Silvercorp consolidates land position at Ying

Vancouver — Silvercorp Metals (SVM-T, SVMFF-O) is buying the Hou-Ping-Gou (HPG) silver-gold-lead mine located within its Ying project area in Henan province, China.

In a move to further consolidate its land position, the company will create a 60/40 joint venture with HT Mining, pay $6 million in instalments, and become operator of the mine.

The HPG underground mine, in operation for around five years, produces 200 to 250 tonnes per day of ore grading 10% lead, 250 grams silver per tonne and 1.6 grams gold per tonne that is processed at its 250-tonne-per-day flotation mill. The operation is exploiting a massive galena lens or sheet, within a quartz-carbonate vein structure, which ranges from 1.5 to 5 metres thick, 70 metres long and over 200 metres deep.

Chinese government studies have identified over 20 northeast-trending veins on the HPG permit area, and estimated about 2.1 million tonnes of inferred resource averaging 12.2% lead, 210 grams silver and 1.9 grams gold (not compliant with National Instrument 43-101) in portions of two veins.

The mineralized lead-silver veins at HPG are similar to those on the SGX area of the company’s Ying project, although the HPG veins are wider with lower grades.

Silvercorp recently received local government approval of its environmental assessment report for mining and development on the SGX area at Ying, and has filed its mining permit application.

During its 2005 exploration program, Silvercorp recovered over 31,000 tonnes of high-grade ore from tunnel development. It reports that almost 1,900 tonnes of direct-to-smelter massive galena material was manually picked out of the “byproduct” ore, of which 1,300 tonnes was sold to local smelters at an average price of US$803 per tonne (netting just over US$1 million). In addition, offsite custom milling of 27,630 tonnes of diluted lower-grade ore yielded 2,581 tonnes of lead-silver concentrate and 1,178 tonnes of zinc concentrate sold to local smelters for US$1,059 per tonne and US$536 per tonne, respectively (net total of about US$3.4 million). The 2006 exploration-development program is expected to be fully funded through sales of ore extracted from planned tunnelling along the mineralized veins, and from mining once permits are obtained.

The company owns a 77.5%-interest in the Sino-foreign joint-venture company Henan Found Mining that holds the Ying silver-lead project. The remaining interest is held by the Henan government.