") (TSX:SVM) is pleased to announce that its 70% owned joint venture company, Henan Huawei Mining Co. Ltd. ("Huawei"), has signed an agreement to acquire a 100% of the operating LM Silver-Lead Mine, which has a mining permit of 3.07 square kilometres (km) in area and is located just southeast of the Ying silver project ("Ying Mine"). The acquisition is carried out by acquiring the private Chinese company holding the LM mining permits for approximately $3.25 million. It is expected that the acquisition will be funded by cash flow from Huawei's HPG Mine and the LM Mine mining operations.
The acquisition of the LM Mine advances Silvercorp's strategy to consolidate the fragmented primary silver sector in China, starting from its foot-hold in Henan Province by expanding the Ying Silver Camp. The current Chinese National Government mandate for the mining industry is to encourage the consolidation within a mining district of small mining operations and companies into larger, well organized operations in order to improve safety and environmental practices and for better utilization of resources.
Silvercorp's Chinese subsidiary company, Henan Found Mining Co. Ltd. ("Henan Found"), has emerged as the largest silver-lead-zinc mining company and one of the largest tax payer in Luoyang City, Henan Province, China. The Ying Mine being the best operated mine in Luoning County is favored by local governments to be the consolidator. The local governmental authorities have designated Henan Found as the sole consolidator of TLP Silver-Lead Mine, where significant amounts of silver and lead have reportedly been produced. Negotiations are currently underway with the shareholders of the TLP Mine to acquire a 100% interest. The TLP Mine, which is located to the east boundary of the Ying Project area, is currently shut down by the local government due to its poor record of safety and environmental practices.
The LM mining permit area is underlain by a highly metamorphosed basement of Archean-aged mafic to felsic gneisses, similar to the Ying and HPG project areas. At least 8 mineralized vein structures have been identified and mapped in the LM area to date. The veins range from 300 to 1,000 meters (m) in striking length and 0.2 to 5.0m in true thickness. Main metallic minerals are massive and disseminated galena, native silver, and freibergite.
The mining and exploration operations at LM started in 2005 and currently produces 300 tonnes of ores per day which are processed using custom mills. A total of 19 adits - approximately 15,000m of exploration and production tunnels - were developed on different veins and on different levels. As the previous operator is only interested in mining any ore shoots found along the veins, no resource was estimated. Its current mining activities have been focused on the high grade ore shoots of veins LM2 (about 1000m long) and LM8 (about 800m long). Silvercorp's geologists made visits to the mine, mapped the tunnels, and collected check samples. Assay results of the check samples are listed in the table below.
Some of the significant intercepts are:
- 1.0m true width grading 2,841 grams per tonne (g/t) silver (Ag), 12.87% lead (Pb), and 3.78% zinc (Zn) at 900m elevation on the LM2 vein;
- 1.2m true width grading 4,336 g/t Ag, 4.91% Pb, and 0.37% Zn at 846m elevation on the LM2 vein;
- 1.5m true width grading 2,032 g/t Ag, 1.39% Pb, and 0.11% Zn at 924m elevation on the LM8 vein;
- 3.0m true width grading 1,113 g/t Ag, 5.69% Pb, and 0.71% Zn at 851m elevation on the LM8 vein and;
- 0.6m true width grading 2,349 g/t Ag, 8.52% Pb, and 0.26% Zn at 845m elevation on the LM3 vein;
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Ag
Equiv-
Eleva- True alent
tion Width Ag Pb Zn (g/t)
Vein# Tunnel (m) (m) (g/t) (%) (%) (i)
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LM2 PD900-LM2-920-NYM 920 0.70 183 0.80 0.39 235
PD900-LM2-920-NYM 920 0.70 125 0.21 0.35 150
PD900-LM2-920-NYM 920 1.40 154 0.51 0.37 193
PD900-LM2-920-NYM 920 0.50 284 0.57 0.26 320
PD900-LM2-920-NYM 920 0.30 4140 22.59 1.40 5160
PD900-LM2-920-NYM 920 0.45 539 1.42 0.26 611
PD900-LM2-920-NYM 920 0.30 4860 16.41 1.30 5614
PD900-LM2-915-NYM 915 0.85 610 3.48 0.28 770
PD900-LM2-915-NYM 915 0.80 348 4.78 0.26 562
PD900-LM2-915-NYM 915 0.50 84 0.75 0.46 137
PD900-LM2-915-NYM 915 1.10 111 0.28 123
PD900-LM2-915-NYM 915 0.70 95 0.28 0.75 142
PD900-LM2-915-NYM 915 0.30 126 0.25 0.22 147
PD900-XJ2-LM2-920-NYM 907 1.45 1005 4.96 1.38 1280
PD900-LM2-900-NYM 900 0.78 58 9.65 0.24 477
PD900-LM2-900-NYM 900 1.00 2841 12.87 3.78 3564
PD900-LM2-900-NYM 900 1.30 104 1.33 0.30 174
PD900-LM2-900-NYM 900 0.30 2233 24.05 0.13 3254
PD900-LM2-900-NYM 900 0.70 1056 10.07 0.30 1495
PD900-LM2-900-NYM 900 1.40 264 4.94 0.13 479
PD900-LM2-900-NYM 900 0.55 270 5.74 0.18 521
PD900-LM2-900-NYM 900 0.15 3996 18.58 0.33 4796
PD900-LM2-900-NYM 900 0.40 2404 12.69 0.30 2954
PD900-LM2-900-NYM 900 0.50 1711 27.59 0.96 2921
PD855-LM2-880-NYM 882 0.60 134 0.99 0.18 184
PD855-LM2-880-NYM 882 1.50 537 4.64 0.39 751
PD855-LM2-880-NYM 882 1.10 146 1.19 0.30 210
PD855-LM2-880-NYM 882 1.00 1085 5.56 0.17 1328
PD855-LM2-880-NYM 882 0.55 72 0.28 85
PD855-LM2-880-NYM-TJ2 882 1.00 1564 31.57 0.54 2922
PD855-LM2-860-NYM 861 1.50 80 0.28 0.28 105
PD855-LM2-860-NYM 861 1.20 713 3.63 0.26 879
PD855-LM2-860-NYM 861 0.65 24 3.21 0.22 170
PD855-LM2-860-NYM 861 0.85 800 2.59 0.30 924
PD855-LM2-860-SYM 861 0.90 81 0.49 0.09 106
PD838-LM2-845-NYM 845 0.90 227 1.09 0.44 294
PD838-LM2-845-NYM 845 1.40 113 0.42 0.30 145
PD838-LM2-845-NYM 845 1.00 268 0.42 0.20 295
PD838-LM2-845-NYM 845 1.20 4336 4.91 0.37 4561
PD838-LM2-830-NYM 830 1.00 3407 11.23 0.56 3907
PD838-LM2-830-NYM 830 0.50 713 1.85 0.31 806
PD838-LM2-830-NYM 830 0.70 181 0.14 187
PD838-LM2-830-NYM 830 1.00 153 0.92 0.30 206
PD838-LM2-830-NYM 830 1.70 165 0.60 0.18 198
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LM3 PD900-LM3-900-NYM 915 0.90 132 1.52 0.44 217
PD900-LM3-900-SYM 900 0.20 224 22.32 0.33 1182
PD855-LM3-880-SYM 880 0.70 12 0.14 0.21 28
PD855-XJ1 870 0.65 470 24.47 0.57 1530
PD855-LM3-860-SYM 861 0.40 1327 27.55 0.61 2518
PD855-LM3-860-SYM 861 1.00 30 1.18 80
PD838-LM3-845-NYM 845 1.20 315 0.85 0.30 365
PD838-LM3-845-NYM 845 0.60 2349 8.52 0.26 2721
PD838-LM3-845-NYM 845 0.80 60 1.65 130
PD838-LM3-845-NYM 845 0.20 991 6.99 1.18 1342
PD838-LM3-845-NYM 845 0.40 636 14.68 0.70 1289
PD838-LM3-830-NYM 830 0.95 346 0.28 358
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LM4 PD900-LM4-920-SYM 920 0.30 252 0.38 0.41 287
PD900-LM4-920-SYM 920 0.40 448 2.66 0.52 585
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LM7 XPD924-LM7-924-NEYM 924 9.50 263 2.54 0.11 375
LM8 XPD924-LM8-924-NWYM 924 1.50 2032 1.39 0.11 2096
XPD924-LM8-924-NWYM 924 1.10 322 0.72 0.06 355
XPD924-LM8-924-NWYM 924 0.50 2344 0.97 0.08 2388
XPD924-LM8-924-NWYM 924 0.60 124 0.63 0.16 159
XPD891-LM8-891-NWYM 891 0.50 174 0.21 0.06 185
XPD891-LM8-891-NWYM 891 0.30 1134 0.63 0.05 1162
XPD891-LM8-891-NWYM 891 0.65 386 0.47 0.08 409
XPD891-LM8-891-NWYM 891 0.80 261 0.54 0.05 286
XPD891-LM8-891-NWYM 891 0.70 220 0.22 0.05 231
XPD860-LM8-860-SEYM 860 0.60 1570 6.36 0.43 1859
XPD860-LM8-860-NWYM 860 0.50 747 3.71 0.11 909
XPD924-LM8-924-NWYM 851 3.00 1113 5.69 0.77 1390
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Silver equivalent grade is calculated on the basis of US$6.5/oz Ag,
US$0.40/lb for Pb, and US$0.45/lb for Zn. Copper grade is not included in
the calculation.
After taking over the LM mine operation in early November 2007, Silvercorp will carry out systematic underground drilling and tunneling programs, including sinking several decline and short shafts, on all 8 veins to define the resource while continuing current mining activities. Ore produced from the LM will be processed in Silvercorp's new 1,000 t/d mill about 14 km northwest of the LM Mine. The exploration and mine development will focus on better-explored LM2, LM3, and LM8 veins.
The acquisition of the HPG property remains subject to regulatory approvals.
Quality Control
Rock samples were collected by channel sampling the face of the undercut drifts. The channels were usually cut 10 cm in width and 5 cm in depth producing a sample weighing approximately 2 kg to 10 kg for each 0.10 to 1.00m interval depending on the thickness of mineralization.
The Company maintains a quality control program to ensure best practice in sampling and analysis of the tunnel samples. The samples are shipped directly in security sealed bags to analytical Lab of No. 6 Team of Henan Non-Ferrous Metals Geological and Mineral Resources Bureau in Luoyang located 120 km by road northeast of the LM Mine.
The sample preparation consists of drying, crushing, and splitting of the sample to 150 grams, then the sample is pulverized to 200 mesh. Ag, Pb and Zn were analyzed by a 3 hour hot aqua regia digestion on 30 gram samples with an AA finish.
Myles Gao, P.Geo, is the Qualified Person on the project under NI 43-101.
CAUTIONARY DISCLAIMER -- FORWARD LOOKING STATEMENTS
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, development, and mining. Production and revenue projections are based not on mineral reserves but on mineral resources which do not have demonstrated economic viability. As a result, actual results may vary materially from those described in the forward-looking statements. There can be no assurance that such forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on such statements. The Company does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws. The Company expressly disclaims any obligation to update any forward-looking statements. We seek safe harbour.
FOR FURTHER INFORMATION PLEASE CONTACT:
Silvercorp Metals Inc.
Rui Feng
Chairman & CEO
(604) 669-9397
Silvercorp Metals Inc.
Lorne Waldman
Corporate Secretary
(604) 669-9397
(604) 669-9387 (FAX)
Email: info@silvercorp.ca
Website: www.silvercorp.ca
