Silvercorp Metals on fast track in China

Silvercorp Metals (SVM-T, SVMFF-O) is on a tear in China.

The Vancouver-based company operates four silver-lead-zinc mines at its flagship Ying mining camp in Henan province and, hoping to make a new discovery, is planning a 30,000-metre drill program at its polymetallic Na Bao project in China’s remote northwestern Qinghai province.

Recently, it acquired Yangtze Mining, which owns rights to two silver, lead and zinc exploration permits in southern China’s Guangdong province.

News of the completion of the deal sent Silvercorp’s stock up 21 a share to close at $7.66 — about midway in its 52-week trading range of $5.10-10.65.

The purchase price for the shares of Yangtze Mining tallied about US$61.95 million, 40% payable in cash and 60% in Silvercorp stock.

Yangtze Mining owns 95% of a Sino-foreign joint-venture company, which in turn owns 100% of the Gaocheng and Shimentou silver, lead and zinc exploration permits.

The Gaocheng (5.54 sq. km) and Shimentou (9.49 sq. km) permits are about 200 km west of the provincial capital of Guangzhou. Since 2001, they have been explored for gold, silver, lead, zinc and sulphur.

A independent technical report (compliant with National Instrument 43-101) released in January concluded that the Gaocheng permit alone had a measured and indicated resource of 1.8 million tonnes grading 129 grams silver per tonne, 1.45% lead, 2.79% zinc and 0.14% tin and inferred resources of 7.2 million tonnes grading 125 grams silver, 1.38% lead, 3% zinc and 0.13% tin.

Now Silvercorp is applying for a mining permit and will spend roughly US$1.5 million to conduct about 10,000 metres of drilling this year.

The two new permits in Guangdong province are located in the South China Orogenic belt.

For the year ended March 31, Silvercorp’s sales increased by US$68.6 million, or 172%, to US$108.4 million, compared with US$39.8 million for the same period last year.

Silvercorp also holds about a 24% interest in New Pacific Metals (NUX-V, NUXFF-O), a company that is exploring for nickel, copper and platinum group metals in China.

Silvercorp has about 148.7 million shares outstanding.