Silvercorp hopes to show Canadian miners the way in China.

Vancouver Aiming to be a trailblazer in Asia, Silvercorp (SVM-T) says it wants to become the first Canadian company to payout dividends to its shareholders using profits from a mine in China.

We like to think that by August 15, we can get our board of directors to ratify a dividend, said Silvercorp President Cathy Fong in an interview. We are targeting 10 cents a share, she said.

The company aims to achieve that goal using profits from its high grade Ying mine in eastern Chinas Henan Province, a joint venture owned 77.5% by Silvercorp and 22.5% by the Henan Non Ferrous Geological & Mining Bureau, an agency of the Chinese government.

Launched in April 2006, it is expected to produce 3.8 million oz of silver, as well as 46.2 million pounds of lead and 18 million pounds of zinc during the fiscal year that begins on in April and ends in March 2008. That production is coming from a series of adits.

But when the company completes work on three new mine shafts and a new 600-tonne-per-day mill, Silvercorp hopes to at least double its production rate in the following year.

Headed by Chairman and chief executive Rui Feng, Silvercorp can consider paying a dividend after seeing its net profits rise by 74% to $9.3 million or 19 cents a share in the third quarter ended Dec. 31, 2006, from $5.3 million or 11 cents in the second quarter ended Sept. 30, 2006.

Silvercorp attributes its success to the fact that it is developing a rich surface deposit with a measured and indicated resources of 811,620 tonnes, grading 49.34 oz silver per tonne, 26.5% lead, and 8.61% zinc.However, the company has also been criticized for safety conditions at the mine site.

During a site visit last December, a Northern Miner reporter noted that contract miners, truckers and barge operators are being paid by the load, so there is a strong incentive to get the ore out of the mine, onto 3-wheel trucks, down a narrow switchback, across a reservoir and to the custom mill as quickly as possible.

The conditions at Ying are only primitive when compared to North American operations, said Fong at the time.

However, in a subsequent interview with the Northern Miner on Feb. 16, Fong attributed the company’s success to the fact that the company “doesn’t tell the Chinese government what to do.”

We don’t shove our behaviour down their throat,” she said. “I really think that is why we are successful.”

However, the company has tried to improve safety by attaching copies of the Chinese Safety Act outside the mine portals. “We also put shrines beside the portals to remind the 900 employees to ask for blessings in hopes that they return safely to surface,” Fong said.

She said the company is constantly grappling with the fact that many of the Ying miners will simply remove their helmets when there are no surpervisers around.

“It’s a different world,” she said, referring to the difference between mining in China and North America.