Silvercorp adds another Chinese silver mine to its stable

Vancouver – Following a strategy that has already made the company into the largest primary silver producer in China, Silvercorp Metals (SVM-T) is spending $33 million to pick up another small, operating mine with good exploration potential.

The Vancouver-based company inked a deal to acquire a 70% interest in Yunxiang Mining, a private mining company in Hunan province. Yuxiang’s primary asset is the BYP gold-lead-zinc mine, located 220 km southwest of Changsha, the provincial capital.

The mine has a 400-tonne-per-day flotation mill and has been in production since 2006. In that time the mill has worked through 300,000 tonnes of low grade lead-zinc mineralization from near surface. The mill recently shut down temporarily, as the tailings pond is full; a new tailings facility is being built and should be complete within five months.

An historic report by the Chinese government geological team pegged BYP’s resources at 5.4 million tonnes grading 2.76 grams gold per tonne in the gold zone plus 3.1 million tonnes of lead-zinc mineralization grading 2.45% lead and 5.26% zinc.

Geologically, the BYP permit area is underlain by limestone, mudstone, and sandstone units that were intruded by the Mesozoic granite that are prominent within the Central Hunan polymetallic belt. Gold mineralization is up to 40 metres thick and occurs within the sandstone, while lead and zinc are found with pyrite in limestone units that are up to 53 metres in true width. Gold is associated with fine quartz veining and disseminated pyrite. Gold, lead, and zinc mineralization has been tracked from surface to depths as great as 350 metres.

Silvercorp sent samples from BYP for metallurgical testwork during its due diligence. Preliminary results indicate conventional flotation recovers 90% of the contained gold to a concentrate; flotation also recovers 80% of the lead and 90% of the zinc in BYP samples. Silvercorp also mentions that there are eight smelters – one gold and seven lead-zinc smelters – within 200 km of BYP, all with extra capacity.

Silvercorp says the BYP mine acquisition fits the company’s “strategy of acquiring precious metal projects that can generate healthy cash flows before the project is fully explored and developed, so that further resource expansion and production growth can be financed by internal cash flow.”

Silvercorp operates four silver-lead-zinc mines at the Ying Mining Camp in Henan province. It is also working to permit its GC project in Guangdong province and advance its Silvertip project in northern British Columbia.

Investors applauded Silvercorp’s BYP mine purchase, lifting the company’s share price 83¢ or 7¢ to $12.73, a new 52-week high. In February its shares were worth $5.10. Silvercorp has 165 million shares outstanding.